Accounting Policies of Speciality Restaurants Ltd. Company
Mar 31, 2018
1 SIGNIFICANT ACCOUNTING POLICIES:
a) Statement of compliance
The financial statements have been prepared in accordance with Ind ASs notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
Upto the year ended 31 March, 2017, the Company prepared its financial statements in accordance with the requirements of previous GAAP, which includes Standards notified under the Companies (Accounting Standards) Rules, 2006. These are the Company''s first Ind AS financial statements. The date of transition to Ind AS is 1 April, 2016. Refer Note 3 for the details of firsttime adoption exemptions availed by the Company.
The Company has not early applied the following IND AS that has been issued but is not yet effective:
IND AS 115 - Revenue from Contracts with Customers
Effective for annual periods beginning on or after 1 April 2018.
IND AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IND AS 115 will supersede the current revenue recognition guidance including IND AS 18 Revenue, IND AS 11 Construction Contracts and the related Interpretations when it becomes effective.
Under IND AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ''control'' of the goods or services underlying the particular performance obligation is transferred to the customer.
The amendments apply prospectively for annual periods beginning on or after April 1, 2018. The Company is still in the process of evaluating the impact of the above standard on the financial statements.
b) Basis of preparation of Financial Statements
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given at the date of the transaction, in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
c) Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Cost includes expenditures directly attributable to the acquisition of the asset.
Freehold land is not depreciated.
Assets acquired under finance leases are accounted for at the inception of the lease in accordance with Ind AS 17 on Leases at the lower of the fair value of the asset and present value of minimum lease payments.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives. Leasehold land is amortised over the duration of the lease.
Leasehold improvements are depreciated over the lower of the lease period and the management''s estimate of the useful life of the asset.
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation has been provided on Written Down Value (WDV) Method. The estimated useful life which is in line with Schedule II to the Act is set out herein below.
The Company has assessed the estimated useful life of furniture and fixtures as 10 years based on past experience and technical evaluation.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as of 1 April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
d) Intangible assets
Intangible assets are stated at their cost of acquisition, less accumulated amortisation and impairment losses. An intangible asset is recognised, where it is probable that the future economic benefits attributable to the asset will flow to the enterprise and where its cost can be reliably measured. The amortisable amount of intangible assets is allocated over the best estimate of its useful life on a straight-line basis.
The Company capitalises software costs where it is reasonably estimated that the software has an enduring useful life. Software is amortised over the management''s estimate of its useful life of five years.
Patents and Trademarks are amortised uniformly over a period of five years.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as of 1 April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
e) Capital work-in-progress:
Projects under which property, plant and equipment are not yet ready for their intended use are carried at cost, comprising direct cost and related incidental expenses.
f) Impairment of tangible and intangible assets:
An asset is considered as impaired in accordance with Ind AS 36 on Impairment of Assets when at the balance sheet date there are indications of impairment and the carrying amount of the asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e. the higher of the asset''s net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognised as an impairment loss in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
g) Revenue Recognition
Revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection.
Revenue from restaurant and sweet shop sales (food and beverages) is recognised upon rendering of service. Sales are net of discounts. Indirect tax is reduced from sales.
The Company also operates through franchise arrangements with third parties in terms of which the third parties are permitted to use the Company''s established trademarks :
- Initial Access Premium Fee charged to franchisees, in consideration of being considered as competent to open a restaurant under a Company owned trademark, is recognised on formalisation of franchisee agreement. The Initial Access Premium Fee is non - refundable, regardless of whether the restaurant outlet under the franchisee agreement commences operations or not.
- Royalty and Management Fee charged to franchisees for use of the trademarks is calculated as a percentage of monthly sales of the restaurant and accrued for in line with sales.
Revenue from displays and sponsorships are recognised based on the period for which the products or the sponsor''s advertisements are promoted/displayed.
h) Other income:
Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.
i) Inventories:
Inventories are measured at the lower of cost and net realisable value.
Cost of materials is determined by the first-in-first-out (FIFO) method. Cost of inventories comprises of all costs of purchase and other costs incurred in bringing the inventories to their present location and condition.
j) Employee Benefits
Compensation to employees for services rendered is measured and accounted for in accordance with Indian Accounting Standard 19 on Employee Benefits.
Employee Benefits such as salaries, allowances, non-monetary benefits and employee benefits under defined contribution plans such as provident and other funds, which fall due for payment within a period of twelve months after rendering service, are charged as expense to profit or loss in the period in which the service is rendered.
Employee Benefits under defined benefit plans such as gratuity which fall due for payment after completion of employment are measured by the projected unit credit method, on the basis of actuarial valuations carried out by third party actuaries at each balance sheet date. The Company''s obligation recognised in the balance sheet represents the present value of obligations as reduced by the fair value of plan assets.
Actuarial Gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest) are recognised immediately in other comprehensive income. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
k) Foreign currency transactions and translations
The functional currency of the Company is the Indian Rupee. The treatment of foreign currency transactions and translations are as under:
Initial recognition
Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or using rates that closely approximate the rate at the date of the transaction.
Measurement at the balance sheet date
Foreign currency monetary items (other than derivative contracts) of the Company, outstanding at the balance sheet date are restated at the year-end rates
Treatment of exchange differences
Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of profit and loss.
l) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
m) Taxation
Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with income tax laws) and deferred tax charge or credit (reflecting the tax effect of timing differences between accounting income and taxable income for the year).
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the Statement of Comprehensive Income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using applicable tax rates that have been enacted or subsequently enacted by the end of the reporting period and the provisions of the Income Tax Act, 1961 and other tax laws, as applicable.
Deferred tax
The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that the assets can be realized in future; however when there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and Deferred Tax for the year
Current and deferred tax are recognised in the Statement of Profit and Loss, except when they relate to items that are recognised in Other Comprehensive Income or directly in equity, in which case, the current and deferred tax are also recognised in Other Comprehensive Income or directly in equity respectively.
n) Earnings Per Share
The Company reports basic and diluted Earnings per Share (EPS) in accordance with IND AS 33 on Earnings Per Share. Basic EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.
o) Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases
Finance lease
Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments, The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
Operating lease
Rental expense from operating leases is generally recognised on a straight line basis over the term of the relevant lease, Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
Interest free lease deposits are remeasured at amortised cost by the effective interest rate method. The difference between the transaction value of the deposit and amortised cost is regarded as prepaid rent and recognised as expense uniformly over the lease period. Interest income measured by the effective interest rate method is accrued.
p) Cash Flow Statement
The Cash Flow Statement is prepared by the indirect method set out in IND AS 7 on Cash Flow Statements and presents the cash flows by operating, investing and financing activities of the Company.
