Mar 31, 2023
1. Corporate information
The Standalone financial statements comprise financial statements of Digispice Technologies Limited ("the Company") for the year ended 31st March, 2023.
The Company is domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its share are listed in National Stock Exchange of India Limited and BSE Limited in India.
The Company is primarily engaged into the Information and Communication Technology business providing Value Added Services, and Mobile Content services to the domestic/international Telecom Operators. Also, the Company undertakes development and sale of telecom related software.
The registered office of the Company is situated at 622, 6th Floor, DLF Tower A, Jasola Distt Centre, New Delhi - 110025 .
2. Summary of Significant accounting policies
2.1 Status of Compliance:-
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act 2013, read with Companies (Indian Accounting Standard) Rules, 2015 as amended time to time.
Accounting Policies have been consistently applied except where a newly issued Ind AS is initially adopted or a revision to an existing accounting standard required a change in the accounting policy hitherto in use.
The Board of Directors approved the financial statements for the year ended 31st March, 2023 and authorised for issue on 19th May, 2023. However, the shareholders of the Company have the power to amend the Financial Statements after the issue.
2.2 Basis of preparation
The financial statements have been prepared on going concern basis and under the historical cost convention on accrual basis except for the followings:
i. Defined benefit plans and other long-term employee benefits are measured at fair value at each reporting date.
ii. Share based payments are initially measured at fair value.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability, if market
participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 116 -Leases, and measurements that have some similarities to fair value but are not fair value, such as value in use in Ind AS 36 - Impairment of Assets.
These financial statements are presented in Indian National Rupee (''?''), which is the Company''s functional currency. All amounts have been rounded to the nearest Lakhs ('' 00,000), except when otherwise indicated.
The significant accounting policies applied by the Company in the preparation of its financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these financial statements, unless otherwise indicated.
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
⦠Expected to be realised or intended to be sold or consumed in normal operating cycle
⦠Held primarily for the purpose of trading
⦠Expected to be realised within twelve months after the reporting period, or
⦠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is classified as current when:
⦠It is expected to be settled in normal operating cycle;
⦠It is held primarily for the purpose of trading;
⦠It is due to be settled within twelve months after the reporting period; or
⦠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
Transactions in foreign currencies are recorded by the Company at their respective functional currency at the exchange rates prevailing at the date of the transaction first qualifies for recognition. At the reporting date, monetary assets and liabilities denominated in foreign currency are restated at the prevailing exchange rates.
Exchange differences arising on settlement or translation of monetary items are recognised in the Statement of Profit & Loss with the exception of the following:
⦠Exchange differences on foreign currency borrowings included in the borrowing cost when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates at the date of initial transactions. Non-monetary items measure at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing on intial recognition and at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realised. For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to the short maturity of these instruments.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability, if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices /net asset value (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices (unadjusted) included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
D. Revenue recognition
The Company recognises revenue at transaction price when it satisfies a performance obligation in accordance with the provisions of contract with the customer. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price allocated to that performance obligation. This is achieved when;
⦠effective control of products along with significant risks and rewards of ownership has been transferred to customer;
⦠the amount of revenue can be measured reliably;
⦠it is probable that the economic benefits associated with the transaction will flow to the Company; and
⦠the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Sale of software/hardware (customised bundled solution) and software services
Sale is recognised at transaction price based on milestone achieved by the Company on development of software and invoice for that milestone raised on the customers.
The Company derives revenues from software development and related services and from the licensing of software products. Arrangements with customers for software related services are either on a fixed-price, fixed-time frame or on a time-and-material basis.
Revenue on time-and-material contracts are recognised as the related services are performed and revenue from the end of the last billing to the balance sheet date, which has not been billed, is recognised as unbilled revenues. Revenue from fixed-price, fixed-time frame contracts, where there is no uncertainty as to measurement or collectability of consideration, is recognised as per the percentage-of-completion method. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. Maintenance revenue is recognised rateably over the term of the underlying maintenance arrangement.
Income from services
Revenue from value added services and Enterprises SMS are recognised at transaction price as per arrangement with the customers at the end of each month/period in which the services are rendered.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time proportionate basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Revenue is recognised when the Company''s right to receive the payment is established, which is generally when shareholders of the investee approve the dividend.
Rental income arising from operating leases on investment properties is accounted for on a straightline basis over the lease terms unless the payments by the lessee are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases. Rental income is included in other income in the Statement of Profit or Loss.
Goods and service tax (GST), wherever applicable, is not received by the Company on its own account. GST is collected on behalf of the government, accordingly, it is excluded from revenue.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date.
Current income tax includes tax paid on foreign income in accordance with the tax laws applicable in the respective jurisdiction. The foreign taxes paid are generally available for set off against the Indian income tax liability of the Company''s worldwide income. In case of foreign taxes paid are not available for set off against the Indian income tax liability, same are being charged to Statement of Profit or Loss.
Current tax, relating to items recognised outside the statement of profit or loss, is recognised directly either in other comprehensive income or in equity in correlation to the underlying transaction. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences other than the deferred tax liability arises from the initial recognition of an asset or liability in a transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax, relating to items recognised outside the statement of profit or loss, is recognised directly either in other comprehensive income or in equity in correlation to the underlying transaction.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax relate to the same taxable entity and the same taxation authority.
Minimum Alternative Tax (MAT) is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset, the said asset is created by way of credit to the statement of profit and loss and included in deferred tax assets.
The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.
Property, Plant and Equipment are stated at cost of acquisition or construction less accumulated depreciation and impairment, if any. For this purpose, cost includes deemed cost which represents the carrying value of property, plant and equipment recognised as at 1st April, 2015 measured as per the
previous Generally Accepted Accounting Principles (GAAP). Cost includes all direct costs and expenditures incurred to bring the asset to its working condition and location for its intended use. Borrowing costs incurred during the period of construction is capitalised as part of cost of qualifying asset.
An item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to costs incurred initially to acquire an item of property, plant and equipment and also to costs incurred subsequently to add to, replace part of. All other repair and maintenance costs, including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is derecognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
The gain or loss arising on disposal of an item of property, plant and equipment is determined as the difference between sale proceeds and carrying value of such item, and is recognised in the statement of profit and loss.
Depreciation on all assets commences from the dates the assets are available for their intended use and are spread over their estimated useful economic lives or, in the case of leased assets, over the lease period or estimated useful life whichever is less. Property, plant and equipment are depreciated using the Straight Line Method over estimated useful lives of assets and residual values are regularly reviewed and, when necessary, are revised.
Particulars |
Useful Life(estimated by management) |
-Building |
25 years |
-Plant and Machinery |
15 years |
-Computers(other than servers etc.) |
3-5 years |
-Server |
6 years |
-Leasehold Improvements |
period of lease, or useful life of 1-9 years, whichever is lower |
-Furniture and fittings |
3-10 years |
-Office equipment''s (other than mobile handsets) |
2-7 years |
-Mobile handsets |
3 years |
-Vehicles |
8-10 years |
The Company, based on assessment made, depreciates certain items of property, plant and equipment over estimated useful lives which are different from the useful life prescribed in Schedule II to the Companies Act, 2013. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
G. Investment properties
The Company has elected to continue with the carrying value for all of its investment property as recognised in its Indian GAAP financial statements as deemed cost at the Ind AS transition date, viz., 1st April, 2015.
Investment properties acquired, subsequent to transaction date, are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in profit or loss as incurred.
I f Company classify a property as an investment property on the basis of its use, which was previously classified under "property, plant and equipment", then on the date of reclassification, the cost of investment property will be the carrying value of that property.
The Company depreciates building component of investment property over 60 years from the date of original purchase/ready for intended use. Furniture & fixture and office equipment, which form part of investment property are depreciated at useful life mentioned in para F.
The Company depreciates building (on leasehold land) component of investment property over the leasehold period of land.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by external registered independent valuers.
Investment properties are derecognised either when they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in statement of profit and loss in the period of derecognition.
The residual values, useful lives and methods of depreciation of investment properties are reviewed at each financial year end and adjusted prospectively, if appropriate.
options. The lease liability is subsequently measured at amortised cost using the effective interest method and remeasured with a corresponding adjustment to the related right-of-use asset when there is a change in future lease payments in case of renegotiation, changes of an index or rate or in case of reassessments of options.
The right-of-use asset comprises, at inception, the initial lease liability, any initial direct costs and, when applicable, the obligations to refurbish the asset, less any incentives granted by the lessors. The right-of-use asset is subsequently depreciated, on a straight-line basis, over the lease term, if the lease transfers the ownership of the underlying asset to the Company at the end of the lease term or, if the cost of the right-of-use asset reflects that the lessee will exercise a purchase option, over the estimated useful life of the underlying asset. other are also subject to testing for impairment if there is an indicator for impairment. Variable lease payments not included in the measurement of the lease liabilities are expensed to the Statement of Profit & Loss in the period in which the events or conditions which trigger those payments occur.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease shall not be straight-lined, if escalation in rentals is in line with expected inflationary cost. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rentals are recognised as revenue in the period in which they are earned.
