1 Accounting Transactions
1.1 None of the employees were in receipt of or are entitled to receive remuneration aggregating to not less than Rs.1,02,00,000/- for the year or not less than Rs.8,50,000/- per month, if employed for part of the year.
1.2 Outstanding balances as at 31st March, 2018 of Current &Non-Current Assets and Liabilities including Trade
Receivables and Trade Payables are subject to confirmation.
1.3 In the opinion of the Board of Directors; the Current and Non-current Assets, Loans & Advances are recorded approximately at the value as if realised in the ordinary course of the business. The provision for depreciation and all known liabilities are adequate and are not in excess of the amounts reasonably necessary.
1.4 In the opinion of the Board of Directors, the Company is dealing in different varieties of computer systems & its peripherals and Consumer Electronic Goods etc. Day to day Quantitative Stock Records have been maintained properly.
1.5 All the Directors have drawn remuneration for the Accounting Year 2017-18 aggregating to Rs.84,00,000/-
2 Miscellaneous Expenditure (Assets)
Expenditure of Rs.62,25,135/-, out of which Rs.15,22,300/- pertaining to increase in Authorized Share Capital of the company incurred in FY 2016-17 and Rs.47,02,835/- pertaining to listing of company’s shares in SME Stock Exchange incurred in FY 2017-18, has been carried in the balance sheet (to the extent not written off), as the management of the company perceives that the benefit of such expenditure would accrue to the company gradually in subsequent years. Accordingly, the management of the company has decided that it will amortize such expenditure over a period of 5 years.
3 Standards Issued , but not yet effective
On 28th March, 2018, the Ministry of Corporate Affairs (MCA) has notified Ind AS 115 - Revenue from Contract with Customers and certain amendment to existing Ind AS. These amendments shall be applicable to the Company from 1st April, 2018.
i. Issue of Ind AS 115 - Revenue from Contracts with Customers Ind AS 115 will supersede the current revenue recognition guidance including Ind AS 18 Revenue, Ind AS 11 Construction Contracts and the related interpretations. Ind AS 115 provides a single model of accounting for revenue arising from contracts with customers based on the identification and satisfaction of performance obligations.
ii. Amendments to Existing Ind AS
The MCA has also carried out amendments of the following accounting standards which are more likely to have effect on reporting of transactions by the enterprise in the subsequent financial years:
- Ind AS-21 - Effect of Changes in foreign currency
- Ind AS 40 - Investment Property
- Ind AS-12 - Income Taxes
- Ind AS-112 - Disclosure of Interest in other Entities
Application of above standards is not expected to have any significant impact on the current year financial Statements of the Company.
NOTE NO. 4
PROPERTY, PLANT & EQUIPMENTS
(a) Method Of Valuation Of Fixed Assets
Property,Plant & Equipment (hereinafter referred to as PPE) is recognised when it is probable that future economic benefits associated with the item will flow to the company and the cost of such PPE can be measured reliably.PPE is stated at original cost net of tax/duty credits availed,if any,as reduced by accumulated depreciation and cumulative impairment.
Expenditure for additions, improvements and renewals are capitalized and expenditure for maintenance & repairs are charged to the profit & loss account.
(b) Value of Property,Plant & Equipment :-
The value of Property,Plant & Equipment in the books of Panache Digilife Limited as at 31st March 2018 is as follows :-
(c) Depreciation
Depreciation on PPE is recognised using Straight Line Method so as to write off the cost of assets less their residual values over their useful lives specified in Schedule- II of the Companies Act,2013.In case of PPE purchased/sold during the year, Depreciation has been provided on pro-rata basis.
The Useful Life of Assets adopted by the management from Schedule II of Companies Act,2013; for calculating Depreciation to be charged on different classes of Assets for the current year are as follows:-
The estimated useful life and residual values are also reviewed at end of each financial year and the effect of any change in the estimates of useful life/residual value is accounted for,on prospective basis as per Ind AS-8.
(d) Impairment Losses
As at the end of each accounting year, the company reviews the carrying amounts of its Property,Plant & Equipment, to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the said assets are tested for impairment so as to determine the impairment loss, if any.
Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined in the case of :-
(i) an individual asset, at the higher of the net selling price and the value in use; and
(ii) a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unit’s net selling price and the value in use.
