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Company Information

Home » Market » Company Information

Repro India Ltd.

Dec 03
578.95 +5.25 (+ 0.92 %)
 
VOLUME : 1104
Prev. Close 573.70
Open Price 583.00
TODAY'S LOW / HIGH
573.10
 
 
 
587.95
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 0.00 (0)
52 WK LOW / HIGH
325.05
 
 
 
660.00
Dec 03
580.55 +6.45 (+ 1.12 %)
 
VOLUME : 3103
Prev. Close 574.10
Open Price 574.10
TODAY'S LOW / HIGH
574.10
 
 
 
590.00
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 0.00 (0)
52 WK LOW / HIGH
326.15
 
 
 
679.20
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Market Cap. ( ₹ ) 738.11 Cr. P/BV 2.63 Book Value ( ₹ ) 220.37
52 Week High/Low ( ₹ ) 679/326 FV/ML 10/1 P/E(X) 0.00
Bookclosure 07/11/2020 TTM EPS ( ₹ ) -21.97 Div Yield (%) 0.00
NOTES TO ACCOUNTS
You can view the entire text of Notes to accounts of the company for the latest year
Year End :2018-03 

1. Reporting entity

Repro India Limited (“the Company”) is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and National Stock Exchange. The Company provides print solutions to clients, which mainly includes value engineering, creative designing, pre-press, printing, post-press, knitting and assembly, warehousing, dispatch, database management, sourcing and procurement, localization and web based services.

2. Basis of preparation

A. Statement of compliance

These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 and other relevant provisions of the Act.

These financial statements for the year ended March 31, 2018 are the first financial statements, the Company has prepared under Ind AS. For all periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with the Companies (Accounting Standards) Rules, 2006 notified under the Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as ‘IGAAP’) used for its statutory reporting requirement in India immediately before adopting Ind AS. The Financial statements for the year ended March 31, 2017 and the opening Balance Sheet as at April 1, 2016 have been restated in accordance with Ind AS for comparative information. Reconciliations and explanations of the effect of the transition from IGAAP to Ind AS on the Company’s Balance Sheet, Statement of Profit and Loss and Statement of Cash Flows are provided in note 38.

These financials statements have been approved for issue by the Board of Directors at their meeting held on May 24, 2018.

B. Functional and presentation currency

“These financial statements are presented in Indian Rupees (INR), which is also the entity’s functional currency.

All amounts have been rounded off to the lakhs unless otherwise indicated.”

C. Basis of measurement

The financial statements have been prepared under the historical cost convention unless otherwise indicated. All assets and liabilities are classified as current or non-current as per the Company’s normal operating cycle, and the criteria set out in schedule III of the Companies Act, 2013. Based on the nature of products and time lag between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months period has been considered by the Company as its normal operating cycle.

D. Key estimates and assumptions

The preparation of financial statements requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the end of the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.

Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties is included in the following notes:

Note 3.4 - Useful Lives of Property, Plant and Equipment

Note 3.12 - Measurement of defined benefit obligations: key actuarial assumptions Note 3.13 - Recognition and measurement of provisions and contingencies Note 3.14 - Recognition of Deferred Tax Assets

Note 3.1 - Provision for doubtful debts with expected credit loss module

E. Measurement of fair values

The Company’s accounting policies and disclosures require the measurement of fair values for financial instruments.

The Company has an established control framework with respect to the measurement of fair values. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.

Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).”

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

The Company has recognized certain assets at fair value and further information is included in the relevant notes.

a Terms / Rights attached to equity shares 1. Terms / Rights attached to equity shares

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividend and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.

On winding up of the Company, the holders of the equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all Preferential amounts in proportion to the number of equity shares held.

Nature and purpose of reserves Capital reserve

The reserve comprises of profits/gains of capital nature earned by the Company and credited directly to such reserve.

Security Premium

Security Premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies Act 2013.

General reserve

General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of dividend.

Employee Stock option reserve

The Company has established equity settled share based payament plan for certian categories of employees of the company. Refer note 37 for further details on these plan.

Retained Earnings

Retained Earnings represents surplus/accumulated earnings of the Company and are available for distribution to shareholders.

