HATHWAY Notes to Accounts


Hathway Cable and Datacom Limited (“the Company) is a Public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. During the year, the Company carried on its activities as Multi System Operator (MSO) and engaged in distribution of television channels through analog and digital cable distribution network and internet services through cable. As stated in note no 4.23, the cable television business was transferred to a wholly owned subsidiary. Its equity shares are listed on National Stock Exchange of India Limited (NSE) & Bombay Stock Exchange Limited (BSE) in India.

Authorization of standalone financial statements

The standalone financial statements were authorized for issue in accordance with a resolution of the directors on May 30, 2017.

a) Reconciliation of the number of shares outstanding as at the beginning and end of the reporting period:

b) Rights, Preference and restrictions attached to Shares;

Terms/ Rights attached to Equity Shares

The Company has issued only one class of equity shares having face value of Rs.2 (March 31, 2016 : Rs.2, April 1, 2015 : Rs.2) per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts in proportion to the number of equity shares held by the shareholders.

c) The details of shareholders holding more than 5% shares in the Company:

d) Shares reserved for issue under options

Nil equity shares (March 31, 2016 : 5,000 equity shares, April 1, 2015 : 142,000 equity shares) of Rs.2 (March 31, 2016: Rs.2, April 1, 2015 : Rs.2) each towards outstanding employees stock option granted/ available for grant. Refer Note 4.07


Description of the nature and purpose of each reserve within equity is as follows:

(a) Retained Earning :

Retained earnings are the losses that the Company has incurred till date.

(b) Securities Premium :

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Act.


a) The Company has given a counter indemnity favoring the bankers to the extent of Rs.3.42 (March 31, 2016: Rs.9.21 & April 1, 2015: Rs.9.58) for issue of Bank Guarantees on behalf of the Company to various authorities/parties.

b) The Company has challenged levy of license fees for pure Internet services before Telecom Disputes Settlement & Appellate Tribunal (TDSAT). On merit of the case, TDSAT has granted stay till disposal of petition. The Company is contingently liable to the extent of Rs.71.45 (March 31, 2016 : Rs.33.55 & April 01,2015 : Rs.Nil). The Company has paid an amount of Rs.5.36 under protest.

c) Income Tax Matters

d) The minority shareholders of the erstwhile joint venture company, Hathway Rajesh Multichannel Pvt. Ltd., filed an arbitration petition against the Company before the High Court, Bombay, which was referred to a sole arbitrator in August 2016. The minority shareholders, in their statement of claim have sought, amongst other reliefs, payment of Rs.54.98 towards costs of STBs, charges under various heads allegedly wrongly debited by the Company etc. The Company has refuted the claims and has made counter claim of Rs.91.17 towards inter-alia outstanding content cost, loans, payments and damages/ compensation for the loss of financial and management credibility, goodwill etc. The matter is currently pending

e) Claims against the Company, other than those stated above, not acknowledged as debts are as under:

Pursuant to Business Transfer Agreement dated March 24, 2017, the Company has transferred it Cable Television business which inter alia includes claims against the Company not acknowledged as debts, by way of slump sale to its wholly owned subsidiary Hathway Digital Private Limited (HDPL). Accordingly, the details of such claims, litigation etc. relating to Cable Television business transferred to HDPL are not disclosed hereinabove.

2.02 financial corporate guarantee

The Company has given Corporate Guarantees of Rs.113.64 (March 31, 2016: Rs.126.23 & April 1, 2015: Rs.135.18) to Banks and Rs.8.38 (March 31, 2016: Rs.32.80 & April 1, 2015: Rs.32.80) to Others towards various credit facilities extended by them to the subsidiary company and Joint Ventures.


Estimated amount of contracts (including acquisition of intangible assets net of advances) remaining to be executed on capital account and not provided for aggregate to Rs.51.02 (March 31, 2016: Rs.63.88 & April 1, 2015: Rs.64.26).

