Mar 31, 2018
1. During the year, the management has completed the process of valuation of its inventories to be in line with the requirements of Ind AS 2 - Valuation of Inventories. The exercise has been carried out by adopting purchase price data available with the company to arrive at the Weighted Average Price as also valuing the refurbished stocks adopting certain prudent estimates. The value of such inventory computed on weighted average basis is with respect to maintenance division of the Company. Further, based on data with respect to the
pattern of usage of inventories available with the company, the management has developed various estimates to determine the net realizable value of these inventories. The revised weighted average prices, estimates and assumptions were developed in the current year and that similar relevant data is not available for making reliable estimates for the earlier years for comparison purposes. The management believes that it is impracticable to recreate the information required to facilitate a retrospective restatement. Accordingly, the impact relating to this exercise, as at 31 March 2018, amounting to '' 1,566 is disclosed as exceptional items.
2. The Company has invested '' 790 in a subsidiary named Accel IT Resources Limited (AITRL). Further, the Company has advanced loan (including interest) amounting to '' 622. The net worth of AITRL is negative as at 31st March 2018. The management of the subsidiary has been revamped to restructure operations to optimize revenue generation by investing in technology and adding customer base. A new business plan has been put in place and the subsidiary has got the training centres accredited to National Skill Development Corporation (NSDC). The management of the subsidiary and the company is of the view that these business plans will help the company grow business and improve the financial position of the subsidiary thereby enabling the recovery of these investments and loans given along with interest. Consequently the Company Management is of the view that the investment and the loan will be recovered, hence no provision needs to be made for the same.
3.Related Parties
a) Names of related parties and nature of relationship Name of related party Nature of relationship
CAC Holdings Corporation, Tokyo, Japan Holding company
Accel Limited, Chennai Promoter company (till 21 August 2017)
CAC Corporation, Tokyo, Japan Fellow subsidiary
Accel Systems & Technologies Pte Limited Subsidiary (till 10 July 2017)
Accel Frontline DMCC, Dubai Subsidiary
Accel Japan Kabushiki Kaisha, Japan Subsidiary
Network Programs (Japan), Inc., USA Subsidiary (till 31 March 2018)
Network Programs (USA) Inc., USA Subsidiary
Accel North America Inc., USA Subsidiary
Accel IT Resources Limited, India Subsidiary
Accel Technologies Ltd, UK Subsidiary
Accel Transmatic Limited, Chennai Subsidiary of promoter company (till 21 August 2017)
Malcolm F. Mehta, Chairman and Chief Executive Officer Key Management Personnel (KMP)
R Neelakantan, Chief Financial Officer Key Management Personnel (KMP) (till 29 November 2017)
Murali Gopalakrishnan, Chief Financial Officer Key Management Personnel (KMP) (from 7 December 2017)
S Sundaramurthy, Company Secretary Key Management Personnel (KMP)
R RamarajIndependent director (till 10 October 2017)
Raj Khalid Independent director
Bin Cheng Independent director
Rajesh Ramniklal Muni Independent director (from 6 May 2017)
Ruchi Naithani Independent director
4. Fair value measurement
Fair value measurement hierarchy
The Company records certain financial assets and financial liabilities at fair value on a recurring basis. The Company determines fair values based on the price it would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.
The Company holds certain financial assets which must be measured using the fair value hierarchy and related valuation methodologies. The guidance specifies a hierarchy of valuation techniques based on whether the inputs to each measurement are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company''s assumptions about current market conditions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Financial assets and financial liabilities measured at fair value in the balance sheet are grouped into three Levels of fair value hierarchy. These levels are based on the observability of significant inputs to the measurement, as follows:
- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
- Level 3: Unobservable inputs for the asset or liability.
The following table shows the Levels within the hierarchy of financial and non-financial assets and liabilities measured at fair value on a recurring basis at 31 March 2018, 31 March 2017 and 01 April 2016 :
The fair values of the Company''s interest-bearing borrowings and loans are determined under amortized cost method using discount rate that reflects the issuer''s borrowing rate as at the end of the reporting period. These rates are considered to reflect the market rate of interest and hence the carrying value are considered to be at fair value.
Loans, cash and bank balances, trade receivables, other financial assets, trade payables and other financial liabilities have fair values that approximate to their carrying amounts due to their short-term nature.
5. Financial risk management
The Company''s principal financial liabilities comprise of loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its and group companies operations. The Company''s principal financial assets include loans, trade and other receivables, investments, cash and deposits that derive directly from its operations.
The Company is exposed to market risk, interest rate risk, foreign currency risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management assesses the financial risks and the appropriate financial risk governance framework in accordance with the Company''s policies and risk objectives. The Board of Directors review and agree on policies for managing each of these risks, which are summarized below.
a) Market risk
The company is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk and certain other price risks, which results from both its operation and investing activities.
b) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates are managed by borrowing at fixed interest rates. During the year Company did not have any floating rate borrowings expect for the borrowings from the Holding Company which is charged at LIBOR 4%.
c) Interest rate sensitivity
The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of /- 1% for the year ended 31 March 2018 (31 March 2017: /- 1%, 1 April 2016: /- 1%). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.