Dividends

The following dividends were declared and paid by the Company:

a. Short Term Borrowings from banks are secured by hypothecation of stock, receivables and other current assets of the Company both present and future ranking pari passu with all banks.

b. Working capital credit facility from State Bank of India is partly secured by second charge on the fixed assets of the Company ranking pari passu with all banks.

c. Cash credit, bank overdraft and working capital demand loans from banks are repayable on demand and carry interest @10.25% to 14.00% p.a.

d. Letter of credit are repayable within 90 days and carry interest @ 9.75% to 10.60%.

e. Packing credit loans are repayable within 180 days and carry interest @ 2.50% to 4.30%.

f. Buyers credit from banks carry interest @ LIBOR Plus 0.55% to 2.5% and repayable within 180 days

g. Bills discounted from banks carry interest @10.25% to 14.00% p.a and repayable within 90 days

3 Earnings per share (EPS)

Basic EPS amounts are calculated by dividing the profit for the year by the weighted average number of Equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable 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 conversion of all the dilutive potential Equity shares into Equity shares.

* Conversion of warrants and Employee stock options has an anti-dilutive impact and thus effects of these anti-dilutive potential equity shares are ignored in calculating diluted earnigns per share. Therefore, diluted EPS is considered same as Basic EPS for the year ended March 31, 2018 and March 31, 2017.

4 Related party relationships, transactions and balances

The table provides the information about the related party ralationships as defined in Ind AS 24 Related party Disclosures. The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year:

a. The following are the names of related parties where control exists:

Terms and Conditions of transaction with Related Parties:

The transaction with Related Parties is made in the normal course of business and on terms equivalent to those that prevail in arm’s length transactions. The above transactions are as per approval of the audit committee.

The Company has not recorded any impairment of receivables relating to amounts owed by Related Parties. 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.

* In the current year, the Company has set off the amounts payable to the subsidiaries with the ICD’s placed amounting to Rs.915.41 lakhs (31 March 2017: 1,177.66 lakhs)

All the above inter-corporate deposit, security deposit, loans and advance and guarantees have been given to recipients for business purposes.

5 Employee Stock Option Plan

During the financial year ended 31 March 2018, the Company implemented “Repro India Limited - Employee Stock Option Scheme- 2010” (Repros ESOS 2010), as approved by the Shareholders of the Company and the Nomination and Remuneration Committee of the Board of Directors (the Committee).

The Committee determines which eligible employees will receive options, the number of options to be granted, the vesting period and the exercise period. The options are granted at an exercise price, which is in accordance with the relevant SEBI guidelines in force, at the time of such grants. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of Rs.10 each. The options issued under the above schemes vest in a phased manner after completion of the minimum period of one year with an exercise period of ten years from the respective grant dates.

The terms and conditions related to the grant of the share options are as follows:

b) Measurement of fair value :

The fair values are measured based on the Black-Scholes-option valuation model. Service and non-market performance conditions attached to the arrangements were not taken into account in measuring fair value.

The inputs used in the measurement of the fair values at grant date and measurement date of the stock options were as follows.

6 Operating Segments

A. Basis for segmentation

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (“CODM”) of the Company. The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director and CEO of the Company. The Company operates only in one business segment i.e.Value Added Print Solutions, hence does not have any reportable segment as per Ind AS 108 “Operating Segments”.

B. Geographic information

*Non-current assets are excluding financial instruments and deferred tax assets.

C. Major customer

Revenue from one customer based in India represented approximately Rs.2,621.87 (March 31, 2017 - Rs.3,004.17) of the company’s total revenues.

B. Measurement of fair values

Valuation techniques and significant unobservable inputs

The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the significant unobservable inputs used:

During the year ended March 31, 2018, March 31, 2017, there was no transfer between level 1 and level 2 fair value measurement.

C. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

- Credit risk;

- Liquidity risk; and

- Market risk

i. Risk management framework

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board of Directors has established the Risk Management Committee, which is responsible for developing and monitoring the Company’s risk management policies. The committee reports regularly to the board of directors on its activities.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The audit committee oversees how management monitors compliance with the company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

ii. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.

Trade and other receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

At March 31, 2018, the Company’s most significant customer accounted for Rs.950.51 Lakhs of the trade and other receivables carrying amount (March 31, 2017 : Rs.284.25 lakhs).

Summary of the Company’s exposure to credit risk by age of the outstanding from various customers is as follows:

Expected credit loss assessment for customers as at 1 April 2016, 31 March 2017 and 31 March 2018

The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgement.

Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of impairment of trade receivables do not reflect any significant credit losses. Given that the macro economic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue.

The movement in the allowance for impairment in respect of trade and other receivables during the year was as follows.

The impairment loss at March 31, 2018 is related to several customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances, mainly due to economic circumstances.

