Home  »  Company  »  Onward Technolog  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Onward Technologies Ltd.

Mar 31, 2019

1. Background: Onward Technologies Limited (“the Company”) is a public limited company domiciled in India and was incorporated on July 18, 1991 under the provisions of the Companies Act, 1956. Onward Technologies is a leading global player in Mechanical Engineering Design and IT Consulting, listed at both Bombay Stock Exchange and National Stock Exchange. The Company has its registered office in Mumbai and another office in Pune. The Company has a branch in United Kingdom.

(iii) Terms/ rights attached to equity shares

The Company has only one class of shares referred to as equity shares having a par value of Rs. 10/-. Each shareholder of equity shares is entitled to one vote per share. 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.The distribution will be in proportion to the number of equity shares held by the shareholders.

569,400 (March 31, 2018 : 904,000 ) equity shares are outstanding under ESOP 2009 scheme as at balance sheet date; each share being fully paid equity share of Rs. 10 each. Refer note 36 for further details of the ESOP scheme.

(iv) Share Application Money

The Company had received share application money in March 2019 towards allotment of 79,300 (March 31, 2018 : 107,500) shares at Rs. 10 per share under ESOP 2009 scheme amounting to Rs. 793,000 (March 31, 2018 : 1,075,000).

Nature and purpose of reserves Securities premium account

Securities premium account is used to record the premium on issue of shares. The reserve is to be utilised in accordance with the provisions of the Companies Act, 2013.

Share option outstanding account

The share option outstanding account is used to record the value of equity settled share based payment transactions with employees. The amounts recorded in share options outstanding account are transferred to share capital and share premium upon exercise of stock options by employees.

Retained earnings

Retained earnings comprise of the Company’s undistributed earnings after taxes, kept aside to meet future (known or unknown) obligations.

Security details for current and non-current borrowings

All the term loans and working capital demand loan are secured by exclusive charges on the properties situated at E-space, Nagar Road, Pune owned by Onward Network Technologies Private Limited, exclusive charges on the entire current and fixed assets both present and future of the company excluding vehicles and letter of comfort from Onward Network Technologies Private Limited.

Net debt reconciliation

An analysis of net debt and the movements in net debt for March 31, 2019 and March 31, 2018

The identification of suppliers as micro and small enterprises covered under Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act’) was done on the basis of the information to the extent provided by the supplier of the company.

A Defined contribution plan (i) Provident fund

The Company has certain defined contribution plans. Contributions are made to provident fund for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan is Rs. 229.74 lakhs (March 31, 2018 - Rs. 238.91 lakhs).

B Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and is administered through group gratuity scheme with Life Insurance Corporation of India.

The Payment of Gratuity (Amendment) Act, 2018 was notified by the Central Government on 29 March 2018. The amendment increases the existing ceiling limit of the amount of gratuity payable to employees who have completed five years of continuous service from rupees 10 lakhs to rupees 20 lakhs. The amendment has also increased the maximum maternity leave from 12 weeks to 26 weeks in the Payment of Gratuity Act 1972 consistent with the requirement in the Maternity Benefit Act, 1961. Maternity leave to the extent specified in the act shall be excluded while determining the period of continuous service for women employees.

Due to the change, the Company has recognized past service cost of Rs. 3.30 lakhs for the year ended March 31, 2018. Refer the table below for further details of the same.

The Company has no legal obligation to settle the deficit in the funded plan with an immediate contribution or additional one-off contributions.

The above sensitivity analyses are based on a change in an assumption while holding all the other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be corelated. 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 period has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

VI Risk Exposure

Through its defined benefit plan, the Company is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility

The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit. All plan assets are maintained in a trust fund managed by a public sector insurer i.e., LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years. The Company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The Company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence, 100% liquidity is ensured. Also, interest rate and inflation risk are taken care of.

Changes in bond yields

A decrease in bond yields will increase plan liabilities, although this will be partially offset by an yields increase in the value of the plans’ bond holdings.

Future salary escalation and inflation risk

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in higher present value of liabilities. Further, unexpected salary increases provided at the discretion of the management may lead to uncertainties in estimating this increasing risk.

Asset-Liability mismatch risk

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused by interest rate movements. Hence, companies are encouraged to adopt asset-liability management.

(a) Disaggregate revenue information

The table below presents disaggregated revenues from contracts with customers period ended March 31, 2019 by geographical region type. The Company believe that this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors

The Company is in the process of evaluating the impact of the recent Supreme Court Judgment in case of “Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal” and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employees’ Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of “basic wages” of the relevant employees for the purposes of determining contribution to provident fund under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952. In the assessment of the management which is supported by internal legal advice, the aforesaid matter is not likely to have a significant impact and accordingly, no provision has been made in these Financial Statements.

b) Capital commitments

i) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs. 29.68 Lakhs (March 31, 2018 : NIL)

c) Lease commitments

Operating lease: Company as lessee

The Company has taken certain office premises on lease for a term generally ranging from a period of 1 year to 5 years. Future minimum lease rental payables under non-cancellable operating leases are as follows:

d) Corporate Guarantee issued to Subsidiaries

The Company has provided Corporate Guarantee for the loans availed by its subsidiary, Onward Technologies, Inc. amounting to Rs.1,039.83 Lakhs (March 31, 2018 : Rs. 507.54 lakhs)

III Terms and conditions for outstanding balances

All outstanding balances are unsecured and payable in cash.

2. Segment reporting

As per Ind AS 108 Operating Segments, when a financial report contains both consolidated financial statements and separate financial statements for the parent, segment information needs to be presented only in case of consolidated financial statements. Accordingly, segment information has been provided only in the consolidated financial statements.

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. However the Company does not have any financial instruments that are measured using Level 1 inputs.

Level 2: The fair value of derivatives is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

This is the case for unlisted preference shares included in Level 3.

Specific valuation techniques used to value financial instruments include:

The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date

All of the resulting fair value estimates are included in Level 2 except for unlisted preference shares where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.

v) Valuation process

Specific valuation techniques used to value financial instruments include the fair value of foreign exchange forward contracts using forward exchange rates at the balance sheet date

The main level 3 inputs for unlisted preference shares used by the Company are derived and evaluated as under :

- Risk free rate of return is calculated based on the yield on 3 year Government Securities yield as at the valuation date.

- Share price volatility is determined on the basis of historical prices of shares of the peer companies as adjusted for any expected changes to the future volatility due to publicly available information.

vi) Fair value of financial assets and liabilities measured at amortised cost

The fair value of all financial instruments carried at amortised cost are not materially different from their carrying amounts, since they are either short-term in nature or the interest rate applicable are equal to the current market rate of interest.

3. Financial risk management

The Company’s activities expose it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

(A) Credit risk

(i) Credit risk management

The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from deposits with banks and other financial instruments. For banks and other financial institutions, only high rated banks/ financial institutions are accepted. The balances with banks, security deposits are subject to low credit risk and the risk of default is negligible or nil. Hence, no provision has been created for expected credit loss for credit risk arising from these financial assets. The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in the credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forward-looking information, for eg, external credit rating (to the extent available), actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to borrower’s ability to meet its obligations.

