1 Background of the Company
D-Link (India) Limited (“The Company”) was incorporated on May 26, 2008. The Company is a subsidiary of D-Link Holding Mauritius Inc. and is primarily engaged in marketing and distribution of Networking products. The Company operates through a distribution network with a wide range of product portfolio and solutions with a nationwide reach across India. The equity shares of the Company are listed on BSE Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE).
The registered office of the Company is “Plot no. U02B, Verna Industrial Estate, Verna, Salcette, Goa - 403 722, India” and the corporate office is at Unit no. 24, 2nd Floor, Kalpataru Square, Kondivita lane, Andheri-East, Mumbai - 400059.
The financial statements for the year ended March 31, 2018 were approved by the Board of Directors and authorised for issue on May 29, 2018.
ii. Terms and Rights attached
The Company has a single class of equity shares. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
v. Shares alloted as fully paid-up pursuant to contracts without payment being received in cash during the period of five years immediately preceding the date of the Balance Sheet are as under :
5,500,000 Equity shares fully paid up issued to the shareholders and promoters of TeamF1 Networks Private Limited (TeamF1) on preferential allotment basis on May 29, 2014 pursuant to a share swap agreement.
Notes :
(i) The general reserve is credited from time to time to transfer profits from retained earnings for appropriation purposes.
(ii) Security premium account is created when shares are issued at premium. Company can use it only in accordance with the provisions of the Companies Act, 2013.
(iii) On September 1, 2017, in respect of financial year 2016-17, a dividend of Rs.0.50 per share (total dividend Rs.177.55 Lakhs ) was approved by the shareholders at the Annual General Meeting and subsequently paid to the holders of fully paid equity shares.
Disclosures relating to amounts payable as at the year end together with interest paid/payable to Micro, Small and Medium Enterprises have been made in the accounts, as required under the Micro, Small and Medium Enterprises Development Act, 2006 to the extent of information available with the Company determined on the basis of intimations received from suppliers regarding their status and required disclosures are given below :
2. Earnings per share
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, as under:
3. Employee benefit plans
i. Defined contribution plans
The Company makes Provident Fund contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.61.06 Lakhs (Previous Year ended March 31, 2017 Rs.64.30 Lakhs) for Provident Fund contributions in the Statement of profit & loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.
ii. Defined benefit plan
The gratuity scheme is a defined benefit plan that provides for a lump sum payment to the employees on exit either by way of retirement, death, disability or voluntary withdrawal. Under the scheme, the employees are entitled to a lump sum amount aggregating to 15 days final basic salary for each year of completed service payable at the time of retirement/resignation, provided the employee has completed 5 years of continuous service. The defined benefit plan is administered by a third-party insurer. The third-party insurer is responsible for the investment policy with regards to the assets of the plan.
Under the plan, the employees are entitled to a sum amounting to 15 days final basic salary for each year of completed service payable subject to maximum of Rs.20 Lakhs (Rs. 10 Lakhs upto previous year) at the time of retirement/resignation provided the employee has completed 5 years of continuous services.
The Plan exposes the Company to the following risks:
Salary Escalation Rate
The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors. Amounts recognised in statement of profit and loss in respect of these defined benefit plans are as follows.
The current service cost and the net interest expense for the year are included in the ‘Employee benefits expense’ line item in the statement of profit and loss.
The remeasurement of the net defined benefit liability is included in other comprehensive income.
The amount included in the balance sheet arising from the entity’s obligation in respect of its defined benefit plans is as follows.
4. Financial instruments
i. Capital management
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 company is not subject to any externally imposed capital requirements.
ii. Categories of financial instruments
5. Financial risk management objectives
The Company’s principal financial liabilities, comprise short term borrowings, trade and other payables. The main purpose of these financial liabilities is to support its operations. The Company’s principal financial assets include investment in subsidiary, trade and other receivables, current investments and cash that are derived directly from its operations.