Cash and Cash equivalents presented in the Cash Flow Statement consist of cash on hand and unencumbered bank balances.
q) Provisions and contingencies
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
A contingent asset is neither recognised nor disclosed in the financial statements.
r) Employee share based payments
Equity settled share based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of Equity settled share based payments is expensed on a straight-line basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the Equity settled employee benefits reserve.
s) Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss (FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost (except for debt instruments that are designated at fair value through profit or loss on initial recognition):
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the "Other income" line item.
Financial assets at FVTPL
Debt instruments that do not meet the amortised cost criteria or Fair value through other comprehensive income (FVTOCI) criteria are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income'' line item. Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Investment in Joint venture
Investment in joint venture is carried at cost in the separate financial statements.
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, trade receivables and other contractual rights to receive cash or other financial asset.
For trade receivables and any contractual right to receive cash or another financial asset that result from transactions that are within the scope of IND AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses. Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under IND AS 109.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL. Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
3 First-time adoption:
Overall principle
The Company has prepared the opening balance sheet as at 1 April, 2016 (the transition date) as per Ind AS by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities. However, this principle is subject to the exemption availed by the Company as per IND AS 101 detailed below.
3.1 Deemed cost for property, plant and equipment, and intangible
The Company has elected to continue with the carrying value of all of its plant and equipment and intangible assets recognised as of 1 April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
4 Critical accounting judgments and key sources of estimation uncertainty
In application of the Company''s accounting policies, which are described in note 2, the directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
4.1 Critical judgments in applying accounting policies
The following is the critical judgement, apart from those involving estimations that the directors have made in the process of applying the Company''s accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
4.1.1 Classification of Mainland China Restaurant (LLC) as a joint venture
Mainland China Restaurant (LLC) is a limited liability company whose legal form confers separation between the parties to the joint arrangement and the Company itself. Furthermore, there is no contractual arrangement or any other facts and circumstances that indicate that the parties to the joint arrangement have right to the assets and obligations for the liabilities of the joint arrangement. Accordingly, Mainland China Restaurant (LLC) is classified as a joint venture of the Company.
4.2 Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
4.2.1 Impairment of equity investment and receivables from joint venture company
During the year, the directors considered the recoverability of equity investments and receivables from joint venture company "Mainland China Restaurant LLC" in Qatar. The joint venture company has stopped commercial operations on account of continuing losses and accordingly the Company has recognised an impairment loss of '' 101.41 million for diminution in value of company''s investment in equity shares and receivables from the joint venture company. The impairment loss has been disclosed as an "Exceptional item" in the Statement of Profit and Loss.
4.2.2 Useful lives of property, plant and equipment
The Company reviews the estimated useful lives of property, plant and equipment and intangible assets at the end of each reporting period. During financial years ended 31 March 2018, 2017 and 2016, there were no changes in useful lives of property plant and equipment and intangible assets.
The company at the end of each reporting period, based on external and internal sources of information, assesses indicators and mitigating factors of whether a restaurant (cash generating unit) may have suffered an impairment loss. If it is determined that an impairment loss has been suffered, it is recognised in the Statement of Profit and Loss.
4.2.3 Impairment of trade receivables
The Company estimates the probability of collection of accounts receivable by analysing historical payment patterns, customer status, customer credit-worthiness and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required.
4.2.4 Deferred tax asset
The Company reviews the carrying value of Deferred tax asset (DTA) at the end of each reporting period. Since the expected revenues and profits were not achieved in the current year, the Management on a prudent basis concluded that sufficient taxable profits are not available for the DTA to be recovered in the near future and accordingly the same has been fully provided in the financial statements.
4.2.5 Contingencies
In the normal course of business, contingent liabilities may arise from litigations and other claims against the company. There are certain obligations which management have concluded based on all available facts and circumstances are not probable of payment and such obligations are treated as contingent liabilities and disclosed in the notes but are not provided for in the financial statements.
Mar 31, 2017
1 COMPANY BACKGROUND
Speciality Restaurants Limited ("The Company") was incorporated on 1 December 1999. The Company is primarily engaged in the business of operating restaurant outlets / sweet shops.
2 SIGNIFICANT ACCOUNTING POLICIES:
a) Basis of preparation of Financial Statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"). The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
b) Use of estimates
The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and differences between actual results and estimates are recognized in the periods in which the results are known / materialize.
c) Property, Plant and Equipment and Depreciation/Amortization
Tangible Assets are stated at their cost of acquisition less accumulated depreciation and impairment losses.
Cost comprises of all costs incurred to bring the assets to their present location and working condition.
Assets acquired under finance leases are accounted for at the inception of the lease in accordance with Accounting Standard 19 on Leases at the lower of the fair value of the asset and present value of minimum lease payments.
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation has been provided on WDV method. The estimated useful life which is in line with Schedule II to the Act is set out herein below.
The Company has assessed the estimated useful life of furniture and fixtures as 10 years based on past experience and technical evaluation.
Leasehold improvements are depreciated over the lower of the lease period and the management''s estimate of the useful life of the asset. Leasehold land is amortized over the duration of the lease.
Intangible assets are stated at their cost of acquisition, less accumulated amortization and impairment losses. An intangible asset is recognized, where it is probable that the future economic benefits attributable to the asset will flow to the enterprise and where its cost can be reliably measured. The amortizable amount of intangible assets is allocated over the best estimate of its useful life on a straight-line basis.
The Company capitalizes software costs where it is reasonably estimated that the software has an enduring useful life. Software is amortized over the management''s estimate of its useful life of five years.
Patents and Trademarks are amortized uniformly over a period of five years.
d) Capital work-in-progress:
Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost and related incidental expenses.
e) Impairment of Assets
An asset is considered as impaired in accordance with Accounting Standard 28 on Impairment of Assets when at the balance sheet date there are indications of impairment and the carrying amount of the asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e. the higher of the asset''s net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognised as an impairment loss in the Statement of Profit and Loss.
f) Investments
Investments are classified as current or long term in accordance with Accounting Standard 13 on Accounting for Investments.