If the recoverable amount of a PPE (or cash generating unit) is estimated to be less than its carrying amount, such deficit is recognised immediately in the Statement of Profit and Loss as impairment loss and the carrying amount of the PPE (or cash generating unit) is reduced to its recoverable amount.
(e) Impact of transition to Ind AS
Fortransition to Ind AS, the company has elected to adopt as deemed cost, the carrying value of Property,Plant & Equipment previously measured as per I-GAAP, as reduced by accumulated depreciation and cumulative impairment till the transition date.
NOTE NO. 5
CAPITAL WORK-IN-PROGRESS
(a) Manner of Classification
PPE not ready for intended use on the date of Balance sheet are disclosed as ‘ Capital work-in-progress’.
(b) Value of Capital Work-in-progress
The value of Capital Work-in-Progress in the books of Panache Digilife Limited as at 31st March 2018 is as follows :-
NOTE NO. 6
INVESTMENT PROPERTIES
(a) Method Of Valuation Of Investment Properties
Properties, including those under construction, held to earn rentals and/or capital appreciation are classified as investment property and measured and reported at cost, including transaction costs.
(b) Value Of Investment Property
The value of Investment Property in the books of Panache Digilife Limited as at 31st March 2018 is as follows :-
(c) Depreciation
Depreciation on Investment Property is recognised using straight line method so as to write off the cost of assets less their residual values over their useful lives specified in Schedule- II of the Companies Act,2013.
The Useful Life of Investment Property adopted by the management from Schedule II of Companies Act,2013; for calculating Depreciation to be charged on such Investment property for the current year is as follows:-
The estimated useful life and residual values are also reviewed at end of each financial year and the effect of any change in the estimates of useful life/residual value is accounted for,on prospective basis as per Ind AS-8.
(d) Impairment Losses
As at the end of each accounting year, the company reviews the carrying amounts of its Investment Property, to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the said assets are tested for impairment so as to determine the impairment loss, if any.
Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined in the case of :-
(i) an individual asset, at the higher of the net selling price and the value in use; and
(ii) a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unit’s net selling price and the value in use.
If the recoverable amount of a Investment Property (or cash generating unit) is estimated to be less than its carrying amount, such deficit is recognised immediately in the Statement of Profit and Loss as impairment loss and the carrying amount of the Investment Property (or cash generating unit) is reduced to its recoverable amount.
(e) Impact of transition to Ind AS
For transition to Ind AS, the company has elected to adopt as deemed cost, the carrying value of investment property as per I-GAAP less accumulated depreciation and cumulative impairment as on the transition date.
(f) Disclosure Pursuant to Ind AS-40 “ Investment Property”
Amount Recognised in the Statement of Profit and Loss for Investment Property
NOTE NO. 7
OTHER INTANGIBLE ASSETS
(a) Method of Valuation of Intangible Assets
Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the assets will flow to the company and the cost of the asset can be measured reliably.Intangible assets are stated at original cost net of tax/duty credits availed,if any,as reduced by accumulated amortisation and cumulative impairment.
(b) Value of Intangible Assets
The value of Intangible Assets in the books of Panache Digilife Limited as at 31st March 2018 is as follows :-
(c) Amortisation
Amortisation charge on Intangible asset has been allocated on a systematic basis over the best estimate of useful life.
Based on Technical evaluation considering the business specific needs & the potency of assets to generate future cash flows, the useful life of different class of intangible assets have been determined by the management, which is as follows:-
The method of amortisation and useful life are reviewed at the end of each Financial Year with the effect of any changes in the estimate being accounted for on a straight line basis.
(d) Impairment Losses
As at the end of each accounting year, the company reviews the carrying amounts of its Intangible Assets, to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the said assets are tested for impairment so as to determine the impairment loss, if any. Intangible assets with indefinite life (if any) will be tested for impairment each year.
If recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, such deficit is recognised immediately in the Statement of Profit and Loss as impairment loss and the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount.
NOTE NO. 8
INVESTMENTS (NON CURRENT)
(a) Investment in Subsidiary
Looking forward to the growth prospect, the company has incorporated a Wholly owned subsidiary company in Ajman Free Zone- Dubai in the name Wemart Global FZE on 21st November, 2016 to expand the company’s business and put its footprints in the global market in near future.
