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Notes to Accounts of Devyani International Ltd.
Mar 31, 2025
(vii) Guarantees/security given by the Company on behalf of the other party
a) The Company has given a corporate guarantee of THB 2,500 million to Bangkok Bank Public Company Limited (Thailand) in respect of term loan and other credit facilities availed by Restaurant Development Co. Ltd. (subsidiary company). The amount of corporate guarantee outstanding as at 31 March 2025 in '' amounts to '' 6,271.37 (31 March 2024: '' 5,689.24) .
b) The Company has given a corporate guarantee of USD 0.5 million and NGN 250 million in current financial year and NGN 1,250 million in previous financial year to Standard Chartered Bank (Nigeria) in respect of term loan and other credit facilities availed by Devyani International (Nigeria) Ltd.(subsidiary company). The amount of corporate guarantees outstanding as at 31 March 2025 in '' amounts to '' 126.32 (31 March 2024: '' 78.31).
c) As at 31 March 2025 and 31 March 2024 the Company has provided a letter of support for financial and operational assistance to RV Enterprizes Pte. Limited, Devyani International Nigeria Limited, Blackbriar Company Limited, Restaurant Development Co,. Ltd, White Snow Company Limited and Yellow Palm Company Limited for ongoing operations for at least 12 months from the reporting dates.
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39. CONTINGENT LIABILITIES, COMMITMENTS AND OTHER CLAIMS (to the extent not provided for) Contingent liabilities, other claims and contingent assets: (a) Claims against the Company not acknowledged as debts-: |
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Particulars |
As at 31 March 2025 |
As at 31 March 2024 |
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(i) Claims made by direct and indirect tax authorities:* |
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(i) Goods and service tax (on account of input credit mismatches) |
38.45 |
20.85 |
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(ii) Value added tax |
2.79 |
2.79 |
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(iii) Service tax |
4.01 |
15.37 |
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(iv) Income tax (on account of expense disallowances) |
277.61 |
258.71 |
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322.87 |
297.72 |
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(ii) Others (miscellaneous claims in relation to Company''s operations) # |
4.57 |
8.07 |
*Against the total tax demand of '' 322.87 (31 March 2024:'' 297.72), the Company has filed appeals before various tax authorities. Based on management''s internal assessment, the management believes that the Company has reasonable chances of succeeding before the tax authorities and does not foresee any material liability. Pending the final decision on this matter, no adjustment has been made in the standalone financial statements.
# The Company is party to various legal proceedings in the normal course of business and does not expect the outcome of these proceedings to have any adverse effect on its financial position and hence no provision has been recorded against these legal proceedings at this stage. Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending with various forums/ authorities. Accordingly, the above mentioned contingent liabilities are disclosed at undiscounted amount.
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(b) Others |
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Particulars |
As at 31 March 2025 |
As at 31 March 2024 |
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Commitments: |
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a. Estimated amount of contracts remaining to be executed on capital account and not provided for [(net of advances of '' 53.43 (31 March 2024: '' 47.87)] |
62.26 |
1,009.62 |
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b. Guarantees issued on behalf of subsidiaries for business purposes |
6,397.69 |
5,767.55 |
Note:
1. The Company has entered Development Agreements with Yum Restaurant (India) Private Limited and Costa International Limited. Based on such agreements, the Company has commitments to open specified number of restaurants under respective agreements from time to time. The amount of such commitments is not quantifiable as of now.
2. During the years ended 31 March 2025 and 31 March 2024 the Company has provided a letter of support for financial and operational assistance to RV Enterprizes Pte. Limited, Devyani International Nigeria Limited, Blackbriar Company Limited, Restaurant Development Co,. Ltd, White Snow Company Limited and Yellow Palm Company Limited for ongoing operations for at least 12 months from the reporting dates.
3. As per the Investment Agreement (agreement) entered between the Company and other parties, including Camas, an affiliate of Temasek (refer note 49), the Company on completion of the time period and after serving a notice in the manner as provided in the agreement, has an option to purchase the shares held by Camas in DMCC at an exit consideration defined in the agreement. The management of the Company believes, that to exercise the said option, there are uncertainties around availability of free cash flows to exercise such option and hence basis this evaluation, the Company had not accounted for such option in the standalone financial statements.
A. Defined contribution plan
An amount of '' 308.91 (31 March 2024: '' 291.20) has been recognised as an expense in respect of the Company''s contribution to provident and other funds deposited with the relevant authorities and has been charged to the standalone statement of profit and loss.
B. Defined benefit plans
The Company operates a gratuity plan wherein every employee is entitled to the benefit. Gratuity is payable to all eligible employees (who have completed 5 years or more of service) of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the Payments of Gratuity Act, 1972. Gratuity liability is partially funded by the Company through annual contribution to DIL Employees Gratuity Trust (the ''Trust'') against ascertained gratuity liability. Trustees administer contributions made to the Trust and contributions are invested in a scheme with the Life Insurance Corporation of India as permitted by law of India.
The funding requirements of the plan are based on the gratuity fund''s actuarial measurement framework set out in the funding policies of the plan. The funding of the plan is based on a separate actuarial valuation for funding purpose for which assumptions may differ from the assumptions set out in (iii) below. Employees do not contribute to the plan.
The Company has defined that, in accordance with the terms and conditions of the aforesaid plan and in accordance with statutory requirements (including minimum funding requirements) of the plan of relevant jurisdiction, the present value of refund or reduction in future contributions is not lower than the balance of the total fair value of the plan assets less than total present value of obligations.
The following table sets out the status of the gratuity plan as required under Ind AS 19 - ''Employee Benefits''
The sensitivity analysis is based on a change in above assumption while holding all other assumptions constant. The changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method ( present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting year) has been applied when calculating the provision for defined benefit plan recognised in the standalone balance sheet.
The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous years.
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it provides an approximation of the sensitivity of the assumptions shown.
Risk exposure:
The defined benefit plan is exposed to a number of risks, the most significant of which are detailed below:
Change in discount rates: A decrease is discount yield will increase plan liabilities
Mortality table: The gratuity plan obligations are to provide benefits for the life of the member, so increase in life expectancy will result in an increase in plan liabilities.
D. Code of Social Security
The Code on Social Security, 2020 ("the Code") relating to employee benefits during employment and postemployment received Presidential assent in September 2020. Subsequently, the Ministry of Labour and Employment had released the draft rules on the aforementioned Code. However, the same is yet to be notified. The Company will evaluate the impact and make necessary adjustments to the financial statements in the period when the Code will be notified and will come into effect.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker ("CODM") of the Company. The CODM is considered to be the Board of Directors who make strategic decisions and is responsible for allocating resources and assessing the financial performance of the operating segments.
As the Company''s business activity primarily falls within a single business and geographical segment, i.e., food and beverages, and in India, thus there are no additional disclosures to be provided under Ind AS 108 - "Operating Segments''. The CODM considers that the various goods and services provided by the Company constitutes single business segment.
a. Description of share based payment arrangements
i. Share Options Schemes (equity settled)
ESOS - 2011
On 20 September 2011 and 20 December 2011, the Board of Directors approved the Employees Stock Option Scheme 2011 (""ESOS 2011""), which was approved by the shareholders on 20 December 2011 and subsequently on 18 May 2012 for increasing the ceiling limit to 49,00,000 Options (""Ceiling Limit"") with condition at any given point of time no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting. As per ESOS 2011, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of '' 111.70. ESOS 2011 was formulated with the objective to enable the Company to grant Options for equity shares of the Company to certain eligible employees, officers and directors of the Company and its subsidiaries, to purchase shares from the Company at a pre-determined price. A resolution was passed in the meeting of the Board of Directors held on 6 May 2014 wherein certain additional Options were granted at the same terms and conditions as mentioned in ESOS 2011.
Further, ESOS 2011 was amended subsequently and was approved by the shareholders on 17 March 2021. The resolution provides the delinking of vesting schedule of the Options from filing of the red herring prospectus (RHP) by the Company and for aligning the Scheme in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/POLICY CELL/2/2015 dated 16 June 2015 ("SEBI SBEB Regulations") and accordingly all Options under ESOS 2011 were vested immediately on the day of passing the said resolution and the exercise window for ESOS 2011 was opened by the Nomination and Remuneration Committee on 17 March 2021.
ESOS - 2018
On 6 April 2018, the Board of Directors approved the Employees Stock Option Scheme 2018 (""ESOS 2018""), which was approved by the shareholders on 21 September 2018. ESOS 2018 has been formulated with the same objective as ESOS 2011. ESOS 2018 provides that Options so granted, shall not represent more than 5% of the fully diluted share capital of the Company at any given point of time (""Ceiling Limit"") and no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting. As per ESOS 2018 Grant letters, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of '' 306.12.
Further ESOS 2018 was subsequently amended and approved by the shareholders on 17 March 2021 for linking the vesting of options to listing date of shares of the Company and to align the Scheme with compliance requirement of SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/ POLICY CELL/2/2015 dated 16 June 2015 ("SEBI SBEB Regulations"). Under the ESOS 2018, no vesting shall occur until date of listing of shares on recognized Stock Exchanges by the Company in respect of proposed offer.
ESOS - 2021
On 17 March 2021, the Board of Directors approved the Employees Stock Option Scheme 2021 ("ESOS 2021") in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/POLICY CELL/2/2015 dated 16 June 2015 ("SEBI SBEB Regulations"), which was approved by the shareholders on 17 March 2021. ESOS 2021 was formulated with the same objective of ESOS 2011 and ESOS 2018.
ESOS 2021 provides that Options so granted, shall not represent more than 5% of the fully diluted share capital of the Company at any given point of time ("Ceiling Limit") and no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting by way of a special resolution. As per ESOS 2021 Grant letters, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price.
Note: The aforementioned schemes have been defined prior to giving effect to stock split from '' 10/- to '' 1/- dated 25 March 2021.
The risk free interest rates are determined based on current yield to maturity of 10 years Government Bonds with similar residual maturity equal to expected life of the Options. Expected volatility calculation is based on historical daily closing stock prices of competitors using standard deviation of daily change in stock price. The minimum life of the stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which options cannot be exercised. The expected life has been considered based on average of maximum life and minimum life and may not necessarily be indicative of exercise patterns that may occur.
On 11 November 2024 Nomination and Remuneration Committee adopted the "Incentive Policy for Middle and Senior Management" ("incentive policy"). As per the policy, the difference between the maturity value and the exercise price is the "gain" for a Grantee. The Company assures the gain equal to 100% of the annual salary of the respective Grantee. In case, the aggregate gain on all the vested options of the respective Grantee is less than his/ her annual salary, then the shortfall, if any, shall be paid by the Company by way of performance award to the Grantee, provided the Grantee remains on the pay-roll of the Company as on the date of settlement of performance award. The Company shall not be liable to pay the performance award in case the Grantee has exercised and sold any share arising out of the options until the date of settlement of performance award.
The Company has recognised liability of '' 9.01 for the same refer note 19. The liability will be due for payment after the period of 4 years and 3 months from the grant date of the options covered in the incentive policy.
The measuremet of liability is arrived through report of a registerd valuer using Monte Carlo model. Key inputs used in the estimation of value of liability are:
- risk-free rate of 6.65%
- volatility of 37.29%
- exercise price of the option of '' 162.90
- annual salary on the date of grant
The number of options covered under the incentive policy are 1,030,400
(C) Guarantees
(i) The Company has given a corporate guarantee of THB 2,500 million to Bangkok Bank Public Company Limited (Thailand) in respect of term loan and other credit facilities availed by Restaurant Development Co. Ltd.(subsidiary company). The amount outstanding as on 31 March 2025 amounts to '' 6,271.37 (31 March 2024 5,689.24).
(ii) The Company has given a corporate guarantee of USD 0.5 million and NGN 250 million in current financial year ended 31 March 2025 and NGN 1,250 million in previous financial year ended 31 March 2024 to Standard Chartered Bank (Nigeria) in respect of term loan and other credit facilities availed by Devyani International (Nigeria) Ltd. (subsidiary company). The amount outstanding as on 31 March 2025 amounts to '' 126.32 (31 March 2024: 78.31)
* refer note 7 for particulars of the loans given.
# refer note 6A and 6B for full particulars of the investments made.
## the above investments are shown at cost as per financial reporting requirements.
** The investments and loans have been impaired during the previous year and current year (refer note 48)
Note: For other commitments refer note 39(b)
Note: The above loans and investments have been given for the general purpose except the investment made in Devyani International DMCC for the purpose of onward acquisition of operating entities in Thailand.
4. CAPITALISATION OF EXPENDITURE INCURRED DURING CONSTRUCTION PERIOD (REFER NOTE 3A & 3B)
The Company has commenced certain quick service restaurants (stores) during the year ended 31 March 2025 and 31 March 2024. Certain directly attributable costs are incurred on commissioning of the quick service restaurants up to the date of commercial operations. These costs have been apportioned to certain property, plant and equipment on reasonable basis. Details of such costs capitalised is as under :-
45. IMPAIRMENT OF NON-CURRENT ASSETS
Impairment assessment of non current assets (other than goodwill and franchisee rights)
In accordance with Ind AS 36 ""Impairment of Assets"", the Group has identified individual quick service restaurant (store) as a separate cash generating unit (CGU) for the purpose of impairment assessment. Carrying value of a store includes property, plant and equipment, intangible assets used at a store, right-of-use assets and allocated corporate assets. Further carrying value and recoverable value of each store is calculated net of lease liabilities,beacuse these specific cash store are separately identifiable.
Management periodically assesses whether there is an indication that a CGU may be impaired using a benchmark of two-year''s history of operating losses or marginal profits for a store, which is even used by the management for the purpose of there internal reviews. Due to higher operating costs or decline in projected sales growth, certain stores have been impaired in the current and previous years for which impairment losses have been recognized and impairment reversals have occurred for certain stores where operational performance has been better than the anticipated one.
Goodwill and franchisee rights on business combination
During the earlier years, the Company had acquired 73 stores from Yum Restaurants (India) Private Limited ("Yum") in the States of Karnataka, Andhra Pradesh and Telangana (except in the city of Hyderabad) as per business purchase agreement dated 11 December 2019. Goodwill and other intangible assets (representing non exclusive franshisee rights) generated/acquired through the said acquisition were as mentioned below :
In accordance with the requirements of Ind AS 36, Impairment of Assets (Ind AS 36), the Company has performed an annual impairment assessment of such franchisee rights and goodwill, which is mandatory as per Ind AS 36 for assets with indefinite life. Till previous year, franchisee rights were being amortised by the management (refer note 5), hence the same were tested for impairment, if any indicator existed till previous years along with the specific stores to which these were allocated too.
Each store is considered to the be the independent cash generating unit (CGU) by the Company as each store has capability to generate independent cash flows and fulfils the requirements of Ind AS 36 also for reporting purposes.
The goodwill and franchisee rights are allocated to the three territories in whole, acquired by the Company under the said acquisition as the Company has rights of operate the acquired stores and the expand within the acquired territories with non-exclusive rights. Hence, the recoverability of the goodwill and franchisee rights is monitored by the management of the Company basis the stores (CGUs) operating in the territories (aggregating CGUs operating with in the territories) and plans to open new stores with in the territories.
Based on the above assumptions, recoverable value against assets mentioned above, exceeds carrying value of assets of CGUs in the territories acquired by '' 3,421.99 as at 31 March 2025. Hence, no impairment is required to be recorded.
Further, since there is significant headroom between carrying values of CGUs and recoverable value determined, recoverable value still after a reasonable change as mentioned below continues to be higher then carrying value of CGUs.
The management of the Company has assessed and considered reasonable changes in the key assumptions as disclosed above and conluded that these reasonable possible changes in inputs used for calculating recoverable values will not lead carrying values to exceed recoverable values in any instance.
The Company has established a comprehensive system of maintenance of information and documents that are required by the transfer pricing legislation under Section 92-92F of the Income tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by due date as required under the law. The management is of the opinion that its transactions with the associated enterprises are at arm''s length so that the aforesaid legislation will not have any impact on the standalone financial statements, particularly on the amount of tax expense and that of provision for taxation.
For the purpose of the Company''s capital management, capital includes issued equity capital, all other equity reserves attributable to the equity holders of the Company and combination of both long-term and short-term borrowings. The Company''s objective for capital management is to maximize shareholder''s value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plan and other strategic investment plans. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company''s funding requirements are met through equity infusions, internal accruals and a combination of both long-term and short-term borrowings. The
Company raises long term loans mostly for its expansion requirements and based on the working capital requirement utilise the working capital facilities. The Company monitors capital on the basis of consolidated total debt to consolidated total equity on a periodic basis. As a part of its capital management policy the Company ensures compliance with all covenants and other capital requirements related to its contractual obligations. No changes were made in the objectives, policies or processes for managing capital during the year ended 31 March 2025 and 31 March 2024.