Currency risk (or foreign exchange risk) arises on financial instruments that are denominated in a foreign currency, i.e. in a currency other than the functional currency in which they are measured. For the purpose of this disclosure, currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency. The following table illustrates the sensitivity of profit and equity in regards to the Company''s financial assets and financial liabilities and the USD/INR exchange rate, AED/INR exchange rate and GBP/INR exchange rate , ''all other things being equal''. It assumes a /- 1% change of the USD/INR exchange rate for the year ended at 31 March 2018 (31 March 2017: 1%), /- 1% change of the AED/INR exchange rate for the year ended 31 March 2018 (31 March 2017: 1%) and a /- 1% change is considered for the GBP/ INR exchange rate for the year ended at 31 March 2018 (31 March 2017: 1%).
If the INR had strengthened against the USD by 1% during the year ended 31 March 2018 (31 March 2017: 1%), AED by 1% during the year edned 31 March 2018 (31 March 2017: 1%) and GBP by 1% during the year ended 31 March 2018 (31 March 2017: 1%) respectively then this would have had the following impact profit before tax and equity before tax:
If the INR had weakened against the USD by 1% during the year ended 31 March 2018 (31 March 2017: 1%) and EUR by 1% during the year ended 31 March 2018 (31 March 2017: 1%) respectively then there would an equal but opposite effect on the above currencies to the amount shown above, on the basis that all other variables remain constant.
e) Credit risk
Credit risk is the risk that a counterparty fails to discharge an obligation to the Company. The Company is exposed to this risk for various financial instruments, for example trade receivables, placing deposits, investment etc. the Company''s maximum exposure to credit risk is limited to the carrying amount of financial assets recognized at reporting period, as summarized below:
The Company continuously monitors defaults of customers and other counterparties, identified either individually or by the Company, and incorporates this information into its credit risk controls. The Company''s policy is to transact only with counterparties who are highly creditworthy which are assessed based on internal due diligence parameters.
In respect of trade receivables, the Company is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various geographical areas. Based on historical information about customer default rates management consider the credit quality of trade receivables that are not past due or impaired to be good.
The credit risk for cash and cash equivalents and fixed deposits are considered negligible, since the counterparties are reputable banks with high quality external credit ratings.
Other financial assets mainly comprises of rental deposits and security deposits which are given to landlords or other governmental agencies in relation to contracts executed and are assessed by the Company for credit risk on a continuous basis.
f) Liquidity risk
Liquidity risk is that the Company might be unable to meet its obligations. The Company manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business. The data used for analyzing these cash flows is consistent with that used in the contractual maturity analysis below. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on a monthly, quarterly, and yearly basis depending on the business needs. Net cash requirements are compared to available borrowing facilities in order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient over the lookout period.
The Company''s objective is to maintain cash and bank''s short term credit facilities to meet its liquidity requirements for 30-day periods at a minimum. This objective was met for the reporting periods. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities.
The Company considers expected cash flows from financial assets in assessing and managing liquidity risk, in particular its cash resources and trade receivables. Cash flows from trade receivables are all contractually due within twelve months except for retention and long term trade receivables which are governed by the relevant contract conditions.
The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of short-term borrowings. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders.
39. First-time adoption of Ind AS
These are the Company''s first financial statements prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2017, the Company prepared its financial statements in accordance with Companies (Accounting Standard) Rules, 2006, notified under section 133 of the Act and other relevant provisions of the Act (Previous GAAP). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on or after 31 March 2018, together with the comparative period data as at and for the year ended 31 March 2017. This note explains the principal adjustments made by the Company in restating its statement of financial position as at 01 April 2016 and its previously published financial statements as at and for the year ended 31 March 2017 under previous GAAP
a) First time adoption exemptions applied
Upon transition, Ind AS 101 permits certain exemptions from full retrospective application of Ind AS. The Company has applied the mandatory exceptions and certain optional exemptions, as set out below:
Mandatory exceptions adopted by the Company
(i) De-recognition of financial assets and liabilities
The de-recognition criteria of Ind AS 109 Financial Instruments has been applied prospectively for transactions occurring on or after the date of transition to Ind AS. Non-derivative financial assets and non-derivative financial liabilities derecognized before date of transition under previous GAAP are not recognized on the opening Ind AS balance sheet.
(ii) Estimates
Hindsight is not used to create or revise estimates. The estimates made by the Company under previous GAAP were not revised for the application of Ind AS except where necessary to reflect any differences in accounting policies or errors.
(iii) Classification and measurement of financial assets
Ind AS 101 requires an entity to assess the classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS. The Company has elected to apply this exemption to its financial assets.
Optional exemptions availed by the Company
(i) Property, Plant and Equipment
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. The Company has elected to use carrying value under previous GAAP as the deemed cost on the date of transition to Ind AS for all property, plant and equipment (including intangible assets). The Company has elected to regard those values of property as deemed cost at the date of the transition since they were broadly comparable to fair value.
(ii) Business combination
Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.
The company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.
