(xiii) Provisions, contingent liabilities and contingent assets
Provisions are recognised when the Company has a present obligation as a result of past events, for which it isprobable that an outflow of resources embodying economic benefits will be required to settle the obligationand a reliable estimate of the amount can be made. A disclosure for a contingent liability is made where thereis a possible obligation that arises from past events and the existence of which will be confirmed only by theoccurrence or non-occurrence of one or more uncertain future events not wholly within the control of theCompany or a present obligation that arises from the past events where it is either not probable that an outflowof resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.Provisions are reviewed regularly and are adjusted where necessary to reflect the current best estimates of theobligation. Where the Company expects a provision to be reimbursed, the reimbursement is recognised as aseparate asset, only when such reimbursement is virtually certain.
Contingent asset is not recognised in the standalone financial statements. However, it is recognised only whenan inflow of economic benefits is probable.
(xiv) Borrowing costs
Borrowing costs includes interest, amortisation of ancillary costs incurred in connection with the arrangement ofborrowings and exchange differences arising from foreign currency borrowings to the extent they are regardedas an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarilytakes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost ofthe respective asset. All other borrowing costs are expensed in the period in which they occur. The Companyceases capitalising borrowing costs when substantially all the activities necessary to prepare the qualifyingasset for its intended use or sale are complete.
(xv) Inventories
Inventories of stock-in-trade are valued at cost or net realisable value, whichever is lower. The cost is determinedon weighted average basis, and includes all costs incurred in bringing the inventories to their present locationand condition including non-recoverable taxes.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs ofcompletion and estimated costs necessary to make the sale.
Further, inventory contains service spares which are used as replacement stocks by the Company for servicingthe customers repairs and maintenance requirements during the service period. Adequate allowances arerecognised as a measure of consumption over their expected life based on their usage.
Cost related to product and implementation contracts where performance obligation is not complete andcertain goods or service inventories transferred to customer premises as a part of contract, is recognised andpresented as “Inventory at customer site".
Cost of stores and spares includes cost of purchase and other costs incurred in bringing the inventories to theirpresent location and condition including non-recoverable taxes. The aforesaid items are valued at net realisablevalue if the finished products in which they are to be incorporated are expected to be sold at a loss.
xvi) Income recognition
(a) Revenue recognition
When a performance obligation is satisfied, the Company recognises as revenue the amount of thetransaction price (which excludes estimates of variable consideration) that is allocated to that performanceobligation. Transaction price is the amount of consideration to which the Company expects to be entitledin exchange for transferring promised goods or services to a customer, excluding amounts collected onbehalf of third parties.
Ind AS 115 specifies five step model for revenue recognition:
1. Identify the contract with a customer;
2. Identify the separate performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to the separate performance obligations; and
5. Recognize revenue when (or as) each performance obligation is satisfied.
Company accounts for a contract when it has approval and commitment from all parties, the rights ofthe parties are identified, payment terms are identified, the contract has commercial substance andcollectability of consideration is probable.
Revenue is recognised in the statement of profit and loss with the contracted price showing separatelyeach of the adjustments made to the contract price and specifying the nature and amount of each suchadjustment separately.
Sale of products
Revenue from sale of products, including leasing of specific inventory item, is recognised when control ofthe product is transferred to the buyer and performance obligation is satisfied, which generally coincideswith acknowledgement of delivery pending which the sale is disclosed as “Contract liabilities”. The Companycollects goods and services tax ('GST') and other indirect taxes on behalf of the government and, therefore,these are not economic benefits flowing to the Company and are accordingly excluded from the revenue.
Sale of services
1. Revenue from implementation services (including installation and commissioning) related to productssupplied or on a standalone basis are recognised when services are rendered, as the performanceobligations are met.
2. Revenue from maintenance contracts is recognised based on time elapsed and revenue is straightlined over the period of the performance or on the performance of services as specified in the contract.This method of revenue recognition provides a faithful depiction of transfer of services.
3. Service income of a periodic nature which is billed but has not accrued during the year is disclosed as“Contract liabilities”.
