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Notes to Accounts of Quick Heal Technologies Ltd.
Mar 31, 2025
m) Provisions
A provision is recognized when the Company has a
present obligation as a result of past event; it is probable
that an outflow of resources embodying economic
benefits will be required to settle the obligation, and
a reliable estimate can be made of the amount of the
obligation.
When the Company expects some or all of a provision
to be reimbursed, for example, under an insurance
contract, the reimbursement is recognized as a
separate asset, but only when the reimbursement is
virtually certain. The expense relating to a provision is
presented in the statement of profit and loss net of any
reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to the
liability. When discounting is used, the increase in the
provision due to the passage of time is recognized as a
finance cost.
n) Contingent liabilities
A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed
by the occurrence or non-occurrence of one or more
uncertain future events beyond the control of the
Company or a present obligation that is not recognized
because it is not probable that an outflow of resources
will be required to settle the obligation. A contingent
liability also arises in extremely rare cases where
there is a liability that cannot be recognized because
it cannot be measured reliably. The Company does
not recognize a contingent liability but discloses its
existence in the standalone financial statements.
o) Retirement and other employee benefits
(i) Post-employment benefits
⢠Defined contribution plan
The Company makes payment to provident
fund scheme which is defined contribution
plan. The contribution paid/payable under
the schemes is recognized in the statement
of profit and loss during the period in which
the employee renders the related service.
The Company has no further obligations
under these schemes beyond its periodic
contributions.
The Company recognize contribution
payable to the provident fund scheme as an
expenditure, when an employee renders the
related services. If the contribution payable
to the scheme for services received before
balance sheet date exceeds the contribution
already paid, the deficit payable to the
scheme is recognized as a liability after
deducting the contribution already paid. If
the contribution already paid exceeds the
contribution due for services received before
the balance sheet date, then the excess
recognized as an asset to the extent that
the pre-payment will lead to, for example, a
reduction in future payment or cash refund.
⢠Defined benefit plan
The Company operates a defined benefit plan
for its employees, viz. gratuity. The present
value of the obligation under such defined
benefit plans is determined based on the
actuarial valuation using the Projected Unit
Credit Method as at the date of the Balance
sheet. The fair value of plan asset is reduced
from the gross obligation under the defined
benefit plans, to recognize the obligation on
a net basis.
Re-measurements, comprising of actuarial
gains and losses, the effect of the asset
ceiling, excluding amounts included in net
interest on the net defined benefit liability and
the return on plan assets (excluding amounts
included in net interest on the net defined
benefit liability), are recognized immediately
in the Balance Sheet with a corresponding
debit or credit to retained earnings through
OCI in the period in which they occur. Re¬
measurements are not reclassified to the
statement of profit and loss in subsequent
periods.
Past service costs are recognized in
statement of profit and loss on the earlier of:
⢠the date of the plan amendment or
curtailment; and
⢠the date that the Company recognizes
related restructuring costs
Net interest is calculated by applying the
discount rate to the net defined benefit
liability or asset. The Company recognizes
the following changes in the net defined
benefit obligation as an expense in the
statement of profit and loss:
⢠service costs comprising current service
costs, past-service costs, gains and
losses on curtailments and non-routine
settlements; and
⢠net interest expense or income.
(ii) Short-term employee benefits
The distinction between short term and long
term employee benefits is based on expected
timing of settlement rather than the employee''s
entitlement benefits. All employee benefits
payable within twelve months of rendering the
service are classified as short term benefits. Such
benefits include salaries, wages, bonus, short
term compensated absences, awards, ex-gratia,
performance pay, etc. and are recognized in the
period in which the employee renders the related
service.
(iii) Other long-term employment benefits:
The Company treats accumulated leave expected
to be carried forward beyond twelve months, as
long-term employee benefit for measurement
purposes. Such long-term compensated
absences are provided for based on the actuarial
valuation using the projected unit credit method
at the year end. Actuarial gains/losses are
immediately taken to the statement of profit and
loss and are not deferred. The Company presents
the leave as a current liability in the Balance Sheet
to the extent it does not have an unconditional
right to defer its settlement for 12 months after
the reporting date. Where the Company has the
unconditional legal and contractual right to defer
the settlement for a period beyond 12 months, the
same is presented as non-current liability.
p) Share based payments
Employees of the Company receive remuneration in the
form of share-based payments, whereby employees
render services as consideration for equity instruments
(equity-settled transactions).
Equity-settled transactions
The cost of equity-settled transactions is determined
by the fair value at the date when the grant is made
using an appropriate valuation model. (refer note 35)
That cost is recognized, together with a corresponding
increase in share based payment reserves in equity,
over the period in which the performance and/or
service conditions are fulfilled in employee benefits
expense. The cumulative expense recognized for
equity-settled transactions at each reporting date until
the vested date reflects the extent to which the vesting
period has expired and the Companyâs best estimate
of the number of equity instruments that will ultimately
vest. The statement of profit and loss expense or credit
for a period represents the movement in cumulative
expense recognized as at the beginning and end of that
period and is recognized in employee benefits expense.
No expense is recognized for awards that do not
ultimately vest, except for equity-settled transactions
for which vesting is conditional upon a market or
non-vesting condition. These are treated as vesting
irrespective of whether or not the market or non¬
vesting condition is satisfied, provided that all other
performance and/or service conditions are satisfied.
When the terms of an equity-settled award are modified,
the minimum expense recognized is the expense had
the terms not been modified, if the original terms of the
award are met. An additional expense is recognized for
any modification that increases the total fair value of
the share-based payment transaction, or is otherwise
beneficial to the employee as measured at the date of
modification.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted
earnings per share.
q) Financial instruments
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.
⢠Financial assets
Initial recognition and measurement of financial
assets
All financial assets are recognized initially at
fair value plus, in the case of financial assets
not recorded at fair value through profit or loss,
transaction costs that are attributable to the
acquisition of the financial asset.
Subsequent measurement
For purposes of subsequent measurement,
financial assets are classified in the following
categories:
- debt instruments at amortized cost
- debt instruments at fair value through profit
or loss (FVTPL)
- equity instruments measured at fair value
through profit or loss (FVTPL) / other
comprehensive income (FVTOCI)
Debt instruments at amortized cost
A ''debt instrumentâ is measured at the amortized
cost if both the following conditions are met:
- the asset is held within a business model
whose objective is to hold assets for
collecting contractual cash flows, and
- contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on
the principal amount outstanding.
This category is the most relevant to the
Company. After initial measurement, such
financial assets are subsequently measured at
amortized cost using the EIR method. Amortized
cost is calculated by taking into account any
discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR
amortization is included in finance income in the
statement of profit and loss. The losses arising
from impairment are recognized in the statement
of profit and loss.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments.
Any debt instrument, which does not meet the
criteria for categorization as at amortized cost or
as FVTOCI, is classified as at FVTPL.
Debt instruments included within the FVTPL
category are measured at fair value with all
changes recognized in the statement of profit and
loss.
Equity investments
All equity investments in scope of Ind AS 109
are measured at fair value. Equity instruments
which are held for trading and contingent
consideration recognized by an acquirer in
a business combination to which Ind AS103
applies are classified as at FVTPL. For all other
equity instruments, the Company may make
an irrevocable election to present subsequent
changes in the fair value in other comprehensive
income. The Company makes such election
on an instrument-by-instrument basis. The
classification is made on initial recognition and is
irrevocable.
The Company has decided to classify equity
instrument as FVTOCI and all fair value changes
on the instrument, excluding dividends, are
recognized in the OCI. There is no recycling of
the amounts from OCI to statement of profit and
loss, even on sale of investment. However, the
Company may transfer the cumulative gain or
loss within equity.
Equity instruments included within the FVTPL
category are measured at fair value with all
changes recognized in the statement of profit and
loss.
Derecognition
A financial asset (or, where applicable, a part of
a financial asset or part of a Company of similar
financial assets) is primarily derecognized when:
- The rights to receive cash flows from the
asset have expired, or
- The Company has transferred its rights to
receive cash flows from the asset or has
assumed an obligation to pay the received
cash flows in full without material delay
to a third party under a ''pass-through''
arrangement; and either (a) the Company
has transferred substantially all the risks and
rewards of the asset, or (b) the Company has
neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset.
When the Company has transferred its rights to
receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates
if and to what extent it has retained the risks
and rewards of ownership. When it has neither
transferred nor retained substantially all of the
risks and rewards of the asset, nor transferred
control of the asset, the Company continues to
recognize the transferred asset to the extent of
the Company''s continuing involvement. In that
case, the Company also recognizes an associated
liability. The transferred asset and the associated
liability are measured on a basis that reflects
the rights and obligations that the Company has
retained.
Continuing involvement that takes the form of a
guarantee over the transferred asset is measured
at the lower of the original carrying amount of the
asset and the maximum amount of consideration
that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company
applies expected credit loss (ECL) model for
measurement and recognition of impairment loss
on the following financial assets and credit risk
exposure:
- Trade receivables or any contractual right to
receive cash or another financial asset that
result from transactions that are within the
scope of Ind AS 115.
The Company follows ''simplified approach'' for
recognition of impairment loss allowance on
trade receivable.
The application of simplified approach does
not require the Company to track changes in
credit risk. Rather, it recognizes impairment
loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.
For recognition of impairment loss on other
financial assets and risk exposure, the Company
determines that whether there has been a
significant increase in the credit risk since initial
recognition. If credit risk has not increased
significantly, 12-month ECL is used to provide
for impairment loss. However, if credit risk has
increased significantly, lifetime ECL is used. If, in a
subsequent period, credit quality of the instrument
improves such that there is no longer a significant
increase in credit risk since initial recognition,
then the entity reverts to recognising impairment
loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses
resulting from all possible default events over
the expected life of a financial instrument. The
12-month ECL is a portion of the lifetime ECL
which results from default events that are possible
within 12 months after the reporting date.
ECL is the difference between all contractual cash
flows that are due to the Company in accordance
with the contract and all the cash flows that the
entity expects to receive (i.e., all cash shortfalls),
discounted at the original EIR. When estimating
the cash flows, an entity is required to consider:
- All contractual terms of the financial
instrument (including prepayment,
extension, call and similar options) over the
expected life of the financial instrument.
However, in rare cases when the expected
life of the financial instrument cannot be
estimated reliably, then the entity is required
to use the remaining contractual term of the
financial instrument; and
- Cash flows from the sale of collateral held or
other credit enhancements that are integral
to the contractual terms
As a practical expedient, the Company uses a
provision matrix to determine impairment loss
allowance on portfolio of its trade receivables.
The provision matrix is based on its historically
observed default rates over the expected life of
the trade receivables and is adjusted for forward¬
looking estimates. At every reporting date, the
historical observed default rates are updated and
changes in the forward-looking estimates are
analyzed.
ECL impairment loss allowance (or reversal)
recognized during the period is recognied as
expense/ (income) in the statement of profit and
loss. This amount is reflected under the head
''Other expensesâ in the statement of profit and
loss. The balance sheet presentation for various
financial instruments is described below:
- Financial assets measured as at amortized
cost and contractual revenue receivables:
ECL is presented as an allowance, i.e., as an
integral part of the measurement of those
assets in the balance sheet. The allowance
reduces the net carrying amount. Until the
asset meets write-off criteria, the Company
does not reduce impairment allowance from
the gross carrying amount; and
- Loan commitments and financial guarantee
contracts: ECL is presented as a provision in
the balance sheet, i.e. as a liability.
For assessing increase in credit risk and
impairment loss, the Company combines
financial instruments on the basis of shared
credit risk characteristics with the objective of
facilitating an analyzis that is designed to enable
significant increases in credit risk to be identified
on a timely basis. The Company does not have
any purchased or originated credit-impaired
(POCI) financial assets, i.e., financial assets which
are credit impaired on purchase/ origination.
⢠Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial
recognition, loans and borrowings or payables as
appropriate.
All financial liabilities are recognized initially at fair
value.
The Companyâs financial liabilities include trade
and other payables.
Subsequent measurement
The measurement of financial liabilities depends
on their classification, as described below:
Derecognition
A financial liability is derecognized when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the
terms of an existing liability are substantially
modified, such an exchange or modification
is treated as the derecognition of the original
liability and the recognition of a new liability. The
difference in the respective carrying amounts is
recognized in the statement of profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the standalone
balance sheet if there is a currently enforceable
legal right to offset the recognized amounts
and there is an intention to settle on a net basis,
to realize the assets and settle the liabilities
simultaneously.
r) Investment in subsidiaries
Investment in subsidiaries is carried at cost less
accumulated impairment in the standalone financial
statements
s) Cash and cash equivalents
Cash and cash equivalents in the balance sheet
comprize cash at banks and on hand and short-term
deposits with original maturity of three months or less,
which are subject to an insignificant risk of changes in
value. In the statement of cash flows, cash and cash
equivalents consist of cash and short-term deposits,
as defined above, net of outstanding bank overdrafts as
they are considered as integral part of the Companyâs
cash management.
t) Cash dividend
The Company recognizes a liability to make cash
distributions to the equity holders of the Company
when the distribution is authorized and the distribution
is no longer at the discretion of the Company. As per the
provisions of the Act, a distribution is authorized when
it is approved by the shareholders. A corresponding
amount is recognized directly in equity.
u) Earnings per share (EPS)
Basic EPS is calculated by dividing the Companyâs
earnings for the year attributable to ordinary equity
shareholders of the Company by the weighted average
number of ordinary shares outstanding during the
year. The earnings considered in ascertaining the
Companyâs EPS comprise the net profit after tax
attributable to equity shareholders. The weighted
average number of equity shares outstanding during
the year is adjusted for events of bonus issue, bonus
element in a rights issue to existing shareholders,
share split, and reverse share split (consolidation of
shares) other than the conversion of potential equity
shares that have changed the number of equity
shares outstanding, without a corresponding change
in resources.
The diluted EPS is calculated on the same basis as
basic EPS, after adjusting for the effects of potential
dilutive equity shares. There were no instruments
excluded from the calculation of diluted earnings per
share for the periods presented because of an anti¬
dilutive impact.
v) Segment reporting
An operating segment is a component of a company
whose operating results are regularly reviewed by the
Companyâs Chief Operating Decision Maker (CODM) to
make decisions about resource allocation and assess
its performance and for which discrete financial
information is available. The Company has identified
the Managing Directors of the Company as its CODM.
Q SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
The preparation of the Companyâs Standalone financial
statements requires management to make judgements,
estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities, and
the accompanying disclosures, including the disclosure of
contingent liabilities. Uncertainty about these assumptions
and estimates could result in outcomes that require a
material adjustment to the carrying amount of assets or
liabilities affected in future periods.
(a) Judgements
In the process of applying the Companyâs accounting
policies, the management has made the following
judgements, which have the most significant effect on
the amounts recognized in the Standalone financial
statements.
Revenue Recognition :
Significant Judgement is required for identifying
separate performance obligations, determination
of basis and its appropriateness for allocation of
transaction price to the identified performance
obligations and recognition of such identified
performance obligations based on timing of
satisfaction (i.e. over time or point in time). The
Company assess each promise in a contract
with customer to transfer a goods or service to
identify performance obligation. These contracts
generally meet the criteria for considering sale of
security software and related services as separate
performance obligation, wherein revenue is recognised
as and when control is transferred to the customer for
each performance obligation. The transaction price is
allocated to each performance obligation that depicts
the amount of consideration which the Company
expects to be entitled in exchange for transferring
the promised goods or services to the customer.
In Contracts, where arrangement is determined to
constitute a single performance obligation revenue
is recognised over the license period, reflecting the
continuous transfer of control to the customer.
(b) Estimates and assumptions
The key assumptions concerning the future and
other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing
a material adjustment to the carrying amounts
of assets and liabilities within the next financial
year, are described below. The Company based its
assumptions and estimates on parameters available
when the Standalone financial statements were
prepared. Existing circumstances and assumptions
about future developments, however, may change due
to market changes or circumstances arising that are
beyond the control of the Company. Such changes are
reflected in the assumptions when they occur.
⢠Expected Credit loss on trade receivables
The Company uses a provision matrix to
determine impairment loss allowance on
portfolio of its trade receivables. The provision
matrix is based on its historically observed
default rates over the expected life of the trade
receivables and is adjusted for forward-looking
estimates. At every reporting date, the historical
observed default rates are updated and changes
in the forward-looking estimates are analyzed.
In addition to that management also makes
specific provision in case the recovery is not
expected based on their discussion with the
customer''s.