L. Impairment of non-financial assets
Impairment loss, if any, is provided to the extent, the carrying amount of assets or cash generating units exceed their recoverable amount. Recoverable amount is higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life. Impairment losses recognised in prior years are reversed when there is an indication that the impairment losses recognised no longer exist or have decreased. Such reversals are recognised as an increase in carrying amounts of assets to the extent that it does not exceed the carrying amounts that would have been determined (net of amortization or depreciation) had no impairment loss been recognised in previous years.
M. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when present obligations as a result of a past event will probably lead to an outflow of economic resources and amounts can be estimated
I ntangible assets are stated at cost of acquisition or construction less accumulated amortisation and impairment, if any. For this purpose, cost includes deemed cost which represents the carrying value of intangible assets recognised as at 1st April, 2015 measured as per the previous Generally Accepted Accounting Principles (GAAP). Intangible assets purchased are measured at cost as at the date of acquisition, as applicable, less accumulated amortisation and accumulated impairment, if any.
The Company capitalises intangible asset under development for a project in accordance with its accounting policy. Initial capitalisation of costs is based on management''s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits.
Software (In-house Developed) product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economical benefits are probable, the Company has an intention and ability to complete and use or sell the software and the costs can be measured reliably. The costs which can be capitalised include material cost, employee benefits and other overhead cost that are directly attributable to preparing the asset for its intended use.
The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
I ntangible assets are amortised over their respective individual estimated useful lives on a straight-line basis, from the date that they are available for use. In case of computer software, the Company has estimated useful life of five years or less.
Intangible assets are amortised using the Straight Line Method over their estimated useful lives as follows :
Intangible Asset |
Estimated Useful Life |
Computer Software (Office) |
3 years |
Computer Software (Site) |
5 years |
In-house developed Software |
5 years |
Intellectual Property Right |
5 years |
Web site Development Cost |
3 years |
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of
the asset and are recognised in the statement of profit or loss when the asset is derecognised.
Investment in subsidiaries, associates and joint venture are measured initially at costs. Subsequent to initial recognition, investment in subsidiaries, associates and joint venture are stated at cost less impairment loss, if any.
Investment in subsidiaries, associates and joint venture are derecognised when they are sold or transferred. The difference between the net proceeds on sales and the carrying amount of the investment is recognised in statement of profit and loss in the year of derecognition.
J. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
Ancillary costs incurred in connection with the arrangement of borrowings are adjusted with the proceeds of the borrowings.
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company assesses if a contract is or contains a lease at inception of the contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period time in exchange for consideration.
The Company recognises a right-of-use asset and a lease liability at the commencement date, except for short-term leases of twelve months or less and leases for which the underlying asset is of low value, which are expensed in the statement of operations on a straightline basis over the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease, or, if not readily determinable, the incremental borrowing rate specific to the Company, term and currency of the contract. Lease payments can include fixed payments, variable payments that depend on an index or rate known at the commencement date, as well as any extension or purchase options, if the Company is reasonably certain to exercise these reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises when there is a presence of a legal or constructive commitment that has resulted from past events, for example, legal disputes or onerous contracts. Provisions are not recognised for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted to their present values, where the time value of money is material.
Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
In those cases where the outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognised.
Contingent liability is disclosed for:
⦠Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
⦠Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognised. However, when inflow of economic benefits is probable, related asset is disclosed.
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the service rendered by employees are recognised during the period when the employee renders the services.
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognises contribution payable to the provident fund scheme and State Plans namely Employees'' State Insurance Fund, as an expense, when an employee renders the related service.
Company''s contribution to Provident Fund is made in accordance with the Statute, and are recognised as an expense when employees have rendered services entitling them to the contribution.
The Company operates a defined benefit gratuity plan in India, which requires contributions to be made to a separately administered fund. Gratuity is a defined benefit obligation.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method by acturial valuer at each reporting date. In respect of post-retirement benefit 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, are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to statement of profit or loss in subsequent periods.
Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier.
Accumulated leave, which is expected to be utilised within the next twelve months, is treated as shortterm employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. Actuarial gains/ losses on the compensated absences are immediately taken to the statement of profit and loss and are not deferred.
The Company recognises compensation expense relating to share-based payment in statement of profit and loss using fair value in accordance with Ind AS 102 "Share-based Payment" except the value of Stock Options to employees of the subsidiary companies and holding Company are considered as investment and directly reduced from the retained earnings respectively.
The Company initially measures the cost of equity-settled transactions with employees using Black and Scholes model to determine the fair value of the liability incurred. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. Vesting conditions, other than market conditions i.e. performance based condition are not taken into account when estimating the fair value. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note 38.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial recognition and measurement
Trade receivables are measured at their transaction price unless it contains a significant financing component in accordance with Ind AS 115 for pricing adjustments embedded in the contract.
All other financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in three categories:
1) Debt instruments at amortised cost
2) Equity instruments at fair value through other comprehensive income (FVTOCI)
3) Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
Debt instrument at amortised cost
A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortised cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to designate a debt instrument, which otherwise meets amortised cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch''). The Company has not designated any debt instrument as at FVTPL.
Debt instruments included within the FVTPL category are measured at fair value with all changes recognised in the Statement of Profit & Loss.
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss.
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e. removed from the Company''s balance sheet) when:
⦠The rights to receive cash flows from the asset have expired, or
⦠The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''passthrough'' arrangement; and either
(a) the Company has transferred substantially all the risks and rewards of the asset
(b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. ECL is the weighted-average of difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate, with the respective risks of default occurring as the weights. When estimating the cash flows, the Company considers:
⦠All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
⦠Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires
measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12 month expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Company compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss.
All financial liabilities are recognised initially at fair value net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised
in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the Derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Reclassification of financial instruments
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments, and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Q. Trust Shares as per Scheme of Amalgamation
In pursuance to a Scheme of Amalgamation effected in Financial year 2010-11 following trusts were created:
⦠Independent Non-Promoter Trust (''NPT'')
⦠Independent Non-Promoter (Spice Employee Benefit) Trust (''EBT'')
Ind AS 1 - Material accounting policies - The amendments mainly related to shifting of disclosure of erstwhile "significant accounting policies" in the notes to the financial statements to material accounting policy information requiring companies to reframe their accounting policies to make them more "entity specific". This amendment aligns with the "material" concept already required under International Financial Reporting Standards (IFRS). The Company does not expect this amendment to have any significant impact on its finanacial statement.
I nd AS 8 - Definition of accounting estimates -The amendments specify definition of ''change in accounting estimate'' replaced with the definition of ''accounting estimates''. The Company does not expect this amendment to have any significant impact on its finanacial statement.
EBT holds equity shares of the Company for the benefit of the employees of the Company, its associates and subsidiaries and NPT holds equity shares for the benefit of the Company. Considering conservative interpretation of Ind AS 32, number of equity shares held by the NPT and EBT are reduced from total number of issued equity shares.
Equity shares that are held by two trusts are recognised at cost and deducted from Equity / Other Equity. No gain or loss is recognised in statement of profit and loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments which is directly adjusted with equity and other equity.
R. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand, cheques on hand and shortterm deposits with an original maturity of three months or less, which are subject to an insignificant risk of change in value.
For the purposes of the Statement of Cash Flows, cash and cash equivalents is as defined above, net of outstanding bank overdrafts. In the balance sheet, bank overdrafts are shown within borrowings in current liabilities.
S. Business Combinations
Business Combination under Common Control
Common control business combination means a business combination involving entities or businesses in which all the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory. Business combinations involving entities or businesses under common control shall be accounted for using the pooling of interests method. The assets and liabilities of the combining entities are reflected at their carrying amounts.
T. Earnings per share
Basic earning per share is calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
Diluted earning per share is calculated by dividing the net profits attributable to equity shareholders by the weighted average number of equity shares outstanding during the year (adjusted for the effects of dilutive options).
U. Standards issued but not yet effective
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31st March, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from 1st April, 2023, as below:
I nd AS 12 - Income taxes - Annual Improvements to Ind AS (2021) - The amendment clarifies that in cases of transactions where equal amounts of assets and liabilities are recognised on initial recognition, the initial recognition exemption does not apply. Also, If a Company has not yet recognised deferred tax asset and deferred tax liability on right-of-use assets and lease liabilities or has recognised deferred tax asset or deferred tax liability on net basis, that Company shall have to recognise deferred tax assets and deferred tax liabilities on gross basis based on the carrying amount of right-of-use assets and lease liabilities existing at the beginning of 1st April, 2022. The Company does not expect this amendment to have any significant impact on its finanacial statement.
