Notes to Accounts of ICRA Ltd.
Mar 31, 2023
Rights, preferences and restrictions attached to equity shares
The Company has one class of equity shares having a par value of Rs 10 each. Each shareholder is eligible for one vote per share held. The dividend, if any, recommended by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
(a) Capital reserve
Capital reserves represents amount of LTIP plan funded by ICRA Employees Welfare Trust (âESOP Trustâ) to the employees of the Company. (Refer note 35).
(b) Capital redemption reserve
The Company has bought back equity shares and as per the provisions of the Companies Act, 2013, has created capital redemption reserve.
(c) General reserve
The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the General reserve will not be reclassified subsequently to the standalone statement of profit and loss.
(d) Retained earnings
This reserve represents undistributed accumulated earnings of the Company as on the balance sheet date.
(e) Other comprehensive income / (loss)
Other comprehensive income / (loss) comprises remeasurement of defined benefit plans, which represents the following as per Ind AS 19, Employee Benefits:
(a) actuarial gains and losses;
(b) the return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset); and
(c) any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset).
The Company is contesting the demand and the management believes that its position will likely be upheld in the appellate process. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company''s financial position and results of operations.
The Supreme Court on February 28, 2019 had provided its judgement regarding inclusion of other allowances such as travel allowances, special allowances, etc. within the expression âbasic wages'' for the purpose of computation of contribution of provident fund under the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952. There are interpretive challenges on the application of the Supreme Court judgement including the period from which judgment would apply, consequential implications on resigned employees etc. Further, various stakeholders have also filed representations with Provident fund authorities. All these factors raises significant uncertainty regarding the implementation of the Supreme Court judgement. Owing to the aforesaid uncertainty and pending clarification from regulatory authorities in this regard, the Company has not recognized provision for the provident fund contribution on the basis of above mentioned order for past periods till March 31, 2019. However, from April 1, 2019, the Company has started inclusion of such allowances within the expression of âbasic wages'' for the purpose of computation of provident fund.
Additionally, the Company is involved in other disputes, lawsuits, claims and/ or regulatory inspections including commercial matters that arise from time to time in the ordinary course of business. The Company believes that none of these matters, either individually or in aggregate, are expected to have any material adverse effect on its standalone financial statements.
b) The Securities and Exchange Board of India ("SEBIâ) had enhanced the penalty amount from Rs 25 lakhs to Rs 1 crore during the quarter ended September 30, 2020 in respect of an adjudication proceeding initiated by it in relation to the credit ratings assigned to one of the Companyâs customer and the customerâs subsidiaries. The Company had deposited the enhanced penalty amount under protest and had filed an appeal with the Securities Appellate Tribunal contesting the said order. The said appeal is under review. On this matter, the Company also co-operated with other government agencies in relation to queries received from them. Basis the foregoing and the legal counsel opinion obtained, the Company does not foresee any significant adverse implications on the Company.
34 Employee benefitsa) Defined contribution plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Employees'' State Insurance, which are the defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the standalone statement of profit and loss as they accrue. The amount recognized as an expense towards contribution to these schemes aggregate to Rs 456.25 lakhs for the year ended March 31, 2023 (previous year Rs 400.99 lakhs) and is included in âEmployee benefits expense.
The Company has a defined benefit gratuity plan, governed by the Payment of Gratuity Act, 1972. Plan entitles an employee, who has rendered at least five years of service to gratuity at the rate of fifteen days salary for every completed year of service or part thereof in excess of six months, based on the rate of salary last drawn by the employees.
The defined benefit plan for gratuity is administered by a gratuity fund trust that is legally separate from the Company. The trustees of the gratuity fund comprises three employees. The trustees of the gratuity fund is required to act in the best interests of the members and/or their beneficiaries in accordance with the provisions of trust deed. This defined benefit plan exposes the Company to actuarial risks, such as interest rate risk and market (investment) risk.
The estimates of future salary escalation rate, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Assumptions regarding future mortality are based on the published statistics and mortality tables.
As at March 31, 2023, the weighted-average duration of the defined benefit obligation was 5 years (March 31, 2022: 5 years).
From the financial year 2018-19, the ESOP Trust introduced LTIP Plan as an incentive to reward a cash amount to the eligible employees of the Company. Based on the estimation, expense of Rs 331.17 lakh (previous year Rs 248.11 lakh) has been recognized and correspondingly, accounted as an adjustment to the capital reserve of the Company.
The Company''s Employee Stock Option Schemes (âESOSsâ) provide for the grant of stock options to eligible employees and whole time directors of the Company and its subsidiaries. The ESOSs are administered through ESOP Trust. The Trust transfers shares to the eligible employees upon exercise of the options by such employees.
During financial year 2018-19, the Company had introduced a new stock option scheme namely âESOS 2018â effective from )une 28, 2018. The grant price shall be as decided by the Nomination and Remuneration Committee (âN&RC'') of the Company. The number of options and terms could vary at the discretion of the N&RC. Till March 31, 2023, the Company has not granted any option under ESOS 2018.
The Company''s business activity falls within a single primary operating segment viz. âRating, research and other servicesâ. The operating segment has been defined based on regular review by the Company''s Chief Operating Decision Maker to assess the performance of the Company and to make decision about allocation of resources. The Company renders its services to customers located in India and does not have any operations in economic environment with different risks and returns. Hence, it is considered as operating in a single geographical segment.
The Company does not derive revenue from any customers which amount to 10 per cent or more of the entity''s revenues.
40 Financial instruments40.1 Financial instruments by category
The following tables presents the carrying value and fair value of each category of financial assets and liabilities as at March 31, 2023 and March 31, 2022:
The fair value of the financial assets and liabilities represents 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 fair values of the quoted investments in equity shares and mutual funds are based on market price and net asset value (NAV) respectively at the reporting date.
b) For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
Management has assessed that fair value of trade receivables, cash and cash equivalents, other bank balances, investments, trade payables, other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
All financial instruments for which fair value is recognized or disclosed are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.
40.3 Financial risk management objectives and policies Risk management framework
The Board has overall responsibility for establishing and governing the Company''s risk management framework. The Board has delegated monitoring and reviewing of the risk management plan to the Risk Management Committee. The Company has constituted a Executive Risk Committee, a Risk management team and functional sub-committees which are responsible to identify, analyse, mitigate and monitor risks as per risk management framework. The primary risks and mitigation actions are also placed before Risk Management Committee and Board.
The Company is exposed to various risks in relation to financial instruments. The Company''s financial assets and liabilities are summarised in note 40.1. The main types of financial risks are market risk (price risk), credit risk and liquidity 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. Such changes may result from changes in foreign currency rate, interest rate, price and other market changes. The Company''s exposure to market risk is mainly due to price risk.
The risk that the fair value or future cash flows of a financial instrument will fluctuate because changes in the market prices, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company has adopted disciplined practices including position sizing, diversification, valuation, loss prevention, due diligence and exit strategies in order to mitigate losses as defined in Board approved investment policy.
The Company is exposed to price risk arising mainly from investment in equity shares and investment in mutual funds recognised at fair value through profit or loss. The detail of such investments are given in note 40.1. If the prices had been higher/ lower by 1% from the market prices exisiting as at the reporting date, profit would have been increased/ decreased by Rs 527.58 lakhs and Rs 291.66 lakhs for the year ended March 31, 2023 and March 31, 2022 respectively.
Credit risk is the risk of financial loss to the Company if customer or counterparty to financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customer and investment in mutual funds and deposits with banks.
To manage credit risk, the Company periodically reviews its receivables from customer for any non-recoverability of the dues, taking in to account the inputs from business development team and ageing of trade receivables. The management establishes an allowance for impairment that represents its expected credit losses in respect of trade and other financial assets. The management uses a simplified approach for the purpose of computation of expected credit loss. While computing expected credit Ioss, the management consider historical credit loss experience adjusted with forward looking information.
Liquidity risk is the risk that the Company will encounter difficultly in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial assets. For the Company, liquidity risk arises from obligations on account of financial liabilities - Lease liabilities, Trade payable and other financial liabilities.
The Company continues to maintain adequate amount of liquidity to meet strategic and growth objectives. The Company''s finance department is responsible for liquidity and fund management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through forecasts on the basis of expected cash flows.
The primary objective of the Company''s capital management is to maximize the shareholder value. For the purpose of Company''s capital management, capital includes issued equity capital, share premium and all other reserves and surplus attributable to the equity shareholders of the Company. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issues new shares and raises money through borrowings.
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2023 and March 31, 2022.
Foreign currency risk is the risk that the fair value or future cashflows often exposure will fluctuate because of change in foreign exchange rates. The Company''s exposure to foreign currency changes is not material.
The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company has maintained adequate documentation for the international transactions entered into with the associated enterprises during the financial year and expect such records to be in existence in accordance with the requirements of the law. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the standalone financial statements, particularly on the amount of tax expense and that of provision for taxation.
e) The amount of revenue from contracts with customers recognised in the standalone statement of profit and loss is the contracted price.
a) The Companyâs significant lease arrangements are in respect of office premises. The lease term for these leases ranges between 11 months and 9 years which includes a lock-in period and in certain cases are renewable by mutual consent on mutually agreeable terms. These options are negotiated by management and aligned with the Companyâs business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised.
b) The Company has discounted lease payments using the applicable incremental borrowing rate, which is 10% for measuring the lease liability.
