Note 1 - Corporate Information
Vakrangee Limited (hereinafter referred to as ‘‘the Company”) is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 2013 applicable in India. The registered office of the Company is located at ‘Vakrangee House’, Plot No. 66, Marol Co-op. Indl. Estate, Off. M. V. Road, Marol, Andheri (East), Mumbai, Maharashtra, India. The Company’s shares are listed on two stock exchanges in India- the Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE).
The Company is engaged in providing diverse solutions, activities in e-governance and e-commerce sector through its Vakrangee Kendra with special competencies in handling massive, multi-state, and e-governance enrollment projects, data digitization.
The financial statements were authorized for issue by the Company’s Board of Directors on May 30, 2017.
Note 2 - Significant Accounting Policies
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These accounting policies have been consistently applied to all the years presented by the Company unless otherwise stated.
A. Basis of preparation
i. Statement of compliance
These financial statements are prepared in accordance with Indian Accounting Standards (hereinafter referred to as “Ind AS”) under the provisions of the Companies Act, 2013 (hereinafter referred to as ‘the Act’) (to the extent notified). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
These financial statements for the year ended March 31, 2017 are the first financial statements of the Company prepared in accordance with Ind AS. For all periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with the Generally Accepted Accounting Principles (hereinafter referred to as ‘previous GAAP’) used for its statutory reporting requirement in India. Refer Note 4 for an explanation of how the transition from the previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows. The Company has adopted the Ind AS standards in accordance with Ind AS 101 First time adoption of Indian Accounting Standards.
The accounting policies have been consistently applied by the Company unless otherwise stated or where a newly issued accounting standard is initially adopted.
ii. Basis of measurement
The financial statements have been prepared on historical cost basis except the following
- certain financial assets and liabilities (including derivative instruments) are measured at fair value;
- assets held for sale- measured at fair value less cost to sell;
- defined benefit plans- plan assets measured at fair value; and
- share based payments
Note 3 - Critical Accounting Judgements and Estimates
The preparation of financial statements in conformity with Ind AS requires judgements, estimates and assumptions to be made that affect the reported amount of assets, liabilities, revenue, expenses, accompanying disclosures and the disclosures of contingent liabilities. The estimates and associates assumptions are based on historical experience and other factors that are considered to be relevant. Actual results could differ from those estimates. These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future period.
Application of accounting policies that require critical accounting estimates and the use of assumptions in the financial statements are as follows:
- Share-based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 49.
- Defined benefit plans
The cost of the defined benefit gratuity plan and other post-employment medical benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.
Further details about gratuity obligations are given in Note 48.
- Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See Note 50 for further disclosures.
Note 4 - First-time adoption of Ind AS
These financial statements, for the year ended March 31, 2017, are the first financial statements prepared in accordance with Ind AS.
The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended on March 31, 2017, the comparative information presented in these financial statements for the year ended March 31, 2016 and in the preparation of an opening Ind AS balance sheet at April 1, 2015 these financial statements (the Company date of transition).
In preparing its opening Ind AS balance sheet and in presenting the comparative information for the year ended March 31, 2016, the Company has adjusted the amounts reported previously in the financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). For the purpose of transition from the Indian GAAP to Ind AS, the Company has applied Ind AS 101 - First Time Adoption of Indian Accounting Standards.
An explanation of how the transition from previous GAAP to Ind AS has affected the Company financial position, financial performance and cash flows is set out in the following tables and notes
Exemptions on first time adoption of Ind AS availed in accordance with Ind AS 101 have been described in below.
I. Exemptions and exceptions availed on first time adoption of Ind AS 101
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS - Ind AS optional exemptions
i. Deemed Cost
Ind AS 101 permits, a first time adopter to elect to continue with the carrying values for all of its property, plant and equipment as 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 after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for Investment properties.
Accordingly, the Company has elected to measure all of its property, plant and equipment, Investment properties and intangible assets at their previous GAAP carrying value.
Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. This assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material.
The Company has elected to apply this exemption for such contracts / arrangements.
iii. Designation of previously recognised financial instruments
Ind AS allows an entity to designate investments in equity instruments (other than equity investments in subsidiaries, associates and joint arrangements and other than held for trading) as at fair value through other comprehensive income (FVTOCI) based on facts and circumstances at the date of transition to Ind AS. Other equity investments are classified as at fair value through profit and loss (FVTPL).