Mar 31, 2018
NOTES TO THE STANDALONE FINANCIAL STATEMENT as at and for the year ended 31 March 2018
1. Corporate information
Spice Mobility Ltd ("the Company") is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company was primarily engaged in the trading of mobile handsets and through its subsidiaries, in trading of IT products, mobile handsets and their accessories and the information and communication technology business providing value added services to the telecom operators.
The registered office of the Company is situated at 622,6th Floor, DLF Tower A, Jasola Distt Centre, New Delhi - 110025 . These financial statements were approved by the Board of Directors of the Company in their meeting held on May 17, 2018.
2. Summary of Significant accounting policies
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by Companies (Indian Accounting Standards) Rules, 2016.
The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities which have been measured at fair value (refer accounting policy regarding financial instruments).
The financial statements are presented in Rs. and all values are rounded to the nearest thousand (Rs. 000), except when otherwise indicated.
2.1 Summary of significant accounting policies
A. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
Expected to be realised or intended to be sold or consumed in normal operating cycle
Held primarily for the purpose of trading
Expected to be realised within twelve months after the reporting period, or Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current. A liability is current when:
It is expected to be settled in normal operating cycle
It is held primarily for the purpose of trading
It is due to be settled within twelve months after the reporting period, or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
B. Foreign currencies
The Company''s financial statements are presented in Rs., which is also Company''s functional currency. Transactions and balances
Transactions in foreign currencies are initially recorded by the Company at currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e..translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).
C. Fair value measurement
The Company measures financial instruments, such as, investments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
i. In the principal market for the asset or liability; or
ii. In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
External valuers are involved for valuation of significant assets, such as properties and unquoted financial assets, and significant liabilities.
All assets and liabilities for which fair value is measured or disclosed in the financial statements 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 I â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 âValuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Company''s management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for distribution in discontinued operation.
External valuers are involved for valuation of significant assets, such as properties and unquoted financial assets. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. Company decides, after discussions with the Company''s external valuers, which valuation techniques and inputs to use for each case.
At each reporting date, the Company analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company''s accounting policies. For this analysis, the Company verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The Company, in conjunction with the Company''s external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
D. Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks.
The specific recognition criteria described below must also be met before revenue is recognised.
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
Interest income
For all debts instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in other income in the statement of profit and loss.
Dividends
Revenue is recognised when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
Rental income
Rental income arising from operating leases on investment properties and leasehold improvements is accounted for on a straight-line basis over the lease terms unless the payments by the lessee are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
E. Taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in India, where the Company operates and generates taxable income.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities.
F. Non-current assets held for sale/ distribution to owners and discontinued operations
The Company classifies non-current assets and disposal group as held for sale/ distribution to owners if their carrying amounts will be recovered principally through a sale/ distribution rather than through continuing use. Actions required to complete the sale/ distribution should indicate that it is unlikely that significant changes to the sale/ distribution will be made or that the decision to sell/ distribute will be withdrawn. Management must be committed to the sale/ distribution expected within one year from the date of classification.
For these purposes, sale transactions include exchanges of non-current assets for other non-current assets when the exchange has commercial substance. The criteria for held for sale/ distribution classification is regarded met only when the assets or disposal group is available for immediate sale/ distribution in its present condition, subject only to terms that are usual and customary for sales/ distribution of such assets (or disposal group), its sale/ distribution is highly probable; and it will genuinely be sold, not abandoned. The Company treats sale/ distribution of the asset or disposal to be highly probable when:
The appropriate level of management is committed to a plan to sell the asset (or disposal group), An active programme to locate a buyer and complete the plan has been initiated (if applicable),
The asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
The sale is expected to qualify for recognition as a completed sale within one year from the date of classification , and
Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Non-current assets held for sale/for distribution to owners and disposal groups are measured at the lower of their carrying amount and the fair value less costs to sell/ distribute. Assets and liabilities classified as held for sale/ distribution are presented separately in the balance sheet.
Property, plant and equipment and intangible assets once classified as held for sale/ distribution to owners are not depreciated or amortised.
G. Property, plant and equipment
The Company has elected to continue with the carrying value for all of its property, plant & equipment, as recognised in its Indian GAAP financial statements as deemed cost at the transition date, viz., I April 2015 .
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:
Particulars |
Useful Life (estimated by management) |
Plant and equipment |
15 years |
Leasehold improvements |
Lower of 2 to 9 years or useful life |
Furniture and fittings |
10 years |
Office equipment''s |
5 years |
Computers (excluding servers) |
3 years |
Servers |
6 years |
Vehicles |
8 years |
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
The residual values, useful lifes and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
H. Investment properties
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
The Company depreciates building component of investment property over 60 years from the date of original purchase. Furniture & fixture and office equipment, which form part of investment property are depreciated at useful life mentioned in para G.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer applying a valuation model recommended by the International Valuation Standards Committee.
Investment properties are derecognised either when they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in statement of profit and loss in the period of derecognition.
The residual values, useful lives and method of depreciation of investment properties are reviewed at each financial year end and adjusted prospectively , if appropriate.
I. Intangible assets
Intangible assets (software) acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets are amortised on straight line basis over the useful economic life (not exceeding six years) and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets is recognised in the statement of profit and loss.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.
J. Investment in subsidiaries
Investment in subsidiaries are measured initially at costs. Subsequent to initial recognition, investment in subsidiaries are stated at cost less impairment loss, if any.
Investment in subsidiaries are derecognised when they are sold or transferred. The difference between the net proceeds on sales and the carrying amount of the asset is recognised in profit or loss in the year of derecognition.
K. Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that retains substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term unless the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
L. Inventories
Inventories comprises of trading goods which are valued at the lower of cost and net realisable value.
Cost of traded goods includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
M. Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for assets is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.
When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
Impairment losses of continuing operations, including impairment on inventories, are recognised in the statement of profit and loss.
N. Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain.The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
O. Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to,for example, a reduction in future payment or a cash refund.
The Company operates a defined benefit gratuity plan in India, which requires contributions to be made to a separately administered fund. The liability as at the year end represents the difference between the actuarial valuation of the gratuity liability of continuing employees and the fair value of the plan assets with the Life Insurance Corporation of India (LIC) as at the end of the year. During the year 2017, Company has fully used funds for gratuity plan. During current year, the Company has not invested any amount in plan assets with the any fund.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months as long term employee benefit for measurement purpose & such long term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end.
Remeasurements, 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 immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non- routine settlements; and
Net interest expense or income P. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
1) Debt instruments at amortised cost
2) Debt instruments at fair value through other comprehensive income (FVTOCI)
3) Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
4) Equity instruments measured at fair value through other comprehensive income (FVTOCI) Company has categorised financial assets under category I & 3 and don''t hold any assets under category 2 & 4.
Debt instruments at amortised cost
A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
This category is the most relevant to the Company.After initial measurement,such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.This category generally applies to trade and other receivables. For more information on receivables, refer note 12.
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Equity investments in subsidiary companies are carried at cost for impairment testing.
Derecogn/t/on
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e. removed from the Company''s balance sheet) when:
The rights to receive cash flows from the asset have expired, or
The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement and either
(a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability.The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables and all other financial assets with no significant financing component is measured at an amount equal to 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured for specific assets. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognized as an impairment gain or loss in profit or loss.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables,.net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings and financial guarantee contracts.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
Gains or losses on liabilities held for trading are recognised in the profit or loss. Loans and borrowings
This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR..The EIR amortisation is included as finance costs in the statement of profit and loss.
This category generally applies to borrowings. For more information (refer note 16) Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
Derecogniton
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability.The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Q. Trust Shares as per Scheme of Amalgamation (refer note 42)
In pursuance to a Scheme of Amalgamation following trusts were created:
Independent Non-PromoterTrust ("NPT) Independent Non-Promoter (Spice Employee Benefit) Trust (''EBT'')
EBT holds equity shares of the Company for the benefit of the employees of the Company, its associates and subsidiaries and NPT holds equity shares for the benefit of the Company. Considering conservative interpretation of Ind AS 32, number of equity shares held by the NPT and EBT are reduced from total number of issued equity shares.
Equity shares that are held by two trusts are recognised at cost and deducted from Equity / Other Equity. No gain or loss is recognised in statement of profit and loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
R. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above as they are considered an integral part of the Company''s cash management.
Recent accounting pronouncements
Ind AS 115, Revenue from Contract with Customers:-
On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Ind AS 115, Revenue from Contract with Customers. Ind AS 115, establishes a comprehensive framework for determining whether, how much and when revenue should be recognised.
It replaces existing revenue recognition guidance, including Ind AS 18 Revenue, Ind AS II Construction Contracts and Guidance Note on Accounting for Real Estate Transactions. Ind AS 115 is effective for annual periods beginning on or after I April 2018 and will be applied accordingly.
The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers.
The standard permits two possible methods of transition:
Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 -Accounting Policies, Changes in Accounting Estimates and Errors.
Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)
The Company has completed its preliminary evaluation of the possible impact of Ind AS 115. The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The Company does not expect the impact of the adoption of the new standard to be material.
Ind AS 21 :-The effect of changes in foreign exchange rates:-
On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The appendix explains that the date of transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability.
The amendment will come into force from April 1, 2018. The Company has preliminary evaluated the effect of this on the financial statements and the impact is not material.
Mar 31, 2015
1. Nature of Operations
Spice Mobility Ltd ("the Company") is a public Company domiciled in
India and incorporated under the provisions of the Companies Act, 1956.
Its shares are listed on two stock exchanges in India. The Company,
through its subsidiaries, is primarily engaged in the trading of Mobile
handsets, IT products and their accessories and the Information and
Communication Technology business providing Value Added Services to the
Telecom Operators. The name of Company has been changed from S Mobility
Limited to Spice Mobility Limited with effect from July 21,2014.
2. Basis of preparation
The financial statements of the Company have been prepared in
accordance with the generally accepted accounting principles in India
(Indian GAAP).The Company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under Section 133 of the Companies Act 2013, read together with Rule 7
of the Companies (Accounts) Rules 2014.The financial statements have
been prepared on an accrual basis and under the historical cost
convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year, except for the
change in accounting policy explained below.
(a) Depreciation on fixed assets
Till the year ended June 30, 2014, Schedule XIV to the Companies Act,
1956, prescribed requirements concerning depreciation of fixed assets.
From the current year, Schedule XIV has been replaced by Schedule II to
the Companies Act, 2013. The applicability of Schedule II has resulted
in the following changes related to depreciation of fixed assets.
Unless stated otherwise, the impact mentioned for the current period is
likely to hold good for future years also.
i) Useful lives/ depreciation rates
Till the year ended June 30,2014, depreciation rates prescribed under
Schedule XIV were treated as minimum rates and the Company was not
allowed to charge depreciation at lower rates even if such lower rates
were justified by the estimated useful life of the asset. Schedule II
to the Companies Act 2013 prescribes useful lives for fixed assets
which, in many cases, are different from lives prescribed under the
erstwhile Schedule XIV However, Schedule II allows companies to use
higher/ lower useful lives and residual values if such useful lives and
residual values can be technically supported and justification for
difference is disclosed in the financial statements.
Considering the applicability of Schedule II, the management has
re-estimated useful lives and residual values of all its fixed
assets.The management believes that depreciation rates currently used
by the Company fairly reflect its estimate of the useful lives and
residual values of fixed assets, though these rates in certain cases
are different from lives prescribed under Schedule II.
Had the Company continued to follow the earlier useful life, the
depreciation expense for the period would have been lower by Rs. 18,232
thousand and loss would have been lower by Rs. 18,232 thousand and the
net block of fixed assets would have been higher by Rs. 18,232
thousand.
Till year ended June 30, 2014, to comply with the requirements of
Schedule XIV to the Companies Act, 1956, the Company was charging 100%
depreciation on assets costing less than Rs. 5,000/- in the year of
purchase. However, Schedule II to the Companies Act 2013, applicable
from the current year, does not recognize such practice. Hence, to
comply with the requirement of Schedule II to the Companies Act, 2013,
the Company has changed its accounting policy for depreciation of
assets costing less than Rs. 5,000/-. As per the revised policy, the
Company is depreciating such assets over their useful life as assessed
by the management. The management has decided to apply the revised
accounting policy prospectively from accounting periods commencing on
or after 1 July 2014.
The change in accounting for depreciation of assets costing less than
Rs.5,000/- did not have any material impact on financial statements of
the Company for the current year.
(b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
(c) Tangible Fixed assets
Fixed assets are stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any.The cost comprises purchase
price, borrowing costs if capitalization criteria are met and directly
attributable cost of bringing the asset to its working condition for
the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
(d) Depreciation on Tangible Fixed assets
i) Depreciation is provided using the straight line method as per the
estimated useful lives of the assets estimated by the management.The
Company has used the following rates to provide depreciation on its
fixed assets :-
ii) Leasehold improvements are depreciated on straight line basis over
the primary lease period ranging from 2-9 years or its useful life
whichever is lower.
(e) Intangible Fixed assets
Intangible Fixed Assets (Software's) acquired separately are measured on
initial recognition at cost. Such assets are amortised over their
useful lives on straight line basis not exceeding six years.
(f) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects
current market assessment of the time value of money and risks specific
to the asset.
(g) Leases
Where the Company is lessee
Leases, where the lessor effectively retains substantially all risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight- line basis over the
lease term.
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Statement of Profit and Loss on a
straight-line basis over the lease term. Costs, including depreciation
are recognized as an expense in the Statement of Profit and Loss.
Initial direct costs such as legal costs, brokerage costs, etc. are
recognized immediately in the Statement of Profit and Loss.
(h) Investments
Investments that are readily realisable and intended to be held for not
more than one year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of the investments.
(i) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act, 1961 enacted in India.The tax
rates and tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
period and reversal of timing differences for the earlier years.
Deferred taxis measured using the tax rates and tax laws enacted or
substantively enacted at the reporting date.
Deferred tax liabilities are recognised for all taxable timing
differences. Deferred tax assets are recognised for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profits.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax assets to the
extent that it has become reasonably certain or virtually certain, as
the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of a
deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
asset can be realised. Any such write-down is reversed to the extent
that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the period in which the Company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
Company reviews the "MAT credit entitlement" asset at each reporting
date and writes down the asset to the extent the Company does not have
convincing evidence that it will pay normal tax during the specified
period.
(j) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.The following specific recognition criteria must also
be met before revenue is recognized:
Sale of goods
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer, which coincides with
their delivery to the customers.The Company collects sales taxes and
value added taxes (VAT) on behalf of the Government and, therefore,
these are not economic benefits flowing to the Company. Hence, they are
excluded from revenue. Excise duty deducted from revenue (gross) is the
amount that is included in the revenue (gross) and not the entire
amount of liability arising during the year.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the applicable interest rate. Interest
income is included under the head "other income" in the statement of
profit and loss.
Dividends
Revenue is recognised when the Company's right to receive dividend is
established by the balance sheet date.
Income on Fixed Maturity Plan Investments
Income on investments made in the units of fixed maturity plans of
various schemes of mutual funds is recognised based on reasonable
certain yield as at the balance sheet date.
(k) Foreign currency translation
Foreign currency transactions and balances
(i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non- monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange differences
Exchange differences arising on the settlement of monetary items or on
reporting Company's monetary items at rates different from those at
which they were initially recorded during the year or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise.
(iv) Forward exchange contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/ income over the
life of the contract. Exchange differences on such contracts are
recognized in the statement of profit and loss in the year in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of such forward exchange contract is also recognized as income
or as expense for the year.
(l) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined
contribution scheme.The Company has no obligation,other than the
contribution payable to the provident fund.The Company recognizes
contribution payable to the provident fund scheme as an expenditure,
when an employee renders the related service. If the contribution
payable to the scheme for service received before the balance sheet
date exceeds the contribution already paid, the deficit payable to the
scheme is recognized as a liability after deducting the contribution
already paid. If the contribution already paid exceeds the contribution
due for services received before the balance sheet date, then excess is
recognized as an asset to the extent that the pre payment will lead to,
for example, a reduction in future payment or a cash refund.
Gratuity liability is a defined benefit obligation and is provided for
on the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year.The liability as at the year end
represents the difference between the actuarial valuation of the
gratuity liability of continuing employees and the fair value of the
plan assets with the Life Insurance Corporation of India (LIC) as at
the end of the year. Actuarial gains/losses are immediately taken to
the statement of profit and loss and are not deferred.
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year-end.Actuarial gains/losses are immediately taken to the statement
of profit and loss and are not deferred.The Company presents the entire
leave as a current liability in the balance sheet, since it does not
have an unconditional right to defer its settlement for 12 months after
the reporting date. Where the Company has the unconditional legal and
contractual right to defer the settlement for a period beyond 12
months, the same is presented as non current liability.
(m) Segment reporting
Identification of segments
The Company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(n) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(o) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date.These are reviewed at
each balance sheet date and are adjusted to reflect the current best
estimates.
(p) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(q) Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at
bank and cash in hand and short term investments with the original
maturity of three months or less.
(r) Derivative instruments
As per the ICAI Announcement, accounting for derivative contracts,
other than those covered under AS-11, are marked to market on a
portfolio basis, and the net loss is charged to the income statement.
Net gains are ignored.
(s) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. In its
measurement, the Company does not include depreciation and amortization
expense, finance costs and tax expense.