(iii) Investment in subsidiaries
Investment in subsidiaries are measured at the carrying value under previous GAAP on the date of transition to Ind AS. These carrying value under previous GAAP are considered to be the deemed cost as at the date of transition.
a) Defined benefit obligation
Both under previous GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under previous GAAP, the entire cost, including actuarial gains and losses, are charged to statement of profit and loss. Under Ind-AS, 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 recognized immediately in the balance sheet with a corresponding debit or credit to other equity through other comprehensive income.
b) Other comprehensive income
Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP
c) Excise Duty
Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expense. This change has resulted in an increase of total revenue and total expense for the year ended 31 March 2017 by Rs, 43. There is no impact on the total equity and profit.
d) Financial assets
Under Ind AS, financial assets other than receivables having a fixed maturity period are to be measured at fair value less transaction costs under Ind AS 109. The Net present value of cash flows which are receivable as a contractual right is considered to be the "fair value" of the financial instrument. The rate used for discounting the rental deposits is the risk free government bond rate as on reporting date. The difference between the restated value and the carrying amount has been adjusted to the opening reserves. As per Ind AS 113, paragraphs B13-30 specify discount rate adjustment techniques which have been used for fair valuing the deposits having fixed maturity period. Under the previous GAAP, these financial assets were valued as the sum of cash flows receivable during their period of life.
e) Financial liabilities
Franchisee deposits are discounted using the risk free government bond rates and the difference between the restated value and the carrying value is adjusted to the opening reserves. As per Ind AS 113, paragraphs B13-30 specify discount rate adjustment techniques which have been used for fair valuing the franchisee deposits having fixed maturity period. Under the previous GAAP, these financial liabilities were valued as the sum of cash flows payable during their period of life.
40 Fair value
42 Segment reporting
The Company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with Ind AS 108, Operating segments, the Company has disclosed the segment information in the consolidated financial statements.
6. Commitments
The Company did not have any capital commitments as at the balance sheet data (Previous year: Nil). Other commitments are cancellable at the option of the company and hence not disclosed.
7. In terms of the Settlement Agreement and Release dated March 15, 2017 entered into between Accel Frontline Limited (''the Company''), CAC Holdings Corporation, Japan (the current promoter) and Accel Limited, Mr N R Panicker and Accel Systems Group Inc, (the erstwhile promoter group of Accel Frontline Limited) 44,64,279 shares (representing 15% of the shareholding of the company) held by the erstwhile promoter group was transferred by such erstwhile promoter group to a Trust between 21st July 2017 and 25th August 2017. The Company does not control this trust including the decisions relating to dealing with these shares. However, the Company is the end beneficiary only of the consideration if and when the shares are sold by the trustees.
Mar 31, 2016
d) Terms/ rights attached to equity shares
The Company has one class of equity shares having a par value of '' 10 per share. Each shareholder is eligible for one vote per share held. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting, except interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion to their share holding.
e) The Company has achieved the Minimum Public Shareholding (MPS) requirements as stipulated by the listing agreement during the year. The Company was required to comply with the MPS requirement by 31 March 2015 as per the directions issued by Securities and Exchange Board of India (SEBI), whereas the same has been complied with on 12 August 2015 for which the Company wrote to SEBI and obtained an order dated 18 March 2016 revoking all earlier directions
a) The loans have been availed for acquiring certain business assets and are secured by hypothecation of specific assets purchased out of such loans. The loans are repaid in equated monthly installments over 60 months from date of loan and carry interest rate between 10% to 15% per annum . Also, refer note 12(v) .
The details of lease commitments in terms of minimum lease payments are as follows:
b. Represents loan availed from Life Insurance Corporation of India, repayable at the time of maturity of the policy or adjustment with maturity value of the policy and is secured against the keyman insurance policy placed with them, which is fully paid up.
c. The loans and advances from related parties represents loan from the holding company, CAC Holding Corporations, to the tune of Rs. 3,902 (As at 31 March 2015: 3,649) with an interest rate of 4.5 % 6 months LIBOR rate, per annum; the entire amount being repayable in 2021-22 and from Accel Limited to the tune of Rs. 1,366 (As at 31 March 2015: Rs. 1,366) with an interest rate of 11% per annum, the entire amount being repayable in 2019-20. Also, refer note 37(c).
a) Employee benefits
i) Gratuity
In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("the Gratuity Plan") covering eligible employees. The Gratuity Plan provides for a lump sum payment to vested employees on retirement (subject to completion of five years of continuous employment), death, incapacitation or termination of employment that are based on last drawn salary and tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation on the reporting date and the Company makes annual contribution to the gratuity fund maintained by Life Insurance Corporation.
A provision is recognized for expected warranty claims on supply of goods, based on past experience of level of repairs and returns. The current and non-current classification of the provision is made based on the remaining warranty period of the goods supplied as at the balance sheet date. The assumptions used to calculate the provision for warranties are based on the Company''s current status of goods supplied that are under warranty and information available about expenditure more probable to be incurred based on the Company''s warranty terms which provides for a warranty period of about 36 months.
(b) Details of security
The Company has availed a working capital demand loan worth Rs. 4,500 (as at 31 March 2015: Rs. 4,500) valid till 31 March 2017 from Sumitomo Mitsui Banking Corporation at an interest rate of 10.90% which is secured by a Corporate Guarantee provided by CAC Holdings Corporation, Japan.
The Company has also availed cash credit facility from Sumitomo Mitsui Banking Corporation at an interest rate of 12.6% which is secured by a Corporate Guarantee provided by CAC Holdings corporation, Japan Cash credits guaranteed by promoter director and promoter company represents:
(i) borrowings availed from SBI bank at an interest rate of 14.35% which is secured by first charge on pari passu basis on all the current assets and moveable assets of the Company, including book debts and inventories and first and exclusive charge on certain properties owned by promoter company.
(ii) borrowings availed from IDBI bank at an interest rate of 14% which is secured by pari passu charge on all the current assets and moveable assets of the Company, including book debts and inventories.