(iv) The Company has not advanced or loaned or invested funds to any other person(s) or entity(s), 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
(v) The Company has not received any fund from any person(s) or entity(s), 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
(vi) The Company does not have any transaction which is not recorded in the books of account that has been subsequently surrendered or disclosed as income during the year as part of the ongoing tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(vii) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(viii) The Company has not been declared as willful defaulter by any bank or financial institution or government or any government authority.
(ix) The Company has complied with the number of layers for its holding in downstream companies prescribed under clause (87) of section 2 of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017.
(x) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
Mar 31, 2022
Nature of reservesa) Capital reserve
Capital reserves represents amount of LTIP plan funded by ICRA Employees Welfare Trust ("ESOP Trust") to the employees of the Company. (Refer note 35)
The Company has bought back equity shares and as per the provisions of the Companies Act, 2013, is required to create capital redemption reserve.
The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the General reserve will not be reclassified subsequently to the standalone statement of profit and loss.
This reserve represents undistributed accumulated earnings of the Company as on the balance sheet date.
(e) Other comprehensive income
Other comprehensive income comprises remeasurement of defined benefit plans, which represents the following as per Ind AS 19, Employee Benefits(a) actuarial gains and losses (b) the return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset); and (c) any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset)
The Company is contesting the demand and the management believes that its position will likely be upheld in the appellate process. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company''s financial position and results of operations.
"The Supreme Court on February 28, 2019 had provided its judgement regarding inclusion of other allowances such as travel allowances, special allowances, etc. within the expression ''basic wages'' for the purpose of computation of contribution of provident fund under the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952. There are interpretive challenges on the application of the Supreme Court Judgement including the period from which judgment would apply, consequential implications on resigned employees etc. Further, various stakeholders have also filed representations with Provident fund authorities. All these factors raises significant uncertainty regarding the implementation of the Supreme Court Judgement. Owing to the aforesaid uncertainty and pending clarification from regulatory authorities in this regard, the Company has not recognised provision for the provident fund contribution on the basis of above mentioned order for past periods till March 31, 2019. However, from April 1, 2019, the Company has started inclusion of such allowances within the expression of ''basic wages'' for the purpose of computation of provident fund. Additionally, the Company is involved in other disputes, lawsuits, claims and/ or regulatory inspections, including commercial matters that arise from time to time in the ordinary course of business. The Company believes that none of these matters, either individually or in aggregate, are expected to have any material adverse effect on its standalone financial statements.
29 During the year ended March 31,2022, the Company was dealing with following matters which arose in current and/ or previous periods:
(a) The Securities and Exchange Board of India ("SEBI") had enhanced the penalty amount from Rs. 25 lakhs to Rs. 1 crore during the quarter ended September 30, 2020 in respect of an adjudication proceeding initiated by it in relation to the credit ratings assigned to one of the Company''s customer and the customer''s subsidiaries. The Company had deposited the enhanced penalty amount under protest and had filed an appeal with the Securities Appellate Tribunal contesting the said order. The said appeal is under review. On this matter, the Company also co-operated with other government agencies in relation to queries received from them. Basis the foregoing and the legal counsel opinion obtained, the Company does not foresee any significant adverse implications on the Company.
(b) The Company had received an anonymous complaint during the quarter ended September 30, 2021, making certain allegations around conflict of interest against two senior officials of the Company, who are no longer in employment. The Company had appointed an external firm to examine the allegations. During the year ended 31 March 2022, the Company has concluded the examination thereof and finalized the necessary action plan. The findings did not indicate any adverse financial impact."
* Pursuant to appeal letter no. 05/1/2020-CSR-MCA dated March 30, 2020, received from Ministry of Corporate Affairs, the Company contributed Rs. 100.00 lakhs to PM Cares Fund on March 31,2020, which resulted in to Rs. 71.26 lakhs excess spent over the FY 2019-20 obligation. Out of excess spent, Rs. 36.03 lakhs has been offset against the obligation for FY 2020-21 and the remaining unutilised balance is not available for set-off in future years, pursuant to circular dated May 20, 2021 issued by Ministry of Corporate Affairs in this regard.
34 Employee benefitsa) Defined contribution plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Employees'' State Insurance which are the defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the standalone statement of profit and loss as they accrue. The amount recognised as an expense towards contribution to these schemes aggregate to Rs. 400.99 lakhs for year ended March 31, 2022 (previous year Rs. 403.49 lakhs) and is included in "Employee benefits expense".
The Company has a defined benefit gratuity plan, governed by the Payment of Gratuity Act, 1972. Plan entitles an employee, who has rendered at least five years of service to gratuity at the rate of fifteen days salary for every completed year of service or part thereof in excess of six months, based on the rate of salary last drawn by the employee concern.
The defined benefit plan for gratuity is administered by a single gratuity fund trust that is legally separate from the Company. The trustees of the gratuity fund comprises four employees. The trustees of the gratuity fund is required to act in the best interests of the members and/or their beneficiaries in accordance with the provisions of trust deed. This defined benefit plan exposes the Company to actuarial risks, such as interest rate risk and market (investment) risk.
The estimates of future salary escalation rate, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Assumptions regarding future mortality are based on the published statistics and mortality tables. The calculation of the defined benefit obligation is sensitive to the mortality assumptions.
As at March 31,2022, the weighted-average duration of the defined benefit obligation was 5 years (March 31, 2021: 5 years).
35 F rom the financial year 2018-19, the ESOP Trust introduced LTIP Plan as an incentive to reward a cash amount to the eligible employees of the Company. Based on the estimation, expense of Rs. 248.11 lakhs (previous year Rs. 450.13 lakhs) has been recognised and correspondingly, accounted as an adjustment to the capital reserve of the Company.
The Company''s Employee Stock Option Schemes ("ESOSs") provide for the grant of stock options to eligible employees and whole time directors of the Company and its subsidiaries. The ESOSs are administered through ESOP Trust. The Trust transfers shares to the eligible employees upon exercise of the options by such employees.
During financial year 2018-19, the Company had introduced a new stock option scheme namely "ESOS 2018" effective from June 28, 2018. The grant price shall be as decided by the Nomination and Remuneration Committee (''N&RC'') of the Company. The number of options and terms could vary at the discretion of the N&RC. Till March 31, 2022, the Company has not granted any option under ESOS 2018.
The Company''s business activity falls within a single primary operating segment viz. "Rating, research and other services". The operating segment has been defined based on regular review by the Company''s Chief Operating Decision Maker to assess the performance of the Company and to make decision about allocation of resources. The Company renders its services to customers located in India and does not have any operations in economic environment with different risks and returns. Hence, it is considered as operating in a single geographical segment.
The Company does not derive revenue from any customers which amount to 10 per cent or more of the entity''s revenues.
The fair value of the financial assets and liabilities represents 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 fair values of the quoted investments in equity shares and mutual funds are based on market price and net asset value (NAV) at the reporting date.
b) For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
Management has assessed that fair value of trade receivables, cash and cash equivalents, other bank balances, investments, trade payables, other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.
Level 1: Quoted prices for identical instruments in active markets.
Level 2: Valuation techniques for which the lowest level input which has a significant effect on the fair value measurement are observable, either directly or indirectly.
Level 3: Valuation techniques for which the lowest level input which has a significant effect on the fair value measurement is not based on observable market data.
The Board has overall responsibility for establishing and governing the Company''s risk management framework. The Board has delegated monitoring and reviewing of the risk management plan to the Risk Management Committee. The Company has constituted a Executive Risk Committee, a Risk management team and functional sub-committees which are responsible to identify, analyse, mitigate and monitor risks as per risk management framework. The primary risks and mitigation actions are also placed before the Risk Management Committee and the Board.
The Company is exposed to various risks in relation to financial instruments. The Company''s financial assets and liabilities are summarised in note 40.1. The main types of financial risks are market risk (price risk), credit risk and liquidity 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. Such changes may result from changes in foreign currency rate, interest rate, price and other market changes. The Company''s exposure to market risk is mainly due to price risk.
Price risk
The risk that the fair value or future cash flows of a financial instrument will fluctuate because changes in the market prices, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company has adopted disciplined practices including position sizing, diversification, valuation, loss prevention, due diligence and exit strategies in order to mitigate losses as defined in Board approved investment policy.
The Company is exposed to price risk arising mainly from investment in equity shares and investment in mutual funds recognised at fair value through profit or loss. The detail of such investments are given in note 40.1. If the prices had been higher/ lower by 1% from the market prices exisiting as at the reporting date, profit would have been increased/ decreased by Rs. 291.66 lakhs and Rs. 157.76 lakhs for the year ended March 31,2022 and March 31,2021 respectively.
Credit risk is the risk of financial loss to the Company if customer or counterparty to financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customer and investment in mutual funds and deposits with banks.