As a part of business strategy, the Company has expanded its area of operations in various parts of the country by entering into arrangements with local partners. Such operations are in the form of subsidiaries/joint ventures. (Subsequently, some of such entities are converted into wholly owned subsidiaries.) Since operations of such entities are significantly dependent on the company’s policies, the Company is committed to provide the required support towards the operations of such entities including financial support that may be required to meet commitments/obligations of such entities.


Two wholly owned subsidiaries of the Company viz. Binary Technologies Transfers Pvt. Ltd. And Hathway Internet Satellite Pvt. Ltd. were majority partners in a partnership firm, namely, M/s. Hathway Space Vision (the firm). The aforesaid majority partners of the firm had initiated legal action i.e. invoked arbitration proceedings, against the minority partner viz. Space Vision Cabletel Pvt. Ltd. with reference to some management and operational issues and had made monetary claims against the minority partner. The minority partner had also filed certain counter claims against the wholly owned subsidiaries. After a long drawn legal battle, the firm stands dissolved as of July 8, 2011. The Court Receiver, High Court of Bombay has been appointed as the Receiver of the assets and business of the firm and Hathway Internet Satellite Private Limited has been appointed as the Agent of the Court Receiver. The issues concerning accounts and dissolution including adjudicating upon the original claims and counter claims made before the earlier Arbitrator are referred to Arbitration before Justice Srikrishna (Retd.). The Court Receiver had taken the possession of the movable assets found at the premises of the Firm and has appointed a valuer, the report thereof is pending. In the mean time, the Court Receiver has fixed an ad hoc royalty of Rs.0.01(March 31, 2016 : Rs.0.01) per month that is to be paid by the agent of the Court Receiver under order dated December 2, 2011. An application by way of chamber summons inter alia for setting aside the said order dated December 2, 2011 has been filed by the Company and Hathway Internet Satellite Private Limited in the High Court, Bombay which was disposed off. Majority Partners moved appeals being Appeal (L) No. 344 of 2017 and 403 of 2017, before the High Court of Bombay challenging the Order, which are pending. In the meantime, Majority Partners deposited a sum of Rs.0.16 with the Court Receiver as per the Order of the Hon’ble High Court dated February 20, 2017.

On May 5, 2017, both the Parties filed their Consent Terms in the High Court, Bombay wherein it is agreed by and between the parties that Majority Partners agrees to remove all moveable assets lying at premises as per the inventory and Reports of the Court Receiver, High Court, Bombay dated 14.09.2011 and 16.09.2011 and CTMS and digital equipment, at is cost and charges. It is further agreed by the Parties that the Court Receiver, High Court, Bombay appointed by an Order dated 08.07.2011, shall stand discharged without passing any accounts. It is agreed that the Binary Technologies Transfers Pvt. Ltd shall bear all the costs, charges, expenses and commission of the Court Receiver, High Court, Bombay. The Court Receiver shall refund all amounts to the Binary Technologies Transfers Pvt. Ltd after deducting its cost and charges. The Minority Partners confirms that they do not have any claim in respect of the amount deposited with the Court Receiver. This settlement is without prejudice to all the rights and contentions of parties in the Appeal pending before the Hon’ble Court.

The Company has investments in said fully owned subsidiaries namely Hathway Internet Satellite Pvt. Ltd. & Binary Technology Transfers Pvt. Ltd. of Rs.0.01 (March 31, 2016 :Rs.0.01 & April 1, 2015 :Rs.0.01) and Rs.0.01 (March 31, 2016 :Rs.0.01 & April 1, 2015 : :Rs.0.01) and Loans and advance of Rs.1.67 (March 31, 2016 :Rs.1.59 & & April 1, 2015 : :Rs.1.59), Rs.1.67 (March 31, 2016 :Rs.1.59 & & April 1, 2015 : :Rs.1.59) respectively which has been fully provided for in the books.


Pursuant to circular dated December 17, 2012 issued by the Delhi Entertainment Department, the MSOs were made responsible for collection and payment of Entertainment Tax for secondary points w.e.f. April 1, 2013. The Company challenged the constitutional vires of the said circular and filed writ petition in the matter before the High Court of Delhi. The High Court pronounced a favourable judgment stating that the liability to collect and deposit the Entertainment Tax for secondary points rests wholly and solely upon the LCOs, before and after March 31,2013, as they are the Proprietor of their individual cable TV network, and not the MSOs. Accordingly, the Company has reversed provision of Rs.9.70 made on account of Entertainment tax.


