Mar 31, 2023
Note: The company has filed a Writ Petition before the Hon''ble High Court of Telangana challenging notifications relating to taxation of Joint Development transactions under which the GST authorities issued summons, detained the Company''s senior management personnel and initiated debit freeze in bank accounts of the company without any written notice or claim for their demand. The company paid Rs 5 crores under protest. The management strongly believes that there is no GST liability on the said transaction and that there is merit in its court case/ WP and is hopeful of a positive outcome. The matter is sub-judice.
c) (i) Rights and Preferences attached to equity shares
Every shareholder is entitled to such rights as to attend and vote at the meeting of the shareholders, to receive dividends distributed and also has a right in the residual interest of the assets of the Company. Every shareholder is also entitled to right of inspection of documents as provided in the Companies Act, 2013.
(ii) There are no restrictions attached to equity shares.
e) During the period of five years immediately preceding the reporting date including the current year, there were no shares issued for consideration other than cash, no issue of bonus shares and no shares bought back.
30. Additional Regulatory Requirement
a) There are no Immovable properties whose title deeds are not held in the name of the company
b) The company does not have investment property
c) The company has not revalued its Property, Plant and Equipment (including Right of Use Assets or Intangible assets)
d) The company has not granted any loans or advances in the nature of loans to promoters, Directors, KMPs and related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, either repayable on demand or without specifying any terms or period of repayment.
e) The Company does not have any Capital-Work-in Progress (CWIP).
f) The Company does not have any Intangible Assets under Development..
g) There have been no proceedings initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder
h) In respect of borrowings from a bank on the basis of security of current assets, the periodic returns / statements of current assets filed by the Company with the bank are in agreement with the books of accounts. The Company does not have any borrowings from financial institutions on the basis of security of current assets.
i) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.
j) The company had no transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
k) There are no charges or satisfactions yet to be registered with the Registrar of Companies beyond the statutory period.
l) The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
n) Utilization of Borrowed Funds and Share Premium
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity (ies),including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
No tax assessments under the Income Tax Act, 1961 (43 of 1961) have been received during the year and hence, there have been no transactions not recorded in the books of account which have been surrendered or disclosed as income during the year. There has also not been any previously unrecorded income or related assets.
p) The Company is not covered under the provisions of Section 135 of the Companies Act, 2013.
32. Commitments & Contingencies (i) Bank guarantees 117.85 162.50 (ii) Income Tax (a) The Company has appealed against the Assessment order for a demand of ^ 250.92 lakhs for the Assessment years 201213 and for the assessment year 2013-14. (b) Tax deducted at Source amounting to ^ 8.60 lakhs for assessment years 2014-15 to 2017-18 is pending for resolution at the TDS circle. |
35. Employee benefits:
Gratuity Plan (defined benefit plan): Every employee is entitled to the benefit equivalent to 15 days of total basic salary last drawn for each completed year of service. Gratuity is payable to all eligible employees of the Company on retirement or separation or death or permanent disablement in terms of the provisions of the Payment of Gratuity Act, 1972.
Based on actuarial valuation necessary provisions have been created in the books to meet the liability as per IndAS 19 - Employee Benefits. Following table presents the disclosure requirements in respect of employee benefit pursuant to IndAS 19 - Employee Benefits:
The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in the assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognized in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
36. Leases
Information on leases as per Indian Accounting Standards (Ind As) 116 on ''Leases''
(a) Lease Income
Company as a Lessor
Other Income includes ^ 3634.67 lakhs pertaining to Lease rentals received by the Company arising out of capitalization of a Property that had been given on Joint Development by the Company.
(a) Lease Expense
Company as a Lessee
(i)Future minimum lease payments* (iii)Impact of adoption of Ind AS 116
Effective 1st April 2019, the company has adopted Ind AS 116 "Leases " and applied the standard to all lease contracts existing on 1st April 2019 according to the provisions of standard.
On the transition date, the application of new accounting standard resulted in recognition of "Right of use asset" and corresponding "Lease Liability" to the extent of ^ 214.82 Lakhs.
b) Fair Value Hierarchy:
The Company has estimated all its financial assets and liabilities under Level 3 prescribed under the Indian Accounting Standards.
c) Valuation Techniques:
The discount rates considered is the borrowing rate charged by the lead lender of the Company after giving effect to the applicable tax rate. The carrying amount of current financial assets and liabilities are considered to be the same as their fair values due to their short-term nature. For financial assets and liabilities that are measured at fair value, the carrying amount is equal to their fair values.
39. Capital Management:
The Company monitors capital on the basis of total equity on periodic basis. Equity comprises of all components of equity including fair value impact and debt includes both long-term and short-term loans.