Jun 30, 2014
(a) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
(b) Tangible Fixed assets
Fixed assets are stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any. The cost comprises purchase
price, borrowing costs if capitalization criteria are met and directly
attributable cost of bringing the asset to its working condition for
the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
(c) Depreciation on fixed assets
i) Depreciation is provided using the straight line method as per the
estimated useful lives of the assets estimated by the management, which
results in depreciation rates being equal to the corresponding rates
prescribed under Schedule XIV of the Companies Act, 1956.
ii) Leasehold improvements are depreciated on straight line basis over
the primary lease period ranging from 2-9 years or its useful life
whichever is lower.
iii) All individual assets costing Rs. 5,000 or less are depreciated in
full in the year of addition.
(d) Intangible Fixed assets
Intangible Fixed Assets (Softwares) acquired separately are measured on
initial recognition at cost. Such assets are amortised over their
useful lives on straight line basis not exceeding six years.
(e) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects
current market assessment of the time value of money and risks specific
to the asset.
(f) Leases
Where the Company is lessee
Leases, where the lessor effectively retains substantially all risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight- line basis over the
lease term.
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Statement of Profit and Loss on a
straight-line basis over the lease term. Costs, including depreciation
are recognized as an expense in the Statement of Profit and Loss.
Initial direct costs such as legal costs, brokerage costs, etc. are
recognized immediately in the Statement of Profit and Loss.
(g) Investments
Investments that are readily realisable and intended to be held for not
more than one year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of the investments.
(h) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act, 1961 enacted in India. The
tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and tax laws enacted or
substantively enacted at the reporting date.
Deferred tax liabilities are recognised for all taxable timing
differences. Deferred tax assets are recognised for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profits.
In the situations where the Company is entitled to a tax holiday under
the Income Tax Act, 1961 enacted in India or tax laws prevailing in the
respective tax jurisdictions where it operates, no deferred tax (asset
or liability) is recognized in respect of timing differences which
reverse during the tax holiday period, to the extent the Company''s
gross total income is subject to the deduction during the tax holiday
period. Deferred tax in respect of timing differences which reverse
after the tax holiday period is recognised in the year in which timing
differences originate. However, the Company restricts recognition of
deferred tax assets to the extent that it has become reasonably certain
or virtually certain, as the case may be, that sufficient future
taxable income will be available against which such deferred assets can
be realized. For recognition of deferred taxes, the timing differences
which originate first are considered to reverse first.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax assets to the
extent that it has become reasonably certain or virtually certain, as
the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of a
deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
asset can be realised. Any such write-down is reversed to the extent
that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the period in which the Company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
Company reviews the "MAT credit entitlement" asset at each reporting
date and writes down the asset to the extent the Company does not have
convincing evidence that it will pay normal tax during the specified
period.
(i) Inventories
Traded Goods, service spares and components are valued at lower of cost
and net realizable value. Cost is determined on transaction moving
weighted average method.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs necessary to make the sale.
(j) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognized:
Sale of goods
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer, which coincides with
their delivery to the customers. The Company collects sales taxes and
value added taxes (VAT) on behalf of the government and, therefore,
these are not economic benefits flowing to the Company. Hence, they are
excluded from
ÂÂ^
revenue. Excise duty deducted from revenue (gross) is the amount that
is included in the revenue (gross) and not the entire amount of
liability arising during the year.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the applicable interest rate. Interest
income is included under the head "other income" in the statement of
profit and loss.
Dividends
Revenue is recognised when the Company''s right to receive dividend is
established by the balance sheet date.
Income on Fixed Maturity Plan Investments
Income on investments made in the units of fixed maturity plans of
various schemes of mutual funds is recognised based on reasonable
certain yield as at the balance sheet date.
(k) Foreign currency translation
Foreign currency transactions and balances
(i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non- monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange differences
Exchange differences arising on the settlement of monetary items or on
reporting Company''s monetary items at rates different from those at
which they were initially recorded during the year or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise.
(iv) Forward exchange contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/ income over the
life of the contract. Exchange differences on such contracts are
recognized in the statement of profit and loss in the year in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of such forward exchange contract is also recognized as income
or as expense for the year.
(l) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined
contribution scheme.The Company has no obligation, other than the
contribution payable to the provident fund.The Company recognizes
contribution payable to the provident fund scheme as an expenditure,
when an employee renders the related service. If the contribution
payable to the scheme for service received before the balance sheet
date exceeds the contribution already paid, the deficit payable to the
scheme is recognized as a liability after deducting the contribution
already paid. If the contribution already paid exceeds the contribution
due for services received before the balance sheet date, then excess is
recognized as an asset to the extent that the pre payment will lead to,
for example, a reduction in future payment or a cash refund.
Gratuity liability is a defined benefit obligation and is provided for
on the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year. The liability as at the year
end represents the difference between the actuarial valuation of the
gratuity liability of continuing employees and the fair value of the
plan assets with the Life Insurance Corporation of India (LIC) as at
the end of the year. Actuarial gains/losses are immediately taken to
the statement of profit and loss and are not deferred.
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year-end. Actuarial gains/losses are immediately taken to the statement
of profit
Nand loss and are not deferred. The Company presents the entire leave
as a current liability in the balance sheet, since it does not have an
unconditional right to defer its settlement for 12 months after the
reporting date. Where the Company has the unconditional legal and
contractual right to defer the settlement for a period beyond 12
months, the same is presented as non current liability.
(m) Segment reporting
Identification of segments
The Company''s operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(n) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
(o) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and are adjusted to reflect the current best
estimates.
(p) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(q) Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at
bank and cash in hand and short term investments with the original
maturity of three months or less.
(r) Derivative instruments
As per the ICAI Announcement, accounting for derivative contracts,
other than those covered under AS-11, are marked to market on a
portfolio basis, and the net loss is charged to the income statement.
Net gains are ignored.
(s) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. In its
measurement, the Company does not include depreciation and amortization
expense, finance costs and tax expense.
(b) Terms/ rights attached to equity shares
During the year ended 30 June 2014, Rs. 0.15 per share has been
recognized as distribution of interim dividend to equity shareholders
(30 June 2013: Rs.1.5 per share was recognised as distribution of final
dividend to equity shareholders).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
(c) Shares held by holding company
Out of equity shares issued by the Company, shares held by its holding
company are as below:
As per records of the Company, including its register of shareholders/
members and other declarations received from shareholders regarding
beneficial interest, the above shareholding represents both legal and
beneficial ownerships of shares.
* Independent non-promoter trust which holds 35,301,215 equity shares
of the Company has waived off its right to receive interim dividend on
these shares. Accordingly, no dividend was paid on these shares.
** Corporate Dividend Tax on final equity dividend has been paid after
adjusting corporate dividend tax of Rs. 30,141 thousand paid by a
subsidiary company on dividend paid to the Company during the year.
"Indian rupee loan from IndusInd Bank Limited amounting to Rs. 3,413
thousand (Previous year: Nil) carries rate of interest of 11% (Previous
year Nil). This loan is repayble in 47 monthly installments of Rs. 91
thousand each beginning from 21 June 2014. The loan together with
interest and other charges are secured by first charge over the vehicle
purchased out of proceeds of the loan amount ."
Provision for warranties
A provision was being recognized for expected warranty claims on
products sold during last one year. Assumptions used to calculate the
provision for warranties were based on past trend of sales of mobile
handsets and customer service expenses incurred.
2. Computers include fixed assets having gross block of Rs. Nil
(Previous year Rs. 7,290 thousand) and written down value of Rs. Nil
(Previous year Rs. 3,066 thousand), which were held in joint ownership
with others.
Note:
Computer Softwares include fixed assets having gross block of Rs.Nil
(Previous year Rs.18,833 thousand) and written down value of Rs. Nil
(Previous year: Rs. 7,920 thousand), which were held in joint ownership
with others.
** comprising of Freehold Land, Buildings and other fixed assets of Rs.
800 thousand, Rs. 9,272 thousand and Rs, 3,310 thousand respectively
(Previous year Rs. 10,256 thousand, Rs. 16,301 thousand and Rs. 208
thousand respectively)
Margin money deposits given as security
Margin money deposits with a carrying amount of Rs.596,731 thousand (30
June 2013: Rs.975,219) are subject to first charge to secure the letter
of credits/ bill discounting/ overdraft facility for two subsidiaries
of the Company (including one subsidiary of a subsidiary company).
b) Details of employee benefits
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service
or part thereof in excess of six months. The scheme is funded with an
insurance company in the form of a qualifying insurance policy.
The following tables summaries the components of net benefit expense
recognised in the statement of profit and loss and the funded status
and amounts recognised in the balance sheet for the gratuity plans:
Statement of profit and loss
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.
The overall expected rate of return on assets is determined based on
the market prices prevailing on that date, applicable to the year over
which the obligation is to be settled.