Current investments are stated at the lower of cost and fair value. Any reduction in the carrying amount and any reversals of such reductions are charged or credited to the Statement of Profit and Loss.
Long term investments are stated at cost. Provision for diminution is made to recognize a decline, other than temporary, in the value of such investments.
g) Revenue Recognition
Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection.
Revenue from restaurant and sweet shop sales (food and beverages) is recognized upon rendering of service. Sales are net of discounts. Value added tax is reduced from sales.
The Company also operates through franchise arrangements with third parties in terms of which the third parties are permitted to use the Company''s established trademarks :
- Initial Access Premium Fee charged to franchisees, in consideration of being considered as competent to open a restaurant under a Company owned trademark, is recognized on formalization of the franchisee agreement. The Initial Access Premium Fee is non-refundable, regardless of whether the restaurant outlet under the franchisee agreement commences operations or not.
- Royalty and Management Fee charged to franchisees for the use of the trademarks is calculated as a percentage of monthly sales of the restaurant and accrued for in line with restaurant sales.
Revenue from displays and sponsorships are recognized based on the period for which the products or the sponsor''s advertisements are promoted/displayed.
In respect of gift vouchers and point awards scheme operated by the Company, sales are recognized when the gift vouchers or points are redeemed on sale of meals to customers.
h) Other income:
Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.
i) Inventories:
Inventories are measured at the lower of cost and net realizable value.
Cost of inventories comprises of all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost of materials is determined by the FIFO method.
j) Employee Benefits
Compensation to employees for services rendered is accounted for in accordance with Accounting Standard 15 on Employee Benefits. Employee Benefits such as salaries, allowances, non-monetary benefits and employee benefits under defined contribution plans such as provident and other funds, which fall due for payment within a period of twelve months after rendering service, are charged as expense to the Statement of Profit and Loss in the period in which the service is rendered.
Employee Benefits under defined benefit plans such as gratuity which fall due for payment after completion of employment are measured by the projected unit credit method, on the basis of actuarial valuations carried out by third party actuaries at each balance sheet date. The Company''s obligation recognized in the balance sheet represents the present value of obligations as reduced by the fair value of plan assets.
Actuarial Gains and losses are recognized immediately in the Statement of Profit and Loss.
k) Foreign Currency Transactions
Transactions in foreign currencies are accounted for at the prevailing rates of exchange on the date of the transaction.
Foreign currency monetary items of the Company are restated at the prevailing rates of exchange at the Balance Sheet date. All gains and losses arising out of fluctuations in exchange rates are accounted for in the Statement of Profit and Loss.
l) Borrowing costs
Borrowing costs attributable to the acquisition or construction of qualifying assets, as defined in Accounting Standard 16 on Borrowing Costs are capitalized as part of the cost of the asset up to the date when the asset is ready for its intended use. Other borrowing costs are expensed as incurred.
m) Income Tax
Income taxes are accounted for in accordance with Accounting Standard 22 on Accounting for Taxes on Income. Taxes comprise both current and deferred tax.
Current tax is measured at the amount expected to be paid to /recovered from the taxation authorities, using the applicable tax rates and tax laws.
The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using the substantively enacted tax rates and tax regulations.
The carrying amount of deferred tax assets at each balance sheet date is reduced to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which the deferred tax asset can be realized.
Tax on distributed profits payable in accordance with the provisions of Section 115-O of the Income-Tax Act, 1961, is in accordance with the Guidance Note on Accounting for Corporate Dividend Tax, regarded as a tax on Distribution on profits and is not considered in determination of the profits of the Company.
n) Earnings Per Share
The Company reports Basic and Diluted Earnings Per Share (EPS) in accordance with Accounting Standard 20 on Earnings Per Share. Basic EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.
o) Leases
Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalized at the inception of the lease at the lower of the fair value and cost. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on the following basis, as applicable:
i) A percentage of restaurant sales as provided for in the lease agreement
ii) In the ratio of forecasted sales, over the balance lease period
p) Cash Flow Statement
The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard 3 on Cash Flow Statements and presents the cash flows by operating, investing and financing activities of the Company.
Cash and Cash equivalents presented in the Cash Flow Statement consist of cash on hand and unencumbered bank balances.
q) Provisions and contingencies
Contingent Liabilities as defined in Accounting Standard 29 on Provisions, Contingent Liabilities and Contingent Assets are disclosed by way of notes to the accounts. Disclosure is not made if the possibility of an outflow of future economic benefits is remote. Provision is made if it becomes probable that an outflow of future economic benefits will be required to settle the obligation.
r) Employee share based payments
The Company has constituted an Employee Stock Option Plan under the ESOP 2012 scheme. Employee Stock Options granted are accounted under the ''Intrinsic Value Method'' stated in the Guidance Note on Employee Share Based Payments issued by the Institute of Chartered Accountants of India.
In accordance with the SEBI Guidelines, the excess, if any, of the closing market price on the day prior to the grant of the options over the exercise price is amortized on a straight-line basis over the vesting period.
Mar 31, 2015
A) Basis of preparation of finacial Statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013 ("the 2013 Act")
b) Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates and
differences between actual results and estimates are recognised in the
periods in which the results are known / materialise.
c) fixed Assets and Depreciation/Amortisation
Tangible Assets are stated at their cost of acquisition less accumulated
depreciation and impairment losses. Cost comprises of all costs incurred
to bring the assets to their present location and working condition.
Assets acquired under finance leases are accounted for at the inception
of the lease in accordance with Accounting Standard 19 on Leases at the
lower of the fair value of the asset and present value of minimum lease
payments. Depreciable amount for assets is the cost of an asset, or
other amount substituted for cost, less its estimated residual value.
Pursuant to the enactment of the Companies Act, 2013, effective 1
April, 2014, the Company has reviewed and revised the estimated
economic useful lives of its fixed assets generally in accordance with
those provided in Schedule II to the Companies Act, 2013 except in case
of furniture and fixtures. The Company has assessed the estimated
useful life of furniture and fixtures as 10 years based on past
experience and technical evaluation. (Refer note 9(3))
Leasehold improvements are depreciated over the lower of the lease
period and the management''s estimate of the useful life of the asset.
Intangible assets are stated at their cost of acquisition, less
accumulated amortisation and impairment losses. An intangible asset is
recognised, where it is probable that the future economic benefits
attributable to the asset will flow to the enterprise and where its
cost can be reliably measured. The amortisable amount of intangible
assets is allocated over the best estimate of its useful life on a
straight-line basis.
