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Notes to Accounts of Danlaw Technologies India Ltd.

Mar 31, 2023

Research and Development :

Direct expenses incurred on R&D during the year for the development of products are treated as deferred revenue expediture. The amount shall be amortized against the revenues to be earned over a period of time, to be determined at the time of product launch. Products under development capitalized as deferred revenue expenses to the extent ofRs.249.01 lacs has been written off as impairment loss per the decision of management and Board, due to the market conditions, technology changes, cost escalations due to electonic components shortage, could not convert into commercial orders.

Note

(a) : Term Loan carry carry an interest rate of 8.00% to 10.40% p.a. This is primarily secured by way of hypothecation of plant & machinery and other fixed assets created out of bank finance. Personal gurantee of Mr.Raju dandu and corporate gurantee of M/S. Danlaw Systems India ltd. is given.Loan is

GECL carry an interest rate of 7.40% to 9.25% p.a. This is primarily secured by way of hypothecation of plant & machinery and other fixed assets created out of bank finance. Personal gurantee of Mr.Raju dandu and corporate gurantee of M/S. Danlaw Systems India ltd. is given.Loan is taken.

(b) : Working capital demand loan/cash credit facilities carry an interest rate of 8.45% to 10.40% p.a.. They are primarily secured by exisiting as well as future inventories, goods in transit, outstanding moneys, book debts,receviables,etc. Personal gurantee of Mr.Raju dandu and corporate guranteeof M/S. Danlaw Systems India ltd. is given.Loan is taken for business purpose and is repayable on demand.

(c) . The company, has taken taken external commercial borrowing from Danlaw Inc, amounting to USD 2,500,000 $. The borrowing rate forthe loans is 4.5% 6m LIBOR. The term of the loan is 5 years. The repayment of the Principal amount is scheduled at the end of Year 5 i.e. the end of the loan period and interest amount is to be paid quarterly.

29. Contingent Liabilities

Particulars

Year Ended

Year Ended

March 31, 2023

March 31, 2022

Bank Guarantees

169.62

119.62

Total Contingent Liabilities

169.62

119.62

31 Capital and Financial risk management objectives and policies

A. Capital Management

The Company''s objective for capital management is to maximise shareholders value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through equity, operating cash flows generated and loans from institutions.

B. Financial Risk Management Framework

The Company''s principal financial liabilities, comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

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. The value of a financial instrument may change as a result of changes in the foreign currency exchange rates and interest rates. Future specific market movements cannot be normally predicted with reasonable accuracy.

Foreign currency risk

The company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to US$, Euros and GBPs . Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the company is to minimize the volatility of the INR cash flows of highly probable forecast transactions.

Interest rate risk

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''s exposure to the risk of changes in market interest rates relates primarily to the Company''s short-term debt obligations with floating interest rates.

Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, cash and cash equivalents, bank deposits and other financial assets.

Liquidity Risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The table below summarises the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments.

(ii) Defined Benefit Plan (a) Gratuity

The Company provides its employees with benefits under a defined benefit plan, referred to as the "Gratuity Plan". The Gratuity Plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service (service of six months and above is rounded off as one year) at the time of retirement/exit, restricted to a sum of ^ 2,000,000.

33. Lease Liabilities

The Company has adopted Ind AS 116 "Leases" with the inception of the lease being April 1, 2019 and has discounted lease payments using the incremental borrowing rate for measuring the lease liability.

The weighted average incremental borrowing rate applied to lease liabilities is 10.7%

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).

The carrying values of the current financial assets and current financial liabilities are taken as fair values because of their short term nature The fair of non current financial assets is determined by using the discounted cash flow method by the management

35. Note of Amalgamation

During the year (NCLT order dated 01st November, 2022) subsidiary of Danlaw Technologies India Limited (DTIL) "M/s.Danalaw Electronic Assembly Limited" has been amalgamated with DTIL. While preparing the financial statements, previous years figures were also restated since the appointed date being 01st April, 2020.

36 Other Statutory Information

1 There are no proceedings initiated or pending against the company as at March 31, 2023, under Prohibition of Benami Property Transaction Act, 1988 (As amended in 2016)

2 The Company do not have any transactions with companies struck off as per Section 248 of the Companies Act, 2013 and Section 560 of the Companies Act, 1956

3 No immovable property is held by the Company except building which is constructed on leased land and lease agreements are duly executed in favour of the company.

4 The Company has been sanctioned working capital limits (non-fund based) in excess of five crore rupees, in aggregate, from banks on the basis of security of current assets. The quarterly returns or statements filed by the Company with such banks are in agreement with the books of account of the Company and found no material discrepancies.