To manage credit risk, the Company periodically reviews its receivables from customer for any non-recoverability of the dues, taking into account the inputs from business development team and ageing of trade receivables. The management establishes an allowance for impairment that represents its expected credit losses in respect of trade and other financial assets. The management uses a simplified approach for the purpose of computation of expected credit loss. While computing expected credit loss, the management consider historical credit loss experience adjusted with forward looking information.
The Company invests its surplus funds as per the investment policy of the Company, which has been approved by the Board of Directors. Deposits are held with only high rated banks.
Liquidity risk is the risk that the Company will encounter difficultly in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial assets. For the Company, liquidity risk arises from obligations on account of financial liabilities - Lease liabilities, Trade payable and other financial liabilities.
The Company continues to maintain adequate amount of liquidity to meet strategic and growth objectives. The Company''s finance department is responsible for liquidity and fund management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through forecasts on the basis of expected cash flows.
The primary objective of the Company''s capital management is to maximise the shareholder value. For the purpose of Company''s capital management, capital includes issued equity capital, share premium and all other reserves and surplus attributable to the equity shareholders of the Company. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, returns capital to shareholders, issues new shares and raises money through borrowings.
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2022 and March 31,2021.
Foreign currency risk is the risk that the fair value or future cashflows often exposure will fluctuate because of change in foreign exchange rates. The Company''s exposure to foreign currency changes is not material.
The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company has maintained adequate documentation for the international transactions entered into with the associated enterprises during the financial year and expect such records to be in existence in accordance with the requirements of the law. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the standalone financial statements, particularly on the amount of tax expense and that of provision for taxation.
a) The Company''s significant lease arrangements are in respect of office premises. The lease term for these leases ranges between 11 months and 9 years which includes a lock-in period and in certain cases are renewable by mutual consent on mutually agreeable terms. These options are negotiated by management and aligned with the Company''s business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised.
b) The Company has discounted lease payments using the applicable incremental borrowing rate, which is 10% for measuring the lease liability.
The Company has given a part of its premises under cancellable operating lease arrangement. Lease rentals amounting to Rs. 21.96 lakhs (previous year Rs. 25.57 lakhs) have been recognised in the standalone statement of profit and loss. As only a portion of these premises has been let out, the gross carrying amount, depreciation for the year and the accumulated depreciation of leased premises/ assets is not separately identifiable.
45 The Company''s management assesses the operations of the subsidiaries, including the future projections, to identify indications of diminution, other than temporary, in the value of the investments recorded in the standalone financial statements and accordingly, no additional provision is required to be made, other than the amounts provided for in the books of account.
1. The movement is primarily on account of other income (dividend, income on investment) during the year.
2. The change is primarily on account of delays in collection in the previous year considering covid-19.
3. The movement in net capital turnover ratio is on account of decrease in working capital during the year.
48 Additional regulatory Information
(i) Basis the information available with the Company, the Company does not have any transaction with struck off companies.
(ii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iii) The Company has not traded or invested in crypto currency or virtual currency during the financial year.
(iv) The Company has not advanced or loaned or invested funds to any other person(s) or entity(s), 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
(v) The Company has not received any fund from any person(s) or entity(s), 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
(vi) The Company does not have any transaction which is not recorded in the books of accounts that has been subsequently surrendered or disclosed as income during the year as part of the on going tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(vii) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(viii) The Company has not been declared as wilful defaulter by any bank or financial institution or government or any government authority.
(ix) The Company has complied with the number of layers prescribed under the Companies Act, 2013.
The Company has considered the possible effects that may result from the pandemic relating to COVID-19 in the preparation of these standalone financial statements including the recoverability of carrying amounts of financial and non-financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Company has, at the date of approval of these standalone financial statements, used internal and external sources of information and expects that the carrying amount of these assets will be recovered. The impact of COVID-19 on the Company''s standalone financial statements may differ from that estimated as at the date of approval of these standalone financial statements and the Company will continue to closely monitor any material changes to future economic conditions.
50 The previous year''s figures have been regrouped/ reclassified wherever considered necessary to make them comparable with those of the current year''s classification.
Mar 31, 2018
1. Corporate social responsibility expenditure
As per Section 135 of the Act, 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 activities. The expenditure has been incurred on activities which are specified in Schedule VII to the Act.
a) Gross amount required to be spent by the Company during the year ended March 31, 2018 was Rs. 182.20 lakh (previous year Rs. 153.99 lakh).
2 Employee benefits a) Defined contribution plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Employees State Insurance Fund which is a defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognised as an expense towards contribution to these funds aggregating to Rs. 338.01 lakh for year ended March 31, 2018 (previous year Rs. 320.08 lakh) and is included in "Employee benefits expense".
b) Defined benefit plans
The Company has a defined benefit gratuity plan, governed by the Payment of Gratuity Act, 1972. Plan entitles an employee, who has rendered at least five years of services, to gratuity at the rate of fifteen days salary for every completed year of service or part thereof in excess of six months, based on the rate of salary last drawn by the employee concern.
The defined benefit plan for gratuity is administered by a single gratuity fund trust that is legally separate from the Company. The trustees of the gratuity fund comprises four employees. The trustees of the gratuity fund is required to act in the best interests of the members and/or their beneficiaries in accordance with the provisions of trust deed. This defined benefit plan expose the Company to actuarial risks, such as interest rate risk and market (investment) risk.
The Company expects to pay Rs. 87.21 lakh in contributions to its defined benefit plans in next financial year.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Assumptions regarding future mortality are based on the published statistics and mortality tables. The calculation of the defined benefit obligation is sensitive to the mortality assumptions.
As at March 31, 2018, the weighted-average duration of the defined benefit obligation was 5 years (March 31, 2017: 5 years).
3 Related party transactions A. List of related parties a) Related parties where control exists
Ultimate holding company
Moody''s Corporation
Companies having substantial interest
Moody''s Investment Company India Private Limited
Moody''s Singapore Pte Limited
b) Subsidiaries including step-down subsidiaries ICRA Management Consulting Services Limited (IMaCS)
ICRA Online Limited
PT ICRA Indonesia ICRA Nepal Limited ICRA Lanka Limited
Pragati Development Consulting Services Limited
ICRA Techno Analytics Limited (now known as "Nihilent Analytics Limited") (till October 7, 2016)
ICRA Sapphire Inc. (now known as "Nihilent Sapphire Inc.") (till October 7, 2016)
ICRA Global Capital Inc. (now known as "Nihilent Global Capital Inc.") (till October 7, 2016)
BPA Technologies Inc. (till October 7, 2016)
BPA Technologies Private Limited (till October 7, 2016)
c) Trusts
ICRA Employees Welfare Trust
ICRA Limited Employees Group Gratuity Scheme
d) Fellow subsidiaries
Moody''s Investors Service India Private Limited Moody''s Investors Service Inc.
MIS Quality Management Corp.
Moody''s Investors Service Singapore Pte Limited Moody''s Investors Service Hong Kong Limited Moody''s Analytics Inc Moody''s Investors Service Pty Limited
MA Knowledge Services Research (India) Private Limited (formerly known as "Copal Research India Private Limited")
e) Key management personnel
Mr. Naresh Takkar Mr. Vipul Agarwal Mr. Amit Kumar Gupta Mr. S. Shakeb Rahman
Independent directors
Mr. Arun Duggal
Ms. Ranjana Agarwal
Ms. Radhika Vijay Haribhakti
The fair value of the financial assets and liabilities represents 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 fair values of the quoted investments in equity shares and mutual funds are based on market price and net asset value (NAV) at the reporting date.
b) For other financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
Management has assessed that fair value of trade receivables, cash and cash equivalents, other bank balances, investments, loans, trade payables, other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
4.Fair value hierarchy
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.
Level 1: Quoted prices for identical instruments in active markets.
Level 2: Valuation techniques for which the lowest level input which has a significant effect on the fair value measurement are observable, either directly or indirectly.
Level 3: Valuation techniques for which the lowest level input which has a significant effect on the fair value measurement is not based on observable market data.
The following table provides the fair value measurement hierarchy of the Company''s assets and liabilities:
5.Financial risk management objectives and policies Risk management framework
The Board has overall responsibility for establishing and governing the Company''s risk management framework. The
Board has delegated monitoring and reviewing of the risk management plan to the Audit Committee. The Company has constituted a Executive Risk Committee, a Risk management team and functional sub-committees which are responsible for identify, analyse, mitigate and monitor risks as per risk management framework. The key risks and mitigation actions are also placed before Audit Committee and Board.
The Company is exposed to various risks in relation to financial instruments. The Company financial assets and liabilities are summarise in note 37.1. The main types of financial risks are market risk (price risk), credit risk and liquidity risk.
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. Such changes may result from changes in foreign currency rate, interest rate, price and other market changes. The Company''s exposure to market risk is mainly due to price risk.
Price risk
The risk that the fair value or future cash flows of a financial instrument will fluctuate because changes in the market prices, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company has adopted disciplined practices including position sizing, diversification, valuation, loss prevention, due diligence and exit strategies in order to mitigate losses as defined in Board approved investment policy.