The Company capitalises software costs where it is reasonably estimated
that the software has an enduring useful life. Software is amortised
over the management''s estimate of its useful life of five years.
Trademarks are amortised uniformly over a period of five years.
d) Capital work-in-progress:
Projects under which tangible fixed assets are not yet ready for their
intended use are carried at cost, comprising direct cost, related
incidental expenses and attributable interest.
e) Impairment of Assets
An asset is considered as impaired in accordance with Accounting
Standard 28 on Impairment of Assets when at the balance sheet date
there are indications of impairment and the carrying amount of the
asset, or where applicable the cash generating unit to which the asset
belongs, exceeds its recoverable amount (i.e. the higher of the asset''s
selling price and value in use). The carrying amount is reduced to
the recoverable amount and the reduction is recognised as an impairment
loss in the Statement of Profit and Loss.
f) Investments
Investments are classified as current or long term in accordance with
Accounting Standard 13 on Accounting for Investments.
Current investments are stated at the lower of cost and fair value. Any
reduction in the carrying amount and any reversals of such reductions
are charged or credited to the Statement of Profit and Loss.
Long term investments are stated at cost. Provision for diminution is
made to recognise a decline, other than temporary, in the value of such
investments.
g) Revenue Recognition
Revenue is recognised when it is earned and no significant uncertainty
exists as to its realisation or collection. Revenue from restaurant
and sweet shop sales (food and beverages) is recognised upon rendering
of service. Sales are net of discounts. Value added tax is reduced from
sales.
The Company also operates through franchise arrangements with third
parties in terms of which the third parties are permitted to use the
Company''s established trademarks :
* Initial Access Premium Fee charged to franchisees, in consideration
of being considered as competent to open a restaurant under a Company
owned trademark, is recognised on formalisation of the franchise
agreement. The Initial Access Premium Fee is non - refundable,
regardless of whether the restaurant outlet under the franchise
agreement commences operations or not.
* Royalty and Management Fee charged to franchisees for the use of the
trademarks is calculated as a percentage of monthly sales of the
restaurant and accrued for in line with restaurant sales.
Revenue from displays and sponsorships are recognised based on the
period for which the products or the sponsor''s advertisements are
promoted/displayed.
In respect of gift vouchers and point awards scheme operated by the
Company, sales are recognised when the gift vouchers or points are
redeemed on sale of meals to customers.
h) Other income:
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
i) Inventories:
Inventories are measured at the lower of cost and net realisable value.
Cost of inventories comprises of all costs of purchase and other costs
incurred in bringing the inventories to their present location and
condition. Cost of materials is determined by the FIFO method.
j) Employee Benefits
Compensation to employees for services rendered is measured and
accounted for in accordance with Accounting Standard 15 on Employee
Benefits.
Employee Benefits such as salaries, allowances, non-monetary benefits
and employee benefits under defined contribution plans such as
provident and other funds, which fall due for payment within a period
of twelve months after rendering service, are charged as expense to the
Statement of Profit and Loss in the period in which the service is
rendered.
Employee Benefits under defined benefit plans such as gratuity which
fall due for payment after completion of employment are measured by the
projected unit credit method, on the basis of actuarial valuations
carried out by third party actuaries at each balance sheet date. The
Company''s obligation recognised in the balance sheet represents the
present value of obligations as reduced by the fair value of plan
assets.
Actuarial Gains and losses are recognised immediately in the Statement
of Profit and Loss.
k) Foreign Currency Transactions
Transactions in foreign currencies are accounted for at the prevailing
rates of exchange on the date of the transaction. Foreign currency
monetary items of the Company are restated at the prevailing rates of
exchange at the Balance Sheet date. All gains and losses arising out of
fluctuations in exchange rates are accounted for in the Statement of
Profit and Loss.
l) Borrowing costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets, as defined in Accounting Standard 16 on Borrowing
Costs are capitalised as part of the cost of the asset up to the date
when the asset is ready for its intended use. Other borrowing costs are
expensed as incurred.
m) Income Tax
Income taxes are accounted for in accordance with Accounting Standard
22 on Accounting for Taxes on Income. Taxes comprise both current and
deferred tax.
Current tax is measured at the amount expected to be paid to /recovered
from the taxation authorities, using the applicable tax rates and tax
laws.
The tax effect of the timing differences that result between taxable
income and accounting income and are capable of reversal in one or more
subsequent periods are recorded as a deferred tax asset or deferred tax
liability. They are measured using the substantively enacted tax rates
and tax regulations.
The carrying amount of deferred tax assets at each balance sheet date
is reduced to the extent that it is no longer reasonably certain that
sufficient future taxable income will be available against which the
deferred tax asset can be realised.
Tax on distributed profits payable in accordance with the provisions of
Section 115-O of the Income-Tax Act, 1961, is in accordance with the
Guidance Note on Accounting for Corporate Dividend Tax, regarded as a
tax on Distribution on profits and is not considered in determination
of the profits of the Company.
n) Earnings per Share
The Company reports basic and diluted Earnings per Share (EPS) in
accordance with Accounting Standard 20 on Earnings per Share. Basic EPS
is computed by dividing the net profit or loss for the year
attributable to equity shareholders by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed by
dividing the net profit or loss for the year attributable to equity
shareholders by the weighted average number of equity shares outstanding
during the year as adjusted for the effects of all dilutive potential
equity shares, except where the results are anti-dilutive.
o) Leases
Assets leased by the Company in its capacity as a lessee, where
substantially all the risks and rewards of ownership vest in the
Company are classified as finance leases. Such leases are capitalised
at the inception of the lease at the lower of the fair value and cost.
Operating lease payments are recognised as an expense in the Statement
of Profit and Loss on the following basis, as applicable:
i) A percentage of restaurant sales as provided for in the lease
agreement
ii) In the ratio of forecasted sales, over the balance lease period
p) Cash Flow Statement
The Cash Flow Statement is prepared by the indirect method set out in
Accounting Standard 3 on Cash Flow Statements and presents the cash
flows by operating, investing and financing activities of the Company.
Cash and Cash equivalents presented in the Cash Flow Statement consist
of cash on hand and unencumbered bank balances.
q) Provisions and contingencies
Contingent Liabilities as defined in Accounting Standard 29 on
Provisions, Contingent Liabilities and Contingent Assets are disclosed
by way of notes to the accounts. Disclosure is not made if the
possibility of an outflow of future economic benefits is remote.
