Capital work in progress
Capital work-in-progress as at March 31, 2023 is H 198.30 million (March 31, 2022 H 423.18 million). Additions made to capital work-in-progress during the year amount to H 197.08 million (March 31, 2022 H 419.07 million).
Asset amounting to H 421.97 million (March 31, 2022 H 222.70 million) has been capitalised during the year. (refer note 28)
The Company has amended the useful life of commercial vehicles in line with industry practice and based on guidelines issued by MHA-RBI, from 6 years to 7 years with effect from April 01, 2022 resulting in lower depreciation charge of H 46.32 million in the year ended March 31, 2023.
(i) Terms and rights attached to equity shares
The Company has only one class of equity shares having par value of H 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 ensuring Annual General Meeting, except in case of interim dividend which is approved by the Board of Directors.
In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive the 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.
i) Funds held relating to cash management activity represents the net funds invested by the Company in one of the services of Cash management business. These include Bank balances and Cash in Vaults as reduced by the amounts payable to customers.
ii) Margin money deposits with carrying amount of H 34.25 million (March 31, 2022: H 32.54 million) are subject to first charge to secure the Bank guarantees/fixed deposits given by banks on behalf of the Company for pending court cases and deposits of H 77.90 million (March 31, 2022 - H 19.39 million) are subject to first charge to secure the facilities for Vaulting and ATM operations.
(i) As per records of the Company, including its register of share holders/members and other declarations received from shareholders regarding beneficial interest, the above share holding represents both legal and beneficial ownership of shares.
(ii) Shares reserved for issue under options
For details of options alloted under employee stock option schemes, refer note 39.
(iii) During the previous year 2021-22, the Board has paid H 226.44 million interim dividends. The first dividend was declared on May 4, 2021 at the rate of H 0.62 per equity share (6.2% of the face value of H 10 each) and second dividend was declared on October 19, 2021 at the rate of H 0.91 per equity share (9.1% of the face value of H 10 each). The dividend distribution tax on the said dividends is H Nil as the Company has withheld 10% TDS on the Gross dividend and remittance is done net of withholding taxes. The witholding taxes are duly deposited with the Government.
B) Nature and purpose of reserves
(i) Securities Premium: The amount received in excess of face value of the equity shares is recognized in Securities Premium. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium, on exercise of the option. During the current year the company has recognized securities premium of H 35.72 million (March 31, 2022 H 136.30 million).
(ii) Share based payment reserves: The fair value of the equity-settled share based payment transactions is recognized in Statement of Profit and Loss with corresponding credit to Share based payment reserves.
(iii) Capital Redemption Reserve: The Company has recognized Capital Redemption Reserve on buyback of equity shares from its retained earnings. The amount in Capital Redemption Reserve is equal to nominal amount of the equity shares bought back.
(iv) Retained Earnings: Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.
Defined benefit plan
As per The Payment of Gratuity Act, 1972, the Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets gratuity on departure at 15 days' salary (last drawn salary) for each completed year of service.The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the Company carries out a acturial valuation based on the latest employee data from the certified actury valuer. Any deficit in the assets arising as a result of such valuations is funded by the Company.
The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity outgoes happening during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate in particular, the significant fall in interest rates, which should result in an increase in liability without corresponding increase in the asset.
The following tables summaries the components of benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the balance sheet for the gratuity plan of the Company.
The estimates of future salary increases, considered in actuarial valuation, takes in account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of reporting period.
Other long term employee benefits
In accordance with its leave policy, the Company has provided for leave encashment on the basis of an actuarial valuation carried out by an independent actuary at the end of the year.
Amount of H 8.87 million (March 31, 2022: H 8.13 million) for Compensated absences is recognized as an expense and included in “Employee benefits” in the Statement of Profit and Loss. Accumulated non-current liability amount to H 22.84 million (March 31, 2022: H 19.23 million) and accumulated current liability amount to H 8.25 million (March 31, 2022: H 7.28 million).
The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.
The weighted average incremental borrowing rate applied to lease liabilities is 8.5%.
The outflow on account of lease liabilities for the year ended March 31, 2023 is 512.85 million.(March 31, 2022 is 392.34 million)
*In relation to the matters of Custom duty, VAT, CST, Service Tax, GST, Income tax and excise matters listed above, the Company is contesting the demands from the respective Government Departments. The management believes that its position will likely be upheld in the appellate process. No expense has been accrued in the financial statements for these demand raised. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company's financial position and results of operations.