(b) Measurement of Invesmtments
Investment in Foreign Subsidiary, classified as Financial Assets for the purpose of Separate Financial Statements of the company has been measured at cost, since the equity instruments of subidiary are not quoted in any market and there are wide range possible fair values which can be considered and the management considers cost of such investment to be the best estimate of fair value.
(c) Value of Investments
Considering the above mentioned Measurement basis, the Value of Investments of the Entity for different reporting dates are as follows:-
(e) Impact of IND AS
Investments which were being carried at cost by following the guidelines prescribed under AS-13 have been remeasured to their respective fair values for the year ended March 2017,as such investments represent Financial Assets as per Ind AS 109.However the carryig value has not been affected as the management has considered cost to be the best estimate of Fair Value.
NOTE NO. 9 LOANS (NON CURRENT)
(a) Measurement
Financial Assets represented by Loans & advances given to parties under the terms, wherein such Loans & advances are repayable on demand to the company have been measured at their respective carrying Values as the management considers that the carrying value of such loans & advances to be the best estimate of its Fair Value.
NOTE NO. 10
OTHER FINANCIAL ASSETS (NON CURRENT)
(a) Measurement Basis
Financial Assets in the nature of deposits have been measured at fair value by discounting the deposits over the tenure of lease.The rest,being in the nature of deposits given to parties for indeterminate period, have been measured at actual amounts given/paid, as the management considers that the Fair Value of such deposits does not materially defer from the actual amounts given/paid.
(b) Value of Other Financial Assets
Considering the above measurement basis, the value of Other Financial assets are as follows :-
NOTE NO. 11
OTHER NON-CURRENT ASSETS
(a) Manner of Classification
Miscellaneous Expenses which will not be Written off either wholly orpartially within a period of 12 months from the end of reporting date have been classified as Non-Current Assets.
(b) Value of Other Non-Current Assets
NOTE NO. 12 INVENTORIES
(a) Valuation Method
Inventories comprise of Computers Systems & its peripherals and Consumer Electronic Goods which have been measured at weighted average cost or Net Realisable Value whichever is lower as per Ind AS-2.Cost of Inventories consist of its purchase price, cost of conversion and other costs including any duties or taxes(to the extent not recoverable) incurred in bringing them to their present location and condition.
(b) Based on the above Valuation Method, the value of Inventories for different reproting periods are as follows
NOTE NO. 13
CASH AND CASH EQUIVALENTS
Investments in Fixed Deposits have been considered by the management to be short term in nature, made against letter of credit facility and buyers credit from the Bank and hence they are valued at cost plus accrued interest on it.
Terms of Repayment of Secured Borrowings
Car Loan of Rs. 10,00,000 (Sanction Amount) is secured by way of exclusive first charge created by hypothecation of concerned Car.The Balance loan as on March 31,2018 is repayable in 59 monthly installments of Rs.20,517 each. Interest to be serviced as and when debited.Interest @ 8.50% is applicable on the said loan.
Car Loan of Rs. 14,84,000 (Sanction Amount) is secured by way of exclusive first charge created by hypothecation of concerned Car.The Balance loan as on March 31,2018 is repayable in 33 monthly installments of Rs.30,823 each. Interest to be serviced as and when debited.Interest @ 9.35% is applicable on the said loan.
Car Loan of Rs. 9,99,000 (Sanction Amount) is secured by way of exclusive first charge created by hypothecation of concerned Car.The Balance loan as on March 31,2018 is repayable in 43 monthly installments of Rs.20,730 each. Interest to be serviced as and when debited.Interest @ 9.66% is applicable on the said loan.
NOTE NO. 14
OTHER NON-CURRENT LIABILITIES
(a) Measurement Basis
Security deposits taken have been measured at fair value by discounting the deposits over the tenure of lease.Deposit against rental systems taken from parties for a short period, have been measured at actual amounts taken/received, as the management considers that the Fair Value of such deposits does not materially defer from the actual amounts taken/received.
The Discount Rate used for discounting security Deposits taken is 7.75%, taken after considering the yield on government bonds over the period equivalent to the tenure of lease.