The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk, market risk (including foreign currency and interest rate risk). The Company’s Board of Directors reviews and sets out policies for managing these risks and monitors suitable actions taken by management to minimize potential adverse effects of such risks on the company’s operational and financial performance.
i. Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the company. The Company has adopted a policy of dealing with only credit worthy counterparties and the credit risk exposure for them is managed by the Company by credit worthiness checks. The Company also takes an credit risk insurance policy.
The credit risk on liquid funds and investments in Mutual funds is limited because the counterparties are banks / Mutual funds with high credit-ratings assigned by international credit-rating agencies.
ii. Liquidity risk management
The Company’s principal sources of liquidity are cash and cash equivalents, cash flow generated from operations and by churning of current investments. The Company does not have any significant borrowing. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
Liquidity risk tables
The following tables detail the company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the company can be required to pay.
The table below provides details regarding the contractual maturities of financial liabilities as at March 31, 2018.
iii. Market risk
The Company is exposed to market risks associated with foreign currency rates.
Foreign currency risk management
The company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.
Foreign currency sensitivity analysis
The company is mainly exposed to the US Dollar currency.
The Company’s exchange risk arises from its foreign currency purchases and revenues, (primarily in U.S. Dollars). “As a result, if the value of the Indian Rupee appreciates relative to these foreign currencies, the Company’s purchases measured in Indian Rupees will decrease. The exchange rate between the Indian Rupee and these foreign currencies has changed substantially in recent periods and may continue to fluctuate substantially in the future. Due to lesser quantum of revenue from foreign currencies, the Company is not significantly exposed to foreign currency risk in receivables. The following table details the company’s sensitivity to a 5% increase and decrease in the ‘ against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. A positive number below indicates an increase in profit or equity where the ‘ strengthens 5% against the relevant currency. For a 5% weakening of the ‘ against the relevant currency, there would be a comparable impact on the profit or equity, and the balances below would be negative.
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.
Forward foreign exchange contracts
The Company enters into foreign exchange forward contracts to offset the foreign currency risk arising from the amounts denominated in currencies other than the Indian rupee. The counter party to the Company’s foreign currency forward contracts is a bank. These contracts are entered into hedge the foreign currency risks of firm commitments.
The following table details the forward foreign currency (FC) contracts outstanding at the end of the reporting period:
6. Fair value measurements
This note provides information about how the Company determines fair values of various financial assets and financial liabilities.
Fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
Fair value of the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis.
Some of the Company’s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used).
Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required)
The directors are of the belief that the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate their fair values.
7.Operating lease arrangements
The Company as lessee
The company has taken premises on cancellable operating lease basis. The tenure of the agreement ranges from 24 to 60 months. There are no renewal and escalation clauses in these agreements.
The lease rentals for the year charged to revenue are Rs.331.53 Lakhs (Previous year Rs.359.46 Lakhs)
8. Segment information
The principal business of the Company is marketing and distribution of D-Link branded Networking products. All other activities of the Company revolve around its main business. The CEO & Managing Director of the Company, has been identified as the chief operating decision maker (CODM). The CODM evaluates the Company’s performance, allocates resources based on analysis of the various performance indicators of the Company as a single unit. Therefore, directors have concluded that there is only one operating reportable segment as defined by Ind AS 108 - Operating Segments.
9. Corporate Social Responsibility
(a) Expenditure related to Corporate Social Responsibility as per Section 135 of the Companies Act, 2013 read with Schedule VII thereof: Rs.47.97 Lakhs (Previous year: Rs.16.01 Lakhs)
(b) Gross amount required to be spent during the period: Rs.63.87 Laks (Previous year: Rs.58.03 Lakhs).
