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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 532848ISIN: INE124G01033INDUSTRY: Miscellaneous

BSE   ` 176.15   Open: 178.05   Today's Range 172.30
188.45
-1.30 ( -0.74 %) Prev Close: 177.45 52 Week Range 155.50
282.10
Year End :2018-03 

Company Overview

Delta Corp Limited (“the Company”), was incorporated in the year 1990 under the provision of the Companies Act applicable in India. The Company along with its subsidiaries currently operates in Goa, Daman, Gurgaon and Sikkim in the Gaming, Hospitality and Online Skill Gaming Segment. The shares of the company is listed on the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited (BSE). The registered office of the company is located at Pune.

a) Terms/Rights Attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs.1/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends 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. The Directors have recommended, subject to approval of the shareholders at the ensuing Annual General Meeting, a Dividend for the Year Ended on 2018 : 100% (2017 : 35%). In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders ‘(Exclusive charge on current assets of the Company present and future, on Credit Card receivables of the Company present and future, extension of exclusive charge by way of equitable mortgage of the fixed assets being hotel building, by way of hypothecation of movable assets hotel at Goa.). The Facility has been repaid during the current year.

Dues to micro and small enterprises have been determined to the extent such parties have been identified on the basis of information available with the company.

(iii) Other Commitments

The Company has obtained licenses under the Export Promotion Credit Guarantee (‘EPCG’) Scheme for importing capital goods at a concessional rate of custom duty against submission of bank guarantee and bonds.

Under the terms of the respective schemes, the Company is required to earn foreign exchange value equivalent to, eight times and in certain cases six times of the duty saved in respect of licenses where export obligation has been fixed by the order of the Director General Foreign Trade, Ministry of Finance, as applicable with in a specified period from the date of import of capital goods. The Export Promotion Capital Goods Schemes, Foreign Trade Policy 2009-2014 as issued by the Central Government of India, covers both manufacturer’s exports and service providers. Accordingly, in accordance with the Chapter 5 of Foreign Trade Policy 2009-2014, the Company is required to export goods of FOB value of : Rs.261.00 Lakhs (Previous Year : Rs.3,675.66 Lakhs). Non fulfilment of the balance of such future obligation, if any entails to the Government to recover full duty saved amount and other penalties under the above referred scheme.

1 EMPLOYEE BENEFITS :

Brief description of the Plans:

The Company has various schemes for employee benefits such as Provident Fund, ESIC, Gratuity and Leave Encashment. The Company’s defined contribution plans are Provident Fund (in case of certain employees) and Employees State Insurance Fund (under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans.

A Defined Benefits Plan:

The Company’s defined benefit plans include Gratuity. The gratuity plan is governed by the Payment of Gratuity Act, 1972 under which an employee who has completed five years of service is entitled to specific benefits. The level of benefits provided depends on the member’s length of service and salary at retirement age.

The Plan typically to expose the Company to actuarial risk such as Interest Risk, Longevity Risk and Salary Risk;

a) Interest Risk:- A decrease in the bond interest rate will increase the plan liability.

b) Longevity Risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

c) Salary Risk: The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan’s participants will increase the plan’s liability.

The above sensitivity analyses are based on change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

B Defined contribution plans

The Company also has certain defined contribution plans. The contributions are made to registered provident fund, Employee State Insurance Corporation and Labour Welfare Fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the year towards defined contribution plans are as follows:

C Leave obligations

The leave obligations cover the Company’s liability for earned leave. The amount of the provision of Rs.170.07 Lakhs (Previous Year: Rs.42.21 Lakhs) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations.

2 INFORMATION IN ACCORDANCE WITH THE REQUIREMENTS OF INDIAN ACCOUNTING STANDARD 24 ON RELATED PARTY DISCLOSURES.

List of related parties

(i) Relationship

@ Voting Power as on 31.03.2018 is 87.16% (Previous Year : 87.16%)

# Liquidated on 31.05.2017

(ii) Key Management Personnels (KMP):

- Mr. Jaydev Mody (JM) - Chairman

- Mr. Ashish Kapadia (AK) - Managing Director

- Mrs. Alpana Chinai (AC) - Director

- Mr. Rajesh Jaggi (RJG) - Director

- Mr. Rakesh Jhunjhunwala (RJ) - Director

- Mr. Vrajesh Udani (VU) - Director

- Mr. Ravi Jain (RJN) - Director

- Mr. Chetan Desai (CD) - Director

- Mr. Hardik Dhebar (HD) - Group CFO

- Mr. Dilip Vaidya (DV) - Company Secretary

(iii) Relatives of Key Management Personnels:

- Mrs. Zia Mody (ZM) - Wife of Chairman

- Mrs. Urvi Piramal (UP) - Sister of Chairman

- Mrs. Kalpana Singhania (KS) - Sister of Chairman

- Ms. Anjali Mody (AM) - Daughter of Chairman

(iv) Enterprises over which persons mentioned in (ii) and (iii) above exercise significant influence with whom company has transactions :

- AAA Holding Trust (AAAHT)

- Aarti J Mody Trust (AAJMT)

- Aditi J Mody Trust (ADJMT)

- Anjali J Mody Trust (ANJMT)

- AZB & Partners (AZB)

- Delta Foundation (DF)

- Freedom Registry Limited (FRL)

- Goan Football Club Private Limited (FCG)

- Highland Resorts Private Limited (HRPL)

- J M Township and Real Estate Private Limited (JMT)

- Jayem Properties Private Limited (JPPL)

- NMRT Partners Communication and Consultancy LLP (SKR)

- Peninsula Land Limited (PLL)

- Skarma Consultancy Private Limited (SCPL)

- Urvi Ashok Piramal Foundation (UAPF)

- Brandlife Entertainment Private Limited (Formerly known as Delta Lifestyle and Entertainment Private Limited) (DLEPL)

- Caravella Entertainment Private Limited (Formerly known as Caravela Casino (Goa) Private Limited) (CCGPL) (till 2.04.2017)

* Subsidiary Company w.e.f. 3rd April, 2017

- Loans and Advances shown above, to subsidiaries and other Company fall under the category of Loans and Advances in nature of Loans where there is no repayment schedule and are re-payable on demand. Investment made in Compulsory Convertible Debenture (CCD) are not reported here.

- Loan to employees as per Company’s policy is not considered.

3 OPERATING LEASE EXPENSES

The Company’s significant operating lease arrangements are mainly in respect of commercial premises. The aggregate lease rentals payable on these leasing arrangements are charged as rent under “Other Expenses” in Note No. 32.

These Non Cancellable lease arrangements are for a period not exceeding 5 years and are renewable by mutual consent, on mutually agreeable terms. On an average, an escalation of 9% to 16% is noted in the lease arrangements.

4 EARNINGS PER SHARES (EPS)

Earnings Per Share is calculated by dividing the profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. Numbers used for calculating basic and diluted earnings per equity share are as stated below:

Note: In calculating diluted earning per share for the year, the effect of dilutive Employee Stock Option outstanding till the date of actual exercise of option is considered and convertible preference shares issued by Company are anti dilutive.

5 UNHEDGED FOREIGN CURRENCY (FC) EXPOSURE

The Foreign currency exposures that are not hedged by a derivative instrument or otherwise as at year end are given below:

Of the above, the Company is mainly exposed to USD, EURO, KES & GBP. Hence the following table analyses the Company’s Sensitivity to a 5% increase and a 5% decrease in the exchange rates of these currencies against INR on profit before tax.

The Company is exposed to Currency Risk arising from its trade exposures and Capital receipt / payments denominated, in other than the Functional Currency. The Company has a detailed policy which includes setting of the recognition parameters, benchmark targets, the boundaries within which the treasury has to perform and also lays down the checks and controls to ensure the continuing success of the treasury function. The Company has defined strategies for addressing the risks for each category of exposures (e.g. for imports, for loans, etc.). The centralised treasury function aggregates the foreign exchange exposure and takes prudent measures to hedge the exposure based on prevalent macro-economic conditions.

6 CREDIT RISK

Credit risk arises from the possibility that the counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses financial reliability of customers and other counter parties, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets. Individual risk limits are set and periodically reviewed on the basis of such information.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of default occurring on asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as:

i) Actual or expected significant adverse changes in business,

ii) Actual or expected significant changes in the operating results of the counter-party,

iii) Financial or economic conditions that are expected to cause a significant change to the counter-party’s ability to meet its obligations,

The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.

7 CAPITAL RISK MANAGEMENT

a) The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in notes 18, 20 and 22 offset by cash and cash equivalent and total equity of the Company.

The Company determines the amount of capital required on the basis of annual as well as long term operating plans and other strategic investment plans. The funding requirements are met through long-term and short-term borrowings. The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

8 LIQUIDITY RISK

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows.