4. The Company collects GST and other indirect taxes on behalf of the government and therefore, theseare not economic benefits flowing to the Company and are accordingly excluded from the revenue.
Any modification or change in existing performance obligations is assessed whether the services is addedto the existing contracts or not. The distinct services are accounted for as a new contract and services whichare not distinct are accounted for on a cumulative catch-up basis.
Cost to fulfil the contracts
Recurring operating costs for contracts with customers are recognised as incurred. Revenue recognitionexcludes any government taxes but includes reimbursement of out of pocket expenses. Provision towardsonerous contracts are recognised when the expected benefits to be derived by the Company from acontract are lower than the unavoidable cost of meeting the future obligations under the contract. Theprovision is measured at present value of the lower of the expected cost of terminating the contract andthe expected net cost of continuing with the contract.
Incremental costs of obtaining a contract
The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract witha customer that it would not have incurred if the contract had not been obtained. For certain contracts,Company does incur insignificant incremental costs to obtain the contract. Company applies practicalexpedient by recognising such cost as expense, when incurred, in the standalone statement of profit andloss instead of creating an asset as the amortisation period of the asset that the Company otherwise wouldhave recognised is one year or less.
Significant financing component
Company considers all relevant facts and circumstances in assessing whether a contract contains afinancing component and whether that financing component is significant to the contract, including boththe conditions:
(a) the difference, if any, between the amount of promised consideration and the cash selling price of thepromised goods or services; and
(b) the combined effect of both the following conditions:
(i) the expected length of time between when the entity transfers the promised goods or servicesto the customer and when the customer pays for those goods or services; and
(ii) the prevailing interest rates in the relevant market.
(b) Other operating revenue
It includes revenue arising from the reversal of operating liabilities / provisions no longer required or revenuearising from Company's ancillary revenue-generating activities. Revenue from these activities are recordedonly when Company is reasonably certain of such income.
(c) Other income
Other income majorly comprises interest income which is recognised using the effective interest methodand on time proportion basis.
(d) Trade receivables, contract assets and contract liabilities
Trade Receivable, net is primarily comprised of billed and unbilled receivables (i.e. only the passage of timeis required before payment is due) for which the Company has an unconditional right to consideration, netof an allowance for doubtful accounts. A contract assets arise when the Company has transferred servicesto the customer (i.e., performance obligation is satisfied), but the right to consideration is conditional onsomething other than the passage of time (e.g., pending billing milestone or scheduled invoicing). Contractliabilities consist of advance payments and billings in excess of revenues recognised. The difference betweenopening and closing balance of the contract assets and liabilities results from the timing differencesbetween the performance obligation and customer payment.
(xvii) Income tax
Tax expense for the year comprises of current tax and deferred tax. Current tax is measured by the amountof tax expected to be paid to the taxation authorities on the taxable profits after considering tax allowancesand exemptions and using applicable tax rates and laws. Deferred tax is recognised on temporary differencesbetween the accounting base and the tax base for the year and quantified using the tax rates and tax lawsenacted or substantively enacted as on the balance sheet date.
Deferred tax is recognised using the balance sheet approach. Deferred tax assets and liabilities are recognisedfor deductible and taxable temporary differences arising between the tax base of assets and liabilities andtheir carrying amount in standalone financial statements, except when the deferred tax arises from the initialrecognition of goodwill or an asset or liability in a transaction that is not a business combination and affectsneither accounting nor taxable profits or loss at the time of the transaction.
Deferred tax asset is recognised to the extent it is probable that taxable profit will be available against whichthe deductible temporary differences, and the carry forward of unused tax credits and unused tax losses canbe utilised. Deferred tax liabilities are recognised for all taxable temporary differences.
Current tax and deferred tax assets and liabilities are offset when there is a legally enforceable right to set offthe recognised amount and there is an intention to settle the asset and liability on a net basis.
(xviii) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equityshareholders of the Company by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable toequity shareholders of the Company and the weighted average number of shares outstanding during the period,are adjusted for the effects of all dilutive potential equity shares.