Working capital loans guaranteed by promoter director and promoter company represents loan from IDBI at an interest rate of 14% which is secured by first charge on pari passu basis on all the current assets and moveable assets of the Company, including book debts and inventories and first and exclusive charge on certain properties owned by the promoter company. The Company has also availed cash credits from Axis bank at an interest rate of 13.40% which is secured by pari passu charge on all the current assets and moveable assets of the Company, including book debts and inventories.
The Company has availed letter of credits from banks which are secured by the hypothecation of goods purchased under the letter of credit.
* There are no micro and small enterprises, as defined under the provisions of Micro, Small and Medium Enterprises Development Act 2006, to whom the Company owes dues as at the reporting date. The micro and small enterprises have been identified by the management on the basis of information available with the Company and have been relied upon by the auditors.
(i) Capital work in progress amounting to Nil ( As at 31 March 2015: Rs. 25 ) as appearing in the balance sheet represents capital assets which are pending completion/installation.
(ii) As at 31 March 2016, the Company has incurred expenditure to the tune of Nil ( As at 31 March 2015: Rs. 74) for software development which was not operational as at the balance sheet date. This expenditure has been disclosed as "Intangible assets under development".
(iii) Hitherto, depreciation on all tangible assets was provided on a straight-line method over the estimated useful life using the rates prescribed under Schedule XIV of the erstwhile Companies Act, 1956. Effective 1 April 2014, in accordance with Schedule II of the Companies Act, 2013, the Company has re-assessed the useful life and adopted the rates prescribed except for certain computers for which the Company has carried out certain technical evaluation to assess the useful life based on which the useful life has been determined to be higher than the life prescribed by Schedule II. Had the Company continued to use the earlier estimate for depreciation of all tangible assets the loss for the year ended 31 March 2015 would have been lower by '' 145 and further an amount of '' 117 (net of deferred taxes) has been charged to the opening balance of the reserves and surplus in respect of the assets whose remaining life is Nil as at 1 April 2014 in accordance with Schedule II to the Act.
(iv) As at 31 March 2016, the Company has assessed the indications of impairment and identified that certain computer and application software needs to be impaired on account of no future economic outflow from such softwares. Since, no cash flows could be estimated the Company has impaired the carrying value of such assets amounting to Rs. 110. (Also refer note 29 (b)).
(v) Adjustments refers to reclassification of certain assets among the different classes based on their nature.
a) During the year 2014-15, the Company has recognized revenue of Rs. 397 with a corresponding cost in changes in inventories of stock-in-trade of Rs. 368 for shipments made during the year whereas the shipment was received and acknowledged by the customer after 31 March 2015. The management believes that the risk relating to the shipments has been transferred before 31 March 2015 and hence believes that this accounting treatment reflects a true and fair view.
c) During the financial year 2015-16, effective 5 May 2015, the operational control of the IT Technology Services (''ITS'') and Software Services Division (''SSD'') were handed over to the present Executive Director of the Company by the erstwhile Executive Chairman of the Company who was operationally managing such divisions till the hand over. Effective 18 September, 2015, the entire operational control and management of the remaining divisions of the company, viz., Warranty Management Services (''WMS'') and all its subsidiaries, were handed over to the present Executive Director of the Company by the erstwhile Executive Chairman of the Company who was operationally managing such division/ subsidiaries till the hand over.
The erstwhile Executive Chairman''s term as a director of the Company ended on 31 March 2016 and he has ceased to be a director of the Company with effect from such date.
In August 2015, certain concerns had been raised by the Audit Committee to the Board on the quality of trade receivables. The internal auditors were instructed by the Audit Committee to carry out line item-wise check on the trade receivables. The need for a general provisioning policy was also recommended by the statutory auditors. The interim report of the internal auditors was tabled in the November 2015 Board Meeting. Based on this report the new management provided for certain bad and doubtful debts. The report had findings that needed further confirmation which was looked into by the newly appointed Chief financial officer. The Chief financial officer provided an internal note to the Audit Committee which called for a Board Meeting in early December 2015. Consequently, in December 2015, the Company engaged an independent consultant, from one of the "big four" accounting firms to investigate the quality of outstanding receivables of the Company for the 3 year period - 2012-13, 2013-14 and 2014-15, which was subsequently extended to 31 December 2015. The consultant report also covered certain specific financial transactions, identified during their work procedures including recording of sales invoices/ fixed assets without adequate supporting documents, improper adjustments and unrecorded purchases.
The impact of all the above and those identified thus far based on the procedures the management has performed subsequently has been provided for or written off and disclosed as prior period items (which pertain to transactions prior to 31st March, 2015) and exceptional items, which in the opinion of the management, are adequate as on date.
Post receipt of the independent consultant report on 14 March 2016, the Company has further undertaken the following processes:
- A subcommittee was constituted by the board of directors on 20 March 2016 to look into the findings of independent consultant and recommend on further steps/ actions to be taken to the board.
- Recommended process controls to strengthen the existing systems including improvements to the accounting software and procedures.
- A process of confirmations/ reconciliations with customers was initiated.
- Physical verification of all tangible and intangible assets.
- Physical verification of all its inventories.
There has been override of financial controls resulting in financial mis-management prior to operations being handed over to the present management, and the present management is in the process of completing the impact assessment and determining conclusively the reasons as to why such losses have been caused.
1 The Company has based on the independent consultant report provided/written off customer balances amounting to Rs. 3,301 (Also, refer note 29(a)). In addition, the company has also initiated a process of confirmation / reconciliation with customers, which is in progress. Based on the additional procedures performed and pending completion of the confirmation/ reconciliation process, the management has on a conservative basis, provided/written off Rs.1,948 in addition to the findings in the independent consultant report. In the opinion of the management the above provisions/ write-offs are adequate as on date.
