note 1 : RELATED PARTY DISCLOSURES.
As per the Indian Accounting Standard on "Related Party Disclosures" (IND AS 24), the related parties of the Company are as follows : Name of Related Parties and Nature of Relationship :
Sr.No Relationship Name of company / person
1 Subsidiary Company Infibeam Digital Entertainment Private Limited
Infinium India Limited
NSI Infinium Global Private Limited
Odigma Consultancy Solutions Private Limited
Infibeam Logistics Private Limited
Sine Qua Non Solutions Private Limited
Infibeam Global EMEA FZ LLC
2 Associate Company Avenues Infinite Private Limited
3 Key Management Personnel
Executive Directors Mr. Vishal Ajit Mehta
Non-executive Directors Mr. Malav Ajit Mehta
Mr. Ajit Champaklal Mehta Mr. Roopkishan Sohanlal Dave Mr. Keyoor Madhusudan Bakshi Ms. Vijaylaxmi Tulsidas Sheth Chief Financial officer (CFO) Mr. Hiren Bachubhai Padhya
Company secretary (CS) Mr. Shyamal Bhaskerbhai Trivedi
Terms and conditions of transactions with related parties
(1) Transaction entered into with related party are made on terms equivalent to those that prevail in arm''''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables.
(2) For the year ended 31 March 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2016: INR Nil, 1 April 2015: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
(3) Adjustments in balance of investments, loan balance and interest income of NSI Infinium Global Private Limited represents Ind AS adjustment on interest free loan given to subsidiary company.
Commitments with related parties
The Company has not provided any commitment to the related party as at March 31, 2017 (March 31, 2016: Rs.Nil and April 1, 2015: Rs.Nil)
~ All the transactions pertaining to purchase, sales, expenses etc. entered with NSI Infinium Global Pvt. Ltd are adjusted against reimbursement of expenses. Hence, the net amount of reimbursement has been derived considering the transactions entered into between the parties during the year.
NOTE 2: sHARE BAsED PAYMENTs Employee stock option (EsOP) scheme (2013-14):
The scheme has been adopted by the Board of Directors pursuant to resolution passed at its meeting held on 17 February 2013, read with Special Resolution passed by shareholder of the company at the extra ordinary general meeting held on 30 March 2013. The plan entitles senior employees to purchase shares in the Company at the stipulated exercise price, subject to compliance with vesting conditions. All exercised options shall be settled by physical delivery of shares. As per the plan, holders of vested options are entitled to purchase one equity share for every option at an exercise price of Rs 10 which is 97.65% below the market price at the date of grant, i.e., 1 April 2013 and
1 April 2014.
Employee stock option (ESOP) scheme (2014-15)
The scheme has been adopted by the Board of Directors pursuant to resolution passed at its meeting held on 27 February 2014, read with Special Resolution passed by shareholder of the company at the extra ordinary general meeting held on 31 March 2014. The plan entitles senior employees to purchase shares in the Company at the stipulated exercise price, subject to compliance with vesting conditions. All exercised options shall be settled by physical delivery of shares. As per the plan, holders of vested options are entitled to purchase one equity share for every option at an exercise price of Rs 10 which is 97.65%, 97.68% and 100% respectively below the market price at the date of grant, i.e., 1 April 2014, 1 April 2015, 1 April 2016, 1 October 2014, 1 October 2015 and 1 October 2016.
The fair value of the share based payment options granted on is determined using the black scholes model using the following inputs at the grant date which takes in to account the exercise price, the term of the option, the share price at the grant date, and the expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
NOTE 3: SEGMENT REPORTING
The Company''''s Chief Operating Decision Maker (CODM) examines the Company''''s performance from business and geographic perspective. In accordance with Ind AS-108 - Operating Segments, evaluation by the CODM and based on the nature of activities performed by the Company, which primarily relate to Software development, maintenance and other ancillary services, the Company does not operate in more than one business segment.