The Company is exposed to price risk arising mainly from investment in equity shares and investment in mutual funds recognised at fair value through profit or loss. The detail of such investments are given in note 37.1. If the prices had been higher/ lower by 1% from the market prices existing as at the reporting date, profit would have been increased/ decreased by Rs. 276.37 lakh and Rs. 223.68 lakh for the year ended March 31, 2018 and March 31,
2017 respectively.
b) Credit risk
Credit risk is the risk of financial loss to the Company if customer or counterparty to financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customer and investment in mutual funds and deposits with banks.
To manage credit risk, the Company periodically review its receivables from customer for any non-recoverability of the dues, taking in to account the inputs from business development team and ageing of trade receivables. The Company establishes an allowance for impairment that represents its expected credit losses in respect of trade and other financial assets. The management uses a simplified approach for the purpose of computation of expected credit loss. While computing expected credit loss, the Company consider historical credit loss experience adjusted with forward looking information.
The Company''s exposure to customers is diversified and no single customer contributes to more than 10% of outstanding accounts receivable and unbilled revenue as of March 31, 2018 and March 31, 2017. The concentration of credit risk is limited due to the fact that the customer base is large.
The Company only invests surplus funds as per the investment policy of the Company, which has been approved by the Board of Directors. Deposits are held with only high rated banks.
c) Liquidity risk
Liquidity risk is the risk that the Company''s will encounter difficultly in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial assets. For the Company, liquidity risk arises from obligations on account of financial liabilities - Trade payable and other financial liabilities.
Liquidity risk management
The Company continues to maintain adequate amount of liquidity to meet strategic and growth objectives. The Company''s finance department is responsible for liquidity and funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s liquidity position through forecasts on the basis of expected cash flows.
6 Capital Management
The primary objective of the Company''s capital management is to maximise the shareholder value. For the purpose of Company''s capital management, capital includes issued equity capital, share premium and all other reserves and surplus attributable to the equity share holders of the Company. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issues new shares and raises money through borrowings.
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31,
2018 and March 31, 2017.
7 Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows often exposure will fluctuate because of change in foreign exchange rates. The Company''s exposure to foreign currency changes is not material.
38 Exceptional items
The Board of Directors of the Company at its meeting held on August 5, 2016 and the Members of the Company through Postal Ballot, on September 17, 2016, approved sale of the entire shareholding held by the Company in ICRA Techno Analytics Limited ("ICTEAS") (now known as "Nihilent Analytics Limited") to Nihilent Technologies Limited, for a consideration of Rs. 6,875 lakh, comprising (i) payment of cash consideration of Rs. 3,200 lakh; and (ii) unsecured, unrated, 10% interest bearing and unlisted non-convertible debentures, issued for the balance amount, to be redeemed after one year and fifteen days from the date of allotment i.e. October 7, 2016. The transaction got consummated on October 7, 2016. As a result, ICTEAS along with its subsidiaries ceased as subsidiaries of the Company. The profit on sale of ICTEAS shares amounting to Rs. 681.29 lakh was classified under ''Exceptional items'' in the financial year 2016-17.
8 Transfer pricing
The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company has maintained adequate documentation for the international transactions entered into with the associated enterprises during the financial year and expect such records to be in existence in accordance with the requirements of the law. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
9 Buy back of shares
The Board of Directors of the Company in its meeting held on February 9, 2017 approved a proposal to buyback equity shares of the Company, for an aggregate amount not exceeding Rs 4,000 lakh (referred to as the "Maximum Buyback Size") from shareholders of the Company under the open market route in accordance with the provisions contained in the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998 and the Companies Act, 2013 and rules made thereunder. The buyback process commenced on March 2, 2017 and closed on April 3, 2017. The Company utilised 99.997% of Maximum Buyback Size authorised for buyback and bought back 96,720 equity shares resulted in total cash outflow of Rs. 3,999.89 lakh. Out of 96,720 equity shares bought back, the Company extinguished 80,677 equity shares as at March 31, 2017 and the remaining 16,043 equity shares were extinguished in the month of April 2017 as per the records of the depositories. In line with the requirement of the Companies Act 2013, an amount of Rs 3,990.22 lakh was utilized from the securities premium account for the buyback. Further, capital redemption reserve of Rs 9.67 lakh (representing the nominal value of the shares bought back) was created as an apportionment from the securities premium account.
10 The Company''s Management assesses the operations of the subsidiaries, including the future projections, to identify indications of diminution, other than temporary, in the value of the investments recorded in the financial statements and accordingly no additional provision is required to be made, other than the amounts provided for in the books of account.
11. First time adoption of Ind AS
These are the Company''s first financial statements prepared in accordance with Ind AS.
The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS Balance Sheet at April 1, 2016 (the Company''s date of transition). In preparing its opening Ind AS Balance Sheet, the Company has adjusted amounts reported previously in the financial statements prepared in accordance with Indian GAAP (previous GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.
a) Exemptions and exceptions availed
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 value 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 (if any). This exemption can also be used for intangible assets covered by Ind AS 38 "Intangible Assets".
Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.
ii. Share - based payment transactions
The Company has elected not to apply Ind AS 102 to equity instruments that vested prior to the date of transition to Ind AS.
iii. Investment in subsidiaries
Ind AS 101 permits the first time adopter to measure investment in subsidiaries in accordance with Ind AS 27 at one of the following:
a) Cost determines in accordance with Ind AS 27 or
b) Deemed cost:
i) Fair value at the date of transition
ii) Previous GAAP carrying amount at that date
The Company has elected to consider previous GAAP carrying amount of its investment in subsidies on the date of transition to Ind AS as its deemed cost for the purpose of determining cost in accordance with principles of Ind AS 27 " Separate financial statements".
Ind AS mandatory exceptions i. Estimates
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, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP.
ii. Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification of financial assets on the basis of the facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.
Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively, except where the same is impracticable.
b) Reconciliations between previous GAAP and Ind AS
Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.
d) Footnotes
i Fair valuation of investments
Under the previous GAAP, investment in equity instruments and mutual funds were classified as long-term investments or current investments based on the intended holding period and reliability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments have been recognised in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended March 31, 2017. Accordingly, total equity increased by Rs. 4,774.21 lakh as March 31, 2017 and Rs. 3,324.60 lakh as at April 1, 2016 and profit for the year ended March 31, 2017 increased by Rs. 1,449.61 lakh.
ii Proposed dividend
Under the previous GAAP, till March 31, 2016 dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs. 3,008.94 lakh (including corporate dividend tax thereon) as at April 1, 2016 included under provisions has been reversed with corresponding adjustment to retained earnings and recognised when the same is approved by shareholders in the general meeting.
iii Provision for straight lining of rental expenses
Under Previous GAAP, lease payments under an operating lease should be recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term unless another systematic basis is more representative of the time pattern of the user''s benefit. Under Ind AS 17, lease payments under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the lease term unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases. Accordingly, other financial liabilities as at April 1, 2016 have been reduced by Rs. 117.44 lakh with the corresponding adjustment in the retained earnings. The other expenses for the year ended March 31, 2017 increased by Rs. 40.65 lakh.
iv Employee benefits
Both under Previous GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Previous GAAP, the entire cost, including actuarial gains and losses, are charged to Statement of Profit and Loss. Under Ind AS, re-measurements (comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability) are recognised in Other comprehensive income instead of profit or loss. As a result of this change, the profit before tax for the year ended March 31, 2017 increased by 73.33 lakh. There is no impact on total equity as at March 31, 2017 and April 1, 2016.
v Deferred tax assets
Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. Also deferred tax have been recognised on the adjustment made on transition to Ind AS. On the date transition, the net impact on deferred tax assets is Rs. 41.09 lakh.
vi Loan to employees
Under Previous GAAP, the Company has recognised the loans granted to its employees (at concessional interest) at the transaction value. Under Ind AS, the same are initially discounted and subsequently recorded at amortised cost at the end of every financial reporting period. Accordingly, the difference between the transaction and discounted value of the loan to employees is recognised as prepayments and is amortised over the period of the loan tenure (along with current and non- current classification). Further, interest is accreted on the present value of the loan amount paid (along with current and non- current classification).
vii Security deposits paid
Under Previous GAAP, the security deposits paid for lease rent are shown at the transaction value. Under Ind AS, the same are initially discounted and subsequently recorded at amortised cost at the end of every financial reporting period.
Accordingly, the difference between the transaction and discounted value of the security deposits paid is recognised as prepayments and is amortised over the period of the lease term (along with current and non- current classification). Further, interest is accreted on the present value of the security deposits paid for lease rent (along with current and non- current classification).
viii Deposits for vehicles
Under Previous GAAP, the security deposits received are shown at the transaction value. Under Ind AS, the same are initially discounted and subsequently recorded at amortised cost at the end of every financial reporting period. Accordingly, the difference between the transaction and discounted value of the security deposits received is recognised as deferred finance income and is amortised over the period of the term (along with current and non- current classification). Further, interest is accreted on the present value of the Deposits for vehicles received (along with current and non- current classification).
ix 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 Measurements of defined benefit obligation. The concept of other comprehensive income did not exist under previous GAAP.
x Statement of cash flows
Other than effect of certain reclassifications due to difference in presentation, there was no other material effect of cash flow from operating, financing, investing activities for all periods presented.