Provision is made if it becomes probable that an outflow of future
economic benefits will be required to settle the obligation.
r) Employee share based payments
The Company has constituted an Employee Stock Option Plan under the
ESOP 2012 scheme. Employee Stock Options granted are accounted under
the ''Intrinsic Value Method'' stated in the Guidance Note on Employee
Share Based Payments issued by the Institute of Chartered Accountants
of India.
In accordance with the SEBI Guidelines, the excess, if any, of the
closing market price on the day prior to the grant of the options over
the exercise price is amortised on a straight-line basis over the
vesting period.
Mar 31, 2014
A) Basis of Preparaton of Finacial Statements
The financial statements have been prepared under the historical cost
conventon in accordance with Generally Accepted Accountng Principles in
India (Indian GAAP) to comply with the Accountng Standards notfied under
Secton 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which
continue to be applicable in respect of Secton 133 of the Companies Act,
2013 ("the 2013 Act") in terms of General Circular 15/2013 dated 13
September, 2013 of the Ministry of Corporate Afairs) and the relevant
provisions of the 1956 Act/ 2013 Act, as applicable.
b) Use of estmates
The preparaton of financial statements in conformity with Generally
Accepted Accountng Principles requires estmates and assumptons to be
made that afect the reported amounts of assets and liabilites and
disclosure of contngent liabilites on the date of the financial
statements and the reported amounts of revenues and expenses during the
reportng period. Actual results could difer from those estmates and
diferences between actual results and estmates are recognized in the
periods in which the results are known / materialize.
c) Fixed assets and depreciaton/amortzaton
Tangible Assets are stated at their cost of acquisiton less accumulated
depreciaton and impairment losses.
Cost comprises of all costs incurred to bring the assets to their
present locaton and working conditon.
Assets acquired under finance leases are accounted for at the incepton
of the lease in accordance with Accountng
Standard 19 on Leases at the lower of the fair value of the asset and
present value of minimum lease payments.
Depreciaton on assets is provided, pro-rata for the period of use, by
the writen down value method at the rates prescribed in Schedule XIV to
the Act. Assets costng less than Rs. 5,000 are depreciated at 100%.
Leasehold improvements are depreciated over the lower of the lease
period and the management''s estmate of the useful life of the asset.
Intangible assets are stated at their cost of acquisiton, less
accumulated amortzaton and impairment losses. An intangible asset is
recognized, where it is probable that the future economic benefits
atributable to the asset will fow to the enterprise and where its cost
can be reliably measured. The depreciable amount of intangible assets
is allocated over the best estmate of its useful life on a
straight-line basis.
The company capitalizes sofware costs where it is reasonably estmated
that the sofware has an enduring useful life.
Sofware is depreciated over the management''s estmate of its useful life
of five years.
Trademarks are amortzed uniformly over a period of five years.
d) Impairment of Assets
An asset is considered as impaired in accordance with Accountng
Standard 28 on Impairment of Assets when at the balance sheet date
there are indicatons of impairment and the carrying amount of the
asset, or where applicable the cash generatng unit to which the asset
belongs, exceeds its recoverable amount (i.e. the higher of the asset''s
net selling price and value in use). The carrying amount is reduced to
the recoverable amount and the reducton is recognized as an impairment
loss in the Statement of profit and Loss.
e) Investments
Investments are classifed as current or long term in accordance with
Accountng Standard 13 on Accountng for Investments.
Current investments are stated at the lower of cost and fair value. Any
reducton in the carrying amount and any reversals of such reductons are
charged or credited to the Statement of profit and Loss.
Long term investments are stated at cost. Provision for diminuton is
made to recognize a decline, other than temporary, in the value of such
investments.
f) Revenue Recogniton
Revenue is recognized when it is earned and no significant uncertainty
exists as to its realizaton or collecton.
Revenue from restaurant and sweet shop sales (food and beverages) is
recognized upon rendering of service. Sales are net of discounts. Value
added tax is reduced from sales.
The Company also operates through franchise arrangements with third
partes in terms of which the third partes are permited to use the
Company''s established trademarks :
- Inital Access Premium Fee charged to franchisees, in consideraton of
being considered as competent to open a restaurant under a Company
owned trademark, is recognized on formalizaton of the franchise
agreement. The Inital
Access Premium Fee is non  refundable, regardless of whether the
restaurant outlet under the franchise agreement commences operatons or
not.
- Royalty and Management Fee charged to franchisees for the use of the
trademarks is calculated as a percentage of monthly sales of the
restaurant and accrued for in line with restaurant sales.
Revenue from displays and sponsorships are recognized based on the
period for which the products or the sponsor''s advertsements are
promoted/displayed.
In respect of gift vouchers and point awards scheme operated by the
company, sales are recognized when the gif vouchers or points are
redeemed on sale of meals to customers.
g) Inventories:
Inventories are measured at the lower of cost and net realizable value.
Cost of inventories comprises of all costs of purchase and other costs
incurred in bringing the inventories to their present conditon and
locaton. Cost of materials is determined by the FIFO method.
h) Employee benefits
Compensaton to employees for services rendered is measured and
accounted for in accordance with Accountng Standard 15 on Employee
benefits.
Employee benefits such as salaries, allowances, non-monetary benefits and
employee benefits under Defined contributon plans such as provident and
other funds, which fall due for payment within a period of twelve
months afer rendering service, are charged as expense to the Statement
of profit and Loss in the period in which the service is rendered.
Employee benefits under Defined benefit plans such as gratuity which fall
due for payment afer completon of employment are measured by the
projected unit credit method, on the basis of actuarial valuatons
carried out by third party actuaries at each balance sheet date. The
company''s obligaton recognized in the balance sheet represents the
present value of obligatons as reduced by the fair value of plan
assets.
Actuarial Gains and losses are recognized immediately in the Statement
of profit and Loss.
i) Foreign Currency Transactons
Transactons in foreign currencies are accounted for at the prevailing
rates of exchange on the date of the transacton. Foreign currency
monetary items of the Company are restated at the prevailing rates of
exchange at the Balance Sheet date. All gains and losses arising out of
fuctuatons in exchange rates are accounted for in the Statement of
profit and Loss.