** The Company has given Corporate guarantees in favour of lenders of Securitrans India Private Limited, a subsidiary of the Company amounting to H 600 million (March 31,2022: H 600 million) in favour of the lenders and H 200 million (March 31, 2022: H 200 million) in favour of one of the customers of subsidiary for overnight vaulting facilities.
c) There has been a Supreme Court (SC) judgment dated 28th February 2019, relating to components of salary structure that need to be taken into account while computing the contribution to provident fund under the EPF Act. The Company believes, based on legal opinion, that the liability if any, in practice would be from the date of order. Based on such opinion and pending clarification from PF authorities, the Company has recorded the cost prospectively from March 2019.
d) In addition, there are certain civil claims against the Company. The Management is confident, that these will not have any material impact in the financial statements.
33 TRADE PAYABLESa) Details of dues to Micro and Small Enterprises as per Micro, Small and Medium Enterprises Development Act, 2006
The Company has H 47.14 million (March 31, 2022 H 75.02 million) dues outstanding to the micro and small enterprises as defined in Micro, Small and Medium Enterprise Development Act, 2006. The information regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.
34 IMPAIRMENT TEST OF GOODWILL
Impairment test of Goodwill
Goodwill acquired through business combinations have indefinite lives. Out of the total Goodwill of the Company, the material amount of goodwill is allocated to the following:
a) H 1035.12 million (March 31, 2022: H 1035.12 million), relates to the Cash Management division of the Company.
b) H 185.94 million (March 31, 2022: H 185.94 million), relates to the acquisition of door step banking business from Checkmate Services Private Limited; also a part of Cash management business.
The Company performed its annual impairment test for years ended March 31, 2023 and March 31,2022 respectively. The Company considers the relationship between its value in use and its carrying value, among other factors, when reviewing for indicators of impairment.
The recoverable amount of the goodwill is determined based on a value in use ('VIU') calculated using cash flow projections from financial budgets approved by management covering a period of five years and the terminal value (after considering the relevant long-term growth rate) at the end of the said forecast periods. The Company has extrapolated cash flows beyond 5 years using a growth rate of 5% for the year ended March 31, 2023 (March 31,2022: 5%). The pre-tax discount rate
applied to the cash flow projections for impairment testing is 13.4% for March 31, 2023 (March 31, 2022: 13.4%)
The said cash flow projections are based on the senior management past experience as well as expected trends for the future periods. The calculation of weighted average cost of capital (WACC) is based on the Company's estimated capital structure as relevant and attributable to the CGU. The WACC is also adjusted for specific risks, market risks and premium, and other inherent risks associated with similar type of investments to arrive at an approximation of the WACC of a comparable market participant. The said WACC being pre-tax discount rates reflecting specific risks relating to the relevant CGUs, are then applied to the above mentioned projections of the estimated future cash flows to arrive at the discounted cash flows.
The key assumptions used in the determination of VIU are the revenue annual growth rates and the EBITDA growth rate.
Based on the above assumptions and analysis, no impairment was identified as at March 31, 2023. Further, on the analysis of the said calculation's sensitivity to a reasonably possible change in any of the above mentioned key assumptions/parameters on which the Management has based determination of the CGU's recoverable amount, there are no scenarios identified by the Management wherein the carrying value could exceed its recoverable amount.
The fair value for the investments is arrived at with reference to the Net asset value (NAV) of the mutual fund unit as disclosed by the Asset Management Company.
The management assessed that cash and cash equivalents, trade receivables, trade payables, and other current financial assets and financial liabilities
approximate their carrying amounts largely due to the short-term maturities of these instruments. Further the difference between carrying amount and fair value of insurance receivables, deposit measured at amortised cost is not significantly different in each of the year presented.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
38 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company through it's operations is exposed to credit risk and liquidity risk. The Company's senior management oversees the management of these risks. The Company's senior management ensures that the Company's financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives. The senior management reviews and agrees policies for managing each of these risks, which are summarised below.
Credit risk
Credit risk is the risk of financial loss to the company if a customer fails to meet its obligations under a financial instrument or customer contract. The carrying amount of financial assets and contract assets represents the minimum credit exposure. The Company is exposed to credit risk from its operating activities (primarily trade receivables).