Mar 31, 2017
1. Employees stock option scheme (Also refer note 36)
2. Pursuant to the resolution passed by the shareholders at the annual general meeting held on June 12, 2006 for the grant of options, 906,000 equity shares representing 9.06% of the equity share capital of the Company have been issued to the ICRA Employees Welfare Trust (''Trust'') for grant of options to the eligible employees. Accordingly, the ICRA Employees Welfare Trust has granted stock options to those eligible employees from the pool of 906,000 equity shares in two tranches so far. The first tranche was granted during 2006-07 and the second during 2010-11.
3. 24,072 equity shares (previous year 8,650 equity shares) of Rs. 10 each transferred from trust to employees on exercise of the vested stock options in accordance with the terms of exercise under the "Employees Stock Option Scheme, 2006" (ESOS). Further, due to non exercise of options by the employees, 289 options (previous year nil) lapsed during the year.
4. Under the Employees Stock Option Scheme, 2006, as at March 31, 2017 - 19,345 options (previous year 43,706 options) are outstanding for exercise out of total options granted under Tranche 2.
5. 120,250 equity shares (previous year 119,961) are held by trust which were issued by the Company but not granted and shares against options granted but lapsed/ expired till March 31, 201 7 under ESOS scheme.
6. Rights, preferences and restrictions attached to equity shares
The Company has one class of equity shares having a par value of Rs. 10 each. Each shareholder is eligible for one vote per share held. The dividend recommended by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
7. Based on the information available with the Company, three suppliers (previous year four) have been identified who are registered under Micro, Small & Medium Enterprises Development Act, 2006 (MSMED), to whom the Company owes dues, but the same are not outstanding for more than 45 days as at March 31, 2017. The information has been determined to the extent such parties have been identified on the basis of information available with the Company.
8. Leases:
As Lessee
The Company''s significant operating lease arrangements are in respect of premises (residential, offices and godowns etc.). The lease term for these leases ranges between 11 months and 12 years which includes a lock-in period and in certain cases are renewable by mutual consent on mutually agreeable terms. Lease payments under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis over the lease term.
As Lessor
The Company has given a part of its premises under cancellable operating lease arrangement. Lease rentals amounting to Rs. 34.91 lakh (previous year Rs. 23.39 lakh) has been recognized in the Statement of Profit and Loss. As only a portion of these premises has been let out, the gross carrying amount, depreciation for the year and the accumulated depreciation of leased premises/ assets is not separately identifiable.
9. Segment reporting:
As the Company''s business activities falls within a single primary business segment and a geographical segment, the disclosure requirements of Accounting Standard 1 7 "Segment Reporting" specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 are not applicable.
10. Buy back of shares:
The Board of Directors of the Company in its meeting held on February 9,201 7 approved a proposal to buy back equity shares of the Company, for an aggregate amount not exceeding Rs 4,000 lakh (referred to as the "Maximum Buy back Size") from shareholders of the Company under the open market route in accordance with the provisions contained in the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998 and the Companies Act, 2013 and rules made there under. The buyback process commenced on March 2, 201 7 and closed on April 3, 201 7. The Company utilized 99.997% of Maximum Buy back Size authorized for buy back. As of March 31,201 7, the Company bought back 96,720 equity shares as part of the aforementioned buy back process resulting in total cash outflow of Rs. 3,999.89 lakh. Out of 96,720 equity shares bought back, the Company extinguished 80,677 equity shares as at March 31, 2017 and the remaining 16,043 equity shares were extinguished in the month of April 2017 as per the records of the depositories. In line with the requirement of the Companies Act 2013, an amount of Rs 3,990.22 lakh has been utilized from the securities premium account for the buy back. Further, capital redemption reserve of Rs 9.67 lakh (representing the nominal value of the shares bought back) has been created as an apportionment from securities premium account.
11. The Board of Directors of the Company at its meeting held on August 5, 2016 and the Members of the Company through Postal Ballot, on September 17, 2016, approved sale of the entire shareholding held by the Company in ICRA Techno Analytics Limited ("ICTEAS") (now known as "Ni hi lent Analytics Limited") to Nihilent Technologies Limited, for a consideration of Rs. 6,875 lakh, comprising (i) payment of cash consideration of Rs. 3,200 lakh; and
12. unsecured, unrated, 1 0% interest bearing and unlisted non-convertible debentures, issued for the balance amount, to be redeemed after one year and fifteen days from the date of allotment i.e. October 7, 2016. The transaction got consummated on October 7,2016. As a result, ICTEAS along with its subsidiaries ceased as subsidiaries of the Company. The profit on sale of ICTEAS shares amounting to Rs. 681.29 lakh has been classified under ''Exceptional items''.
The exceptional items in previous year amounting to Rs. 345.52 lakh represent provision for other than temporary diminution in the value of non-current investment in PT ICRA Indonesia."
13. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company has maintained adequate documentation for the international transactions entered into with the associated enterprises and domestic transactions entered into with the specified person during the financial year and expect such records to be in existence in accordance with the requirements of the law. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
14. Corporate social responsibility expenditure
As per Section 135 of the Act, 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 expenditure has been incurred on activities which are specified in Schedule VII to the Act.
15. Gross amount required to be spent by the Company during the year ended March 31, 201 7 was Rs. 153.99 lakh (previous year Rs. 129.62 lakh)
16. Amount spent during the year on:
17. Disclosure in respect of employee benefits under Accounting Standard (AS) - 15 (Revised) "Employee Benefits" prescribed by the Companies (Accounts) Rules, 2014.
Defined contribution plans
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Employees State Insurance fund which is a defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognized as an expense towards contribution to these funds for the year aggregated to Rs. 320.08 lakh (previous year Rs. 260.43 lakh) and is included in "Employee benefits".
Defined benefit plans
The Company operates post-employment defined benefit plan that provides gratuity. The gratuity is payable to all eligible employees of the Company on superannuation, death or permanent disablement in terms of the provisions of the payment of Gratuity Act or as per the Company''s scheme, whichever is more beneficial.
The liability with regard to gratuity is accrued based on actuarial valuation at the Balance Sheet date, carried out by an independent actuary.
18. The Board of Directors, in its meeting on May 11, 2017, have proposed a dividend of Rs. 27 (previous year Rs. 25) per equity share for the financial year ended March 31, 201 7. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held on August 3, 201 7 and if approved would result in a cash outflow of approximately Rs. 3,218.23 lakh including dividend distribution tax.
19. The previous year''s figures have been regrouped/ reclassified wherever considered necessary to make them comparable with those of the current year''s classification.
Mar 31, 2016
1. Employees stock option scheme (Also refer note 38)
a) Pursuant to the resolution passed by the shareholders at the annual
general meeting held on June 12, 2006 for the grant of options, 906,000
equity shares representing 9.06% of the equity share capital of the
Company have been issued to the ICRA Employees Welfare Trust (''Trust'')
for grant of options to the eligible employees. Accordingly, the ICRA
Employees Welfare Trust has granted stock options to those eligible
employees from the pool of 906,000 equity shares in two tranches so
far. The first tranche was granted during 2006-07 and the second during
2010-11.
b) 8,650 equity shares (previous year 47,097 equity shares) of Rs. 10
each transferred from trust to employees on exercise of the vested
stock options in accordance with the terms of exercise under the
"Employees Stock Option Scheme, 2006".
c) Under the Employees Stock Option Scheme, 2006, as at March 31, 2016
- 43,706 options (previous year 52,356 options) are outstanding for
exercise out of total options granted under Tranche 2.
d) 119,961 equity shares (previous year 119,961) are held by trust
which were issued by the Company but not yet granted under ESOS Scheme.
2. Rights, preferences and restrictions attached to equity shares
The Company has one class of equity shares having a par value of Rs. 10
each. Each shareholder is eligible for one vote per share held. The
dividend recommended by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting. In
the event of liquidation, the equity shareholders are eligible to
receive the remaining assets of the Company after distribution of all
preferential amounts, in proportion to their shareholding.
3. Pursuant to Companies Act, 2013 (''the Act'') being effective from
April 1, 2014, the Company had revised depreciation rate on fixed assets
as per the useful life specified in Part ''C'' of Schedule II to the Act.
As a result of this change, the depreciation charge for the year ended
March 31, 2015 was higher by Rs. 117.23 lakh. In respect of assets
whose useful life already expired as on April 1, 2014, depreciation of
Rs. Nil (previous year Rs 20.18 lakh) [net of deferred tax impact of
Rs. Nil (previous year Rs.10.39 lakh)] had been adjusted from reserves
and surplus in accordance with the requirements of Schedule II of the
Act.
4. Leases:
As Lessee
The Company''s significant operating lease arrangements are in respect of
premises (residential, offices, godown etc.). The lease term for these
leases ranges between 11 months and 12 years which includes a lock-in
period and in certain cases are renewable by mutual consent on mutually
agreeable terms. Lease payments under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
5. Segment reporting:
As the Company''s business activities falls within a single primary
business segment and a geographical segment, the disclosure
requirements of Accounting Standard 17 "Segment Reporting" specified
under Section 133 of the Act, read with Rule 7 of the Companies
(Accounts) Rules, 2014 are not applicable.