The shareholders of the Company have approved Employee Stock Option Plan i.e. HATHWAY ESOP 2007 (“The Plan”). The Plan provides for issue of options (underlying equity share of Rs.10 each) to the persons specified in the scheme at the price determined by the remuneration committee appointed by the Board of Directors. Price determined by the remuneration committee is in the range of Rs.110.20 to Rs.157.30.

The Options granted under the Plan shall vest within not less than one year and not more than five years from the date of grant of options. Under the terms of the Plan, 20% of the options will vest to the employees every year. Once the options vest as per the Plan, they would be exercisable by the Option Grantee at any time within a period of three years from the date of vesting and the shares received on exercise of such options shall not be subject to any lock-in period.

The value of the options granted is determined by the management based on the rates at which shares were allotted to the investors during the relevant year and the same has been considered as fair value of option.

2.07 EMPLOYEE Benefits

a) Defined Benefit Plans:

The Present value of the defined benefit obligations and related current service cost were measured using the Projected Unit Credit Method, with acturial valuation being carried out at each Balance Sheet date.

b) Defined Contribution Plans:

The Company operated defined benefits contribution retirment benefit plans for all qualifying employees.

The Total expenses recognised in the statement of Profit and Loss is Rs.3.24 (March 31, 2016: Rs.2.86) represents contribution payable to these plans by the Company at the rates specified in the rules of plan.


As the Company’s business activity falls within a single business segment viz. providing Cable Television network services, Internet Services and allied services which is considered as the only reportable segment and the revenue substantially being in the domestic market, the financial statement are reflective of the information required by Ind AS 108 “Operating Segments”.


(a) Finance Leases (As Lessee):

Lease rentals outstanding as at March 31, 2017 in respect of fixed assets taken on finance lease are as under:

Upon expiry of the original term lessor may offer lessee to purchase all of the equipments at nominal value

Finance Lease obligation of Non Current Borrowing (Ref: Note No: 2.15) include Rs.Nil (March 31, 2016: Rs.49.95 & April 1, 2015: 107.09) payable to lessor under finance lease arrangement.

(b) operating Leases (As Lessee): The Company’s significant leasing arrangements in terms of Ind AS 17 on lease are in respect of Operating Leases for Premises and Equipments. The period of these leasing arrangements, which are cancellable in nature range between eleven months to six years and are renewable by mutual consent.

Rental Expenses debited to the Statement of Profit and Loss Rs.10.72 (March 31, 2016: Rs.11.07) Details of Cancellable Leases are as under:

Lease Expenses debited to the Statement of Profit and Loss Rs.27.39 (March 31, 2016: Rs.14.62) Some of these lease agreements have price escalation clauses

(c) operating Leases (As Lessor):

(d) The right to use granted to subsidiaries/local cable operators in respect of Access devices are not classified as lease transactions as the same are not for an agreed period of time.


The Company’s objective while managing capital is to maintain stable capital structure to support business stability and growth, ensure adherence to the covenants and restrictions imposed by lenders and / or relevant laws and regulations, and maintain an optimal and efficient capital structure so as to reduce the cost of capital that would enable to maximise the return to stakeholders.

The Company’s capital requirement is mainly to fund its business expansion and repayment of borrowings. The principal source of funding of the Company has been, and is expected to continue to be, cash generated from its operations supplemented by funding from bank borrowings and the capital markets.

The Company has adhered to material externally imposed conditions relating to capital requirements and there has not been any delay or default during the period covered under these financial statements with respect to payment of principal and interest. No lender has raised any matter that may lead to breach of covenants stipulated in the underlying documents.

The Company monitors its capital using gearing ratio, which is net debt divided to total equity. Net debt includes, interest bearing loans and borrowings less cash and cash equivalents.