48. ASSESSMENT OF INVESTMENT IN AND LOAN TO SUBSIDIARY COMPANY
The Company holds 87.19% (31 March 2024: 87.00%) of equity share capital and 76.00% (31 March 2024: 76.00%) preference share capital of RV Enterprizes Pte. Limited (hereinafter referred to as "RVE"). The value of investments (equity and preference shares) as at the year end is '' 728.51 (31 March 2024: '' 726.79). The value of the loans to RVE, including interest accrued thereon is '' 433.30 (31 March 2024: '' 433.30). RVE is a special purpose vehicle, which has invested the funds in Devyani International (Nigeria) Limited (a step down subsidiary) through investment in shares and grant of loans USD 3.75 million(~'' 252.51) (31 March 2024: USD 3.75 million(~'' 252.51)) and USD 16.51 (~? 1376.71) (31 March 2024: USD 16.56 million(~'' 1,361.57)), respectively.
During the current year and previous year, the step down subsidiary has generated loss of '' 320.86 (31 March 2024: '' 2,420.29) and based on the cashflow projections of the step down subsidiary, RVE has impaired the investment and loans amounting to USD Nil (31 March 2024: USD 3.75 million) and USD 0.20 million (31 March 2024: USD 16.51 million), respectively.
As at 31 March 2025 and 31 March 2024, the management of the Company assessed the recoverability of the investments and loans by carrying out a valuation of the stepdown subsidiary''s business with the help of an external valuation expert using the discounted cashflow method which resulted into the impairment of the said balances and accordingly the Company recognised Impairment of '' 1.72 (31 March 2024: '' 1,160.09), which has been presented as impairment of non current assets /exceptional item (refer note 30/32).
Key assumptions used in the calculating the recoverable value of the step down subsidiary:
- discount rates 22.40% (31 March 2024: 26.30%)
- terminal growth rate 3.00% (31 March 2024: 3.00%)
Major reasons which results in impairment in previous year was significant devaluation of the functional currency of Nigerian entity against USD.
49. INVESTMENT IN DEVYANI INTERNATIONAL DMCC
The Company holds 51% of equity share capital of Devyani International DMCC, Dubai (hereinafter referred to as "DID"). The carrying value of investment in DID as at 31 March 2025 is '' 3,427.07 (as at 31 March 2024 is '' 3,427.07 ). The Company and Camas, an affiliate of Temasek, invested AED 150.47 million (~ '' 3,407.85) and AED 145.53 million (~ '' 3,295.96) respectively, in DID under the Investment Agreement dated 18 December 2023 in ratio of 51:49. DID is subsidiary of the Company wherein the Company holds majority stake (51%) and has power to govern all relevant activities of DID thereby
establishing control over DID. Under the Investment Agreement, Camas has an exit right by way of a put option towards the other party (holding company of the Company) after an agreed period as per the agreement itself.
On 17 January 2024, DID acquired Restaurants Development Co., Ltd. ("RD") (step down subsidiary) , operating chain of 283 KFC restaurants in Thailand and expansion rights therein, by way of acquiring controlling interest in RD and its related entities for the consideration of THB 4,681.99 million (~ '' 10,913.28 ) including payment of erstwhile shareholder''s loan, pursuant to the Share Purchase Agreement dated 18 December 2023. Under the said agreement, DID has obtained power to govern all relevant activities of RD and its related entities and has therefore, established its control over the aforesaid entities.
As DID has invested and acquired RD and its related entities, the recoverability of investment of the Company depends upon the performance of RD and its related entities being further investments of DID. Therefore, for impairment assessment perspective, RD and its related entities in whole, are a cash generating unit (CGU).
Impairment assessment
In accordance with the requirements of Ind AS 36, to determine whether the carrying value of the CGU exceeds its recoverable value as at 31 March 2025, the Company has performed an annual impairment assessment of investment basis impairment indicator identified which is lower financial performance of CGU than anticipated at the time of acquisition. The recoverable value of CGU used in impairment assessment is determined based on cash flow projections for next five years approved by the management of the CGU and the Company with certain assumptions as mentioned below:
50. SCHEME OF AMALGAMATION-BETWEEN WHOLLY OWNED SUBSIDIARIES
The Board of Directors of the Company ("Board") at its meeting held on 13 December 2021, had approved the amalgamation of Devyani Food Street Private Limited and Devyani Airport Services (Mumbai) Private Limited (erstwhile wholly-owned subsidiary companies) (here in after referred as "transferor companies") with the Company. The Hon''ble National Company Law Tribunal had approved the scheme vide Order dated 13 July 2023 with appointed date as 01 April 2022. The Scheme became effective upon filing of the certified true copy of the Order with the Registrar of Companies, NCT of Delhi & Haryana, on 18 August 2023 (being effective date).
During the previous year, with effect from the appointed date, the entire business and whole of the undertaking (including all assets, titles, licenses, liabilities, rights, commitments and obligations) of the transferor companies, without any further act, instrument or deed, stood transferred to and vested in the Company, as a going concern.
As the transferor companies are wholly owned subsidiaries of the Company i.e. the entire issued, subscribed and paid up share capital of the transferor companies were held by the Company and upon this Scheme becoming effective, entire such capital stood cancelled and the Company was not required to issue and allot any shares to the shareholders of the transferor companies in accordance with the Scheme. The intercompany balances also stood cancelled on the appointed date by virtue of the Scheme.
Accounting Treatment:
The Company had accounted for such merger in accordance with "Pooling of interest method" of accounting as laid down in Appendix C of IND AS-103 Business Combinations of Entities Under Common Control notified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as specified in the Scheme.
Further, on the effective date, the authorised equity share capital '' 645.00 and authorised preference share capital '' 30.00 of the transferor companies stands transferred to the Company without payment of any additional fees or charge as per the Scheme.
52. INVESTMENT IN JOINT VENTURES
Investment in Devyani PVR INOX Private Limited, a joint venture
During the year ended 31 March 2025, the Company has entered into an agreement with PVR INOX Limited and jointly incorporated an entity, namely ""Devyani PVR INOX Private Limited"" on 26 July 2024 to undertake business relating to development, operation and maintenance of Food Courts, standalone Food and Beverage outlets, and Lounges within the existing or future territories. Further, the arrangement has been considered as a joint venture basis on the jointly controlled matters agreed with parties under the arrangement. However the Company holds 51% economic interest within the joint venture.
Investment in Devyani RK Private Limited, a joint venture
During the year ended 31 March 2024, the Company has entered into an agreement with R.K. Associates & Hoteliers Private Limited ("RKAHPL'') and jointly incorporated an entity, namely ''Devyani RK Private Limited'' ("DRKPL'') on 30 January 2024 to undertake business relating to development, operation and maintenance of Food Courts, standalone Food and Beverage outlets, and Lounges within the existing or future territories of railway stations. Further, the arrangement has been considered as a joint venture basis on the jointly controlled matters agreed with parties under the arrangement. However the Company holds 51% economic interest within the joint venture. The joint venture has not started its business operations as of the reporting date.
53. ADDITIONAL REGULATORY INFORMATION NOT DISCLOSED ELSEWHERE IN THE STANDALONE FINANCIAL INFORMATION
a) During the current and previous year, the Company does not have any Benami property and no proceedings have been initiated or pending against the Company for holding any Benami property, under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.
c) During the current year and previous year, the Company does not have any charge which is yet to be registered with ROC beyond the statutory period for the financial year ended 31 March 2025. However during year ended 31 March 2024, in some cases the satisfaction of charges were yet to be registered with ROC due to pending NOC from banks for the loans already repaid to the banks.
d) The Company has not traded or invested in Crypto currency or Virtual Currency during the current and previous financial year.
e) The Company has not advanced or provided loan to or invested funds in any entity(ies) including foreign entities (Intermediaries) or to any other person(s), with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries During the year ended 31 March 2025 (31 March 2024 : refer note 55).
f) The Company has not received any fund during the year ended 31 March 2025 (31 March 2024: Nil) from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(g) The Company has not undertaken any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year ended 31 March 2025 in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961) (31 March 2024: Nil).
(h) The Company has not been declared a ''Wilful Defaulter'' by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India. (31 March 2024: Nil)
(i) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017 during the year ended 31 March 2025 (31 March 2024: Nil).
(j) During the year ended 31 March 2025 and 31 March 2024,the Company has followed cost model while valuing its property, plant & equipments. The same is in accordance with the reporting standard.
The Ministry of Corporate Affairs (MCA) has prescribed a requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies covered under the Act, which uses accounting software for maintaining its books of accounts, shall only use such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the user details and the date when such changes were made and ensuring that the audit trail cannot be disabled.
The Company uses accounting softwares for maintaining its accounting records, sales invoicing and inventory management. During the year, the audit trail (edit log) feature at the application level was operating for all relevant transactions recorded in such software. However, the audit trail (edit log) feature for any direct changes made at the database level was not enabled for the such accounting softwares.
The Company uses another accounting software for maintenance of payroll records which is operated by a third-party software service provider. As per the ''Independent Service Auditor''s Report on a Description of the Service Organization''s System and the Suitability of the Design and Operating Effectiveness of Controls'' (based on the criteria for a description of a service organization''s system as set forth in DC Section 200, 2018 Description Criteria for a Description of a Service Organization''s System in a SOC 2 Report, in AICPA Description criteria), the audit trail (edit log) feature for any direct changes made at the database level and changes made at application level was operating throughout the period for all relevant transactions recorded in the software.
Further, for all the accounting softwares, the audit trail has been preserved by the Company as per the statutory requirements for record retention as applicable, execpt for database level for accounting sofware used for maintaining its accounting records, sales invoicing and inventory management.
57. Subsequent to the year end 31 March 2025, the Board of Directors of the Company on 24 April 2025, has approved acquisition of up to 80.72% equity stake, on fully diluted basis, in Sky Gate Hospitality Private Limited ("Sky Gate") [excluding the business of Krazy Kebab Co. and its investment in Peanutbutter] for a total consideration of '' 4,196.00.
58. The Company has generally been regular in depositing provident fund dues for employees on time, except in few cases due to Aadhaar Card demographic mismatches. The Company has already initiated the necessary steps to minimise such mismatches in future.
59. The previous year numbers have been regrouped/reclassified wherever necessary to confirm the current year presentation. The impact of such reclassification/regrouping is not material.
Mar 31, 2024
B) RIGHTS, PREFERENCES AND RESTRICTIONS ATTACHED TO EQUITY SHARES
The Company has only one class of equity share having a par value of '' 1.00/- per share. Each holder of the equity share is entitled to one vote per share and is entitled to dividend declared, if any. The paid up equity shares of the Company rank pari-passu in all respects, including dividend. In the event of liquidation of the Company, the holders of the equity shares will be entitled to remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholder.
a) Share application pending allotment represents the amount received on the share application on which allotment is not yet made.
b) Securities premium is used to record the premium on issue of shares. It will be utilised in accordance with the provisions of the Companies Act, 2013.
c) Employee stock option outstanding account is used to record the impact of employee stock option schemes. Refer note 42 for further details of these plans.
d) General reserve are free reserves of the Company which are kept aside out of the Company''s profit to meet the future requirements as and when they arise. The Company had, in the previous years, transferred a portion of profit after tax to general reserve pursuant to the provisions of the erstwhile Companies Act, 1956.
e) Capital reserve is on account of merger of entities under common control . Refer note 50 for further details .
f) Retained earnings are the accumulated losses earned by the Company till date, as adjusted for distribution to owners.
Other comprehensive income pertains to remeasurement gains/ (losses) on defined benefit plans, which are transferred to retained earnings at the end of the year.
*Consequent to the merger of Devyani Food Street Private Limited and Devyani Airport Services (Mumbai) Private Limited (erstwhile wholly-owned subsidiary companies), the Company has availed certain income tax benefits for the previous year amounting to '' 106.42 and has recognised deferred tax assets on temporary differences available with the transferor companies (wholly owned subsidiaries) amounting to '' 131.29 during the year ended 31 March 2024, based on the business projection of taxable earnings available at that point in time of the Company.
# During the previous year, owning to improved financial performance of the Company and expected taxable earnings for near future at that point in time, the Company recognised deferred tax asset on available tax benefits amounting to '' 855.97.
@ The Company has not recognised the deferred tax asset on provision for impairment of subsidiary as the Company believes that there will not be sufficient taxable earnings available to claim benefits of such losses in foreseeable future.
* The carrying amounts of loans, trade receivables, cash and cash equivalents, bank balances other than cash and cash equivalents, other current financial assets, trade payables and Other financial liabilities represents employee related payables, capital creditors approximates the fair values, and due to their short-term nature. The other non-current financial assets represents bank deposits (due for maturity after twelve months from the reporting date) and interest accrued but not due on bank deposits, the carrying value of which approximates the fair values as on the reporting date.
** For details regarding charge on such current financial assets - refer note 17.
# The Company''s lease liabilities and borrowings have fair values that approximate to their carrying amounts as they are based on the net present value of the anticipated future cash flows.
@ Measured using level 3 inputs.
Other notes:
The investment in equity and preference shares of subsidiaries are measured at cost. Refer note 6A for further details. There has been no transfer from level 3 to level 1 and level 2 for the year ended 31 March 2024 and 31 March 2023.
Valuation techniques used to determine fair values:
Specific valuation techniques used to value financial instruments include:
- Fair value of financial instruments using present value techniques, which is based on discounting expected cash flows using a risk-adjusted discount rate.
The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. This team performs valuation either internally or externally through valuers and reports directly to the senior management. Discussions on valuation and results are held between the senior management and valuation team on annual basis. Further, the carrying value of investments measured at FVTPL, are not material.
Significant inputs
Significant unobservable input used in Level 3 fair values of investments measured at FVTPL is discount rate which is weighted average cost of borrowing of the Company plus spread of corporate guarantee commission which is 8.37% (31 March 2023: '' 7.40%) and estimated cash flows of respective companies in which investment in preference shares is made.
The carrying values of investments measured through at fair value through profit and loss are not material. Hence the management believes, changes in significant observable inputs will not have a material impact of financial position of the Company.
b. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
⢠Credit risk;
⢠Liquidity risk;
⢠Market Risk - Interest Rate; and
⢠Market Risk - Foreign Currency
Risk Management Framework
The Board of Directors of the Company is responsible for reviewing the risk management policies and ensuring its effectiveness.
The Company''s risk management policies are established to identify and analyse the risks faced by the Company to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in the market conditions and the Company''s activities.
The Board of Directors oversees how management monitors compliance with Company''s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risk faced by the Company.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
Credit risk on cash and cash equivalents and bank deposits (shown under bank balances other than cash and cash equivalents, above) and other financial assets is limited as the Company generally invests in deposits with banks with high credit ratings assigned by domestic credit rating agencies. The other financial assets primarily represents security deposits given to lessors for premises taken on lease. Such deposits will be returned to the Company on vacation of the premises or termination of the agreement whichever is earlier. Loan to subsidiaries will be repaid as per the terms of the agreement and there has been no default in repayment of such loans by subsidiaries.
The exposure to the credit risk at the reporting date is primarily from loan to subsidiaries, security deposit receivables and investment in subsidiaries. The Investment and Borrowing Committee monitors the investment in subsidiaries and loans granted to subsidiaries and it evaluates if any impairment is required. As at year end, Investment and Borrowing Committee based on the internal and external valuation and after assessing the performance of the subsidiaries, is of the view that impairment is required (refer note 32).
Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India and Nepal. Trade receivables also includes receivables from credit card companies and online aggregator platforms, which are generally realisable on fortnightly basis. The Company does monitor the economic environment in which it operates. The Company manages its credit risk through credit approvals, establishing credit limits and continuously monitoring credit worthiness of customers to which the Company grants credit terms in the normal course of business.
The Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available internal credit risk factors such as the Company''s historical experience for customers. Based on the business environment in which the Company operates, management considers that the trade receivables are in default (credit impaired) if the payments are more than 90 days past due however, the Company based upon past trends determines an impairment allowance for loss on receivables (other than receivables from related parties) outstanding for more than 180 days past due. Majority of trade receivables are from domestic customers, which are fragmented and are not concentrated to individual customers. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
- For trade receivables ageing refer note 11. Also, the management of the Company has preferred credit risk assessment on individual basis for trade receivables.
- For security deposits and other receivables also management has preferred credit risk assessment at category level and individual level. Based on this, the management has concluded that there are no significant Impact other than already provided for, in the standalone financial statements (refer note 8).
(ii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The Company''s approach to manage liquidity is to have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed circumstances, without incurring unacceptable losses or risking damage to the Company''s reputation.
The Company''s liquidity management process as monitored by management, includes the following:
- Day to day funding, managed by monitoring future cash flows to ensure that requirements can be met.
- Maintaining rolling forecasts of the Company''s liquidity position on the basis of expected cash flows.
- It maintains adequate source of financing through the use of short term bank deposits and cash credit facility.
- The Company assessed the concentration of risk with respect to its financial liabilities and concluded it to be low.
As on 31 March 2024, the Company has undrawn credit facility for '' 533.60 (31 March 2023: '' 975.33)
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The contractual cash flow amounts are gross and undiscounted.
(iii) Market risk
Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk namely: currency risk and interest rate risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s borrowings with floating interest rates.