5 The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

6 CSR provisions as per sec. 135 of the Companies Act, 2013 are not applicable to the company.

7 The Company has not declared/paid any dividend during the year

8 The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority

9 The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.

10 The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether

recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

11 The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries


Mar 31, 2018

During the year 2017-18, the Company bought back 12,810 equity shares out of the period of five years immediately preceeding the reporting date.

In the year 2017-18, the Company had approved proposal for buy back of its equity shares at a price not exceeding Rs.65/- per equity share for an aggregate amount not exceeding Rs.4,83,63,900 which is 20% of its maximum buy back size. The Company bought back and extinguished 12,810 equity shares for a total consideration of Rs.8,32,650/-.

1. Managerial Remuneration

The following managerial remuneration was paid as per board of director’s decision and approved by shareholders.

There are no financial instruments of the company that are subsequently measured at fair value.

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).

The carrying values of the current financial assets and current financial liabilities are taken as fair values because of their short term nature The fair of non current financial assets is determined by using the discounted cash flow method by the management

NOTE 2 - Loan Receivable - Affiliate:

The loan receivable from Danlaw, Inc., an affiliate of the Company, is unsecured with interest at 1.12% per annum. Interest of $2,084 has been accrued at March 31, 2018. The loan balance has been received in full as of the report date.

NOTE 3 - Income Taxes:

The provision for Federal income tax for 2018 and 2017 is based on taxable income at statutory rates. The provision or benefit for state income tax is based on taxes assessed at statutory rates. Management has reviewed the Company’s tax positions and concluded that there are no significant uncertain tax positions that are required to be recognized in the financial statements. The Company does not have any unrecognized tax benefits which would impact the effective income tax rate. The total amount of interest and penalties relating to income taxes was not material.

The Company files income tax returns with various federal and state tax jurisdictions. Tax returns filed with the Internal Revenue Service for the years 2015 - 2017 are subject to examination. Tax returns filed with the various states for the years 2014 - 2017 are subject to examination.

As of December 31, the component of the Federal income tax expense is as follows:

NOTE 4 - Related Party Transactions:

The Company is related by common ownership to Danlaw Technologies India, Ltd. and by common management to Danlaw, Inc. The following schedule summarizes transactions and outstanding balances with the related entities:

N OTE 5 - Retirement Plan:

The Company maintains a 401(k) Profit Sharing Plan available to all employees meeting certain age and service requirements. The plan allows employees to contribute up to 15% of their salary to the plan, subject to Internal Revenue Code limitations. The Company may elect to match a portion of the employees’ contributions to the plan and may contribute additional amounts at its discretion. There were no employer contributions for the years ended March 31, 2018 and 2017.


Mar 31, 2015

1.1.1 Taxes on Income as per Accounting Standard 22

a) In accordance with the Accounting Standard (AS)22 relating to "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, an amount of Rs.2,31,948/- has been recognized as Deferred Tax Asset accrued during the year. Thus net Deferred Tax Asset of .2,31948/- charged in the Profit & Loss Account.

1.1.2 Disclosure under Macro, Small and Medium Enterprises Development Act, 2006 There are no Micro, Small Scale Business Enterprises to whom the Company owes dues, which are outstanding for more than45daysasatMarch31,2015. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

1.1.3 The Company has overdraft facility with HDFC Bank Ltd to the extent of Rs.2.70 crores against the security of Company's term deposits of Rs.3.00 crores with them.

The Transactions with related parties have been carried at arm's leng price and also supported by the documentation reflecting the arm's leng transaction

1.1.4 Disclosure of Depreciation as per the Companies Act 2013

Useful life of various assets was revised in accordance with Schedule II of the Companies Act 2013. The change in useful life resulted in the completion of useful life certain fixed assets before 31.03.2014. The written down value of the assets after retaining the salvage value was transferred to the opening balance of retained earnings in the current year in the amount or Rs. 45,84,746/-

1.1.5. Depreciation

Certain Assets which were old and not in use having net book value Nil have been retired.

1.1.6 Notes on accounts

The previous year's figures have been regrouped, reclassified / restated, wherever necessary, to conform to the current year's classification.


Mar 31, 2014

Contingent Liabilities:

Bank Guarantees 15,65,011 9,54,503


Mar 31, 2013

1.1.1 Contingent Liabilities:

Bank Guarantees 9,54,503 3,44,417

1.1.2 Disclosure under Macro, Small and Medium Enterprises Development Act, 2006 There are no Micro, Small Scale Business Enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2013. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

1.1.3 The Company has overdraft facility with HDFC Bank Ltd to the extent of Rs.2.70 crores against the security of Company''s term deposits of Rs.3.00 crores with them.