⢠Fair value measurement of financial instruments
- Investment in equity instruments and
preference shares
When the fair values of financial assets and
financial liabilities recorded in the balance sheet
cannot be measured based on quoted prices
in active markets, their fair value is measured
using valuation techniques including the DCF
model. The inputs to these models are taken from
observable markets where possible, but where this
is not feasible, a degree of judgement is required
in establishing fair values. Judgements include
considerations of inputs such as liquidity risk,
credit risk and volatility. Changes in assumptions
about these factors could affect the reported fair
value of financial instruments. Refer note 43 for
further disclosures.
1.1 Standards (including amendments) issued but not yet
effective
Ministry of Corporate Affairs ("MCA") notifies new
standard or amendments to the existing standards.
There is no such notification which would have been
applicable from April 01,2025.
The Companyâs investment properties consist of office premises in India given on non-cancellable lease for a period of 11
months to 5 years.
Measurement of fair values of investment properties
As at March 31,2025, the fair values of the property is '' 75.91 (March 31,2024''65.79). The valuations are based on valuations
performed by Magnitas Valuation & Advisory Services LLP and M/s Rao associates (Registered Valuer & Chartered Engineer),
accredited independent valuer. The Valuer are a specialist in valuing these types of investment properties. A valuation model
in accordance with "internationally accepted valuation standards" that recommended by the International Valuation Standards
Committee has been applied.
Fair value hierarchy disclosures for investment properties have been provided in Note 44.
1. The Company has no restriction on the realizability of its investment properties and no contractual obligations to purchase, or
develop investment properties.
2. The fair valuation is based on current prices in the active market for similar properties. The main inputs used are quantum,
area, location, demand, age of the property. The fair value is based on valuation performed by an accredited independent valuer.
Fair valuation is based on Market and income approach for valuation. The fair value measurement is categorised in level 2 fair
value hierarchy.
Key assumption and inputs
The Company have adopted market approach to estimate the value of property, market rate is estimated based on Prime data
source & the rate applicable at surrounding vicinity.
1. Prime Source: Recorded sales tranaction in the vicinity of property.
2. Secondary sources: Local enquiry about the rates, web advertisement about the land rates, ready reckoner/ guideline rates.
(b) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares having par value of '' 10 per share. Each holder of equity shares is entitled to
one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors
is subject to approval of the shareholders in ensuing Annual General Meeting.
The Board of Directors, in their meeting on April 25, 2024, proposed a final dividend of '' 3 per equity share and the same was
approved by the shareholders at the Annual General Meeting held on September 06, 2024. The amount was recognized as
distributions to equity shareholders during the year ended March 31,2025 and the total appropriation was '' 16.13 including Tax
deduction at source.
The Board of Directors, in their meeting on April 17, 2023, proposed a final dividend of '' 2.50 per equity share and the same
was approved by the shareholders at the Annual General Meeting held on August 11, 2023. The amount was recognized as
distributions to equity shareholders during the year ended March 31,2024 and the total appropriation was '' 13.27 including Tax
deduction at source.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the
Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held
by shareholders.
ES OTHER EQUITY (Contd.)
Amalgamation reserve
Pursuant to the scheme of amalgamation ("the Scheme") sanctioned by the Honourable High Court of Bombay, Cat Labs Private
Limited (CLPL), subsidiary of the Company, had been merged with the Company with effect from April 01,2010. Accordingly, an
amount of '' 2.65 was recorded as amalgamation reserve.
General reserve
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified
percentage in accordance with applicable regulations. Consequent to introduction of Companies Act 2013, the requirement
to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount
previously transferred to the general reserve can be utilized only in accordance with the specific requirements of Companies
Act, 2013.
Capital redemption reserve
The Company had bought back its share in the past. In accordance with section 69 of the Companies Act, 2013, Capital
Redemption Reserve is created (which represent nominal value of share bought back).
Retained earnings
Retained Earnings represent surplus i.e., balance of the relevant column in the Statement of Changes in Equity.
Share based payment reserve
The Company has two employee stock option schemes under which options to subscribe for the Companyâs shares have been
granted to certain executives and senior employees. The share-based payment reserve is used to recognize the value of equity-
settled share-based payments provided to employees, including key management personnel, as part of their remuneration.
Refer note 35 for further details of these plans.
Fair value through other comprehensive income reserve
The Company has elected to recognize changes in the fair value of certain investments in equity securities in other comprehensive
income. These changes are accumulated within the equity instruments through other comprehensive income within equity. The
Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognized.
i) Direct tax
The claims against the Company primarily represent demands arising on completion of assessment proceedings under the
Income Tax Act, 1961. These claims are majorly on account of disallowance of expenses pertaining to exempt income as per
section 14A read with rule 8D of the Income Tax Act, 1961.
These matters are pending before various Income Tax Authorities and the Management including its tax advisors expect that its
position will likely be upheld on ultimate resolution and will not have a material effect on the Companyâs financial position and
results of operations.
ii) Indirect tax
The claim against the Company represented a demand arising on account of mismatch of ITC under the Goods and Services
Act, 2017. This matter was pending before Assistant Commissioner CGST and the Management including its tax advisors
expected that its position will likely be upheld on ultimate resolution and will not have a material effect on the Companyâs
financial position and results of operations. The said demand is dropped by the office of the assistant commissioner of CGST
vide Order No 51/Adj/DIV-/C.Tax/GST/24-25 DIN - 20250268UC000000FB1F dated February 04, 2025.
iii) Provident fund
During the year ended March 31,2025, the Regional P.F. Commissioner ("RPFC") passed an order under Section 7A & 7Q of the
Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952 ("Act") demanding '' 5.01 (including interest of '' 2.49)
on the grounds that it failed to remit Provident Fund ("PF") on wages for its employees for the period from September 2014 to
March 2019 for certain allowances of salary. The Company filed an appeal before the Central Government Industrial Tribunal
Cum-Labour Court ("CGIT") challenging the Employeesâ Provident Fund Organisationâs ("EPFO") order along with the application
under Section 7O of the Act seeking a waiver from pre-deposit of the alleged Provident Fund Contributions till the final disposal
of the Appeal. The CGIT, after hearing the submissions made, passed an Order and directed RPFC, not to proceed with the
recovery against the Company on depositing 30% of the total amount assessed. The Company, based on the legal counselâs
opinion, is of the view that the claim made by the RPFC is not probable, and accordingly no provision is recorded in the financial
statement of the year ended March 31,2025.
e. Other litigations
An erstwhile distributor had filed a First Information Report (FIR) in May 2016 at Uttarpara Police Station, Hooghly District, West
Bengal, against certain directors of the Company, their spouses, and other associates, alleging embezzlement of his investment
and misappropriation of shares. Pursuant to this, the police had filed a charge sheet. Subsequently, the Company, along with
the concerned directors and other parties, filed petitions seeking quashing of the proceedings before the Honâble High Court at
Calcutta during the financial year ended March 31,2018. During the current financial year ended March 31,2025, the Honâble
High Court at Calcutta, vide its judgment dated June 25, 2024, has quashed all the aforesaid proceedings
The management assessed that the fair value of cash and cash equivalents, trade receivables, trade payables and other current
financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.
The amortized cost using effective interest rate (EIR) of non-current financial assets consisting of security and term deposits
are not significantly different from the carrying amount.
Financial assets that are neither past due nor impaired include cash and cash equivalents, security deposits, term deposits, and
other financial assets.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or liquidation sale.
IE1 FAIR VALUE HIERARCHY
The following table provides the fair value measurement hierarchy of the Companyâs assets and liabilities:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included with in Level 1 that the observable for the asset or liability, either directly (i.e.
as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data unobservable inputs.
The following table presents the fair value measurement hierarchy of financial assets and liabilities measured at fair value on a
recurring basis as at March 31,2024 and March 31,2023.
The following methods and assumptions were used to estimate the fair values:
(i) The fair value of the quoted mutual fund are based on the price quotations at reporting date. The fair value of unquo
instruments, related parties and other financial liabilities as well as other non-current financial liabilities is estimatec
discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturit
(ii) The fair values of the unquoted equity and preference shares have been estimated using a discounted cash flow (D
model. The valuation requires management to make certain assumptions about the model inputs, including forecast c
flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasons
assessed and are used in management''s estimate of fair value for these unquoted equity and preference investments.
(a) Considering the financial position, liquidity condition, market conditions and geopolitical scenario in Israel, management
based on its assessment the Company has recorded a fair value loss in other comprehensive income (FVOCI) amounting to
'' 13.45 in the year ended March 31,2024. Accordingly, the carrying value of investment made in L7 Defense Limited has been
considered as Nil during the year ended March 31,2025.
EH FINANCIAL INSTRUMENTS RISK MANAGEMENT OBJECTIVES AND POLICIES
The Companyâs principal financial liabilities comprise trade and other payables. The main purpose of these financial liabilities
is to finance the Companyâs operations and to support its operations. The Companyâs principal financial assets include
investments, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company
does not have borrowings and derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Board of Directors review and agree policies for
managing each of these risks, which are summarised below:
(a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market
prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and
commodity risk. Financial instruments affected by market risk include deposits, investments, receivables, payables, advances
and other financial instruments. From the perspective of the Company, the impact of the foreign currency risk, material price
risk, interest rate risk and other price risk is not significant.
The Company has certain financial assets and financial liabilities in foreign currencies which expose the Company to foreign
currency risks. The foreign currency exposure of the Company has been disclosed in Note 39 to the standlaone financial
statements.
Foreign currency sensitivity
The Company does not take any steps to hedge the foreign currency exposure as mentioned above as the Management believes
that there is natural hedge to some extent and balance exposure not really having significant impact on the financial health of
the Company.
F5B FINANCIAL INSTRUMENTS RISK MANAGEMENT OBJECTIVES AND POLICIES (Contd.)
(b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading
to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its
financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Trade receivables
Customer credit risk is managed by the Companyâs established policy, procedures and control relating to customer credit risk
management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits
are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored. On account of
adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company
follows simplified approach for recognition of impairment loss allowance on Trade receivables.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance
with the Companyâs policy. Investments of surplus funds are made with banks in terms of fixed deposits and investment in
designated mutual funds. Investment decision in mutual fund is taken with the assistance from appointed agent. Credit risk on
cash deposits is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings
assigned by international and domestic credit rating agencies. Other investments primarily include investment in liquid mutual
fund units of reputed companies where historically, the Company has not incurred any loss due to credit risk.
(c) Liquidity risk
The Company had no outstanding bank borrowings as of March 31,2025 and March 31,2024. The working capital as at March
31,2025 was '' 291.96 (March 31,2024: '' 289.60) including cash and cash equivalents.
As at March 31,2025 and March 31, 2024, the outstanding employee obligations were '' 18.85 and '' 15.57 respectively which
have been substantially funded. Accordingly, no significant liquidity risk is perceived.
The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted
payments.
1E1 AUDIT TRAIL
The Company has used an accounting software, for maintaining its books of account which has a feature of recording audit
trail (edit log) facility, except during the year ended in March 31,2025 and March 31,2024 audit trail feature was not enabled at
the data base level, in respect of Accounting Software to log any changes at Database level. Further, the audit trail facility has
been operated with effect from April 19, 2024 for all relevant transactions recorded in the accounting software, except at the
database level.
Further, no instance of audit trail feature being tampered with was noted in respect of the accounting software where enabled.
Additionally, the audit trail of the preceding year has been preserved by the Company as per the statutory requirements for
record retention to the extent it was enabled and recorded in the accounting software.
WH TITLE DEEDS OF IMMOVABLE PROPERTIES NOT HELD IN NAME OF THE COMPANY
The title deeds of all the immovable properties are held in the name of the Company.
PH LOANS OR ADVANCES IN THE NATURE OF LOANS ARE GRANTED TO PROMOTERS, DIRECTORS, KMPS AND THE
RELATED PARTIES (AS DEFINED UNDER COMPANIES ACT, 2013), EITHER SEVERALLY OR JOINTLY WITH ANY OTHER
PERSON, THAT ARE:
The Company has not granted any loans or advances in the nature of loans to promoters, directors and KMPs, either severally
or jointly with any other person.
EEI details of benami property held
The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company
for holding any Benami property.
1501 WILFUL DEFAULTER
The Company has not been declared wilful defaulter by any bank or financial institution or government or any government
authority.
KTi RELATIONSHIP WITH STRUCK OFF COMPANIES UNDER SECTION 248 OF THE COMPANIES ACT, 2013 OR SECTION
560 OF COMPANIES ACT, 1956,
The Company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or
section 560 of Companies Act, 1956,
|5E| REGISTRATION OF CHARGES OR SATISFACTION WITH REGISTRAR OF COMPANIES
The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
EEI COMPLIANCE WITH NUMBER OF LAYERS OF COMPANIES
The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the
Companies (Restriction on number of Layers) Rules, 2017.
1541 COMPLIANCE WITH APPROVED SCHEME(S) OF ARRANGEMENTS
The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial
year.
EEH UTILISATION OF BORROWED FUNDS AND SHARE PREMIUM:
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or
kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the
understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on
behalf of the Company (Ultimate Beneficiaries).
The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall
whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate
Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
ESI UNDISCLOSED INCOME
The Company does not have any undisclosed income which is not recorded in the books of account that has been surrendered
or disclosed as income during the year (and previous year) in the tax assessments under the Income Tax Act, 1961 (such as,
search or survey or any other relevant provisions of the Income Tax Act, 1961.
IS DETAILS OF CRYPTO CURRENCY OR VIRTUAL CURRENCY
The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
ESI THE CODE ON SOCIAL SECURITY 2020
The Code on Social Security 2020 (''the Codeâ) relating to employee benefits, during the employment and post-employment, has
received Presidential assent on September 28, 2020. The Code has been published in the Gazette of India. Further, the Ministry
of Labor and Employment has released draft rules for the Code on November 13, 2020. However, the effective date from which
the changes are applicable is yet to be notified and rules for quantifying the financial impact are also not yet issued.
The Company will assess the impact of the Code and will give appropriate impact in the Standalone financial statements in the
period in which, the Code becomes effective and the related rules to determine the financial impact are published. Based on a
preliminary assessment, the entity believes the impact of the change will not be significant.
Previous year figures have been regrouped/ reclassified to confirm presentation as per Ind AS and as required by Schedule III
of the Act.
The accompanying notes form an integral part of the standalone financial statements.
As per our report of even date For and on behalf of the Board of Directors of
For M S K A & Associates Quick Heal Technologies Limited
Chartered Accountants CIN: L72200MH1995PLC091408
ICAI Firm Registration Number: 105047W
Sd/- Sd/- Sd/- Sd/- Sd/- Sd/-
Shraddha D Khivasara Kailash Katkar Sanjay Katkar Vishal Salvi Ankit Maheshwari Sarang Hari Deshpande
Partner Chairman & Managing Director Joint Managing Director Chief Executive Officer Chief Financial Officer Company Secretary
Membership Number: 134285 DIN: 00397191 DIN: 00397277 Regs. No. ACS-18613
Place: Pune Place: Pune Place: Pune Place: Pune Place: Pune Place: Pune
Date: May 06, 2025 Date: May 06, 2025 Date: May 06, 2025 Date: May 06, 2025 Date: May 06, 2025 Date: May 06, 2025
Mar 31, 2024
EARNINGS PER SHARE (EPS)
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on exercise of stock options.
The Company declares and pays dividends in Indian rupees. Companies are required to pay/distribute dividend after deducting applicable taxes if any. The remittance of dividends outside India is governed by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.
The Board of Directors of the Company in their meeting held on April 25, 2024 recommended a final dividend of '' 3.00 per equity share for the financial year ended March 31, 2024. The payment is subject to the approval of shareholders in the AGM of the Company. If approved, would result in a net cash outflow of approximately '' 16.05.
ESI DISCLOSURE PURSUANT TO EMPLOYEE BENEFITS
A. Defined contribution plans:
Amount of'' 4.30 (March 31, 2023: '' 3.98) is recognised as expenses and included in note no. 26 "Employee benefit expense"
The Company has a defined benefit gratuity plan (funded) for its employees. The Companyâs defined benefit gratuity plan is a final salary plan for its employees, which requires contributions to be made to a separately administered fund. The scheme is funded with an insurance company in the form of a qualifying insurance policy.
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service as per the provisions of the Payment of Gratuity Act, 1972.