Exchange diferences on forward exchange contracts, entered into for
hedging foreign exchange fuctuaton risk in respect of an existng
asset/liability, are recognized in the Statement of profit and Loss in
the reportng period in which the exchange rate changes. Premium /
Discount on forward exchange contracts is amortzed over the period of
the contract.
j) Borrowing Costs
Borrowing costs atributable to the acquisiton or constructon of
qualifying assets, as Defined in Accountng Standard 16 on Borrowing
Costs are capitalized as part of the cost of the asset upto the date
when the asset is ready for its intended use. Other borrowing costs are
expensed as incurred.
k) Income Tax
Income taxes are accounted for in accordance with Accountng Standard 22
on Accountng for Taxes on Income. Taxes comprise both current and
deferred tax.
Current tax is measured at the amount expected to be paid to /recovered
from the taxaton authorites, using the applicable tax rates and tax
laws.
The tax effect of the tming differences that result between taxable
income and accountng income and are capable of reversal in one or more
subsequent periods are recorded as a deferred tax asset or deferred tax
liability. They are measured using the substantvely enacted tax rates
and tax regulatons.
The carrying amount of deferred tax assets at each balance sheet date
is reduced to the extent that it is no longer reasonably certain that
sufcient future taxable income will be available against which the
deferred tax asset can be realized.
l) Earnings per Share
The Company reports basic and diluted Earnings per Share (EPS) in
accordance with Accountng Standard 20 on Earnings per Share. Basic EPS
is computed by dividing the net profit or loss for the year atributable
to equity shareholders by the weighted average number of equity shares
outstanding during the year. Diluted EPS is computed by dividing the
net profit or loss for the year atributable to equity shareholders by
the weighted average number of equity shares outstanding during the
year as adjusted for the effects of all dilutve potental equity shares,
except where the results are ant-dilutve.
m) Leases
Assets leased by the Company in its capacity as a lessee, where
substantally all the risks and rewards of ownership vest in the Company
are classifed as finance leases. Such leases are capitalised at the
incepton of the lease at the lower of the fair value and cost.
Operatng lease payments are recognized as an expense in the Statement
of profit and Loss on the following basis, as applicable:
i) A percentage of restaurant sales as provided for in the lease
agreement
ii) In the rato of forecasted sales, over the balance lease period
n) Cash flow statement
The Cash Flow Statement is prepared by the indirect method set out in
Accountng Standard 3 on Cash Flow Statements and presents the cash flows
by operatng, investng and fnancing actvites of the Company. Cash and
Cash equivalents presented in the Cash Flow Statement consist of cash
on hand and unencumbered bank balances.
o) Provisions and Contingencies
Contngent Liabilites as Defined in Accountng Standard 29 on Provisions,
Contngent Liabilites and Contngent Assets are disclosed by way of notes
to the accounts. Disclosure is not made if the possibility of an outlow
of future economic benefits is remote. Provision is made if it becomes
probable that an outlow of future economic benefits will be required to
setle the obligaton.
p) Employee Share Based Payments
The Company has consttuted an Employee Stock Opton Plan under the ESOP
2012 scheme. Employee Stock Optons granted are accounted under the
''Intrinsic Value Method'' stated in the Guidance Note on Employee Share
Based Payments issued by the Insttute of Chartered Accountants of
India.
In accordance with the SEBI Guidelines, the excess, if any, of the
closing market price on the day prior to the grant of the optons over
the exercise price is amortsed on a straight-line basis over the vesting
period.
Mar 31, 2013
A) Basis of preparation of finacial Statements.
The financial statements have been prepared under the historical cost
convention in accordance with Generally Accepted Accounting Principles
and the provisions of the Companies Act, 1956.
b) Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates and
differences between actual results and estimates are recognized in the
periods in which the results are known / materialize.
c) Fixed Assets and Depreciation/Amortization
Tangible Assets are stated at their cost of acquisition less
accumulated depreciation and impairment losses. Cost comprises of all
costs incurred to bring the assets to their present location and
working condition.
Assets acquired under finance leases are accounted for at the inception
of the lease in accordance with Accounting Standard 19 on Leases at the
lower of the fair value of the asset and present value of minimum lease
payments.
Depreciation on assets is provided, pro-rata for the period of use, by
the written down value method at the rates prescribed in Schedule XIV
to the Act. Assets costing less than Rs. 5,000 are depreciated at 100%.
Leasehold improvements are depreciated over the lower of the lease
period and the management''s estimate of the useful life of the asset.
Intangible assets are stated at their cost of acquisition, less
accumulated amortization and impairment losses. An intangible asset is
recognized, where it is probable that the future economic benefits
attributable to the asset will flow to the enterprise and where its
cost can be reliably measured. The depreciable amount of intangible
assets is allocated over the best estimate of its useful life on a
straight-line basis.
The company capitalizes software costs where it is reasonably estimated
that the software has an enduring useful life. Software is depreciated
over the management''s estimate of its useful life of five years.
Trademarks are amortized uniformly over a period of five years.
d) Impairment of Assets
An asset is considered as impaired in accordance with Accounting
Standard 28 on Impairment of Assets when at the balance sheet date
there are indications of impairment and the carrying amount of the
asset, or where applicable the cash generating unit to which the asset
belongs, exceeds its recoverable amount (i.e. the higher of the asset''s
net selling price and value in use). The carrying amount is reduced to
the recoverable amount and the reduction is recognized as an impairment
loss in the Statement of Profit and Loss.
e) Investments
Investments are classified as current or long term in accordance with
Accounting Standard 13 on Accounting for Investments.
Current investments are stated at the lower of cost and fair value. Any
reduction in the carrying amount and any reversals of such reductions
are charged or credited to the Statement of Profit and Loss.
Long term investments are stated at cost. Provision for diminution is
made to recognize a decline, other than temporary, in the value of such
investments.
f) Revenue Recognition
Revenue is recognized when it is earned and no significant uncertainty
exists as to its realization or collection. Revenue from restaurant
and sweet shop sales (food and beverages) is recognized upon rendering
of service. Sales are net of discounts. Value added tax is reduced from
sales.
The Company also operates through franchise arrangements with third
parties in terms of which the third parties are permitted to use the
Company''s established trademarks :
- Initial Access Premium Fee charged to franchisees, in consideration
of being considered as competent to open a restaurant under a Company
owned trademark, is recognized on formalization of the franchise
agreement. The Initial Access Premium Fee is non - refundable,
regardless of whether the restaurant outlet under the franchise
agreement commences operations or not.