6. The exceptional items represent provision for other than temporary
diminution of Rs. 345.52 lakh (previous year Rs. 1,151.95 lakh) in the
value of non-current investment in PT ICRA Indonesia (including advance
given for allotment of shares, if any). This decision was taken by the
Company based on extensive review of results, continuous losses in
Indonesia entity and path of scalability, which presents significant
challenges in the current environment. During current year, the Company
has withdrawn the rating services business activity in Indonesia.
7. The Company has established a comprehensive system of maintenance of
information and documents as required by the transfer pricing
legislation under sections 92-92F of the Income-tax Act, 1961. Since
the law requires existence of such information and documentation to be
contemporaneous in nature, the Company has maintained adequate
documentation for the international transactions entered into with the
associated enterprises and domestic transactions entered into with the
specified person during the financial year and expect such records to be
in existence in accordance with the requirements of the law. The
management is of the opinion that its international transactions are at
arm''s length so that the aforesaid legislation will not have any impact
on the financial statements, particularly on the amount of tax expense
and that of provision for taxation.
8. Corporate social responsibility expenditure
As per Section 135 of the Act, 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. A CSR committee was formed during the
year 2014-15 and expenditure has been incurred on activities which are
specified in Schedule VII of the Act.
(a) Gross amount required to be spent by the Company during the year
ended March 31, 2016 was Rs. 129.62 lakh (previous year Rs. 123.41
lakh)
9. Employee Stock Option Scheme
The Company has a stock option plan in place namely:
Employee Stock Option Scheme 2006
The Board of Directors had constituted ESOS Compensation Committee
(''Committee'') comprising a majority of Independent Directors for
administration and supervision of the Stock Option Scheme.
In 2006-07, members approved constitution of ICRA Employees Welfare
trust (''Trust'') for the purpose of welfare of the Employees and for
administration of ESOS 2006. The Trust provides a convenient method for
transferring shares to the eligible employees upon exercise of the
options by such employees. The members authorised grant of loan(s) from
time to time to the Trust in one or more tranches as agreed between the
Board and the Trust.
10. Disclosure in respect of employee benefits under Accounting Standard
(AS) Â 15 (Revised) "Employee Benefits" prescribed by the Companies
(Accounts) Rules, 2014.
defined contribution plans
The Company makes contributions, determined as a specified percentage of
employee salaries, in respect of qualifying employed towards Provident
fund and Employees State Insurance fund which is a defined contribution
plan. The Company has no obligations other than to make the specified
contributions. The contributions are charged to the Statement of Profit
and Loss as they accrue. The amount recognised as an expense towards
contribution to these funds for the year aggregated to Rs. 260.43 lakh
(previous year Rs. 259.97 lakh) and is included in "Employee benefits".
defined benefit plans
The Company operates post-employment defined benefit plan that provides
gratuity. The gratuity is payable to all eligible employees of the
Company on superannuation, death or permanent disablement in terms of
the provisions of the payment of Gratuity Act or as per the Company''s
scheme, whichever is more beneficial.
The liability with regard to gratuity and compensated absences is
accrued based on actuarial valuation at the Balance Sheet date, carried
out by an independent actuary.
11. During the current year, amount payable to employees Rs. 591.46 lakh
(previous year Rs. 499.63 lakh) and commission payable to Non-executive
Directors Rs. 45.00 lakh (previous year Rs. 42.68 lakh) have been
presented as ''Other current liability'' and ''Trade payable'' respectively
instead of previous year classification of ''Short term provision''. The
classification for the previous year amounts has been retained as
presented in previous year''s financial statements.
Mar 31, 2015
1. Background
ICRA Limited (formerly Investment Information and Credit Rating Agency
of India Limited) was set up in 1991 by leading financial/investment
institutions, commercial banks and financial services companies as an
independent and professional Investment Information and Credit Rating
Agency, incorporated under the Companies Act, 1956, having its
registered office in Delhi. It is listed on Bombay Stock Exchange and
the National Stock Exchange of India. It has various subsidiaries
involved in rating, management consulting, software solutions,
information services etc.
1.1 Employees stock option scheme (AIso refer note 37)
a) Pursuant to the resolution passed by the shareholders at the annual
general meeting held on June 12, 2006 for the grant of options, 906,000
equity shares representing 9.06% of the equity share capital of the
Company have been issued to the ICRA Employees Welfare Trust for grant
of options to the eligible employees. Accordingly, the ICRA Employees
Welfare Trust has granted stock options to those eligible employees
from the pool of 906,000 equity shares in two tranches so far. The
first tranche was granted during 2006-07 and the second during 2010-11.
b) 47,097 equity shares (previous year 136,946 equity shares) of Rs. 10
each transferred from trust to employee on exercise of the vested stock
options in accordance with the terms of exercise under the "Employees
Stock Option Scheme, 2006".
c) Under the Employees Stock Option Scheme, 2006, as at March 31,2015 -
52,356 options (previous year 99,453 options) are outstanding for
exercise out of total options granted under Tranche 1 and Tranche 2.
1.2 Rights, preferences and restrictions attached to equity shares
The Company has one class of equity shares having a par value of Rs. 10
each. Each shareholder is eligible for one vote per share held. The
dividend recommended by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting. In
the event of liquidation, the equity shareholders are eligible to
receive the remaining assets of the Company after distribution of all
preferential amounts, in proportion to their shareholding.
1.3 Shares held by subsidiaries of the ultimate holding company
During the year, Moody's Corporation (the ultimate holding company of
Moody's Group including Moody's Singapore Pte Ltd and Moody's
Investment Company India Private Limited), on successful completion of
February 2014-initiated Open Offer, acquired through Moody's Singapore
Pte Ltd, 2,154,722 equity shares representing 21.55% of the share
capital of ICRA. Consequently, the shareholding of Moody's Group in
ICRA has increased from 28.51% to 50.06%.
* The Company declares dividends in Indian rupees. The dividend
proposed by the Board of Directors is subject to the approval of the
shareholders in the ensuing Annual General Meeting. For the year ended
March 31,2015, dividend of 240% (previous year 230%) i.e. Rs. 24
(previous year Rs. 23) per fully paid up equity share has been
recognised as distributions to equity shareholders.
* excluding deferred tax assets of Rs. 261.03 lakh (previous year nil)
for item of capital nature resulted from recording of impairment loss
on investment in one of the wholly owned subsidiary (Refer note 34)
which is not recorded in absence of virtual certainty for realisation
thereof.
2 Contingent Liabilities (to the extent not provided for):-
As at As at
March 31,2015 March 31,2014
(Rupees in lakh) (Rupees in lakh)
Claims against the Company disputed
and not acknowledged as debts.
Income Tax 620.46 443.22
Total 620.46 443.22
The Company is contesting the demand and the management including its
tax advisors believe that its position will likely be upheld in the
appellate process. The management believes that the ultimate outcome of
these proceedings will not have a material adverse effect on the
Companies financial position and results of operations.
3 There are no Micro, Small & Medium Enterprises, to whom the Company
owes dues, which are outstanding for more than 45 days as at March
31,2015 and as at March 31,2014. The information as required to be
disclosed under the Micro, Small and Medium Enterprises Development
Act, 2006 (MSMED) has been determined to the extent such parties have
been identified on the basis of information available with the Company.
4 Pursuant to Companies Act, 2013 ('the Act') being effective from
April 1,2014, the Company has revised depreciation rate on fixed assets
as per the useful life specified in Part 'C' of Schedule II to the Act.
As a result of this change, the depreciation charge till March 31,2015
is higher by Rs. 117.23 lakh. In respect of assets whose useful life
already expired as on April 1, 2014, depreciation of Rs 20.18 lakh (net
of deferred tax impact of Rs.10.39 lakh) has been adjusted from
reserves and surplus in accordance with the requirements of Schedule II
of the Act.
5 Leases:
As Lessee
The Company's significant operating lease arrangements are in respect
of premises (residential, offices, godown etc.). These are generally
not non-cancellable and range between 11 months and 12 years and in
certain cases are renewable by mutual consent on mutually agreeable
terms. Lease payments under operating leases are recognised in the
Statement of Profit & Loss on a straight-line basis over the lease
term.
6 Segment reporting:-
As the Company's business activities falls within a single primary
business segment and a geographical segment, the disclosure
requirements of Accounting Standard 17 "Segment Reporting" specified
under Section 133 of the Act, read with Rule 7 of the Companies
(Accounts) Rules, 2014 are not applicable.
7 During the year ended March 31,2015, the Company has prudently
recognized an impairment loss of Rs. 1,151.95 lakh (previous year nil)
in relation to its investment in PT ICRA Indonesia (including advance
given for allotment of shares), due to past recurring losses and lack
of certainty to the extent of its recoverability in future.