Deferred Tax asset as at 31st March,2023 and 31st March 2022 is recognized to the extent of Deferred tax liability arising out of temporary differences between accounting as per books and accounting as per IT Act,1961
b) Reconciliation of Tax expense and the accounting profit multiplied by the tax rate:
The Company is exposed to credit risk, which is the risk that counter party will default on its contractual obligation resulting in a financial loss to the Company. Credit risk arises from cash and cash equivalents, financial assets carried at amortized cost and deposits
with banks and financial institutions, as well as credit exposures to trade customers including outstanding receivables.
(i)Credit risk management
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.
Trade Receivable
The Company closely monitors the credit-worthiness of the debtors and only sells goods to credit-worthy parties. The Company''s internal systems are configured to define credit limits of customers, thereby limiting the credit risk to pre-calculated amounts.
b.Liquidity risk:
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions.
The Company''s objective in relation to its existing operating business is to maintain sufficient funding to operate at an optimal level.
Market risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because of volatility of prices in the financial markets. Market risk can be further segregated as:
i) Foreign currency risk:
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company has exposure foreign currency risk in case of Trade and other payables.
ii) Interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During March 31, 2022 the Company''s borrowings at variable rate were mainly denominated in Rupees. The Company''s fixed rate borrowings are carried at amortized cost. They are therefore not subject to interest rate risk as defined in Ind AS -107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
42. Previous Years Figures have been regrouped/reclassified wherever necessary to confirm to current years classification.
Mar 31, 2018
Note 1: Company information and Significant accounting policies
A Background
Megasoft Limited, a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956, on 29 June 1999 has its registered office in Chennai. The company''s shares are listed on BSE and NSE, in India. The company is a unique trans-nation company with customers, employees and operations across multiple continents and combines the best global practices with a focus on the global telecommunication domain.
B Basis of Preparation
These Financial Statements have been prepared on accrual basis of accounting in accordance with Indian Accounting Standards (IND AS) as per the Companies (Indian Accounting Standards) Rule, 2015 notified under Section 133 of Companies Act, 2013, (the ''Act'') and other relevant provisions of the Act. These are the Company''s first Financial Statements under Indian Accounting Standards (IND AS). The Financial Statements upto year ended 31st March 2017 were prepared in accordance with Generally Accepted Accounting principles (GAAP) in India, accounting standards specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies Act, 2013 collectively referred to as "Indian GAAP". The company followed the provisions of IND AS 101 in preparing its opening IND AS Balance Sheet as on the date of transition viz. 1st April, 2016. Some of the Company''s IND AS accounting policies used in the opening balance sheet are different from the previous GAAP policies applied as at 31st March, 2016 and accordingly adjustments were made to restate the opening balances as per IND AS. The adjustments arose from events and transactions before the date of transition of IND AS were recognised directly to Retained earnings as at 1st April, 2016, as required by IND AS 101.
Disclosures under IND AS are made only in respect of material items and in respect of the items that will be useful to the users of Financial Statements in making economic decisions.
An explanation of how the transition to IND AS has affected the previously reported financial position, financial performance and cash flows is provided in Notes 30 and 31 to the Financial statements.
C Basis of Measurement
The Financial Statements have been prepared in Going concern basis and on an accrual method of accounting. Historical cost is used in preparation of Financial Statements except for the following items which are measured at Fair value:
i) Certain Financial assets and liabilities
ii) Net Defined benefit (Asset)/ Liability
D Functional and Presentation currency
The Financial Statements are presented in Indian Rupees (INR), which is the Company''s functional currency. All financial information presented in INR has been rounded to the nearest Lakhs, except as stated otherwise.
E Use of estimates and management judgement
The preparation of Financial Statements in conformity with the accounting policies requires the management to make estimates and assumption considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the Financial Statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialize.
c) (i) Rights and Preferences attached to equity shares
Every shareholder is entitled to such rights as to attend and vote at the meeting of the shareholders, to receive dividends distributed and also has a right in the residual interest of the assets of the Company. Every shareholder is also entitled to right of inspection of documents as provided in the Companies Act, 2013.
(ii) There are no restrictions attached to equity shares.
Working Capital Loan has been primarily secured by exclusive charge on the current assets and collaterally secured by the Fixed Assets of the Company. The Company has also given its land that is currently under development as collateral security for this loan. The rate of interest on this loan is 3 months MCLR 4.5% and there have been no defaults in repayments during the year.
The company has complied this information based on the current information in its possession. As at the year end, no supplier has intimated the company about its status as a Micro or Small Enterprise or its registration with the appropriate authority under the Micro, Small and Medium Enterprises Development Act, 2006.