(xix) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, balance with banks in current account and deposits, togetherwith other short-term, highly liquid investments (original maturity less than three months) that are readilyconvertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
(xx) Equity shares
Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or optionsare shown in equity as a deduction, net of tax, from the proceeds.
(xxi) Service charges
Service charges comprise of cost for back to back implementation services / installation and commissioningrelated to products supplied at customer location. Cost is recognised when services are received / commissionedor on completion of performance obligation.
Further, cost towards maintenance contracts is recognised based on receipt / delivery of services under thecontract. It includes charges paid / payable to vendors towards annual maintenance contracts / warrantycontracts / software support charges / engineers posted at customer sites.
(xxii) Events after the reporting date
If the Company receives information after the reporting period, but prior to the date when the financial statementsare approved for issue, about conditions that existed at the end of the reporting period, it will assess whetherthe information affects the amounts that it recognises in its standalone financial statements. The Company willadjust the amounts recognised in its standalone financial statements to reflect any adjusting events after thereporting period and update the disclosures that relate to those conditions in light of the new information. Fornon-adjusting events after the reporting period, the Company will not change the amounts recognised in itsstandalone financial statements, but will disclose the nature of the non adjusting event and an estimate of itsfinancial effect, or a statement that such an estimate cannot be made, if applicable.
(xxiii) Recent accounting pronouncements
There are no standards of accounting or any addendum thereto, prescribed by Ministry of Corporate Affairsunder section 133 of the Companies Act, 2013, which are issued but are not yet effective as at 31 March 2025.
Section 129(3) of the Act requires preparation of consolidated financial statements of the Holding Company and ofall the subsidiaries including associate company and joint venture businesses in the same form and manner as thatof its own. Ind AS 28 defines Associate as an entity over which the investor has significant influence. It mentions thatif an entity holds, directly or indirectly through intermediaries, 20% or more of the voting power of the enterprise, itis presumed that the entity has significant influence, unless it can be clearly demonstrated that this is not the case.Also, the fact that an investor does not have significant influence in an enterprise can be demonstrated throughfollowing conditions:
(i) The investor does not have any representation on the board of directors or corresponding governing body ofthe investee.
(ii) The investor does not participate in policy making process.
(iii) The investor does not have any material transactions with the investee.
(iv) The investor does not interchange any managerial personnel.
(v) The investor does not provide any essential technical information to the investee.
Investments in subsidiaries and associates are carried at cost less accumulated impairment losses, if any. Where anindication of impairment exists, the carrying amount of the investment is assessed and written down immediatelyto its recoverable amount. On disposal of investments in subsidiaries and associates, the difference between netdisposal proceeds and the carrying amounts are recognised in the standalone statement of profit and loss.
Footnote:
The Board of Directors and the Shareholders of the Company at their meetings held on 02 August 2024 and 29 August2024, respectively, had approved the issuance of 9,832,123 convertible warrants at a price of ' 417 per warrant.
Considering the approval received from the Board and the shareholders and the receipt of initial subscription moneyfrom the allottees, the Board of Directors, through a circular resolution passed on 27 September 2024, allotted 9,265,215convertible warrants to both the promoter and non-promoter categories. These warrants were allotted at a price of ' 417per warrant, with the right for each warrant holder to apply for and be allotted one equity share of the Company, havinga face value of ' 2 per share and a premium of ' 415 per share, within a period of 18 months from the date of allotmentof the warrants.
The paid-up share capital of the Company stands increased from ' 33.61 Crores (168,025,590 equity shares of ' 2 each)to '33.87 Crores (169,346,882 equity shares of ' 2 each) on issue and allotment of 49,500 equity shares of ' 2 eachpursuant to ESOP Scheme, 2015 during the quarter ended 30 June 2024. Further 461,626, 645,179 and 164,987 equityshares of ' 2/- each were allotted on 9 December 2024, 20 December 2024 and 16 January 2025, respectively, pursuantto conversion of warrants during the year ended 31 March 2025.
