r) Provision, Contingent Liabilities and Contingent Assets
The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liability is made when there is possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.
Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect current best estimates.
Contingent assets are neither recognised nor disclosed.
s) Employee benefits
i) Defined Contribution Plan
Contribution to defined contribution plans are recognised as expense in the Statement of Profit and Loss, as they are incurred.
ii) Defined Benefit Plan
Company's liabilities towards gratuity and leave encashment are determined using the projected unit credit method with actuarial valuation being carried out as at Balance Sheet date. Actuarial gains / losses are recognised immediately in the Statement of Profit and Loss. Long-term compensated absences are provided for based on actuarial valuation.
iii) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12
months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
iv) Performance Based Employee Stock Option Plan
The Company recognizes compensation expenses relating to share-based payments in net profit based on estimated fair- value of the awards on the grant date. The estimated fair value of awards is recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was in - substance. The entitlement of award which depends on the various parameters will be reviewed on annual basis.
t) Contributed equity
Equity shares are classified as equity.
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.
u) Earnings per share
In determining Earnings per Share, the Company considers the net profit attributable to company's owners. The number of shares used in computing basic Earnings per Share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted Earnings per Share comprises the weighted average shares considered for deriving basic Earnings per Share and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.
v) Recent Indian Accounting Standards (Ind AS)
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
* During the previous year in the promoter and promoter group holding, Delta Infosolutions Private Limited (erstwhile holding company) was holding 32,098,742 equity shares being 54.45% of the shareholding of the Company. Pursuant to scheme of Amalgamation, inter alia, under Section 230-232 of the Companies Act, 2013, ("Scheme") between Delta Infosolutions Private Limited (Delta) and Datamatics Global Services Limited (DGSL) and their respective shareholders, for amalgamation and vesting of Delta into DGSL with effect from April 01, 2021. The NCLT has approved the amalgamation of Delta with the Company vide order no. CP (CAA) 239/MB/C-NI/2023 in connected with CA (CAA) 50/MB/C-NI/2023 dated 13 February 2024 and as a part of the scheme the shares held by Delta in the Company were to be transferred to the shareholders of Delta in the proportion of their holding in the Delta and accordingly the previous years promotors holding have been restated.
(v) Terms / rights attached to equity shares
The Company, at present, has one class of equity shares having a par value of Rs. 5 per share. Each shareholder is eligible for one vote per share held. The voting rights on Unclaimed Suspense Account shares are frozen till the rightful owner of such shares claims the shares. The Company declares and pays dividend in Indian Rupees. The remittance of dividends outside India is governed by Indian law on foreign exchange and is subject to applicable distribution taxes. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Nature of reserves
(i) Securities Premium
Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provision of the Companies Act, 2013.
(ii) General Reserve
The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the General reserve is created by a transfer from one component of equity to another and is not item of other comprehensive income, items included in the General reserve will not be reclassified subsequently to statement of profit and loss.
(iii) PSOP Reserve
PSOP reserve is created for issue of share capital under Performance Based Employee Stock Option Plan ('PSOP') 2022.
(iv) OCI - Equity investments
The company recognises unrealised and realised gain on equity shares in FVOCI - Equity investments.
(v) OCI - Cash Flow Hedging Reserve
The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flow hedging reserve. Such gains or losses will be reclassified to statement of profit and loss in the period in which the hedged transaction occurs.
ii) Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
* the use of quoted market prices or dealer quotes for similar instruments
All of the resulting fair value estimates are included in level 3 except for unlisted equity securities, contingent consideration and indemnification asset, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.
iii) Valuation processes
The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature.
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
Note 37: Financial risk management
The company’s activities expose it to market risk, liquidity risk and credit risk. In order to minimise any adverse effects on the financial performance of the company, derivative financial instruments, such as foreign exchange forward contracts are entered to hedge certain foreign currency risk exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements.
A) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses the direct risk of default, risk of deterioration of creditworthiness as well as concentration risks. The Company is exposed to credit risk from its operating activities (primarily trade receivables), deposits with banks and loans given.
Credit risk management
The company's credit risk mainly from trade receivables as these are typically unsecured. This credit risk has always been managed through credit approvals, establishing credit limits and continuous monitoring the creditworthiness of customers to whom credit is extended in the normal course of business. The Company estimates the expected credit loss based on past data, available information on public domain and experience. Expected credit losses of financial assets receivable are estimated
B) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company treasury maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, the company’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
C) Market risk
i) Foreign currency risk
The company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, EUR and GBP. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company’s functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the INR cash flows of highly probable forecast transactions.
The company’s risk management policy is to hedge around 50% to 70% of forecasted receivables for the subsequent 18 months. As per the risk management policy, foreign exchange forward contracts are taken to hedge round 50% to 70% of the forecasted receivables.
ii) Cash flow and fair value interest rate risk
The company’s main interest rate risk arises from long-term borrowings with variable rates, which expose the company to cash flow interest rate risk. company policy is to maintain most of its borrowings at fixed rate using interest rate swaps to achieve this when necessary.
The company’s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
iii) Price risk a) Exposure
The company’s exposure to equity securities price risk arises from investments held by the company and classified in the balance sheet either as fair value through OCI or at fair value through profit or loss.
To manage its price risk arising from investments in equity securities, the company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the company.
All of the company’s equity investments are publicly traded.
Note 38: Capital management
a) Risk management
For the purpose of the Company’s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders. The primary objective of the Company capital management is to maximise the shareholder value.
III. Leave Encashment
The Company has a policy on compensated absences which is accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each Balance Sheet date. This is done using projected unit credit method on the additional amount expected to be paid / availed as a result of the unused entitlement that has accumulated at the Balance Sheet date. Expenses relating to the same are recognised in the statement of profit and loss.