Gratuity obligation and plan assets at the end of current year and
previous four years are as follows:
Jun 30, 2013
(a) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
(b) Tangible Fixed assets
Fixed assets are stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any. The cost comprises purchase
price, borrowing costs if capitalization criteria are met and directly
attributable cost of bringing the asset to its working condition for
the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
(c) Depreciation on fixed assets
i) Depreciation is provided using the straight line method as per the
estimated useful lives of the assets estimated by the management, which
results in depreciation rates being equal to the corresponding rates
prescribed under Schedule XIV of the Companies Act, 1956; except for
the following, where the rate of depreciation is higher than the rates
prescribed under Schedule XIV of the Companies Act, 1956.
i) The Company has on January 1, 2013 reassessed the remaining useful
life of certain plant and machinery having gross block of Rs 39,939
thousand as fifteen months and accordingly is depreciating these assets
on straight line basis over the remaining useful life of fifteen
months.
ii) Leasehold improvements are depreciated on straight line basis over
the primary lease period ranging from 2-9 years or its useful life
whichever is lower (Refer Note 40).
iii) All individual assets costing Rs. 5,000 or less are depreciated in
full in the year of addition.
(d) Intangible Fixed assets
Intangible Fixed Assets (Softwares) acquired separately are measured on
initial recognition at cost. Such assets are amortised over their
useful lives on straight line basis not exceeding six years.
(e) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects
current market assessment of the time value of money and risks specific
to the asset.
(f) Leases
Where the Company is lessee
Leases, where the lessor effectively retains substantially all risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight- line basis over the
lease term.
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Statement of Profit and Loss on a
straight-line basis over the lease term. Costs, including depreciation
are recognized as an expense in the Statement of Profit and Loss.
Initial direct costs such as legal costs, brokerage costs, etc. are
recognized immediately in the Statement of Profit and Loss.
(g) Investments
Investments that are readily realisable and intended to be held for not
more than one year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of the investments.
(h) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Ta x Act, 1961 enacted in India. The
tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date.
Deferred income taxes reflects the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and tax laws enacted or
substantively enacted at the reporting date.
Deferred tax liabilities are recognised for all taxable timing
differences. Deferred tax assets are recognised for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profits.
In the situations where the Company is entitled to a tax holiday under
the Income Tax Act, 1961 enacted in India or tax laws prevailing in the
respective tax jurisdictions where it operates, no deferred tax (asset
or liability) is recognized in respect of timing differences which
reverse during the tax holiday period, to the extent the Company''s
gross total income is subject to the deduction during the tax holiday
period. Deferred tax in respect of timing differences which reverse
after the tax holiday period is recognised in the year in which timing
differences originate. However, the Company restricts recognition of
deferred tax assets to the extent that it has become reasonably certain
or virtually certain, as the case may be, that sufficient future
taxable income will be available against which such deferred assets can
be realized. For recognition of deferred taxes, the timing differences
which originate first are considered to reverse first.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax assets to the
extent that it has become reasonably certain or virtually certain, as
the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of a
deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
asset can be realised. Any such write-down is reversed to the extent
that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the period in which the Company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement." The
Company reviews the "MAT credit entitlement" asset at each reporting
date and writes down the asset to the extent the Company does not have
convincing evidence that it will pay normal tax during the specified
period.
(i) Inventories
Raw materials, components, stores and spares are valued at lower of
cost and net realizable value. However, materials and other items held
for use in the production of inventories are not written down below
cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. Cost is determined on transaction
moving weighted average method.
Work-in-progress and finished goods(manufactured) are valued at lower
of cost and net realizable value. Cost includes direct materials
(determined on transaction moving weighted average basis) and labour
and an appropriate proportion of manufacturing overheads based on
normal operating capacity. Cost of finished goods includes excise duty.
Traded Goods are valued at lower of cost and net realizable value. Cost
is determined on transaction moving weighted average method.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(j) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognized:
Sale of goods
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer, which coincides with
their delivery to the customers. The Company collects sales taxes and
value added taxes (VAT) on behalf of the government and, therefore,
these are not economic benefits flowing to the Company. Hence, they are
excluded from revenue. Excise duty deducted from revenue (gross) is the
amount that is included in the revenue (gross) and not the entire
amount of liability arising during the year.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the applicable interest rate. Interest
income is included under the head "other income" in the statement of
profit and loss.
Dividends
Revenue is recognised when the Company''s right to receive dividend is
established by the balance sheet date.
Income on Fixed Maturity Plan Investments
Income on investments made in the units of fixed maturity plans of
various schemes of mutual funds is recognised based on reasonable
certain yield as at the balance sheet date.
(k) Foreign currency translation
Foreign currency transactions and balances
(i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non- monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange differences
Exchange differences arising on the settlement of monetary items or on
reporting Company''s monetary items at rates different from those at
which they were initially recorded during the period or reported in
previous financial statements, are recognised as income or as expenses
in the period in which they arise.
(iv) Forward exchange contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/ income over the
life of the contract. Exchange differences on such contracts are
recognized in the statement of profit and loss in the period in which
the exchange rates change. Any profit or loss arising on cancellation
or renewal of such forward exchange contract is also recognized as
income or as expense for the year.
(l) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined
contribution scheme.The Company has no obligation, other than the
contribution payable to the provident fund.The Company recognizes
contribution payable to the provident fund scheme as an expenditure,
when an employee renders the related service. If the contribution
payable to the scheme for service received before the balance sheet
date exceeds the contribution already paid, the deficit payable to the
scheme is recognized as a liability after deducting the contribution
already paid. If the contribution already paid exceeds the contribution
due for services received before the balance sheet date, then excess is
recognized as an asset to the extent that the pre payment will lead to,
for example, a reduction in future payment or a cash refund.
Gratuity liability is a defined benefit obligation and is provided for
on the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year. The liability as at the year
end represents the difference between the actuarial valuation of the
gratuity liability of continuing employees and the fair value of the
plan assets with the Life Insurance Corporation of India (LIC) as at
the end of the year. Actuarial gains/losses are immediately taken to
the statement of profit and loss and are not deferred.
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year-end. Actuarial gains/losses are immediately taken to the statement
of profit and loss and are not deferred. The Company presents the
entire leave as a current liability in the balance sheet, since it does
not have an unconditional right to defer its settlement for 12 months
after the reporting date. Where the Company has the unconditional legal
and contractual right to defer the settlement for a period beyond 12
months, the same is presented as non current liability.
(m) Segment reporting
Identification of segments
The Company''s operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(n) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
(o) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and are adjusted to reflect the current best
estimates.
(p) Warranty
Warranty costs on mobile handsets are provided on an accrual basis,
taking into account the past trend of warranty claims received by the
Company, to settle the obligation at the balance sheet date.
(q) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(r) Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at
bank and cash in hand and short term investments with the original
maturity of three months or less.
(s) Derivative instruments
As per the ICAI Announcement, accounting for derivative contracts,
other than those covered under AS-11, are marked to market on a
portfolio basis, and the net loss is charged to the income statement.
Net gains are ignored.
(t) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. In its
measurement, the Company does not include depreciation and amortization
expense, finance costs and tax expense.
Jun 30, 2012
(a) Change in accounting policy
Presentation and disclosure of financial statements
During the period ended 30 June 2012, the Revised Schedule VI notified
under the Companies Act 1956, has become applicable to the Company, for
preparation and presentation of its financial statements. Except
accounting for dividend on investments in subsidiary companies (see
below), the adoption of Revised Schedule VI does not impact recognition
and measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current period.
Dividend on investment in subsidiary companies
Till the year ended 31 March 2011, the Company, in accordance with the
pre-revised Schedule VI requirement, had a policy of recognizing
dividend proposed by subsidiary companies after the reporting date in
the current year's statement of profit and loss if such dividend
pertained to the period ending on or before the reporting date. The
Revised Schedule VI, applicable for financial years commencing on or
after I April 2011, does not contain this requirement. Hence, to comply
with AS 9 Revenue Recognition, the Company has changed its accounting
policy for recognition of dividend income from subsidiary companies.
In accordance with the revised policy, the Company recognizes dividend
as income only when the right to receive the same is established by the
reporting date.
Had the Company continued to use the earlier policy of recognizing
dividend, the credit to the statement of profit and loss after tax for
the current period would have been higher by Rs.176,255 thousand and
other current assets would correspondingly have been higher by
Rs.176,255 thousand.
(b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
(c) Tangible Fixed assets
Fixed assets are stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any.The cost comprises purchase
price, borrowing costs if capitalization criteria are met and directly
attributable cost of bringing the asset to its working condition for
the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price. Gains or losses arising from
derecognition of fixed assets are measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are
recognized in the statement of profit and loss when the asset is
derecognized.
(d) Depreciation on fixed assets
i) Depreciation is provided using the straight line method as per the
estimated useful lives of the assets estimated by the management, which
results in depreciation rates being equal to the corresponding rates
prescribed under Schedule XIV of the Companies Act, 1956; except for
the following, where the rate of depreciation is higher than the rates
prescribed under Schedule XIV of the Companies Act, 1956.
ii) Leasehold improvements are depreciated on straight line basis over
the primary lease period ranging from 2-9 years or its useful life
whichever is lower.
iii) All individual assets costing Rs. 5,000 or less are depreciated in
full in the year of addition.