10.Explanation to Transition to Ind AS
These financial statements for the year ended March 31, 2018 are the first financial statements prepared by the Company in accordance with Ind AS. The Company had prepared its financial statements for periods up to and including the year ended March 31, 2017 in accordance with statutory reporting requirements in India (‘previous GAAP’) immediately before adopting Ind AS. Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for year ended as on March 31, 2018 together with the comparative data as at and for the year ended March 31, 2017. In preparing these financial statements, the Company’s opening balance sheet was prepared as at April 1, 2016, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating the previous GAAP financial statements, including the balance sheet as at April 1, 2016 and the financial statements as at and for the year ended March 31, 2017.
Notes to reconciliation between Previuos GAAP and Ind AS
1. Dividends
Under previous GAAP until 2017 dividend payable was recorded as a liability in the period to which it related. Whereas, under Ind AS, dividend to shareholder is recognised as a liability in the period in which the obligation to pay is established. This has resulted in increase in equity by Rs.299.13 Lakhs (including corporate tax on proposed dividend) as on April 1, 2016.
2. Employee benefits
Under previous GAAP, actuarial gains and losses were recognised in the statement of profit and loss. Under Ind AS, the return on plan asset and actuarial gains and losses form part of remeasurement of the net defined benefit liability/asset which is recognised in other comprehensive income. This resulted in a reclassification between profit or loss and other comprehensive income.
3. Forward Contract Liability
Under Previous GAAP in respect of forward exchange contracts the company has recognised the mark to market loss by comparing the spot rates on booking date with the reporting date and also amortised forward premium over the life of the contract. Under Ind AS, the Company has fair valued the forward contracts. The effect of these is reflected in total equity and / or profit or loss, as applicable.
4. Investments
Under Previous GAAP Investments in mutual funds were measured at lower of cost or fair value. Under Ind AS, these financial assets have been classified as FVTPL on the date of transition. The effect of these is reflected in total equity and/or profit or loss, as applicable.
5. Cash credit account with Bank
Under IND AS, Cash credit account with bank which is payable on demand and form an integral part of an entity’s cash management system is included in cash and cash equivalents for the purpose of presentation of statement of cashflows. Whereas under previous GAAP there was no similar guidance and hence, Cash credit account with bank were considered similar to other borrowings and the movement therein were reflected in cash flows from financing activities. The effect of these is reflected in cashflows from financing activities and Cash and cash equivalents.
11.Related party disclosures
a) Name of related parties where control exists
D-Link Holding Mauritius Inc. Holding Company
D-Link Corporation, Taiwan Ultimate Holding Company
TeamF1 Networks Private Limited Subsidiary Company
b) List of related parties with whom transactions have taken place during the year and nature of relationship Name of the related parties Nature of relationship
D-Link Corporation Ultimate Holding Company
D-Link (Europe) Ltd Fellow Subsidiary
D-Link International (Singapore) Fellow Subsidiary
D-Link Canada Inc. Fellow Subsidiary
D-Link Middle East-FZCO Fellow Subsidiary
D-Link Japan K K (DJP) Fellow Subsidiary
D-Link International Pte. Ltd Fellow Subsidiary
D-Link International Pte. Ltd. (DILA) Fellow Subsidiary
D-Link Latin America Company Ltd. Fellow Subsidiary
D-Link Brazil LTDA Fellow Subsidiary
D-Link Australia Pty Limited Fellow Subsidiary
D-Link Systems Inc. Fellow Subsidiary
TeamF1 Networks Private Limited Subsidiary Company
Mr. Yao Chuan Yang (Gary Yang) Key management person [Upto November 1, 2017]
Mr. Tushar Sighat Key management person
Mr. Douglas Hsiao Director [Upto August 7, 2017]
Mr. Rajaram Ajgaonkar Director
Mr. Satish Godbole Director
Mr. Anil Bakshi Director [Upto November 1, 2017]
Ms. Madhu Gadodia Director [w.e.f August 27, 2016]
Mr. Mukesh Lulla Director [w.e.f February 4, 2016]
12. Events after the reporting period
In respect of the year ended March 31, 2018, The Board of Directors proposed that a dividend of Rs.0.50/- (i.e. 25% ) per share be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs.177.53 Lakhs.
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