(ii) Issuance of Stand-by Letter of credit by the company''s bankers in respect of working capital loan taken by the wholly owned subsidiary. The said loan taken by the subsidiary is further secured by way of a corporate guarantee of the company.
(iii) The Company has appealed against the Assessment order for a demand of Rs. 645.88 lakhs for the Assessment years 2012-13 and 2013-14 and 2013-14 to 2016-17 of CIT Appeals, TDS circle and Income Tax Appellate Tribunal.
2. Employee benefits:
Gratuity Plan (defined benefit plan): Every employee is entitled to the benefit equivalent to 15 days of total basic salary last drawn for each completed year of service. Gratuity is payable to all eligible employees of the Company on retirement or separation or death or permanent disablement in terms of the provisions of the Payment of Gratuity Act, 1972.
Based on actuarial valuation necessary provisions have been created in the books to meet the liability as per IndAS 19 - Employee Benefits. Following table presents the disclosure requirements in respect of employee benefit pursuant to IndAS 19 - Employee Benefits:
The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in the assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognized in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
3. Segment Reporting
The company prepares consolidated financial statements, hence as per Accounting Standard 17 on Segment Reporting segment information has not been provided in the standalone financial statements.
4. Note on First time adoption of Ind AS:
i) Measurement of Certain Financial assets at Amortised cost:
Under Previous GAAP, all financial assets have been carried at cost or carrying value. Whereas under Ind AS, they are measured and recognized at Fair value and discounted using the post tax borrowing rate. Accordingly, the total equity as on the transition date has been decreased by NIL and profit for the year ended 31st March, 2017 has increased by Rs. 5.25 Lacs
II) Other Comprehensive income
Under Ind AS, all items of income and expense recognized in a period should be included in Statement of profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the Statement of Profit or Loss as "Other Comprehensive income" includes remeasurement of Post - employment benefit obligations
iii) Remeasurements of Post employment benefits:
Under Ind AS, the actuarial gains / losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined liability are recognised in other comprehensive income instead of Profit or loss. Under the Previous GAAP, these remeasurements were forming part of the Profit and loss account . As a result of this, the Profit for the year ended 31st March 2017, has been decreased by Rs. 9.01 Lacs
iv) Prior Period items:
Under Ind AS, material prior period errors are corrected retrospectively, by restating the comparative amounts for the prior periods presented in which the error occurred.
v) Other Equity
Other equity including retained earnings as at 1st April, 2017 has been adjusted consequent to the above Ind AS adjustments, wherever necessary.
5. Reconciliation between Previous GAAP and Ind AS:
Ind AS 101 Requires an entity to reconcile equity, total comprehensive income and cash flows under the erstwhile Indian GAAP and the Ind AS for the previous financial years. The previous GAAP figures are based on the audited financial statements of the Company for the year ended 31st March, 2017.
b) Fair Value Hierarchy:
The Company has extimated all its financial assets and liabilities under Level 3 prescribed under the Indian Accounting Standards.
c) Valuation Techniques:
The discount rates considered is the borrowing rate charged by the lead lendor of the Company after giving effect to the applicable tax rate. The carrying amount of current financial assets and liabilities are considered to be the same as their fair values due to their short-term nature. For financial assets and liabilities that are measured at fair value, the carrying amount is equal to their fair values.
6. Capital Management:
The Company monitors capital on the basis of total equity on periodic basis. Equity comprises of all components of equity including fair value impact and debt includes both long-term and short-term loans.
Deferred tax asset as at 31st March, 2018 and 31st March, 2017 is recognized to the extent of Deferred tax liability arising out of temporary differences between accounting as per books and accounting as per Income Tax Act, 1961.
b) Reconciliation of Tax expense and the accounting profit multilplied by the tax rate:
7. Financial Risk Management:
The Company''s business activities expose it to a variety of financial risks, namely liquidity risk, market risks and credit risk.
a) Credit Risk:
The Company is exposed to credit risk, which is the risk that counterparty will default on its contractual obligation resulting in a financial loss to the Company. Credit risk arises from cash and cash equivalents, financial assets carried at amortised cost and deposits with banks and financial institutions, as well as credit exposures to trade customers including outstanding receivables.
Credit risk management
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.
b) Liquidity risk:
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions.