Trade Receivables

The credit risk from customer receivables is recorded and monitored on an ongoing basis. Responsibilities and duties relating to credit risks are governed by an internal directive. This mainly concerns the stipulation of payment terms, fixing of credit limits, release of deliveries, and receivables monitoring. The credit risk is considered low given the sound credit ratings and past history of timely payments being made by the customers.

(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. Due to the dynamic nature of the underlying business, the Company maintains flexibility in funding by maintaining availability under committed credit lines.

(C) Market risk

I) Foreign currency risk

The company operates internationally and thereby exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, Euro and GBP. Foreign exchange risk arises from future commercial transactions and recognised assets denominated in a currency that is not the company’s functional currency (INR). The company uses foreign exchange forward contracts to hedge its exposure in foreign currency risk. The risk is measured through forecast of foreign currency transactions.

II) Interest rate risk

(i) The Company’s interest rate risk arises from long-term and short-term borrowings. Borrowings obtained at variable rates expose the Company to cash flow interest rate risk. Borrowings issued at fixed rates expose the Company to fair value interest rate risk.

Management closely tracks the base interest rate movements on regular basis. Based on regular review, Management assesses the need to hedge interest rate risk. Management reviews the future movement in base rate against different factors such as overall micro and macro economic factors, liquidity in the spending cycle. Further, on a regular basis, Management assesses the possibility of entering into new facilities which would reduce the future finance cost which helps the Management to mitigate risk related to interest rate movement.

Sensitivity

The Company’s policy is to minimize the interest rate cash flow risk exposure on borrowing. The Company has exposure to local currency only. The local currency loans are linked to bank base rate/ marginal cost of funds based lending (MCLR).

4. Capital Management

a) Risk management

The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and maintain an optimal capital structure to reduce the costofcapital. For the purpose of the Company’s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Company’s capital management is to maximise the shareholders value. In order to achieve this objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.

No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2019 and March 31, 2018.

5 1.17 Recent accounting pronouncements:

a) Ind AS 116 - Leases

On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 116, Leases. Ind AS 116 will replace the existing leases Standard, Ind AS 17 Leases, and related Interpretations. The Standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e., the lessee and the lessor. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than twelve months, unless the underlying asset is of low value. Currently, operating lease expenses are charged to the statement of Profit & Loss. The Standard also contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17.

The effective date for adoption of Ind AS 116 is annual periods beginning on or after April 1, 2019. The standard permits two possible methods of transition:

- Full retrospective - Retrospectively to each prior period presented applying Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors

- Modified retrospective - Retrospectively, with the cumulative effect of initially applying the Standard recognized at the date of initial application.

The Company is in the process of evaluating the impact on the financial statements under the new standard.

b) Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments

On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments which is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. According to the appendix, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount

or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.

The standard permits two possible methods of transition

- Full retrospective approach - Under this approach, Appendix C will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, without using hindsight

- Retrospectively with cumulative - effect of initially applying Appendix C recognized by adjusting equity on initial application, without adjusting comparatives.

The effective date for adoption of Ind AS 12 Appendix C is annual periods beginning on or after April 1, 2019. The Company is in the process of evaluating effect on adoption of Ind AS 12 Appendix C on the financial statements

c) Amendment to Ind AS 12 - Income taxes

On March 30, 2019, Ministry of Corporate Affairs issued amendments to the guidance in Ind AS 12, ‘Income Taxes’, in connection with accounting for dividend distribution taxes.

The amendment clarifies that an entity shall recognise the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events.

Effective date for application of this amendment is annual period beginning on or after April 1, 2019. The Company is in process of evaluating the effect of this amendment on the financial statements.

d) Amendment to Ind AS 19 - plan amendment, curtailment or settlement

On March 30, 2019, Ministry of Corporate Affairs issued amendments to Ind AS 19, ‘Employee Benefits’, in connection with accounting for plan amendments, curtailments and settlements. The amendments require an entity:

- to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement; and

- to recognise in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognised because of the impact of the asset ceiling.

Effective date for application of this amendment is annual period beginning on or after April 1, 2019. The Company is in process of evaluating the effects of this amendment on the financial statements.

6. Events after reporting period

a) The final dividend recommended by Directors is subject to the approval of shareholders in the ensuing annual general meeting

7. Share-based payments

Employee Stock Option Plan

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs. 10 per equity share of Rs. 10 each. Under the term of scheme, the vesting period shall commence on the expiry of one year from the date of grant of the options to the employees and it will be spread equally over 4 years. 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

The employee stock options granted shall be capable of being exercised within a period of one year from the date of vesting the options, they would be exercisable by the option holder and the shares arising on exercise of such options shall not be subject to any lock-in period. When exercisable, each option is convertible into four equity share of the Company. Further, in the case of termination of employment, all non-vested options would stand cancelled. Options that have vested but have not been exercised can be exercised within the time prescribed as mentioned above, failing which they would stand cancelled.

For options granted to employees of subsidiary companies, the Company recharges the cost (based on the fair value determined on the grant date) to respective subsidiaries. Total amount recharged to subsidiaires in Rs. 28.96 lacs (March 2018 - Rs 45.21 lacs)

The weighted average share price at the date of exercise of options exercised during the year ended March 31, 2019 was Rs. 77.41 (March 31, 2018 - Rs. 143.29)

Fair value of the options granted

The fair value at the grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the options, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

The expected price volatility is based on the historic volatility (based upon the remaining life of the options), adjusted for any expected changes to the future volatility due to publicly available information.


Mar 31, 2018

Notes to Separate Financial Statements

Expenses arising from share-based payment transactions

Particulars

Year ended 31st March 2018

Year ended 31st March 2017

Employee Option Plan

167.40

180.24

Total

167.40

180.24

Expenses arising from share-based payment transactions relating to employees of subsidiaries

Particulars

Year ended 31st March 2018

Year ended 31st March 2017

Employee Option Plan

-

74.38

Total

-

74.38

Note : The said expenses have been classified as "Investments" and have been disclosed accordingly. Refer Note 5 for further details.

37 First-time adoption Transition to Ind AS

These are the Company''s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 31st March, 2018, the comparative information presented in these financial statements for the year ended 31st March, 2017 and in the preparation of an opening Ind AS balance sheet at 1st April, 2016 (the Company''s date of transition to Ind AS). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.

I Exemptions availed

a) Deemed cost - Property, plant and equipment (PPE), intangible assets

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment and intangible assets as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

b) Investment in subsidiary

Ind AS 101 permits a first-time adopter to measure an investment in subsidiary either at cost determined as per Ind AS 27 or deemed cost being the fair value as at the date of transition or the previous GAAP carrying amount as at that date. Accordingly, the Company has elected to measure its investment in subsidiary at the previous GAAP carrying value.

c) Share based payments

Ind AS 101 permits a first-time adopter to apply Ind AS 102, Share-based payment, to equity instruments that remain unvested as of the transition date. Accordingly, these options have been measured at fair value as against intrinsic value previously under IGAAP. The excess of stock

compensation expenses measured using fair value over cost recognized under IGAAP using intrinsic value has been adjusted in ''Share Option Outstanding account'' with corresponding impact taken to the retained earnings as on the transition date.