The Company has only one class of equity shares having par value of ' 2 per share. Each holder of equity share isentitled to one vote per equity share. The Company declares and pays dividends in INR.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive assets of theCompany remaining after distribution of all preferential amounts. The distribution will be in proportion to the numberof fully paid-up equity shares held by the shareholders.
(c) Essar Telecom Limited ('ETL') is the holding company with effect from 28 December 2023. Essar Global Fund Limitedis the ultimate holding company as at 31 March 2025 and 31 March 2024. Refer note (i) below.
The Company has neither issued bonus shares nor has there been any buy back of shares during five years immediatelypreceding 31 March 2025.
There are no such shares issued, allotted or bought back during the period of five years immediately preceding thereporting date.
The Board of Directors of the Company have recommended a final dividend of ' 1 per equity share (face value ' 2)for the year ended 31 March 2025 and final dividend is payable subject to the approval of the shareholders at thethirty-ninth annual general meeting.
Above amounts have been included in the line item "Contribution to provident fund and other funds" in note 26.Also, the contribution of the Company is limited to the amount contributed and it has no further contractual orconstructive obligation.
(b) Defined benefit plan - The Company has an partially funded defined benefit plan i.e. Gratuity, for its employees.Under the gratuity plan, every employee who has completed at least five years of service gets a gratuity on departureat 15 days of last drawn salary for each completed year of service. This defined benefit plan is governed by ThePayment of Gratuity Act, 1972.
The following tables summarise the components of employee benefits expense recognised in the standalonestatement of profit and loss and the amounts recognised in the standalone balance sheet for the gratuity plan.
The Company provides share based payment schemes to its employees. Since the year ended 31 March 2016, an employeestock option plan ('ESOP') was in existence i.e. ESOP scheme 2015. The relevant details of the scheme (post sub-divisionof its equity share of ' 10 each into equity share of ' 2 each) and the grant are as below.
The shareholders of the Company through postal ballot on 21 April 2015 approved the equity settled ESOP scheme2015 for issue of stock options to key employees and directors of the Company setting aside 7,116,615 options underthis scheme. The Company had previously granted 5,024,330, 1,601,240, 853,995 and 315,000 stock options on14 May 2015, 19 May 2016, 15 June 2018 and 19 October 2020, respectively. According to the scheme, the employeesselected by the Nomination and Remuneration Committee from time to time will be entitled to options, subject tosatisfaction of the prescribed vesting conditions. The other relevant terms of the grants are as below:
Volatility : Volatility is a measure of the amount by which a price has fluctuated or is expected to fluctuate during theperiod. The measure of volatility used in Black-Scholes-Merton formula is the annualised standard deviation of thecontinuously compounded rates of return on the stock over a period of time. Company considered the daily historicalvolatility of Company's stock price on NSE over a period prior to the date of grant, corresponding with the expected lifeof the options.
Risk free rate : The risk free rate being considered for the calculation is the interest rate applicable for a maturity equalto the expected life of the options based on zero coupon yield curve for government securities.
Expected life of the options : Expected life of the options is the period for which the Company expects the options tobe live. The minimum life of stock options is the minimum period before which the options cannot be exercised andthe maximum life of the option is the maximum period after which the options cannot be exercised. The Company hascalculated expected life as the average of the minimum and the maximum life of the options.
Dividend yield: Expected dividend yield has been calculated by dividing the last declared dividend per share by themarket price per share as on the date of grant.
The Company has presented data related to its segments in its consolidated financial statements. No disclosures regardingsegments are therefore presented in these standalone financial statements.
believes that the ultimate outcome of these proceedings are not expected to have a material adverse effect on theCompany's financial position and results of operations and hence no provision has been made in this regard.
2. It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above, pendingresolution of the respective proceedings.
3. The amounts disclosed above represent the best possible estimates arrived at on the basis of available informationand do not include any penalty payable.