- Royalty and Management Fee charged to franchisees for the use of the
trademarks is calculated as a percentage of monthly sales of the
restaurant and accrued for in line with restaurant sales.
Revenue from displays and sponsorships are recognized based on the
period for which the products or the sponsor''s advertisements are
promoted/displayed.
In respect of gift vouchers and point awards scheme operated by the
company, sales are recognized when the gift vouchers or points are
redeemed and on sale of meals to customers.
g) Inventories:
Inventories are measured at the lower of cost and net realizable value.
Cost of inventories comprises of all costs of purchase and other costs
incurred in bringing the inventories to their present condition and
location. Cost of materials is determined by the FIFO method.
h) Employee Benefits
Compensation to employees for services rendered is measured and
accounted for in accordance with Accounting Standard 15 on Employee
Benefits.
Employee Benefits such as salaries, allowances, non-monetary benefits
and employee benefits under defined contribution plans such as
provident and other funds, which fall due for payment within a period
of twelve months after rendering service, are charged as expense to the
Statement of Profit and Loss in the period in which the service is
rendered.
Employee Benefits under defined benefit plans such as gratuity which
fall due for payment after completion of employment are measured by the
projected unit credit method, on the basis of actuarial valuations
carried out by third party actuaries at each balance sheet date. The
company''s obligations recognized in the balance sheet represent the
present value of obligations as reduced by the fair value of plan
assets, where applicable. Actuarial Gains and losses are recognized
immediately in the Statement of Profit and Loss.
i) Foreign Currency Transactions
Transactions in foreign currencies are accounted for at the prevailing
rates of exchange on the date of the transaction.
Monetary items denominated in foreign currencies, are restated at the
prevailing rates of exchange at the Balance Sheet date. All gains and
losses arising out of fluctuations in exchange rates are accounted for
in the Statement of Profit and Loss.
Exchange differences on forward exchange contracts, entered into for
hedging foreign exchange fluctuation risk in respect of an existing
asset/liability, are recognized in the Statement of Profit and Loss in
the reporting period in which the exchange rate changes. Premium /
Discount on forward exchange contracts is amortized over the period of
the contract.
j) Borrowing costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets, as defined in Accounting Standard 16 on Borrowing
Costs are capitalized as part of the cost of the asset up to the date
when the asset is ready for its intended use. Other borrowing costs are
expensed as incurred.
k) Income Tax
Income taxes are accounted for in accordance with Accounting Standard
22 on Accounting for Taxes on Income. Taxes comprise both current and
deferred tax.
Current tax is measured at the amount expected to be paid to /recovered
from the taxation authorities, using the applicable tax rates and tax
laws.
The tax effect of the timing differences that result between taxable
income and accounting income and are capable of reversal in one or more
subsequent periods are recorded as a deferred tax asset or deferred tax
liability. They are measured using the substantively enacted tax rates
and tax regulations.
The carrying amount of deferred tax assets at each balance sheet date
is reduced to the extent that it is no longer reasonably certain that
sufficient future taxable income will be available against which the
deferred tax asset can be realized.
l) Earnings Per Share
The Company reports basic and diluted Earnings per Share (EPS) in
accordance with Accounting Standard 20 on Earnings per Share. Basic EPS
is computed by dividing the net profit or loss for the year
attributable to equity shareholders by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed by
dividing the net profit or loss for the year attributable to equity
shareholders by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of all dilutive
potential equity shares, except where the results are anti-dilutive.
m) Operating leases
Operating lease payments are recognized as an expense in the Statement
of Profit and Loss on the following basis, as applicable:
i) A percentage of restaurant sales as provided for in the lease
agreement
ii) In the ratio of forecasted sales over the balance lease period
n) Securities Expenses
Expenses on issue of securities are written off to the securities
premium account in accordance with Section 78 of the Act.
o) Cash Flow Statement
The Cash Flow Statement is prepared by the indirect method set out in
Accounting Standard 3 on Cash Flow Statements and presents the cash
flows by operating, investing and financing activities of the Company.
Cash and Cash equivalents presented in the Cash Flow Statement consist
of cash on hand and unencumbered bank balances.
p) Contingent liabilities
Contingent Liabilities as defined in Accounting Standard 29 on
Provisions, Contingent Liabilities and Contingent Assets are disclosed
by way of notes to the accounts. Disclosure is not made if the
possibility of an outflow of future economic benefits is remote.
Provision is made if it becomes probable that an outflow of future
economic benefits will be required to settle the obligation.
Mar 31, 2012
A) Basis of preparation of financial Statements.
The financial statements have been prepared under the historical cost
convention in accordance with Generally Accepted Accounting Principles
and the provisions of the Companies Act, 1956.
The Ministry of Corporate Affairs revised Schedule VI to the Act for
financial years commencing on or after 1 April 2011. The Balance Sheet,
Statement of Profit and Loss and the comparative financial information
for the previous year have accordingly been prepared and presented with
disclosures as required under the Revised Schedule VI.
b) Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates and
differences between actual results and estimates are recognized in the
periods in which the results are known / materialize.
c) Fixed Assets and Depreciation/Amortization
Tangible Assets are stated at their cost of acquisition less
accumulated depreciation and impairment losses.
Cost comprises of all costs incurred to bring the assets to their
location and working condition.
Assets acquired under finance leases are accounted for at the inception
of the lease in accordance with Accounting Standard 19 on Leases at the
lower of the fair value of the asset and present value of minimum lease
payments.
Depreciation on assets is provided, pro-rata for the period of use, by
the written down value method at the rates prescribed in Schedule XIV
to the Act. Assets costing less than Rs. 5,000 are depreciated at 100%
Leasehold improvements are depreciated over the lower of the lease
period and the management's estimate of the useful life of the asset.
Intangible assets are stated at their cost of acquisition, less
accumulated amortization and impairment losses. An intangible asset is
recognized, where it is probable that the future economic benefits
attributable to the asset will flow to the enterprise and where its
cost can be reliably measured. The depreciable amount of intangible
assets is allocated over the best estimate of its useful life on a
straight-line basis.
The company capitalizes software costs where it is reasonably estimated
that the software has an enduring useful life. Software is depreciated
over the management's estimate of its useful life of five years.