The Company''s objective in relation to its existing operating business is to maintain sufficient funding to operate at an optimal level.
c) Market Risk:
Market risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because of volatility of prices in the financial markets. Market risk can be further segregated as:
i) Foreign currency risk:
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company has exposure foreign currency risk in case of Trade and other payables.
ii) Interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During March 31, 2017 and April 01, 2016 the Company''s borrowings at variable rate were mainly denominated in Rupees. The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS -107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
Mar 31, 2017
The company has only one class of shares referred to as equity shares having a par value of Rs.10 each. Each holder of the equity share, as reflected in the records of the company as of the date of the shareholder meeting, is entitled to one vote in respect of each share held for all matters submitted to vote in the shareholder meeting.
In the event of liquidation of the company, the holders of equity shares will be entitled to receive any of the remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Equity shareholders holding more than 5 percent of equity shares along with the number of equity shares held at the beginning and at the end of the period is as given below:
The company has not allotted any equity shares by way of bonus shares nor has bought back any equity shares during the period of five years immediately preceding the balance sheet date. The company has not allotted any equity shares without payment being received in cash during the period of five years immediately preceding the balance sheet date.
The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be continuous, the Company is in the process of continually updating the documentation for the international transactions entered into with the associated enterprises during the financial year. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
1 Commitments & Contingencies
(i) Estimated amount of contracts pending execution on capital account (net of advances) -
(ii) Bank guarantees 326.50 236.69
(iii) Issuance of Stand-by Letter of credit by the company''s bankers in respect of working capital loan taken by the wholly owne subsidiary. The said loan taken by the subsidiary is further secured by way of a corporate guarantee of the company.
(iv) The Company has appealed against the Assessment order for a demand of Rs. 6.27 crs for the Assessment year 2012-13 and 2013 14 to CIT Appeals and Income Tax Appellate Tribunal.
2. Related party transactions
A. Wholly owned Subsidiary companies
Megasoft Consultants Sdn Bhd, Malaysia XIUS Holding Corp , USA
XIUS Corp, USA (Step down subsidiary of XIUS Holding Corp, USA)
XIUS S DE RL DE CV, formerly Boston Communications Group De Mexico, S.R.L (Step down subsidiary of XIUS Holding Corp, USA)
B. Associates
Entities controlled by Director/s
D Sudhakar Reddy
NMR Property Development Private Limited Sricity Holdings India Private Limited
Sricity Private Limited Sricity Utility Services Private Limited
Suprani Farms Private Limited Sri Dhruva Builders Private Limited
C. Directors & Key Management Personnel
GV Kumar
D Sudhakar Reddy
28. Employee Benefit Plans
(a) Provident Fund:
Both the Employees and the company make monthly contributions to the Provident Fund Plan equal to a specified percentage of covered employee''s salary. The entire contribution in respect of employees is contributed to the Government administered
Employee Provident and Pension Fund.
(b) Defined benefit Plans:
The company offers the following Employee benefit schemes to its Employees
(i) Gratuity (unfunded) - The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment based completed years of service or part there of in excess of six months Vesting occurs on completion of five years of service.
(ii) Post-employment leave encashment (unfunded) - Leave encashment is payable to the employees on separation from the company at retirement, death while in employment or on termination of employment. Employees are not entitled to encash leave while in employment.
3. Segmental Information
The company prepares consolidated financial statements, hence as per Accounting Standard 17 on Segment Reporting, segment information has not been provided in the standalone financial statements.
4. Disclosure on Specified Bank Notes:
During the year the Company had specified bank notes or denomination note as defined in MCA notification G.S.R. 308 E dated March 30, 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from November 08, 2016 to December 30, 2016, the denomination wise SBNs and other notes as per the notification is given below.
Mar 31, 2016
The company has only one class of shares referred to as equity shares having a par value of '' 10 each. Each holder of the equity share, as reflected in the records of the company as of the date of the shareholder meeting, is entitled to one vote in respect of each share held for all matters submitted to vote in the shareholder meeting.
The company declares and pays dividends in Indian rupees.
In the event of liquidation of the company, the holders of equity shares will be entitled to receive any of the remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
The company has not allotted any equity shares by way of bonus shares nor has bought back any equity shares during the period of five years immediately preceding the balance sheet date. The company has not allotted any equity shares without payment being received in cash during the period of five years immediately preceding the balance sheet date.
Employees Stock Option Plans
The company had two stock option plans viz Associates Stock Option Plan 2004 and Employees Stock Option Plan 2007 which provided for the granting of stock options to employees / directors of the company and its subsidiaries (not being promoter directors of the company). The said plans lapsed during the financial year under review in accordance with the terms of the shareholders'' resolutions dated 18.06.2004, 10.05.2005, 22.06.2006 and 08.06.2007.
Vehicles are hypothecated to the Banks / Financial Institutions as security for the amounts borrowed by the company.