II Exceptions applied

a) Estimates

An entity''s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1st April, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP.

b) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investments in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

Reconciliation of total equity as at 31st March, 2017 and 1st April, 2016

Description

Notes to first time adoption

As at 31st March, 2017

As at 1st April, 2016

Total equity as per previous GAAP

4,776.19

4,307.98

Ind AS Adjustments \ Increase in Equity/

(Decrease in Equity)]

Effect of employees stock option measurement and amortisation based on fair value of options under graded method

1

111.68

37.30

ii

Effect of measuring investment in preference share at fair value

2

55.80

-

iii

Fair valuation of derivatives

3

(6.30)

(6.30)

iv

Commission on bank guarantee given on behalf of subsidiaries

4

28.21

-

V

Effect of fair valuing security deposits and amortisation of prepaid rent

5

(1.56)

(1.45)

vi

Proposed dividend

8

-

179.74

vii

Others

(34.88)

(34.88)

viii

Tax impact of Ind AS adjustments

10

(15.48)

12.01

Total Ind-AS adjustments

137.47

186.42

Total Equity as per Ind-AS

4,913.66

4,494.40

Reconciliation of total comprehensive income for the year ended 31st March, 2017

Description

Notes to first time adoption

Year ended 31st March, 2017

Net profit after tax under previous GAAP Ind AS adjustments [Increase in profits / (decrease in profits)]

291.55

i

Effect of employees stock option measurement and amortisation based on

1

(67.76)

fair value of options under graded method

ii

Effect of measuring investment in preference share at fair value

2

55.80

iii

Commission on bank guarantee given on behalf of subsidiaries

4

28.21

iv

Effect of fair valuing security deposits and amortisation of prepaid rent

5

(0.11)

vi

Remeasurment of post-employment benefit obligations recognised in

6

25.58

other comprehensive income

vii

Tax impact of Ind AS adjustments

10

(36.02)

Total of adjustments

5.70

Net Profit after tax as per Ind-AS

297.25

Other Comprehensive Income

i.

Remeasurements of defined benefit obligations

6

(25.58)

ii

Tax impact of above adjustment

9

8.55

Total Other comprehensive income

(17.03)

Total Comprehensive Income as per Ind-AS

280.22

Impact of Ind AS adoption on the statements of cash flows for the year ended 31st March, 2017

Particulars

Notes to

Previous

Adjustments

Ind AS

first time

GAAP

adoption

Net cash flows from operating activities

2,010.84

(1,023.17)

987.67

Net cash flows from investing activities

(1,501.72)

1,113.29

(388.43)

Net cash flows from financing activities

7

(421.32)

299.48

(121.84)

Net increase/(decrease) in cash and cash equivalents

87.80

389.60

477.40

Cash and cash equivalents as at 1st April, 2016

127.03

(1,147.47)

(1,020.44)

Cash and cash equivalents as at 31st March, 2017

214.83

(757.87)

(543.04)

Note : Under the previous GAAP, the "Balance held as security against bank guarantees" was disclosed as a part of Cash and bank balances. However, under Division II to Schedule III, the same is to be disclosed as Bank balances other than cash and cash equivalents and accordingly the Cash and Cash equivalents have reduced by Rs. 9.47 as on 31st March, 2017 and by Rs. 9.51 as on 1st April, 2016.

Notes to first-time adoption

1 Employee Stock Option expenses

Under the previous GAAP, the cost of equity-settled employee share based plan were recognized using the intrinsic value method. Under Ind AS, the cost of equity settled share-based payment plan is recognized based on the fair value of the options as at the grant date. Consequently, the profit for the year ended 31st March, 2017 reduced by Rs. 67.76 Lakhs. Further, the Company has also alloted options under the ESOP scheme to the employees of the Subsidiary Companies. The fair value charge on account of the same are recognized as Investment in Subsidiaries. The total equity increased by Rs. 111.68 Lakhs (1st April 2016 : Rs. 37.30 Lakhs).

Fair valuation of Investment in Preference Shares

Under the previous GAAP, investments in preference shares were classified as long-term investments or current investments based upon the intended holding period and readability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investment. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value change of these investments purchased during the year have been recognized in statement of profit or loss. This increased the profit for the year ended 31st March, 2017 by Rs. 55.80 Lakhs.

Derivative Financial Instruments - Forward contracts

Under Ind AS, the derivative financial instrument i.e. the foreign currency forward exchange contracts have been fair valued through profit or loss as per Ind AS109. The total equity decreased by Rs.6.30 Lakhs (1st April 2016 : Rs. 6.30 Lakhs).

Corporate Guarantee

The Company has provided Corporate Guarantee for the loans availed by its subsidiaries viz, Onward e-Services Limited and Onward Technologies, Inc during the year 2016-17. Under Ind AS, the Company has recognized notional commission income on the corporate guarantees so provided at the interest generally charged by an independent third party for the guarantee. Accordingly, the Company has recognized income of Rs. 28.21 Lakhs for the year ended 31st March, 2017.

Security Deposits

Under the previous GAAP, interest free security deposits (that are refundable in cash on the completion of the lease term) are recorded at their transaction value. Under Ind AS, all the financial assets are required to be initially recognized at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between fair value and transaction value of security deposits has been recognized as prepaid rent. Consequent to this change, total equity decreased by 1.56 Lakhs as at 31st March, 2017 (1st April, 2016 : Rs. 1.45 Lakhs). The profit for the year ended 31st March, 2017 reduced by 0.11 Lakhs due to amortisation of prepaid rent which is partially offset by notional interest income recognized on security deposit.

Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended 31st March, 2017 increased by Rs. 25.58 Lakhs. There is no impact on the total equity as at 31st March, 2017.

Bank overdraft

Under Ind AS, bank overdrafts repayable on demand which form an integral part of the cash management process are included in cash and cash equivalents for the purpose of presentation of statement of cash flows. Under previous GAAP, bank overdrafts were considered as part of borrowings and movements in bank overdrafts were shown as part of financing activities. Consequently, cash and cash equivalents have reduced by Rs. 748.42 Lakhs as at 31st March, 2017 (1st April, 2016 : Rs. 1,138.06 Lakhs) and cash flows from financing activities for the year ended 31st March, 2017 have also increased by Rs. 389.59 Lakhs to the effect of the movements in bank overdrafts.

Proposed dividend

Under the previous GAAP (Upto 31st March, 2016), dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for propose d dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by shareholders in the general meeting. Accordingly, the liability for proposed dividend

(including tax thereon) of Rs. 179.74 Lakhs as at 1st April, 2016 inluded under short term provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

9 Other Comprehensive Income

Under Ind AS, all items of income and expenses recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expenses that are not recognized in profit or loss but are shown in statement of profit or loss as ''Other Comprehensive Income'' includes remeasurements of defined benefit plans and effective portion of gains and losses on cash flow hedging instruments. The concept of other comprehensive income did not exist under previous GAAP.