The Company is exposed to interest rate risk on account of variable rate borrowings. The Company''s risk management policy is to mitigate its interest rate exposure in accordance with the exposure limits advised from time to time.
B. Currency risk
Currency risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to the effects of fluctuation in the prevailing foreign currency exchange rates on its financial position and cash flows. Exposure arises primarily due to exchange rate fluctuations between the functional currency and other currencies from the Company''s operating, investing and financing activities. The Investment and Borrowing Committee evaluates foreign exchange rate exposure arising from foreign currency transactions on periodic basis and follows appropriate risk management policies.
A reasonably possible strengthening (weakening) of the Indian Rupees against below currencies as at the year end would have affected the measurement of financial instruments denominated in foreign currency and affected profit or loss and other equity by the amounts shown below. This analysis is performed on foreign currency denominated monetary financial assets and financial liabilities outstanding as at the year end. This analysis assumes that all other variables, in particular interest rates, remain constant.
C. Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company''s performance to developments affecting a particular industry. Based upon the Company''s evaluation, there is no excessive risk concentration.
iv. Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised
on a straight-line basis as an expense in standalone Statement of profit and loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.
B. Leases where the Company is a lessor
The Company has sub-leased out some of its leased properties primarily in various food courts. All leases are classified as operating leases from a lessor perspective with the exception of certain sub-leases, which the Company has classified as finance subleases based on the reporting requirement.
i. Finance lease (sub leases classified as finance leases)
During the year ended 31 March 2024 and year ended 31 March 2023, the Company has sub-leased some of the portions of leased properties, the Company makes an overall assessment of whether the sublease to be classified as finance lease considering the recognition criteria as per Ind AS 116 - ''Leases''
ii. The incremental borrowings rate range is between 10.25% p.a. - 11.55% p.a. (31 March 2023: 9.25% p.a. - 11.55% p.a.). The management of the Company estimates the loss allowance on finance lease receivables at the end of the reporting period at an amount equal to lifetime expected credit loss under simplified approach. None of the finance lease receivables at the end of the reporting period is past due, and taking into account the historical default experience and the future prospects of the industries in which the lessees operate, together with the value of collateral held over these finance lease receivables (refer note 8), the management of the Company consider that no finance lease receivable is impaired.
The Company entered into finance leasing arrangements as a lessor for certain leased properties under sub leasing arrangements. The term of finance leases entered into is ranging from 4.64 - 17.83 years (31 March 2023: 3.16 - 18.01 years). The Company is not exposed to foreign currency risk as a result of the lease arrangements, as all leases are denominated in ''. Residual value risk on such right of use assets under lease is not significant.
iii. Operating lease (sub leases classified as operating leases)
Operating leases, in which the Company is the lessor, relate to leased and owned properties by the Company with lease terms of between 1 to 12 years. The unguaranteed residual values do not represent a significant risk for the Company, as they relate to leased properties of lessor under sub leasing contracts which are located in a location with active market for lessees. The Company did not identify any indications that this situation will change.
Estimation of fair value
* The Company''s leasehold investment properties consist of right-of-use assets In leased food courts subleased to other operators, which has been determined based on the nature, characteristics of leases of each property.
#The fair value of investment property has been determined by independent registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017, having appropriate recognised professional qualification and recent experience in the location and category of the property being valued. The fair value measurement has been categorized as level 3 inputs and has been arrived at using discounted cash flow projections based on reliable estimates of future cash flows considering growth in rental income of 8% to 10% (31 March 2023:8% p.a. to 10% p.a) and discount rate of 13.58% p.a. (31 March 2023: 14.20% p.a.). The impacts of senstivities of the estimates use while valuation, are not material to the Company.
iv. Presenting cashflows
The Company classifies cash outflows to acquire or to construct the investment properties as investing cash flows and rental inflows as operating cash flows.
Impairment of leasehold investment properties:
In accordance with Ind AS 36 "Impairment of Assets", such investment is considered as a separate cash generating unit (CGU) for the purpose of impairment review. Management periodically assesses whether there is an indication that such investment may be impaired. For investment, where impairment indicators exists, management compares the carrying amount of such investment with its recoverable amount. Recoverable amount is value in use of the investment computed based upon discounted cash flow projections. As on the reporting date for current year and the previous year, the recoverable amount of this cash generating unit is determined at '' 251.32 (31 March 2023: '' 282.01) through a registered independent valuer, based on the value in use calculation which uses cash flow projections based on the projected business operations. The Company has determined an impairment charge of '' Nil (31 March 2023: Nil) based on the discount rate of 13.58% p.a (31 March 2023: 14.20% p.a) and rental income growth rate of 8.00% p.a.to 10.00% p.a.(31 March 2023: 8.00% p.a. to 10.00% p.a.). An analysis of the sensitivity of the computation to a change in key parameters (rental income and discount rates), based on reasonable assumptions, Management is of the view that there would be no material impact to the impairment charge which has already been recognised in the standalone financial statements of the Company in the previous years. Further, there is significant headroom available between carrying values of leasehold investment properties and its recoverable value as at reporting dates.
For owned investment properties also, the recoverable values of owned investment properties held by the Company is significantly higher than the carrying value. Therefore, no impairment is required.
A Pursuant to the order of the Hon''ble National Company Law Tribunal dated 13 July, 2023 with appointed date as on 01 April, 2022, which became effective upon filing of the certified true copy of the Order with the Registrar of Companies, NCT of Delhi & Haryana, on 18 August 2023, both subsidiaries have been merged with the Company and accordingly transactions reported between the holding company and these two subsidaries, have not been reported.
*Acquired on 17 January 2024. The Company''s control has been established basis the ownership interest acquired and power to govern the operations/relevant activities of the acquired entities. (refer note 49)
# As per section 203 of the Companies Act, 2013, definition of Key Managerial Personnel includes Chief Executive Officer (CEO), Chief Financial Officer (CFO) and Company Secretary.
(vii) Guarantees/security given by the Company on behalf of the Other party
1. The Company has given a corporate guarantee of THB 2500 million to Bangkok Bank Public Company Limited (Thailand) in respect of term loan and other credit facilities availed by Restaurants Development Co., Ltd.(subsidiary company). The amount outstanding as on 31 March 2024 amounts to '' 5,689.24.
2. The Company has given a corporate guarantee of NGN 1250 million to Standard Chartered Bank (Nigeria) in respect of term loan and other credit facilities availed by Devyani International (Nigeria) Ltd.(subsidiary company). The amount outstanding as on 31 March 2024 amounts to '' 78.31.
(V) Terms and conditions
All transactions with related parties are made on the terms equivalent to those that prevail in arm''s length transactions and within the ordinary course of business. Outstanding balances at respective year ends are unsecured and settlement is generally done in cash.
39. CONTINGENT LIABILITIES, COMMITMENTS AND OTHER CLAIMS
(to the extent not provided for)
Contingent liabilities and other claims:
(a) Claims against the Company not acknowledged as debts-:
|
Particulars |
As at 31 March 2024 |
As at 31 March 2023# |
|
(i) Claims made by direct and indirect tax authorities:* |
||
|
(i) Goods and service tax (on account of input credit mismatches) |
20.85 |
138.45 |
|
(ii) Value added tax |
2.79 |
25.56 |
|
(iii) Service tax |
15.37 |
15.37 |
|
(iv) Income tax (on account of expense disallowances) |
258.71 |
278.85 |
|
297.72 |
458.23 |
|
|
(ii) Others (miscellaneous claims in relation to Company''s operations) # |
8.07 |
26.85 |
*Against the total tax demand of '' 297.72 (31 March 2023:'' 458.23), the Company has filed appeals before various tax authorities. Based on management assessment and upon consideration of advice from the independent legal counsels, the management believes that the Company has reasonable chances of succeeding before the tax authorities and does not foresee any material liability. Pending the final decision on this matter, no adjustment has been made in the standalone financial statements.
# The Company is party to various legal proceedings in the normal course of business and does not expect the outcome of these proceedings to have any adverse effect on its financial position and hence no provision has been recorded against these legal proceedings at this stage. Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending with various forums/authorities. Accordingly, the above mentioned contingent liabilities are disclosed at undiscounted amount.
|
(b) Others |
||
|
Particulars |
As at 31 March 2024 |
As at 31 March 2023 |
|
Commitments: |
||
|
a. Estimated amount of contracts remaining to be executed on capital account and not provided for [net of advances of '' 47.87 (31 March 2023: '' 98.68)] |
1,009.62 |
1,591.04 |
|
b. Guarantees issued on behalf of subsidiaries for business purposes |
5,767.55 |
- |
|
Note: |
||
1. The Company has entered Development Agreements with Yum Restaurant (India) Private Limited and Costa International Limited. Based on such agreements, the Company has commitments to open specified number of restaurants under respective agreements from time to time. The amount of such commitments is not quantifiable as of now.
2. During the years ended 31 March 2024 and 31 March 2023 the Company has provided a letter of support for financial and operational assistance to RV Enterprizes Pte. Limited, Devyani International Nigeria Limited, Blackbriar Company Limited, Restaurant Development Co,. Ltd, White Snow Company Limited and Yellow Palm Company Limited for ongoing operations for at least 12 months from the reporting dates.
A. Defined contribution plan
An amount of '' 291.20 (31 March 2023: '' 209.13) has been recognised as an expense in respect of the Company''s contribution to provident and other funds deposited with the relevant authorities and has been charged to the Standalone Statement of Profit and Loss.
B. Defined benefit plans
The Company operates a gratuity plan wherein every employee is entitled to the benefit. Gratuity is payable to all eligible employees (who have completed 5 years or more of service) of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the Payments of Gratuity Act, 1972. Gratuity liability is partially funded by the Company through annual contribution to DIL Employees Gratuity Trust (the ''Trust'') against ascertained gratuity liability. Trustees administer contributions made to the Trust and contributions are invested in a scheme with the Life Insurance Corporation of India as permitted by law of India.
The funding requirements of the plan are based on the gratuity fund''s actuarial measurement framework set out in the funding policies of the plan. The funding of the plan is based on a separate actuarial valuation for funding purpose for which assumptions may differ from the assumptions set out in (iii) below. Employees do not contribute to the plan.
The Company has defined that, in accordance with the terms and conditions of the aforesaid plan and in accordance with statutory requirements (including minimum funding requirements) of the plan of relevant jurisdiction, the present value of refund or reduction in future contributions is not lower than the balance of the total fair value of the plan assets less than total present value of obligations.
The following table sets out the status of the gratuity plan as required under Ind AS 19 - ''Employee Benefits''
The sensitivity analysis is based on a change in above assumption while holding all other assumptions constant. The changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method ( present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting year) has been applied when calculating the provision for defined benefit plan recognised in the Standalone Balance Sheet.
The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous years. Although the analysis does not take account of the full distribution of cash flows expected under the plan, it provides an approximation of the sensitivity of the assumptions shown.
Risk exposure:
The defined benefit plan is exposed to a number of risks, the most significant of which are detailed below:
Change in discount rates: A decrease is discount yield will increase plan liabilities
Mortality table: The gratuity plan obligations are to provide benefits for the life of the member, so increase in life expectancy will result in an increase in plan liabilities.
D. Code of Social Security
The Code on Social Security, 2020 ("the Code") relating to employee benefits during employment and postemployment received Presidential assent in September 2020. Subsequently, the Ministry of Labour and Employment had released the draft rules on the aforementioned Code. However, the same is yet to be notified. The Company will evaluate the impact and make necessary adjustments to the financial statements in the period when the Code will be notified and will come into effect.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker ("CODM") of the Company. The CODM is considered to be the Board of Directors who make strategic decisions and is responsible for allocating resources and assessing the financial performance of the operating segments.
As the Company''s business activity primarily falls within a single business and geographical segment, i.e., food and beverages, and in India, thus there are no additional disclosures to be provided under Ind AS 108 - ''Operating Segments''. The CODM considers that the various goods and services provided by the Company constitutes single business segment.
a. Description of share based payment arrangements i. Share Options Schemes (equity settled)
ESOS - 2011
On 20 September 2011 and 20 December 2011, the Board of Directors approved the Employees Stock Option Scheme 2011 ("ESOS 2011"), which was approved by the shareholders on 20 December 2011 and subsequently on 18 May 2012 for increasing the ceiling limit to 49,00,000 Options ("Ceiling Limit") with condition at any given point of time no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting. As per ESOS 2011, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of '' 111.70. ESOS 2011 was formulated with the objective to enable the Company to grant Options for equity shares of the Company to certain eligible employees, officers and directors of the Company and its subsidiaries, to purchase shares from the Company at a pre-determined price. A resolution was passed in the meeting of the Board of Directors held on 6 May 2014 wherein certain additional Options were granted at the same terms and conditions as mentioned in ESOS 2011.
Further, ESOS 2011 was amended subsequently and was approved by the shareholders on 17 March 2021. The resolution provides the delinking of vesting schedule of the Options from filing of the red herring prospectus (RHP) by the Company and for aligning the Scheme in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/POLICY CELL/2/2015 dated 16 June 2015 ("SEBI SBEB Regulations") and accordingly all Options under ESOS 2011 were vested immediately on the day of passing the said resolution and the exercise window for ESOS 2011 was opened by the Nomination and Remuneration Committee on 17 March 2021.
ESOS - 2018
On 6 April 2018, the Board of Directors approved the Employees Stock Option Scheme 2018 ("ESOS 2018â), which was approved by the shareholders on 21 September 2018. ESOS 2018 has been formulated with the same objective as ESOS 2011. ESOS 2018 provides that Options so granted, shall not represent more than 5% of the fully diluted share capital of the Company at any given point of time ("Ceiling Limit") and no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting. As per ESOS 2018 Grant letters, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of '' 306.12.
Further ESOS 2018 was subsequently amended and approved by the shareholders on 17 March 2021 for linking the vesting of options to listing date of shares of the Company and to align the Scheme with compliance requirement of SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/ POLICY CELL/2/2015 dated 16 June 2015 ("SEBI SBEB Regulations"). Under the ESOS 2018, no vesting shall occur until date of listing of shares on recognized Stock Exchanges by the Company in respect of proposed offer.
ESOS - 2021
On 17 March 2021, the Board of Directors approved the Employees Stock Option Scheme 2021 ("ESOS 2021") in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/POLICY CELL/2/2015 dated 16 June 2015 ("SEBI SBEB Regulations"), which was approved by the shareholders on 17 March 2021. ESOS 2021 was formulated with the same objective of ESOS 2011 and ESOS 2018.
ESOS 2021 provides that Options so granted, shall not represent more than 5% of the fully diluted share capital of the Company at any given point of time ("Ceiling Limit") and no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting by way of a special resolution. As per ESOS 2021 Grant letters, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of '' 433.28.
Note: The aforementioned schemes have been defined prior to giving effect to stock split from '' 10/- to '' 1/- with effect from 25 March 2021.
The risk free interest rates are determined based on current yield to maturity of 10 years Government Bonds with similar residual maturity equal to expected life of the Options. Expected volatility calculation is based on historical daily closing stock prices of competitors using standard deviation of daily change in stock price. The minimum life of the stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which options cannot be exercised. The expected life has been considered based on average of maximum life and minimum life and may not necessarily be indicative of exercise patterns that may occur.
(C) Guarantees
(i) The company has given a corporate guarantee of THB 2,500 million to Bangkok Bank Public Company Limited (Thailand) in respect of term loan and other credit facilities availed by Restaurants Development Co., Ltd. (subsidiary company). The amount outstanding as on 31 March 2024 amounts to '' 5,689.24 .
(ii) The company has given a corporate guarantee of NGN 1,250 million to Standard Chartered Bank (Nigeria Limited) in respect of term loan and other credit facilities availed by Devyani International (Nigeria) Ltd.(subsidiary company). The amount outstanding as on 31 March 2024 amounts to '' 78.31.
* refer note 7 for particulars of the loans and advances given.
# refer note 6A for full particulars of the investments made.
## the above investments are shown at cost as per financial reporting requirements.
** The investments and loans have been impaired during the year (refer note 48)
Note: For other commitments refer note 39(b)
Note: The above loans and investements have been given for the general purpose except the investement made in Devyani International DMCC for the purpose of onward acquisition of operating entities in Thailand.
45. IMPAIRMENT OF NON-FINANCIAL ASSETS
Non financial assets i.e PPE and other intangible assets (other than goodwill and investment properties)
In accordance with Ind AS 36 "Impairment of Assetsâ, the Company has identified individual quick service restaurant (store) as a separate cash generating unit (CGU) for the purpose of impairment assessment. Management periodically assesses whether there is an indication that a CGU may be impaired using a benchmark of two-year''s history of operating losses or marginal profits for a store, which is even used by the management for the purpose of there internal reviews. In view of higher operating costs or decline in projected sales growth, certain stores have been impaired in the current and previous years. Based on the results of impairment testing for these stores in the current year, the property, plant and equipment, right-of-use assets and other intangible assets, carrying value of these stores aggregating '' 529.82 (net of opening provision for impairment of '' 12.26) (31 March 2023: '' 451.83 net of opening impairment provision of '' 53.38) have been reduced to the recoverable amount aggregating to '' 414.00 (31 March 2023: '' 368.03) by way of impairment charge of '' 115.82 (31 March 2023: '' 83.80). Recoverable amount is value in use of these stores computed based upon projected cash flows from operations with sales growth of 6% p.a. (31 March 2023: 6% p.a.) and salary growth rate of 6% p.a. (31 March 2023: 6% p.a.), over balance lease term, discounted at rate (determined by an independent registered valuer) of 13.58% p.a. (31 March 2023: 14.20% p.a.). Carrying value of a store includes property, plant and equipment, intangible assets used at a store, right-of-use assets and allocated corporate assets. Further carrying value and recoverable value of each store is calculated net of lease liabilities, beacuse these specific cash store are seprately identifiable.