2 Refer note 29 (a) and (b) above, the management has based on the independent consultant report, coupled with additional procedures performed by the company, written off fixed assets amounting to Rs.1,162 (Original cost of the asset Rs.1,362), wherever it was noticed that the assets were non-existent. In addition, the Company has commenced the process of physical verification of its fixed assets and reconciliation of the same with books of accounts. As at date, the Company has completed the process for certain block of assets. Pending completion of the said process, in the opinion of the management, the write offs are adequate as on date.
3 Refer note 29 above, the Company has during the year performed a 100% physical verification of its inventories and material discrepancies identified were provided as on date. Further, the Company has initiated a process of evaluating and strengthening the existing process
4 During the previous year, the Company has migrated to a new software, which facilitated recording of inventory transactions pertaining to maintenance divisions - Stores and spares. This software, due to certain inherent limitations, was not capable of computing the weighted average cost of consumption on transaction basis for the inventory used for rendering the services by maintenance division. During the current year, the issue was addressed for transactions recorded in the current financial year and the company is in the processing of replicating the same for opening inventory. Accordingly, valuation of the closing stock with respect to the opening stock of this division has not being performed in accordance with the requirements of Accounting Standard (AS) 2 - Valuation of inventories. Further, the Company has not being able to ascertain the net realizable value of the inventory pertaining to maintenance divisions.
5 For the year ended 31 March 2016, the Company had a net loss of Rs.13,759, negative cash flows of Rs.430, negative net worth of Rs.2,356 and current liabilities exceed current assets by Rs.6,458. These financial indicators cast a significant doubt upon the company''s ability to continue as a going concern. The Company has availed adequate facilities with various banks and strengthened the management team, which should enable the company to meet its obligations and operate over the next 12 months and accordingly the financials have been prepared on a going concern basis. Subsequent to year end, during the quarter ended 30 June 2016, the Company has also made a cash profit of Rs.423.
6 Segment reporting
"Considering the risk/return profiles of the segments between product and geography, the Company has identified business as primary segment in accordance with Accounting Standard (AS) 17 Segment Reporting"". The Company does not have any secondary segment.
The Company''s principal lines of business is IT services which includes, providing system integration (SI) solutions comprising network design, hardware and software, IT Infrastructure management solutions (IMS), software development and support (SS) and warranty management solutions (WMS) for imported and indigenous equipments, development, implementation and
7 Commitments
The Company did not have any capital commitments as at the balance sheet date. Other commitments are cancellable at the option of the company and hence not disclosed.
Mar 31, 2015
1. General Information:
(a) Background:
Accel Frontline Limited ("Accel" or the Company) was incorporated on
8th June, 1995. The Company's principal lines of business in IT
services which includes, providing system integration solutions
comprising network design, hardware and software, IT infrastructure
management solutions, warranty management solutions for imported and
indigenous equipment, development, implementation and maintenance of
software applications.
(b) Comparatives:
All amounts in the standalone financial statements are presented in
Rs.. in lakhs except per share data and as otherwise stated. Figures
for the previous year have been regrouped / rearranged wherever
considered necessary to conform to the figures presented in the current
year. The previous year figures have been audited by a firm other than
Walker Chandiok & Co LLP.
2 Transfer pricing
As per the Transfer pricing norms introduced in India with effect from
1st April, 2001, the Company is required to use certain specific
methods in computing arm's length price of international transactions
between the associated enterprises and maintain prescribed information
and documents relating to such transactions. The appropriate method to
be adopted will depend on the nature of transactions/class of
transactions, class of associated persons, functions performed and
other factors, which have been prescribed. The Transfer pricing study
for the fiscal year ended 31st March, 2015 is in progress and
accordingly, the contracts may be amended subsequently and related
adjustment, if any, will be quantified upon completion of this study.
However, in the opinion of the Management, the outcome of the study
will not have material impact on the Company's results.
3 Segment reporting
Considering the risk/return profiles of the segments between product
and geography, the Company has identified business as primary segment
in accordance with Accounting Standard (AS) 17 Segment Reporting. The
Company does not have any secondary segment.
The Company's principal lines of business is IT services which
includes, providing system integration (SI) solutions comprising
network design, hardware and software, IT Infrastructure management
solutions (IMS), software development and support (SS) and warranty
management solutions (WMS) for imported and indigenous equipments,
development, implementation and maintenance of software applications.
4 Overseas Branch Operation
During the year, the branch at Singapore in the name of "Accel
Frontline Limited - Singapore Branch" continued its operation. The
revenue and expenses of the said Branch have been included in the
financials of the company against each line item, translated into
Indian rupees, as applicable. The summary of the financials of the
Branch is as follows:
5 Disclosures in respect of non-cancellable operating leases
The lease rentals charged for the years ended 31st March, 2015 and 2014
and maximum obligations on long-term, non-cancellable operating leases
payable as per the rentals stated in the respective agreements are as
follows: The total of future minimum lease payments for each of the
following periods:
6 Prior period item includes Rs.1,433, representing revenues
pertaining to certain back to back annual maintenance contracts
recognised in the previous year based on the billing instead of
straight lining the revenue over the period of the contract. The
Company has revised the process of revenue recognition retrospectively
during the year ended 31st March, 2015. Further, it includes Rs.72
relating to employee benefit expenses.