A. Information about geographical areas
The Company operates in three principal geographical areas of the world, in India, its home country, Middle East and the Other countries. As the Company does not operate in more than one business segment, disclosures for primary segment as required under Ind AS 108 have not been given.
B. unallocated items:
India, geographical segment includes certain assets which are common to all the geographical segment (i.e. India, Middle East and Others). Non-current assets exclude financial instruments, deferred tax assets and tax assets.
C. segment policies:
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
D. Major customer
Revenue from two customers of the Company''''s India segment is Rs. 200 million and two customer of the Company''''s Middle East segment is Rs. 192.72 million which is more than 10 percent of the Company''''s total revenue.
NOTE 4 : Operating LEASE
The Company has taken a commercial premises under operating leases. The leases period is of 1 year. These leasing arrangements are cancellable, and are renewable on a periodic basis by mutual consent on mutually accepted terms including escalation of lease rent. Total expense incurred under the cancellable operating lease agreement recognized as an expense in the Statement of Profit and Loss during the year is Rs 1.56 million (previous year Rs. 1.49 million)
NOTE 5: FINANCIAL INSTRUMENTS - FAIR VALUEs AND Risk MANAGEMENT A. Accounting classification and fair values
Set out below, is a comparison by class of the carrying amounts and fair value of the Company''''s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:
The management assessed that trade receivables, cash and cash equivalents, other bank balance, other financial assets, trade payables and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The following table provides the fair value measurement hierarchy of the Company''''s assets and liabilities other than assets and liabilities which approximate their carrying amounts largely due to the short-term maturities.
Fair value hierarchy
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
Level 2 - Valuation technique and significant observable inputs for assets and liabilities
Loan represents interest free loans given to subsidiary companies. The fair value of loans is derived based on market observable interest rate.
B. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk ;
- Liquidity risk ; and
- Market risk
i. Risk management framework
The Company''''s board of directors has overall responsibility for the establishment and oversight of the Company''''s risk management framework. The Company manages market risk through a treasury operations, which evaluates and exercises independent control over the entire process of market risk management. The treasury team recommends risk management objectives and policies. The activities of this operations include management of cash resources, borrowing strategies, and ensuring compliance with market risk limits and policies.
The Company''''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate
risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The audit committee oversees how management monitors compliance with the company''''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''''s receivables from customers and investments in debt securities. The carrying amount of following financial assets represents the maximum credit exposure.
Cash and cash equivalents
The company maintains its Cash and cash equivalents and Bank deposits with banks having good reputation, good past track record and high quality credit rating and also reviews their credit-worthiness on an on-going basis.
Trade receivables of the company are typically unsecured. Credit risk is managed through credit approvals and periodic monitoring of the creditworthiness of customers to which company grants credit terms in the normal course of business. The company performs ongoing credit evaluations of its customers'''' financial condition and monitors the creditworthiness of its customers to which it grants credit terms in the normal course of business. The allowance for impairment of Trade receivables is created to the extent and as and when required, based upon the expected collectability of accounts receivables. The company has no concentration of credit risk as the customer base is geographically distributed.
The above receivables which are past due but not impaired are assessed on individual case to case basis and relate to a number of independent third party customers from whom there is no recent history of default. These financial assets were not impaired as there had not been a significant change in credit quality and the amounts were still considered recoverable based on the nature of the activity of the customer portfolio to which they belong and the type of customers. There are no other classes of financial assets that are past due but not impaired except for Trade receivables as at March 31, 201/; March 31, 2016 and April 1, 2015.
iii. Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company''''s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system.
The table below summaries the maturity profile of the Company''''s financial liabilities based on contractual undiscounted payments:
(a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Financial instruments affected by market risk include loans and borrowings, deposits.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company transacts business in local currency and in foreign currency, primarily in USD. The
Company has foreign currency trade payables and receivables and is, therefore, exposed to foreign exchange risk. The Company does not use any derivative instruments to hedge its risks associated with foreign currency fluctuations.
Foreign currency sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD, AED and SAR rates to the functional currency of respective entity, with all other variables held constant. The Company''''s exposure to foreign currency changes for all other currencies is not material. The impact on the Company''''s profit before tax is due to changes in the fair value of monetary
assets and liabilities.