KE1 SHARE BASED ARRANGEMENTS Share based payment arrangement 2014
On February 6, 2014, the Board of Directors approved the Equity Settled ESOP Scheme 2014 for issue of stock options to the employees of the Company. According to the ESOP 2014, the employee selected by the Board of Directors from time to time will be entitled for scheme options, subject to satisfaction of the prescribed vesting conditions, viz., continued employment and performance parameters of employee. The contractual life (comprising the vesting period and the exercise period) of options and the other relevant terms of the grant are as below:
For share options exercised during the reporting period, the weighted average share price at the date of exercise, or if options were exercised on a regular basis throughout the reporting period, the entity may instead disclose the weighted average share price during the reporting period.
The weighted average share price at the date of exercise of these options, as at March 31,2024 was '' 390.71 (March 31,2023: '' 198.91)
Manner in which the fair value of the stock option granted during the period was determined:
There are no grants in financials ended March 31,2024 and March 31,2023 for share based payment arrangement 2014 Share based payment arrangement 2021
On March 10, 2021, the Board of Directors approved the Equity Settled ESOP Scheme 2021 for issue of stock options to the employees of the Company. According to the ESOP 2021, the employee selected by the Board of Directors from time to time will be entitled for scheme options, subject to satisfaction of the prescribed vesting conditions, viz., continued employment and performance parameters of employee. The contractual life (comprising the vesting period and the exercise period) of options and the other relevant terms of the grant are as below:
For share options exercised during the reporting period, the weighted average share price at the date of exercise, or if options were exercised on a regular basis throughout the reporting period, the entity may instead disclose the weighted average share price during the reporting period.
The weighted average share price at the date of exercise of these options, as at March 31,2024 was '' 404.42 (March 31,2023: '' 142.16)
Manner in which the fair value of the stock option granted during the period was determined:
The weighted average fair value of stock options granted during the year was '' 152.98 (March 31,2023: '' 78.03). The Black and Scholes valuation model has been used for computing the weighted average fair value considering the following inputs;
EEH COMMITMENTS AND CONTINGENCIES a. Operating lease - Company as a lessee
There are various office premises and warehouse which have been taken by the Company on lease. As per the lease agreements these are cancellable on 60- 90 days notice. Further, there are no restrictions imposed by lease agreements and there are no subleases. The Company has elected not to apply the requirements of Ind AS 116 to the short-term leases and, the lease payments associated with these leases are expensed as per the terms of lease agreement.
The Company has entered into operating leases for its investment properties (refer note 6) . These leases have terms ranging from eleven months to five years. Some of these leases include an annual escalation clause on rental prices based on prevailing market conditions.
During the year ended 31 March 2024''4.99 (31 March 2023: '' 3.58) was recognised in profit and loss in relation to rental income from the investment properties. (refer note 24)
i) There are numerous interpretative issues relating to the Supreme Court (SC) judgement on PF dated February 28, 2019. As a matter of caution, the Company has made a provision on a prospective basis from the date of the SC order. The Company will update its provision, on receiving further clarity on the subject.
The claims against the Company primarily represent demands arising on completion of assessment proceedings under the Income Tax Act, 1961. These claims are majorly on account of disallowance of expenses pertaining to exempt income as per section 14A read with rule 8D of the Income Tax Act, 1961.
These matters are pending before various Income Tax Authorities and the Management including its tax advisors expect that its position will likely be upheld on ultimate resolution, and will not have a material effect on the Companyâs financial position and results of operations.
iii) Indirect tax
The claim against the Company represents a demand arising on account of mismatch of ITC under the Goods and Services Act, 2017. This matter is pending before Assistant Commissioner CGST and the Management including its tax advisors expect that its position will likely be upheld on ultimate resolution, and will not have a material effect on the Companyâs financial position and results of operations.
e. Other litigations
An ex-distributor had filed First Information Report (FIR) in May, 2016 at Uttarpara Police Station, Hooghly District, West Bengal against certain directors of the Company, their wives and other associates alleging embezzlement of his investment and misappropriation of shares. The police had filed the charge sheet. The Company, its directors and others have filed Quashing Petitions before the Honâble High Court, Calcutta and obtained stay of trial court proceedings from time to time. The Company also believes that the police had neither conducted the investigation in proper and orderly manner in this matter nor has considered the materials and records placed before it by the Company including the statements of witnesses and thus Company have strong and sufficient arguments on facts and on point of law.
40 (b). Managerial remuneration
During the year ended March 31, 2024, due to inadequacy of profits earned by the Company, the remuneration paid to the Managing Director and Joint Managing Director of the Company exceeds the limits prescribed under Section 197 of the Companies Act, 2013 read with Schedule V to the Act, by '' 0.24. Further, the remuneration paid exceeds the limit prescribed under regulation 17(6)(e) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, by '' 1.72. The Company is in the process of placing this matter before the shareholders for seeking the requisite approvals at the forthcoming Annual General Meeting.
40 (c). During the year employee stock option were granted to key managerial personnel. The expenses on account of above share base payment recorded through the year ended March 31,2024 amounts to '' 2.21. (March 31,2023: '' Nil)
Terms and conditions of transactions with related parties
The sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended March 31,2024, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2023: '' Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
The Company is engaged in providing security software solutions. The Chief Operating Decision Maker (CODM) reviews the information pertaining to revenue of each of the target customer group (segments) as mentioned below. However, based on similarity of activities/products, risk and reward structure, organisation structure and internal reporting systems, the Company has structured its operations into one operating segment viz. cyber security platform and as such there is no separate reportable operating segment as defined by Ind AS 108 "Operating segments". For management purposes, the Company reports the details of operating segments based on the target customer groups as under:
- Consumer
- Enterprise and Government
In accordance with paragraph 4 of Ind AS 108 ''Operating segmentsâ, the Company has disclosed segment information only on the basis of the consolidated financial statement.
The management assessed that the fair value of cash and cash equivalents, trade receivables, trade payables and other current financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments. The amortised cost using effective interest rate (EIR) of non-current financial assets consisting of security and term deposits are not significantly different from the carrying amount.
Financial assets that are neither past due nor impaired include cash and cash equivalents, security deposits, term deposits, and other financial assets.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following table provides the fair value measurement hierarchy of the Companyâs assets and liabilities:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included with in Level 1 that the observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data unobservable inputs.
The following table presents the fair value measurement hierarchy of financial assets and liabilities measured at fair value on a recurring basis as at March 31,2024 and March 31,2023.
There have been no transfers among Level 1, Level 2 and Level 3 during the year.
The following methods and assumptions were used to estimate the fair values:
(i) The fair value of the quoted mutual fund are based on the price quotations at reporting date. The fair value of unquoted instruments, related parties and other financial liabilities as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
(ii) The fair values of the unquoted equity and perference shares have been estimated using a discounted cash flow (DCF) model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in managementâs estimate of fair value for these unquoted equity and perference investments.
*The above sensitivity analysis for fair value calculation has been derived on the entire Ray Pte. Limited and L7 Defense Limited capital amount of the companies.
(a) Considering the financial position, liquidity condition, market conditions and geopolitical scenario in Israel, management based on its assessment has recorded a fair value loss in other comprehensive income (FVOCI) amounting to '' 13.45. Accordingly, the carrying value of investment made in L7 Defense Limited has been considered as '' Nil during the year ended March 31,2024.
IE1 FINANCIAL INSTRUMENTS RISK MANAGEMENT OBJECTIVES AND POLICIES
The Companyâs principal financial liabilities comprise trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations and to support its operations. The Companyâs principal financial assets include investments, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company does not have borrowings and derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Board of Directors review and agree policies for managing each of these risks, which are summarised below:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include deposits, investments, receivables, payables, advances and other financial instruments. From the perspective of the Company, the impact of the foreign currency risk, material price risk, interest rate risk and other price risk is not significant.
The Company has certain financial assets and financial liabilities in foreign currencies which expose the Company to foreign currency risks. The foreign currency exposure of the Company has been disclosed in Note 39 to the Standalone financial statements.
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Customer credit risk is managed by the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company follows simplified approach for recognition of impairment loss allowance on Trade receivable.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance with the Company''s policy. Investments of surplus funds are made with banks in terms of fixed deposits and investment in designated mutual funds. Investment decision in mutual fund is taken with the assistance from appointed agent. Credit risk on cash deposits is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Other investments primarily include investment in liquid mutual fund units of reputed companies where historically, the Company has not incurred any loss due to credit risk.
(c) Liquidity risk
The Company had no outstanding bank borrowings as of March 31,2024 and March 31,2023. The working capital as at March 31,2024 was '' 289.60 (March 31,2023: '' 250.72) including cash and cash equivalents.
As at March 31,2024 and March 31,2023, the outstanding employee obligations were '' 15.57 and '' 1.17 respectively which have been substantially funded. Accordingly, no significant liquidity risk is perceived.
Financial risk management Capital management
For the purpose of the Companyâs capital management, capital includes issued equity share capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholderâs value. The Company manages its capital and makes adjustments to it in light of the changes in economic and market conditions. The total equity as at March 31,2024 is '' 436.90 (March 31, 2023: '' 419.72).
The Company does not have any debt as on March 31,2024 & March 31,2023 and hence no debt-equity ratio is computed.
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2024 and March 31,2023.
The Company has used an accounting software, for maintaining its books of account which has a feature of recording audit trail (edit log) facility, except that no audit trail feature was enabled at the database level during the year ended March 31, 2024, in respect of Accounting Software to log any changes at Database level. Further, the audit trail facility has been operated throughout the year for all relevant transactions recorded in the accounting software, except at the database level; wherein the audit trail facility was enabled with effect from April 19, 2024.
However, for the year ended March 31, 2024, as part of IT control environment of the Company, the privileged access to the ERP database was restricted to limited set of users who necessarily require this access for maintenance and administration of the database. Further, no instance of audit trail feature being tampered with was noted in respect of the accounting software. The Company has used an accounting software which is operated by a third-party software service provider, for maintaining its payroll records. In the absence of independent service auditors report. The Company is unable to state that the audit trail feature was enabled in the said software and operated throughout the year for all relevant transactions recorded in the software.
H6I TITLE DEEDS OF IMMOVABLE PROPERTIES NOT HELD IN NAME OF THE COMPANY
The title deeds of all the immovable properties are held in the name of the Company.
¦ LOANS OR ADVANCES IN THE NATURE OF LOANS ARE GRANTED TO PROMOTERS, DIRECTORS, KMPS AND THE RELATED PARTIES (AS DEFINED UNDER COMPANIES ACT, 2013), EITHER SEVERALLY OR JOINTLY WITH ANY OTHER PERSON, THAT ARE:
The Company has not granted any loans or advances in the nature of loans to promoters, directors and KMPs, either severally or jointly with any other person.
PH DETAILS OF BENAMI PROPERTY HELD
The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
I RELATIONSHIP WITH STRUCK OFF COMPANIES UNDER SECTION 248 OF THE COMPANIES ACT, 2013 OR SECTION 560 OF COMPANIES ACT, 1956,
The Company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956,
FTB REGISTRATION OF CHARGES OR SATISFACTION WITH REGISTRAR OF COMPANIES
The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period. F21 COMPLIANCE WITH NUMBER OF LAYERS OF COMPANIES
The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
E3I COMPLIANCE WITH APPROVED SCHEME(S) OF ARRANGEMENTS
The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
F4B UTILISATION OF BORROWED FUNDS AND SHARE PREMIUM:
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).
The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
The Company does not have any undisclosed income which is not recorded in the books of account that has been surrendered or disclosed as income during the year (and previous year) in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
FBI DETAILS OF CRYPTO CURRENCY OR VIRTUAL CURRENCY
The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
FT! THE CODE ON SOCIAL SECURITY 2020
The Code on Social Security 2020 (''the Codeâ) relating to employee benefits, during the employment and post-employment, has received Presidential assent on September 28, 2020. The Code has been published in the Gazette of India. Further, the Ministry of Labour and Employment has released draft rules for the Code on November 13, 2020. However, the effective date from which the changes are applicable is yet to be notified and rules for quantifying the financial impact are also not yet issued. The Company will assess the impact of the Code and will give appropriate impact in the Stanalone financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published. Based on a preliminary assessment, the entity believes the impact of the change will not be significant.
Previous year figures have been regrouped/ reclassified to confirm presentation as per Ind AS and as required by Schedule III of the Act.
The accompanying notes form an integral part of the standalone financial statements.
Mar 31, 2023
m) Provisions
A provision is recognized when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
n) Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the standalone financial statements.
o) Retirement and other employee benefits
a) Short-term employee benefits
The distinction between short term and long term employee benefits is based on expected timing of settlement rather than the employee''s entitlement benefits. All employee benefits payable within twelve months of rendering the service are classified as short term benefits. Such benefits include salaries, wages, bonus, short term
compensated absences, awards, ex-gratia, performance pay, etc. and are recognized in the period in which the employee renders the related service.
b) Post-employment benefits
(i) Defined contribution plan
The Company makes payment to provident fund scheme which is defined contribution plan. The contribution paid/payable under the schemes is recognized in the statement of profit and loss during the period in which the employee renders the related service. The Company has no further obligations under these schemes beyond its periodic contributions.
The Company recognize contribution payable to the provident fund scheme as an expenditure, when an employee renders the related services. If the contribution payable to the scheme for services received before balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then the excess recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or cash refund.
(ii) Defined benefit plan
The Company operates a defined benefit plan for its employees, viz. gratuity. The present value of the obligation under such defined benefit plans is determined based on the actuarial valuation using the Projected Unit Credit Method as at the date of the Balance sheet. The fair value of plan asset is reduced from the gross obligation under the defined benefit plans, to recognize the obligation on a net basis.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to the statement of profit and loss in subsequent periods.
Past service costs are recognized in statement of profit and loss on the earlier of:
⢠The date of the plan amendment or curtailment; and
⢠The date that the Company recognizes related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
⢠Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
⢠Net interest expense or income.
c) Other long-term employment benefits:
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company presents the leave as a current liability in the Balance Sheet to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Where the Company has the unconditional legal and contractual right to defer the settlement for a period beyond 12 months, the same is presented as noncurrent liability.
p) Share based payments
Employees (including senior executives) of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions). Equity-settled transactions The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
That cost is recognized, together with a corresponding increase in share-based payment ("SBPâ) reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The statement of profit and loss expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense.
No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions for which vesting is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognized is the expense had the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
q) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
a) Financial assets
Initial recognition and measurement of financial assets
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Subsequent measurement For purposes of subsequent measurement, financial assets are classified in the following categories:
- Debt instruments at amortized cost
- Debt instruments at fair value through profit or loss (FVTPL)
- Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortized cost
A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:
The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortized cost using the EIR method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit and loss.
Debt instrument at FVTPL FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognized by an acquirer in a business combination to which Ind AS103 applies are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in other comprehensive income. The Company makes such election on an instrument-byinstrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognized when:
The rights to receive cash flows from the asset have expired, or The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement;and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
- Financial assets that are debt instruments, and are measured at amortized cost
Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115 The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivable.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used
to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider:
- All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense/ (income) in the statement of profit and loss. This amount is reflected under the head ''other expenses'' in the
statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
- Financial assets measured as at amortized cost and contractual revenue receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount
- Loan commitments and financial guarantee contracts: ECL is presented as a provision in the balance sheet, i.e. as a liability
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analyzis that is designed to enable significant increases in credit risk to be identified on a timely basis. The Company does not have any purchased or originated credit-impaired (POCI) financial assets, i.e., financial assets which are credit impaired on purchase/ origination.
b) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, loans and borrowings or payables as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit and loss.
Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the standalone balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
r) Investment in subsidiaries
Investment in subsidiaries is carried at cost less accumulated impairment in the standalone financial statements
s) Assets held for sale
The Company classifies non-current assets (or disposal group) as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use.
The criteria for held for sale classification is regarded met only when the assets (or disposal group) is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets (or disposal group), its sale is highly probable; and it will genuinely be sold, not abandoned. The Company treats sale of the asset (or disposal group) to be highly probable when:
? The appropriate level of management is committed to a plan to sell the asset (or disposal group),
? An active programmed to locate a buyer and complete the plan has been initiated (if applicable),
? The asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
? The sale is expected to qualify for recognition as a completed sale within one year from the date of classification , and
? Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Non-current assets (or disposal group) held for sale are measured at the lower of their carrying amount and the fair value less costs to sell. Assets and liabilities (or disposal group) classified as held for sale are presented separately in the balance sheet.
Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortized.
t) Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and shortterm deposits with original maturity of three months or less, which are subject to an insignificant risk of changes in value. In the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered as integral part of the Company''s cash management.
u) Cash dividend
The Company recognizes a liability to make cash distributions to the equity holders of the Company when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the provisions of the Act, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity.
v) Contributed equity
Equity shares are classified as equity share capital. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
w) Earnings per share (EPS)
Basic EPS is calculated by dividing the Company''s earnings for the year attributable to ordinary equity shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. The earnings considered in ascertaining the Company''s EPS comprise the net profit after tax attributable to equity shareholders. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders, share split, and reverse share split (consolidation of shares) other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares. There were no instruments excluded from the calculation of diluted earnings per share for the periods presented because of an anti-dilutive impact.
x) Segment reporting
An operating segment is a component of a company whose operating results are regularly reviewed by the Company''s Chief Operating Decision Maker (CODM) to make decisions about resource allocation and assess its performance and for which discrete financial information is available. The Company has identified the Managing Director of the Company as its CODM.
|4l SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, including the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Judgements
In the process of applying the Company''s accounting policies, the management has made the following judgements, which have the most significant effect on the amounts recognized in the financial statements: Significant Judgement is required for identifying separate performance obligation, determination of basis and its appropriateness for allocation of transaction price to the identified performance obligations and recognition of such identified performance obligations based on timing of satisfaction (i.e. over time or point in time). The Company considered each promise in a contract with customer to transfer a goods or service that is distinct or a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer to identify separate performance obligation, transaction price is allocated to each performance obligation that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services to the customer and point of transfer of control in goods or service to determine whether the performance obligation is satisfied over time or at a point in time.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow (DCF) model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.
Defined benefit plans
The cost of the defined benefit gratuity plan and other post-employment benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies
consistent with the currencies of the post-employment benefit obligation.
The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries. Further details about gratuity obligations are given in note 31.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques
including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer note 42 for further disclosures.
Standards (including amendments) issued but not yet
effective
Ministry of Corporate Affairs ("MCAâ) notifies new standard or amendments to the existing standards. There is no such notification which would have been applicable from April 01,2023.
The Company''s investment properties consist of office premises in India given on non-cancellable lease for a period of 3 years. Estimation of fair value
As at March 31,2023, the fair values of the property is '' 41.42 ( March 31,2022''39.40). The valuations are based on valuations performed by Mr. Devendra Patekar (Registered Valuer & Chartered Engineer) , an accredited independent valuer. Devendra Patekar is a specialist in valuing these types of investment properties. A valuation model in accordance with that recommended by the International Valuation Standards Committee has been applied.
The Company has no restrictions on the realizability of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements.
Fair value hierarchy disclosures for investment properties have been provided in Note 41.
1. The Company has no restriction on the realizability of its investment properties and no contractual obligations to purchase, or develop investment properties or for repairs, maintenance.
2. The fair valuation is based on current prices in the active market for similar properties. The main inputs used are quantum, area, location, demand, age of the property. The fair value is based on valuation performed by an accredited independent valuer. Fair valuation is based on comparable fair value method. The fair value measurement is categorized in level 2 fair value hierarchy
Retained earnings
Retained Earnings represents surplus i.e. balance of the relevant column in the Statement of Changes in Equity.
Securities premium
Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilized only for limited purposes such as issuance of bonus and buy back shares in accordance with the provisions of the Companies Act, 2013.
Amalgamation reserve
Pursuant to the scheme of amalgamation ("the Schemeâ) sanctioned by the Honourable High Court of Bombay vide Order dated April 08, 2011, Cat Labs Private Limited (CLPL), subsidiary of the Company, had been merged with the Company with effect from April 01,2010, the Appointed Date. The Company completed the process of amalgamation on May 02, 2011 on filing of above Court Orders with the Registrar of Companies. Accordingly, an amount of '' 2.65 was recorded as amalgamation reserve.
General reserve
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilized only in accordance with the specific requirements of Companies Act, 2013.
Capital redemption reserve account
In line with the requirement of the Companies Act, 2013, an amount of '' 3.31 and '' 176.63 (Including tax on buy back of '' 34.94) has been utilized from securities premium and retained earnings respectively. In accordance with section 69 of the Companies Act, 2013, capital redemption reserve of ''5.00 (representing the nominal value of the shares bought back) has been created as an apportionment from retained earnings. Consequent to such buy back, the paid-up equity share capital has reduced by ''5.00. Further, transaction cost of buy back of shares of ''1.85 has been reduced from retained earnings.
Employee stock options outstanding account
The Company has two employee stock option schemes under which options to subscribe for the Company''s shares have been granted to certain executives and senior employees. The share-based payment reserve is used to recognize the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration. Refer note 32 for further details of these plans.
ITT OTHER EQUITY (Contd.)
FVTOCI reserve
The Company has elected to recognize changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the FVTOCI equity investments reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognized.
In the period of five years immediately preceding March 31, 2023:
The Board of Directors of the Company at its meeting held on March 10, 2021 and the shareholders by way of postal ballot on April 18, 2021, approved the buy back of the Company''s fully paid equity shares of the face value of ''10 each from its shareholder/beneficial owners of equity shares of the Company including promoters of the Company as on the record date, on a proportionate basis through the "tender offerâ route at a price of '' 245 per share for an aggregate amount not exceeding ''155.0. The Company completed the Buy Back Process on June 24, 2021 and has complied with all the requisite formalities with SEBI and ROC.
In accordance with section 69 of the Companies Act, 2013, during the year the Company has created ''Capital Redemption Reserve'' of '' 6.33 equal to the nominal value of the shares bought back as an appropriation from Securities Premium Account. The Board of Directors of the Company at its meeting held on March 05, 2019 and the shareholders by way of postal ballot on April 13, 2019, approved the buy back of the Company fully paid equity shares of the face value of '' 10 each from its shareholder/ beneficial owners of equity shares of the Company including promoters and promoter group of the Company as on the record date, on a proportionate basis through the "tender offerâ route at a price of '' 275 per share for an aggregate amount not exceeding '' 175. The Company completed the Buy Back Process in June 2019 and has complied with all the requisite formalities with SEBI and ROC
|42| FINANCIAL INSTRUMENTS RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company''s principal financial liabilities comprise trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations and to support its operations. The Company''s principal financial assets include investments, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company does not have borrowings and derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized below:
(a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprizes three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include deposits, investments, receivables, payables, advances and other financial instruments. From the perspective of the Company, foreign currency risk is the most significant risk and the impact of interest rate risk and other price risk is not significant. The Company is not exposed to any material price risk.
The Company has certain financial assets and financial liabilities in foreign currencies which expose the Company to foreign currency risks. The foreign currency exposure of the Company has been disclosed in Note 37 to the financial statements.
(b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Trade receivables
Customer credit risk is managed by the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company follows simplified approach for recognition of impairment loss allowance on Trade receivable.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made with banks in terms of fixed deposits and investment in designated mutual funds. Investment decision in mutual fund is taken with the assistance from appointed agent. Credit risk on cash deposits is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Other investments primarily include investment in liquid mutual fund units of reputed companies where historically, the Company has not incurred any loss due to credit risk.
(c) Liquidity risk
The Company had no outstanding bank borrowings as of March 31,2023 and March 31,2022. The working capital as at March 31,2023 was '' 250.72 (March 31,2022: '' 445.04) including cash and cash equivalents.
Financial risk management Capital management
For the purpose of the Company''s capital management, capital includes issued equity share capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder''s value. The Company manages its capital and makes adjustments to it in light of the changes in economic and market conditions. The total equity as at March 31,2023 is '' 419.72 (March 31,2022: '' 627.21).
*The Company does not have any debt as on March 31, 2023 & March 31,2022 and thus no debt -equity ratio is computed No changes were made in the objectives, policies or processes for managing capital during the years ended March 31,2023 and March 31,2022.
|43l TITLE DEEDS OF IMMOVABLE PROPERTIES NOT HELD IN NAME OF THE COMPANY
The title deeds of all the immovable properties are held in the name of the Company.
|44.| Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, that are:
The Company has not granted any loans or advances in the nature of loans to promoters, directors and KMPs, either severally or jointly with any other person.
@ DETAILS OF BENAMI PROPERTY HELD
The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
E6I WILFUL DEFAULTER
The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
|47.| Relationship with Struck off Companies under section 248 of the Companies Act, 2013 or section 560 of Companies
Act, 1956,
The Company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956
Cal REGISTRATION OF CHARGES OR SATISFACTION WITH REGISTRAR OF COMPANIES
The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
|49j COMPLIANCE WITH NUMBER OF LAYERS OF COMPANIES
The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
|50l COMPLIANCE WITH APPROVED SCHEME(S) OF ARRANGEMENTS
The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
1511 UTILIZATION OF BORROWED FUNDS AND SHARE PREMIUM:
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediariesâ) with the understanding, whether recorded in writing or otherwize, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).
The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
K2A UNDISCLOSED INCOME
The Company does not have any undisclosed income which is not recorded in the books of account that has been surrendered or disclosed as income during the year (and previous year) in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
K3A DETAILS OF CRYPTO CURRENCY OR VIRTUAL CURRENCY
The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
|54l THE CODE ON SOCIAL SECURITY 2020
The Code on Social Security 2020 (''the Code'') relating to employee benefits, during the employment and post-employment, has received Presidential assent on September 28, 2020. The Code has been published in the Gazette of India. Further, the Ministry of Labour and Employment has released draft rules for the Code on November 13, 2020. However, the effective date from which the changes are applicable is yet to be notified and rules for quantifying the financial impact are also not yet issued.
The Company will assess the impact of the Code and will give appropriate impact in the financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published. Based on a preliminary assessment, the entity believes the impact of the change will not be significant.
I55!
Previous year figures have been regrouped/ reclassified to confirm presentation as per Ind AS and as required by Schedule III of the Act.
As per our report of even date For and on behalf of the Board of Directors of
For MSKA & Associates Quick Heal Technologies Limited
Chartered Accountants CIN: L72200MH1995PLC091408
ICAI Firm Registration Number: 105047W
Sd/- Sd/- Sd/- Sd/- Sd/-
Nitin Manohar Jumani Kailash Katkar Sanjay Katkar Navin Sharma Srinivasa Rao Anasingaraju
Partner Managing Director Joint Managing Director Chief Financial Officer Company Secretary
Membership Number: 111700 & Chief Executive Officer & Chief Technical Officer Regs. No. FCS-9901
DIN: 00397191 DIN: 00397277
Place: Pune Place: Pune Place: Pune Place: Pune Place: Pune
Date: April 17, 2023 Date: April 17, 2023 Date: April 17, 2023 Date: April 17, 2023 Date: April 17, 2023
Mar 31, 2019
1. Significant accounting judgments, estimates and assumptions
The preparation of the Company''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, including the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Judgments
In the process of applying the Company''s accounting policies, the management has made the following judgmentâs, which have the most significant effect on the amounts recognized in the financial statements:
Significant judgmentâs is required to apply lease accounting rules under Appendix C to lnd AS 17 âDetermining whether an arrangement contains a lease''. In assessing the applicability to arrangements entered into by the Company with its various sub-contractors regarding providing of certain services, the Company has exercised judgment to evaluate the right to use the underlying assets, substance of the transaction including legally enforced arrangements, and other significant terms and conditions of the arrangement to conclude whether the arrangements meets the criteria under Appendix C to lnd AS 17. Based on the evaluation, the Company has concluded that the arrangements do not meet the definition of lease as specified under Appendix C to lnd AS 17.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow (DCF) model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.
Defined benefit plans
The cost of the defined benefit gratuity plan and other postemployment benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries.
Further details about gratuity obligations are given in note 31.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer note 45 for further disclosures.
2. (a) Standards issued but not yet effective
The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Company''s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective. The Ministry of Corporate Affairs (âMCA'') has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and Companies (Indian Accounting Standards) Amendment Rules, 2018 amending the following standard:
(i) Ind AS 116 - Leases
Ind AS 116 Leases was notified on March 30, 2019 and it replaces Ind AS 17 Leases, including appendices there to. Ind AS 116 is effective for annual periods beginning on or after April 1, 2019. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires essees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under Ind AS 17. The standard includes two recognition exemptions for lessees - leases of âlow-value'' assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognize a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use asset.
Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognized the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.
Lessor accounting under Ind AS 116 is substantially unchanged from today''s accounting under Ind AS 17. Lessors will continue to classify all leases using the same classification principle as in Ind AS 17 and distinguish between two types of leases: operating and finance leases.
The Company intends to adopt these standards, if applicable, when they become effective. As the Company does not have any material leases, therefore the adoption of this standard is not likely to have a material impact in its financial statements.
(ii) Appendix C to Ind AS 112 Uncertainty over Income Tax Treatment
The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of Ind AS 12 and does not apply to taxes or levies outside the scope of Ind AS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following:
- Whether an entity considers uncertain tax treatments separately
- The assumptions an entity makes about the examination of tax treatments by taxation authorities
- How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates
- How an entity considers changes in facts and circumstances
An entity has to determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty should be followed. In determining the approach that better predicts the resolution of the uncertainty, an entity might consider, for example, (a) how it prepares its income tax filings and supports tax treatments; or
(b) how the entity expects the taxation authority to make its examination and resolve issues that might arise from that examination.
The interpretation is effective for annual reporting periods beginning on or after April 1, 2019, but certain transition reliefs are available. The Company will apply the interpretation from its effective date. The Company does not expect to have any material impact on its financial statements.
(iii) Amendment to Ind AS 19 - Employee Benefits:
The amendments to Ind AS 19, Employee Benefits relate to effects of plan amendment, curtailment and settlement. When an entity determines the past service cost at the time of plan amendment or curtailment, it shall remeasure the amount of net defined benefit liability/asset using the current value of plan assets and current actuarial assumptions which should reflect the benefits offered under the plan and plan assets before and after the plan amendment, curtailment and settlement. These amendments are not expected to have any significant impact on the Company.
Note:-
1. The value of land has been estimated based on the stamp duty valuation rate
2. Additions of building includes office building (including share in undivided portion of land) taken on long term lease i.e. 999 years.
3. The Company had elected to continue with the carrying value of property, plant and equipment as recognized in the financial statements as per previous GAAP and had regarded those values as the deemed cost on the date of transition (i.e. April 1, 2015). The Company has disclosed the gross block and accumulated depreciation above, for information purpose only. The accumulated depreciation as at April 1, 2015 was INR 228.19.
1. The Company had elected to continue with the carrying value of intangible assets as recognized in the financial statements as per previous GAAP and had regarded those values as the deemed cost on the date of transition (i.e. April 1, 2015). The Company has disclosed the gross block and accumulated amortization above, for information purpose only. The accumulated amortization as at April 1, 2015 was INR 174.39.
(b) Terms / rights attached to equity shares
The Company has only one class of equity shares having par value of INR 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in ensuing Annual General Meeting.
The Board of Directors, in their meeting on May 10, 2018, proposed a final dividend of INR 3.00 per equity share and the same was approved by the shareholders at the Annual General Meeting held on August 8, 2018. The amount was recognized as distributions to equity shareholders during the year ended March 31, 2019 and the total appropriation was INR 254.42 including dividend distribution tax. The Board of Directors, in their meeting on May 10, 2019, have proposed a final dividend of INR 2 per equity share for the financial year ended March 31, 2019. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved would result in a cash outflow of approximately INR 169.86 including dividend distribution tax.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by shareholders.
(c) Shares held by holding/ ultimate holding Company and /or their subsidiaries/ associates
None.
The shareholding information has been extracted from the records of the Company including register of shareholders/ members and is based on legal ownership of shares.
(f) Shares reserved for issue under option
For details of shares reserved for issue under ESOP of the Company, please refer note 32.
(g) Buyback of shares
The Board of Directors of the Company at its meeting held on March 5, 2019 and the shareholders by way of postal ballot on April 13, 2019, approved the buyback of the Company''s fully paid equity shares of the face value of INR 10 each from its shareholder/beneficial owners of equity shares of the Company including promoters and promoter group of the Company as on the record date, on a proportionate basis through the "tender offer" route at a price of INR 275 per share for an aggregate amount not exceeding INR 1,750. The Company had filed the draft letter of offer (DLoF) with Securities and Exchange Board of India (SEBI) on April 24, 2019. Further, the Company has received final SEBI observations on the DLoF, and shall be dispatching the Letter of Offer for the Buyback to the eligible shareholders appearing on the record date of April 26, 2019, on or before May 13, 2019.