9 INTEREST RATE RISK & SENSITIVITY ANALYSIS

Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimize the Company’s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

The sensitivity analyses below have been determined based on the exposure to interest rates for assets and liabilities at the end of the reporting period. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year and the rates are reset as per the applicable reset dates. The basis risk between various benchmarks used to reset the floating rate assets and liabilities has been considered to be insignificant.

If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Company’s Profit for the year would decrease/increase by amount as stated below.

10 OTHER PRICE RISKS

The Company is exposed to price risks arising from equity & mutual fund investments. Certain of the Company’s equity investments are held for strategic rather than trading purposes.

Price sensitivity analysis:

The sensitivity analysis below have been determined based on the exposure to equity & mutual fund price risks at the end of the year.

11 In accordance with Ind AS 108 ‘Operating Segment’, segment information has been given in the consolidated financial statements and therefore, no separate disclosure on segment information is given in these financial statements.

12 Exceptional Items for the year ended 31st March, 2018 include profit of Rs.90.73 Lakhs on liquidation of a subsidiary company and one time expenses in relation to government dues of Rs.83.09 Lakhs and interest there upon of Rs.109.37 Lakhs. Last year’s exceptional items includes profit on sale of Subsidiary Companies.

13 CORPORATE SOCIAL RESPONSIBILITY (CSR) EXPENDITURE

a) Gross amount required to be spent by the Company during the year 2017-18 - Rs.119.20 Lakhs ( previous year 2016-17 - Rs.115.23 Lakhs)

b) Amount spent during the year on:

14 EVENT OCCURRING AFTER BALANCE SHEET DATE:

The Board of Directors has recommended Equity dividend of ‘1/- per share (Previous year Rs.0.35 per equity shares) for the financial year 2017-18.

15 BUSINESS COMBINATION

(i) Pursuant to the Scheme of Amalgamation (‘The Scheme’) between Delta Corp Limited (“ the Company”) (“Transferee Company”) and Gauss Networks Private Limited (“Transferor Company”), approved by the respective shareholders and by the National Company Law Tribunal (“NCLT”) vide its Order dated 28th June, 2017 which has been filed with the Registrar of Companies on 5th July, 2017 (the Effective Date), the entire business and the whole undertakings of a transferor company was transferred to the Company, effective from 1st April, 2016 (the appointed date). The Company has accounted the business combination in its books as per the Ind AS 103 “ Business Combination” from 5th July, 2017, is the day on which Company has obtained the control to give the effect of the business combination in the books.

(ii) All the assets and liabilities of transferor companies as at acquisition date were incorporated in the Financial of the Company at their fair value.

(iii) The excess of Net Assets of the Transferor Companies transferred to the Transferee Company over the Sales Consideration paid by the transferee Company has been credited to Capital Reserve of the Transferee Company as detailed below-

16 SHARE-BASED PAYMENTS

Employee share option plan of the Company

Details of the employee share option plan of the Company

The options are granted at the price determined by the Compensation Committee. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of Rs.1/- each. The Option granted in Financial in Financial Year 2013-14 shall vest in one instalment only, while the Option granted in Financial Year 2014-15 and 2017-18 shall vest in three instalments. Details of options granted during the financial year 2013-14, 2014-15 & 2017-18 duly approved by the Nomination, Remuneration Compensation Committee under the said scheme are given below.

Each employee share option converts into one equity share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

The following share-based payment arrangements were in existence during the current and prior years:

Exercise period will expire after five years from the date of vesting of options or such other period as may be decided by the Compensation Committee.

Fair value of share options granted

Options were priced using a Black Scholes Option Pricing Model. Where relevant, the expected life used in the model has been adjusted based on management’s best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations. Expected volatility is based on the historical share price volatility over the past 3 years.

Note:

a) Volatility:

Volatility is a measure of the amount by which a price has fluctuated or is expected to fluctuate during the year. The measure of volatility is used in Black Schole annualized standard deviation of the continuously compounded rate of return on the stock over a period of time. The Company considered the daily historical volatility of the Company’s expected life of each vest.

b) Risk Free Rate:

The risk free rate being considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero - coupon securities

c) Expected Life of the Options:

Expected life of the options is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum per cannot be exercised and the maximum life of the options cannot be exercised. The Company has calculated expected life as the average of life of the options.

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilized business loss and depreciation carry-forwards and tax credits. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilized.

b) Fair Value Hierarchy and Method of Valuation

Except as detailed in the following table, the Company considers that the carrying amounts of financial instruments recognised in the financial statements approximate their fair values.

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. The following table presents fair value of assets and liabilities measured at fair value on recurring basis as of 31st March, 2018