Moreover, the impairment reversal of '' 72.56 (31 March 2023: '' 89.20) is primarily on account of stores where the actual sales growth rate has exceeded the projected sales growth rate, hence the recoverable amount aggregating to '' 2834.7 (31 March 2023: '' 2940.87) has exceeded the written down value of these stores aggregating '' 1736.72 (after considering impairment charge recorded in previous years amounting to '' 337.57) (31 March 2023: '' 1,673.00 after considering impairment charge recorded in preceding previous year amounting to '' 305.27).
Goodwill on business combination
During the previous years, the Company had acquired 73 stores from Yum Restaurants (India) Private Limited ("Yum") in the States of Goa, Kerala, Karnataka, Andhra Pradesh and Telangana (except in the city of Hyderabad). The Company acquired goodwill of '' 504.57 through business combinations which is attributable to the operational synergies and expansion on market share. In order to further expand its business operations, the Company has opened new stores in these States. The Company has assessed goodwill for impairment on the basis of acquired stores as well as new stores. Management periodically assesses whether there is an indication that such goodwill may be impaired. For goodwill, where impairment indicators exists, management compares the carrying amount of such goodwill with its recoverable amount. As on the reporting date, the recoverable amount of this cash generating unit is determined at '' 2315.69 (31 March 2023:
'' 1,945.57). Recoverable amount is value in use of these stores computed based upon projected cash flows from operations with sales growth of 6% p.a. (31 March 2023:6% p.a.) and salary growth rate of 6% p.a. (31 March 2023: 6% p.a.), over balance lease term, discounted at rate (determined by an independent registered valuer) of 13.58% p.a (31 March 2023: 14.20% p.a). As the recoverable amount is in excess of the carrying amount of goodwill, hence no impairment loss has been recorded on the aforesaid goodwill during the year.
The key assumptions have been determined based on management''s calculations after considering, past experiences and other available internal information and are consistent with external sources of information to the extent applicable. The time period considered is contractual period of stores in operation as on date.
For goodwill impairment assessment, management believes that any reasonably possible change in the key assumptions would not cause the carrying amount to exceed the recoverable amount of the said stores.
Management has identified that a reasonably possible change in the three key assumptions could cause a change in amount of impairment loss/ (reversal). The following table shows the amount by which the impairment loss/(reversal) would increase/ (decrease) on change in these assumptions by 1%. All other factors remaining constant.
The Company has established a comprehensive system of maintenance of information and documents that are required by the transfer pricing legislation under Section 92-92F of the Income tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by due date as required under the law. The management is of the opinion that its transactions with the associated enterprises are at arm''s length so that the aforesaid legislation will not have any impact on the standalone financial statements, particularly on the amount of tax expense and that of provision for taxation.
For the purpose of the Company''s capital management, capital includes issued equity capital, all other equity reserves attributable to the equity holders of the Company and combination of both long-term and short-term borrowings. The Company''s objective for capital management is to maximize shareholder''s value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plan and other strategic investment plans. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company''s funding requirements are met through equity infusions, internal accruals and a combination of both long-term and short-term borrowings. The Company raises long term loans mostly for its expansion requirements and based on the working capital requirement utilise the working capital facilities. The Company monitors capital on the basis of consolidated total debt to consolidated total equity on a periodic basis. As a part of its capital management policy the Company ensures compliance with all covenants and other capital requirements related to its contractual obligations. No changes were made in the objectives, policies or processes for managing capital during the year ended 31 March 2024 and 31 March 2023.
48. ASSESSMENT OF INVESTMENT IN AND LOAN TO SUBSIDIARY COMPANY
The Company holds 87.00% (31 March 2023: 87.00%) of equity share capital and 76.00% (31 March 2023: 76.00%) preference share capital of RV Enterprizes Pte. Limited (hereinafter referred to as "RVE"). The value of investments (equity and preference shares) as at the year end is '' 726.79 (31 March 2023: '' 724.23). The value of the loans to RVE, including interest accrued thereon is '' 433.30 (31 March 2023: '' 398.93). RVE is a special purpose vehicle, which has invested the funds in Devyani International (Nigeria) Limited (a step down subsidiary) through investment in shares and grant of loans USD 3.75 million(~? 252.51) (31 March 2023: USD 3.75 million (~? 252.51)) and USD 16.51 million (~? 1376.71) (31 March 2023: USD 16.56 million(~'' 1,361.57)), respectively. During the current year, the step down subsidiary has generated loss of '' 2,420.29 (31 March 2023: '' 37.56) and based on the cashflow projections of the step down subsidiary, RVE has impaired the investment and loans amounting to USD 3.75 million (31 March 2023: USD Nil) and USD 16.51 (31 March 2023: USD Nil), respectively. As at 31 March 2024, the management of the Company assessed the recoverability of the investments and loans by carrying out a valuation of the stepdown subsidiary''s business with the help of an external valuation expert using the discounted cashflow method which resulted into the impairment of the said balances and accordingly the Company recognised Impairment of '' 1,160.09 (31 March 2023: '' Nil), which has been presented as exceptional item (refer note 32). Considering the value and incidence of this transaction the management, the impairment loss has been disclosed as exceptional item (refer note 32).
Key assumptions used in the calculating the recoverable value of the step down subsidiary:
- discount rates 26.30% (31 March 2023: 28.60% )
- terminal growth rate 3.00% (31 March 2023: 3.00%)
Major reasons which results in impairment was significant devaluation of the functional currency of Nigerian entity against USD. Also there new certain operational reasons which contibution for impairment in investment and loan.
49. INVESTMENT IN DEVYANI INTERNATIONAL DMCC
The Company holds 51% of equity share capital of Devyani International DMCC, Dubai (hereinafter referred to as "DID"). The carrying value of investment as at the year end is '' 3,427.07. The Company and Camas, an affiliate of Temasek, invested AED 150.47 million (~ '' 3,407.85) and AED 145.53 million (~ '' 3,295.96) respectively, in DID under the Investment Agreement dated 18 December 2023 in ratio of 51:49. DID is subsidiary of the Company wherein the Company holds majority stake (51%) and has power to govern all relevant activites of DID thereby establishing control over DID. Under the Investment Agreement, Camas has exit right by way of a put option towards the other party after an agreed period.
On 17 January 2024, DID acquired Restaurants Development Co., Ltd. ("RD"), operating chain of 283 KFC restaurants in Thailand, by way of acquiring controlling interest in RD and its related entities for the consideration of THB 4,681.99 million (~ '' 10,913.28 million) including payment of erstwhile shareholder''s loan, pursuant to the Share Purchase Agreement dated 18 December 2023. Under the said agreement, DID has obtained power to govern the all relevant activities of RD and its related entities and has therefore, established its control over the aforesaid entities.
50. SCHEME OF AMALGAMATION-BETWEEN WHOLLY OWNED SUBSIDIARIES
The Board of Directors of the Company ("Board") at its meeting held on 13 December 2021, had approved the Sceme of amalgamation of Devyani Food Street Private Limited and Devyani Airport Services (Mumbai) Private Limited (erstwhile wholly-owned subsidiary companies) (here in after referred as "transferor companiesâ) with the Company. The Hon''ble National Company Law Tribunal had approved the scheme vide Order dated 13 July 2023 with appointed date as 01 April 2022. The Scheme became effective upon filing of the certified true copy of the Order with the Registrar of Companies, NCT of Delhi & Haryana, on 18 August 2023. Accordingly, comparatives of standalone financial statements have been restated from the beginning of the previous year, being 01 April 2022.
With effect from the appointed date, the entire business and whole of the undertaking (including all assets, titles, licenses, liabilities, rights, commitments and obligations) of the transferor companies, without any further act, instrument or deed, stood transferred to and vested in the Company, as a going concern.
As the transferor companies are wholly owned subsidiaries of the Company i.e. the entire issued, subscribed and paid up share capital of the transferor companies were held by the Company and upon this Scheme becoming effective, entire such capital stood cancelled and the Company was not required to issue and allot any shares to the shareholders of the transferor companies in accordance with the Scheme. The intercompany balances also stood cancelled on the appointed date by virtue of the Scheme.
Accounting Treatment:
The Company has accounted for such merger in accordance with "Pooling of interest method" of accounting as laid down in Appendix C of IND AS-103 Business Combinations of Entities Under Common Control notified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as specified in the Scheme.
Further, on the effective date, the authorised equity share capital '' 645.00 and authorised preference share capital '' 30.00 of the transferor companies stands transferred to the Company without payment of any additional fees or charge as per the Scheme.
52. INVESTMENT IN DEVYANI RK PRIVATE LIMITED, A JOINT VENTURE
During the year ended 31 March 2024, the Company has entered into an agreement with R.K. Associates & Hoteliers Private Limited ("RKAHPL") and jointly incorporated an entity, namely âDevyani RK Private Limited'' ("DRKPL") on 30 January 2024 to undertake business relating to development, operation and maintenance of Food Courts, standalone Food and Beverage outlets, and Lounges within the existing or future territories of railway stations. Further, the arrangement has been considered as a joint venture basis on the jointly controlled matters agreed with parties under the arrangement. However the Company holds 51% economic interest within the joint venture. The joint venture has not started its business operations as of the reporting date.
53. ADDITIONAL REGULATORY INFORMATION NOT DISCLOSED ELSEWHERE IN THE STANDALONE FINANCIAL INFORMATION
a) The Company does not have any Benami property and no proceedings have been initiated or pending against the Company for holding any Benami property, under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.
b) The Company does not have any transactions with struck off companies under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956, except for the parties mentioned below:
c) The Company does not have any charge which is yet to be registered with ROC beyond the statutory period. During the previous years, the Company had obtained loans from banks which had been fully repaid. However pending NOCs from banks, the satisfaction of charges is yet to be registered with ROC in some of the cases.
d) The Company has not traded or invested in Crypto currency or Virtual Currency during the current and previous financial year.
e) The Company has not advanced or provided loan to or invested funds in any entity(ies) including foreign entities (Intermediaries) or to any other person(s) other than disclosed in note 55, with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
f) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(g) The Company has not undertaken any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(h) The Company has not been declared a ''Wilful Defaulter'' by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
(i) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.
(j) For compliance with scheme of amalgamation (refer note 50)
(k) The Company has followed cost model while valuing its property, plant & equipments. The same is in accordance with the reporting standard.
The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies covered under the Act, which uses accounting software for maintaining its books of accounts, shall only use such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
The Company uses accounting softwares for maintaining its accounting records, sales invoicing & inventory management . During the year, the audit trail (edit log) feature at the application level was operating for all relevant transactions recorded in such software. However, the audit trail (edit log) feature for any direct changes made at the database level was not enabled for the such accounting softwares.
The Company uses another accounting software for maintenance of payroll records which is operated by a third-party software service provider. The âIndependent Service Auditor''s Report on a Description of the Service Organization''s System and the Suitability of the Design and Operating Effectiveness of Controls'' (based on the criteria for a description of a service organization''s system as set forth in DC Section 200, 2018 Description Criteria for a Description of a Service Organization''s System in a SOC 2 Report, in AICPA Description criteria), does not provide information on retention of audit trail (edit logs) for any direct changes made at the database level. However, the audit trail (edit log) feature at the application level was operating for all relevant transactions recorded in the software.
57. The Company has evaluated subsequent events from the balance sheet date through May 14, 2024, the date at which the financial statements were available to be issued and determined that there are no material items to disclose.
58. The Company has generally been regular in depositing provident fund dues for employees on time, except in few cases due to Aadhaar Card demographic mismatches. The Company has already initiated the necessary steps to minimise such mismatches in future.
59. Previous year''s reported numbers have been restated in order to comply with the reporting requirements of the Indian Accounting Standards (refer note 50).
Mar 31, 2023
AThe Company had given loan to Devyani International (Nepal) Private Limited, a wholly owned subsidiary, at interest rate which is lower than the market rate of interest. Such loan had been fair valued and recorded as additional investment in the wholly owned subsidiary per generally accepted accounting principles in India and also the Company had given financial guarantee to Everest Bank Limited on behalf of Devyani International (Nepal) Private Limited, a wholly owned subsidiary, for the loan availed by the wholly owned subsidiary. Such financial guarantee had been fair valued and recorded as an additional investment in the wholly owned subsidiary.
*The Company had given financial guarantee to Yes Bank Limited on behalf of Devyani Food Street Private Limited, a wholly owned subsidiary, for the loan availed by the wholly owned subsidiary. Such financial guarantee had been fair valued and recorded as an additional investment in the wholly owned subsidiary per generally accepted accounting principles in India. During the year ended 31 March 2022, the Company has waived INR 102.43 receivables of its wholly owned subsidiary, which is in substance being treated as capital contribution (investment) made towards the subsidiary.
**The preference shares are redeemable at the option of the subsidiary RV Enterprizes Pte. Limited, Singapore, hence the same are carried at cost considering the investment evidencing a residual interest and therefore treated as equity investment.
Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity share having a par value of INR 1.00/- per share. Each holder of the equity share is entitled to one vote per share and is entitled to dividend declared, if any. The paid up equity shares of the Company rank pari-passu in all respects, including dividend. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of the equity shares will be entitled to remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholder.
For the period of five years immediately preceding the reporting date, there was no share allotment made for consideration other than cash. Further, no bonus shares have been issued and there has been no buy back of shares during the period of five years immediately preceding 31 March 2023 and 31 March 2022.
a) Share application pending allotment represents the amount received on the share application on which allotment is not yet made.
b) Securities premium is used to record the premium on issue of shares. It will be utilised in accordance with the provisions of the Companies Act, 2013.
c) General reserve are free reserves of the Company which are kept aside out of the Company''s profit to meet the future requirements as and when they arise. The Company had, in the previous years, transferred a portion of profit after tax to general reserve pursuant to the provisions of the erstwhile Companies Act, 1956.
d) Retained earnings are the accumulated losses earned by the Company till date, as adjusted for distribution to owners.
e) Employee stock option outstanding account is used to record the impact of employee stock option schemes. Refer note 42 for further details of these plans.
b) Other comprehensive income
Other comprehensive income pertains to remeasurement gains/ (losses) on defined benefit plans, which are transferred
to retained earnings at the end of the year.
(a) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date. Further, there were no loans taken by the Company during the year ended 31 March 2023.
(b) The quarterly returns/statements of current assets filed by the Company with banks or financial institutions in relation to secured borrowings / sanctioned loans, wherever applicable, are in agreement with the books of accounts.
(c) The charge created on property, plant and equipment as at 31 March 2023 is for undrawn facilities/sanctioned facilities.
(i) The Company has measured its deferred tax assets and liabilities based on the income tax rates that are expected to apply to the period when such assets/liabilities are expected to be realized/settled. As per section 115BAA of the Income-tax Act 1961, as introduced by the Taxation Laws (Amendment) Ordinance, 2019 (Ordinance), the Company has opted lower tax rate of 25.168%. Hence, deferred tax asset has been measured at 25.168%.
(ii) During the year ended 31 March 2022, the Company had recognized deferred tax assets of INR 410.78 based on the business projections of taxable earnings in the near future at that point in time. While recognizing such deferred tax assets, the Company has been cognizant enough to consider the history of losses they have, uncertainties of business in place and rising input costs. Carrying value of deferred tax assets (net) is INR 410.78 as at 31 March 2022. However, during the current year, owning to improved financial performance of the Company and expected taxable earnings for near future, the Company has recognised the unrecognised deferred tax asset amounting to INR 868.84 and the carrying value is INR 901.79 as at 31 March 2023.
35. FAIR VALUE MEASUREMENT AND FINANCIAL INSTRUMENTS
a. Financial instruments - by category and fair values hierarchy
The following table shows the carrying amounts and fair value of financial assets and financial liabilities, including their levels in the fair value hierarchy.
Other notes:
The investment in equity and preference shares of subsidiaries are measured at cost. Refer note 6A for further details. There has been no transfer from level 3 to level 1 and level 2 for the year ended 31 March 2023 and 31 March 2022. Valuation techniques used to determine fair values:
Specific valuation techniques used to value financial instruments include:
- Fair value of financial instruments using present value techniques, which is based on discounting expected cash flows using a risk-adjusted discount rate.
The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. This team performs valuation either internally or externally through valuers and reports directly to the senior management. Discussions on valuation and results are held between the senior management and valuation team on annual basis. Further, the carrying value of investments measured at FVTPL, are not material.