17. Other equity (Contd.)
Retained earnings
Retained Earnings represents surplus i.e. balance of the relevant column in the Statement of Changes in Equity;
Securities premium
Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilized only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
Amalgamation reserve
Pursuant to the scheme of amalgamation ("the Scheme") sanctioned by the Honourable High Court of Bombay vide Order dated April 8, 2011, Cat Labs Private Limited (CLPL), subsidiary of the Company, had been merged with the Company with effect from April 1, 2010, the Appointed Date. The Company completed the process of amalgamation on May 2, 2011 on filing of above Court Orders with the Registrar of Companies. Accordingly, an amount of INR 26.45 was recorded as amalgamation reserve.
General reserve
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilized only in accordance with the specific requirements of Companies Act, 2013.
Employee stock options outstanding account
The Company has two employee stock option schemes under which options to subscribe for the Company''s shares have been granted to certain executives and senior employees. The share-based payment reserve is used to recognized the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration. Refer note 32 for further details of these plans. FVTOCI reserve
The Company has elected to recognized changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the FVOCI equity investments reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognized.
Terms and conditions of the above financial and other liabilities:
- Trade payables are non-interest bearing and have an average term of 60 days.
- Payables for purchases of fixed assets are non-interest bearing and have an average term of 90 days.
- Other liabilities (other than taxes and deferred revenue) are non-interest bearing and have an average term of 45 days.
- Taxes such as tax deducted at source and goods and service tax / vat payable, provident fund and other taxes are non-interest bearing and are generally paid within the due date.
Disaggregate revenue information
The table below presents disaggregated revenues from contracts with customers by geography and details of products and services sold. The Company believes 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.
Performance obligations and remaining performance obligations
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the Company expects to recognize these amounts in revenue.
The aggregate value of performance obligations that are completely or partially unsatisfied as of March 31, 2019, is INR 21.60. Out of this, the Company expects to recognize revenue of around INR 21.60 within one to three years respectively, depending on the license period.
The impact on account of applying the erstwhile Ind AS 18 Revenue standard instead of Ind AS 115 Revenue from contract with customers on the financial statements of the Company for the year ended March 31, 2019 is insignificant.
The Company has applied Ind AS 115 for the first time for the year ended March 31, 2019 and accordingly disclosures for ''Disaggregated revenue information has been furnished only for year ended March 31, 2019.
3. Gratuity benefit plans
The Company has a defined benefit gratuity plan (funded) for its employees. The Company''s defined benefit gratuity plan is a final salary plan for its employees, which requires contributions to be made to a separately administered fund. The scheme is funded with an insurance company in the form of a qualifying insurance policy.
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service as per the provisions of the Payment of Gratuity Act, 1972.
The following table summarizes the components of net benefit expense recognized in the statement of profit and loss and the funded status and the amounts recognized in the balance sheet for the gratuity plan.
4. Share based arrangements
Share based payment arrangement 2010
On June 10, 2010, the Board of Directors approved the Equity Settled Share Based Payment Arrangement (SBPA), for issue of stock options to the employees and directors of the Company. According to the SBPA 2010, the employee selected by the Board of Directors from time to time will be entitled for scheme options, subject to satisfaction of the prescribed vesting conditions, viz., continued employment and performance parameters of employee. The contractual life (comprising the vesting period and the exercise period) of options and the other relevant terms of the grant are as below:
The weighted average share price at the date of exercise of these options, as at March 31, 2019 was INR 273.86 The weighted average share price at the date of exercise of these options, as at March 31, 2018 was INR 214.61.
Share based payment arrangement 2014
On February 6, 2014, the board of directors approved the Equity Settled ESOP Scheme 2014 ("ESOP Scheme 2014") for issue of stock options to the employees and directors of the Company. According to the ESOP Scheme 2014, the employee selected by the Board of Directors from time to time will be entitled for scheme options, subject to satisfaction of the prescribed vesting conditions, viz., continued employment and performance parameters of employee. The contractual life (comprising the vesting period and the exercise period) of options and the other relevant terms of the grant are as below:
5. Commitments and contingencies a. Operating lease - Company as a lessee
The Company has obtained office premises under operating lease agreements out of which there is a lease agreement for an office premise for 6 years with a lock-in period of 3 years. These are generally cancellable and are renewable by mutual consent on mutually agreed terms. There are no restrictions imposed by lease agreements. There are no subleases. The details are as follows:
Finance lease - Company as a lessee
The Company has finance leases contracts for building purchased during the financial year ended March 31, 2015. These leases involve upfront payment to the lessor as and by way of premium for grant of lease of the building by the lessor to the lessee. No lease rent was payable by the lessee to the lessor for grant of lease from lessee. There is no escalation clause and no minimum lease payments (MLP) under finance lease.
Note A
The Company has provided letters committing continuing financial support to its subsidiaries; Quick Heal Technologies Japan K.K., Quick Heal Technologies Africa Limited, Quick Heal Technologies America Inc. and Seqrite Technologies DMCC to meet their day to day obligations / commitments; to the extent these entities may be unable to meet their obligations.
i) During the year ended March 31, 2019, the Company has received statement of demand dated March 13, 2019, in relation to service tax under the provisions of Finance Act, 1994 for INR 387.43 (excluding interest and penalties) covering the period from April 1, 2016 to June 30, 2017 on supply of anti-virus software in Compact Disk. The Company is in the process of filing the reply for the same.
During the earlier years, the Company had received statement of demands in relation to service tax under the provisions of Finance Act, 1994 for INR 1,223.07 (excluding penalty of INR 626.97 and redeposit, if any) covering the period from March 1, 2011 to March 31, 2016 on supply of anti-virus software in Compact Disk. The Company had filed an appeal with Customs, Excise and Service Tax Appellate Tribunal, New Delhi for the period March 1, 2011 to March 31, 2014 and with the Customs, Excise and Service Tax Appellate Tribunal, Mumbai for the period April 1, 2014 to March 31, 2016.
Based on technical circular issued by government authorities and an independent legal opinion, the Company is confident of getting this claim set aside and accordingly no provision including interest and penalty has been recognized in the financial statement and the demand has been disclosed as contingent liability.
ii) There are numerous interpretative issues relating to the Supreme Court (SC) judgment on PF dated February 28, 2019. As a matter of caution, the company has made a provision on a prospective basis from the date of the SC order. The company will update its provision, on receiving further clarity on the subject.
d. Other litigations
i) In the year 2016, one of the erstwhile distributor of the Company had filed a suit before the Civil Judge (Senior Division) at Sera pore Court, Hooghly District, West Bengal against the Company and others, claiming Intellectual Property Rights to one of the brand names (Quick Heal - Total Security) and alleging illegal usage of said brand name by the Company. The case was dismissed by the Court, however later on was restored. The Company believes that the suit is false, frivolous and will contest the suit on merit. The Trade Mark is registered in name of the Company and thus, the Company believes that it has sufficient grounds to counter the litigations and has strong arguments on facts as well as on point of law.
ii) In February 2016, one of the erstwhile distributor instituted a suit at High Court, Calcutta against the Company and others claiming INR 16,100 for various reasons including loss of business profits, loss of capital assets & infrastructure etc. With respect to the above matters, the Company believes that the suit is frivolous and defending to seek the leave of the court for its dismissal. The Company also believes that they have sufficient grounds based on the facts as well as on point of law. Accordingly no provision in this regard has been recognized in the financial statements.
iii) One of the erstwhile vendor had filed a First information Report (FIR) in May 2016 at Uttarpara Police Station, West Bengal, against certain directors of the Company, their wives and other associates alleging embezzlement of his investment and misappropriation of shares. The police had filed the charge sheet. The Company, its directors and others had filed quashing applications before Hon''ble Calcutta High Court and obtained stay on proceedings before trial Court. The Company also believes that police have not conducted proper investigation and have not collected nor considered relevant records, documents, statements of witnesses and thus have sufficient and strong arguments on facts as well as on point of law.
The information has been given in respect of such vendors to the extent they could be identified as "Micro and Small" enterprises on the basis of information available with the Company.
As per the objects of the offer stated in the prospectus the Total Net Proceeds received by Company by way of IPO should be deployed during the fiscal years 2016, 2017, 2018 and 2019.
However, if the funds are not utilized within prescribed period for reasons mentioned in prospectus, then such unutilized funds can be utilized in fiscal year 2020 or any subsequent period as may be determined by the company.
Based on the above, the Board of Directors of Company in the board meeting dated February 13, 2019 have decided to extend the utilization of Net Proceeds to the subsequent fiscal years up to March 31, 2021.
* includes in March 31, 2019: INR 13.85 (March 31, 2018: INR 13.85) spent by the Company from bank accounts other than the IPO account.
* The unhedged foreign currency exposure in relation to certain foreign currency balances (SGD, BDT, etc.) have not been included in the above disclosures since the figures have been disclosed in millions.
6. Related party transaction
List of related parties as per the requirements of Ind AS 24 - Related Party Disclosures Related parties where control exists
Quick Heal Technologies America Inc., USA Quick Heal Technologies Japan K.K., Japan Wholly owned subsidiaries Quick Heal Technologies Africa Limited, Kenya
Quick Heal Technologies (MENA) FZE, UAE (Deregistered on February 28, 2018) Seqrite Technologies DMCC, UAE
Related parties with whom transactions have taken place during the year
Kailash Katkar, Managing Director, Chief Executive Officer and ultimate holding shareholder
Sanjay Katkar, Joint Managing Director, Chief Technical Officer and ultimate holding shareholder
Vijay Mhaskar, Chief Operating Officer
Nitin Kulkarni, Chief Financial Officer (w.e.f. May 10, 2018)
Srinivasa Rao Anasingaraju (w.e.f. May 10, 2019)
Rajesh Ghonasgi, Chief Financial Officer (upto February 28, 2018)
Raghav Mulay, Company Secretary (upto January 16, 2019)
Key management personnel Vijay Shirode, Company Secretary (upto June 30, 2017)
Mehul Savla, Independent Director Apurva Joshi, Independent Director Pradeep Bhide, Independent Director (upto April 01, 2019)
Sunil Sethy, Independent Director (upto April 24, 2018)
Priti Rao, Independent Director (w.e.f. April 10, 2018)
Shailesh Lakhani, Non-Executive Director_
Manu Parpia, Independent Director (w.e.f May 10, 2018)
Abhijit Jorvekar, Executive Director and Vice President Sales and Marketing (upto October 12, 2017)
Anupama Katkar (wife of Kailash Katkar and ultimate holding shareholder)
Relatives of key management personnel Chhaya Katkar (wife of Sanjay Katkar and ultimate holding shareholder)
Sneha Katkar (daughter of Kailash Katkar and ultimate holding shareholder)
Kailash Sahebrao Katkar HUF
Enterprises owned by directors or major shareholders Sanjay Sahebrao Katkar HUF
Quick Heal Foundation
7. Related party transaction (contd.)
Terms and conditions of transactions with related parties
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables, except for the commitments as disclosed in note 33(b)(A) . For the year ended March 31, 2019, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2018: INR Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
8. (a). Segment
The Company is engaged in providing security software solutions. The Chief Operating Decision Maker (CODM) reviews the information pertaining to revenue of each of the target customer group (segments) as mentioned below. However, based on similarity of activities/ products, risk and reward structure, organization structure and internal reporting systems, the Company has structured its operations into one operating segment viz. anti-virus and as such there is no separate reportable operating segment as defined by Ind AS 108 "Operating segments".
- Retail
- Enterprise and Government
- Mobile
In accordance with paragraph 4 of Ind AS 108 ''Operating segments'', the Company has disclosed segment information only on the basis of the consolidated financial statement.
9. Fair values (Contd.)
The following methods and assumptions were used to estimate the fair values:
(i) The fair value of the quoted mutual fund are based on the price quotations at reporting date. The fair value of unquoted instruments, related parties and other financial liabilities as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
(ii) The fair values of the unquoted equity shares, compulsory convertible preference shares have been estimated using a discounted cash flow (DCF) model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments.
10. Fair value hierarchy
The following table provides the fair value measurement hierarchy of the Company''s assets and liabilities:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 - Inputs other than quoted prices included with in Level 1 that the observable for the asset or liability, either directly (i.e. as pieces) or indirectly (i.e. derived from prices)
Level 3 - Inputs for the assets or liabilities that are not based on observable market data unobservable inputs
The following table presents the fair value measurement hierarchy of financial assets and liabilities measured at fair value on a recurring basis as at March 31, 2019 and March 31, 2018.
There have been no transfers among Level 1, Level 2 and Level 3 during the year.
11. Financial instruments risk management objectives and policies
The Company''s principal financial liabilities comprise trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations and to support its operations. The Company''s principal financial assets include investments, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company does not have borrowings and derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized below:
(a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include deposits, investments, receivables, payables, advances and other financial instruments. From the perspective of the Company, foreign currency risk is the most significant risk and the impact of interest rate risk and other price risk is not significant. The Company is not exposed to any material price risk.
The Company has certain financial assets and financial liabilities in foreign currencies which expose the Company to foreign currency risks. The foreign currency exposure of the Company has been disclosed in Note 42 to the financial statements.
12. Financial instruments risk management objectives and policies (contd.)
Foreign currency sensitivity
The Company does not take any steps to hedge the foreign currency exposure as mentioned above as the Management believes that there is natural hedge to some extent and balance exposure not really having significant impact on the financial health of the Company.
(b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Trade receivables
Customer credit risk is managed by the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company follows simplified approach for recognition of impairment loss allowance on Trade receivable.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made with banks in terms of fixed deposits and investment in designated mutual funds. Investment decision in mutual fund is taken with the assistance from appointed agent. Credit risk on cash deposits is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Other investments primarily include investment in liquid mutual fund units of reputed companies where historically, the Company has not incurred any loss due to credit risk.
(c) Liquidity risk
The Company had no outstanding bank borrowings as of March 31, 2019 and March 31, 2018. The working capital as at March 31, 2019 was INR 5,686.87 (March 31, 2018: INR 5,080.28) including cash and cash equivalents.
As at March 31, 2019 and March 31, 2018, the outstanding employee obligations were INR 39.49 and INR 34.14 respectively which have been substantially funded. Accordingly, no significant liquidity risk is perceived.
Financial risk management Capital management
For the purpose of the Company''s capital management, capital includes issued equity share capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder''s value. The Company manages its capital and makes adjustments to it in light of the changes in economic and market conditions. The total equity as at March 31, 2019 is INR 7,948.92 (March 31, 2018: INR 7,371.32).
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2019 and March 31, 2018.
The accompanying notes form an integral part of the financial statements.
Mar 31, 2018
1. Corporate information
Quick Heal Technologies Limited (âthe Companyâ), a public company domiciled in India, was incorporated on August 7, 1995 under the Companies Act, 1956. The CIN of the Company is L72200MH1995PLC091408. The Companyâs shares are listed on the BSE Limited (âBSEâ) and National Stock Exchange of India Limited (âNSEâ) w.e.f. February 18, 2016. The registered office of the Company is located at Marvel Edge, Office No.7010 C & D, 7th Floor, Viman Nagar, Pune 411014, Maharashtra, India.
The Company is engaged in the business of providing security software products. The Company caters to both domestic and international market.
The standalone financial statements of the Company for the year ended March 31, 2018 were authorised for issue in accordance with a resolution of the Board of Directors on May 10, 2018.
2. Basis of preparation
The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended.
The standalone financial statements have been prepared on a historical cost basis, except for certain financial assets which have been measured at fair value. The standalone financial statements are presented in INR Millions; except when otherwise indicated.
3. Significant accounting judgements, estimates and assumptions
The preparation of the Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, including the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Judgements
In the process of applying the Companyâs accounting policies, the management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:
Significant judgements is required to apply lease accounting rules under Appendix C to lnd AS 17 âDetermining whether an arrangement contains a leaseâ. In assessing the applicability to arrangements entered into by the Company with its
various sub-contractors regarding providing of certain services, the Company has exercised judgment to evaluate the right to use the underlying assets, substance of the transaction including legally enforced arrangements, and other significant terms and conditions of the arrangement to conclude whether the arrangements meets the criteria under Appendix C to lnd AS 17. Based on the evaluation, the Company has concluded that the arrangements do not meet the definition of lease as specified under Appendix C to lnd AS 17.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at armâs length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow (DCF) model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the assetâs performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.
Defined benefit plans
The cost of the defined benefit gratuity plan and other postemployment benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries.
Further details about gratuity obligations are given in note 31.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer note 46 for further disclosures.