The Company has entered into leasing / hire purchase arrangements with banks and financial institutions for the hire / lease of motor vehicles ("the leased asset") for a period not exceeding 60 months. During the lease / hire period, the Company has agreed to hypothecate and create an exclusive charge on the vehicle in favour of the bank / financial institution and repay the principal amount of the loan along with interest thereon by way of installments as agreed upon. The charge / security created in favour of the bank / financial institution shall remain in force until such time all the dues under the agreement are fully discharged.
Pending lease / hire purchase obligations comprising minimum lease / hire payments
The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be continuous, the Company is in the process of continually updating the documentation for the international transactions entered into with the associated enterprises during the financial year. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
1 Investment
Investment amounting to Rs. 1238.61 has been adjusted against the Reserve &surplus based on the Legal Opinion.
2. Employee Benefit Plans
(a) Provident Fund:
Both the Employees and the company make monthly contributions to the Provident Fund Plan equal to a specified percentage of covered employee''s salary. The entire contribution in respect of employees is contributed to the Government administered Employee Provident and Pension Fund.
(b) Defined benefit Plans:
The company offers the following Employee benefit schemes to its Employees
(i) Gratuity (unfunded) - The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment based completed years of service or part thereof in excess of six months Vesting occurs on completion of five years of service.
(ii) Post -employment leave encashment (unfunded) - Leave encashment is payable to the employees on separation from the company at retirement, death while in employment or on termination of employment. Employees are not entitled to encash leave while in employment.
3. Quantitative details
The Company is in the business of development and maintenance of computer software. The development and sale of such software cannot be expressed in any generic unit. Hence, it is not possible to furnish the quantitative details and the information required under the Companies Act, 2013
4. Segmental Information
The company prepares consolidated financial statements, hence as per Accounting Standard 17 on Segment Reporting, segment information has not been provided in the standalone financial statements.
5. Previous year comparatives
The financial statements present the results of operations of the company and its subsidiaries for the financial year ended 31 March 2016 (12 months period) and are not directly comparable for the period ended 31 March 2015 (15 months period).
Mar 31, 2015
1. Related party transactions
Wholly owned Subsidiary companies
Megasoft Consultants Sdn Bhd, Malaysia; Megasoft Consultants Pte Ltd,
Singapore; XIUS Holding Corp (formerly, Boston Communications Group,
Inc.), USA; XIUS Corp (formerly, Cellular Express, Inc.), USA; BCGI
Wireless Private Limited.
Enterprise over which Director(s) / KMP have significant influence
NMR Property Development Private Limited, Sri City Private Limited,
Suprani Farms Private Limited, Sricity Holdings India Private Limited,
Sricity Utility Services Private Limited, Sumedha Estates Private
Limited, Haripuram Developers Private Limited, Lamda Developers Private
Limited, lota Developers Private Limited, Kappa Developers Private
Limited, Gamaa Developers Private Limited, Sri Dhruva Builders Private
Limited.
2. Employee benefit plans
(a) Provident Fund
Both the employees and the company make monthly contributions to the
Provident Fund Plan equal to a specified percentage of the covered
employee's salary. The entire contribution in respect of employees is
contributed to the Government administered employee Provident and
Pension Fund.
(b) Defined benefit plans
The company offers the following employee benefit schemes to its
employees:
(i) Gratuity (unfunded) - The scheme provides for lump sum payment to
vested employees at retirement, death while in employment or on
termination of employment based on completed years of service or part
thereof in excess of six months. Vesting occurs on completion of five
years of service.
(ii) Post-employment leave encashment (unfunded) - Leave encashment is
payable to the employees on separation from the company at retirement,
death while in employment or on termination of employment. Employees
are not entitled to encash leave while in employment.
3. Quantitative details
The Company is in the business of development and maintenance of
computer software. The development and sale of such software cannot be
expressed in any generic unit. Hence, it is not possible to furnish the
quantitative details and the information required under paragraphs 3,
4C and 4D of part II of Schedule VI to the Companies Act, 1956.
4. Segmental Information
The company prepares consolidated financial statements, hence as per
Accounting Standard 17 on Segment Reporting, segment information has
not been provided in the standalone financial statements.
5.Previous year comparatives
The financial statements have been prepared for the fifteen months
period ended 31 March 2015 due to change in accounting year-end from
December to March. The comparatives presented are for the year ended 31
December 2013 (12 months) and hence, not comparable to the current
fifteen months period ended 31 March 2015. The previous period figures
have been regrouped / reclassified, wherever necessary to conform to
the current period presentation.