Trade receivables
Customer credit risk is managed by the Company's established policy. To minimise the risk from the counter parties the Company enters into financial transaction with counter parties who are major names in the industry.
A significant risk in respect of receivables is related to the default risk and credit risk. An impairment analysis
is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous companies and assessed for impairment collectively. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of receivables disclosed in Note 12. The Company does not hold collateral as security.
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations. Trade receivables concentration of credit risk with respect to trade receivables are limited, due to the Company's customer base being large and diverse.
Other receivables
Security deposits are interest free deposits given by the Company for properties taken on Lease. Provision is taken on a case to case basis depending on circumstances with respect to non-recoverability of the amount. The gross carrying amount of Security deposit is H 114.67 million as at March 31 2023, H 126.30 million as at 31st March 2022.
Other financial asset includes claims receivable, and other receivables (refer note 8). Provision is made where there is significant increase in credit risk of the asset.
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 delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
Management monitors rolling forecasts of the Company's liquidity position on the basis of expected cash flows. This monitoring includes financial ratios and takes into account the accessibility of cash and cash equivalents.
The Company has sufficient current assets comprising of Trade Receivables, Cash and Cash Equivalents, Investment in Mutual Funds, Other Bank Balances (other than restricted balances), Loans, Inventories and Other Current Financial Assets to manage the liquidity risk, if any in relation to current financial liabilities.
The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of cash credit, working capital, demand loan and bank loans. The Company has access to a sufficient variety of sources of funding. The table below provides details regarding the contractual maturities of significant financial liabilities as at year end.
For options granted under Employee scheme, 21st month onward vesting will be based on Company/business unit performance for the second financial year after the financial year in which the options have been granted and so on. The performance condition are assessed as non-market conditions.
The vested options can be exercised by the employees only upon happening of liquidity event. The vested options can be exercised within 2 year of the date such options are vested. In any other liquidity event, the vested options can be exercised within such period as may be prescribed by the Board in this regard.
Capital management
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 parent. The primary objective of the Company's capital management is to maximize the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net
debt. The Company includes within net debt, interest bearing loans and borrowings, less cash and cash equivalents. In order to achieve this overall objective, the Company's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. The Company does not have any loans outstanding as at March 31, 2023. It has taken adequate credit facilities from various banks to maintain its liquidity.
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2023 and March 31,2022.
company, entered into an agreement with Chief Executive Officer of the Company (CEO) pursuant to which, the CEO was granted options under the stock option plan of Vault L.P. These options vested immediately to entitle base units in Vault L.P. to the extent of amount equivalent to 0.61% of the value of the Company for a consideration equivalent to such value of the Company as per the terms and conditions of the agreement. As per the plan, the base units are entitled for upward adjustment subject to fulfilment of certain market and service conditions.
Upon redemption of base or adjusted base units, CEO will receive from Vault L.P., an amount equivalent to value of the Company vis-a-vis such units at the time of sale of Sion's shareholding in the Company subject to certain conditions set out in the agreement.
Since the option granted to CEO is for the services rendered to the Company, the Option has been valued considering the various probable scenarios and using specific assumptions relating to expected volatility and risk free return. The total charge over the period of vesting estimated is H 70.20 million. The proportionate charge recognized during the current year is H Nil (March 31, 2022: H 15.10 million)
41 OPERATING SEGMENT
Since the segment information as required by Ind AS 108-Operating Segments is provided in consolidated financial statements, the same is not provided in the Company's separate financial statement.
The expected life of the share options is based on current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome. The historical volatility is based on price volatility of listed companies in same or similar industry. The company has allotted employee stock options to some of its employees through its Employee Stock Option Scheme. Over the year's 1,126,893 (year ended March 31, 2022; 1,053,493) stock options has expired and lapsed on account of employees left the organization. During the current year, reversal on account of such expired options is recognized in the profit and loss account aggregating to H 1.85 million. The Company has recognized H 92.80 million, (March 31, 2022 - H 57.50 million) as employee benefit expense in relation to all the active options outstanding as at March 31,2023.