7 Commitments
The Company did not have any capital commitments as at the balance
sheet date. Other commitments are cancellable at the option of the
company and hence not disclosed.
Mar 31, 2014
1.01 Background
Accel Frontline Limited ("Accel" or the Company) was incorporated in
Chennai in 1995. The Company''s principal lines of business in IT
services includes, providing system integration solutions comprising
network design, hardware and software, IT Infrastructure management
solutions, warranty management solutions for imported and indigenous
equipments, development, implementation and maintenance of software
applications. The company has the following subsidiaries.
1.02 Contingent liabilities
2014 2013
Sales tax 8,740,588 6,071,815
Service tax 584,433 4,428,905
Income tax 103,707,400 123,884,050
Central Excise 2,431,495 -
Bank Guarantees outstanding 257,960,823 297,344,600
Provident Fund Authorities 18,417,730 -
Claims against the company 22,233,262 21,952,808
not acknowledged as debt
Note : The contingent liability with respect to Income tax as mentioned
above has been shown based on the various assessment orders received by
the company. However, part of the disallowances as mentioned in the
said orders has already been allowed in the subsequent assessment
years. The adjustments (if any) will be made in the financials after
our appeals before appropriate authorities are disposed off.
During the year 2010-2011, Accel IT Resources Limited hived off its
outsourcing division for a total consideration of Rs.500 lacs based on
independent valuation from a Chartered Accountant pursuant to the
approval of the shareholders in their meeting held on 04th February,
2011 w.e.f closing business hours of 31st March, 2011. The amount of
such consideration has been included under "Income from Sale of
Business" in the year 31st March, 2011. The transaction included
transfer of all contracts, consents, commercial rights, know how,
employees outsourced to different organizations, all rights, powers,
liabilities relating to or connected with business of providing/
outsourcing IT manpower etc. There was no transfer of tangible assets
of the company.
As per clause no.10.7. of the agreement for the sale of the outsourcing
division of the company, dated 15th March, 2011, in the unlikely event
of the business getting reduced by the Group companies, the company
agrees to indemnify the purchaser an amount equivalent to the short
fall in the yearly minimum service charges of Rs.1.25 crores as
mentioned in clause no.10.5 of the said agreement. The shortfall amount
would be paid back to the purchaser at the end of each subsequent
financial year. If the short fall is not made good in the next
financial year the company has the right to adjust any such refunds on
any time before 31st March, 2016.
Mar 31, 2013
1.01 Background
Accel Frontline Limited ("Accel" or the Company) was incorporated in
Chennai in 1995. The Company''s principal lines of business in IT
services includes, providing system integration solutions comprising
network design, hardware and software, IT Infrastructure management
solutions, warranty management solutions for imported and indigenous
equipments, development, implementation and maintenance of software
applications.
2.1.1.- Rights, preferences and restrictions attached to shares
The Company has one class of equity shares having a par value of Rs.10
per share. Each share holder is eligible for one vote per share held.
In the event of liquidation, the equity shareholders are eligible to
receive the remaining assets of the company after distribution of all
preferential amounts in proportion to their share holding.
2.2.A.1 Dividend added back to reserves in the previous year include
Rs.114.94 lakhs representing dividend received by Accel Frontline
Services Limited from the company which got cancelled as per the merger
scheme and Rs.29.16 lakhs representing write back of dividend proposed
in Accel Frontline Services Limited for the year 2010-11, but, not
approved later in the AGM.
2.2.A.2 To give efect to the merger scheme in the previous year,
5,747,127 shares of the company held by Accel Frontline Services
Limited was cancelled. The value of these shares was Rs.2,500 lakhs,
out of this, Rs.574.71 lakhs was deducted from the Issued, Subscribed &
Paid up capital and the balance of Rs.1,925.29 lakhs was deducted from
Proft and Loss account
2.3.1 The term loan is secured by a pari passu charge by way of
hypothecation of current assets and the moveable assets of the company.
The loan carries an interest rate of 14% per annum.The loan is
repayable over a period of three years in ten quaterly instalments
(including current maturities) in the below mentioned repayment pattern
2.3.2 Term loan from fnancial institutions include the following:
a. Rs.497.08 lakhs which is secured against the immoveable property
belonging to the managing director and is repayable over a period of 5
years, out of which, Rs.78.43 lakhs is repayable within one year
b. Rs.100 lakhs which is secured against certain shares held by the
holding company M/s.Accel Limited and is repayable after 2 years
2.3.3 The loans have been availed for acquiring certain fxed assets and
are secured by hypothecation of specifc assets purchased out of such
loans. The loans are repaid in accordance to the repayment schedule
agreed with the lender.
2.3.4 This loan is availed from Life Insurance Corporation of India and
is secured against the keyman insurance policy placed with them
3.1 Investments in subsidiaries
As at March 31, 2013, the Company had an aggregate investment of Rs
215,107,541 in its subsidiaries. During the current year, the company
increased its investment in Accel Systems & Technologies Pte Ltd. by
Rs.69,430,441 (S$1,60,000) and the percentage of shares held by the
company as at 31.3.13 is 57.39%. The Company also invested Rs 863,513
(£10,000) in Accel Technologies Limited, a newly incorporated 100%
subsidiary company in United Kingdom.
3.2 Sundry debtors/sundry creditors/loans & advances
a) The balances stated at their values shown under sundry debtors,
sundry creditors and loans & advances are subject to confrmation
b) During the year, a provision for doubtful debts was created for
Rs.4,109,530 /- (previous year Rs. 2,501,075/- ). A sum of
Rs.13,050,409/- (previous year Rs. 17,288,686/-) was written of as bad
debts as the management felt that these are doubtful of recovery /
irrecoverable.