Dec 31, 2012
(1) Corporate Information
Megasoft Limited, a public limited company domiciled in India and
incorporated under the provisions of the Companies Act, 1956, on 29
June 1999 and is having its registered office in Chennai. The
company''s shares are listed on Madras Stock Exchange, The National
Stock Exchange and The Bombay Stock Exchange, in India. The company is
a unique Indo-American trans-national company that combines the best
practices of both cultures (Indian and American), creating a high
quality and cost effective entity with a focus on the global
telecommunications domain.
(2) Related party transactions
Wholly owned Subsidiary companies
Megasoft Consultants Sdn Bhd, Malaysia, Megasoft Consultants Pte Ltd,
Singapore, XIUS Holding Corp (f/k/a Boston Communications Group, Inc.),
USA, XIUS Corp (f/k/a Cellular Express, Inc.), USA, BCGI Wireless
Private Limited.
Associates - Entities controlled by Director/s
S Ravindra Babu HUF
Aries Foundations Private Limited, Innovative Water Solutions Limited,
NMR Property Development Private Limited, Sannareddy Holdings Private
Limited, SR Heritage Farms Private Limited, SRB Infrastructure Private
Limited, Sri City Infrastructure Development Private Limited, Sri City
Private Limited, Sri City Property Development Private Limited, Sricity
E-World Private Limited, Sricity Holdings India Private Limited,
Sricity Projects Private Limited, Sricity Utility Services Private
Limited, Suprani Farms Private Limited.
Directors & Key Management Personnel
GV Kumar & D Sudhakar Reddy
(3) Quantitative details
The Company is in the business of development and maintenance of
computer software. The development and sale of such software cannot be
expressed in any generic unit. Hence, it is not possible to furnish the
quantitative details and the information required under paragraphs 3,
4C and 4D of part II of Schedule VI to the Companies Act, 1956.
(4) Segmental Information
In accordance with AS 17 - Segment Reporting, segment information has
been given in the consolidated financial statements of Megasoft Group
and therefore no separate disclosure on segment information is given in
these financial statements.
(5) Corporate Guarantees
The company has given a corporate guarantee for a foreign currency loan
of US$ 8.00 million (Previous year - US$ 12.00 million) from Axis Bank,
Hong Kong to XIUS Holding Corp (f/k/a Boston Communications Group,
Inc.), USA.
(6) Forward contracts
Foreign exchange forward contracts outstanding at the end of the year
is Nil (Previous year - USD 1 million approx. Rs. 48 million )
(7)Previous year comparatives
The company has prepared these financial statements as per the format
prescribed by Revised Schedule VI to the Companies Act, 1956 (''the
schedule'') issued by Ministry of Corporate Affairs. Previous periods''
figures have been recast / restated to conform to the classification
required under revised Schedule VI.
(8) Cash flows
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from regular revenue generating, financing and
investing activities of the company are segregated. Cash flows in
foreign currencies are accounted at average monthly exchange rates that
approximate the actual rates of exchange prevailing at the dates of the
transactions.
(9)Subsidiary companies details
The details of subsidiary companies are given in a separate statement
attached to the accounts in terms of the general circular No 2/2011
dated 8 February 2011 of the Ministry of Corporate Affairs.
Dec 31, 2011
(1) Secured loans / borrowings are secured as follows:
(a) For borrowings by the company
(i) The working capital loan facilities from Axis Bank are secured by a
first charge on entire current assets and fixed assets (except
company's assets acquired under hire purchase scheme), present and
future, of the company.
(ii) Vehicles are hypothecated to the Banks / Financial Institutions as
security for the amounts borrowed by the Company. Amount repayable
within one year is Rs 1,405 (Previous year - Rs 499).
(b) Collaterals for borrowings by the company's wholly owned subsidiary
The foreign currency loan of US$ 12 million from Axis Bank, Hong Kong
to XIUS Holding Corp., USA, against the SBLC from Axis Bank, Hyderabad,
India, is secured by a pari passu first charge on the assets of XIUS
Holding Corp., USA. Amount repayable within one year is US$ 7 million
(Previous year - Nil).
(2) Leases / Hire purchase
(a) Leases / Hire purchase - Capital
The Company has entered into leasing / hire purchase arrangements with
banks and financial institutions for the hire / lease of motor vehicles
("the leased asset") for a period not exceeding 60 months. During the
lease / hire period, the Company has agreed to hypothecate and create
an exclusive charge on the vehicle in favour of the bank / financial
institution and repay the principal amount of the loan along with
interest thereon by way of instalments as agreed upon. The charge /
security created in favour of the bank / financial institution shall
remain in force until such time all the dues under the agreement are
fully discharged.