The Company has not elected to apply this exemption for its equity investments (other than equity investments in subsidiaries, associates and joint arrangements and other than held for trading) to designate it as FVTPL
iv. Measurement of Investment in subsidiaries, associates and joint ventures
Ind AS allows entity that subsequently measures an investment in a subsidiary, joint ventures or associate at cost, may measure such investment at cost (determined in accordance with Ind AS 27) or deemed cost (fair value or previous GAAP carrying amount) in its separate opening Ind AS balance sheet.
For investments in equity instruments of subsidiaries the Company has elected to apply separate exemption available under Ind AS 101 by measuring at their previous GAAP carrying amount cost which is the deemed cost at the date of transition to Ind AS.
- Ind AS mandatory exceptions
An entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:
- Investment in equity instruments carried at FVTPL or FVTOCI
- Impairment of financial assets based on expected credit loss model.
ii. Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
Accordingly, the Company has determined the classification of financial assets based on the facts and circumstances that exist on the date of transition.
II. Reconciliations between previous GAAP and Ind AS
Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows. The following tables represent the reconciliations from previous GAAP to Ind AS.
III. Notes to first-time adoption
1) Trade receivables
As per Ind AS 109, the Company is required to apply expected credit loss model for recognising the allowance for doubtful debts. As a result, the allowance for doubtful debts increased by Rs.134.89 lakhs as at March 31, 2016 (April 1, 2015 Rs.655.50 lakhs). Consequently, the total equity as at March 31, 2016 decreased by Rs.790.39 lakhs (April 1, 2015 Rs.655.50 lakhs) and profit for the year ended March 31, 2016 decreased by Rs.134.89 lakhs.
2) Proposed dividend
Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered adjusting events. Accordingly, provision for proposed dividend was recognized as a liability.
Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend (excluding corporate dividend tax) of Rs.6,614.95 lakhs as at March 31, 2016 (April 1, 2015 Rs.1,258.71 lakhs) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.
Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in the profit and loss over the tenure of the borrowing as part of the finance cost by applying effective interest rate method.
Under previous GAAP, these transaction costs were charged to profit and loss as and when incurred. Accordingly, borrowings as at March 31, 2016 have been reduced by Rs.28.02 lakhs (April 1, 2015 Rs.42.05 lakhs) with a corresponding adjustment to retained earnings. The total equity increased by an equivalent amount. The profit for the year ended March 31, 2016 reduced by Rs.27.98 lakhs as a result of the additional interest expense.
4) Employee stock option
Under the previous GAAP, the cost of equity- settled employee shared-based plan were recognised using the intrinsic value method.
Under Ind AS, the cost of equity settled share-based plan is recognised based on the fair value of the options as at the grant date. Consequently, the amount recognised in share option outstanding account increased by Rs.109.50 lakhs as at March 31, 2016 (April 1, 2015 Rs.54.34 lakhs). The profit for the year ended March 31, 2016 decreased by Rs.55.16 lakhs. There is no impact on equity.
5) Remeasurements of post- employment benefit obligations
Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss.
Under the previous GAAP, these remeasurements were forming part of the profit and loss for the year. As a result of this change, the profit for the year ended March 31, 2016 increased Rs.57.64 lakhs. There is no impact on the total equity as at March 31, 2016.
6) Other comprehensive income
Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as “other comprehensive income” includes remeasurement of defined benefit plans and fair value gains or (losses) on FVTOCI equity instruments. The concept of other comprehensive income did not exist under previous GAAP
Note 5 - Investment Properties (a) Description
(b) Amount recognised in Statement of Profit & Loss for Investment Property.
(c) For investment property existing on April 1, 2015 i.e. its date of transition to Ind AS, the company has used India GAAP carrying value as deemed cost.
(d) Details of charges
The above assets have been given as first pari-passu charge security for working capital facilities availed from banks.
(e) Fair Value
As at March 31, 2017 and March 31, 2016, the fair value of property is Rs.179.59 lakhs and Rs.122.00 lakhs respectively.
Note 6 - Borrowings (Non - Current)
Terms of repayment of term loans and other loans.
Term Loan from Banks (March 31, 2016 and April 1, 2015) :
1. The Company had taken a term loan of Rs.2,500.00 lakhs. The rate of interest was 11.95% p.a. The loan was to be repaid in 16 quarterly installments of Rs.156.25 lakhs starting from availability-cum-moratorium period of 15 months from the date of first disbursement (first instalment payable on 31.05.2015), thereby total tenor of the loan will be 63 months. However, the Company has made prepayment of the loan during the year and therefore, there is no amount outstanding towards the said loan as on March 31, 2017.