4. The Company does not expect any reimbursements in respect of the above contingent liabilities.
5. Refer note 46 for penalty unascertained on account of non-compliance with provisions of Foreign ExchangeManagement Act, 1999.
* Amount outstanding as at balance sheet date represents gross demand raised by the tax authorities, as amount paid under protest isnot charged to the standalone statement of profit and loss by the Company
Footnotes:
(a) It represents demand raised by vendor for remaining outstanding amount which is disputed by Company over non¬performance of certain duties by vendor under the contract.
(b) It represents demands raised by direct and indirect tax authorities on various grounds, which are contested bythe Company.
(c) It represents demand raised by sales tax authorities for non submission of Form F.
Estimated amount of contracts remaining to be executed on capital account and not provided for is ' 0.05 Crores(31 March 2024: ' Nil).
For lease commitment, refer note 40
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments byvaluation technique:
Level 1: quoted (unadjusted) prices 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: techniques which use inputs that have a significant effect on the recorded fair value that are not based onobservable market data (unobservable inputs).
There have been no transfer amongst the levels of fair value hierarchy during the year.
For assets and liabilities that are recognised in the standalone financial statements on a recurring basis, the Companydetermines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based onthe lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The fair values of the financial assets and liabilities are included at the amount at which the instrument could beexchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The followingmethods and assumptions are used to estimate the fair values:
1. Fair value of cash and cash equivalents, bank balances other than cash and cash equivalents, trade receivables,trade payables, other current financial assets/ liabilities and short term borrowings approximate their carryingamounts largely due to short term maturities of these instruments.
2. Financial instruments are evaluated by the Company based on parameters such as individual credit worthinessof the counter-party. Based on this evaluation, allowances are taken to account for expected losses on thesereceivables. Accordingly, fair value of such instruments is not materially different from their carrying amounts.
3. The fair values for lease contracts were calculated based on cash flows discounted using market interest rate onthe date of initial recognition and fair values for deposits were calculated based on cash flows discounted usingmarket interest rate on the date of initial recognition and subsequently on each reporting date. The lease liabilityis initially recognised at the present value of the future lease payments and is discounted using the interest rateimplicit in the lease or, if not readily determinable, using the incremental borrowing rates and subsequentlymeasured at amortised cost.
4. Fair value of long term borrowings approximate their carrying amounts due to the fact that no upfront fees ispaid as compensation to secure the borrowing and the interest rate is equal to the market interest rate.
The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company'sprimary focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on itsfinancial performance. The Company's management oversees these risks and formulates the policies which are reviewedand approved by the Board of Directors and Audit Committee. Such risks are summarised below:
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changein market prices. The primary market risk to the Company is currency risk and interest risk.
Interest risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate becauseof changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relatesprimarily to the Company's debt obligations.
The Company's exposure to risk of change in foreign currency exchange rates arising from foreign currency transactions,is primarily with respect to the currencies where the exchange rates are not fixed. Foreign exchange risk arises fromfuture commercial transactions and recognised assets and liabilities denominated in a currency that is not the functionalcurrency of the Company. The Company procures/ sell goods and services in their functional currency and in case ofimports/ exports, it primarily deals in United States Dollars ('USD') and Great Britain Pound ('GBP').
The Company evaluates exchange rate exposure arising from foreign currency transactions and follows establishedrisk management policies. There are earnings from customers in foreign currency which act as a natural hedge againstforeign currency risk.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument failsto meet its contractual obligations, and arises from cash and cash equivalents, bank balances other than cash andcash equivalents, other financial assets as well as credit exposures to customers including outstanding receivablesand contract assets. The maximum exposure to credit risk is equal to the carrying value of the financial assets.
Trade receivables and contract assets
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. Tomanage this, the Company periodically assesses the financial reliability of customers, taking into account the financialcondition, current economic trends, forward looking macroeconomic information, analysis of historical bad debtsand ageing of accounts receivables. Individual risk limits are set accordingly. The Company's exposure to creditrisk is influenced mainly by the individual characteristics of each customer. The demographics of the customerincluding the default risk of the industry and country in which the customer operates also has an influence on creditrisk assessment.