Cash and cash equivalents

The Company held cash and cash equivalents of Rs.130.05 lakhs at March 31, 2018 (March 31, 2017: Rs.55.53 lakhs, April 1, 2016 : Rs.838.27 lakhs). The cash and cash equivalents are held with bank and financial institution counterparties with good credit ratings.

iii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities to be settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The table below provides details of financial liabilities at the reporting date based on undiscounted contractual values.

iv. Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. The Company exposed to market risk primarily related to foreign exchange rate risk. Thus, the Company’s exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.

Currency risk

The Company is exposed to currency risk on account of its operations in other countries. The functional currency of the Company is Indian Rupee. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent periods and may continue to fluctuate substantially in the future. Consequently, the Company uses both derivative instruments, i.e, foreign exchange forward contracts to mitigate the risk of changes in foreign currency exchange rates in respect of its highly probable forecasted transactions and recognized assets and liabilities.

Sensitivity analysis

A reasonably possible strengthening (weakening) of the Indian Rupee against foreign currency at March 31 would have affected the measurement of financial instruments denominated in US dollars and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.

Exposure to interest rate risk

The Company’s interest rate risk arises from borrowings. Borrowings taken at fixed rates are exposed to fair value interest rate risk. The interest rate profile of the Company’s interest-bearing financial instruments as reported to the management of the Company is as follows:

Fair value sensitivity analysis for Fixed-rate Instruments

The Company does not account for any fixed-rate borrowings at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

Cash flow sensitivity analysis for variable-rate instruments

The risk estimates provided assume a change of 25 basis points interest rate for the interest rate benchmark as applicable to the borrowings summarised above. This calculation assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date assuming that all other variables, in particular foreign currency exchange rates, remain constant.. The period end balances are not necessarily representative of the average debt outstanding during the period.

7. Transition to Ind AS:

For the purposes of reporting as set out in Note 1, the Company has transitioned its basis of accounting from Indian generally accepted accounting principles (“IGAAP”) to Ind AS. The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the “transition date”). In preparing our opening Ind AS balance sheet, the Company adjusted amounts reported in financial statements prepared in accordance with IGAAP. An explanation of how the transition from IGAAP to Ind AS has affected our financial performance, cash flows and financial position is set out in the following tables and the notes that accompany the tables. On transition, the company did not revise estimates previously made under IGAAP except where required by Ind AS.

Adjustments to statement of cash flows

There were no material differences between the statement of cash flows preseneted under Ind AS and the IGAAP.

Notes to the reconciliation:

1 Security deposits recognised at amortised cost

Under IGAAP, the interest free security deposits and advances were accounted for at transaction price. Under Ind AS, security deposits are to be measured at fair values at inception, with reference to market rates (i.e. fixed deposit rate), and the difference is to be recognised as prepaid rentals.

2 Trade and other receivables

Under IGAAP, the Company has created provision for impairment of receivables consists only in respect of specific amount for incurred losses. Under Ind-AS, impairment allowance has been determined based on Expected Loss model (ECL).

3 Amortisation of transaction costs on borrowings basis effective interest method

Under IGAAP, directly attributable transaction costs are charged to the Statement of profit or loss in the year of procurement of the loan. As per the requirements of Ind AS, the Company has measured the borrowings at amortised cost based on the effective interest rate of the borrowings. Appropriate adjustment to the statement of profit or loss or property, plant and equipment have been made.

4 Fair valuation of Property, Plant and equipment

On the date of transition the company has elected to fair value property, plant and equipments. This has resulted into increase in the value of land and Building and decrease in the value of Plant & machinery and other assets with corresponding impact on retained earings and consequent decrease in depreciation.

5 Timing of revenue recognition

Impact pertains to the difference in timing of revenue recognition on account of transition to Ind AS.

6 Proposed dividend

Under IGAAP, proposed dividends are recognised as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, a proposed dividend is recognised as a liability in the period 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 has occurred after period end. Therefore, the liability recorded for this dividend and tax thereon, has been derecognised against retained earnings.

7 Exchange gain/(loss) accumulated in foreign currency monetary item translation difference account

Under Ind AS, all exchange differences are accounted for in the statement of profit and loss in the period in which they arise. Under IGAAP, exchange differences relating to long term foreign currency monetary assets/liabilities were accumulated in foreign currency monetary item translation difference account, to be amortized over the period, beginning April 1, 2011 or date of inception of such item, as applicable, and ending on March 31, 2020 or the date of its maturity, whichever was earlier.

8 Deferred tax assets (net)

IGAAP 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 temprorary differences which was not required under IGAAP.

9 Minimum Alternate Tax (MAT) Credit Entitlement

As per Ind AS 12, the Company has considered MAT credit entitlement as deferred tax asset being unused tax credit entitlement.