2. The Company had taken a term loan in the form of External Commercial Borrowings (ECBs) of USD 10 million. The borrowings were made at an interest rate equal to the sum of LIBOR and the Margin as specified in the Term Loan Facility Agreement. The payment of interest to be made quarterly. The rate of interest was 3.561% p.a. The loan was to be repaid in 12 quarterly installments starting from June 30, 2014, with first 11 installments in equal amounts & the amount of the last i.e. twelth installment being the balance of principal pending for repayment, thereby total tenor of the loan to be five years. The Company has made prepayment of the said loan during the year and therefore, there is no amount outstanding towards the said loan as on March 31, 2017.
The Company had entered into a Cross Currency & Interest Rate Swap facility for hedging of the ECB repayments (principal and interest). By way of this swap facility, the rate of interest had been fixed at 9.62% p.a. for complete tenor of the term loan. The spot reference rate for repayment of the said loan had been fixed at Rs.56.08 for 1 USD.
The bank had sanctioned Loan Equivalent Value (LEV) of Rs.649.30 lakhs under currency swap facility. Negative Mark-to-Market threshold limit for margin call had been fixed at Rs.500.00 lakhs.
In case, the net payables exceed the exposure, the Bank has the right to call for additional deposit margin forthwith to maintain the exposure within the threshold limit. The Company shall deposit cash collateral as per Bank’s instructions, if negative MTM exceeds Rs.500.00 lakhs”
Nature of security of each type of secured loans.
i) Term Loans from Banks (Rs.2500.00 lakhs) :
1. First pari-passu charge by way of hypothecation on micro ATM, Financial Inclusion (FI) kits and assets purchased out of the said rupee term loan.
2. First charge on the designated bank account through which all the revenues and receivables of all the FI centres will be routed.
3. First charge on the Debt Service Reserve account (DSRA) and any other bank account of the company with respect to proposed FI project.
4. Second pari-passu charge on all the present and future current assets of the Company.
5. Second pari-passu charge on the movable fixed assets of the company (present & future), except micro ATMs and other FI kits.
6. Second parri-passu charge through mortgage on the office premises of the Company, situated at Marol CoOperative Industrial Society & Hind Saurashtra Industries Co-Operative Society Limited, Marol, Andheri (East), Mumbai.
7. Second pari-passu charge on office premise of Vakrangee Technologies Limited, situated at Marol CoOperative Industrial Society, Marol, Andheri (East), Mumbai.
8. Second pari-passu charge on property situated at Deer Park, New Delhi.
9. Personal Guarantee of Mr. Dinesh Nandwana, Managing Director & CEO of the Company & Corporate Guarantee of Vakrangee Technologies Limited.
ii) Term Loans from Banks - External Commercial Borrowings (ECB) :
1. First charge on all moveable and immoveable fixed assets financed out of the term loan, with a minimum asset cover ratio of 1.33 times.
2. Second parri-passu charge on all assets of the Company excluding those financed through this term loan.
3. Second pari passu charge on the UID kits procured from existing term loans availed from banks.
4. Personal Guarantee of Mr. Dinesh Nandwana, Managing Director & CEO of the Company.
Details of the aggregate of each loan guaranteed by directors or others, each head-wise.
All the term loans amounting to Rs.Nil (March 31, 2016 : Rs.1,221.98 lakhs, April 1, 2015 : Rs.3,698.55 lakhs) guaranteed by Mr. Dinesh Nandwana, Managing Director & CEO of the Company.
Details of continuing default in the repayment of loans and interest, specifying the period and amount separately in each case.
There has been no default in the repayment of loans or interest thereon as on date.
Nature of security of each type of secured loans. a) Loans repayable on demand from Banks :
The Company had entered into a Security Trustee Agreement for availing the working capital facilities under the consortium banking arrangement and the limit sanctioned is aggregating to Rs.75,000.00 lakhs vide agreement dated June 5, 2015. Based on the operational requirements, the Company has proposed revision in working capital facilities from Rs.51,090.00 lakhs (as at March 31, 2016) to Rs.33,200.00 lakhs (as at March 31, 2017). The Lead Bank vide their letter dated March 27, 2017 has approved the assessment of working capital requirements at the reduced level of Rs.33,200.00 lakhs.
These facilities are secured against the following charge on various assets of the Company :
1. Primary : First pari-passu charge on the entire current assets of the Company, both present & future.
2. Collateral :
- First pari-passu charge on the entire movable fixed assets of the Company, both present & future.