NOTE 6 : CAPITAL MANAGEMENT
For the purpose of the Company''''s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''''s capital management is to ensure that it maintains an efficient capital structure and healthy capital ratios in order to support its business and maximize shareholder value.
The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions or its business requirements.
To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings less cash and short-term deposits (including other bank balance).
In order to achieve this overall objective, the Company''''s capital management, amongst other things, aims to ensure that it meets borrowings that define capital structure requirements. There are no financial covenants attached to borrowings.
No changes were made in the objective, policies or processes for managing capital during the years ended March 31, 2017 and March 31, 2016.
NOTE 7: DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES
The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated August 26, 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum in accordance with the ''''Micro, Small and Medium Enterprises Development Act, 2006'''' (''''the MSMED Act'''') accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2017 lias been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance-sheet date.
On basis of information and records available with the Company, the above disclosures are made in respect of amount due to the micro, small and medium enterprises, which have been registered with the relevant competent authorities. This has been relied upon by the auditors.
NOTE 8 : FIRST- TIME ADOPTION OF IND AS
These financial statements, for the year ended March 31, 2017, are the first annual Ind AS financial statements, the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).
Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for year ending on March 31, 2017, together with the comparative period data as at and for the year ended March 31, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''''s opening balance sheet was prepared as at April 1, 2015, the Company''''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2015 and the previously published Indian GAAP financial statements as at and for the year ended March 31, 2016.
Ind AS 101 "First-time Adoption of Indian Accounting Standards” allows first-time adopter certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:
1 Deemed cost
The Company has elected to continue with the carrying value of all of its property, plant and equipment and intangible assets including capital work in progress and intangibles under development as recognized in the financial statements as at the date of transition to Ind AS, measured as per previous GAAP and used it as its deemed cost at the date of transition.
2 Investment in Subsidiaries and Associates
The Company has elected the option provided under Ind AS 101 to measure all its investments in Subsidiaries and Associates at previous GAAP carrying value on the date of transition in its separate financial statement and used that carrying value as the deemed cost of such investments.
* For the purposes of this clause, the term ''''Specified Bank Notes'''' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.
9 During the year ended March 31, 2016, the Company has raised funds pursuant to Initial Public Offering (IPO) for the purpose of setting up of cloud data center, purchase of property for shifting and setting up of registered and corporate office of the company, setting up of 75 logistic centers, purchase of software and general corporate purposes. The Company issued 10,416,666 equity shares of Rs. 10 each at an issue price of Rs 432 per equity share. The proceeds from IPO is Rs. 4,499.99 million. The Company has incurred IPO expenses of Rs. 343.85 million (such as merchant bankers fees, underwriting fees, selling commission, legal counsel fees, registrar to the issue, brokerage and selling commission, printing and stationary expenses, advertising and marketing expenses and other incidental expenses). Of the total IPO expenses, expenses aggregating to Rs. 312.78 million have been adjusted towards the securities premium account. Further IPO expenses aggregating to Rs. 5.52 million (March 2016: 25.55 million) have been charged to the Statement of Profit and Loss. The unutilized amount received through IPO is temporarily deployed as under:
10 The Company''''s transactions with associated enterprises are at arm''''s length. Management believes that the company''''s domestic transactions with associated enterprises post March 31, 2016 continue to be at arm''''s length and that the transfer pricing legislation will not have any impact on the financial statements particularly on the amount of the tax expense for the year and the amount of the provision for taxation at the period end.
11 Previous year figures have been regrouped or recast wherever necessary to make them comparable with those of the current year. The comparative financial information of the Company for the year ended March 31, 2016 and the transition date opening balance sheet as at April 01, 2015 included in these standalone Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by one of the joint auditor (B S R & Associates LLP) whose report for the year ended March 31, 2016 and March 31, 2015 dated May 30, 2016 and September 5, 2015 respectively expressed an unmodified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by joint auditors.