10 Deferred tax

Deferred tax have been recognised on the adjustments made on transition to Ind AS.

11 Retained Earnings

Retained earnings as at 1st April, 2016 has been adjusted consequent to the above Ind AS transition adjustments

For Price Waterhouse Chartered Accountants LLP

For and on behalf of the Board of Directors of

Firm Registration Number: 012754N/N500016

Onward Technologies Limited

Chartered Accountants

Neeraj Sharma

Harish Mehta

Jigar Mehta

Pranay Vakil

Partner

Executive

Managing

Audit Committee

Membership No.: 108391

Chairman

Director

Chairman

Place : Mumbai

MVSS Narayanacharyulu

Monik Damania

Date : 11th May, 2018

Chief Financial Officer

Company Secretary

Place : Mumbai

Date : 11th May, 2018


Mar 31, 2017

1. In the opinion of the management and to the best of their knowledge, the current assets, loans and advances, shown in the balance sheet have a value on realization in the ordinary course of business at least equal to the amount at which they are stated therein.

2. Trade receivables and trade payables are subject to confirmation and reconciliation.

vi) Compensated leave

Para 132 of Accounting Standard 15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard # 5 or Accounting Standard # 18. In the opinion of the management, the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of Accounting Standard 15 (revised 2005).

ix) Gratuity is administered through group gratuity scheme with Life Insurance Corporation of India.

x) Salary escalation rate

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

xi) Expected rate of return on plan assets

This is based on actuaries'' expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

xii) Discount rate

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

3. a) OnwardTechnologiesemployeestockoptionplan2009

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs. 10 per equity share of Rs. lOeach.

Under the term of scheme, the vesting period shall commence on the expiry of one year from the date of grant of the options to the employees and it will be spread equally over 4 years. 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

The employee stock options granted shall be capable of being exercised within a period of one year from the date of vesting the options, they would be exercisable by the option holder and the shares arising on exercise of such options shall not be subject to any lock-in period. Further, in the case of termination of employment, all non-vested options would stand cancelled. Options that have vested but have not been exercised can be exercised within the time prescribed as mentioned above, failing which they would stand cancelled. The movement in the stock options during the year was as per the table given below:

b) Stock options issued during the year have been accounted as per the accounting guidelines issued by the Securities and Exchange Board of India (Share Based Employee Benefits) Regulation, 2014. Accordingly, an amount of Rs.11,248,244 (Rs. 10,972,018) representing the current year charge has been debited to statement of profit and loss during the year under both plan.

4. a) Term loans including term loans and foreign currency term loans sanctioned by Kotak Mahindra Bank Limited

(KMBL) and Yes Bank Limited (YBL) are secured by exclusive charge on all existing and future current assets and movable fixed assets of the Company and personal guarantee of Mr. Harish Mehta and Mr. Jigar Mehta along with corporate guarantee of Onward Network Technologies Private Limited. Further secured by extension of equitable mortgage over the properties situated at Sterling Centre, Worli, Mumbai and E-Space, NagarRoad, Pune (both the properties are owned by Onward Network Technologies Private Limited). The term loans which were converted to foreign currency term loans carried interest rate of LIBOR plus 6%. Term loans taken from KMBL carries floating interest rate of 10.50% p.a. and from YBL carries floating interest rate of 10.50% p.a.

b) Term loans obtained from Kotak Mahindra Prime Limited for purchase of vehicles are secured by hypothecation of vehicles and repayable in equal monthly installments.

c) Loan from Onward Properties Private Limited is interest free and the Company has unconditional right to defer the repayment.

d) There are no defaults in repayment of term loans during the year.

5. Dues to micro, small & medium enterprise

As at March 31, 2017, the Company has no payables outstanding to any micro or small enterprises registered under "The Micro, Small and Medium Enterprises Development Act, 2006".

6. The Company has not yet appointed the key managerial personnel - Chief Financial Officer as required under provisions of section 203 read with Companies (Appointment and remuneration of Managerial person) Rules, 2014; however, all secretarial compliances are done by an independent Company Secretary firm.

7. All assets and liabilities have been classified as current or non-current as per the operating cycle criteria set out in the Schedule III of Companies Act, 2013. Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosure.

8. Figures are rounded off to the nearest rupee and figures in bracket pertain to the previous year


Mar 31, 2015

A. Terms/rights attached to equity shares

Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share.

1,186,600 (942,750) equity shares are outstanding under ESOP 2009 scheme as at balance sheet date; each share being fully paid equity share of Rs. 10 each.

B. Share Application Money

Currently Company is in balance towards share application money of Rs. 290,000 which have received on 27.03.2015, 31.03.2015 in anticipation to issue 29,000 shares @ Rs. 10 per share under ESOP 2009 scheme. The shares have been allotted on 08.05.2015.

2. In the opinion of the management and to the best of their knowledge, the current assets, loans and advances, shown in the balance sheet have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated therein.

3. Trade receivables and trade payables are subject to confirmation and reconciliation.

4. Contingent liabilities not provided for

Year ended March 31 (Rs.) Particular 2015 2014

Counter guarantees given by the Company against the bank guarantees 175,840 153,308 issued by Company s bankers

Fixed deposits shown under the head cash and bank balances include deposits pledged with the banks as margins to secure letters of credit and 175,840 153,308 guarantees issued by banks

Net amount - -

Corporate guarantees given by the Company for the loans taken by subsidiaries 101,459,730 129,629,611

Disputed income tax demand 48,482,500 48,482,500

Capital commitments (net of advance) - 4,280,600

Total 149,942,230 182,392,711

5. a) The principal amount of working capital term loan repayable within a year is Rs. 3,350,665 (Rs. 2,974,446). b) The principal amount of term loan repayable within a year is Rs. 28,959,688 (Rs. 29,666,942).

i. Compensated leave

Para 132 of Accounting Standard 15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard # 5 or Accounting Standard # 18. In the opinion of the management, the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of Accounting Standard 15 (revised 2005).

ii. Gratuity is administered through group gratuity scheme with Life Insurance Corporation of India.

iii. Salary escalation rate

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

iv. Expected rate of return on plan assets

This is based on actuaries' expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

v. Discount rate

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

5. Information about business segments

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), 'Segment Reporting', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS - 17 are given in consolidated financial statements.

6. Related party disclosures

(a) List of related parties and relationships

A. Holding Company Onward Network Technologies Private Limited

B. Subsidiary Companies

Onward Technologies GmbH, Germany Onward Technologies, Inc., USA Onward eServices Limited

Onward Properties Private Limited (erstwhile Shantmurli Holdings Private Limited)

C. Enterprise over which key management personnel exercise significant influence

Desai Finwealth Investments and Securities Private Limited Onward Software Technologies Private Limited

D. Key management personnel and relatives

Chairman and Managing Director Harish Mehta

Director Shaila Mehta*

Additional Director Prachi Mehta

Chief operating officer and related to Directors Jigar Mehta Related to Director Arun Meghani

* Shaila Mehta passed away on 20.2.2014

7. a) Onward Technologies employee stock option plan 2009

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs. 10 per equity share of Rs. 10 each.