8 The Company has established a comprehensive system of maintenance of
information and documents as required by the transfer pricing
legislation under sections 92-92F of the Income-tax Act, 1961. Since
the law requires existence of such information and documentation to be
contemporaneous in nature, the Company has maintained adequate
documentation for the international transactions entered into with the
associated enterprises and domestic transactions entered into
with the specified person during the financial year and expect such
records to be in existence in accordance with the requirements of the
law. The management is of the opinion that its international
transactions are at arm's length so that the aforesaid legislation will
not have any impact on the financial statements, particularly on the
amount of tax expense and that of provision for taxation.
9 The Company has constituted a Corporate Social Responsibility (CSR)
Committee in accordance with Section 135 of the Companies Act, 2013 and
the CSR Policy has been devised on the basis of the recommendations
made by the CSR Committee. The CSR Policy of the Company and details
about the development of CSR Policy as required under the Companies
(Corporate Social Responsibility Policy) Rules, 2014, have been
provided in the Directors' Report 2014-15. The Company has not
incurred during the financial year 2014-15, two per cent of the average
net profit of the last three financial years under CSR, as the
intention of the CSR related provisions under the Companies Act, 2013
is to encourage corporates to meaningfully engage in social
development. In view of the same, the CSR Committee recommended to the
Board to not allocate any cash flow in year ended March 31,2015, and
take a considered and long term decision and formulate a long term plan
based on the concrete recommendations of the CSR Committee. The said
decision was thought fit and proper as the contributions to long term
programs would fulfill the CSR goals of the Company in its true spirit.
Gross amount required to be spent by the Company was Rs.123.41 lakh.
10 Employee Stock Option Scheme
The Company has a stock option plan in place namely:
Employee Stock Option Scheme 2006
The Board of Directors had constituted ESOS Compensation Committee
('Committee') comprising a majority of Independent Directors for
administration and supervision of the Stock Option Scheme.
In 2006-07, members approved constitution of ICRA Employees Welfare
trust ('Trust') for the purpose of welfare of the Employees and for
administration of ESOS 2006. The Trust provides a convenient method for
transferring shares to the eligible employees upon exercise of the
options by such employees. The members authorised grant of loan(s) from
time to time to the Trust in one or more tranches as agreed between the
Board and the Trust.
The outstanding loan to the Trust as at March 31,2015 is nil (previous
year - Rs 117.13 lakh). Out of total options in force as on March
31,2014, 47,097 shares (previous year - 1,36,946 share) were transfered
to the employees on exercise of Options during the year ended March
31,2015.
The unissued and lapsed options lying at the end of the year is
119,961. The movement of the stock options in force under the ESOS plan
2006 is set out below:
11 Disclosure in respect of employee benefits under Accounting Standard
(AS) - 15 (Revised) "Employee Benefits" prescribed by the Companies
(Accounting Standards) Rules, 2006.
Defined contribution plans
The Company makes contributions, determined as a specified percentage
of employee salaries, in respect of qualifying employeed towards
Provident fund and Employees State Insurance fund which is a defined
contribution plan. The Company has no obligations other than to make
the specified contributions. The contributions are charged to the
Statement of Profit and Loss as they accrue. The amount recognised as
an expense towards contribution to these funds for the year aggregated
to Rs. 238.20 lakh (previous year Rs. 213.73 lakh) and is included in
"Employee benefits". (Refer note 22)
Defined benefit plans
The Company operates post-employment defined benefit plan that provides
gratuity.
The gratuity Plan Liability with regard to gratuity and compensated
absences is accrued based on actuarial valuation at the Balance Sheet
date, carried out by an independent actuary.
a) Gratuity Plan
The present value of the obligation is determined based on an actuarial
valuation using the projected unit credit method.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
Assumptions regarding future mortality are based on the published
statistics and mortality tables. The calculation of the defined benefit
obligation is sensitive to the mortality assumptions.
b) Other long-term benefits
The Company provides compensated absences benefits to the employees of
the company which can be carried forward to future years. Amount
recognised in Statement of Profit and Loss for leave benefits is as
under -
12 Disclosures as required by the Accounting Standard 18 on "Related
Party Disclosures" are given below:
A. Related Parties where control exists:
Ultimate holding company:- Moody's Corporation
Fellow subsidiary companies:-
Moody's Investment Company India Private Limited Moody's Singapore Pte
Limited
B. Subsidiaries including step-down subsidiaries
ICRA Management Consulting Services Limited
ICRA Techno Analytics Limited
ICRA Online Limited
PT ICRA Indonesia
ICRA Lanka Limited
ICRA Nepal Limited
ICRA Sapphire Inc.
ICRA Global Capital Inc.
BPA Technologies Inc.
BPA Technologies Private Limited IMaCS Virtus Global Partners, Inc.
Pragati Development Consulting Services Limited
C. Ultimate holding company/ fellow subsidiary companies with whom
transactions taken place during the year:
Moody's Investment Company India Private Limited Moody's Singapore Pte
Limited Moody's Investors Service India Private Limited Moody's
Investors Service Inc.
Moody's Investors Service Limited
Moody's Investors Service Singapore Pte Limited
* As the liabilities for gratuity and leave encashment are provided on
an actuarial basis for the company as a whole, the amounts pertaining
to the key management personnel is not included above.
# ICRA Techno Analytics Limited has taken unsecured loan at the rate of
interest of 12% per annum for purchase of Office at Kolkata.
13 Other operating income of Rs. 106.70 lakh (previous year Rs. 79.05
lakh) represents royalty income, professional services, bad debts
recovered which were earlier written off and liabilities in the nature
of advances received from clients written back as management believes
that these are no longer payable.
14 The figures for previous ended Mach 31,2014 were audited by the
erstwhile Statutory Auditor.
15 Certain amounts reported in the financial statement for the year
ended March 31,2014, require regrouping/ reclassification to conform to
the current year's classification. The following table shows the
reclassification of material amounts which were reported in the
financial statements for the year ended March 31,2014 and how these
amounts now appear in the financial statements for the year ended March
31,2015 if the current year grouping / classification are applied:
Mar 31, 2014
1. Contingent Liabilities and Commitments (to the extent not provided
for):-
(1) Contingent Liabilities:-
As at As at
March 31, 2014 March 31, 2013
(Rupees in
lakh) (Rupees in
lakh)
Guarantees given by Banks against
counter
guarantees of the Company 11.26 21.71
Disputed income tax demands 432.22 191.44
Total 443.48 213.15
The Company has taken the necessary steps to protect its position in
respect of all disputed claims and has received competent legal advice
to the effect that the Company has strong positions in respect of
disputed amounts claimed and accordingly considers that no provisions
are required against these claims. The guarantees have been given in
the ordinary course of business and are not likely to result in any
liability.
(2) Other commitments:-
Estimated amount of contracts
remaining to be executed on
capital account and not provided
for (advance given Rs. 92.21 lakh
(previous year Rs. 133.27 lakh)) 159.70 270.97
Total 159.70 270.97
2. As required under the Micro, Small and Medium Enterprises
Development Act, 2006, the disclosure related to Trade Payable (under
Note - 5 of "Current Liabilities") is based on the information received
from the Suppliers to the Company. Payable to MSME at the end of the
year is nil (previous year Rs. 0.60 lakh).
3. Pursuant to the resolution passed by the shareholders at the
annual general meeting held on June 12, 2006 for the grant of options,
906,000 equity shares amounting to 9.06% of the equity share capital of
the Company have been issued to the ICRA Employees Welfare Trust for
grant of options to the eligible employees. Accordingly, the ICRA
Employees Welfare Trust has granted stock options to those eligible
employees from the pool of 906,000 equity shares in two tranches so
far. The first tranche was granted during 2006-07 and the second during
2010-11. 549,640 options were exercised till March 31, 2013 and
136,946 options were exercised during the year under review.
4. Figures are expressed in lakhs of rupees.
5. The previous year figures have been regrouped/reclassified wherever
considered necessary to make them comparable with those of the current
year.
Mar 31, 2013
1. Contingent Liabilities and Commitments (to the extent not provided
for):-
(1) Contingent Liabilities:-
As at As at
March 31, 2013 March 31, 2012
(Rupees in lakh) (Rupees in lakh)
Claims against the
Company disputed and
not acknowledged as debts. 0.00 12.85
Guarantees given by
Banks against counter
guarantees of the Company 21.71 21.71
Disputed income tax demands 191.44 300.80
Total 213.15 335.36
The Company has taken the necessary steps to protect its position in
respect of all disputed claims and has received competent legal advice
to the effect that the Company has strong positions in respect of
disputed amounts claimed and accordingly considers that no provisions
are required against these claims. The guarantees have been given in
the ordinary course of business and are not likely to result in any
liability.
2. As required under the Micro, Small and Medium Enterprises
Development Act, 2006, the disclosure related to Trade Payable (under
Note - 5 of "Current Liabilities") is based on the information received
from the Suppliers to the Company. Payable to MSME at the end of the
year is Rs. 0.60 lakh (previous year NIL).