Significant inputs
Significant unobservable input used in Level 3 fair values of investments measured at FVTPL is discount rate which is weighted average cost of borrowing of the Company plus spread of corporate guarantee commission which is 7.40% (31 March 2022: INR 7.20%) and estimated cash flows of respective companies in which investment in preference shares is made.
Risk Management Framework
The Board of Directors of the Company is responsible for reviewing the risk management policies and ensuring its effectiveness.
The Company''s risk management policies are established to identify and analyse the risks faced by the Company to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in the market conditions and the Company''s activities.
The Board of Directors oversees how management monitors compliance with Company''s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risk faced by the Company.
i. Credit risk
The maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the balance sheet
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
Credit risk on cash and cash equivalents and bank deposits (shown under bank balances other than cash and cash equivalents, above) and other financial assets is limited as the Company generally invests in deposits with banks with high credit ratings assigned by domestic credit rating agencies. The other financial assets primarily represents security deposits given to lessors for premises taken on lease. Such deposits will be returned to the Company on vacation of the premises or termination of the agreement whichever is earlier. Loan to subsidiaries will be repaid as per the terms of the agreement and there has been no default in repayment of such loans by subsidiaries.
The exposure to the credit risk at the reporting date is primarily from loan to subsidiaries, security deposit receivables and investment in subsidiaries. The Investment and Borrowing Committee monitors the investment in subsidiaries and loans granted to subsidiaries and it evaluates if any impairment is required. As at year end, Investment and Borrowing Committee based on the internal and external valuation and after assessing the performance of the subsidiaries, is of the view that no impairment is required (refer note 32).
Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India and Nepal. Trade receivables also includes receivables from credit card companies and online aggregator platforms, which are generally realisable on fortnightly basis. The Company does monitor the economic environment in which it operates. The Company manages its credit risk through credit approvals, establishing credit limits and continuously monitoring credit worthiness of customers to which the Company grants credit terms in the normal course of business.
The Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available internal credit risk factors such as the Company''s historical experience for customers. Based on the business environment in which the Company operates, management considers that the trade receivables are in default (credit impaired) if the payments are more than 90 days past due however, the Company based upon past trends determines an impairment allowance for loss on receivables (other than receivables from related parties) outstanding for more than 180 days past due. Majority of trade receivables are from domestic customers, which are fragmented and are not concentrated to individual customers. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
- For trade receivables ageing refer note 11. Also, the management of the Company has preferred credit risk assessment on individual basis for trade receivables.
- For security deposits and other receivables also management has preferred credit risk assessment at category level and individual level. Based on this, the management has concluded that there are no significant Impact other than already provided for, in the standlone financial statements (refer note 8).
(ii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or other financial assets. The Company''s approach to manage
liquidity is to have sufficient liquidity to meet it''s liabilities when they are due, under both normal and stressed
circumstances, without incurring unacceptable losses or risking damage to the Company''s reputation.
The Company''s liquidity management process as monitored by management, includes the following:
- Day to day funding, managed by monitoring future cash flows to ensure that requirements can be met.
- Maintaining rolling forecasts of the Company''s liquidity position on the basis of expected cash flows.
- It maintains adequate source of financing through the use of short term bank deposits and cash credit facility.
- The Company assessed the concentration of risk with respect to its financial liabilities and concluded it to be
low
As on 31 March 2023 the Company has undrawn credit facility for INR 975.33 (31 March 2022: INR 936.87)
(iii) Market risk
Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk namely: currency risk and interest rate risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s borrowings with floating interest rates.
The Company is exposed to interest rate risk on account of variable rate borrowings. The Company''s risk management policy is to mitigate its interest rate exposure in accordance with the exposure limits advised from time to time.
B. Currency risk
Currency risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to the effects of fluctuation in the prevailing foreign currency exchange rates on its financial position and cash flows. Exposure arises primarily due to exchange rate fluctuations between the functional currency and other currencies from the Company''s operating, investing and financing activities. The Investment and Borrowing Committee evaluates foreign exchange rate exposure arising from foreign currency transactions on periodic basis and follows appropriate risk management policies.
Sensitivity analysis
A reasonably possible strengthening (weakening) of the Indian Rupees against below currencies as at the year end would have affected the measurement of financial instruments denominated in foreign currency and affected profit or loss and other equity by the amounts shown below. This analysis is performed on foreign currency denominated monetary financial assets and financial liabilities outstanding as at the year end. This analysis assumes that all other variables, in particular interest rates, remain constant.
C. Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company''s performance to developments affecting a particular industry. Based upon the Company''s evaluation, there is no excessive risk concentration.
During the year ended 31 March 2023 and 31 March 2022, consequential to COVID-19 pandemic, the Company has negotiated several rent concessions with the landlords. Further, in view of amendments by the Companies (Indian Accounting Standards) Amendment Rules, 2020, the Company has elected to apply the practical expedient of not assessing the rent concessions originally due on or before 30 June 2021 as a lease modification, as per MCA notification dated 24 July 2020, which has been further extended till 30 June 2022 on Ind AS 116 during the current year, for rent concessions received on account of COVID-19 pandemic.
Accordingly, as per requirements of MCA notifications, out of total rent concessions of INR Nil (31 March 2022: INR 271.49) confirmed till 31 March 2023, INR Nil (31 March 2022: INR 271.49) has been reduced towards rent expenses.
iv. Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in Statement of profit and loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.
B. Leases where the Company is a lessor
The Company has sub-leased out some of its leased properties primarily in various food courts. All leases are classified as operating leases from a lessor perspective with the exception of certain sub-leases, which the Company has classified as finance subleases.
The incremental borrowings rate range between 9.25% - 11.55% (31 March 2022: 9.25% - 11.55%).
The management of the Company estimates the loss allowance on finance lease receivables at the end of the reporting period at an amount equal to lifetime expected credit loss under simplified approach. None of the finance lease receivables at the end of the reporting period is past due, and taking into account the historical default experience and the future prospects of the industries in which the lessees operate, together with the value of collateral held over these finance lease receivables (see note 8), the management of the Company consider that no finance lease receivable is impaired.
The Company entered into finance leasing arrangements as a lessor for certain leased properties under sub leasing arrangements. The term of finance leases entered into is ranging from 2.92 - 18.01 years (31 March 2022: 3.16 - 18.01 years). The Company is not exposed to foreign currency risk as a result of the lease arrangements, as all leases are denominated in INR. Residual value risk on such right of use assets under lease is not significant.
ii. Operating lease (sub leases classified as operating leases)
Operating leases, in which the Company is the lessor, relate to leased properties by the Company with lease terms of between 1 to 9 years.
The unguaranteed residual values do not represent a significant risk for the Company, as they relate to leased properties of lessor under sub leasing contracts which are located in a location with active market for lessees. The Company did not identify any indications that this situation will change.
Estimation of fair value
* The Company''s leasehold investment properties consist of right-of-use assets in leased food courts, which has been determined based on the nature, characteristics of leases of each property.
The fair value of investment property has been determined by independent registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017, having appropriate recognised professional qualification and recent experience in the location and category of the property being valued. The fair value measurement has been categorized as level 3 inputs and has been arrived at using discounted cash flow projections based on reliable estimates of future cash flows considering growth in rental income of 8% to 10% (31 March 2022: 8% to 10% p.a) and discount rate of 14.20% p.a (31 March 2022: 12.09% p.a).
# The fair value of owned investment property has been determined by independent registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017, having appropriate recognised professional qualification and recent experience in the location and category of the property being valued. The fair value measurement has been categorized as level 3 inputs. The fair value has been arrived using market prevailing rates applicable to same location.
Impairment of leasehold investment properties:
In accordance with Ind AS 36 "Impairment of Assets", such investment is considered as a separate cash generating unit (CGU) for the purpose of impairment review. Management periodically assesses whether there is an indication that such investment may be impaired. For investment, where impairment indicators exists, management compares the carrying amount of such investment with its recoverable amount. Recoverable amount is value in use of the investment computed based upon discounted cash flow projections. As on the reporting date for current year, the recoverable amount of this cash generating unit is determined at INR 282.01 (31 March 2022: INR 244.95) through an registered independent valuer, based on the value in use calculation which uses cash flow projections based on the projected business operations. The Company has determined an impairment charge of INR Nil (31 March 2022: 65.43) based on the discount rate of 14.20% p.a (31 March 2022: 12.09% p.a) and rental income growth rate of 8.00% to 10.00% (31 March 2022: 8.00% to 10.00% p.a). An analysis of the sensitivity of the computation to a change in key parameters (rental income and discount rates), based on reasonable assumptions, Management is of the view that there would be no material impact to the impairment charge which has already been recognised in the standalone financial statements of the Company in the previous year. Further, there is significant headroom available between carrying values of leasehold investment properties and its recoverable value as at reporting dates.
During the years ended 31 March 2023 and 31 March 2022 the Company has provided a letter of support for financial and operational assistance to Devyani Food Street Private Limited, Devyani Airport Services (Mumbai) Private Limited, RV Enterprizes Pte. Limited and Devyani International Nigeria Limited for ongoing operations for atleast 12 months from the reporting dates.
During the previous year ended 31 March 2022, Devyani Airport Services (Mumbai) Private Limited converted its Non-cumulative Redeemable Preference Shares to Compulsorily Convertible Preference Shares ("CCPS") pursuant to provisions of Section 48 of the Companies Act, 2013 as per shareholder''s approval in Extra Ordinary General Meeting held on 17 August, 2021. Devyani Airport Services (Mumbai) Private Limited converted its CCPS to equity shares as on 01 October 2021.
(V) Terms and conditions
All transactions with related parties are made on the terms equivalent to those that prevail in arm''s length transactions and within the ordinary course of business. Outstanding balances at respective year ends are unsecured and settlement is generally done in cash.
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39. CONTINGENT LIABILITIES, COMMITMENTS AND OTHER CLAIMS (to the extent not provided for) Contingent liabilities and other claims: (a) Claims against the Company not acknowledged as debts-: |
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Particulars |
As at 31 March 2023 |
As at 31 March 2022 |
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(i) Claims made by direct and indirect tax authorities:* |
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(i) Goods and service tax (on account of input credit mismatches) |
138.45 |
138.45 |
|
(ii) Value added tax |
12.40 |
13.10 |
|
(iii) Service tax |
11.36 |
11.36 |
|
(iv) Income tax (on account expense disallowances) |
38.56 |
46.84 |
|
200.77 |
209.75 |
|
|
(ii) Others (miscellaneous claims in relation to Company''s operations) # |
25.21 |
17.75 |
*Against the total tax demand of INR 200.77 (31 March 2022: INR 209.75) , the Company has filed appeals before various tax authorities. Based on management assessment and upon consideration of advice from the independent legal counsels, the management believes that the Company has reasonable chances of succeeding before the tax authorities and does not foresee any material liability. Pending the final decision on this matter, no adjustment has been made in the standalone financial statements.
# The Company is party to various legal proceedings in the normal course of business and does not expect the outcome of these proceedings to have any adverse effect on its financial position and hence no provision has been recorded against these legal proceedings at this stage. Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending with various forums/authorities. Accordingly, the above mentioned contingent liabilities are disclosed at undiscounted amount.
Also, during the years ended 31 March 2023 and 31 March 2022 the Company has provided a letter of support for financial and operational assistance to Devyani Food Street Private Limited, Devyani Airport Services (Mumbai) Private Limited, RV Enterprizes Pte. Limited and Devyani International Nigeria Limited for ongoing operations for at least 12 months from the reporting dates.
|
(b) Others |
||
|
Particulars |
As at 31 March 2023 |
As at 31 March 2022 |
|
Commitments: |
||
|
Estimated amount of contracts remaining to be executed on capital account and not provided for [(net of advances of INR 98.68 (31 March 2022: INR 278.27)] |
1,591.04 |
1,112.00 |
Note: Also, the Company has entered Development Agreements with Yum Restaurant (India) Private Limited and Costa International Limited. Based on such agreements, the Company has commitments to open specified number of restaurants under respective agreements from time to time. The amount of such commitments is not quantifiable as of now.
A. Defined contribution plans
An amount of INR 201.83 (31 March 2022: INR 126.92) has been recognised as an expense in respect of the Company''s contribution to provident and other funds deposited with the relevant authorities and has been charged to the Standalone Statement of Profit and Loss.
B. Defined benefit plans
The Company operates a gratuity plan wherein every employee is entitled to the benefit. Gratuity is payable to all eligible employees (who have completed 5 years or more of service) of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the Payments of Gratuity Act, 1972. Gratuity liability is partially funded by the Company through annual contribution to DIL Employees Gratuity Trust (the ''Trust'') against ascertained gratuity liability. Trustees administer contributions made to the Trust and contributions are invested in a scheme with the Life Insurance Corporation of India as permitted by law of India.
The funding requirements of the plan are based on the gratuity fund''s actuarial measurement framework set out in the funding policies of the plan. The funding of the plan is based on a separate actuarial valuation for funding purpose for which assumptions may differ from the assumptions set out in (iii) below. Employees do not contribute to the plan.
The Company has defined that, in accordance with the terms and conditions of the aforesaid plan and in accordance with statutory requirements (including minimum funding requirements) of the plan of relevant jurisdiction, the present value of refund or reduction in future contributions is not lower than the balance of the total fair value of the plan assets less than total present value of obligations.
The following table sets out the status of the gratuity plan as required under Ind AS 19 - ''Employee Benefits''
The sensitivity analysis is based on a change in above assumption while holding all other assumptions constant. The changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method ( present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting year) has been applied when calculating the provision for defined benefit plan recognised in the Standalone Balance Sheet.
The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous years.
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it provides an approximation of the sensitivity of the assumptions shown.
Risk exposure:
The defined benefit plan is exposed to a number of risks, the most significant of which are detailed below:
Change in discount rates: A decrease is discount yield will increase plan liabilities
Mortality table: The gratuity plan obligations are to provide benefits for the life of the member, so increase in life expectancy will result in an increase in plan liabilities.
D. Code of Social Security
The Code on Social Security, 2020 ("the Code") relating to employee benefits during employment and postemployment received Presidential assent in September 2020. Subsequently, the Ministry of Labour and Employment had released the draft rules on the aforementioned Code. However, the same is yet to be notified. The Company will evaluate the impact and make necessary adjustments to the financial statements in the period when the Code will be notified and will come into effect.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker ("CODM") of the Company. The CODM is considered to be the Board of Directors who make strategic decisions and is responsible for allocating resources and assessing the financial performance of the operating segments.
As the Company''s business activity primarily falls within a single business and geographical segment, i.e., food and beverages, and in India, thus there are no additional disclosures to be provided under Ind AS 108 - "Operating Segments''. The CODM considers that the various goods and services provided by the Company constitutes single business segment.
a. Description of share based payment arrangements i. Share Options Schemes (equity settled)
ESOS - 2011
On 20 September 2011 and 20 December 2011, the Board of Directors approved the Employees Stock Option Scheme 2011 ("ESOS 2011"), which was approved by the shareholders on 20 December 2011 and subsequently on 18 May 2012 for increasing the ceiling limit to 49,00,000 Options ("Ceiling Limit") with condition at any given point of time no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting. As per ESOS 2011, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of INR 111.70. ESOS 2011 was formulated with the objective to enable the Company to grant Options for equity shares of the Company to certain eligible employees, officers and directors of the Company and its subsidiaries, to purchase shares from the Company at a pre-determined price. A resolution was passed in the meeting of the Board of Directors held on 6 May 2014 wherein certain additional Options were granted at the same terms and conditions as mentioned in ESOS 2011.
Further, ESOS 2011 was amended subsequently and was approved by the shareholders on 17 March 2021. The resolution provides the delinking of vesting schedule of the Options from filing of the red herring prospectus (RHP) by the Company and for aligning the Scheme in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/POLICY CELL/2/2015 dated 16 June 2015 ("SEBI SBEB Regulations") and accordingly all Options under ESOS 2011 were vested immediately on the day of passing the said resolution and the exercise window for ESOS 2011 was opened by the Nomination and Remuneration Committee on 17 March 2021.
ESOS - 2018
On 6 April 2018, the Board of Directors approved the Employees Stock Option Scheme 2018 ("ESOS 2018"), which was approved by the shareholders on 21 September 2018. ESOS 2018 has been formulated with the same objective as ESOS 2011. ESOS 2018 provides that Options so granted, shall not represent more than 5% of the fully diluted share capital of the Company at any given point of time ("Ceiling Limit") and no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting. As per ESOS 2018 Grant letters, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of INR 306.12.
Further ESOS 2018 was subsequently amended and approved by the shareholders on 17 March 2021 for linking the vesting of options to listing date of shares of the Company and to align the Scheme with compliance requirement of SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/POLICY CELL/2/2015 dated 16 June 2015 ("SEBI SBEB Regulations"). Under the ESOS 2018, no vesting shall occur until date of listing of shares on recognized Stock Exchanges by the Company in respect of proposed offer.