- First pari-passu charge on all the immovable assets of the company acquired after 31.03.2011, both present and future.
- First pari-passu charge on entire lands & office premises of the company, situated at Marol Co-Operative Industrial Estate & Hind Saurashtra Industries Co-Operative Society Limited, Marol, Andheri (East), Mumbai.
- First pari-passu charge on office premises, situated at Marol Co-Operative Industrial Estate, Marol, Andheri (E), Mumbai of Vakrangee Technologies Limited
- First Pari passu charge on residential house at Chandigarh.
3. Corporate Guarantee of Company, Vakrangee Technologies Limited to the extent of value of property.
4. Personal Guarantee of Mr. Dinesh Nandwana, Managing Director & CEO of the Company.
b) Details of the aggregate of each loan guaranteed by directors or others, each head-wise.
All the loans repayable on demand from banks amounting to Rs.14,401.89 lakhs (March 31, 2016 : Rs.28,275.04 lakhs, April 1, 2015 : Rs.29,968.80 lakhs) guaranteed by Mr. Dinesh Nandwana, Managing Director & CEO of the Company.
c) Details of continuing default in the repayment of loans and interest, specifying the period and amount separately in each case.
There has been no default in the repayment of loans or interest thereon as on date.
Note 7 - Corporate Social Responsibility
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the Company as per the Act.
Note 8 - Disclosure on Specified Bank Notes (SBNs)
During the year, the Company had specified bank notes or other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December, 30 2016, the denomination wise SBNs and other notes as per the notification is given below:
* 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 November 8, 2016.
** The Company had obtained licence for operating White Label ATMs (WLAs) from the Reserve Bank of India and is currently carrying ATM services in rural, semi-urban and urban areas in India. The Company had cash, both SBNs and other denomination notes, as on the closing hours of November 8, 2016 in the WLA ATMs operated by the Company. Thereafter, the Company has carried out exercise of removing such SBNs from those ATMs and depositing them into the Company’s specified bank account. The total amount of such specified bank notes deposited into bank by the Company is Rs.777.18 lakhs. This amount has not been included above as the SBN currency was not held as cash balance with the company during the period from November 8, 2016 to December 30, 2016.
Note 9 - Money received against Share warrants
The Company had issued 250.00 lakhs fully convertible warrants to M/s. NJD Capital Private Limited (formerly known as Vakrangee Capital Private Limited) at Rs.100/- per warrant in February, 2014. The warrants issued were convertible into equal no. of equity shares having face value of Rs.1/- with premium of Rs.99/- per share. Those warrants have been converted into 250.00 lakhs fully paid-up equity shares of Rs.1/- each in August, 2015 i.e. before the expiry of 18 months from the date of allotment of warrants. These equity shares are subject to lock-in-period of three years from date of allotment of the equity shares or such reduced period as may be permitted under the SEBI Issue of Capital & Disclosure Requirements (ICDR) Regulations, 2009 as amended time to time.
Note 10 - Segment Reporting
The Company’s activities predominantly revolve around providing the e-governance related activites of Mission Mode Projects covered under “National e-Governance Plan” (NeGP). Considering the nature of Company’s business and operations, there is only one reportable segment (business and / or geographical) in accordance with the requirements of the Indian Accounting Standard 108 - “Operating Segments” However, on the basis of delivery modes, the Company’s business operations has been classified into two business segments, viz. e-Governance Projects and Vakrangee Kendra.
Revenue and identifiable operating expenses in relation to these segments are categorised based on items that are individually identifiable to those segments. Certain expenses such as depreciation, which form a significant component of total expenses, are not specifically allocable to specific segments as the underlying assets are used interchangeably to utilise the resources optimally. The management believes that it is not practical to provide segment disclosures relating to those costs and expenses, and accordingly these expenses are separately disclosed as ‘unallocated’ and adjusted against the total income of the Company. Fixed assets or liabilities contracted have not been identified to any of the segments as the fixed assets and services are used interchangeably between segments. Accordingly, no disclosure relating to total segment assets and liabilities are made.
The company identifies operating segments based on the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board of directors committee that makes strategic decisions.
The accounting policies adopted for segment reporting are in line with the accounting policies of the company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.
Note 11 - Employee Benefit Obligations
(i) Leave obligations
The leave obligations cover the Company’s liability for earned leave.
The amount of provision of Rs.101.06 lakhs (March 31, 2016 - Rs.58.95 lakhs) is presented as current and non-current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employee to take the full amount of accrued leave or require payment within the next 12 months.