(i) Methods & assumption used to estimates the fair values

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

a) The carrying amounts of receivables and payables which are short term in nature such as trade receivables, other bank balances, deposits, loans to employees, trade payables, payables for acquisition of non- current assets, demand loans from banks and cash and cash equivalents are considered to be the same as their fair values.

b) The fair values for long term loans, long term security deposits given and remaining non current financial assets were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs.

c) The fair values of long term security deposits taken and non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs.

d) For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

(ii) Categories of financial instruments

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: directly or indirectly observable market inputs, other than Level 1 inputs; and

Level 3: inputs which are not based on observable market data


The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by the Board of Directors. The details of different types of risk and management policy to address these risks are listed below:

The business activities of Company activities expose it to financial risks namely Credit risk, Liquidity risk and Market risk. In order to minimise any adverse effects on the financial performance of the Company, it uses derivative financial instruments, such as foreign exchange forward contracts, foreign currency swap contracts, call options are entered to hedge certain foreign currency risk exposures and follows policies set up by a Treasury department under policies approved by the Board of Directors.

1. credit risk

Credit risk arises from the possibility that counter party will cause financial loss to the company by failing to discharge its obligation as agreed.

The Company’s exposure to credit risk arises mainly from the trade receivables, loans given, financial guarantee contract and derivative financial instruments.

Credit risks from balances with banks and financial institutions are managed in accordance with the Company policy. For derivative and financial instruments, the Company attempts to limit the credit risk by only dealing with reputable banks and financial institutions having high credit-ratings assigned by credit-rating agencies.

The Company’s major revenue streams arises from services provided to end use customers in the form of monthly subscription income. The trade receivables on account of subscription income are typically un-secured and derived from sales made to large number of independent customers. As the customer base is distributed economically and geographically, there is no concentration of credit risk. The credit period provided by the Company to its end use customers generally ranges from 0 to 30 days.

The Company follows a simplified approach (i.e based on lifetime ECL) for recognition of impairment loss allowance on Trade receivables. For the purpose of measuring the lifetime ECL allowance for trade receivables, the Company uses a provision matrix which comprise a very large number of small balances grouped into homogenous groups and assessed for impairment collectively. Individual trade receivables are written off when management deems them not recoverable. Based on the industry practices and business environment in which the Company operates, management considers that the trade receivables are in default if the payment are more than 12 months past due.

The Trade Receivables includes amount due from disconnected / inactive customers / LCOs with whom no interconnect documents have been executed and outstanding in excess of one year. The Company is taking adequate steps for recovery of overdue debts and advances and wherever necessary, adequate provisions as per expected credit loss model have been made.

2. Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company liquidity risk management policies include to, at all times ensure sufficient liquidity to meet its liabilities when they are due, by maintaining adequate sources of financing from both domestic and international banks at an optimised cost. In addition, processes and policies related to such risks are overseen by senior management. The Company’s senior management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows.

Maturities of financial liabilities

The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.

The Company from time to time in its usual course of business issues financial guarantees to certain subsidiaries and joint ventures. Accordingly, as on March 31, 2017, March 31, 2016 and April 1, 2015 Company has issued corporate guarantee for debt of Rs.122.02, Rs.104.81 and Rs.125.77 respectively. The outflow in respect of these guarantees will arise only upon default of the such subsidiaries and joint ventures. Rs.66.70 is due for repayment within 1 year and Rs.55.32 is due for repayment within 1 - 5 Years from the reporting date.

Financing arrangements

The Company has sufficient sanctioned line of credit from its bankers / financiers; commensurate to its business requirements. The Company reviews its line of credit available with bankers and lenders from time to time to ensure that at all point of time there is sufficient availability of line of credit.

The Company pays special attention to the net operating working capital invested in the business. In this regard, as in previous years, considerable work has been performed to control and reduce collection periods for trade and other receivables, as well as to optimise accounts payable with the support of banking arrangements to mobilise funds.

3. Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company is exposed in the ordinary course of business to risks related to changes in foreign currency exchange rate and interest rate.

a) Market Risk - Foreign Exchange

Foreign exchange risk arises on all recognised monetary assets and liabilities which are denominated in a currency other than the functional currency of the Company. The Company has foreign currency trade payables, receivables and borrowings. However, foreign exchange exposure mainly arises from borrowings and trade payables denominated in foreign currencies.