ESOS - 2021
On 17 March 2021, the Board of Directors approved the Employees Stock Option Scheme 2021 (""ESOS 2021"") in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 ("SEBI SBEB Regulations"), which was approved by the shareholders on 17 March 2021. ESOS 2021 was formulated with the same objective of ESOS 2011 and ESOS 2018.
ESOS 2021 provides that Options so granted, shall not represent more than 5% of the fully diluted share capital of the Company at any given point of time ("Ceiling Limit") and no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting by way of a special resolution. As per ESOS 2021 Grant letters, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of INR 433.28.
The risk free interest rates are determined based on current yield to maturity of 10 years Government Bonds with similar residual maturity equal to expected life of the Options. Expected volatility calculation is based on historical daily closing stock prices of competitors using standard deviation of daily change in stock price. The minimum life of the stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which options cannot be exercised. The expected life has been considered based on average of maximum life and minimum life and may not necessarily be indicative of exercise patterns that may occur.
45. IMPAIRMENT OF NON-FINANCIAL ASSETS
Non financial assets i.e PPE and other intangible assets (other than goodwill and investment properties)
In accordance with Ind AS 36 "Impairment of Assets", the Company has identified individual quick service restaurant (store) as a separate cash generating unit (CGU) for the purpose of impairment review. Management periodically assesses whether there is an indication that a CGU may be impaired using a benchmark of two-year''s history of operating losses or marginal profits for a store. In view of higher operating costs or decline in projected sales growth, certain stores have been impaired in the current and previous years. Based on the results of impairment testing for these stores in the current year, the property, plant and equipment, right-of-use assets and other intangible assets, carrying value of these stores aggregating INR 451.83 (net of opening provision for impairment of INR 53.38) (31 March 2022: INR 542.04 net of opening impairment provision of INR 5.05) have been reduced to the recoverable amount aggregating to INR 368.03 (31 March 2022: INR 409.97) by way of impairment charge of INR 83.80 (31 March 2022: INR132.07). Recoverable amount is value in use of these stores computed based upon projected cash flows from operations with sales growth of 6% (31 March 2022: Nil-5%) and salary growth rate of 6% (31 March 2022: 6%), over balance lease term, discounted at rate (determined by an independent registered valuer) of 14.20% p.a. (31 March 2022: 12.15% p.a.). Carrying value of a store includes property, plant and equipment, intangible assets used at a store, right-of-use assets and allocated corporate assets. Further carrying value and recoverable value of each store is calculated net of lease liabilities.
Moreover, the impairment reversal of INR 89.20 (31 March 2022: INR 140.30) is primarily on account of stores where the actual sales growth rate has exceeded the projected sales growth rate, hence the recoverable amount aggregating to INR 2,940.87 (31 March 2022: INR 1,828.78) has exceeded the written down value of these stores aggregating INR 1,673.00 (after considering impairment charge recorded in previous years amounting to INR 305.27) (31 March 2022: INR 1,356.99 after considering impairment charge recorded in preceding previous year amounting to INR 370.76).
Goodwill on business combination
During the previous years, the Company had acquired 73 stores from Yum Restaurants (India) Private Limited ("Yum") in the States of Karnataka, Andhra Pradesh and Telangana (except in the city of Hyderabad). The Company acquired goodwill of INR 504.57 through business combinations which is attributable to the operational synergies and expansion on market share. In order to further expand its business operations, the Group has opened new stores in these States.
The Company has tested goodwill for impairment on the acquired stores as well as new stores opened in the acquired territories. Management periodically assesses whether there is an indication that such goodwill may be impaired. For goodwill, where impairment indicators exists, management compares the carrying amount of such goodwill with its recoverable amount. As on the reporting date, the recoverable amount of this cash generating unit is determined at INR 1,945.57 (31 March 2022: INR1,704.57). Recoverable amount is value in use of these stores computed based upon projected cash flows from operations with sales growth of Nil-6% (31 March 2022:5%-20%) and salary growth rate of Nil - 6% (31 March 2022: 6%), over balance lease term, discounted at rate (determined by an independent registered valuer) of 14.20% p.a (31 March 2022: 12.15% p.a). As the recoverable amount is in excess of the carrying amount of goodwill, hence no impairment loss has been recorded on the aforesaid goodwill during the year.
The key assumptions have been determined based on management''s calculations after considering, past experiences and other available internal information and are consistent with external sources of information to the extent applicable.
For goodwill impairment assessment, management believes that any reasonably possible change in the key assumptions would not cause the carrying amount to exceed the recoverable amount of the said stores, as there is significant headroom between recoverable amount and the carrying amount.
Management has identified that a reasonably possible change in the three key assumptions could cause a change in amount of impairment loss/ (reversal). The following table shows the amount by which the impairment loss/(reversal) would increase/ (decrease) on change in these assumptions by 1%. All other factors remaining constant.
The Company has established a comprehensive system of maintenance of information and documents that are required by the transfer pricing legislation under Section 92-92F of the Income tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by due date as required under the law. The management is of the opinion that its transactions with the associated enterprises are at arm''s length so that the aforesaid legislation will not have any impact on the standalone financial statements, particularly on the amount of tax expense and that of provision for taxation.
For the purpose of the Company''s capital management, capital includes issued equity capital, all other equity reserves attributable to the equity holders of the Company and combination of both long-term and short-term borrowings. The Company''s objective for capital management is to maximize shareholder''s value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plan and other strategic investment plans. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company''s funding requirements are met through equity infusions, internal accruals and a combination of both long-term and short-term borrowings. The Company raises long term loans mostly for its expansion requirements and based on the working capital requirement utilise the working capital facilities. The Company monitors capital on the basis of consolidated total debt to consolidated total equity on a periodic basis. As a part of its capital management policy the Company ensures compliance with all covenants and other capital requirements related to its contractual obligations. No changes were made in the objectives, policies or processes for managing capital during the year ended 31 March 2023 and 31 March 2022.
48. ASSESSMENT OF INVESTMENT IN AND LOANS TO SUBSIDIARY COMPANY
The Company holds 87.00% (31 March 2022: 87.00%) of equity share capital and 76.00% (31 March 2022: 76.00%) preference share capital of RV Enterprizes Pte. Limited (hereinafter referred to as "RVE"). The carrying value of investments (equity and preference shares) as at the year end is INR 724.23 (31 March 2022: INR 724.23). The carrying value of the loans to RVE, including interest accrued thereon is INR 398.93 (31 March 2022: INR 350.01). RVE is a special purpose vehicle, which has invested the funds in Devyani International (Nigeria) Limited (a step down subsidiary) through investment in shares and grant of loans USD 3.75 million (31 March 2022: USD 2.92 million) and USD 16.56 (31 March 2022: USD 17.26 million), respectively.
During the current year, the step down subsidiary has generated (loss)/profit of INR (37.56) (31 March 2022: INR 3.36). As at 31 March 2023, RVE has not impaired the loan amounting to USD 16.56 million outstanding as at 31 March 2023 (31 March 2022: USD 17.26 million). Further, no impairment loss of property, plant and equipment has been recorded in the books of the step down subsidiary.
The management of the Company, based on cash flow projections of the step down subsidiary has concluded that there is no need to recognise any impairment loss on the investment made in and loan given (including interest accrued thereon) to RVE amounting to INR 724.23 (31 March 2022: INR 724.23 ) and INR 398.93 (31 March 2022: INR 350.01), respectively.
Key assumptions used in the calculating the recoverable value of the step down subsidiary:
- discount rates 28.60% (31 March 2022: 22.00% )
- terminal growth rate 3.00% (31 March 2022: 3.00%)
Further more, the recoverable value of investments (after adjusting loans) in RVE (derived based on the recoverable value of the step down subsidiary) was INR 1,234.56 (31 March 2022: INR 1,725.15).
The management believes that any reasonably possible change in the key assumptions would not cause the carrying amount to exceed the recoverable amount of the investments, as there is significant headroom available between recoverable amount and the carrying amount of investments.
49. INVESTMENT IN DEVYANI AIRPORT SERVICES (MUMBAI) PRIVATE LIMITED, A SUBSIDIARY ("DASMPL")
During the previous year ended 31 March 2022, pursuant to Deed of Settlement and Share Transfer Agreement dated 12 July 2021 executed between the Company, its subsidiary DASMPL and non-controlling shareholder High Street Food Services Private Limited, the Company has purchased 2,940,000 Equity Shares of face value of INR 10/- each and 11,316,693 8% Non-cumulative Redeemable Preference Shares ("NCRPS") for consideration of INR 69.04 (including INR 0.74 towards purchase of equity shares) from non-controlling shareholder. Pursuant to the acquisition, DASMPL became a wholly owned subsidiary of the Company. DASMPL converted its NCRPS to Compulsorily Convertible Preference Shares ("CCPS") pursuant to provisions of Section 48 of the Companies Act, 2013 as per shareholder''s approval in Extra Ordinary General Meeting held on 17 August, 2021. DASMPL converted its CCPS to equity shares as on 01 October 2021.
As at 31 March 2023, the Company has investment in equity shares of DASMPL amounting to INR 153.87 (31 March 2022: INR 153.87), accounted for at cost under Ind AS 27. In accordance with Ind AS 36 "Impairment of Assets", such investment is considered as a separate cash generating unit (CGU) for the purpose of impairment review. Management periodically assesses whether there is an indication that such investment may be impaired. For investment, where impairment indicators exists, management compares the carrying amount of such investment with its recoverable amount. Recoverable amount is value in use of the investment computed based upon discounted cash flow projections.
During the year ended 31 March 2022, the Company has determined impairment reversal of INR 84.84 based on the discount rate of 18.78% and sales growth rate of 17%. Such impairment reversal has been disclosed under "Exceptional
items" in the Standalone Statement of Profit and Loss (refer note 32).An analysis of the sensitivity of the computation to a change in key parameters (sales growth and discount rates), based on reasonable assumptions, did not identify any probable scenario in which the recoverable amount of the CGU would decrease below its carrying amount.
During the current year, the business performance of the subsidiary has improved substantially and the Company has witnessed significant uptake in the operations of the subsidiary, basis which the management believes that there are no internal or external indicators which can trigger impairment assessment as per Ind AS 36, ''Impairment of Assets'', as at 31 March 2023.
50. INVESTMENT IN DEVYANI FOOD STREET PRIVATE LIMITED, A SUBSIDIARY ("DFSPL")
As at 31 March 2023, the Company has investment in equity shares of Devyani Food Street Private Limited (a subsidiary company) amounting to INR 175.92 (31 March 2022: INR 175.92), and additional deemed equity of INR 128.76 (31 March 2022: INR 128.76) accounted for under Ind AS 27. In accordance with Ind AS 36 "Impairment of Assets", such investment is considered as a separate cash generating unit (CGU) for the purpose of impairment review. Management periodically assesses whether there is an indication that such investment may be impaired. For investment, where impairment indicators exists, management compares the carrying amount of such investment with its recoverable amount. Recoverable amount is value in use of the investment computed based upon discounted cash flow projections.
During the previous year ended 31 March 2022, the recoverable amount of this cash generating unit was determined at INR 192.34, through an independent valuer, based on the value in use calculation which uses cash flow projections based on the projected profitability till the end of the contract period. The Company has determined impairment loss of INR 85.89 based on the discount rate of 18.5% and sales growth rate 30% - 109% and was of the view that there would be no material increase to the impairment charge which would impact the decision of the user of the financial statements. Such impairment charge had been disclosed under "Exceptional items" in the Standalone Statement of Profit and Loss (refer note 32). The Company had performed sensitivity analysis of impairment test to changes in the key assumptions used to determine the occurrence of impairment loss, if any, as if there was an increase in the discount rate by 0.50%, keeping the other variable constant, the impairment loss would have increased by INR INR 1.53.
During the current year, the business performance of the subsidiary has improved substantially and the Company has witnessed significant uptake in the operations of the subsidiary, basis which the management believes that there are no internal or external indicators which can trigger impairment assessment as per Ind AS 36, ''Impairment of Assets'', as at 31 March 2023.
51. The Board of Directors of the Company ("Board") at its meeting dated 13 December 2021, had approved the Scheme of Amalgamation (the ''Scheme'') for amalgamation of Devyani Food Street Private Limited and Devyani Airport Services (Mumbai) Private Limited (both are wholly owned subsidiary companies) with the Company. The Scheme was filed with the Hon''ble National Company Law Tribunal, New Delhi (NCLT) on 17 September 2022, and the NCLT had approved the first motion application on 11 November 2022. The equity shareholders and unsecured creditors of the Company at their respective meetings held on December 29, 2022, had approved the Scheme with requisite majority. Subsequently, the Company has filed second motion petition with NCLT and the Scheme is pending for final approval.
52. INITIAL PUBLIC OFFERING (IPO)
During the year ended 31 March 2022, the Company had completed its Initial Public Offer ("IPO") of 204,222,218 Equity Shares of Face Value of INR 1/- each ("equity shares") for a price of INR 90/- per Equity Share (including a share premium of INR 89/- per Equity Share) aggregating to INR 18,380 comprising a fresh issue of 48,888,888 Equity Shares for INR 4,400 (the "fresh issue") and an Offer for Sale of 155,333,330 Equity Shares for INR 13,980. The Equity Shares of the Company got listed with BSE Limited and National Stock Exchange of India Limited on 16 August 2021.
The Company had incurred expenses of INR 158.40 during the year ended 31 March 2022 in connection with public offer of equity shares. Out of this, INR 146.29 have been adjusted against securities premium as permissible under section 52 of the Companies Act, 2013 on successful completion of Initial Public Offer (IPO) and listing expenses of INR 12.10 have been shown as IPO expenses under exceptional items (refer note 32).
53. During the year ended 31 March 2022, the Company had paid remuneration to a whole-time director of INR 138.70, which was in excess of the limits laid down under the provisions of the section 197 read with Schedule V of the Companies Act, 2013 by INR 75.73 which had also resulted in exceeding the overall limit of remuneration payable by the Company to its directors by INR 53.79. Such remuneration exceeded by virtue of exercise of employee stock options. The Company had obtained approval from the Nomination and Remuneration Committee of the Company for the excess managerial remuneration paid and had obtained approval from its shareholders at the Annual General Meeting (AGM) held on 28 June 2022 by way of a special resolution as per the provisions of section 197 and Schedule V to the Act during the current year.
54. During the year ended 31 March 2022, the Company has signed amendment to Development Agreements with Yum Restaurant (India) Private Limited (franchiser) with revised store opening targets and terms, accordingly franchiser has agreed to give certain incentives to the Company in the form of initial fee waiver and certain other operational incentives. The Company has achieved the targets in both current and previous years for both KFC and PH brands and received incentives as per the aforesaid Development Agreement, which have been accounted as per Ind AS in the standalone financial statements.
a) The Company does not have any Benami property and no proceedings have been initiated or pending against the Company for holding any Benami property, under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.
c) The Company does not have any charge which is yet to be registered with ROC beyond the statutory period. The Company had obtained loans from banks in earlier years which have been fully repaid. However pending NOCs from banks, the satisfaction of charges is yet to be registered with ROC in some of the cases.
d) The Company has not traded or invested in Crypto currency or Virtual Currency during the current and previous financial year.
e) The Company has not advanced or provided loan to or invested funds in any entity(ies) including foreign entities (Intermediaries) or to any other person(s), with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
f) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(g) The Company has not undertaken any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(h) The Company has not been declared a ''Wilful Defaulter'' by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
(i) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.
57. The Company has generally been regular in depositing provident fund dues for employees on time, except in few cases due to Aadhaar Card demographic mismatches. The Company has already initiated the necessary steps to minimise such mismatches in future.
58. The previous year numbers have been regrouped/ reclassified wherever necessary to conform to current year presentation. The impact of such reclassification/regrouping is not material.
Mar 31, 2022
A The Company had given loan to Devyani international (Nepal) Private Limited, a wholly owned subsidiary, at interest rate which is lower than the market rate of interest. Such loan had been fair valued and recorded as additional investment in the wholly owned subsidiary per generally accepted accounting principles in India and also the Company had given financial guarantee to Everest Bank Limited on behalf of Devyani International (Nepal) Private Limited, a wholly owned subsidiary, for the loan availed by the wholly owned subsidiary. Such financial guarantee had been fair valued and recorded as an additional investment in the wholly owned subsidiary.
* The Company had given financial guarantee to Yes Bank Limited on behalf of Devyani Food Street Private Limited, a wholly owned subsidiary, for the loan availed by the wholly owned subsidiary. Such financial guarantee had been fair valued and recorded as an additional investment in the wholly owned subsidiary per generally accepted accounting principles in India. During the year ended 31 March 2022, the Company has waived '' 102.43 receivables of its wholly owned subsidiary, which is in substance being treated as capital contribution (investment) made towards the subsidiary.
** The preference shares are redeemable at the option of the subsidiary RV Enterprizes Pte. Limited, Singapore, hence the same are valued at cost considering the investment evidencing a residual interest and in equity nature.
b) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity share having a par value of '' 1/- per share (pursuant to the share split from '' 10/- to '' 1/- per share with effect from 25 March 2021). Each holder of the equity share is entitled to one vote per share and is entitled to dividend declared, if any. The paid up equity shares of the Company rank pari-passu in all respects, including dividend. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of the equity shares will be entitled to remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholder.