Under the term of scheme, the vesting period shall commence on the expiry of one year from the date of grant of the options to the employees and it will be spread equally over 4 years. And 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

b) Stock options issued during the year have been accounted as per the accounting guidelines issued by SEBI in the year 1999. Accordingly, an amount of Rs. 8,406,448 (Rs. 11,213,635) representing the current year charge has been debited to statement of profit and loss during the year under both plan.

8. a) Term loans including working capital term loans and foreign currency term loans sanctioned by Kotak Mahindra Bank Limited are secured by exclusive charge on all existing and future current assets and movable fixed assets of the Company and personal guarantee of Mr. Harish Mehta and Mr. Jigar Mehta along with corporate guarantee of Onward Network Technologies Private Limited. Further secured by extension of equitable mortgage over the properties situated at Sterling Centre, Worli, Mumbai and E-Space, Nagar Road, Pune (both the properties are owned by Onward Network Technologies Private Limited). The existing term loans which were converted to foreign currency term loans during the year carried interest rate of LIBOR plus 6%. Term loans taken during the financial year 2013-14 carries floating interest rate of 12% to 14.50% p.a. and for 2014-15 it is 12% p.a.

b) Term loans obtained from Kotak Mahindra Prime Limited for purchase of vehicles are secured by hypothecation of vehicles and repayable in equal monthly instalments.

c) Loans from Onward Network Technologies Private Limited for which the Company has unconditional right to defer the repayment along with interest carry interest rate of 12.25% p.a.

d) Loan from Onward Properties Private Limited (erstwhile Shantmurli Holdings Private Limited) is interest free and the Company has unconditional right to defer the repayment along with interest.

e) There are no defaults in repayment of term loans during the year.

9. The Company has not yet appointed key managerial personnel - Company Secretary and Chief Financial Officer as required under provisions of section 203 read with Companies (Appointment and remuneration of Managerial person) Rules, 2014; however, all secretarial compliances are done by an independent Company Secretary firm.

10. Depreciation for current financial year is calculated as per provisions of Companies Act, 2013 and Company opted to take the impact of the new provision to retained earnings vide the MCA notification dated 29.08.2014.

11. All assets and liabilities have been classified as current or non-current as per the operating cycle criteria set out in the Schedule III of Companies Act, 2013. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure.

12. Figures are rounded off to the nearest rupee and figures in bracket pertain to the previous year.


Mar 31, 2014

1. In the opinion of the management and to the best of their knowledge, the current assets, loans and advances, shown in the balance sheet have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated therein.

2. Trade receivables and trade payables are subject to confirmation and reconciliation.

3. Contingent liabilities not provided for:

Year ended March 31 (Rs. )

Particular 2014 2013

Counter guarantees given by the Company against the bank guarantees issued by Company''s bankers

Fixed deposits shown under the head cash and bank balances include deposits pledged with the banks as margins to secure letters of credit and 153,308 612,124 guarantees issued by banks

- Net amount - 113,401

Corporate guarantees given by the Company for the loans taken by

subsidiaries 129,629,611 111,105,272

Disputed income tax demand 48,482,500 48,482,500

Disputed sales tax demand - 698,463

Capital commitments (net of advance) 4,280,600 864,934

Total 182,392,711 161,264,570

4. a) The principal amount of working capital term loan repayable within a year is Rs. 2,974,446 (Rs. 1,858,397). b) The principal amount of term loan repayable within a year is Rs. 29,666,942 (Rs. 16,826,961).

vi. Compensated leave:

Para 132 of Accounting Standard 15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard # 5 or Accounting Standard # 18. In the opinion of the management the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of Accounting Standard 15 (revised 2005).

ix. Gratuity is administered through group gratuity scheme with Life Insurance Corporation of India.

x. Salary escalation rate:

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

xi. Expected rate of return on plan assets:

This is based on actuaries'' expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

xii. Discount rate:

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

5. Information about business segments

As permitted by paragraph 4 of Accounting Standard-17 (AS -17), ''Segment Reporting'', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS -17 are given in consolidated financial statements.

6. a) Onward Technologies employee stock option plan 2009

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs. 10 per equity share of Rs. 10 each.

Under the term of scheme, the vesting period shall commence on the expiry of one year from the date of grant of the options to the employees and it will be spread equally over 4 years. And 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

b) Stock options issued during the year have been accounted as per the accounting guidelines issued by SEBI in the year 1999. Accordingly, an amount of Rs. 11,213,635 (Rs. 6,718,071) representing the current year charge has been debited to statement of profit and loss during the year under both plan.

7. a) Term loans including working capital term loans sanctioned by Kotak Mahindra Bank Limited are secured by exclusive charge on all existing and future current assets and movable fixed assets of the Company and personal guarantee of Mr. Harish Mehta & Mr. Jigar Mehta along with Corporate Guarantee of Onward Network Technologies Private Limited. Further secured by extension of equitable mortgage over the properties situated at Sterling Centre, Worli, Mumbai and E-Space, Nagar Road, Pune (both the properties are owned by Onward Network Technologies Private Limited). Term loans taken during the financial year 2012-13 & 2013-14 carries floating interest rate of 12% to 14.50% p.a.

b) Term loans obtained from Kotak Mahindra Prime Limited for purchase of vehicles are secured by hypothecation of vehicles and repayable in equal monthly installments.

c) Loans from Onward Network Technologies Private Limited for which the Company has unconditional right to defer the repayment along with interest carry interest rate of 12.25% p.a. & other ICD @12% p.a.

d) Loan from Onward Properties Private Limited (erstwhile Shantmurli Holdings Private Limited) is interest free and the Company has unconditional right to defer the repayment along with interest.

8. The Company has not yet appointed a full time Company Secretary; however, all compliances are done by an independent Company Secretary firm.

9. Based on the current experience, the Company has decided to recognise the bond money receivable from ex-employees on receipt basis. As at 31st March, 2014 bond money receivable from resigned employees amounts to Rs. 8,859,544 pertaining to the previous years and recognised on accrual basis. The management is confident of recovering the said amount in the ordinary course of business.

10. All assets and liabilities have been classified as current or non-current as per the operating cycle criteria set out in the Revised Schedule VI. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

11. Figures are rounded off to the nearest rupee and figures in bracket pertain to the previous year.


Mar 31, 2013

1. In the opinion of the board and to the best of their knowledge, the current assets, loans and advances, shown in the balance sheet have a value on realization in the ordinary course of business at least equal to the amount at which they are stated therein.