(a) Disclosure
There are no overdue amounts to Micro Small and Medium Enterprises as at 31st March 2018 for which disclosure requirements under Micro Small and Medium Enterprises Development Act 2006, are applicable.
NOTE NO. 15
OTHER CURRENT LIABILITIES
(a) Measurement of Current Liabilities
Current Liabilities, being in the nature of Short term payables with no stated interest rates, have been measured at their Carrying Values as the effect of discounting on such Liabilities has been considered to be immaterial.
NOTE NO. 16 REVENUE FROM OPERATIONS
(a) Recognition of Revenue
Revenue is recognized based on the nature of activity when consideration can be measured and recovered with reasonable certainty. Revenue is measured at fair value of consideration received or receivable and is reduced for discounts, rebates and other similar allowances.
Goods & Services tax (GST) has been implemented with effect from 1st July ,2017 which replaces Excise Duty and other input taxes. According to the requirements of Ind AS, revenue for the year ended 31st March, 2017 are reported inclusive of Excise duty and other taxes like VAT, CST and Service Tax. As per Ind AS, the revenue for the year ended 31st March,2018 are reported net of GST and other aforementioned taxes.In view of aforesaid restructuring of indirect taxes, Revenue from sale of products & services for the year ended 31st March, 2018 are not comparable with the previous period.
(b) Revenue from Sales
Sales Include Revenue from sale of Computers Systems & its peripherals and Consumer Electronic Goods etc.Revenue from sale of such goods is recognized when the goods are delivered and titles have been passed, provided all the following conditions are satisfied.
(i) Significant risks and rewards of ownership of the goods are transferred to buyer;
(ii) The company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
(iii) The amount of revenue can be measured reliably;
(iv) It is probable that the economic benefits associated with the transaction will flow to the company; and
(v) The costs incurred or to be incurred in respect of the transaction can be measured reliably.
(c) Revenue from Rendering of Services
Service Charges includes revenue from repairing and servicing of Computer Systems and Consumer Electronic Goods, provided by in-house servicing staffs of the company.Revenue from such services are recognised on completed service contract method as such services are completed within a time span of hours, forwhich, adoption of stage of completion method shall prove to be inappropriate. Moreoversuch revenues are recognised only when the following conditions are satisfied :-
(i) The amount can be measured reliably.
(ii) It is probable that the economic benefits associated with the transaction will flow to the entity.
(iii) The costs incurred in respect of the transaction can be measured reliably.
Measurement of Other Incomes
(i) Interest Income is accrued on a time basis by reference to the principal amount outstanding and the effective interest rate.
NOTE NO. 17
DISCLOSURE OF CURRENT ASSETS & LIABILITIES
A. Basis of classification of Current Assets
The company classifies an asset as current asset when :-
(i) it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;
(ii) it holds the asset primarily for the purpose of trading;
(iii) it expects to realise the asset within twelve months after the reporting period; or
(iv) the asset is cash or a cash equivalent (as defined in Ind AS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets have been classified as Non-Current Recovery Period for Current Assets
Pursuant to requirements of Ind AS-1, diclosures regarding current assets which are expected to be recovered within twelve months and after twelve months from the reporting date are as follows:-
B. Basis of classification of Current Liabilities The company classifies a liability as current libility when :-
(i) it expects to settle the liability in its normal operating cycle;
(ii) it holds the liability primarily for the purpose of trading;
(iii) the liability is due to be settled within twelve months after the reporting period; or
(iv) it does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period .
All other Liabilities have been classified as Non-Current
Credit Period for Current Liabilities
Pursuant to requirements of Ind AS-1, disclosures regarding current Liabilities which are expected to be recovered within twelve months and after twelve months from the reporting date are as follows:-
NOTE NO. 18 RISK MANAGEMENT
The company’s Board of Directors has overall responsibility for establishment and oversight of the Compan’s risk management framework.
The Company, through three layers of defence viz: policies & procedures, review mechanism, and assurance, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The audit committee oversees the formulation and implementation of Risk Management Policies.The risk and mitigation plan are identified,deliberated and reviewed at appropriate Forums.