The expected credit loss rates are based on the payment profiles of sales over a period of 36 months before thereporting date and the corresponding historical credit losses experienced within this period. The historical loss ratesare adjusted to reflect current and forward-looking information on macro-economic factors affecting the ability ofthe customers to settle the receivables. The Company recognises lifetime expected losses for all trade receivablesand contract assets that do not constitute a financing component.
The Company has no concentration of credit risk as the customer base is widely distributed both economically andgeographically. There is one customer contributing 18% of outstanding trade receivables and contract assets as at31 March 2025 (31 March 2024: 13%), however it is a reputed organisation and credit risk is minimal with no historyof dispute/ non-recovery.
Outstanding customer receivables and contract assets are regularly monitored.
Other financial assets
The Company periodically monitors the recoverability and credit risks of its other financial assets. The Companyevaluates 12 months expected credit losses for all the financial assets for which credit risk has not increasedsignificantly. In case credit risk has increased significantly, the Company considers life time expected credit lossesfor the purpose of impairment provisioning.
The Company has considered financial condition, current economic trends, forward looking macroeconomicinformation, analysis of historical bad or doubtful receivables and ageing of receivables related to cash and cashequivalents, bank balances other than cash and cash equivalents, margin deposits, security deposits, finance leaseassets and other financial assets. In most of the cases, risk is considered low since the counterparties are reputedorganisations with no history of default to the Company and no unfavourable forward looking macro economicfactors. Wherever applicable, expected credit loss allowance is recorded (refer notes 7, 8 and 12).
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. TheCompany manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meetits liabilities when due. Also, the Company has unutilized credit limits with banks. The Company manages its liquidityneeds by monitoring scheduled debt servicing payments for financial liabilities as well as forecast cash inflow andoutflows due in day to day business. In addition, processes and policies related to such risks are overseen by seniormanagement. The Company's management monitors the net liquidation position through rolling forecast on thebasis of expected cash flows.
a) The Company's leased assets primarily consist of leases for office premises, furniture, computer and servershaving different lease terms. There are several lease agreements with extension and termination options, forwhich management exercises significant judgement in determining whether these extension and terminationoptions are reasonably certain to be exercised. Since it is reasonably certain to exercise extension option and notto exercise termination option, the Company has opted to include such extended term and ignore terminationoption in determination of lease term. Further, Company is not exposed to any variable lease payments or residualvalue guarantee.
e) The Company has entered into finance leases on its office premise. These leases have term of ten years. The leasecontract includes a clause to enable upward revision of the rental charge on an annual basis according to prevailingmarket conditions. Rental income (including unwinding of interest) recognised by the Company during the year is' 2.01 Crores (31 March 2024: ' 2.25 Crores). Further, wherever applicable, lessee is reasonably certain to exerciseextension option and not to exercise termination option, hence the Company has opted to include such extendedterm and ignore termination option in determination of lease term. Further, Company has not retained any right inunderlying asset.
The performance obligation of Company is satisfied at a point in time or over the period of time depending on the
nature of products and services provided.
1) Revenue from sale of products: It includes unified and voice communication solutions, IP Phones, data products,video conferencing products and cyber security solutions. Revenue is recognised at a point in time, which isgenerally on the delivery of product (performance obligation is satisfied).
2) Revenue from implementation contracts: It includes implementation services on products (includinginstallation and commissioning). Revenue is recognised in the accounting period in which services are rendered,as the performance obligations are met.
3) Revenue from maintenance contracts: Revenue from fixed maintenance contracts is recognised based on timeelapsed and revenue is straight lined over the period of the performance.
43 As per Ind AS 12 "Income Taxes", a deferred tax asset ('DTA') shall be recognised for the carry forward of unusedtax loss, unused tax credits and taxable timing differences to the extent it is probable that future taxable profit willbe available against which the unused tax loss, unused tax credits and taxable timing differences can be utilised.Accordingly, DTA has been recognised only to the extent of deferred tax liability.