3.3 Contingent liabilities
(In Indian Rupees)
2013 2012
Sales tax 6,071,815 6,113,923
Service tax 4,428,905 8,955,820
Income tax 123,884,050 95,160,050
Letters of
credit outstanding 20,325,636
Bank Guarantees
outstanding 297,344,600 314,934,395
Claims against
the company 21,952,808 21,915,411
not
acknowledged as debt
Note : The contingent liability with respect to Income tax as mentioned
above has been shown based on the various assessment orders received by
the company. However, part of the disallowances as mentioned in the
said orders has already been allowed in the subsequent assessment
years. The adjustments (if any) will be made in the fnancials after our
appeals before appropriate authorities are disposed of.
3.4 Segment reporting
During the year under review, the company''s operations predominantly
relate to IT related services and accordingly, this is the only primary
reportable segment. The geographical segment is not relevant since
export sales are less than 10% of the total sales.
3.5 Comparative fnancial information
The previous year''s balances have been regrouped/reclassifed wherever
necessary to conform to the current year''s presentation in accordance
with the Revised Schedule VI of the Companies Act 1956.
Mar 31, 2011
1.01 Background
Accel Frontline Limited ("Accel" or the Company) was incor- porated in
Chennai in 1995. The Company's principal lines of business, in IT
services includes, providing system integration solutions comprising
network design, hardware software and website development and the sale
and implementation of customized software products and IT
Infrastructure manage- ment solutions,
1.02 Cash and bank balances
Cash and bank balances includes Rs.50,648,666 (Previous year Rs
49,403,191), held as Margin money for various guarantees and letters of
credit issued by the company's bankers.
A balance with schedule banks in current accounts includes an amount of
Rs.478,948 (previous year: Rs. 343,612) representing the balances in
unclaimed dividend accounts as at March 31, 2011.
Note : Item under parenthesis represent previous year figures.
Balance in current accounts as on March 31, 2011 include an amount of
Rs. 512,561 (USD 11,318 ) (PY: 63,521 (USD 1,411.46)) lying in the
Exchange Earners Foreign Currency (EEFC) account maintained with State
Bank of India in US Dollar account.
1.03 Secured loans
Working capital facilities from banks are secured by a pari passu
charge by way of hypothecation of current assets and the moveable
properties of the company. Hypothecation loans are secured by
hypothecation of the respective assets acquired.
Secured loans include Rs. 904,565,253 (previous year - Rs. 40,106,917)
due within one year.
1.04 Disclosures in accordance with Accounting Standard (AS) Ã15 on
"Employee Benefits"
(a) Defined contribution plans
The Company has incurred the following amounts and charged to the
Profit and Loss Account during the year
AS - 15 (Revised 2005) on "Employee Benefits" has been adopted by the
Company and the disclosures as required by the said accounting standard
are given hereunder:
The transition liability created out of the general reserve for
compensated absence valuing Rs. 211.92 lakhs in the financial year
2007- 08 in accordance with revised AS - 15 is getting adjusted in the
subsequent financial years based on the actuarial valuation report of
that year through the profit and loss account.
1.05 Segment reporting
The company's operations predominantly relate to IT related services
and accordingly this is the only primary reportable segment. The
geographical segment is not relevant since export sales are less than
10% of the total sales.
1.06 Related party transactions
Related parties where control exists:
Name of the Party Nature of relationship
BT Frontline Pte Limited, Singapore. Controlling Company
Accel Limited, Chennai. Controlling company
ACL Systems & Technologies PTE
Limited, Singapore Subsidiary Company
Accel Frontline FZE, Dubai Subsidiary Company
Network Programs USA Inc.,USA Subsidiary Company
Network Programs (Japan) Inc., USA Subsidiary Company
Network Programs Japan KK Japan Subsidiary Company
Other related parties with whom transactions have taken place during
the year:
Name of the Party Nature of relationship
Accel Systems Group, Inc. USA Companies under common
control
Accel Transmatic Limited, Chennai. Companies under common
control
Accel Frontline Services Limited Companies under common
control
Accel IT Resources Limited, Chennai Companies under common
control
Key Management Personnel
Mr. N.R. Panicker Managing Director
Mr. K.R Chandrasekaran Whole time Director
Relative of Key Management Personnel
Mrs. Sreekumari Panicker Wife of the Managing
Director
Mrs. Shanthi Chandrasekaran Wife of Mr. K.R
Chandrasekaran
1.07 Operating leases:
The company has deposited an amount of Rs.32,338,119 (Previous year:
Rs. 29,540,200/-) as interest free security deposits towards the above
leases and the same has been included in the Loans and advances.
1.08 Micro small and medium Enterprise development Act 2006.
As per the stipulations and conditions referred to in the above Act,
the Company is not required to register under the above Act. Further,
the Company has circulated letters to its suppliers seeking information
about their status as mentioned in the Act. Since the information from
the suppliers has not been received, the provisioning of the interest
and disclosure requirements under Schedule VI to the Companies Act,
1956 could not be complied with.
1.09 Quantitative information as per companies Act 1956
The company has not disclosed the information as required under para
3(i)(a) and 3(ii)(b) of Part II of Schedule VI pursuant to the
notification released by Ministry of Corporate Affairs given vide SO
301(E) dated February 8, 2011.
