1 Corporate information

Jetking Infotrain Limited (hereinafter referred to as “the Company”) is a Company incorporated under the Companies Act, 1956 and having its Registered Office at 401, Bussa Udyog Bhavan, Tokersi Jivraj Road, Sewri (West), Mumbai 400 015. The Company is engaged in the business of “IT Training in Hardware, Networking and Digital courses” having its Head Office at Mumbai. The Company operates through its training centres and affiliates to provide these services across India, Nepal and South East Asia.

The financial statements for the year ended March 31, 2019 were approved by the Board of Directors and authorised for issue on May 27, 2019.

Notes:

2. There was no impairment loss on the property, plant & equipments on the basis of review carried out by the Management in accordance with Indian Accounting Standard (Ind AS)-36 ‘Impairment of Assets’.

3. During the year ended March 31, 201 8, the Company transferred building with a net book value of Rs. 666.46 lakhs to investment property.

(i) Contractual obligations

Refer to note 27 of contractual obligations, to purchase, construct, or develop investment property or its repairs, maintenance or enhancements.

(ii) Leasing arrangements

Certain investment properties are leased to tenants under long term operating leases with monthly rentals. Minimum lease payments receivable under non-cancellable operating leases of investment properties are as follows:

(iii) Estimation of fair value

The fair value is based on current prices in the active market for similar properties. The main inputs used are quantum, area, location, demand, restrictive entry in the complex, age of the building and trend of fair market rent in area in which the property is located.

The fair valuation is based on valuations performed by an accredited independent valuer for the year ended March 31, 2018. Fair valuation is based on market approach. The fair valuation method is categorized in Level 3 fair value hierarchy of Rs. 940.23 lakhs.

The company has an investment property under construction for which the Management has estimated stamp duty valuation to be the most representative value of fair value. The fair valuation method is categorized in Level 3 fair value hierarchy of Rs. 209 lakhs for the year ended March 31, 2018.

The Management estimates that there is no material change in the fair value of assets classified as investment property for the year ended March 31, 2019.

b) Terms / rights attached to Equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of the liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

c) Re-issue of forfeited shares

During the previous year the Company has re-issued 18,500 equity shares of Rs. 10/- each at a premium of Rs. 46/per share on a ‘Preferential Basis’ to the Promoter Group, which were earlier forfeited by the Company due to non-payment of call money of Rs. 5/- per share in 2004. These shares are listed and admitted to dealings w.e.f. January 30, 2018. The said shares are locked-in for a period of 3 years.

Nature and purpose of reserves

Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares and is utilised in accordance with the provisions of the Companies Act, 2013.

General reserve

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to statement of profit and loss.

Retained Earnings

Retained earnings are the profits of the Company earned till date net of appropriations.

The Company has unabsorbed business losses/ depreciation and long/ short term capital losses which according to the management will be used to set off taxable profit arising, in next few years from, operation and/ or sale of investments. Significant management judgement has been considered in determining the provision for income tax, deferred tax assets and liabilities and recoverability of deferred tax assets. The recoverability of deferred tax assets is based on estimate of the taxable income for the period over which deferred tax assets will be recovered.

* The Company is in the process of compiling relevant information from its suppliers about their coverage under the Micro, Small and Medium Enterprises Development Act, 2006. As the Company has not received any intimation from its suppliers as on date regarding their status under the above said Act, no disclosure has been made.

4. Segment information

I) The Company operates in a single primary business segment i.e. “IT Training in Hardware and Networking”. Hence, there are no reportable segments as per Indian Accounting Standard (Ind AS) - 108 “Operating Segment”. The secondary segment, i.e. ‘geographical segments by location of customers’ is given below:

Information about major customers

No single customer represents 10% or more of the Company’s total revenue for the year ended March 31, 2019 and March 31, 2018.

5. Employee benefits

I) Defined contribution plan:

(i) Provident fund:

Retirement benefits in the form of provident fund are a defined contribution scheme and the contributions are charged to the statement of profit and loss of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective trusts.

II) Defined benefit plans:

(i) Post employment obligations: Gratuity:

Gratuity liability is defined benefit obligation and is provided for on the basis of an actuarial valuation made at the end of each financial year.

I Assumptions Demographic assumptions at the valuation date:

i) Retirement age: The employees of the company are assumed to retire at the age of 60 and 65 years.

ii) Mortality & morbidity rates: 100% of IALM (2006-08) rates have been assumed which also includes the allowance for disability benefits.

iii) Leaving service: Rates of leaving service at specimen ages.

iv) Disability: Leaving service due to disability is included in the provision made for all causes of leaving service.

Sensitivities due to mortality & withdrawals are not material & hence impact of change due to these not calculated. Sensitivities as rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable.

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

d) Description of Risk Exposures

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such Company is exposed to various risks as follows:

A) Salary increases - Actual salary increases will increase the Plan’s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

B) Investment risk - If Plan is funded then assets liabilities mismatch and actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.

C) Discount rate - Reduction in discount rate in subsequent valuations can increase the Plan’s liability.

D) Mortality and disability - Actual deaths and disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan’s liability.”

Note: As the future liability for gratuity is provided on an actuarial basis for the company as whole, the amount pertaining to the key management personnel and their relatives is not ascertainable and, therefore, not included above.

The Group has made the payment of remuneration to directors amounting Rs. 187.10 lakhs (previous year Rs. 197.10 lakhs). However, in the view of inadequacy of profits, the Company has made the payment of remuneration in accordance with the provisions of the Companies Act, 2013.