44 As per the transfer pricing rules, the Company has examined international transactions and documentation in respectthereof to ensure compliance with the said rules. The management does not anticipate any material adjustmentswith regard to the transactions involved, other than those already adjusted in the standalone financial statements,if any.
As per section 135 of the Act, and rules therein, the Company is required to spend at least 2% of its average netprofits for three immediately preceding financial years towards CSR activities. The Company has CSR committee
The Company's spend towards CSR does not involve any long term projects and accordingly, disclosure requirementsrelating to ongoing projects is not applicable as at reporting dates.
46 The Company has foreign currency trade payables and other payables amounting to ' 3.13 Crores and ' Nil (31 March2024: ' 3.02 crores and ' 0.07 crores) as on 31 March 2025, which are due for a period more than six months as on31 March 2025, and includes balance payable amounting to ' 2.00 crores (31 March 2024: ' 1.55 crores), which areoutstanding for more than three years as on that date. Also, the Company has foreign currency trade receivables andother financial assets amounting to ' 3.24 crores and ' 2.41 crores (31 March 2024: ' 3.48 crores and ' 13.06 crores)respectively as on 31 March 2025, which are due for more than nine months as on 31 March 2025, and includesbalance receivable amounting to ' 2.99 crores (31 March 2024: ' 4.15 crores) which are outstanding for more thanthree years as on that date.
The delay in remittances / collections beyond the timeline stipulated under the circulars, directions issued underthe Foreign Exchange Management Act, 1999, as amended from time to time (collectively referred as 'the FEMARegulations') has resulted in non-compliances, however, the Company has filed necessary application with theAuthorised Dealer Category - I bank ('AD Bank') for extension of time limit and condonation of delay on payablesaggregating to ' 2.86 crores during the current year and on payables aggregating to ' 0.16 crores subsequent toyear end. For the residual payables amounting to ' 0.11 crores where extension has not been filed management isin the process of approaching the Reserve Bank of India through AD Bank for write back.
Similarly, during the current year the Company has filed an application with its AD Bank for extension of time limitand condonation of delay for the aforementioned receivables aggregating to ' 5.49 crores during the current year andfor ' 0.16 crores subsequent to year end. The Company is awaiting approval from the AD Bank for these applicationsfiled. Pending conclusion of the aforesaid matter, the management of the Company believes no material penalties/fines could be levied on account of such non-compliances and accordingly the Company have not accounted forpenalties and fines, if any in the Standalone financial statements for the year ended 31 March 2025.
47 The MCA has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies(Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules, 2021 requiring companies, whichuse accounting software for maintaining its books of account, to use only such accounting software which has afeature of recording audit trail of each and every transaction, creating an edit log of each change made in the booksof account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
The Company has used an accounting software for maintaining its books of account, which has a feature of recordingaudit trail (edit log) facility except that the audit trail feature at the application level was not enabled from 1 April2024 to 12 May 2024 and was not enabled at the database level to log any direct data changes for the entire year.
Further, to the extent enabled, audit trail feature has been operated throughout the period for all relevant transactionsrecorded in the accounting software at application level. Also, we did not come across any instance of audit trailfeature being tampered with. Additionally, the audit trail feature of prior year has been preserved by the Companyas per the statutory requirements for record retention to the extent it was enabled and recorded in previous year.
Company is not holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988)and rules made thereunder as at 31 March 2025 and 31 March 2024. Further, no proceedings have been initiatedor pending against the Company for holding any benami property under the said act and rules mentioned abovefor the years ended 31 March 2025 and 31 March 2024.
The Company has not been declared wilful defaulter by any bank or financial institution or any other lender for theyears ended 31 March 2025 and 31 March 2024.
The disclosure of relationship and transaction with struck off companies under section 248 of the Act is as follows:
The Company has complied with the number of layers prescribed under section 2(87) of the Act for the years ended31 March 2025 and 31 March 2024.