3(a) Standards issued but not yet effective
The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Companyâs financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective. The Ministry of Corporate Affairs (âMCAâ) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and Companies (Indian Accounting Standards) Amendment Rules, 2018 amending the following standard
a) Ind AS 115 - Revenue from Contracts with Customers
Ind AS 115 was notified on March 28, 2018 with guidance to account for revenue arising from contracts with customers. Under Ind AS 115, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The new revenue standard will supersede all current revenue recognition requirements under Ind AS. This new standard requires revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Ind AS 115 is effective for the Company in the first quarter of fiscal 2019 using either one of two methods: (i) retrospectively to each prior reporting period presented in accordance with Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors, with the option to elect certain practical expedients as defined within Ind AS 115 (the full retrospective method); or (ii) retrospectively with the cumulative effect of initially applying Ind AS 115 recognized at the date of initial application (April 1, 2018) and providing certain additional disclosures as defined in Ind AS 115 (the modified retrospective method).
The Company continues to evaluate the available transition methods and its contractual arrangements. The ultimate impact on revenue resulting from the application of Ind AS 115 will be subject to assessments that are dependent on many variables, including, but not limited to, the terms of the contractual arrangements and the mix of business. The Companyâs considerations also include, but are not limited to, the comparability of its financial statements and the comparability within its industry from application of the new standard to its contractual arrangements.
Sale of goods
For contracts with customers in which the sale of goods is generally expected to be the only performance obligation, adoption of Ind AS 115 is not expected to have any significant impact on Companyâs profit or loss. The Company expects the revenue recognition to occur at a point in time when control of the asset is transferred to the customer, generally on delivery of the goods.
In preparing to adopt Ind AS 115, the Company is considering various other aspects in the same contracts such as elements of multiple element contract, volume rebates, terms of service delivery and other considerations in service sale agreements etc. While the management continue to believe that the impact of Ind AS 115 will not be material, a reliable estimate of the quantitative impact of Ind AS 115 on the financial statements will not be possible once the implementation project has been completed.
b) Amendments to Ind AS 112 Disclosure of Interests in Other Entities: Clarification of the scope of disclosure requirements in Ind AS 112
The amendments clarify that the disclosure requirements in Ind AS 112, other than those in paragraphs B10-B16, apply to an entityâs interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal group that is classified) as held for sale.
As the Company has not included in disposal group/ classified as held for sale any of its subsidiary, joint ventures or associate. Accordingly, the amendments in Ind AS 112 will not have any impact on the Company.
c) Amendments to Ind AS 12 Recognition of Deferred Tax Assets for Unrealised Losses
The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.
Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact.
These amendments are effective for annual periods beginning on or after April 1, 2018. These amendments are not expected to have any impact on the Company as the Company has no deductible temporary differences or assets that are in the scope of the amendments.
d) Transfers of Investment Property - Amendments to Ind AS 40
The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in managementâs intentions for the use of a property does not provide evidence of a change in use.
Entities should apply the amendments prospectively to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. An entity should reassess the classification of property held at that date and, if applicable, reclassify property to reflect the conditions that exist at that date. Retrospective application in accordance with Ind AS 8 is only permitted if it is possible without the use of hindsight.
The amendments are effective for annual periods beginning on or after April 1, 2018. The Company will apply amendments when they become effective. Since the Company does not have any such transaction, this amendment does not have any effect of the financial statements of the Company.
e) Appendix B to Ind AS 21 Foreign Currency Transactions and Advance Consideration
The Appendix clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or nonmonetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment or receipt of advance consideration.
Entities may apply the Appendix requirements on a fully retrospective basis. Alternatively, an entity may apply these requirements prospectively to all assets, expenses and income in its scope that are initially recognised on or after:
(i) The beginning of the reporting period in which the entity first applies the Appendix, or
(ii) The beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies the Appendix.
The Appendix is effective for annual periods beginning on or after April 1, 2018. Since the Company does not have any such transaction, this amendment does not have any effect of the financial statements of the Company.
Note:-
1. The value of land has been estimated based on the stamp duty valuation rate
2. Additions of building includes office building (including share in undivided portion of land) taken on long term lease i.e. 999 years.
3. The Company had elected to continue with the carrying value of property, plant and equipment as recognised in the financial statements as per previous GAAP and had regarded those values as the deemed cost on the date of transition (i.e. April 01, 2015). The Company has disclosed the gross block and accumulated depreciation above, for information purpose only. The total gross cost and corresponding total accumulated depreciation as at March 31, 2018 and March 31, 2017 as disclosed above should be adjusted (at least) by an amount of INR 228.19 (representing accumulated depreciation as at April 01, 2015) to compute the cost and accumulated depreciation as per IND AS. Such adjustment will have no impact on the net block as at March 31, 2018 and March 31, 2017.
1. The Company had elected to continue with the carrying value of intangible assets as recognised in the financial statements as per previous GAAP and had regarded those values as the deemed cost on the date of transition (i.e. April 01, 2015). The Company has disclosed the gross block and accumulated amortisation above, for information purpose only. The total gross cost and corresponding total accumulated amortisation as at March 31, 2018 and March 31, 2017 as disclosed above should be adjusted (at least) by an amount of INR 174.39 (representing accumulated amortisation as at April 01, 2015) to compute the cost and accumulated amortisation as per IND AS. Such adjustment will have no impact on the net block as at March 31, 2018 and March 31, 2017.
No loans are due from directors or other officers of the Company either severally or jointly with any other person. Nor any loans are due from firms or private companies respectively in which any director is a partner, a director or a member.
Loans are non-derivative financial assets which generate a fixed or variable interest income for the Company. The carrying value may be affected by changes in the credit risk of the counterparties.
* The Company has identified an impairment of INR Nil (March 31, 2017: INR 35.00) on loan to Wegilant Net Solutions Private Limited. The impairment on FVTPL financial assets was recognised as an exceptional item in the statement of profit and loss for the year ended March 31, 2017.
Out of the total deposits, INR 2.92 (March 31, 2017: INR Nil) are pledged against bank guarantees.
* The Company has identified an impairment of INR Nil (March 31, 2017: INR 2.80) on interest accrued on loan to Wegilant Net Solutions Private Limited. The impairment on FVTPL financial assets was recognised as an exceptional item in the statement of profit and loss for the year ended March 31, 2017.
No trade or other receivable are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member. Trade receivables are non interest bearing and generally on credit terms of 30 to 60 days.
For terms and condition relating to related party receivables, refer note 44.
(b) Terms / rights attached to equity shares
The Company has only one class of equity shares having par value of INR 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in ensuing Annual General Meeting.
The Board of Directors, in their meeting on May 12, 2017, proposed a final dividend of INR 2.50 per equity share and the same was approved by the shareholders at the Annual General Meeting held on August 11, 2017. The amount was recognized as distributions to equity shareholders during the year ended March 31, 2018 and the total appropriation was INR 211.19 including dividend distribution tax.
The Board of Directors, in their meeting on May 10, 2018, have proposed a final dividend of INR 3 per equity share for the financial year ended March 31, 2018. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved would result in a cash outflow of approximately INR 254.15 including dividend distribution tax.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by shareholders.
(c) Shares held by holding/ ultimate holding Company and /or their subsidiaries/ associates
None.
(f) Shares reserved for issue under option
For details of shares reserved for issue under ESOP of the Company, please refer note 32.
Employee stock options outstanding account
The Company has two employee stock option schemes under which options to subscribe for the Companyâs shares have been granted to certain executives and senior employees. The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration. Refer note 32 for further details of these plans.
Amalgamation reserve
Pursuant to the scheme of amalgamation (âthe Schemeâ) sanctioned by the Honourable High Court of Bombay vide Order dated April 8, 2011, Cat Labs Private Limited (CLPL), subsidiary of the Company, had been merged with the Company with effect from April 1, 2010, the Appointed Date. The Company completed the process of amalgamation on May 2, 2011 on filing of above Court Orders with the Registrar of Companies. Accordingly, an amount of INR 26.45 was recorded as amalgamation reserve.
Terms and conditions of the above financial and other liabilities:
- Trade payables are non-interest bearing and have an average term of 60 days.
- Payables for purchases of fixed assets are non interest bearing and have an average term of 90 days.
- Other liabilities (other than taxes) are non interest bearing and have an average term of 45 days.
- Taxes such as tax deducted at source and goods and service tax / sales tax / Vat payable, provident fund and other taxes are non interest bearing and are generally paid within the due date.
The Company offsets the tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
4. Earnings per share (EPS)
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on exercise of stock option.
The following reflects the income and share data used in the basic and diluted EPS computations:
5. Gratuity benefit plans
The Company has a defined benefit gratuity plan (funded) for its employees. The Companyâs defined benefit gratuity plan is a final salary plan for its employees, which requires contributions to be made to a separately administered fund. The scheme is funded with an insurance company in the form of a qualifying insurance policy.
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service as per the provisions of the Payment of Gratuity Act, 1972.
The following table summarises the components of net benefit expense recognised in the statement of profit and loss and the funded status and the amounts recognised in the balance sheet for the gratuity plan.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. There has been no change in expected rate of return on assets
The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
6. Share based arrangements
Share based payment arrangement 2010
On June 10, 2010, the Board of Directors approved the Equity Settled Share Based Payment Arrangement (SBPA), for issue of stock options to the employees and directors of the Company. According to the SBPA 2010, the employee selected by the Board of Directors from time to time will be entitled for scheme options, subject to satisfaction of the prescribed vesting conditions, viz., continued employment and performance parameters of employee. The contractual life (comprising the vesting period and the exercise period) of options and the other relevant terms of the grant are as below:
The weighted average share price at the date of exercise of these options, as at March 31, 2018 was INR 214.61.
The weighted average share price at the date of exercise of these options, as at March 31, 2017 was INR 263.45.
Share based payment arrangement 2014
On February 6, 2014, the board of directors approved the Equity Settled ESOP Scheme 2014 (âESOP Scheme 2014â) for issue of stock options to the employees and directors of the Company. According to the ESOP 2014, the employee selected by the Board of Directors from time to time will be entitled for scheme options, subject to satisfaction of the prescribed vesting conditions, viz., continued employment and performance parameters of employee. The contractual life (comprising the vesting period and the exercise period) of options and the other relevant terms of the grant are as below:
The weighted average share price at the date of exercise of these options, as at March 31, 2018 was INR 222.48
The weighted average share price at the date of exercise of these options, as at March 31, 2017 was INR 250.59.
Manner in which the fair value of the stock option granted during the period was determined:
The weighted average fair value of stock options granted during the year was INR 65.26 (March 31, 2017: INR 82.59). The Black and Scholes valuation model has been used for computing the weighted average fair value considering the following inputs:
7. Commitments and contingencies
a. Operating lease - Company as a lessee
The Company has obtained office premises under operating lease agreements out of which there is a lease agreement for an office premise for 6 years with a lock-in period of 3 years. These are generally cancellable and are renewable by mutual consent on mutually agreed terms. There are no restrictions imposed by lease agreements. There are no subleases. The details are as follows:
Finance lease - Company as a lessee
The Company has finance leases contracts for building purchased during the financial year ended March 31, 2015. These leases involve upfront payment to the lessor as and by way of premium for grant of lease of the building by the lessor to the lessee. No lease rent was payable by the lessee to the lessor for grant of lease from lessee. There is no escalation clause and no minimum lease payments (MLP) under finance lease.
b. Commitments
Note A
The Company has provided letters committing continuing financial support to its subsidiaries; Quick Heal Technologies Japan K.K., Quick Heal Technologies Africa Limited, Quick Heal Technologies America Inc. and Seqrite Technologies DMCC to meet their day to day obligations / commitments; to the extent these entities may be unable to meet their obligations.
c. Contingent liabilities
i) During the previous year and earlier years, the Company has received three statement of demands of service tax under the provisions of Finance Act, 1994 for INR 1,223.07 Million (excluding penalty of INR 626.97 Million and predeposit if any) covering the period from March 01, 2011 to March 31, 2016 on supply of anti-virus software in Compact Disk. The Company had filed an appeal with Customs, Excise and Service Tax Appellate Tribunal, New Delhi for the period March 01, 2011 to March 31, 2014 and with the Customs, Excise and Service Tax Appellate Tribunal, Mumbai for the period April 01, 2014 to March 31, 2015. Based on technical circular issued by the government authorities and an independent legal opinion, the Company is confident of getting this claim set aside and accordingly no provision for liability has been recognised in the financial statements and the demand has been disclosed as contingent liability.
ii) During the year ended March 31, 2015, the Company had received a notice of demand of VAT in the state of Kerala for INR 0.15 (VAT liability INR 0.13, Interest INR 0.02 and excluding penalty) in relation to stock transfers of anti-virus products transferred to Branch. The Company had appealed the same before the first level appellate authority in previous year. During the year ended March 31, 2018, the hearing was completed and appeal filed by the Company was dismissed by the first level appelate authority, accordingly management has provided for VAT liability, interest and penalty in the books of accounts.
d. Other litigations
i) During the previous year, the suit filed before the Civil Judge (Senior Division) at Serampore Court, Hooghly District, West Bengal by one of the erstwhile distributor of the Company against the Company and others, claiming Intellectual Property Rights to one of the brand names (Quick Heal - Total Security) and alleging illegal usage of said brand name by the Company and the suit filed before the City Civil Court, Calcutta by certain individuals who are relative of the erstwhile distributor claiming ownership of certain shares of the Company have been dismissed by the respective Courts.
ii) In February 2016, one of the erstwhile distributor instituted a suit at High Court, Calcutta against the Company and others claiming INR 16,100 for various reasons including loss of business profits, loss of capital assets & infrastructure etc. With respect to the above matters, the Company believes that the suits are frivolous and is seeking dismissal of the suits. The Company also believes that they have sufficient and strong arguments on facts as well as on point of law and accordingly no provision in this regard has been recognised in the financial results.
iii) The Director of one of the erstwhile vendor had filed a First information Report (FIR) in June 2014 at Baddi Police Station, Himachal Pradesh, against certain directors and employees of the Company. The police investigated the case and came to the conclusion that there was no truth to the allegations in the FIR. The director of one of the erstwhile vendor subsequently filed a writ petition before the Himachal Pradesh High Court against the State of Himachal Pradesh and others against the said finding of the police. The said writ petition was dismissed by Honâble Himalchal Pradesh High Court vide order dated March 23, 2018.
8. Details of dues to micro and small enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006)
There are no amounts as at March 31, 2018 (March 31, 2017: Nil) that need to be disclosed pertaining to Micro and Small Enterprises under MSMED Act, 2006. As at March 31, 2018 and March 31, 2017, the disclosure has been made on the basis of intimation provided by the supplier to the Company.
The loan given to Wegilant Net Solutions Private Limited had been utilized for meeting their working capital requirements and for their business operations.
The amount due amounting to INR 35 (March 31, 2017 INR 35) has been provided for by the company.
9. Utilization of money raised through public issue
During the year ended March 31, 2016, the Company has raised INR 4,512.53 through public issue, specifically to meet the following objects of the Offer. The utilisation of IPO proceeds during the year ended March 31, 2018 and March 31, 2017 against the following objects of the Offer is as follows:
The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management personnel. The remuneration and perquisites on account of ESOP to key management personnel does not include employee stock compensation expense. The non-executive and independent directors do not receive gratuity entitlements from the Company.
Share options held by executive members of the Board of Directors under the Share Based Payment arrangement to purchase equity shares have the following expiry dates and exercise prices:
Terms and conditions of transactions with related parties
The sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables, except for the commitments as disclosed in note 33(b)(A) . For the year ended March 31, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2017: INR Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
10 (a). Segment
The Company is engaged in providing security software solutions. The Chief Operating Decision Maker (CODM) reviews the information pertaining to revenue of each of the target customer group (segments) as mentioned below. However, based on similarity of activities/ products, risk and reward structure, organisation structure and internal reporting systems, the Company has structured its operations into one operating segment viz. anti-virus and as such there is no separate reportable operating segment as defined by Ind AS 108 âOperating segmentsâ.
- Retail
- Enterprise and Government
- Mobile
In accordance with paragraph 4 of Ind AS 108 âOperating segmentsâ, the Company has disclosed segment information only on the basis of the consolidated financial statement.
10 (d). Exceptional items
Exceptional items includes impairment of investment in wholly owned subsidiaries amounting to INR 75.09 Million (March 31, 2017: INR 6.33 Million). It also included INR Nil (March 31, 2017: INR 37.80 Million) towards impairment of financial assets being loan to and interest receivable from Wegilant Net Solutions Private Limited.