(e) Intangible Fixed assets
Intangible Fixed Assets (Softwares) acquired separately are measured on
initial recognition at cost. Such assets are amortised over their
useful lives on straight line basis not exceeding six years.
(f) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects
current market assessment of the time value of money and risks specific
to the asset.
(g) Leases
Where the Company is lessee
Leases, where the lessor effectively retains substantially all risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight- line basis over the
lease term.
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Statement of Profit and Loss on a
straight-line basis over the lease term. Costs, including depreciation
are recognized as an expense in the Statement of Profit and Loss.
Initial direct costs such as legal costs, brokerage costs, etc. are
recognized immediately in the Statement of Profit and Loss.
(h) Investments
Investments that are readily realisable and intended to be held for not
more than one year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of the investments.
(i) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act, I96I enacted in India. The
tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date.
Deferred income taxes reflects the impact of timing differences between
taxable income and accounting income originating during the current
period and reversal of timing differences for the earlier years.
Deferred tax is measured using the tax rates and tax laws enacted or
substantively enacted at the reporting date.
Deferred tax liabilities are recognised for all taxable timing
differences. Deferred tax assets are recognised for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profits.
In the situations where the Company is entitled to a tax holiday under
the Income Tax Act, I96I enacted in India or tax laws prevailing in the
respective tax jurisdictions where it operates, no deferred tax (asset
or liability) is recognized in respect of timing differences which
reverse during the tax holiday period, to the extent the Company's
gross total income is subject to the deduction during the tax holiday
period. Deferred tax in respect of timing differences which reverse
after the tax holiday period is recognised in the year in which timing
differences originate. However, the Company restricts recognition of
deferred tax assets to the extent that it has become reasonably certain
or virtually certain, as the case may be, that sufficient future
taxable income will be available against which such deferred assets can
be realized. For recognition of deferred taxes, the timing differences
which originate first are considered to reverse first.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax assets to the
extent that it has become reasonably certain or virtually certain, as
the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of a
deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
asset can be realised. Any such write-down is reversed to the extent
that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the period in which the Company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement."
The Company reviews the "MAT credit entitlement" asset at each
reporting date and writes down the asset to the extent the Company does
not have convincing evidence that it will pay normal tax during the
specified period.
(j) Inventories
Raw materials, components, stores and spares are valued at lower of
cost and net realizable value. However, materials and other items held
for use in the production of inventories are not written down below
cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. Cost is determined on transaction
moving weighted average method.
Work-in-progress and finished goods(manufactured) are valued at lower
of cost and net realizable value. Cost includes direct materials
(determined on transaction moving weighted average basis) and labour
and an appropriate proportion of manufacturing overheads based on
normal operating capacity. Cost of finished goods includes excise duty.
Traded Goods are valued at lower of cost and net realizable value. Cost
is determined on transaction moving weighted average method.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(k) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognized:
Sale of goods
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer, which coincides with
their delivery to the customers. The Company collects sales taxes and
value added taxes (VAT) on behalf of the government and, therefore,
these are not economic benefits flowing to the Company. Hence, they are
excluded from revenue. Excise duty deducted from revenue (gross) is the
amount that is included in the revenue (gross) and not the entire
amount of liability arising during the period.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the applicable interest rate. Interest
income is included under the head "other income" in the statement
of profit and loss.
Dividends
Revenue is recognised when the Company's right to receive dividend is
established by the balance sheet date.
Income on Fixed Maturity Plan Investments
Income on investments made in the units of fixed maturity plans of
various schemes of mutual funds is recognised based on reasonable
certain yield as at the balance sheet date.
(l) Foreign currency translation
Foreign currency transactions and balances
(i) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are retranslated using the exchange
rate prevailing at the reporting date. Non- monetary items, which are
measured in terms of historical cost denominated in a foreign currency,
are reported using the exchange rate at the date of the transaction.
Non-monetary items, which are measured at fair value or other similar
valuation denominated in a foreign currency, are translated using the
exchange rate at the date when such value was determined.
(iii) Exchange differences
Exchange differences arising on the settlement of monetary items or on
reporting Company's monetary items at rates different from those at
which they were initially recorded during the period or reported in
previous financial statements, are recognised as income or as expenses
in the period in which they arise.
(iv) Forward exchange contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/ income over the
life of the contract. Exchange differences on such contracts are
recognized in the statement of profit and loss in the period in which
the exchange rates change. Any profit or loss arising on cancellation
or renewal of such forward exchange contract is also recognized as
income or as expense for the period.
(m) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined
contribution scheme. The contributions to the provident fund are
charged to the statement of profit and loss for the period when the
contributions are due. The Company has no obligation, other than the
contribution payable to the provident fund.
Gratuity liability is a defined benefit obligation and is provided for
on the basis of an actuarial valuation on projected unit credit method
made at the end of each financial period. The liability as at the
period end represents the difference between the actuarial valuation of
the gratuity liability of continuing employees and the fair value of
the plan assets with the Life Insurance Corporation of India (LIC) as
at the end of the period. Actuarial gains/losses are immediately taken
to the statement of profit and loss and are not deferred.
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward
beyond twelve months, as long-term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
year-end. Actuarial gains/losses are immediately taken to the statement
of profit and loss and are not deferred. The Company presents the
entire leave as a current liability in the balance sheet, since it does
not have an unconditional right to defer its settlement for 12 months
after the reporting date.
(n) Segment reporting Identification of segments
The Company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate. Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(o) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(p) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and are adjusted to reflect the current best
estimates.
(q) Warranty
Warranty costs on mobile handsets are provided on an accrual basis,
taking into account the past trend of warranty claims received by the
Company, to settle the obligation at the balance sheet date.
(r) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(s) Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at
bank and cash in hand and short term investments with the original
maturity of three months or less.
(t) Derivative instruments
As per the ICAI Announcement, accounting for derivative contracts,
other than those covered under AS-II, are marked to market on a
portfolio basis, and the net loss is charged to the income statement.
Net gains are ignored.
(u) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, I956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss.The Company
measures EBITDA on the basis of profit/ (loss) from continuing
operations. In its measurement, the Company does not include
depreciation and amortization expense, finance costs and tax expense.
Mar 31, 2011
A) Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies Accounting
Standard Rules, 2006 (as amended), and the relevant provisions of the
Companies Act, 1956. The financial statements have been prepared under
the historical cost convention on an accrual basis. The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
year end. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates.
c) Fixed Assets
Fixed assets are stated at cost, less accumulated
depreciation/amortisation and impairment losses, if any. Cost comprises
the purchase price and any attributable cost of bringing the asset to
its working condition for its intended use. Borrowing costs relating to
acquisition of fixed assets which takes substantial period of time to
get ready for its intended use are also included to the extent they
relate to the period till such assets are ready to be put to use.
d) Depreciation / Amortisation
i) Depreciation is provided using the straight line method as per the
useful lives of the assets estimated by the management, or at the rates
prescribed under Schedule XIV of the Companies Act, 1956, whichever is
higher. In the following cases, the depreciation rates are higher than
the corresponding rates prescribed in Schedule XIV of the Companies
Act, 1956:
Rates (SLM) Sch XIV Rates(SLM)
Technical equipments (included in Plant and Machinery) 10.00% 4.75%
Building at Baddi in the State of Himachal Pradesh 7.27% 3.34%
ii) Leasehold improvements are depreciated over the primary lease
period or its useful life whichever is lower.
iii) All individual assets costing Rs. 5,000 or less are depreciated in
full in the year of addition.
iv) Intangible Assets (Software's) are amortised over their useful
lives not exceeding six years.
e) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value using a preÃtax discount rate that reflects
current market assessment of the time value of money and risks specific
to the asset.
f) Leases
Where the Company is the lessee
Leases, where the lessor effectively retains substantially all risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straightÃline basis over the lease
term.
Where the Company is lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Profit and Loss Account on a straightÃline
basis over the lease term. Costs, including depreciation are recognized
as an expense in the Profit and Loss Account. Initial direct costs such
as legal costs, brokerage costs, etc. are recognized immediately in the
Profit and Loss Account.
g) Investments
Investments that are readily realisable and intended to be held for not
more than one year are classified as current investments. All other
investments are classified as longÃterm investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. LongÃterm investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of the investments.
h) Inventories
Inventories are valued as follows:
Raw materials, service components and spares Lower of cost and net
realizable value.
However, materials and other items held for use in the production of
inventories are not written down below cost if the finished products in
which they will be incorporated are expected to be sold at or above
cost. Cost is determined on transaction moving weighted average method.
WorkÃinÃprogress and finished goods (Manufactured)
Lower of cost and net realizable value.