10 Bills Discounted

Under IGAAP, trade receivables derecognised by way of bills of exchange have been shown as contingent liability since there is recourse clause. Under Ind AS, the trade receivables have been restated with corresponding recognition of short term borrowings.

11 Remeasurement of defined benefit liabilities

Under IGAAP, the Corporation recognised remeasurement of defined benefit plans under Profit or Loss.

Under Ind AS, remeasurement of defined benefit plans are recognised in Other Comprehensive Income.

12 Others

This includes corporate guarantees in favor of subsidiary and impact of stores and spares.Under Ind AS, financial guarantee contracts are accounted as investment in subsidiaries and measured initially at fair value. Subsequently, the guarantee income is recognised over the period of the guarantee on a straight line basis.

8. Transition to Ind AS:

For the purposes of reporting as set out in Note 1, the Company has transitioned its basis of accounting from Indian generally accepted accounting principles (“IGAAP”) to Ind AS. The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 2017, the comparative information presented in these financial statements for the year ended 31 March 2016 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the “transition date”). In preparing the opening Ind AS balance sheet, the Company adjusted amounts reported in financial statements prepared in accordance with IGAAP. An explanation of how the transition from IGAAP to Ind AS has affected our financial performance, cash flows and financial position is set out in the following tables and the notes that accompany the tables. On transition, the Company did not revise estimates previously made under IGAAP except where required by Ind AS.

9 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:

“Exceptions from full retrospective application

a. Estimates exceptions

Upon an assessment of the estimates made under IGAAP, the Company has concluded that there was no necessity to revise such estimates under Ind AS, except where estimates were required by Ind AS and not required by IGAAP.

b. Investments in subsidiaries

The Company has elected to measure the investments in its subsidiaries at its IGAAP carrying amount (i.e. at cost) rather than at its fair value.

c. Classification and measurement of financial assets

Ind AS 101 requires an entity to assess the classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the Standard permits measurement of financial assets accounted at amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of financial assets accounted at amortized cost has been done retrospectively except where the same is impracticable.

10. Employee benefits

The Company contributes to the following post-employment plans in India.

(A) Defined Contribution Plans:

The Company makes contributions towards provident fund and superannuation fund which are in the nature of defined contribution post employment benefit plans . Under the plan, the Company is required to contribute a specified percentage of payroll cost to fund the benefits.

The Company recognised Rs.82.63 for the year ended March 31, 2018 (March 31, 2017 Rs.157.10 ) towards provident fund contribution and Rs.6.50 for the year ended March 31, 2018 (March 31, 2017 Rs.7.00 ) towards super-annuation fund contribution in the Statement of Profit and Loss.

The contributions to these plans are at rates specified in the rules of the schemes.

(B) Defined Benefit Plan:

In accordance with the provisions of the Payment of Gratuity Act, 1972, the Company has a defined benefit plan which provides for gratuity payments. The plan provides a lump sum gratuity payment to eligible employees at retirement or termination of their employment. The amounts are based on the respective employee’s last drawn salary and the years of employment with the Company. Liabilities in respect of the gratuity plan are determined by an actuarial valuation, based upon which the Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees. Trustees adminster the contributions made by the Company to the gratuity scheme.

The most recent actuarial valuation of the defined benefit obligation along with the fair valuation of the plan assets in relation to the gratuity scheme was carried out as at March 31, 2018. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

This plan exposes the Company to actuarial risks such as longetivity risk, interest rate risk and market (investment) risk.

Expected contribution to post-employment plans for the year ended March 2019 are Rs.90 lakhs.

Based on the actuarial valuation obtained in this respect, the following table sets out the details of the employee benefit obligation and the plan assets as at balance sheet date:

Assumptions regarding future mortality have been based on published statistics and mortality tables.

Asset liability matching Strategy:

The money contributed by the Company to the fund to finance the liabilities of the plan has to be invested.

LIC is required to invest the funds as per the prescribed pattern of investments laid out in the income tax rules for such approved schemes. Due to the restrictions in the type of investments that can be held by the fund, it is not possible to explicitly follow an asset-liability matching strategy to manage risk actively.

There is no compulsion on the part of the Company to fully pre fund the liability of the Plan. The Company’s philosophy is to fund the benefits based on its own liquidity and tax position as well as level of under funding of the plan.

11. Operating Leases A. Leases as lessee

The Company has taken premises under operating lease. The lease period of these premises have lease period ranging from 1 to 9 years with an option to renew the Lease after this period. In case of the premises taken on operating leases, sub-letting is not permitted.