The management assessed that the fair value of cash and cash equivalents, trade receivables, trade payables and other current financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
(i) The fair value of the quoted mutual fund are based on the price quotations at reporting date. The fair value of unquoted instruments, related parties and other financial liabilities as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
(ii) The fair values of the unquoted equity shares, compulsory convertible preference shares have been estimated using a discounted cash flow (DCF) model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in managementâs estimate of fair value for these unquoted equity investments.
11. Fair value hierarchy
The following table provides the fair value measurement hierarchy of the Companyâs assets and liabilities:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 - Inputs other than quoted prices included with in Level 1 that the observable for the asset or liability, either directly (i.e. as pieces) or indirectly (i.e. derived from prices)
Level 3 - Inputs for the assets or liabilities that are not based on observable market data unobservable inputs
The following table presents the fair value measurement hierarchy of financial assets and liabilities measured at fair value on a recurring basis as at March 31, 2018 and March 31, 2017.
12. Financial instruments risk management objectives and policies
The Companyâs principal financial liabilities comprise trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations and to support its operations. The Companyâs principal financial assets include investments, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company does not have borrowings and derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
(a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include deposits, investments, receivables, payables, advances and other financial instruments. From the perspective of the Company, foreign currency risk is the most significant risk and the impact of interest rate risk and other price risk is not significant. The Company is not exposed to any material price risk.
The Company has certain financial assets and financial liabilities in foreign currencies which expose the Company to foreign currency risks. The foreign currency exposure of the Company has been disclosed in Note 44 to the financial statements.
The Company does not take any steps to hedge the foreign currency exposure as mentioned above as the Management believes that there is natural hedge to some extent and balance exposure not really having significant impact on the financial health of the Company.
Foreign currency sensitivity
The Company does not take any steps to hedge the foreign currency exposure as mentioned above as the Management believes that there is natural hedge to some extent and balance exposure not really having significant impact on the financial health of the Company.
(b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Trade receivables
Customer credit risk is managed by the Companyâs established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company follows simplified approach for recognition of impairment loss allowance on Trade receivable.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance with the Companyâs policy. Investments of surplus funds are made with banks in terms of fixed deposits and investment in designated mutual funds. Investment decision in mutual fund is taken with the assistance from appointed agent. Credit risk on cash deposits is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Other investments primarily include investment in liquid mutual fund units of reputed companies where historically, the Company has not incurred any loss due to credit risk.
(c) Liquidity risk
The Company had no outstanding bank borrowings as of March 31, 2018 and March 31, 2017. The working capital as at March 31, 2018 was INR 5,080.28 (March 31, 2017: INR 4,131.35) including cash and cash equivalents.
As at March 31, 2018 and March 31, 2017, the outstanding employee obligations were INR 34.14 and INR 37.15 respectively which have been substantially funded. Accordingly, no significant liquidity risk is perceived.
The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments.
Financial risk management Capital management
For the purpose of the Companyâs capital management, capital includes issued equity share capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholderâs value. The Company manages its capital and makes adjustments to it in light of the changes in economic and market conditions. The total equity as at March 31, 2018 is INR 7,397.48 (March 31, 2017: INR 6,790.52).
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2018 and March 31, 2017.
Mar 31, 2017
No loans are due from directors or other officers of the Company either severally or jointly with any other person. Nor any loans are due from firms or private companies respectively in which any director is a partner, a director or a member.
Loans are non-derivative financial assets which generate a fixed or variable interest income for the Company. The carrying value may be affected by changes in the credit risk of the counterparties.
In the current year, the Company has identified an impairment of Rs. 35.00 (March 31,2016: Nil; April 1,2015: Nil) on loan to Wegilant Net Solutions Private Limited. The impairment on FVTPL financial assets has been recognized as an exceptional item in the statement of profit and loss.
1. Terms / rights attached to equity shares
The Company has only one class of equity shares having par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in ensuing Annual General Meeting.
The Board of Directors, in their meeting on August 17,2015 declared an interim dividend of Rs. 6.60 per equity share for the year ended March 31,2015, which resulted in cash outflow of Rs. 485.11 inclusive of dividend distribution tax. The amount was recognized as distributions to equity shareholders during the year ended March 31,2016.
The Board of Directors, in their meeting on May 11,2016, proposed a final dividend of Rs. 2.50 per equity share and the same was approved by the shareholders at the Annual General Meeting held on August 5, 2016. The amount was recognized as distributions to equity shareholders during the year ended March 31, 2017 and the total appropriation was Rs. 210.73 including dividend distribution tax.
The Board of Directors, in their meeting on May 12,2017, have proposed a final dividend of Rs. 2.5 per equity share for the financial year ended March 31,2017. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved would result in a cash outflow of approximately Rs. 210.94 including dividend distribution tax."
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be proportion to the number of equity shares held by shareholders.
2. Shares held by holding/ ultimate holding company and /or their subsidiaries/ associates None.
The shareholding information has been extracted from the records of the Company including register of shareholders/ members and is based on legal ownership of shares.
3. Shares reserved for issue under option
For details of shares reserved for issue under ESOP of the Company, please refer note 32.
Securities premium account
Increase during the financial year 2015-16 is due to issuance of ordinary equity shares through initial public offer (refer Note 15(a)) and issuance of ordinary equity shares exercised under employee stock option scheme. Further it has been adjusted on account of share issue expenses.
Employee stock options outstanding account
The Company has two employee stock option schemes under which options to subscribe for the Company''s shares have been granted to certain executives and senior employees. The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration. Refer note 32 for further details of these plans.
Amalgamation reserve
Pursuant to the scheme of amalgamation ("the Scheme") sanctioned by the Honourable High Court of Bombay vide Order dated April 8, 2011, Cat Labs Private Limited (CLPL), subsidiary of the Company, had been merged with the Company with effect from April 1,2010, the Appointed Date. The Company completed the process of amalgamation on May 2,2011 on filing of above Court Orders with the Registrar of Companies. Accordingly, an amount of Rs. 26.45 was recorded as amalgamation reserve.
4. Earnings per share (EPS)
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on exercise of stock option.
5. Gratuity benefit plans
The Company has a defined benefit gratuity plan (funded) for its employees.The Company''s defined benefit gratuity plan is a final salary plan for its employees, which requires contributions to be made to a separately administered fund. The scheme is funded with an insurance company in the form of a qualifying insurance policy.
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service as per the provisions of the Payment of Gratuity Act, 1972.
6. Share based arrangements
Share based payment arrangement 2010
On June 10, 2010, the Board of Directors approved the Equity Settled Share Based Payment Arrangement (SBPA), for issue of stock options to the employees and directors of the Company. According to the SBPA 2010, the employee selected by the Board of Directors from time to time will be entitled for scheme options, subject to satisfaction of the prescribed vesting conditions, viz., continued employment and performance parameters of employee. The contractual life (comprising the vesting period and the exercise period) of options and the other relevant terms of the grant are as below:
The weighted average share price at the date of exercise of these options, as at March 31,2017 was Rs. 263.45.
The weighted average share price at the date of exercise of these options, as at March 31,2016 was Rs. 40.88.
Share based payment arrangement 2014
On February 6, 2014, the board of directors approved the Equity Settled ESOP Scheme 2014 for issue of stock options to the employees and directors of the Company. According to the ESOP 2014, the employee selected by the Board of Directors from time to time will be entitled for scheme options, subject to satisfaction of the prescribed vesting conditions, viz., continued employment and performance parameters of employee. The contractual life (comprising the vesting period and the exercise period) of options and the other relevant terms of the grant are as below:
For share options exercised during the reporting period, the weighted average share price at the date of exercise, or if options were exercised on a regular basis throughout the reporting period, the entity may instead disclose the weighted average share price during the reporting period.
The weighted average share price at the date of exercise of these options, as at March 31,2017 was Rs. 250.59.
The weighted average share price at the date of exercise of these options, as at March 31,2016 was Rs. 110.00.
7. Commitments and contingencies
8. Operating lease - Company as a lessee
The Company has obtained office premises under operating lease agreements out of which there is a lease agreement for an office premise for 6 years with a lock-in period of 3 years. These are generally cancellable and are renewable by mutual consent on mutually agreed terms. There are no restrictions imposed by lease agreements. There are no subleases. The details are as follows:
Note 9
During the year ended March 31,2016, the Company had entered into an agreement for making an investment of Rs. 60 in equity shares of Smartalyse Technologies Private Limited ("Smartalyse") by way of two tranches of Rs. 30 each. The Company had already made in investment ofRs. 30 in Smartalyse which has been disclosed under âon-current investment''. The second tranches of investment will be made within a period of 9 months from the date of execution of the agreement (i.e. November 3,2015) upon satisfaction of certain terms and conditions as enunciated in the agreement. Subsequently, during the year ended March 31,2017, the Company has made the second tranche of an investment of Rs. 30 in Smartalyse.
Note 10
The Company has provided letters committing continuing financial support to its subsidiaries; Quick Heal Technologies Japan K.K., Quick Heal Technologies Africa Limited, Quick Heal Technologies America Inc., Quick Heal Technologies (MENA) FZE and Seqrite Technologies DMCC to meet their day to day obligations / commitments; to the extent these entities may be unable to meet their obligations.
Finance lease - Company as a lessee
The Company has finance leases contracts for building purchased during the financial year ended March 31,2015. These leases involve upfront payment to the lessor as and by way of premium for grant of lease of the building by the lessor to the lessee. No lease rent was payable by the lessee to the lessor for grant of lease from lessee. There is no escalation clause and no minimum lease payments (MLP) under finance lease.
11. During the year ended March 31, 2016, the Company had received a statement of demand dated January 28, 2016 in relation to service tax for Rs. 560.71 (excluding penalty of Rs. 560.72) for the period from March 01, 2011 to March 31, 2014 on anti-virus software in Compact Disk issued by Additional Director General, New Delhi. The Company had filed an appeal with the Customs, Excise and Service Tax Appellate Tribunal against the said order. The management has represented, based on legal opinion obtained by the Company, that they have sufficient and strong arguments on fact as well as on point of law and outflow is not probable. Accordingly, no provision for liability has been recognized in the financial statements and the demand has been disclosed as contingent liability as at March 31, 2017, March 31, 2016 and April 1, 2015.
12. During the year ended March 31, 2016, the Company had received statement of demand dated January 25, 2016, in relation to the Service tax of Rs. 285.35 (excluding interest and penalties) for the period April 2014 to March 2015 on supply of anti-virus replicated CDs/DVDs along with license keys through dealers/ distributors to end customers in India issued by Principal Commissioner of Service tax, Pune. During the year ended March 31, 2017, the Company has received an order dated March 31, 2017 confirming the demand of Rs. 285.35 (excluding penalty of Rs. 28.55). The Company is in the process of filing a reply against the said notice with appropriate authority. The management has represented, based on legal opinion obtained by the Company, that they have sufficient and strong arguments on fact as well as on point of law and outflow is not probable. Accordingly, no provision for liability has been recognized in the financial statements and the demand has been disclosed as contingent liability as at March 31, 2017, March 31, 2016 and April 1, 2015.
Based on the grounds mentioned in point (i) and (ii) above, the Company has not recognized provision for liability in the financial statements in relation to the potential consequential liability for service tax for the period April 1, 2015 to March 31,2017."
13. During the year ended March 31,2015, the Company had received a notice of demand of VAT in the state of Kerala for Rs. 0.15 (VATRs. 0.13; Interest Rs. 0.02 and excluding penalty) on the ground of dispute in the stock transfer of antivirus products transferred to the Branch. The Company had appealed the same before the first level appellate authority and the management had represented that they have sufficient and strong arguments on facts as well as on point of law and outflow is not probable. Accordingly, no provision for liability has been recorded in the financial statements and the demand has been disclosed as contingent liability as at March 31, 2017, March 31, 2016 and April 1,2015.
14. This represented disputed income tax demand of Rs. 3.50 (including interest of Rs. 0.36 and excluding penalty) under section 156 of the Income-tax Act, 1961 related to A.Y. 2010-11 .The Company had filed appeals against assessment order with relevant authorities and have received favourable order.
15. Other litigations
16. During the current year, the suit filed before the Civil Judge (Senior Division) at Serampore Court, Hooghly District, West Bengal by one of the erstwhile distributor of the Company against the Company and others, claiming Intellectual Property Rights to one of the brand names (Quick Heal - Total Security) and alleging illegal usage of said brand name by the Company and the suit filed before the City Civil Court, Calcutta by certain individuals who are relative of the erstwhile distributor claiming ownership of certain shares of the Company have been dismissed by the respective Courts.
17. In February 2016, one of the erstwhile distributor instituted a suit at High Court, Calcutta against the Company and others claiming Rs. 16,100 for various reasons including loss of business profits, loss of capital assets & infrastructure etc. With respect to the above matters, the Company believes that the suits are frivolous and is seeking dismissal of the suits. The Company also believes that they have sufficient and strong arguments on facts as well as on point of law and accordingly no provision in this regard has been recognized in the financial results.
18 The Director of one of the erstwhile vendor had filed a First information Report (FIR) in June 2014 at Baddi Police Station, Himachal Pradesh, against certain directors and employees of the Company. The police investigated the case and came to the conclusion that there was no truth to the allegations in the FIR. The director of one of the erstwhile vendor subsequently filed a writ petition before the Himachal Pradesh High Court against the State of Himachal Pradesh and others against the said finding of the police.
19. Details of dues to micro and small enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006)
There are no amounts as at March 31, 2017 (March 31, 2016: Nil) that need to be disclosed pertaining to Micro and Small Enterprises under MSMED Act, 2006. As at March 31, 2017 and March 31, 2016, the disclosure has been made on the basis of intimation provided by the supplier to the Company.
20. Share issue expenses recoverable
During the year ended March 31, 2016, the Company had completed its Initial Public Offer (IPO) through an Offer for Sale of 6,269,558 equity shares and a fresh issue of 7,788,161 equity shares at a price of Rs. 321 per share (including share premium of Rs. 311 per equity share). Sequoia Capital India Investments III, which was holding 2,501,984 equity shares in the Company offered its entire holding in the Offer for Sale. Sequoia Capital India Investment Holdings III offered 87,574 equity shares, Mr. Kailash Katkar.and Sanjay Katkar offered 1,840,000 equity shares and 1,840,000 equity shares, respectively in the Offer for Sale in order to comply with SEBI''s requirement of maximum holding of promoter and promoter group to 75%. Since the issue was an Offer for Sale and a fresh issue, all the share issue expenses related to the IPO have been proportionately distributed between the Company and the selling shareholders.
Share issue expenses
Other financial assets comprises share issue expenses incurred in connection with proposed Initial Public offer (IPO) only by way of offer for sale by existing shareholders of the Company and a fresh issue offered to public. These receivables includes fees paid to bankers, stock exchanges, SEBI, lawyers, auditors, etc., in connection with the IPO of the Company. As per offer agreement between the Company and the selling shareholders, all expenses with respect to the IPO have been proportionately distributed between the Company and the selling shareholders. Accordingly, the Company has classified the expenses incurred in connection with the IPO as receivable from selling shareholders under other receivables, since these are not the expenses for the Company.
21. Segment
The Company is engaged in providing security software solutions. The Chief Operating Decision Maker (CODM) reviews the information pertaining to revenue of each of the target customer group (segments) as mentioned below. However, based on similarity of activities/products, risk and reward structure, organization structure and internal reporting systems, the Company has structured its operations into one operating segment viz. anti-virus and as such there is no separate reportable operating segment as defined by Ind AS 108"0perating segments".
- Retail
- Enterprise and Government
- Mobile
In accordance with paragraph 4 of Ind AS 108''Operating segments'', the Company has disclosed segment information only on the basis of the consolidated financial statement.
22. Delay in filing of Form FC-GPR
During the previous year there was an un-intentional delay in reporting of foreign inward remittances and filing of form FC-GPR in respect of the shares allotted to non- resident shareholders in the Form FC - GPR as required under the FDI Regulations of FEMA1999, which was due to delay in receipt of foreign inward remittance certificates from the authorized dealers (AD). The said Form FC-GPR had been submitted for filing by the Company to AD.
23. Exceptional items
Exceptional items includes Rs. 37.80 (March 31, 2016: Rs. Nil) towards impairment of financial assets being loan to and interest receivable from Wegilant Net Solutions Private Limited. It also includes impairment of investment in Quick Heal Technologies (MENA) FZE, UAE amounting to Rs. 6.33 (March 31,2016: Rs. Nil).