1.10 Comparative financial information
The previous year's balances have been regrouped/reclassified wherever
necessary to conform to the current year's presentation.
Mar 31, 2010
1.01 Background
Accel Frontline Limited ("Accel" or the Company) was incorporated in
Chennai in 1995. The Companys principal lines of business, in IT
services includes, providing system integration solutions comprising
network design, hardware software and website development and the sale
and implementation of customized software products and IT
Infrastructure management solutions,
1.02 Cash and bank balances
Cash and bank balances includes Rs.49,403,191 /- (previous year Rs
63,004,677/-), held as margin money for various guarantees and letters
of credit issued by the companys bankers.
A balance with schedule banks in current accounts includes an amount of
Rs. 343,612/- (previous year: Rs. 345,288/-) representing the balances
in unclaimed dividend accounts as at March 31, 2010.
Balances in current account as on March 31, 2010, include an amount of
Rs. 115,588,121/- (US$2,568,397) PY: Rs. 22,663,923/- (US$ 434,389)
lying in DBS Bank, Singapore and an amount of Rs.1,670,391/-(Sing $
51,932) PY: Rs. 774,382/-((Sing $ 22,563) lying in DBS Bank, Singapore
in the name of Accel Frontline Limited, Singapore branch.
Balance in current accounts as on March 31, 2010 include an amount of
Rs.63,521 (USD 1,411) (PY: Rs.4,211,276/- (USD 80,715) lying in the
Exchange Earners Foreign Currency (EEFC) account maintained with State
Bank of India in US Dollar account.
1.03 Secured loans
Working capital facilities from banks are secured by a pari passu
charge by way of hypothecation of current assets and the moveable
properties of the company. Hypothecation loans are secured by
hypothecation of the respective assets acquired.
Secured loans include Rs.440,106,917 (previous year à Rs 337,
605,378/-) due within one year.
1.04 Payment to the Managing Director & whole time Director
The managerial remuneration mentioned above does not include an amount
of Rs.520,135 paid to the Managing Director as salary as per the
existing agreement approved by the shareholders, but not payable due to
inadequacy of profts during the fnancial year 2009-10. The company will
be fling an application with the Central Government for approval of
this payment after the shareholders approval in the ensuing annual
general meeting of the company.
1.05 Disclosures in accordance with Accounting Standard (AS) Ã15 on
"Employee Benefts"
1.06 Remuneration to statutory auditors
1.07 Contingent liabilities
2010 2009
Sales tax matters 8,512,404 1,425,186
ESI matters 2,758,801 2,758,801
Income tax matters * 49,000,700 6,582,000
Letters of credit outstanding 89,557,099 176,558,127
Bank Guarantees outstanding 111,364,965 259,650,185
Claims against the company not ac
knowledged as debt 16,435,381 31,182,586
Service tax matters 584,433 -
Estimated amount of contracts remai
ning to be
executed on capital account and not
provided for (net of advances) - 5,216,180
* The Income tax matters includes a demand notice received by the
company for Rs.42,418,700 from the Income Tax department for the
assessment year 2007-08. The company has fled an appeal application
with appellate commissioner against this demand notice.
1.08 Segment reporting
The companys operations predominantly relate to IT related services
and accordingly this is the only primary reportable segment. The
geographical segment is not relevant since export revenue are less than
10% of the total revenue.
1.09 Related party transactions
1.10 Leasing arrangements in the capacity of a Lessor
Finance lease
The Companys business includes leasing of computers, peripherals, and
accessories on long - term non - cancellable leases which are generally
in the nature of fnance leases as described in AS - 19, "Accounting for
leases " issued by the ICAI. The terms of the lease agreements do not
provide for any unguaranteed residual value or contingent rents. The
leased assets are insured by the lessor during the contract of the
lease. Initial direct costs are recognised as an expense at the
commencement of the lease period.
Sundry debtors include the present value of minimum lease payments on
fnance leases accounted for in accordance with AS 19 ÃAccounting for
leases issued by the ICAI. Reconciliation between the gross investment
and the present value of minimal lease
1.11 Operating leases:
The company has taken various offce premises on operating lease and the
lease payments are amortized on a straight-line basis over the lease
term. The total of minimum future lease payments for various periods
are as follows:
1.12 Micro Small and Medium Enterprise Development Act 2006.
As per the stipulations and conditions referred to in the above Act,
the Company is not required to register under the above Act. Further,
the Company has circulated letters to its suppliers seeking information
about their status as mentioned in the Act. Since the information from
the suppliers has not been received, the provisioning of the interest
and disclosure requirements under Schedule VI to the Companies Act,
1956 could not be complied with.
1.13 Overseas branch operation
During the year, the branch at Singapore in the name of "Accel
Frontline Limited - Singapore Branch" continued its operation. The
revenue and expenses of the said Branch have been included in the
fnancials of the company against each line item, translated into INR,
as applicable. The summary of the fnancials of the Branch is as
follows:
1.14 Quantitative information as per the companies Act 1956
1.15 Expenditure in foreign currency (on payment basis)
1.16 CIF value of Imports
1.17 Amount remitted in foreign currencies towards dividend
1.18 Earnings in foreign currency
1.19 Comparative fnancial information
The previous years balances have been regrouped/reclassifed wherever
necessary to conform to the current years presentation.
1.20 The previous year fgures include the results of the Warranty
Management Services Division which was hived-off from January 1, 2009
and hence not comparable with the current year fgures.