(3) Loans and advances
(i) The erstwhile VisualSoft had entered into an agreement with Andhra
Pradesh Industrial Infrastructure Corporation Limited ("APIIC") to
acquire land admeasuring 0.751 acres at Madhapura and 15.61 acres at
Nanakramguda, Hyderabad. As per the agreement the erstwhile VisualSoft
had paid the required amount towards purchase of the land, stamp duty,
other expenditure, etc., and the same has been included under Loans &
Advances as capital advance. On satisfaction of certain terms and
conditions laid down in the agreement, the deed of conveyance shall be
executed in favour of the Company after payment of differential stamp
duty, if any. Non-compliance of certain terms and conditions would
attract withdrawal of rebate which may increase the cost of land.
(ii) Advance income-tax include MAT credit entitlement.
* The liability towards gratuity is provided on an actuarial basis for
the company as a whole. The amount pertaining to directors is not
individually ascertainable and is therefore not included above. Above
amount does not include remuneration paid by wholly owned subsidiary
company to Managing Director of the company aggregaing to Rs 3,913
(Previous year Nil) in terms of section 314 of the companies act, 1956
with due approval of the shareholders at the annual general meeting
held on 17 June 2011.
(4) Quantitative details
The Company is in the business of development and maintenance of
computer software. The development and sale of such software cannot be
expressed in any generic unit. Hence, it is not possible to furnish the
quantitative details and the information required under paragraphs 3,
4C and 4D of part II of Schedule VI to the Companies Act, 1956.
(5) Segmental Information
In accordance with AS 17 - Segment Reporting, segment information has
been given in the consolidated financial statements of Megasoft Group
and therefore no separate disclosure on segment information is given in
these financial statements.
(6) Taxation
Profit for taxation has been made after taking into consideration the
appropriate exemptions available for operations till 31 March 2011
(7) Transfer pricing legislation
The Company has established a comprehensive system of maintenance of
information and documents as required by the transfer pricing
legislation under sections 92-92F of the Income Tax Act, 1961. Since
the law requires existence of such information and documentation to be
continuous, the Company is in the process of updating the documentation
for the international transactions entered into with the associated
enterprises during the financial year. The management is of the opinion
that its international transactions are at arm's length so that the
aforesaid legislation will not have any impact on the financial
statements, particularly on the amount of tax expense and that of
provision for taxation.
(8) Employees Stock Option Plans
The company has two stock option plans that provide for the granting of
stock options to employees / directors of the company and its subsid-
iaries (not being promoter directors of the company). The objectives of
these plans include attracting and retaining the best personnel,
providing for additional performance incentives and promoting the
success of the company by providing employees the opportunity to
acquire equity shares. Remuneration / Compensation Committee
administers all these stock options under various plans. The stock
option plans are summarised below:
(i) Associates Stock Option Plan 2004
The shareholders of the company in the AGM held on 18 June 2004
approved the Associate Stock Option Plan (ASOP-2004). The ASOP- 2004
provides for issue of 755,000 equity shares of Rs 10 each to the
employees including directors at the market price of the shares on the
date of grant.
At the AGM held on 22 June 2006, the exercise price of the options to
be granted was amended to enable issue of options / shares at such
discounts to the Market Price as on the date of the grant of the
options subject to the exercise price not being less than the face
value of shares.
(ii) Employees Stock Option Plan 2007
The shareholders of the company through a postal ballot process, postal
ballot notice dated 26 April 2007, results declared on 8 June 2007,
approved an Employees Stock Option Plan (ESOP-2007). The ESOP-2007
provides for issue of 2,700,000 options (underlying equity shares of Rs
10 each) to the employees / Directors of both the company and its
subsidiaries, at such discounts to the Market Price as on the date of
the grant of the options subject to the exercise price not being less
than the face value of equity shares.
(9) Related party transactions
Wholly owned Subsidiary companies Megasoft Consultants Sdn Bhd,
Malaysia, Megasoft Consultants Pte Ltd, Singapore, XIUS Holding Corp,
(formerly Boston Communications Group, Inc.,), USA, Xius Corp (formerly
Cellular Express, Inc.,) USA, BCGI Wireless Private Limited Associates
- Entities controlled by Director/s S Ravindra Babu HUF Innovative
Water Solutions Limited, NMR Property Develolpment Private Limited,
Sannareddy Holdings Private Limited, SR heritage Farms private Limited,
SRB Infrastructure Private Limited, Sri City Infrastructure Development
private Limited, Sri City Private Limited, Sri City Property
Development Private Limited, Sri City E-World Private Limited, Sricity
Holdings India Private Limited, Sricity Projects Private Limited,
Sricity Utility Services Private Limited, Suparani Farms Private
Limited.