During the previous year, Yum Restaurants India Private Limited ("YRIPL") has been allotted 5,308,333 (pre-split of shares) equity shares of '' 10/- each of the Company. Further, Dunearn Investments (Mauritius) Pte Limited ("Dunearn"), and YRIPL, both the investors in the Company, enjoyed certain exit rights as defined in their respective Shareholder''s Agreements executed with the Company. By virtue of amendment cum termination agreement entered on 3 May 2021, their rights were terminated on the listing date i.e. 16 August 2021.
c) Shares reserved for issue under options and contracts
For terms and other details of shares reserved for issue and options exercised during the year under Employee Stock Option Scheme ("ESOS") of the Company- refer note 42.
a) Securities premium is used to record the premium on issue of shares. It will be utilised in accordance with the provisions of the Companies Act, 2013.
b) General reserve are free reserves of the Company which are kept aside out of the Company''s profit to meet the future requirements as and when they arise. The Company had, in the previous years, transferred a portion of profit after tax to general reserve pursuant to the provisions of the erstwhile Companies Act, 1956.
c) Retained earnings are the accumulated losses earned by the Company till date, as adjusted for distribution to owners.
d) Employee stock option outstanding account is used to record the impact of employee stock option schemes. Refer note 42 for further details of these plans.
b) Other comprehensive income
Other comprehensive income pertains to remeasurement gains/ (losses) on defined benefit plans.
17 (i) Utilisation of borrowings
(a) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date.
(b) The quarterly returns/statements of current assets filed by the Company with banks or financial institutions in relation to secured borrowings wherever applicable, are in agreement with the books of accounts.
(ii) The Company has measured its deferred tax assets and liabilities based on the income tax rates that are expected to apply to the period when such assets/liabilities are expected to be realized/settled. As per section 115BBA of the Income-tax Act 1961, as introduced by the Taxation Laws (Amendment) Ordinance, 2019 (Ordinance), the Company has option to opt for a lower tax rate of 25.168%, as against current enacted tax rate of 31.20%). The Company has opted for such reduced income tax rate during the year ended 31 March 2022. Hence, deferred tax has been measured at 25.168% in the above reconciliation of tax expense.
(iii) During the previous year, the Company had significant unabsorbed depreciation and other temporary differences. Therefore, in absence of convincing evidences that sufficient taxable profits will be available against which such deferred tax asset shall be utilised at that point in time, the Company only recognised deferred tax asset to the extent of deferred tax liabilities as at the reporting date.
* In respect of continuing/discontinued operations, the outstanding potential equity shares (options granted to employee under various ESOS schemes) had an anti-dilutive effect on the EPS for the year ended 31 March 2021. For the year ended 31 March 2022, they have been included in the calculation of dilutive earnings per share. Refer above.
# Equity shares of '' 1/- each as at 31 March 2021 pursuant to share split with effect from 25 March 2021.
* The carrying amounts of loans, trade receivables, cash and cash equivalents, bank balances other than cash and cash equivalents, other current financial assets, trade payables, employee related payables, capital creditors approximates the fair values, due to their short-term nature. The other non-current financial assets represents bank deposits (due for maturity after twelve months from the reporting date) and interest accrued but not due on bank deposits, the carrying value of which approximates the fair values as on the reporting date.
** For details regarding charge on such current financial assets - refer note 17.
# The Company''s borrowings and lease liabilities have fair values that approximate to their carrying amounts as they are based on the net present value of the anticipated future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
Other notes:
The investment in equity and preference shares of subsidiaries are measured at cost. Refer note 6A for further details.
There has been no transfer between level 1, level 2 and level 3 for the year ended 31 March 2022 and 31 March 2021.
Valuation techniques used to determine fair values:
Specific valuation techniques used to value financial instruments include:
- Fair value of derivatives using dealer quotes for similar instruments (on marked to market value as on balance sheet date of such derivative transaction).
- Fair value of non-derivative financial instruments using present value techniques, which is based on discounting expected cash flows using a risk-adjusted discount rate.
The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. This team performs valuation either internally or externally through valuers and reports directly to the senior management. Discussions on valuation and results are held between the senior management and valuation team on annual basis.
Significant inputs
Significant unobservable input used in Level 3 fair values of investments measured at FVTPL is discount rate which is weighted average cost of borrowing of the Company plus spread of corporate guarantee commission which is 7.20% (31 March 2021: 9.56%) and estimated cash flows of respective companies in which investment in preference shares is made.
Significant inputs used in Level 2 fair value of derivatives measured at FVTPL is marked to market value as on balance sheet date of such derivative transaction.
Reconciliation of Level 3 recurring fair value measurement is as follows:
The following table provides the details as to changes in value of financial instruments categorised within level 3 of the fair value hierarchy:
* Unrealised gains/(losses) recognised in profit or loss under "Net loss/ (gain) on investment carried at fair value through profit or loss
Sensitivity analysis of significant unobservable inputs
The carrying values of investments measured through at fair value through profit and loss are not material. Hence the management believes, changes in significant observable inputs will not have a material impact of financial position of the Company.
b. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
Credit risk;
Liquidity risk;
Market Risk - Interest Rate; and
Risk Management Framework
The Board of Directors of the Company is responsible for reviewing the risk management policies and ensuring its effectiveness.
The Company''s risk management policies are established to identify and analyse the risks faced by the Company to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in the market conditions and the Company''s activities.
The Board of Directors oversees how management monitors compliance with Company''s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risk faced by the Company.
i. Credit risk
The maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the balance sheet
|
Particulars |
As at 31 March 2022 |
As at 31 March 2021 |
|
(i) Loans |
614.93 |
619.88 |
|
(ii) Investments |
1,105.01 |
876.17 |
|
(iii) Guarantee given on behalf of subsidiaries |
- |
18.95 |
|
(iii) Trade receivables |
306.39 |
387.05 |
|
(iv) Cash and cash equivalents |
399.98 |
281.85 |
|
(v) Bank balances other than cash and cash equivalents, above |
7.11 |
2.88 |
|
(vi) Other financial assets (current and non-current) |
1,891.60 |
725.41 |
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
Credit risk on cash and cash equivalents and bank deposits (shown under bank balances other than cash and cash equivalents, above) and other financial assets is limited as the Company generally invests in deposits with banks with high credit ratings assigned by domestic credit rating agencies. The loans primarily represents security deposits given to lessors for premises taken on lease and loans given to subsidiaries. Such deposits will be returned to the Company on vacation of the premises or termination of the agreement whichever is earlier. Loan to subsidiaries will be repaid as per the terms of the agreement and there has been no default in repayment of such loans by subsidiaries.
The exposure to the credit risk at the reporting date is primarily from loan to subsidiaries, security deposit receivables and investment in subsidiaries. The Investment and Borrowing Committee monitors the investment in subsidiaries and loans granted to subsidiaries and it evaluates if any impairment is required. As at year end, Investment and Borrowing Committee based on the internal and external valuation and after assessing the performance of the subsidiaries, is of the view that no impairment is required other than investments in Devyani Food Street Private Limited.
Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India and Nepal. Trade receivables also includes receivables from credit card companies and online aggregator platforms, which are generally realisable on fortnightly basis. The Company does monitor the economic environment in which it operates. The Company manages its credit risk through credit approvals, establishing
credit limits and continuously monitoring credit worthiness of customers to which the Company grants credit terms in the normal course of business.
The Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available internal credit risk factors such as the Company''s historical experience for customers. Based on the business environment in which the Company operates, management considers that the trade receivables are in default (credit impaired) if the payments are more than 90 days past due however, the Company based upon past trends determines an impairment allowance for loss on receivables (other than receivables from related parties) outstanding for more than 180 days past due. Majority of trade receivables are from domestic customers, which are fragmented and are not concentrated to individual customers. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
(ii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The Company''s approach to manage liquidity is to have sufficient liquidity to meet it''s liabilities when they are due, under both normal and stressed circumstances, without incurring unacceptable losses or risking damage to the Company''s reputation.
The Company believes that its liquidity position, including total cash and cash equivalents and bank deposits maturing within a year (including bank deposits under lien) of '' 407.09 (31 March 2021: '' 284.73), anticipated future internally generated funds from operations, its fully available, revolving undrawn credit facility of '' 936.87 (31 March 2021: '' 713.97) and certain other current assets (financial and non financial) of '' 2,367.00 (31 March 2021: '' 1,137.24) will enable it to meet its future known obligations due in next year, in the ordinary course of business.
In the year ended 31 March 2022, the Company has earned a cash inflow from operating activities of '' 3,851.16 (31 March 2021: '' 1,580.88). Further, the Company generated an earnings before tax, depreciation and amortisation, impairment and fair valuation gains/losses of '' 3,042.89 (31 March 2021: '' 1,206.48). Based on the projections, the Company expects to earn cash inflow from operating activities, which can be used to settle its liabilities in the near future.
The Company''s liquidity management process as monitored by management, includes the following:
- Day to day funding, managed by monitoring future cash flows to ensure that requirements can be met.
- Maintaining rolling forecasts of the Company''s liquidity position on the basis of expected cash flows.
- Maintaining diversified credit lines.
b) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity share having a par value of '' 1/- per share (pursuant to the share split from '' 10/- to '' 1/- per share with effect from 25 March 2021). Each holder of the equity share is entitled to one vote per share and is entitled to dividend declared, if any. The paid up equity shares of the Company rank pari-passu in all respects, including dividend. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of the equity shares will be entitled to remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholder.
During the previous year, Yum Restaurants India Private Limited ("YRIPL") has been allotted 5,308,333 (pre-split of shares) equity shares of '' 10/- each of the Company. Further, Dunearn Investments (Mauritius) Pte Limited ("Dunearn"), and YRIPL, both the investors in the Company, enjoyed certain exit rights as defined in their respective Shareholder''s Agreements executed with the Company. By virtue of amendment cum termination agreement entered on 3 May 2021, their rights were terminated on the listing date i.e. 16 August 2021.
c) Shares reserved for issue under options and contracts
For terms and other details of shares reserved for issue and options exercised during the year under Employee Stock Option Scheme ("ESOS") of the Company- refer note 42.
a) Securities premium is used to record the premium on issue of shares. It will be utilised in accordance with the provisions of the Companies Act, 2013.
b) General reserve are free reserves of the Company which are kept aside out of the Company''s profit to meet the future requirements as and when they arise. The Company had, in the previous years, transferred a portion of profit after tax to general reserve pursuant to the provisions of the erstwhile Companies Act, 1956.
c) Retained earnings are the accumulated losses earned by the Company till date, as adjusted for distribution to owners.
d) Employee stock option outstanding account is used to record the impact of employee stock option schemes. Refer note 42 for further details of these plans.
b) Other comprehensive income
Other comprehensive income pertains to remeasurement gains/ (losses) on defined benefit plans.
17 (i) Utilisation of borrowings
(a) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date.
(b) The quarterly returns/statements of current assets filed by the Company with banks or financial institutions in relation to secured borrowings wherever applicable, are in agreement with the books of accounts.
(ii) The Company has measured its deferred tax assets and liabilities based on the income tax rates that are expected to apply to the period when such assets/liabilities are expected to be realized/settled. As per section 115BBA of the Income-tax Act 1961, as introduced by the Taxation Laws (Amendment) Ordinance, 2019 (Ordinance), the Company has option to opt for a lower tax rate of 25.168%, as against current enacted tax rate of 31.20%). The Company has opted for such reduced income tax rate during the year ended 31 March 2022. Hence, deferred tax has been measured at 25.168% in the above reconciliation of tax expense.
(iii) During the previous year, the Company had significant unabsorbed depreciation and other temporary differences. Therefore, in absence of convincing evidences that sufficient taxable profits will be available against which such deferred tax asset shall be utilised at that point in time, the Company only recognised deferred tax asset to the extent of deferred tax liabilities as at the reporting date.
* In respect of continuing/discontinued operations, the outstanding potential equity shares (options granted to employee under various ESOS schemes) had an anti-dilutive effect on the EPS for the year ended 31 March 2021. For the year ended 31 March 2022, they have been included in the calculation of dilutive earnings per share. Refer above.
# Equity shares of '' 1/- each as at 31 March 2021 pursuant to share split with effect from 25 March 2021.
* The carrying amounts of loans, trade receivables, cash and cash equivalents, bank balances other than cash and cash equivalents, other current financial assets, trade payables, employee related payables, capital creditors approximates the fair values, due to their short-term nature. The other non-current financial assets represents bank deposits (due for maturity after twelve months from the reporting date) and interest accrued but not due on bank deposits, the carrying value of which approximates the fair values as on the reporting date.
** For details regarding charge on such current financial assets - refer note 17.
# The Company''s borrowings and lease liabilities have fair values that approximate to their carrying amounts as they are based on the net present value of the anticipated future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
Other notes:
The investment in equity and preference shares of subsidiaries are measured at cost. Refer note 6A for further details.
There has been no transfer between level 1, level 2 and level 3 for the year ended 31 March 2022 and 31 March 2021.
Valuation techniques used to determine fair values:
Specific valuation techniques used to value financial instruments include:
- Fair value of derivatives using dealer quotes for similar instruments (on marked to market value as on balance sheet date of such derivative transaction).
- Fair value of non-derivative financial instruments using present value techniques, which is based on discounting expected cash flows using a risk-adjusted discount rate.
The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. This team performs valuation either internally or externally through valuers and reports directly to the senior management. Discussions on valuation and results are held between the senior management and valuation team on annual basis.
Significant inputs
Significant unobservable input used in Level 3 fair values of investments measured at FVTPL is discount rate which is weighted average cost of borrowing of the Company plus spread of corporate guarantee commission which is 7.20% (31 March 2021: 9.56%) and estimated cash flows of respective companies in which investment in preference shares is made.
Significant inputs used in Level 2 fair value of derivatives measured at FVTPL is marked to market value as on balance sheet date of such derivative transaction.
Reconciliation of Level 3 recurring fair value measurement is as follows:
The following table provides the details as to changes in value of financial instruments categorised within level 3 of the fair value hierarchy:
* Unrealised gains/(losses) recognised in profit or loss under "Net loss/ (gain) on investment carried at fair value through profit or loss
Sensitivity analysis of significant unobservable inputs
The carrying values of investments measured through at fair value through profit and loss are not material. Hence the management believes, changes in significant observable inputs will not have a material impact of financial position of the Company.
b. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
Credit risk;
Liquidity risk;
Market Risk - Interest Rate; and
Risk Management Framework
The Board of Directors of the Company is responsible for reviewing the risk management policies and ensuring its effectiveness.
The Company''s risk management policies are established to identify and analyse the risks faced by the Company to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in the market conditions and the Company''s activities.
The Board of Directors oversees how management monitors compliance with Company''s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risk faced by the Company.
i. Credit risk
The maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the balance sheet
|
Particulars |
As at 31 March 2022 |
As at 31 March 2021 |
|
(i) Loans |
614.93 |
619.88 |
|
(ii) Investments |
1,105.01 |
876.17 |
|
(iii) Guarantee given on behalf of subsidiaries |
- |
18.95 |
|
(iii) Trade receivables |
306.39 |
387.05 |
|
(iv) Cash and cash equivalents |
399.98 |
281.85 |
|
(v) Bank balances other than cash and cash equivalents, above |
7.11 |
2.88 |
|
(vi) Other financial assets (current and non-current) |
1,891.60 |
725.41 |
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
Credit risk on cash and cash equivalents and bank deposits (shown under bank balances other than cash and cash equivalents, above) and other financial assets is limited as the Company generally invests in deposits with banks with high credit ratings assigned by domestic credit rating agencies. The loans primarily represents security deposits given to lessors for premises taken on lease and loans given to subsidiaries. Such deposits will be returned to the Company on vacation of the premises or termination of the agreement whichever is earlier. Loan to subsidiaries will be repaid as per the terms of the agreement and there has been no default in repayment of such loans by subsidiaries.
The exposure to the credit risk at the reporting date is primarily from loan to subsidiaries, security deposit receivables and investment in subsidiaries. The Investment and Borrowing Committee monitors the investment in subsidiaries and loans granted to subsidiaries and it evaluates if any impairment is required. As at year end, Investment and Borrowing Committee based on the internal and external valuation and after assessing the performance of the subsidiaries, is of the view that no impairment is required other than investments in Devyani Food Street Private Limited.
Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India and Nepal. Trade receivables also includes receivables from credit card companies and online aggregator platforms, which are generally realisable on fortnightly basis. The Company does monitor the economic environment in which it operates. The Company manages its credit risk through credit approvals, establishing
credit limits and continuously monitoring credit worthiness of customers to which the Company grants credit terms in the normal course of business.
The Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available internal credit risk factors such as the Company''s historical experience for customers. Based on the business environment in which the Company operates, management considers that the trade receivables are in default (credit impaired) if the payments are more than 90 days past due however, the Company based upon past trends determines an impairment allowance for loss on receivables (other than receivables from related parties) outstanding for more than 180 days past due. Majority of trade receivables are from domestic customers, which are fragmented and are not concentrated to individual customers. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
(ii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The Company''s approach to manage liquidity is to have sufficient liquidity to meet it''s liabilities when they are due, under both normal and stressed circumstances, without incurring unacceptable losses or risking damage to the Company''s reputation.
The Company believes that its liquidity position, including total cash and cash equivalents and bank deposits maturing within a year (including bank deposits under lien) of '' 407.09 (31 March 2021: '' 284.73), anticipated future internally generated funds from operations, its fully available, revolving undrawn credit facility of '' 936.87 (31 March 2021: '' 713.97) and certain other current assets (financial and non financial) of '' 2,367.00 (31 March 2021: '' 1,137.24) will enable it to meet its future known obligations due in next year, in the ordinary course of business.
In the year ended 31 March 2022, the Company has earned a cash inflow from operating activities of '' 3,851.16 (31 March 2021: '' 1,580.88). Further, the Company generated an earnings before tax, depreciation and amortisation, impairment and fair valuation gains/losses of '' 3,042.89 (31 March 2021: '' 1,206.48). Based on the projections, the Company expects to earn cash inflow from operating activities, which can be used to settle its liabilities in the near future.
The Company''s liquidity management process as monitored by management, includes the following:
- Day to day funding, managed by monitoring future cash flows to ensure that requirements can be met.
- Maintaining rolling forecasts of the Company''s liquidity position on the basis of expected cash flows.
- Maintaining diversified credit lines.
Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk namely: currency risk and interest rate risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s borrowings with floating interest rates.
The Company is exposed to interest rate risk on account of variable rate borrowings. The Company''s risk management policy is to mitigate its interest rate exposure in accordance with the exposure limits advised from time to time. The Company has used interest rate swaps to mitigate its interest rate risk arising from certain transactions, these are recognised as derivatives.
Derivative Financial Instruments:
The Company uses derivative instruments as part of its management of exposure to fluctuations in interest rates. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes. The Company does not enter into complex derivative transactions to manage treasury risks. Treasury derivative contracts are normally in the nature of swap contracts and these are subject to the Company''s guidelines and policies. Derivative financial instruments are recognized as assets or liabilities on the balance sheet and measured at fair value, generally based on valuations obtained from banks. The accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative and the resulting designation.
The fair values of all derivatives are separately recorded in the balance sheet within other financial assets/ liabilities, as applicable. The use of derivatives can give rise to credit and market risk. The Company tries to control credit risk as far as possible by only entering into contracts with reputable banks. The use of derivative instruments are subject to limits, authorities and regular monitoring by appropriate levels of management. The limits, authorities and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of the underlying assets, liabilities or transactions, as derivatives are used only for risk management purposes.
Non qualifying hedges
The Company enters into derivative contracts which are not designated as hedges for accounting purposes, but provide an economic hedge of a particular transaction risk or a risk component of a transaction. Hedging instruments include as on date include "Interest Rate Swaps" being entered by the Company with bankers to hedge floating interest foreign currency loan and interest payments as due related thereto. Fair value changes on such derivative instruments are recognized in the Statement of Profit and Loss.
B. Currency risk
Currency risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to the effects of fluctuation in the prevailing foreign currency exchange rates on its financial position and cash flows. Exposure arises primarily due to exchange rate fluctuations between the functional currency and other currencies from the Company''s operating, investing and financing activities. The Investment and Borrowing Committee evaluates foreign exchange rate exposure arising from foreign currency transactions on periodic basis and follows appropriate risk management policies.
Sensitivity analysis
A reasonably possible strengthening (weakening) of the Indian Rupees against below currencies as at the year end would have affected the measurement of financial instruments denominated in foreign currency and affected profit or loss and other equity by the amounts shown below. This analysis is performed on foreign currency denominated monetary financial assets and financial liabilities outstanding as at the year end. This analysis assumes that all other variables, in particular interest rates, remain constant.
C. Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company''s performance to developments affecting a particular industry. Based upon the Company''s evaluation, there is no excessive risk concentration.
A. Leases where the Company is a lessee
The Company leases several assets including buildings for food outlets and warehouse. Lease payments are generally fixed or are linked to revenue with minimum guarantee and lease term ranges 1-30 years.
The Company has limited number of leases where rentals are linked to annual changes in an index (either RPI or CPI).
During the year ended 31 March 2022 and 31 March 2021, consequential to COVID-19 pandemic, the Company has negotiated several rent concessions with the landlords. Further, in view of amendments by the Companies (Indian Accounting Standards) Amendment Rules, 2020, the Company has elected to apply the practical expedient of not assessing the rent concessions originally due on or before 30 June 2021 as a lease modification, as per MCA notification dated 24 July 2020, which has been further extended till 30 June 2022 on Ind AS 116 during the current year, for rent concessions received on account of COVID-19 pandemic.
Accordingly, as per requirements of MCA notifications, out of total rent concessions of '' 271.49 (31 March 2021: '' 801.12) confirmed till 31 March 2022, '' 271.49 (31 March 2021: '' 567.19) has been reduced towards rent expenses (to the extent available) and balance of '' Nil (31 March 2021: '' 233.93) reported under other income. Rent concessions for leases in respect of discontinued operations amounted to '' Nil (31 March 2021: '' 12.16). Total rent concessions amounts to '' 271.49 (31 March 2021: '' 813.28).
iv. Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in Statement of profit and loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.
B. Leases where the Company is a lessor
The Company has sub-leased out some of its leased properties primarily in various food courts. All leases are classified as operating leases from a lessor perspective with the exception of certain sub-leases, which the Company has classified as finance subleases.
ii. The incremental borrowings rate range between 9.25% - 11.55% (31 March 2021: 9.25% - 11.55%).
The management of the Company estimates the loss allowance on finance lease receivables at the end of the reporting period at an amount equal to lifetime expected credit loss under simplified approach. None of the finance lease receivables at the end of the reporting period is past due, and taking into account the historical default experience and the future prospects of the industries in which the lessees operate, together with the value of collateral held over these finance lease receivables (see note 8), the management of the Company consider that no finance lease receivable is impaired.
The Company entered into finance leasing arrangements as a lessor for certain leased properties under sub leasing arrangements. The term of finance leases entered into is ranging from 3.16 - 18.01 years (31 March 2021: 3.16 - 18.01 years). The Company is not exposed to foreign currency risk as a result of the lease arrangements, as all leases are denominated in ''. Residual value risk on such right of use assets under lease is not significant.
iii. Operating lease (sub leases classified as operating leases)
Operating leases, in which the Company is the lessor, relate to leased properties by the Company with lease terms of between 1 to 9 years.
The unguaranteed residual values do not represent a significant risk for the Company, as they relate to leased properties of lessor under sub leasing contracts which are located in a location with active market for lessees. The Company did not identify any indications that this situation will change.
Estimation of fair value
* The Company''s leasehold investment properties consist of right-of-use assets in leased food courts, which has been determined based on the nature, characteristics of leases of each property.
The fair value of investment property has been determined by independent registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017, having appropriate recognised professional qualification and recent experience in the location and category of the property being valued. The fair value measurement has been categorized as level 3 inputs and has been arrived at using discounted cash flow projections based on reliable estimates of future cash flows considering growth in rental income of 8% to 10% p.a (31 March 2021: 5%) and discount rate of 12.09% (31 March 2021: 10.81%).
# The fair value of owned investment property has been determined by independent registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017, having appropriate recognised professional qualification and recent experience in the location and category of the property being valued. The fair value measurement has been categorized as level 3 inputs. The fair value has been arrived using market prevailing rates applicable to same location.
Impairment of leasehold investment properties
In accordance with Ind AS 36 "Impairment of Assets", such investment is considered as a separate cash generating unit (CGU) for the purpose of impairment review. Management periodically assesses whether there is an indication that such investment may be impaired. For investment, where impairment indicators exists, management compares the carrying amount of such investment with its recoverable amount. Recoverable amount is value in use of the investment computed based upon discounted cash flow projections. As on the reporting date for current year, the recoverable amount of this cash generating unit is determined at '' 244.95 (31 March 2021: '' 306.85) through an registered independent valuer, based on the value in use calculation which uses cash flow projections based on the projected profitability. The Company has determined an impairment charge of '' 65.43 (31 March 2021: Nil) based on the discount rate of 12.09% (31 March 2021: 10.81%) and rental income growth rate of 8% to 10% (31 March 2021: 5%). An analysis of the sensitivity of the computation to a change in key parameters (rental income and discount rates), based on reasonable assumptions, Management is of the view that there would be no material increase to the impairment charge which would impact the decision of the user of the standalone financial statements.
A The Company had given guarantee to Everest Bank Limited with a limit of NPR Nil (31 March 2021: NPR 30.34 million) in respect of borrowings of Devyani International Nepal Private Limited.
The Company has provided a letter of support for financial and operational assistance to Devyani Food Street Private Limited, Devyani Airport Services (Mumbai) Private Limited, RV Enterprizes Pte. Limited and Devyani International Nigeria Limited for ongoing operations for atleast 12 months.
a a Mr. Ravi Kant Jaipuria had given a personal guarantee to IndusInd Bank Limited, SBM Bank Limited & Axis Bank Limited in respect of term loan outstanding on 31 March 22 is '' Nil (31 March 2021: '' 1,218.75) taken by the Company.
# # Ravi Kant Jaipuria and sons (HUF) had given a personal guarantee to IndusInd Bank Limited in respect of term loan outstanding on 31 March 2022 of '' Nil (31 March 21: '' 480.70) taken by the Company.
** RJ Corp Limited had given a corporate guarantee to Axis Bank Limited in respect of term loan outstanding on 31 March 2022 of '' Nil (31 March 21: '' 539.18) taken by the Company.
During the year ended 31 March 2022, Devyani Airport Services (Mumbai) Private Limited converted its Noncumulative Redeemable Preference Shares to Compulsorily Convertible Preference Shares ("CCPS") pursuant to provisions of Section 48 of the Companies Act, 2013 as per shareholder''s approval in Extra Ordinary General Meeting held on 17 August, 2021. Devyani Airport Services (Mumbai) Private Limited converted its CCPS to equity shares as on 01 October 2021.
(V) Terms and Conditions
All transactions with related parties are made on the terms equivalent to those that prevail in arm''s length transactions and within the ordinary course of business. Outstanding balances at respective year ends are unsecured and settlement is generally done in cash.
* Against the total tax demand of '' 209.75, the Company has filed appeals before various tax authorities. Based on management assessment and upon consideration of advice from the independent legal counsels, the management believes that the Company has reasonable chances of succeeding before the tax authorities and does not foresee any material liability. Pending the final decision on this matter, no adjustment has been made in the financial statements.
# The Company is party to various legal proceedings in the normal course of business and does not expect the outcome of these proceedings to have any adverse effect on its financial position and hence no provision has been recorded against these legal proceedings at this stage. Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending with various forums/authorities. Accordingly, the above mentioned contingent liabilities are disclosed at undiscounted amount.
A. Defined contribution plans
An amount of '' 126.92 (31 March 2021: '' 81.79) has been recognised as an expense in respect of the Company''s contribution to provident and other funds deposited with the relevant authorities and has been charged to the Standalone Statement of Profit and Loss.
B. Defined benefit plans
The Company operates a gratuity plan wherein every employee is entitled to the benefit. Gratuity is payable to all eligible employees (who have completed 5 years or more of service) of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the Payments of Gratuity Act, 1972. Gratuity liability is partially funded by the Company through annual contribution to DIL Employees Gratuity Trust (the âTrust'') against ascertained gratuity liability. Trustees administer contributions made to the Trust and contributions are invested in a scheme with the Life Insurance Corporation of India as permitted by law of India.
The funding requirements of the plan are based on the gratuity fund''s actuarial measurement framework set out in the funding policies of the plan. The funding of the plan is based on a separate actuarial valuation for funding purpose for which assumptions may differ from the assumptions set out in (iii) below. Employees do not contribute to the plan.
The Company has defined that, in accordance with the terms and conditions of the aforesaid plan and in accordance with statutory requirements (including minimum funding requirements) of the plan of relevant jurisdiction, the present value of refund or reduction in future contributions is not lower than the balance of the total fair value of the plan assets less than total present value of obligations.
The sensitivity analysis is based on a change in above assumption while holding all other assumptions constant. The changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method ( present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting year) has been applied when calculating the provision for defined benefit plan recognised in the Standalone Balance Sheet.
The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous years.
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it provides an approximation of the sensitivity of the assumptions shown.
Risk exposure:
The defined benefit plan is exposed to a number of risks, the most significant of which are detailed below:
Change in discount rates: A decrease is discount yield will increase plan liabilities
Mortality table: The gratuity plan obligations are to provide benefits for the life of the member, so increase in life expectancy will result in an increase in plan liabilities.
D. Code of Social Security
The Code on Social Security, 2020 ("the Code") relating to employee benefits during employment and post-employment received Presidential assent in September 2020. Subsequently, the Ministry of Labour and Employment had released the draft rules on the aforementioned Code. However, the same is yet to be notified. The Company will evaluate the impact and make necessary adjustments to the financial statements in the period when the Code will be notified and will come into effect.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker ("CODM") of the Company. The CODM is considered to be the Board of Directors who make strategic decisions and is responsible for allocating resources and assessing the financial performance of the operating segments.
As the Company''s business activity primarily falls within a single business and geographical segment, i.e., food and beverages, and in India, thus there are no additional disclosures to be provided under Ind AS 108 - "Operating Segments''. The CODM considers that the various goods and services provided by the Company constitutes single business segment.
a. Description of share based payment arrangements i. Share Options Schemes (equity settled)
ESOS - 2011
On 20 September 2011 and 20 December 2011, the Board of Directors approved the Employees Stock Option Scheme 2011 ("ESOS 2011"), which was approved by the shareholders on 20 December 2011 and subsequently on 18 May 2012 for increasing the ceiling limit to 4,900,000 Options ("Ceiling Limit") with condition at any given point of time no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting. As per ESOS 2011, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of '' 111.70. ESOS 2011 was formulated with the objective to enable the Company to grant Options for equity shares of the Company to certain eligible employees, officers and directors of the Company and its subsidiaries, to purchase shares from the Company at a pre-determined price. A resolution was passed in the meeting of the Board of Directors held on 6 May 2014 wherein certain additional Options were granted at the same terms and conditions as mentioned in ESOS 2011.
Further, ESOS 2011 was amended subsequently and was approved by the shareholders on 17 March 2021. The resolution provides the delinking of vesting schedule of the Options from filing of the red herring prospectus (RHP) by the Company and for aligning the Scheme in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/POLICY CELL/2/2015
dated 16 June 2015 ("SEBI SBEB Regulations") and accordingly all Options under ESOS 2011 were vested immediately on the day of passing the said resolution and the exercise window for ESOS 2011 was opened by the Nomination and Remuneration Committee on 17 March 2021. The Company received the exercise letters from the Options holders and allotted 1,581,500 equity shares pursuant to exercise of Options.
ESOS - 2018
On 6 April 2018, the Board of Directors approved the Employees Stock Option Scheme 2018 ("ESOS 2018"), which was approved by the shareholders on 21 September 2018. ESOS 2018 has been formulated with the same objective as ESOS 2011. ESOS 2018 provides that Options so granted, shall not represent more than 5% of the fully diluted share capital of the Company at any given point of time ("Ceiling Limit") and no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting. As per ESOS 2018 Grant letters, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of '' 306.12.
Further ESOS 2018 was subsequently amended and approved by the shareholders on 17 March 2021 for linking the vesting of options to listing date of shares of the Company and to align the Scheme with compliance requirement of SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/POLICY CELL/2/2015 dated 16 June 2015 ("SEBI SBEB Regulations"). Under the ESOS 2018, no vesting shall occur until date of listing of shares on recognized Stock Exchanges by the Company in respect of proposed offer.
ESOS - 2021
On 17 March 2021, the Board of Directors approved the Employees Stock Option Scheme 2021 ("ESOS 2021") in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, read with the SEBI Circular no. CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 ("SEBI SBEB Regulations"), which was approved by the shareholders on 17 March 2021. ESOS 2021 was formulated with the same objective of ESOS 2011 and ESOS 2018.
ESOS 2021 provides that Options so granted, shall not represent more than 5% of the fully diluted share capital of the Company at any given point of time ("Ceiling Limit") and no Grantee shall be granted Options during any one year, equal to or exceeding 1% of the issued capital of the Company except with the specific approval of the members accorded in a general body meeting by way of a special resolution. As per ESOS 2021 Grant letters, holders of vested Options are entitled to purchase one equity share for every Option at an exercise price of '' 433.28.
The risk free interest rates are determined based on current yield to maturity of 10 years Government Bonds with similar residual maturity equal to expected life of the Options. Expected volatility calculation is based on historical daily closing stock prices of competitors using standard deviation of daily change in stock price. The minimum life of the stock option is the minimum
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