2. Trade receivables and trade payables are subject to confirmation and reconciliation.

3. Contingent liabilities not provided for:

Year ended March 31 ( Rs. )

Particular

Particular 2013 2012

Counter guarantees given by the Company against the bank guarantees 725,525 719,500 issued by Company''s bankers

Fixed deposits shown under the head cash and bank balances include

deposits pledged with the banks as margins to secure letters of credit and 612,124 719,500 guarantees issued by banks

Net amount 113,401 -

Corporate guarantees given by the Company for the loans taken by subsidiaries 111,105,272 52,660,050

Disputed income tax demand 48,482,500 112,953,247

Disputed sales tax demand 6,98,463 1,307,274

Disputed profession tax demand - 579,128*

Capital commitments (net of advance) 864,934

Total 161,264,570 167,499,699

*Out of Rs. 579,128, Rs. 150,000/- were paid under protest

4. a) The principal amount of working capital term loan repayable within a year is Rs. 1,858,397 (Rs. 10,704,157).

b) The principal amount of term loan repayable within a year is Rs. 16,826,961 (Rs. 8,237,315).

i. Compensated leave:

Para 132 of Accounting Standard 15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard # 5 or Accounting Standard # 18. In the opinion of the management the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of Accounting Standard 15 (revised 2005).

ii. Gratuity is administered through group gratuity scheme with Life Insurance Corporation of India.

iii. Salary escalation rate:

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

iv. Expected rate of return on plan assets:

This is based on actuaries'' expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

v. Discount rate:

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

5. Information about business segments

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), ''Segment Reporting'', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS - 17 are given in consolidated financial statements.

** Erstwhile Shantmurli Holdings Private Limited

* During the financial year 2011-12, Company has received Central Government''s approval for Rs. 8,400,000 per annum towards remuneration payable to Mr. Harish Mehta for the period of 3 years effective from April 1, 2011 to March 31, 2014. Salary and allowances amounting to Rs. 8,094,980 (Rs. 8,112,500) include rent free accommodation.

# Remuneration paid for the period April 1, 2012 to March 31, 2013 was approved by the shareholders in the Annual General Meeting held on July 27, 2012. Consequently Company had applied to the Central Government for approval, which is pending as on date.

** Erstwhile Shantmurli Holdings Private Limited

6. a) Onward Technologies employee stock option plan 2009

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs. 10 per equity share of Rs. 10 each.

Under the term of scheme, the vesting period shall commence on the expiry of one year from the date of grant of the options to the employees and it will be spread equally over 4 years. 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

The employee stock options granted shall be capable of being exercised within a period of one year from the date of vesting the options, they would be exercisable by the option holder and the shares arising on exercise of such options shall not be subject to any lock-in period. Further, in the case of termination of employment, all non-vested options would stand cancelled. Options that have vested but have not been exercised can be exercised within the time prescribed as mentioned above, failing which they would stand cancelled. The movement in the stock options during the year was as per the table given below:

b) Stock options issued during the year have been accounted as per the accounting guidelines issued by SEBI in the year 1999. Accordingly, an amount of Rs. 6,718,071 (Rs. 1,854,358) representing the current year charge has been debited to statement of profit and loss during the year under both plan.

7. a. Cash credits and term loans including working capital term loans sanctioned by Kotak Mahindra Bank Limited are secured by exclusive charge on all existing and future current assets and movable fixed assets of the Company and personal guarantee of Mr. Harish Mehta & Mr. Jigar Mehta. Further secured by extension of equitable mortgage over the properties situated at Sterling Centre, Worli, Mumbai and E-Space, Nagar Road, Pune (both the properties are owned by Onward Network Technologies Private Limited). Term loans taken during the financial year 2011-12 & 2012-13 carries floating interest rate of 12% to 14.50% p.a.

b. Term loans obtained from Kotak Mahindra Prime Limited for purchase of vehicles are secured by hypothecation of vehicles and repayable in equal monthly installments.

c. Loans from Onward Network Technologies Private Limited for which the Company has unconditional right to defer the repayment along with interest carry interest rate of 12.25% p.a. respectively.

d. Loan from Onward Properties Private Limited (erstwhile Shantmurli Holdings Private Limited) is interest free and the Company has unconditional right to defer the repayment along with interest.

8. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. All assets and liabilities have been classified as current or non-current as per the operating cycle criteria set out in the Revised Schedule VI. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

9. The Company has not yet appointed a full time Company Secretary; however, all compliances are done by an independent Company Secretary firm.

10. Figures are rounded off to the nearest rupee.

11. Figures in bracket pertain to the previous year.


Mar 31, 2012

Terms/rights attached to equity shares

Company has only one class of equity shares having a par value of Rs 10 per share. Each holder of equity shares is entitled to one vote per share.

1,434,950 (960,200) equity shares are outstanding under ESOP 2009 scheme as at balance sheet date; each share being fully paid equity share of Rs 10 each.

A) Term loans including working capital term loans sanctioned by Kotak Mahindra Bank Limited are secured by exclusive charge on all existing and future current assets and movable fixed assets of the Company and personal guarantee of Mr. Harish Mehta & Mr. Jigar Mehta. Further secured by extension of equitable mortgage over the properties situated at Sterling Centre, Worli, Mumbai and E-Space, Nagar Road, Pune (both the properties are owned by Onward Network Technologies Private Limited). Term loans taken during the financial year 2010-11 & 2011-12 carries floating interest rate of 12% to 14.50% p.a.

B) Term loans obtained from ICICI Bank & Kotak Mahindra Prime Limited for purchase of vehicles are secured by hypothecation of vehicles and repayable in equal monthly installments.

C) Loans from Desai Finwealth Investment & Securities Private Limited and Onward Network Technologies Private Limited for which the Company has unconditional right to defer the repayment along with interest @ 1% & 12.25% p.a. respectively.

D) Loan from Shantmurli Holdings Private Limited is interest free and the Company has unconditional right to defer the repayment along with interest.

A) Cash credits and term loans including working capital term loans sanctioned by Kotak Mahindra Bank Limited are secured by exclusive charge on all existing and future current assets and movable fixed assets of the Company and personal guarantee of Mr. Harish Mehta & Mr. Jigar Mehta. Further secured by extension of equitable mortgage over the properties situated at Sterling Centre, Worli, Mumbai and E-Space, Nagar Road, Pune (both the properties are owned by Onward Network Technologies Private Limited). Term loans taken during the financial year 2010-11 & 2011-12 carries floating interest rate of 12% to 14.50% p.a.

B) Term loans obtained from ICICI Bank & Kotak Mahindra Prime Limited for purchase of vehicles are secured by hypothecation of vehicles and repayable in equal monthly installments.

1. In the opinion of the board and to the best of their knowledge, the current assets, loans and advances, shown in the balance sheet have a value on realization in the ordinary course of business at least equal to the amount at which they are stated therein.

2. Trade receivables and trade payables are subject to confirmation and reconciliation.

3. Other commitments:

Liabilities on account of forward contracts entered during the year and are outstanding as at March 31, 2012 against forecasted transactions amounting to Rs 162,208,250 ($ 325,000).