Cost includes direct materials (determined on transaction moving
weighted average basis) and labour and an appropriate proportion of
manufacturing overheads based on normal operating capacity.
Traded Goods
Lower of cost and net realizable value.
Cost is determined on transaction moving weighted average method.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
i) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of Goods
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer which coincides with
their delivery to the customers. Turnover is net of trade discount etc.
Excise Duty deducted from turnover (gross) are the amount that is
included in the amount of turnover (gross) and not the entire amount of
liability that arose during the year.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividend
Revenue is recognised when the shareholder's right to receive dividend
is established by the balance sheet date.
Income on Fixed Maturity Plan Investments
Income on investments made in the units of fixed maturity plans of
various schemes of mutual funds is recognised based on reasonable
certain yield as at the balance sheet date.
j) Foreign Currency Transactions
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate.
NonÃmonetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting Company's monetary items at rates different from those at
which they were initially recorded during the year or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise.
(iv) Forward exchange contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
year.
k) Retirement and other employee benefits
(i) Provident fund is a defined benefit obligation. The Company has a
private provident fund trust to whom provident fund contributions are
made as and when due. There are no other obligations other than the
contribution payable to the trust except where the deficit, arises in
making the statutory payment by the Trust to its members, is borne by
the Company in terms of the provisions under Employee Provident Fund &
Miscellaneous Provisions Act, 1952.
(ii) Gratuity liability is a defined benefit obligation and is provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year. The liability as at the
year end represents the difference between the actuarial valuation of
the gratuity liability of continuing employees and the fair value of
the plan assets with the Life Insurance Corporation of India (LIC) as
at the end of the year.
(iii) Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method.
(iv) Actuarial gains/losses are immediately taken to the Profit and
Loss Account and are not deferred.
l) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act, 1961. Deferred income taxes
reflect the impact of current year's timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years. Deferred tax is measured based on the tax
rates and the tax laws enacted or substantively enacted at the balance
sheet date. Deferred tax assets and deferred tax liabilities are
offset, if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred tax assets and
deferred tax liabilities relate to the taxes on income levied by same
governing taxation laws. Deferred tax assets are recognised only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. In situations where the Company has unabsorbed
depreciation or carry forward of tax losses, all deferred tax assets
are recognised only if there is virtual certainty supported by
convincing evidence that such deferred tax assets can be realised
against future taxable profits. At each balance sheet date, the Company
reassesses unrecognised deferred tax assets. It recognises
unrecognised deferred tax assets to the extent that it has become
reasonably or virtually certain as the case may be, that sufficient
future taxable income will be available against which such deferred tax
assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writesÃdown the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such writeÃdown is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the Company will pay normal income tax
during the specified period. In the year in which the Minimum
Alternative tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in guidance Note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the profit and loss account and
shown as MAT Credit Entitlement. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
m) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
n) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and are adjusted to reflect the current best
estimates.
o) Warranty
Warranty costs on mobile handsets are provided on an accrual basis on
the sales under warranty, taking into account the past trend of
warranty claims received by the Company, to settle the obligation at
the balance sheet date.
p) Segment Reporting Policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
q) Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at
bank and cash in hand and short term investments with the original
maturity of three months or less.
r) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs
are expensed in the year they occur. Borrowing costs consist of
interest and other costs that an entity incurs in connection with the
borrowing of funds.
s) Derivative Instruments
As per the ICAI Announcement, accounting for derivative contracts,
other than those covered under ASÃ11, are marked to market on a
portfolio basis, and the net loss is charged to the income statement.
Net gains are ignored.
Mar 31, 2010
A) Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies Accounting
Standard Rules, 2006 (as amended), and the relevant provisions of the
Companies Act, 1956. The financial statements have been prepared under
the historical cost convention on an accrual basis. The accounting
policies have been consistently applied by the Company, and except for
the change in accounting policy discussed more fully below, are
consistent with those used in the previous year.
b) Change in Accounting Policy
During the year with effect from January 8, 2010, the Company has
implemented SAP system under ERP Platform. Accordingly, the Company has
changed its method of valuation of inventory of traded goods, raw
materials, service components and spares from monthly weighted average
method to transaction moving weighted average method. The impact of
change has not been ascertained. However the same is not likely to have
a material impact on the profit of the Company for the current year.
c) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon managementÃs best
knowledge of current events and actions, actual results could differ
from these estimates.
d) Fixed Assets
Fixed assets are stated at cost, less accumulated
depreciation/amortisation and impairment losses, if any. Cost comprises
the purchase price and any attributable cost of bringing the asset to
its working condition for its intended use. Borrowing costs relating to
acquisition of fixed assets which takes substantial period of time to
get ready for its intended use are also included to the extent they
relate to the period till such assets are ready to be put to use.
ii) Leasehold improvements are depreciated over the primary lease
period or its useful life whichever is lower. iii) All individual
assets costing Rs. 5,000 or less are depreciated in full in the year of
addition. iv) Intangible Assets (SoftwareÃs) are amortised over their
useful lives not exceeding six years.
f) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assetÃs net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
g) Leases
Where the Company is the lessee
Leases, where the lessor effectively retains substantially all risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straightà line basis over the lease
term.
Where the Company is lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Profit and Loss Account on a straightÃline
basis over the lease term. Costs, including depreciation are recognized
as an expense in the Profit and Loss Account. Initial direct costs such
as legal costs, brokerage costs, etc. are recognized immediately in the
Profit and Loss Account.
h) Investments
Investments that are readily realisable and intended to be held for not
more than one year are classified as current investments. All other
investments are classified as longÃterm investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. LongÃterm investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of the investments.
j) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of Goods
Revenue is recognised when the signifi cant risks and rewards of
ownership of the goods have passed to the buyer, which coincides with
their delivery to the customers.
Revenue from Maintenance Contracts
Revenues from maintenance contracts are recognised proÃrata over the
period of the contract as and when services are rendered.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividend
Revenue is recognised when the shareholderÃs right to receive dividend
is established by the balance sheet date.
k) Foreign Currency Transactions
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate.
NonÃmonetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting CompanyÃs monetary items at rates different from those at
which they were initially recorded during the year or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise.
(iv) Forward exchange contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
year.
l) Retirement and other employee benefits
(i) Provident fund is a defined benefit obligation. The Company has a
private provident fund trust to whom provident fund contributions are
made as and when due.
(ii) Gratuity liability is a defined benefit obligation and is provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year / period. The liability
as at the year / period end represents the difference between the
actuarial valuation of the gratuity liability of continuing employees
and the fair value of the plan assets with the Life Insurance
Corporation of India (LIC) as at the end of the year / period.
(iii) Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method.
(iv) Actuarial gains/losses are immediately taken to the Profit and
Loss Account and are not deferred.
m) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act, 1961. Deferred income taxes
reflect the impact of current yearÃs timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years / period. Deferred tax is measured based
on the tax rates and the tax laws enacted or substantively enacted at
the balance sheet date. Deferred tax assets and deferred tax
liabilities are offset, if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred
tax assets and deferred tax liabilities relate to the taxes on income
levied by same governing taxation laws. Deferred tax assets are
recognised only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company
has unabsorbed depreciation or carry forward of tax losses, all
deferred tax assets are recognised only if there is virtual certainty
supported by convincing evidence that such deferred tax assets can be
realised against future taxable profits. At each balance sheet date,
the Company reassesses unrecognised deferred tax assets. It recognises
unrecognised deferred tax assets to the extent that it has become
reasonably or virtually certain as the case may be, that sufficient
future taxable income will be available against which such deferred tax
assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writesÃdown the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such writeÃdown is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
n) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year / period attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year /
period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year / period attributable to equity
shareholders and the weighted average number of shares outstanding
during the year / period are adjusted for the effects of all dilutive
potential equity shares.
o) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and are adjusted to reflect the current best
estimates.
p) Warranty
Warranty costs are provided on accrual basis on the total sales under
warranty on the following basis:
Telecommunications - Mobiles
Warranty costs are provided on an accrual basis, taking into account
the past trend of warranty claims received by the Company, to settle
the obligation at the balance sheet date.
Information Technology
Warranty costs are provided at the specifi c rates agreed with the
authorised service providers.q) Segment Reporting Policies
Identifi cation of segments
The CompanyÃs operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on geographical location of the customers.
Intersegment Transfers
The Company generally accounts for intersegment sales and transfers as
if the sales or transfers were to third parties at current market
prices.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
The unallocated items include general corporate income and expense
items which are not allocated to any business segment.
r) Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at
bank and cash in hand and short term investments with the original
maturity of three months or less.
s) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the year they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds.
t) Derivative Instruments
As per the ICAI Announcement, accounting for derivative contracts,
other than those covered under ASÃ11, are marked to market on a
portfolio basis, and the net loss is charged to the income statement.
Net gains are ignored.
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