Foreign currency risk is managed by following established risk management policies, which inter alia includes monitoring the movements in currencies in which the borrowings / capex vendors are payable and hedging the exposure to foreign currency risk by entering into forward currency contracts, call options and currency swaps contracts.

The Company does not enter into or trade financial instrument including derivative for speculative purpose

The carrying amount of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows

The Company has booked INR USD Cross Currency Swap Contracts of USD 3.50 (March 31, 2016 : USD 3.50) against the underlying INR borrowing of Rs.215.71 (March 31, 2016 : Rs.215.71). Outstanding at the year end for the same is INR borrowing is Rs.25.09 and Currency Swap Contract amount is USD 0.41. The actual interest earned on notional INR deposit, interest paid on notional USD borrowing, Exchange fluctuation on payment/ settlement of principal amount and marked to market loss on USD exposure aggregating net gain / (loss) of Rs.14.76 (March 31, 2016 : Rs.0.25) are included under finance cost in note number 3.05 in Notes to the financial statements.

Foreign currency sensitivity

1 % increase or decrease in foreign exchange rates will have the following impact on loss before tax and on other components of equity

b) Market Risk - interest Rate

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk because the Company has borrowed funds substantially at floating interest rates. The interest rate risk is managed by the Company by the use of interest rate swap and by monitoring monthly cash flow which is reviewed by management to prevent loss of interest.

Interest rate sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to interest rates on the borrowings at the end of the reporting period. For floating rate borrowings, the analysis is prepared assuming the amount of borrowing outstanding at the end of the reporting period was outstanding for whole of the year. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel.

The sensitivity disclosed in the above table is attributable to variable interest rate borrowings and the interest swaps. The above sensitivity analysis is based on a a reasonably possible change in the under-lying interest rate of the Company’s borrowings in INR & USD (being the significant currencies in which it has borrowed funds), while assuming all other variables (in particular foreign currency rates) to be constant.

In addition to above, the Company has extended aggregate loan of Rs.37.35 to various subsidiaries and Joint Ventures, out of which Rs.16.12 is interest free. The Company had invested in 5% Non cumulative Redeemable Preference shares issued by Hathway Digital Pvt Ltd aggregating to Rs.0.05 (March 31, 2016 : 0.05, April 01,2015 : 0.05). The Company has given Corporate financial Guarantees of Rs.120.93 (March 31, 2016 Rs.150.93) on behalf of GTPL Hathway Ltd., Rs.Nil (March 31, 2016: Rs.5.00) on behalf of Hathway Datacom Central Pvt. Ltd. and Rs.1.09 (March 31, 2016: Rs.3.1) on behalf of Hathway MCN Pvt Ltd.The Company had fair value investment in some of its subsidiaries and Joint Ventures and recognised net gain aggregating to Rs.378.69 (March 31, 2016 ; 378.69)

Investments by the loanee in the shares of parent company and subsidiary company, when the company has made a loan or advance in the nature of loan.

(a) None of the loanee have made, per se, investment in the shares of the Company.

(b) Investment made by Hathway Media Vision Pvt. Ltd in Hathway Bhawani Cabletel & Datacom Ltd - 21,60,000 equity shares of Rs. 2.46.

(c) Investment made by Hathway New Concept Cable & Datacom Pvt Ltd in Hathway Media Vision Private Limited - 2,000 preference shares of Rs. 0.00

(d) Investment made by Hathway New Concept Cable & Datacom Pvt Ltd in Win Cable & Datacom Private Limited - 5,000 preference shares, of Rs. 0.01

2.13 The Company being engaged in the business of providing infrastructure facilities, the provision of section 186 of the Companies Act, 2013 are not applicable and accordingly, disclosure of details with respect to Loan given, guarantee given, and security made during the Financial Year 2016-17 in terms of Section 186 (4) of the Act is not applicable. Disclosure of Investment made during Financial Year 2016-17 and Financial Year 2015-16 is as follows:-

2.14 The earlier discussion of demerger of the ISP Business Undertaking of the Company to the wholly owned subsidiary viz Hathway Broadband Pvt Ltd as of April 1, 2015 (the Appointed Date), which was pending before the High Court of Bombay, was withdrawn during the year after taking requisite approval from the shareholders.