4. Contingent liabilities not provided for:

Year ended March 31 (Rs)

Particular 2012 2011

Counter guarantees given by the Company against the bank guarantees issued by Company s bankers 719,500 3,474,500

Fixed deposits shown under the head cash and bank balances include

deposits pledged with the banks as margins to secure letters of credit and 719,500 2,921,500

guarantees issued by banks Net amount - 553,000

Corporate guarantees given by the Company for the loans taken by subsidiaries 52,660,050 48,832,878

Disputed income tax demand 112,953,247 64,470,747

Disputed sales tax demand 1,307,274 1,307,274

Disputed profession tax demand 579,128* 579,128

Total 167,499,699 66,910,149

* Out of Rs 579,128, Rs 150, 000 were paid under protest.

5. a) The principal amount of working capital term loan repayable within a year is Rs 10,704,157 (Rs 8,671,432).

b) The principal amount of term loan repayable within a year is Rs 8,237,315 (Rs Nil).

vi. Compensated leave:

Para 132 of Accounting Standard 15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard # 5 or Accounting Standard # 18. In the opinion of the management the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of Accounting Standard 15 (revised 2005).

ix. Gratuity is administered through group gratuity scheme with Life Insurance Corporation of India.

x. Salary escalation rate:

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

xi. Expected rate of return on plan assets:

This is based on actuaries expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

xii. Discount rate:

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

6. Information about business segments

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), 'Segment Reporting', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS - 17 are given in consolidated financial statements.

* During the financial year 2011-12, Company has received Central Government's approval for Rs 8,400,000 per annum towards remuneration payable to Mr. Harish Mehta for the period of 3 years effective from April 1, 2011 to March 31, 2014. Salary and allowances amounting to Rs 8,112,500 include rent free accommodation.

7. a) Onward Technologies employee stock option plan 2009

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs 10 per equity share of Rs 10 each.

Under the term of scheme, the vesting period shall commence on the expiry of one year from the date of grant of the options to the employees and it will be spread equally over 4 years. And 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

The employee stock options granted shall be capable of being exercised within a period of one year from the date of vesting the options, they would be exercisable by the option holder and the shares arising on exercise of such options shall not be subject to any lock-in period. Further, in the case of termination of employment, all non-vested options would stand cancelled. Options that have vested but have not been exercised can be exercised within the time prescribed as mentioned above, failing which they would stand cancelled. The movement in the stock options during the year was as per the table given below:

b) Stock options issued during the year have been accounted as per the accounting guidelines issued by SEBI in the year 1999. Accordingly, an amount of Rs 1,854,358 (Rs 4,134,766) representing the current year charge has been debited to statement of profit and loss during the year under both plan.

8. The Company has not yet appointed a full time Company Secretary; however, all compliances are done by an independent Company Secretary firm.

9. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. All assets and liabilities have been classified as current or non-current as per the operating cycle criteria set out in the Revised Schedule VI. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

10. Figures are rounded off to the nearest rupee.

11. Figures in bracket pertain to the previous year.


Mar 31, 2011

1. In the opinion of the board and to the best of their knowledge, the current assets, loans and advances, shown in the balance sheet have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated therein.

2. Debtors and Creditors are subject to confirmation.

10. Additional Information Pursuant to the Provisions of Paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956:

(A) Information in respect of capacity and class of goods manufactured:

The Company, being primarily engaged in rendering of services, the details in respect of licensed capacity, installed capacity and production / consumption of raw materials etc. are not given.

f) Compensated Leave:

Para 132 of AS15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard No. 5 or Accounting Standard No. 18. In the opinion of the management the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of AS 15 (revised 2005).

i) Gratuity is administered through group gratuity scheme with Life Insurance Corporation of India.

j) Salary Escalation Rate:

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

k) Expected rate of return on plan assets:

This is based on actuaries expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

l) Discount Rate:

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

3. Information about Business Segments

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), Segment Reporting, if a single fniancial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS - 17 are given in consolidated financial statements.

4. Related Party Disclosures

(a) List of related parties and relationships:

Relation Parties

A. Subsidiaries Onward Technologies GmbH, Germany

Shantmurli Holdings Pvt. Ltd. Onward Technologies, Inc., USA Onward eServices Ltd.

B. Enterprise over which key management Onward Network Technologies Pvt. Ltd. personnel exercise significant influence Desai Finwealth Investments & Securities Pvt. Ltd.

Onward Software Technologies Pvt. Ltd.

C. Key Management Personnel and Relatives Chairman & Managing Director Harish Mehta Director Shaila Mehta Related to Directors Jigar Mehta Related to Director Arun Meghani

5 a. Onward Technologies employee stock option plan 2001

The Company instituted the 2001 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on January 15, 2001. Scheme covers grant of options to specifed permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs. 10 per equity share of Rs. 10 each.

Under the term of scheme, 25% of the options will vest in the employees at the end of frst year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

b. Onward Technologies employee stock option plan 2009

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specifed permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs. 10 per equity share of Rs. 10 each.

Under the term of scheme, 25% of the options will vest in the employees at the end of frst year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

c) Stock options issued during the year have been accounted as per the accounting guidelines issued by SEBI in the year 1999. Accordingly, an amount of Rs. 4,134,766 (P. Y. Rs. (-) 6,827,879) representing the current year charge has been debited to proft & loss account during the year under both plan.

6. During the fnancial year 2009-10, the Company had written off as bad debts certain receivables for offshore work done for Rs. 575.04 Lac for its US based customers who were affected by the downturn in the US economy and the Global economic meltdown.

7. The Company has not yet appointed a Company Secretary, however, all compliances are done by an independent Company Secretary frm.

8. Previous years fgures have been regrouped /recast wherever necessary.

9. Figures are rounded off to the nearest rupee.

10. Figures in bracket pertain to the previous year.


Mar 31, 2010

1. In the opinion of the board and to the best of their knowledge, the current assets, loans and advances, shown in the balance sheet have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated therein.

2. Debtors and Creditors are subject to confirmation.

3. Contingent Liabilities not provided for:

Year Ended March 31 (Rs.)

Particular 2010 2009

Counter guarantees given by the Company for the guarantees issued by 2,289,750 10,732,394 Company s bankers

Fixed deposits shown under the head cash and bank balances include deposits pledged with the banks as margi ns to secure letters of credit and (350,425) (1,687,305) guarantees issued by banks

Net amount 1,939,325 9,045,089

Disputed income tax / sales tax demand 80,325,421 42,875,435

Total 82,264,746 51,920,524

( * ) In previous year an amount of Rs.3,120,910 includes leave travel allowance of Rs.337,500, which was paid for earlier years.

Remuneration paid for the period Jan 1, 2009 to March 31, 2010 is approved by shareholders in the Annual General Meeting held on August 31, 2009, however it is subject to approval of Central Government, which is pending as on date.

4. Amount Due to Small, Medium and Micro enterprises:

5. Additional Information Pursuant to the Provisions of Paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956:

(A) Information in respect of capacity and class of goods manufactured:

The Company, being primarily engaged in rendering of services, the details in respect of licensed capacity, installed capacity and production / consumption of raw materials etc. are not given.