3. Pursuant to the resolution passed by the shareholders at the annual
general meeting held on june 12, 2006 for the grant of options,
9,06,000 equity shares amounting to 9.06% of the equity share capital
of the Company have been issued to the ICRA Employees Welfare Trust for
grant of options to the eligible employees. Accordingly, the ICRA
Employees Welfare Trust has granted stock options to those eligible
employees from the pool of 9,06,000 equity shares in two tranches so
far. The first tranche was granted during 2006-07 and the second during
2010-11. 3,86,729 options were exercised till March 31, 2012 and
1,62,911 options were exercised during the year under review.
4. A sum of Rs. 751.30 lakh and Rs. 1291.99 lakh was amortised during
the financial year 2010-11 and 2011-12 respectively as "deferred
employees compensation" in accordance with the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
The said amounts were taken as disallowable expenses while making
provisions for Income Tax during respective years. Following the
rationale of recent judgments passed by the High Court of Madras and
the Income Tax Appellate Tribunal, Chandigarh, on identical facts, the
Company has reversed Income Tax provision of Rs. 249.56 lakh and Rs.
419.19 lakh relating to the financial years 2010-11 and 2011-12
respectively and adjusted the same against Current Tax.
5. In view of recovery of security deposit from Associated journals
Limited in May 2013, provision of Rs. 46.73 lakh for doubtful advance
created in this regard has been reversed during the year. Further, in
view of the Accounting Standard-9, interest amounting to Rs. 44.55 lakh
recovered in May 2013 has been accounted for as income during the year.
6. Figures are expressed in lakhs of rupees.
7. The previous year figures have been regrouped/reclassified wherever
considered necessary to make them comparable with those of the current
year.
Mar 31, 2012
(A) Rights, preferences and restrictions attached to shares Equity
Shares
The Company has one class of equity shares having a par value of Rs. 10
each. Each shareholder is eligible for one vote per share held. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting. In the event
of liquidation, the equity shareholders are eligible to receive the
remaining assets of the Company after distribution of all preferential
amounts, in proportion to their shareholding.
1. Contingent Liabilities and Commitments (to the extent not provided
for):-
(1) Contingent Liabilities:-
As at As at
March 31, 2012 March 31, 2011
(Rupees in lakh) (Rupees in lakh)
i) Claims against the
Company disputed and
not acknowledged as debts. 12.85 12.92
ii) Guarantees given by Banks
against counter guarantees of
the Company 21.71 21.71
iii) Disputed income tax demands 300.80 286.79
Total 335.36 321.42
The Company has taken the necessary steps to protect its position in
respect of all disputed claims and has received competent legal advice
to the effect that the Company has strong positions in respect of
disputed amounts claimed and accordingly counters that no provisions
are required against these claims. The guarantees have been given in
the ordinary course of business and are not likely to result in any
liability.
(2) Other commitments:-
i) Estimated amount of contracts
remaining to be executed on
capital account and not provided
for (advance given Rs. 10 lakh) 0.00 26.04
Total 0.00 26.04
2. Based on the information obtained from suppliers regarding their
status as Micro, Small or Medium enterprises under Micro, Small and
Medium Enterprises Development Act, 2006, there are no amounts due to
them as at the end of the year.
3. Pursuant to the resolution passed by the shareholders at the annual
general meeting held on June 12, 2006 for the grant of options,
9,06,000 equity shares amounting to 9.06% of the equity share capital
of the Company have been issued to the ICRA Employees Welfare Trust for
grant of options to the eligible employees. Accordingly, the ICRA
Employees Welfare Trust has granted stock options to those eligible
employees from the pool of 9,06,000 equity shares in two tranches so
far. The first tranche was granted during 2006-07 and the second during
2010-11. 3,18,466 options were exercised till March 31, 2011 and 68,263
options were exercised during the year under review.
4. During the year, the Company acquired an additional 4,10,818 equity
shares of PT. ICRA Indonesia (a subsidiary company) at the par value of
IDR 10,000 each, equivalent to Rs. 225.92 lakh (previous year 2,47,500
equity shares equivalent to Rs. 127.76 lakh).
5. During the year, the Company acquired 13,48,900 equity shares of
ICRA Lanka Ltd. (a wholly owned subsidiary) at par value of LKR 10
each, equivalent to Rs. 62.89 lakh (previous year 25,00,000 equity
shares equivalent to Rs. 102.35 lakh).
6. During the year, the Company invested Rs. 63.24 lakh (previous year
nil) in ICRA Nepal Limited to acquire its shares of the face value of
Nepalese Rupees 100 each at par value. ICRA Nepal Limited had not
allotted any shares by March 31, 2012.
7. Operating Leases:-
The Company has taken certain premises under operating leases. The
Company shares leased and owned premises with other companies from whom
it receives rent in accordance with mutually agreed arrangements.
8. Figures are expressed in lakhs of rupees.
9. The financial statements for the year ended March 31, 2012 have
been prepared in accordance with the requirements of the revised
schedule VI to the Companies Act, 1956. The previous year figures have
been regrouped/reclassified wherever considered necessary to make them
comparable with those of the current year. The adoption of Revised
Schedule VI for previous year figures does not impact recognition and
measurement principles followed for preparation of financial
statements.
Mar 31, 2011
1. Contingent Liabilities not provided for are as under:-
As at As at
March 31, 2011 March 31, 2010
(Rs. in thousand)(Rs. in thousand)
i) Disputed claims against the
Company not acknowledged as debts. 1,292 1,519
ii) Guarantees given by the Bank
against Counter
Guarantees of the Company 2,171 2,171
iii) Disputed Income Tax Demands 28,679 29,999
iv) Estimated amount of contracts
remaining to be executed on capital
account and not provided for
(advance given Rs. 1,000 thousand) 2,604 0
Total 34,746 33,689
The Company has taken the necessary steps to protect its position in
respect of all disputed claims and has received competent legal advice
to the effect that no provisions are required against these claims. The
guarantees have been given in the ordinary course of business and are
not likely to result in any liability.
2. The Company has the process of identification of suppliers
registered under the Micro, Small and Medium Enterprises Development
Act, 2006 by obtaining confirmation from suppliers. The Company does
not owe any dues as on March 31, 2011 (previous year Rs. 124 thousand)
to any supplier registered under the Micro, Small and Medium
Enterprises Development Act, 2006.
3. Pursuant to the resolution passed by the Shareholders at the Annual
General Meeting held on June 12, 2006 for the grant of Options,
9,06,000 Equity Shares amounting to 9.06% of the Equity Share Capital
of the Company have been issued to the ICRA Employees Welfare Trust for
grant of Options to the eligible Optionees. Accordingly, the ICRA
Employees Welfare Trust has granted Stock Options to the eligible
Optionees from the said pool of 9,06,000 Equity Shares in two tranches
so far. The first tranche was granted during 2006-07 and the second
during 2010-11. Out of the above, 159,461 options were exercised till
March 31, 2010 and 159,005 options were exercised during the year under
review.
4. During the year, the Company acquired additional 247,500 Equity
shares of P T. ICRA Indonesia (a subsidiary company) at par value of
IDR 10,000 each, equivalent to Rs. 12,776 thousand (Previous Year Rs.
12,388 thousand).
5. During the year, the Company acquired 2,500,000 Equity shares of
ICRA Lanka Ltd. (wholly owned subsidiary company) at par value of LKR
10 each, equivalent to Rs. 10,235 thousand (Previous Year Nil).
6.Operating Leases:- The Company has taken certain premises under
operating lease. The Company shares leased and owned premises with
other companies from whom it receives rent in accordance with mutually
agreed arrangements.
7. Figures are expressed in thousands of rupees.
8. The figures for the previous year have been regrouped/rearranged
wherever considered necessary to make them comparable with those of the
current year.
Mar 31, 2010
1. Contingent Liabilities not provided for are as under:-
The Company has taken the necessary steps to protect its position in
respect of all disputed claims and has received competent legal advice
to the effect that no provisions are required against these claims. The
guarantees have been given in the ordinary course of business and are
not likely to result in any liability.
2. As required under the Micro, Small and Medium Enterprises
Development Act, 2006, the disclosure related to Sundry Creditors
(under Schedule - 9 of "Current Liabilities & Provisions") is based on
the information received from the Suppliers to the Company.
3. The Company had made a preferential allotment of 906,000 equity
shares to ICRA Employees Welfare Trust on March 24, 2007 at the IPO
issue price of Rs. 330 per equity share for grant of options to the
eligible employees of the Company and subsidiary companies. Out of the
above, 615,763 options were granted on March 24, 2007 to the eligible
employees of the Company and subsidiary companies as laid down in the
Employees Stock Option Scheme (ESOS) of the Company. Out of the above,
225,746 options vested in the eligible employees in accordance with the
terms of the ESOS on March 24, 2008, 161,346 options were vested on
March 24, 2009 and 157,767 options were vested on March 24, 2010. Out
of the above, 22,858 options were exercised till March 31, 2009 and
136,603 options were excercised during the year.
4.Operating Leases:- The Company has taken certain premises under
operating lease. The Company shares leased and owned premises with
other companies from whom it receives rent in accordance with mutually
agreed arrangements.
5. Figures are expressed in thousands of rupees.
6. The figures for the previous year have been regrouped/rearranged
wherever considered necessary to make them comparable with those of the
current year.
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