2.15 Pursuant to introduction of Digital Addressable System (DAS), in terms of TRAI Regulations the MSOs are required to inter alia enter into inter connect agreements with local cable operators in notified cities. The Company has not been able to complete the above process successfully in networks where there are cases of resistance from local cables operators. Pending execution of documents, income recognized is based on various underlying factors including rate charged by other MSO’s, ongoing negotiations with cable operators etc. The management has reviewed the outstanding receivables and has made suitable provisioning, wherever required and is confident that it is stated at realizable amount.

2.16 The Company has it’s presence in various cities, which form part of phase III of DAS rollout in terms of MIB notification. Preparatory to DAS rollout dates, the Company had established required infrastructure. The monetization of these investments is subject to successful DAS implementation and the management is hopeful of the same.

2.17 The board of directors of 5 wholly owned subsidiaries of the Company viz. Hathway New Concept Cable and Datacom Private Limited, Hathway Krishna Cable Private Limited, UTN Cable Communications Private Limited, Hathway software Developers Private Limited and Hathway Mysore Cable Network Private Limited have resolved, subject to necessary approvals, to demerge their cable television business to Hathway Digital Private Limited with effect from closing hours of March 31, 2017.


Pursuant to receipt of approval to the internal restructuring from the board of directors and the shareholders and after seeking in-principle prior approvals from all the lenders, the Company transferred its Cable Television business by way of slump sale to its wholly owned subsidiary Hathway Digital Private Limited (earlier known as Hathway Datacom Central Private Limited) (“the said Subsidiary”) with effect from close of business hours as of March 31, 2017 for a total consideration of Rs.302. In view of the same, all assets and liabilities including borrowings & contingent liabilities attributed to the cable television business got vested in the said Subsidiary. The Company has intimated the effect of the same to its lenders and the lenders are inter alia in the process of completing documentations in this regard. The disclosures in note no. 2.15 relating to securities offered to the banks and others against borrowings extended by them is based on terms of Business Transfer Agreement executed to give effect to slump sale, however, execution of necessary documents and filing of relevant forms with the office of the Registrar of Companies is under progress.

2.19 There is an unclaimed share application money of Rs.29,375 (Amount in ‘) required to be transferred to Investor Education and Protection Fund (IEPF). The Company is in process of transferring such amount to IEPF, in accordance with the provisions of section 125 of the Companies Act, 2013 and relevant rules thereunder.

Foot notes for ind AS adjustments Note 1: Property, Plant and Equipment

The Company has availed the exemption available under Ind AS 101 to continue the carrying value for all of its Property, Plant and Equipments and Intangibles recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.

Note 2: Non current investments - Investments in equity instruments (a) Investment in subsidiaries and joint ventures and associates :-

Under Ind AS, a first- time adopter can measure investments in each subsidiary, joint venture and associate at cost determined in accordance with Ind AS 27or at deemed cost. The deemed cost of the investment can be the fair value of the investment at the transition date or the previous GAAP carrying amount. The Company has opted to value its investments in certain subsidiaries and joint ventures at deemed cost using the fair value option.

(b) Investment in Other companies :-

Under previous GAAP, non current investment in equity instruments of other companies were measured at cost less provision for dimunition (other than temporary). Under Ind AS, the Company has recognised such investments at FVTOCI through irrecovable option. On the date of transition to Ind AS, the difference between the fair value of NonCurrent Investments as per Ind AS and their corresponding carrying amount as per financial statements prepared under previous GAAP, has resulted in decrease in the carrying amount of these investments which has been recognised directly in opening retained earnings.

Note 3: Current investments - Investments in Mutual funds

Under previous GAAP, current investments were measured at lower of cost or fair value. Under Ind AS, these investments have been classified as FVTPL on the date of transition.