(ii) Gratuity (post-employment benefits)
The Company provides for gratuity to employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised/ approved funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.
(iii) Defined contribution plans
The Company also has ceratin defined benefit obligations. Contributions are made to provident fund in India for employees at the specified rate of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligations of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan is Rs.134.78 lakhs (March 31, 2016 - Rs.105.63 lakhs).
The following table sets out the amount recognised in the balance sheet and the movements in the net defined benefit obligations over the year are as follows:
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant.
In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.
Maturity profile of gratuity liability and Employer contribution
Expected contributions to post-employment benefit plans for the year ending March 31, 2018 are Rs.81.32 lakhs (as at March 31, 2017 : Rs.57.86 lakhs).
The weighted average duration (based on discounted cash flows) of the defined benefit obligation is 21 years (2016- 20 years). The expected maturity analysis of undiscounted gratuity is as follows :
Note 12 - Share based payments
The company has formulated Employee Stock Option Scheme, 2008 (ESOP Scheme) which was approved by the members/ shareholders of the Company at their annual general meeting held on 23 September, 2008, as modified on 10 January, 2011 and 1 June, 2012 annual report general meeting. Further the company has formulated the new “ESOP Scheme 2014” approved by the members of the company through postal ballot on 23rd May, 2014. The Employee Option Plan is designed to provide incentives to all the existing employees serving with the Company. Under the plan, employees are granted options which vest proportionately from 2 - 6 years from the grant date which includes lock in period.
Once vested, the options remain exercisable for a period of 4 years.
Options are granted under the plan for no consideration and carry no dividend or voting rights. When exercisable, each option is convertible into one equity share. The exercise price of the options is a price which is determined at 50% of market price of the scrip of the company (on the highest traded Stock Exchange) or at any other price as decided by the Nomination and Remuneration and Compensation Committee.
The weighted average share price at the date of exercise of options exercised during the year ended March 31, 2017 was Rs.243.95 (March 31, 2016 : Rs.108.06).
No options expired during the periods in the above tables.
Share options outstanding at the end of the year have the following expiry date and exercise prices:
Fair value of options granted
The fair value at grant date of options granted during the year ended March 31, 2017 was NIL per option (March 31, 2016 : Rs.152.51). The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
The model inputs for options granted during the year ended March 31, 2017 included:
a) Options are granted for no consideration and vest upon completion of service for a period of two years. Vested options are exercisable for a period of two years after vesting.
b) Exercise price : Rs.Nil (March 31, 2016 - Rs.113.08)
c) Grant date : NIL (March 31, 2016 - March 11, 2016)
d) Expiry date : NIL (March 31, 2016 - March 10, 2025)
e) Share price at grant date : Rs.Nil (March 31, 2016 - Rs.224.50)
f) Expected price volatility of the company’s shares : NIL (March 31, 2016 - 42.50%)
g) Expected dividend yield : NIL (March 31, 2016 - 0.40%)
h) Risk free interest rate : NIL (March 31, 2016 - 7.60%)
The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information.
b) Expense arising from share based payment transactions
Total expenses arising from share based payment transactions recognized in profit or loss as part of employee benefit expense were as follows:
Note 13 - Financial Risk Management
The Company’s activities expose it to market risk, liquidity risk and credit risk. The below note explains the sources of risk which the entity is exposed to and how the entity manages the risk :
Note 14 - Income Taxes
(a) A reconciliation of the income tax provision to the amount computed by applying the statutory income tax rate to the income before income taxes is summarized below:
(b) The following table provides the details of income tax liabilities and income tax assets as of March 31, 2017, March 31, 2016 and April 1, 2015
The gross movement in the current income tax liability / (asset) for the year ended March 31, 2017 and March 31, 2016 is as follows:
(c ) The gross movement in the deferred income tax account for the year ended March 31, 2017 and March 31, 2016, are as follows:
The timing differences arising as at year-end are deferred tax assets. There are no items for which there is deferred tax liability as at year-end. Hence, on the basis of reasonable certainty, such deferred tax assets have not been recognised and carried forward.
Note 15 - Previous year / period figures
The financial statements have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) prescribed under Section 133 of the Companies Act, 2013 and other recognised accounting practices and policies to the extent applicable. The Company has adopted Ind AS on April 1, 2016 with the transition date as April 1, 2015, and adoption was carried out in accordance with Ind-AS 101 - First time adoption of Indian Accounting Standards. The previous period’s figures have been regrouped or rearranged wherever necessary.