The Company has not entered into any scheme of arrangement in terms of section 230 to 237 of the Act for theyears ended 31 March 2025 and 31 March 2024. Also, refer note 52.
The Company has not advanced or loaned or invested (either from borrowed funds or share premium or anyother sources or kind of funds) to any other person or entity, including foreign entity ('Intermediaries') with theunderstanding (whether recorded in writing or otherwise) that the Intermediary shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or onbehalf of the Company ('Ultimate Beneficiaries') or
b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
The Company has not received any fund from any person or entity, including foreign entity ('Funding Party') withthe understanding (whether recorded in writing or otherwise) that the Company shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or onbehalf of the Funding Party ('Ultimate Beneficiaries') or
b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
The Company does not have any transactions not recorded in the books of accounts that has been surrendered ordisclosed as income during the year in tax assessments under the Income-tax Act, 1961.
The Company has not traded or invested in crypto currency or virtual currency during the current and previous year.
There are no charges which are yet to be registered with the ROC beyond the statutory period as at 31 March 2025and 31 March 2024.
The Company has not revalued its PPE, ROU assets and intangible assets during the current and previous year.
The Company has not granted any loan or advance in the nature of loan, during the current and previous year, topromoters, directors, KMPs or other related parties, either severally or jointly with any other person, that is repayableon demand or without specifying any terms or period of repayment. Also, no such loan or advance in nature of loanis outstanding as at 31 March 2025 and 31 March 2024.
51 The Company has not given any loan or advance in the nature of loan to its subsidiary or other entity during the yearended 31 March 2025 and 31 March 2024. Therefore, disclosure under Regulation 53(1)(f) of SEBI (Listing Obligationsand Disclosure Requirements) Regulations, 2015 is not applicable.
52 In the board meeting held on 11 November 2022, the Board of Directors of the Company had approved setting off ofaccumulated losses under retained earnings with credit balance in securities premium account and capital reserveaccount (the 'Scheme of reduction of share capital'). The Company had received requisite approval from NationalStock Exchange of India Limited and BSE Limited (collectively referred to as 'stock exchanges') vide their letters dated15 June 2023 and approval from members of the Company by way of special resolution in Extra Ordinary Generalmeeting held on 25 July 2023. The Company had filed application with National Company Law Tribunal ('NCLT') on29 September 2023 for its approval. Pursuant to NCLT's hearing order issued in December 2023, the Company hasserved notices to all the creditors of the Company and to statutory authorities seeking their representations, if any.
NCLT has approved the Scheme of reduction of share capital on 21 June 2024. Consequently, Company has reducedthe credit balance in securities premium and capital reserve by ' 85.31 Crores and ' 22.64 Crores respectively.This reduction is effected by writing off debit balance in retained earnings (i.e. accumulated losses) amounting to' 107.95 Crores.
The standalone financial statements as at and for the year ended 31 March 2025 were approved by the Board ofDirectors on 27 May 2025.
The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post employmentbenefits received Presidential assent in September 2020. The Code has been published in the Gazette of India.However, the date on which the Code will come into effect has not been notified and the final rules/interpretationhave not yet been issued. The Company will assess the impact of the Code when it comes into effect and will recordany related impact in the period the Code becomes effective.
55 Previous year figures have been regrouped, reclassified and rearranged wherever necessary, to conform to thisyear's presentation.
These are the material accounting policies and other explanatory information referred to in our report of even date.
For M S K A & Associates For and on behalf of the Board of Directors of
Chartered Accountants Black Box Limited
Firm Registration No. : 105047W
UDIT BRIJESH PARIKH SANJEEV VERMA ANSHUMAN RUIA
Partner Whole-time Director Executive Director
Membership No. 151016 DIN - 06871685 DIN - 00008501
Place : Dallas, Texas, USA Place : Mumbai
ADITYA GOSWAMI DEEPAK KUMAR BANSAL
Company Secretary Chief Financial Officer and
Executive DirectorDIN - 07495199
Place : Mumbai Place : Indore Place : Mumbai
Date : 27 May 2025 Date : 27 May 2025