Note 4: Loss allowance on Trade receivables

Under the previous GAAP, the Company has created provision for impairment of receivables consisting specific amount for incurred losses. Under Ind AS, impairment allowance has been determined based on the Expected Credit Loss Model which has led to an increase in the amount of provision as on the date of transition.

Note 5: Security deposits

Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly, the company has fair valued these security deposits under Ind AS and the difference between the fair value and the transaction value of the security deposit has been recognised as prepaid rent.

Note 6: Financial corporate guarantee

The Company has issued corporate guarantee on behalf of its joint ventures for the borrowings taken by them. Under previous GAAP, financial guarantee contracts were not accounted for. The Company has recognised finance guarantee obligation at fair value with corresponding recognition in investments. Interest income is recognised with a corresponding reduction from Finance Guarantee Obligation.

Note 7: Investment in Preference Shares

The preference shares do not meet the definition of equity instrument as per Ind AS 32 and are held to collect contractual cashflows, hence they are fair valued at amortised cost. The fair value is determined using the present value method using the discount rate which is the borrowing market rate. The difference between the amount paid for acquiring the preference shares and its fair value is considered as investment in equity. The Company has accrued interest using the effective interest rate (discount rate) over the term of the preference shares.

Note 8: Defined benefit obligations

Under previous GAAP, actuarial gains and losses were recognised in Statement of Profit and Loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of the net defined benefit liability / asset which is recognised in other comprehensive income. Consequently, the tax effect of the same has also been recognised in other comprehensive income under Ind AS instead of profit or loss.

Note 9: Borrowings

Under previous GAAP, in case of fixed interest rate borrowings, transaction cost incurred were charged to statement of profit and loss on straight line basis over the tenure of the borrowings. As per Ind AS 109, the transaction costs incurred towards origination of borrowings are deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the statement of profit and loss over the tenure of the borrowing as part of the interest expense by applying effective interest rate method (i.e., amortised cost method).

As per Ind AS 109, for variable interest rate borrowings, the transaction costs incurred towards origination of borrowings are deducted from the carrying amount of borrowings on initial recognition. Accordingly, the unamortised balance of transaction cost has been deducted from the carrying amount of the borrowings as on the date of transition.

Note 10: Derivative Instruments - Forward contracts

Under previous GAAP, there is concept of deferred premium/discount which is recognised based on difference between spot rate and forward rate and amortised over the tenure of the forward contract. Under Ind AS, forward contract is required to accounted at fair value. Accordingly, the Company has reversed deferred premium outstanding in the books of accounts.

Note 11: Loan given to subsidiaries and joint ventures

Under previous GAAP, interest free loans given to subsidiaries and joint ventures are accounted at their transaction value. Under Ind AS, the Company has discounted the interest free loans given to subsidiaries and joint ventures with corresponding increase in the investment.

Note 12: Deferment of activation income

Under previous GAAP, activation income is recognized upfront as revenue. Under Ind AS, supply of services involving a non-refundable fee along with subsequent periodic payments for services in future are construed as linked transactions. All linked transactions where individual transactions have no commercial meaning on their own and occurrence of one is dependent on occurrence of another are to be evaluated on combined basis. Activation fee, which in substance is an advance payment for future services or the ongoing services being provided are essential to the subscribers receiving the expected benefit of the upfront payment of activation fee. Accordingly, activation fee is earned as services are provided over the term of the arrangement and need to be deferred over the expected customer relationship period (i.e. expected life of the customer).

Note 13: Other Comprehensive income

Under previous GAAP, there was no concept of other comprehensive income. Under Ind AS, items of income or expense that are not recognised in statement of profit and loss are recognised as “other comprehensive income” which includes remeasurement of defined benefit plans.

Note 14: Inclusion of Bank Overdraft for the purpose of Cashflow

Under Ind AS, bank overdrafts which are repayable on demand and form an integral part of the Company’s cash management system and are included in cash and cash equivalents for the purpose of presentation of Statement of Cash flows. Whereas under previous GAAP, there was no similar guidance and hence, bank overdrafts were considered similar to other borrowings and the movements therein were reflected in cash flows from financing activities.

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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