6. The principal amount of term loan payable within a year is Rs.125.00 Lac (P. Y. Rs.125.00 Lac).

7. Disclosure in pursuance of Accounting Standard - 15 (Revised 2005) on "Employee Benefits"

1. Defined Contribution Plans

2. Defined Benefit Plans / Compensated absences - as per Actuarial Valuation on March 31, 2010.

f) Compensated Leave:

Para 132 of AS15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard No. 5 or Accounting Standard No. 18. In the opinion of the management the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of AS 15 (revised 2005).

i) Gratuity is administered through group gratuity scheme with Life Insurance Corporation of India.

j) Salary Escalation Rate:

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

k) Expected rate of return on plan assets:

This is based on actuaries expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

l) Discount Rate:

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

8. Information about Business Segments

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), Segment Reporting, if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS - 17 are given in consolidated financial statements.

9. Related Party Disclosures

* Remuneration paid for the period April 1, 2009 to March 31, 2010 is approved by shareholders in the Annual General Meeting held on August 31, 2009, however it is subject to approval of Central Government, which is pending as on date.

Note: Previous year figures have been shown in brackets.

(*) The above amount includes Rs. 491.62 Lac due to Onward Technologies, Inc., USA towards Capital Software purchase.

Note: Previous year figures have been shown in brackets.

10. I) Disclosure for Income from Operating Lease:

11. Earnings per Share

12 a. Onward Technologies employee stock option plan 2001

The Company instituted the 2001 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on January 15, 2001. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs 10 per equity share of Rs 10 each.

Under the term of scheme, 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at end of fourth year from the grant date.

The employee stock options granted shall be capable of being exercised within a period of four years from the date of first vesting the options, they would be exercisable by the option holder and the shares arising on exercise of such options shall not be subject to any lock-in period. Further, in the case of termination of employment, all non-vested options would stand cancelled. Options that have vested but have not been exercised can be exercised within the time prescribed as mentioned above, failing which they would stand cancelled. The movement in the stock options during the year was as per the table given below:

b. Onward Technologies employee stock option plan 2009

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs 10 per equity share of Rs 10 each.

Under the term of scheme, 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at end of fourth year from the grant date.

The employee stock options granted shall be capable of being exercised within a period of four years from the date of first vesting the options, they would be exercisable by the option holder and the shares arising on exercise of such options shall not be subject to any lock-in period. Further, in the case of termination of employment, all non-vested options would stand cancelled. Options that have vested but have not been exercised can be exercised within the time prescribed as mentioned above, failing which they would stand cancelled. The movement in the stock options during the year was as per the table given below:

c) Stock options issued during the year have been as per the accounting guidelines issued by SEBI in the year 1999 and as further amended in year 2004. Further during the year, 2001 Scheme has been partly lapsed and Company has scraped 2005 Scheme. Accordingly, an amount of Rs. 6,827,879 (P.Y.Rs. (-) 2,373,807) reversed during the year been credited to Profit & Loss Account

13. During the said financial year the Company has written off as bad debts certain receivables for offshore work done for Rs. 575.04 Lac for its US based customers who were affected by the downturn in the US economy and the Global economic meltdown. In addition to delay in payment and the inability of the customer to confirm the balance forced the Company to write-off these receivables. Looking at the general economic scenario, the efforts, time and money which would be required to pursue this outstanding and the very negligible chances of recovering the same at the earliest, the Company decided against taking any further action in this matter.

14. Scheme of arrangement / compromise between Onward Technologies Limited (hereinafter refer as "OTL") and Onward eServices Limited (hereinafter refer as "OEL") as approved by the Honorable High Court of Mumbai:

During the financial year 2008-09, as a part of arrangement / compromise, the Company pursuant to provisions of Section 391 & 394 of the Companies Act, 1956, offered a scheme of arrangement / compromise to respective Members of OTL and OEL and for reconstruction and reduction of capital of OEL and specified creditor of OEL viz OTL and further convened meetings of shareholders of OTL on June 9, 2008 pursuant to an order of the Honorable High Court of Judicature at Mumbai.

Pursuant to the above meeting the Company had obtained necessary sanction of the scheme from the Honorable High Court of Mumbai vide its Order dated April 16, 2009. Even though, the appointed date was April 1, 2007, the effect of the above scheme has been given in the books of accounts for the year ending March 31, 2009 and comparative figures of the previous year has not been adjusted to that extent.

The scheme of arrangement as sanctioned by the Honorable High Court of Mumbai provides for the following accounting treatment in the books of accounts:

- The outstanding loan of Rs.106,897,410 (Rupees Ten Crore Sixty Eight Lac Ninety Seven Thousand Four Hundred Ten Only) obtained by OEL from OTL, was converted into equity share capital of OEL.

- The debit balance of profit and loss account amounting to Rs.156,888,820, irrecoverable debtors Rs.19,001,570, loss/reduction in value of sundry advances Rs.99,908,873 and reduction in the value of inventories Rs.18,198,147 of OEL aggregating Rs.293,997,410 (Rupees Twenty Nine Crore Thirty Nine Lac Ninety Seven Thousand Four Hundred Ten Only) were reduced against the reduction in share capital of OEL.

- Consequent to such reduction in share capital, the diminution in the value of investments of OTL in the share capital of OEL was reduced / adjusted against the securities premium account of OTL. Thus the securities premium account of OTL was reduced by Rs.293,997,410 (Rupees Twenty Nine Crore Thirty Nine Lac Ninety Seven Thousand Four Hundred Ten Only) and the loan given to OEL and investments in share capital of OEL will reduce to the extent of Rs.293,997,410 (Rupees Twenty Nine Crore Thirty Nine Lac Ninety Seven Thousand Four Hundred Ten Only).

Since the loan outstanding as on March 31, 2008 given by OTL to OEL was converted in to equity and thereafter reduced pursuant to High Court order with retrospective effect from April 1, 2007, interest charged by OTL to OEL amounting to Rs.6,782,667 in the financial year 2007-08 has been adjusted in the previous year.

15. The sales & other income as shown in the profit and loss accounts includes the value of sales reversal of Rs. Nil (P. Y. Rs.80,313,553) towards on going pilots conducted at the behest of one of Companys major offshore customer. These pilots were in the nature of software and engineering designs to demonstrate feasibility of ideas, modifications to suit the changed specifications of the said customer. The Company has been representing to the said customers that these assignments though individually small, collectively aggregated to large sums and therefore the invoices raised by the Company were legitimate dues. However, while such negotiations were on the economic meltdown happened and the customers did not agree to the Companys contention. In light of these unforeseen developments, and keeping in mind the current relationship and the future prospects from the customer, the Company decided to reverse the sales.

16. The Company has not yet appointed a Company Secretary, however, all compliances are done by an independent Company Secretary firm.

17. Previous years figures have been regrouped / recast wherever necessary except figures affected by scheme of compromise/arrangement.

18. Figures are rounded off to the nearest rupee.

19. Figures in bracket pertain to the previous year.

Get Instant News Updates
Enable
x
Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X