The management assessed that the fair value of cash and cash equivalents, trade receivables, trade payables and other current financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
24. The fair value of the quoted mutual fund are based on the price quotations at reporting date. The fair value of unquoted instruments, related parties and other financial liabilities as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
25. The fair values of the unquoted equity shares, compulsory convertible preference shares have been estimated using a discounted cash flow (DCF) model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments.
Level 3 - Inputs for the assets or liabilities that are not based on observable market data unobservable inputs
The following table presents the fair value measurement hierarchy of financial assets and liabilities measured at fair value on a recurring basis as at March 31,2017, March 31,2016 and April 1,2015.
26. Financial instruments risk management objectives and policies
The Company''s principal financial liabilities comprise trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations and to support its operations. The Company''s principal financial assets include investments, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company does not have borrowings and derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized below:
27. Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include deposits, investments, receivables, payables, advances and other financial instruments. From the perspective of the Company, foreign currency risk is the most significant risk and the impact of interest rate risk and other price risk is not significant. The Company is not exposed to any material price risk.
The Company has certain financial assets and financial liabilities in foreign currencies which expose the Company to foreign currency risks. The foreign currency exposure of the Company has been disclosed in Note 45 to the financial statements.
The Company does not take any steps to hedge the foreign currency exposure as mentioned above as the Management believes that there is natural hedge to some extent and balance exposure not really having significant impact on the financial health of the Company.
28. Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Trade receivables
Customer credit risk is managed by the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company follows simplified approach for recognition of impairment loss allowance on Trade receivable.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made with banks in terms of fixed deposits and investment in designated mutual funds. Investment decision in mutual fund is taken with the assistance from appointed agent. Credit risk on cash deposits is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Other investments primarily include investment in liquid mutual fund units of reputed companies where historically, the Company has not incurred any loss due to credit risk.
29. Liquidity risk
The Company had no outstanding bank borrowings as of March 31,2017, March 31,2016 and April 1,2015. The working capital as at March 31,2017 was Rs. 4,131.35 (March 31, 2016: Rs. 4,020.55; April 1,2015: Rs. 1,710.47) including cash and cash equivalents.
As at March 31,2017, March 31,2016 and April 1,2015, the outstanding employee obligations were Rs. 37.15, Rs. 33.13 and Rs. 31.50 respectively which have been substantially funded. Accordingly, no significant liquidity risk is perceived.
Financial risk management Capital management
For the purpose of the Company''s capital management, capital includes issued equity share capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder''s value. The Company manages its capital and makes adjustments to it in light of the changes in economic and market conditions. The total equity as at March 31, 2017 is Rs. 6,790.52 (March 31, 2016: Rs. 6,399.97 and April 1, 2015: Rs. 3,872.65).
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2017, March 31, 2016 and April 1,2015.
30.. First time adoption of Ind AS
As stated in note 2, these are the Company''s first financial statements prepared in accordance with Ind AS.
The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended March 31, 2017, the comparative information presented in these financial statements for the year ended March 31, 2016 and in the preparation of an opening Ind AS balance sheet as at April 1, 2015 (the Company''s date of transition).
These financial statements, for the year ended March 31,2017, are the first financial statement which Company has prepared in accordance with Ind AS. In preparing these financial statements. Company''s opening statement of financial position was prepared as at April 1,2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1,2015 and the financial statements as at and for the year ended March 31,2016.
In preparing its opening Ind AS balance sheet, the Company has adjusted amounts reported previously in financial statements prepared in accordance with Indian GAAP. An explanation of how the transition from Indian GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flow is set out below.
In preparing its opening Ind AS balance sheet, the Company has applied the following principles for assets, liabilities and equity forming part of the combined financial statements:
Recognize all assets and liabilities whose recognition is required by Ind ASs;
Not recognize items as assets and liabilities if Ind ASs do not permit such recognition;
Reclassify items that it recognized in accordance with previous GAAP as one type of asset, liability or component of equity, but are a different type of asset, liability or component of equity in accordance with IndAS; and apply Ind ASs in measuring all recognized assets and liabilities.
Exemptions available under Ind AS 101
In preparing these financial statements, the Company has availed itself of certain exemptions and exceptions in accordance with Ind AS 101 as explained below:
31. Since there is no change in functional currency, the Company has elected to continue with the carrying value for all of its Property, plant and equipment and Intangible assets as recognized in its Indian GAAP financial statements as deemed cost at the date of transition.
32. Ind AS 102 Share-based Payment has not been applied to equity instruments in share-based payment transactions that vested before April 1,2015.
33. The Company has elected to continue use the Indian GAAP carrying amount for investment in subsidiaries as deemed cost as at the date of transition.
Exceptions from full retrospective application:
Estimates
The estimates at April 1,2015 and at March 31,2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items where application of Indian GAAP did not require estimation:
FVTOCI - unquoted equity shares
FVTPL - debt securities
Impairment of financial assets based on expected credit loss model
The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2015, the date of transition to Ind AS and as of March 31,2016.
Explanation of transition to Ind AS:
The below mentioned reconciliations provide a quantification of the effect of significant differences arising from the transition from Indian GAAP to Ind AS in accordance with Ind AS 101 for the following:
- equity as at April 1,2015;
- equity as at March 31,2016; and
- profit for the year ended March 31,2016
There are no material adjustments to the cash flow statements
In the reconciliations mentioned above, certain reclassifications have been made to Indian GAAP financial information to align with the Ind AS presentation.
34. FVTOCI financial assets
Under Indian GAAP, the Company accounted for long term investments in unquoted equity shares and preference shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated such investments as FVTOCI investments. Ind AS requires FVTOCI investments to be measured at fair value. The difference between the instrument''s fair value and Indian GAAP carrying amount has been recognized as a separate component of equity, in the FVTOCI reserve.
35. FVTPL financial assets
Under Indian GAAP, the Company accounted for investment in mutual funds as investment measured at lower of cost and market value. Under Ind AS, the Company has classified such investments as FVTPL investments. Ind AS requires FVTPL investments to be measured at fair value. The difference between the instrument''s fair value and Indian GAAP carrying amount has been recognized in retained earnings, as at transition date and in statement of profit and loss for the year ended March 31,2016.
36. Employee stock option
Under Indian GAAP, the Company recognized only the intrinsic value for the long-term incentive plan as an expense. Ind AS requires the fair value of the share options to be determined using an appropriate pricing model recognized over the vesting period. An additional expense of Rs. 2.44 million has been recognized in statement of profit and loss for the year ended March 31,2016. Share options which were granted before and still vesting at April 1,2015, have been recognized as a separate component of equity in ESOP reserve against retained earnings as at April 1,2015.
37. Defined benefit obligation
Both under Indian GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to statement of profit and loss. Under Ind-AS, re-measurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.
38. Deferred tax
Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.
In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction in retained earnings as at transition date and statement of profit and loss for the year ended March 31,2016.
39. Other equity
Consequential impact of the abovementioned Ind AS Adjustments have been considered in retained earnings and other comprehensive income.
40. Other comprehensive income
Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.
41. Other payables
Under Indian GAAP, proposed dividends including DDT are recognized as a liability in the year to which they relate, irrespective of when they are declared. Under Ind AS, a proposed dividend is recognized as a liability in the year in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid. In the case of the Company, the declaration of dividend occurs after year end. Therefore, the liability of Rs. 485.11 for the year ended on March 31,2015 recorded for dividend has been derecognized against retained earnings on April 1, 2015. The proposed dividend for the year ended on March 31,2016 of Rs. 210.73 recognized under Indian GAAP was reduced from other payables and with a corresponding impact in the retained earnings.
42. Trade payables and Trade receivables
Under Indian GAAP, sales incentive payable for one customer was disclosed under Trade payables whereas trade receivable from the same customer was disclosed under Trade receivables. Under Ind AS, these balances have been netted off.
43. Revenue from operation and other expenses
Under Indian GAAP, sales incentive and promotional expenses was disclosed under other expenses. Under Ind AS, these expenses have been netted off against revenue from operation.
Mar 31, 2016
1. Gratuity
The Company has a defined benefit gratuity plan for its employees. Under the gratuity plan, every employee who has completed
five years or more of service gets a gratuity on departure at 15 days of last drawn salary for each completed year of service.
The scheme is funded with an insurance Company in the form of a qualifying insurance policy.
The following tables summarise the components of net benefit expense recognized in the statement of profit and loss and the
funded status and amounts recognized in the balance sheet for the gratuity plan.
2. Employee stock option plan
The Company provides share-based payment schemes to its employees. During the year ended March 31, 2016, an employee stock
option plan (ESOP) was in existence. The relevant details ofthe scheme and the grant are as below:
i. Details of Employee stock option plan Employee Stock Option Plan, 2010 (ESOP 2010)
On June 10, 2010, the Board of Directors approved the Equity Settled ESOP Scheme 2010 for issue of stock options to the employees
and directors of the Company. According to the ESOP 2010, the employee selected by the Board of Directors from time to time will
be entitled for scheme options, subject to satisfaction of the prescribed vesting conditions, viz., continued employment and
performance parameters of employee. The contractual life (comprising the vesting period and the exercise period) ofoptions and
the other relevant terms ofthe grant are as below:
3. Segment information
Primary segment
The Company is engaged in providing security software solutions. Based on similarity of activities/products, risk and reward
structure, organisation structure and internal reporting systems, the Company has structured its operations into one business
segment.
Geographical segment
Secondary segment reporting is performed on basis of location of customers. The Company has identified India and outside India as
two geographical segments for secondary segment reporting. All assets and liabilities of the Company except trade receivables are
situated in India.
Note A
The Company has entered into an agreement for making an investment of Rs. 60,000,000 in equity shares of Smartalyse Technologies
Private Limited ("Smartalyse") by way of two tranches of Rs. 30,000,000 each. The Company has already made an investment of Rs.
30,000,000 in Smartalyse which has been disclosed under ''Non-current investments''. The second tranche of investment will be made
within a period of 9 months from the date ofthe execution ofthe agreement (i.e. November 3, 2015) upon satisfaction of certain
terms and conditions as enunciated in the agreement.
Note B
For lease related commitments refer note 26.
Note C
The Company has provided letters committing continuing financial support to its subsidiary, Quick Heal Technologies Africa
Limited and Quick Heal Technologies America Inc. to meet their day to day obligations / commitments; to the extent these entities
may be unable to meet their obligations
Notes:
i. During the current year, the Company received a statement of demand dated January 28, 2016 in relation to the show cause
notice of service tax forRs. 550,705,595 (excluding penalty ofRs. 560,715,595) for the period from March 01, 2011 to March 31,
2014 on supply of anti-virus software in Compact Disk issued by Additional Director General, New Delhi. The Company has filed an
appeal with Customs, Excise and Service Tax Appellate Tribunal, New Delhi against the said demand. Based on recent technical
circular issued by government authorities and an independent legal opinion, the Company is confident of getting this claim set
aside and accordingly no provision have been considered necessary in this regards and also for the subsequent period till March
31, 2016.
ii. During the current year, the Company received statement of demand dated January 25, 2016, in relation to Service tax ofRs.
285,354,034 (excluding interest and penalties) forthe period April 01, 2014to March31, 2015 on supply of anti-virus replicated
CDs/DVDs along with license keys through dealers/ distributors to end customers in India issued by Principal Commissioner of
Service tax, Pune. The Company is in the process of filing a reply against the said notice with appropriate authority. Based on
recent technical circular issued by government authorities and an independent legal opinion, the Company is confident of getting
this claim set aside and accordingly no provision have been considered necessary in this regards and also for the subsequent
period till March 31, 2016.
Based on the grounds mentioned in point (i) and (ii) above, the Company has not recognised provision for liability in the
financial statements in relation to the potential consequential liability for service tax for the period April 1, 2015 to March
31, 2016.
iii. During the year ended March 31, 2015, the Company had received a notice of demand of VAT in the state of Kerala for Rs.
154,326 (VAT Rs. 130,785; Interest Rs. 23,541 and excluding penalty) on the ground of dispute in the stock transfer of
anti-virus products transferred to the Branch. The Company had appealed the same before the first level appellate authority and
the management had represented that they have sufficient and strong arguments on facts as well as on point of law and outflow is
not probable. Accordingly, no provision for liability has been recorded in the financial statements and the demand has been
disclosed as contingent liability as at March 31, 2016 and as at March 31, 2015.
iv. This represents disputed income tax demand ofRs. 3,504,300 (including interest of Rs. 361,467 and excluding penalty) under
section 156 of the Income-tax Act, 1961 related to A.Y. 2010-11. The Company has filed appeals against assessment order with
relevant authorities. The management had represented that they have sufficient and strong arguments on facts as well as on point
of law and outflow is not probable. Accordingly, no provision for liability has been recorded in the financial statements and the
demand has been disclosed as contingent liability as at March 31, 2016 and as at March 31, 2015.
(B) Other litigation
i) One of the erstwhile distributor of the Company, had filed a title suit in February 2016 before the Civil Judge (Senior
Division) at Serampore Court, Hooghly District, West Bengal against the Company and others, claiming Intellectual Property Rights
to one of the brand names (Quick Heal-Total Security) and alleging illegal usage of said brand name by the Company. The Company
is seeking dismissal of the said Title Suit.
ii) In February 2016, certain individuals who are relative of one of the erstwhile distributor instituted a suit before the City
Civil Court, Calcutta claiming ownership of certain shares of the Company.
iii) In February 2016, one of the erstwhile distributor instituted a suit at High Court, Calcutta against the Company and others
claiming Rs. 16,100 million for various reasons including loss of business profits, loss of capital assets and infrastructure
etc.
With respect to the above matters, the Company believes that the suits are frivolous and is seeking dismissal ofthe suits. The
Company also believes that they have a sufficient and strong arguments on facts as well as on point of law and accordingly no
provision in this regard has been recognised in the financial results..
iv) The Director of one of the erstwhile vendor had filed a First information Report (FIR) in June 2014 at Baddi Police Station,
Himachal Pradesh, against certain directors and employees of the Company. The police investigated the case and came to the
conclusion that there was no truth to the allegations in the FIR. The director of one of the erstwhile vendor subsequently filed
a writ petition before the Himachal Pradesh High Court against the State of Himachal Pradesh and others against the said finding
ofthe police.
4. Details of dues to micro and small enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006
There are no amounts as at March 31, 2016 (March 31, 2015: Nil) that need to be disclosed pertaining to Micro and Small
Enterprises under MSMED Act, 2006.
As at March 31, 2016 and previous year March 31, 2015, the disclosure has been made on the basis of intimation provided by the
supplier to the Company.
5. Share issue expenses recoverable
During the year, the Company has completed its Initial Public Offer (IPO) through an Offer for Sale of 6,269,558 equity shares
and a fresh issue of 7,788,161 equity shares at a price ofRs. 321 per share (including share premium of Rs.311 per equity share).
Sequoia Capital India Investments III, which was holding 2,501,984 equity shares in the Company offered its entire holding in the
Offer for Sale. Sequoia Capital India Investment Holdings III offered 87,574 equity shares, Mr. Kailash Katkar, and Sanjay
Katkar offered 1,840,000 equity shares and 1,840,000 equity shares, respectively in the Offer for Sale in order to comply with
SEBI''s requirement of maximum holding of promoter and promoter group to 75%. Since the issue was an Offer for Sale and a fresh
issue, all the share issue expenses related to the IPO have been proportionately distributed between the Company and the selling
shareholders.
Share issue expenses
Other receivables comprises share issue expenses incurred in connection with proposed Initial Public offer (IPO) only by way of
offer for sale by existing shareholders of the Company and a fresh issue offered to public. These receivables include fees paid
to bankers, stock exchanges, SEBI, lawyers, auditors, etc., in connection with the IPO ofthe Company. As per offer agreement
between the Company and the selling shareholders, all expenses with respect to the IPO have been proportionately distributed from
between the Company and the selling shareholders. Accordingly, the Company has classified the expenses incurred in connection
with the IPO as receivable from selling shareholders under other receivables, since these are not the expenses for the Company.
41. Delay in filing of Form FC-GPR
During the current year there is an un-intentional delay in reporting of foreign inward remittances and filing of form FC-GPR in
respect ofthe shares allotted to non- resident shareholders in the Form FC GPR as required underthe FDI Regulations of FEMA 1999,
which was due to delay in receipt of foreign inward remittance certificates from the authorised dealers (AD). The said Form FC
GPR has been submitted for filing by the Company to AD, as on the date of this certificate.
42. Loans and advances given to subsidiaries and associates and firms/ companies in which directors are interested
Advances given to wholly owned subsidiary
43. Previous year figures
Previous year''s figures have been regrouped, where necessary, to conform to current year''s classification.
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