IV. Performance Based Employee Stock Option Plan ('PSOP') 2022
The Company has granted Stock Options under Performance Based Employee Stock Option Plan 2022 ("PSOP 2022"). The plan shall extend to present and future eligible employees of the Company or its Subsidiary/ies or its Group Company(ies) working exclusively for such company whether within or outside India and/or such other persons, as may be permitted from time to time, under Applicable Laws, rules and regulations and/or amendments thereto as eligible to participate in this PSOP 2022 who meet the eligibility criteria set out in the Grantee’s Option Agreement in accordance with this PSOP 2022 as determined by the Compensation Committee from time to time. Stock Options shall vest based upon satisfaction of the performance criteria. The continuation of employee in the services of the Company shall be the primary requirement of the vesting.
a) Non-cancellable operating leases
The Company’s significant leasing arrangements are mainly in respect of residential and office premises. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other expenses" in Note 35. These leasing arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms.
The Company in accordance with its risk management policies and procedures, enters into foreign currency forward contracts to manage its exposure in foreign exchange rates. The counter party is generally a bank. The foreign exchange forward contracts mature within a period of one month and two years.
The Company uses forward exchange contracts to hedge its exposure in foreign currency on highly probable forecast transactions. The information on derivative instruments is given below. The table below analyzes the derivative financial instruments into relevant maturity groupings based on the remaining period as of the balance sheet date:
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the company as per the Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013:
No single customer represents 10% or more of the Company's total revenue during the year ended March 31, 2024 and March 31, 2023.
While disclosing the aggregate amount of transaction price yet to be recognised as revenue towards unsatisfied (or partially satisfied) performance obligations, along with the broad time band for the expected time to recognise those revenues, the Company has applied the practical expedient in Ind AS 115. Accordingly, the Company has not disclosed the aggregate transaction price allocated to unsatisfied (or partially satisfied) performance obligations which pertain to contracts where revenue recognise corresponds to the value transferred to customer typically involving time and material, outcome based and event based contracts. Unsatisfied (or partially satisfied) performance obligations are subject to variability due to several factors such as terminations, changes in scope of contracts, periodic revalidations of estimates, economic factors (changes in currency rates, tax laws etc). This excludes transactions with subsidiaries of the Company.
Note 50: Amalgamation of Delta Infosolutions Private Limited with company
The Board of Directors, in their meeting held on March 04, 2022, subject to obtaining the requisite approvals/consents, had approved the Scheme of Amalgamation, inter alia, under Section 230-232 of the Companies Act, 2013, ("Scheme”) between Delta Infosolutions Private Limited (Delta) and Datamatics Global Services Limited (DGSL) and their respective shareholders.
Subsequently, after obtaining requisite approvals from BSE and NSE, shareholders and creditors, Regional Director, Official Liquidator, and complying with other procedural formalities, the Hon'ble National Company Law Tribunal, Mumbai Bench, sanctioned the Scheme vide order dated 13 February 2024. The Company has allotted shares to the shareholders of Delta Infosolutions Private Limited vide its board meeting on 21 March 2024, as intimated to BSE and NSE on 21 March 2024.
The Company and Delta have complied with all the requisite filings as per directions of the National Company Law Tribunal, Mumbai Bench ("NCLT”). The NCLT has approved the amalgamation of Delta with the Company vide order no. CP (CaA) 239/MB/C-III/2023 in connected with CA (CAA) 50/MB/C-III/2023 dated 13 February 2024. In view thereof, since the amalgamation of Delta with DGSL is effective from April 01, 2021 i.e. the appointed date and the business combination being under common control, The amalgamation effect has been given in the books and accordingly previous years figures have been restated as per the IND AS 103 on Business Combination. Following is effect given in the previous years figures.
As per Companies (Accounting Standards) Rules, 2013 issued by the Central Government, in consultation with National Advisory Committee on Accounting Standards ('NACAS') and the relevant provisions of the Companies Act, 2013, to the extent applicable, the carrying value of the asset has been reviewed for impairment of assets.
Note 52: Transfer pricing
The Management is of the opinion that its international transactions are at arm's length as per the independent accountants certificate for the year ended March 31, 2024. The Management continues to believe that its international transactions during the current financial year are at arm's length and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expense and that of provision for taxation.
Note 53: Events occuring after Balance Sheet date
Dividend
Dividends declared by the Company are based on the profit available for distribution. On May 08, 2024, the Board of Directors of the Company have proposed final dividend of Rs. 5 per equity share (i.e 100%) in respect of the year ended March 31, 2024 subject to the approval of shareholders at the Annual General Meeting.
Note 54:
There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
Note 55:
The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
Note 56:
The Company has not revalued its property, plant and equipment (including right to use assets) or intangible assets or both during the current or previous year.
Note 57:
The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
No proceeding has been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
Note 59: Relationship with struck off Companies
The Company has no transaction with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.
Note 60: Borrowings from Banks
The Company has borrowings from banks on the basis of security of current assets and quarterly returns or statements of current assets filed by the Company with banks are in agreement with the books of account.
Note 61: Previous year's figures
Previous year figures are appropriately regrouped / reclassified and rearranged wherever necessary to conform to the current year's presentation along with disclosure.
As per our attached report of even date
For M L BHUWANIA AND CO LLP For and on Behalf of the Board
Chartered Accountants FRN: 101484W/W100197
Dr. Lalit S. Kanodia Rahul L. Kanodia
Ashishkumar Bairagra Chairman Vice Chairman & CEO
Partner DIN 00008050 DIN 00075801
Membership No. 109931
Divya Kumat Sandeep Mantri
Place : Mumbai EVP, Chief Legal Officer EVP, Chief Financial Officer
Dated : May 8, 2024 & Company Secretery
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