(10) Commitments & Contingencies
(Rs 000s)
Contingent liabilities including bank
guarantees, letter of credits, etc. 26,813 62,749
(20) Corporate Guarantees
The company has given a corporate guarantee for the foreign currency
loan of US$ 12 million from Axis Bank, Hong Kong to XIUS Holding Corp.,
USA.
(11) Forward contracts
Foreign exchange forward contracts outstanding at the end of the year
USD 4 million approx. Rs 193,500 (Previous year - Nil).
(12) Foreign exchange rates
Foreign exchange rates adopted for balance sheet purposes is USD = Rs
53.266 as at 31 December 2011 and USD = Rs 44.7223 as at 31 December
2010. The income and expenses accounts of the overseas subsidiaries
have been translated at the annual average rate of USD = Rs 47.0322 and
USD = Rs 45.7195 for the financial year 2011 and 2010, respectively. The
balance sheet is to be read considering the effect of the significant
USD rate variations between the two periods.
(13) Dues to micro, small and medium enterprises
As at 31 December 2011, the company had no outstanding dues to
small-scale industrial (SSI) undertakings and Micro and Medium
enterprises (Previous year - Nil). The list of SSI undertakings, Micro
and Medium enterprises was determined on the basis of information
available with the company.
(14) Previous year comparatives
Previous years' figures have been regrouped, reclassified / rearranged
wherever necessary to conform to current year's presentation. Current
years' figures are without IT Services Division and hence are not
comparable.
(15) Cash flows
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from regular revenue generating, financing and
investing activities of the company are segregated. Cash flows in
foreign currencies are accounted at average monthly exchange rates that
approximate the actual rates of exchange prevailing at the dates of the
transactions.
(16) The Ministry of Corporate Affairs ("MCA") vide its circular dated
8 February 2011 has exempted the companies from attaching the financial
statements of the company's subsidiaries along with the company's
accounts for the financial year ended 31 December 2011.
Dec 31, 2009
5 Divestment of IT Services (BlueAlly) Division (Note No.22 of the
annual standalone financial statements)
(a) The company has completed the sale / transfer of the IT Services
(BlueAlly) division to an overseas company w.e.f. 1st October 2009,
as approved by the members by a postal ballot process.
(b) The Company has formulated a scheme of business restructuring to
deal with the divestment of the IT Services Division. Accordingly, as
per a Scheme of Arrangement under sections 391 to 394 of the Companies
Act 1956 ("the Scheme") between the Company and its equity shareholders
approved by the High Court of Judicature at Madras vide its Order dated
30 March 2010 duly filed with the Registrar of Companies on 30 March
2010 (effective date), a separate reserve account titled as Business
Reconstruction Reserve ("BRR") has been created by transferring balance
standing to the credit of Securities Premium Account and the General
Reserve of the Company for adjustment of certain expenses as prescribed
therein. Accordingly, Rs 1,250,000 has been transferred to BRR and Rs
1,246,237 has been set-off.
(c) Any reversal of any such set-off at any time later would be
adjusted to the same Business Reconstruction Reserve.
6 FCCB (Note No.3(i) of the annual standalone financial statements)
The company issued 8,000 1.5% Foreign Currency Convertible Bonds
("FCCB") of US$ 1,000 each on preferential basis on 16 September 2005
in terms of the approval of the shareholders of the Company at the
Extra-ordinary General Meeting held on 26 August 2005 aggregating to
US$ 8 million. Post conversion of FCCB aggregating to US$ 6 million
into equity shares during earlier year, the balance FCCB aggregating to
US$ 2 million payable to the FCCB holders on redemption was negotiated
and settled in full by making payment of US$ 1 million during the year.
7 Quantitative details (Note No.12 of the annual standalone financial
statements)
The Company is in the business of development and maintenance of
computer software. The development and sale of such software cannot be
expressed in any generic unit. Hence, it is not possible to furnish the
quantitative details and the information required under paragraphs 3,4C
and 4D of part II of Schedule VI to the Companies Act, 1956.
8 Dues to micro, small and medium enterprises (Note No.23 of the annual
standalone financial statements)
As at 31 December 2009, the company had no outstanding dues to
small-scale industrial (SSI) undertakings and Micro and Medium
enterprises (Previous year - Nil). The list of SSI undertakings, Micro
and Medium enterprises was determined on the basis of information
available with the company.
9 Previous year comparatives (Note No.24 of the annual standalone
financial statements)
Previous years figures have been regrouped, reclassified / rearranged
wherever necessary to conform to current years presentation. Current
years figures are without IT Services Division w.e.f. 1 October 2009
and hence are not comparable.