Non-cancellable operating lease payable (minimum lease payments) under these lease are as follows

During the year an amount of Rs.964.01 was recognized as an expenses in the statement of profit and loss in respect of operating leases (31 March 2017: Rs.642.13).

12. Capital Management

The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Company monitors capital using a ratio of ‘adjusted net debt’ to ‘adjusted equity’. For this purpose, adjusted net debt is defined as total liabilities, comprising interest-bearing loans and borrowings and obligations under finance leases, less cash and cash equivalents. Adjusted equity comprises all components of equity other than amounts accumulated in the hedging reserve.

The Compay’s policy is to keep the ratio below 2. The Company’s adjusted net debt to equity ratio is as follows:

Note 1

The Company had received Order from Commissioner of Customs (Import), levying differential duty and penalties for the period March 2006 to March 2009 aggregating to 3,176.07 plus interest on duty at the appropriate rate as applicable during the relevant period, on the computer software imported by the Company for its erstwhile Microsoft business. The Company had filed an appeal before theSupreme Court against the order of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) which has been admitted by Supreme Court. Based on the legal advice, the management is confident that no liability will devolve on the Company in respect of the above litigations.

Note 2

The Company had received an order from Commissioner of customs (Import) levying differential duty and penalties aggregating to 94,5.00 for the period March 2006 to March 2009 on the computer software imported by Wipro and HCL and the Company has been made a party to the proceedings for its erstwhile Microsoft business. The Company had filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) against the above order and CESTAT has remanded the matter back to Commissioner of Customs (Import) to do fresh adjudication. Based on the legal advice, the management is confident that no liability will devolve on the Company in respect of the above litigations.

Note 3

The Company’s pending litigations comprise of claims against the Company by employees and pertaining to proceedings pending with Income Tax, Excise, Custom. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.

Commitments

Estimated amounts of contracts remaining to be executed on March 31 ,2018 on capital account and not provided for (Net of Advances) Rs.3.32, March 31,2017 : Rs 16.47. March 31 2016 : Rs 88.14)

13. Disclosure on Corporate Social Responsibility

Gross amount required to be spent by the Company during the year 2017-18 Rs.10.25 lakhs (2016-17 : Rs.37.14 lakhs)

Amount spent during the year: Rs. Nil (31 March 2017: Rs. Nil)

*For the purpose of this note, the term Specified Bank Notes shall have the same meaning as provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407€, dated the 8 November.

14. During the year the Company has issued 5,92,592 warrants on preferential basis to entities which form part of the public shareholders of the Company, each warrant convertible in to, or exchangeable for, one equity share of face value of Rs.10 each at a price(including the warrant subscription price and the warrant exercise price) of Rs.675/-. As per the terms of issue 25% of total amount of Rs.40 cr i.e. Rs.9.99 cr have been paid at the time of subscription and the balance 75% to be payable at the time of exercising the warrant within 18 months from the date of allotment. In case the warrant holder does not exercise within that time, the warrants shall lapse and the subscription amount paid by warrant holders stands forfeited by the Company.

15. The workers at Mahape plant of the Company are on strike since April 8, 2017 and the strike is continuing. The Company’s application for the closure filed with Labour and Energy department has been declined and the same is being challenged before the Labour Tribunal. The Company has made the necessary provision for legal dues payable to the workers.

16. Disclosures pursuant to Securities And Exchange Board Of India (Listing Obligations And Disclosure Requirements) Regulations, 2015 And Section 186 Of The Companies Act, 2013.

17. Standards issued but not yet effective

Ind AS 115: Revenue from Contracts with Customers

In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying Ind AS 115, ‘Revenue from Contracts with Customers’. The Standard is applicable to the Company with effect from 1st April, 2018. Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 Revenue, Ind AS 11 Construction Contracts when it becomes effective. The core principle of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:

The Company is in process of its preliminary evaluation of the possible impact of Ind AS 115 and will adopt it retrospectively with the cumulative effect of initially applying this standard recognised as an adjustment to the opening balance of retained earnings at the date of initial application i.e. April 1, 2018 and accordingly comparatives for the year ended March 31, 2018 will not be retrospectively adjusted. This standard is applied retrospectively only to the contracts that are not completed contracts at the date of initial application. The Company does not expect the impact of the adoption of new standard to be material on its retained earnings and to its net income on an ongoing basis.

Ind AS 21 - The effect of changes in Foreign Exchange rates (Appendix B)

The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration.

The amendment will come into force from April 1, 2018. The Company does not expect the effect of this on the financial statements to be material based on preliminary evaluation.