6. Financial risk management

The Management of the Company has implemented a risk management system that is monitored by the Board of Directors. The general conditions for compliance with the requirements for proper and future-oriented risk management within the Company are set out in the risk management principles. These principles aim at encouraging all members of staff to responsibly deal with risks as well as supporting a sustained process to improve risk awareness. The guidelines on risk management specify risk management processes, compulsory limitations, and the application of financial instruments. The risk management system aims at identifying, analyzing, managing, controlling and communicating risks promptly throughout the Company. Risk management reporting is a continuous process and part of regular reporting. In addition, the Management regularly checks whether the Company complies with risk management system requirements.

The Company is exposed to credit, liquidity and market risks (foreign currency risk and price risk) during the course of ordinary activities. The aim of risk management is to limit the risks arising from operating activities and associated financing requirements by applying selected derivative and non-derivative hedging instruments.

Credit risk

The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments. The balances with banks, loans given to employees and security deposits are subject to low credit risk since the counter-party has strong capacity to meet the obligations and where the risk of default is negligible or nil. Hence, no provision has been created for expected credit loss for credit risk arising from these financial assets.

Trade receivables

Credit risk arises from the possibility that customer will not be able to settle their obligations as and when agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, analysis of historical bad debts, ageing of accounts receivable and forward looking information.

The provision for expected credit loss is recognised on the basis of life-time expected credit losses (simplified approach). Trade receivables are evaluated separately for balances towards progress billings and retention money due from customers. An expected loss rate is calculated at each year-end, based on combination of rate of default and rate of delay. The Company considers the rate of default and delay upon initial recognition of asset, based on the past experience and forward-looking information, wherever available.

Liquidity risk

Liquidity risk is the risk that the Company is unable to meet its existing or future obligations due to insufficient availability of cash or cash equivalents. Managing liquidity risk, and therefore allocating resources and hedging the Company’s financial independence, are some of the central tasks of the Company’s treasury. In order to be able to ensure the Company’s solvency and financial flexibility at all times and cash and cash equivalents are reserved on the basis of perennial financial planning and periodic rolling liquidity planning. The Company’s financing is also secured for the next fiscal year.

Market risk

Market risk is the risk that fair values or future cash flows of non-derivative or derivative financial instruments will fluctuate due to changes in risk factors. Among market risks relevant to the Company are foreign currency risk and price risks. Associated with these risks are fluctuations in income, equity and cash flow. The objective of risk management is to eliminate or limit emerging risks by taking appropriate precautions, especially by applying derivatives. The application of derivatives is subject to strict controls set up on the basis of guidelines as part of regular reporting. Various measures are used to mitigate or eliminate the risk of fluctuations in the fair value of future cash flows from financial instruments due to market changes.

Foreign currency risk

The international nature of the Company’s business activities generates cash flows in different currencies - especially in USD. The Company’s exposure to foreign currency risk at the end of reporting period are as follows:

The Company’s objectives when managing capital are to:

- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- maintain an optimal capital structure to reduce the cost of capital.

For the purpose of the Company’s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximise the shareholders value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders. The Capital structure of the Company is as follows:

The fair values of financial assets and liabilities are included at the amount at which the instrument can be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair vales:

a) Fair value of cash and cash equivalents, trade and other current financial assets, trade & other payables and short-term borrowings approximate their carrying amounts due to the short maturities of these instruments.

b) The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques:

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

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

7. Revenue from contract with customers Ind AS 115

‘Revenue from contracts from customers’

With effect from April 1, 2018, the Company has adopted Ind AS 115 ‘Revenue from Contracts with Customers’ that replaces Ind AS 18. It introduces a new five-step approach to measuring and recognising revenue from contracts with customers. Under Ind AS 115, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for services to a customer.

The Company has opted for the cumulative effect method (modified retrospective application) permitted by Ind AS 115 upon adoption of new standard. Accordingly, the standard has been applied for the year ended March 31, 2019 only (i.e. the initial application period). This method requires the recognition of cumulative impact of adoption of Ind AS 115 on all contracts as at April 1, 2018 (‘transition date’) in equity and the comparative information continues to be reported under Ind AS 18. The impact of the adoption of the standard on the financial statements is not material.

Prior to adoption of IND AS 115, the Company’s revenue was primarily comprised of Training fees and income from franchisee operations. The recognition of these revenue streams is largely unchanged by Ind AS 115.

(iii) Contract balances

The contract liabilities primarily relate to the unaccrued fixed affiliation fees and the advance consideration received from customers for which revenue is recognised when the performance obligation is over / services delivered.

Advance Collections is recognised when payment is received before the related performance obligation is satisfied. This includes advances received from the customer towards training fees. Revenue is recognised once the performance obligation is met i.e. imparting training sessions to students with respect to IT Training in Hardware, Networking and digital courses. It also includes unaccrued fixed affiliation fees received from affiliates centres.

Considering the nature of business of the Company, the above contract liabilities are generally materialised as revenue within the same operating cycle.

8. Corporate social responsibility

The Company is not required to spend towards Corporate Social Responsibility (CSR) as per the Section 135 of the Companies Act, 2013, in the absence of profits, calculated on the basis of average profits for the last 3 years, calculated in accordance with the provisions of the Act.

9. Events after the reporting period

The Company evaluated all events and transactions that occurred after March 31, 2019, through May 27, 2019, the date on which the financial statements are issued. Based on the evaluation, the Company is not aware of any events or transactions that would require recognition or disclosure in the financial statements.