1.1.4 Notes on accounts

The previous year''s figures have been regrouped, reclassified / restated, wherever necessary, to conform to the current year''s classification.


Mar 31, 2012

1.1.1 Contingent Liabilities:

Bank Guarantees 3,44,417 98,26,200

1.1.2 Disclosure under Macro, Small and Medium Enterprises Development Act, 2006 There are no Micro, Small Scale Business Enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2012. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

1.1.3 Notes on accounts

The previous year's figures have been regrouped, reclassified / restated, wherever necessary, to conform to the current year's classification.


Mar 31, 2011

The previous year's figures have been regrouped, reclassified / restated, wherever necessary, to conform to the current year's classification.

1.2.1 Contingent liabilities

The Company has outstanding counter guarantees of Rs.98,26,200/- as at March 31, 2011, to various banks, in respect of guarantees given by the said banks in favor of bodies corporate to the extent of Rs.96,23,084/- and Rs.2,03,116/- to government authorities. The counter guarantees outstanding as at the previous year-end was Rs. 93,19,557/- and Rs.2,61,465/- respectively.

1.2.2 Quantitative details

The information as required under paragraphs 3, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956 are not applicable to this company.

1.2.3 Taxes on Income as per Accounting Standard 22

a) In accordance with the Accounting Standard (AS) 22 relating to “Accounting for Taxes on Income” issued by the Institute of Chartered Accountants of India, an amount of Rs.3.75 lakhs has been recognized as Deferred Tax Asset accrued during the year and Rs.27.45 Lakhs as Deferred Tax Liability on time barred carry forward loss. Thus Net Deferred Tax Liability of Rs.23.70 Lakhs charged in Profit & Loss Account

1.2.4 Secured Loans:

Overdraft facility from The Dhanalakshmi Bank Ltd is secured against the fixed deposits of the Company.

1.2.6 Related Party transactions

The Company had transactions with the following related parties:

Danlaw Inc., USA (DI) in which Mr. Raju S Dandu is CEO; Danlaw Technologies Inc., USA, (DTI) which is 100% Subsidiary of Danlaw Technologies India Ltd; Danlaw Systems India Ltd., in which Mrs. Lakshmi Dandu wife of Mr. Raju S Dandu is director; Mr. Raju S Dandu, Chairman & Managing Director (CMD); Mr. D S N Raju, brother of Raju S Dandu, and Mrs. D Lakshmi, wife of Mr. D S N Raju.

1.2.7 Segment reporting

The company's sales are basically related to providing software development services delivered to customers situated at USA. Hence the primary and secondary segment reporting is based on the software development services to USA only.

1.2.8 Disclosure under Macro, Small and Medium Enterprises Development Act, 2006

There are no Micro, Small Scale Business Enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2011. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.


Mar 31, 2010

The previous years figures have been regrouped, reclassified / restated, wherever necessary, to conform to the current years classification.

1.1.1 Contingent liabilities

The Company has outstanding counter guarantees of Rs.95,81,022/- as at March 31, 2010, to various banks, in respect of guarantees given by the said banks in favor of bodies corporate to the extent of Rs.93,19,557/- and Rs.2,61,465/- to government authorities. The counter guarantees outstanding as at the previous year-end was Rs. 80,18,856/- and Rs.1,92,525/- respectively.

1.1.2 Quantitative details

The information as required under paragraphs 3, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956 are not applicable to this company.

1.1.3 Taxes on Income as per Accounting Standard 22

a) In accordance with the Accounting Standard (AS) 22 relating to "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, an amount of Rs.14.29 lakhs has been recognized in Profit & Loss Account as Deferred Tax Asset accrued during the year.

1.1.4 Secured Loans:

Overdraft facility from The Dhanalakshmi Bank Ltd is secured against the fixed deposits of the Company.

1.1.5 Related Party transactions

The Company had transactions with the following related parties:

Danlaw Inc., USA (DI) in which Mr. Raju S Dandu is CEO; Danlaw Technologies Inc., USA, (DTI) which is 100% Subsidiary of Danlaw Technologies India Ltd; Danlaw Systems India Ltd., in which Mrs. Lakshmi Dandu wife of Mr. Raju S Dandu is director; Mr. Raju S Dandu, Chairman & Managing Director (CMD); Mr. D S N Raju, Director; and Mrs. D Lakshmi, wife of Mr. D S N Raju.

1.1.6 Segment reporting

The companys sales are basically related to providing software development services delivered to customers situated at USA. Hence the primary and secondary segment reporting is based on the software development services to USA only.

1.1.7 There are no dues to small Scale Industrial undertakings outstanding above Rs. one lack and exceeding 30 days.

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