A. Market Risk Management
Market Risk is the risk that changes in market prices-such as foreign exchange rates-will affect the company’s income or the value of Financial Instruments. The objective of Market Risk Management is to manage and control market risk exposure within acceptable parameters, while optimizing the return.
i. Foreign Exchange Risk
In General, the company is a net payer of Foreign Currency.Accordingly, changes in exchange rates and in particulara strengthening of Indian rupee will positively affect the Company’s net results as expressed in Indian Rupees.The currency towards which the company is exposed to risk is US Dollars.
The Quantitative Summary about the company’s exposure to currency risk as on different reporting date are as follows:-
Sensitivity Analysis
A reasonable possible strengthening/weakening of foreign currencies to which the company is exposed to, against all other currencies as at reporting date would have affected the measurement of financial exposure denominated in a foreign currency and would have affected equity and profit or loss by the amounts shown below.This analysis assumes that all other variables remain constant and ignores any impact on forecast sales and purchases.
ii. Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.The company is not exposed to any such kind of interest rate risk.
The Company’s exposure to changes in interest rates relates primarily to the Company’s outstanding floating rate debt and Overdraft CC Account. The company’s total outstanding debt in local currency presented in the Financial Statements is a combination of fixed rate and floating rate Debts. For the portion of local currency debt on fixed rate basis, there is no interest rate risk.Floating Rate Debts are linked to domestic interest rate benchmarks issued by Reserve Bank of India like MCLR (Marginal Cost of funds based Lending Rate).
The Exposure of Company’s Borrowings to interest rate changes at the end of reporting period are as follows :-
Sensitivity Analysis
A hypothetical 10 basis point shift in MCLR rates on the unhedged loans would result in corresponding increase/decrease in interest cost for the group on a yearly basis.
B. Financial Risk Management
i. Credit Risk
Credit Risk is the Risk of Financial Loss to the company if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers.
Trade Receivable and other financial assets
The company has established a credit policy under which each new customer is analysed individually for creditworthiness before the payment and delivery terms and conditions are offered. The company’s review includes external ratings (if they are available), financial statements, industry information and business intelligence.
In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, their geographic location, industry, trade history with the Company and existence of previous financial difficulties.
Expected Credit loss for trade receivable:
The Company, based on internal assessment which is driven by the historical experience/current facts available in relation to defaults and delays in collection tereof, the credit risk for trade receivable is considered low having no material impact on Financial Statements.
ii. Liquidity Risk
Liquidity Risk is the risk that the company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by cash or another financial asset.The Company manages liquidity risk by maintaining sufficient cash and marketable securities and by having access to funding through an adequate amount of committed credit lines. Management regularly monitors the position of cash and cash equivalents vis-a-vis projections. Assessment of maturity profiles of financial assets and financial liabilities including debt financing plans and maintenance of Balance Sheet liquidity ratios are considered while reviewing the liquidity position.
The Company’s Finance Department is responsible for managing the short term and long term liquidity requirements. Short term liquidity finance is reviewed daily by finance department.Long Term Liquidity position is reviewed on a regular basis by the board of directors and appropriate decisions are taken according to the situation.
NOTE NO. 19
EMPLOYEE BENEFIT EXPENSES
(a) Disclosures pursuant to Ind AS-19
i. Defined Contribution Plans The company has only one defined contribution plan such i.e provident fund, wherein specified percentage is contributed.
The company has contributed the following amounts to the fund :-
ii. Defined Benefit Plans.
The company’s gratuity plan to provide post employement benefits to its employees is reported in accordance with Ind AS 19, “Employee Benefits” - based on an actuarial valuation carried out in respect of such gratuity plan.
(d) Actuarial Assumptions
The discount rate assumed is 7% p.a which is determined by reference to market yield at the balance sheet date on government bonds. The retirement age has been considered to be 60 years.
The estimate of Future Salary increase considered in actuarial valuation is 6.5% p.a taking into account inflation, seniority, promotion and other relevant factors such as demand and supply in the employment market.
NOTE : A
CHANGES IN PROPERTY PLANT & EQUIPMENT AND INVESTMENT PROPERTY
Pursuant to Ind As Requirements, investment Property is presented separately.Under I-GAAP the same was presented as a part of tangible assets.Tangible assets presented under I-GAAP, have now been divided ino two categories under Ind AS viz: Property, plant and equipment and investment property.
NOTE : B
The Previously Reported I-GAAP Figures have been reclassified / regrouped to make them comparable with Ind AS Presentation.
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