Trademarks are amortized uniformly over a period of five years.
d) Impairment of Assets
An asset is considered as impaired in accordance with Accounting
Standard 28 on Impairment of Assets when at the balance sheet date
there are indications of impairment and the carrying amount of the
asset, or where applicable the cash generating unit to which the asset
belongs, exceeds its recoverable amount (i.e. the higher of the asset's
net selling price and value in use). The carrying amount is reduced to
the recoverable amount and the reduction is recognized as an impairment
loss in the Statement of Profit and Loss.
e) Investments
Investments are classified as current or long term in accordance with
Accounting Standard 13 on Accounting for Investments.
Current investments are stated at the lower of cost and fair value. Any
reduction in the carrying amount and any reversals of such reductions
are charged or credited to the Statement of Profit and Loss.
Long term investments are stated at cost. Provision for diminution is
made to recognize a decline, other than temporary, in the value of such
investments.
f) Revenue Recognition
Revenue is recognized when it is earned and no significant uncertainty
exists as to its realization or collection.
Revenue from restaurant and sweet shop sales (food and beverages) is
recognized upon rendering of service. Sales are net of discounts. Value
added tax is reduced from sales.
The Company also operates through franchise arrangements with third
parties in terms of which the third parties are permitted to use the
Company's established trademarks :
Initial Access Premium Fee charged to franchisees, in consideration of
being considered as competent to open a restaurant under a Company
owned trademark, is recognized on formalization of the franchise
agreement. The Initial Access Premium Fee is non - refundable,
regardless of whether the restaurant outlet under the franchise
agreement commences operations or not.
Royalty and Management Fee charged to franchisees for the use of the
trademarks is calculated as a percentage of monthly sales of the
restaurant and accrued for in line with restaurant sales.
Revenue from displays and sponsorships are recognized based on the
period for which the products or the sponsor's advertisements are
promoted/displayed.
In respect of gift vouchers and point awards scheme operated by the
company, sales are recognized when the gift vouchers or points are
redeemed and on sale of meals to customers.
g) Inventories
Inventories are measured at the lower of cost and net realizable value.
Cost of inventories comprises of all costs of purchase and other costs
incurred in bringing the inventories to their present condition and
location. Cost of materials is determined by the FIFO method.
h) Employee Benefits
Compensation to employees for services rendered is measured and
accounted for in accordance with Accounting Standard 15 on Employee
Benefits.
Employee Benefits such as salaries, allowances, non-monetary benefits
and employee benefits under defined contribution plans such as
provident and other funds, which fall due for payment within a period
of twelve months after rendering service, are charged as expense to the
Statement of Profit and Loss in the period in which the service is
rendered.
Employee Benefits under defined benefit plans such as gratuity which
fall due for payment after completion of employment are measured by the
projected unit credit method, on the basis of actuarial valuations
carried out by third party actuaries at each balance sheet date. The
company's obligations recognized in the balance sheet represent the
present value of obligations as reduced by the fair value of plan
assets, where applicable.
Actuarial Gains and losses are recognized immediately in the Statement
of Profit and Loss.
i) Foreign Currency Transactions
Transactions in foreign currencies are accounted for at the prevailing
rates of exchange on the date of the transaction.
Monetary items denominated in foreign currencies, are restated at the
prevailing rates of exchange at the Balance Sheet date. All gains and
losses arising out of fluctuations in exchange rates are accounted for
in the Statement of Profit and Loss.
Exchange differences on forward exchange contracts, entered into for
hedging foreign exchange fluctuation risk in respect of an existing
asset/liability, are recognized in the Statement of Profit and Loss in
the reporting period in which the exchange rate changes. Premium /
Discount on forward exchange contracts is amortized over the period of
the contract.
j) Borrowing costs
Borrowing costs attributable to the acquisition or construction of
qualifying assets, as defined in Accounting Standard 16 on Borrowing
Costs are capitalized as part of the cost of the asset up to the date
when the asset is ready for its intended use. Other borrowing costs are
expensed as incurred.
k) Income Tax
Income taxes are accounted for in accordance with Accounting Standard
22 on Accounting for Taxes on Income. Taxes comprise both current and
deferred tax.
Current tax is measured at the amount expected to be paid to /recovered
from the taxation authorities, using the applicable tax rates and tax
laws.
The Tax effect of the timing differences that result between taxable
income and accounting income and are capable of reversal in one or more
subsequent periods are recorded as a deferred tax asset or deferred tax
liability. They are measured using the substantively enacted tax rates
and tax regulations.
The carrying amount of deferred tax assets at each balance sheet date
is reduced to the extent that it is no longer reasonably certain that
sufficient future taxable income will be available against which the
deferred tax asset can be realized.
l) Earnings Per Share
The Company reports basic and diluted Earnings per Share (EPS) in
accordance with Accounting Standard 20 on Earnings per Share. Basic EPS
is computed by dividing the net profit or loss for the year
attributable to equity shareholders by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed by
dividing the net profit or loss for the year attributable to equity
shareholders by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of all dilutive
potential equity shares, except where the results are anti-dilutive.
m) Operating leases
Operating lease payments are recognized as an expense in the Statement
of Profit and Loss on the following basis, as applicable:
i) A percentage of restaurant sales as provided for in the lease
agreement
ii) In the ratio of forecasted sales over the lease period
Consequently, based on the current trend of sales, the company has
recognized an additional charge of Rs 27.17 Million towards lease
rentals.
n) Intial Public Offering Expenses
Initial Public Offering related expenses are carried in the balance
sheet to be written off to the Securities Premium account in accordance
with section 78 of the Companies Act 1956 and to the extent the
Securities Premium account is unable to absorb the costs, expensed to
the Statement of Profit and Loss on completion of listing (refer note I
above).
o) Cash Flow Statement
The Cash Flow Statement is prepared by the indirect method set out in
Accounting Standard 3 on Cash Flow Statements and presents the cash
flows by operating, investing and financing activities of the Company.
Cash and Cash equivalents presented in the Cash Flow Statement consist
of cash on hand and unencumbered bank balances.
p) Contingent liabilities
Contingent Liabilities as defined in Accounting Standard 29 on
Provisions, Contingent Liabilities and Contingent Assets are disclosed
by way of notes to the accounts. Disclosure is not made if the
possibility of an outflow of future economic benefits is remote.
Provision is made if it becomes probable that an outflow of future
economic benefits will be required to settle the obligation.
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