The CEO ESOP 2016, Employee ESOP 2016 and Management ESOP 2016 scheme has been modified, in which exercise period is extended by 1 (One) year as approved by the shareholders on December 28, 2022. This has resulted in an additional ESOP cost of H 35.25 million for the year ended March 31, 2023.
40 AGREEMENT BETWEEN PROMOTER AND CEO
On September 26th, 2017, Vault Co-Investment Vehicle L.P. (“Vault L.P.”), a limited liability partnership incorporated in the Cayman Islands and controlled by Barings Private Equity Asia GP VI Limited, the ultimate promoter of SION Investment Holdings Pte. Limited (“Sion”), the holding
The investments in the subsidiaries are accounted for at cost in the standalone financial statements.
43 IND AS 115 REVENUE FROM CONTRACTS WITH CUSTOMERSSale of Product
The Company applies practical expedient in paragraph 121 of Ind AS 115 for all contract entered for sale of product and does not disclose information about remaining performance obligation that have original expected duration of one year or less.
Revenue for services
The Company applies practical expedient in paragraph 121 of Ind AS 115 for all contract entered
for revenue from services, whereby it has right to receive consideration from a customer in an amount that corresponds directly with the value to the customer of the entity's performance completed to date. Hence the Company does not disclose information of remaining performance obligation of such contracts.
Disaggregation of revenue from contract with customers
Revenue from sale of goods is recognized at point in time when control of the products being sold is transferred to our customer and Revenue from services is recognized over time as and when services are rendered. Revenue from contracts with customers is disaggregated by primary business units as given in the note 19.
returns or quarterly statements of current assets filed by the Company with banks or financial institutions during the year ended March 31, 2023 and the year ended March 31, 2022 are in agreement with the books of accounts.
48 DIVIDEND
(a) The interim dividend declared and paid by the Company during the year and until the date of this audit report is in accordance with section 123 of the Companies Act 2013.
(b) The Board of Directors at its meeting held on May 23, 2023 recommended a Final Dividend of H 4.75 per Equity share of H 10 each for FY 2022-23. This Final dividend is subject to the approval of the Members at the ensuing Annual General Meeting which will be held on or before September 30, 2023.
49 DISCLOSURE REQUIRED UNDER RULE 11(E) OF THE COMPANIES RULES, 2014
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
There is no obligation for returns, refunds and other similar obligation as at March 31, 2023 and March 31, 2022
Revenue for the period ended March 31, 2023 includes revenue from two customers of the Company amounting to H 6,317.50 million.
44 INITIAL PUBLIC OFFERING
During the previous year ended March 31, 2022, the Company has completed its Initial Public offer (“IPO”), comprising of an offer for sale of 5,09,25,925 equity shares of face value H 10 each at an issue price of H 216 per share by existing shareholders. Pursuant to the IPO, the equity shares of the Company were listed on National Stock Exchange of India (NSE) and BSE Limited (BSE) on December 31, 2021.
45 REGISTRATION OF CHARGES OR SATISFACTION WITH REGISTRAR OF COMPANIES
The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
46 UNDISCLOSED INCOME
a) The Company has not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
b) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
47 DISCLOSURE REQUIRED FOR QUARTERLY STATEMENT SUBMITTED WITH BANKS
For borrowings from banks or financial institutions on the basis of security of current assets, quarterly
52 BUSINESS COMBINATION
During the previous year ended 31 March 2022, the Company has acquired 100% of the equity share capital of Hemabh Technology Private Limited for a consideration of H 28.05 million. Assets taken over comprises of Property Plant and Equipment (H 115.49 million), Customer Contracts (H 44.70 million) and other assets (H 78.55 million) comprising H 238.74 million. Liabilities taken over comprises of borrowings (H 143.86 million), trade payables (H 69.05 million) and other liabilities (H 24.93 million) amounting to H 237.84 million. No additional intangible assets have currently been identified and the purchase consideration, over assets taken over amounting to H 27.14 million, has been recognized as goodwill. The Goodwill represents expected synergies and assembled workplace.
54 SUBSEQUENT EVENT
There are no significant subsequent events that would require adjustments or disclosures in the financial statements as on the balance sheet date.
55 ADDITIONAL DISCLOSURE REQUIRED BY SCHEDULE III (AMENDMENTS DATED 24TH MARCH 2021) TO THE COMPANIES ACT, 2013
No transactions to report against the following disclosure requirements as notified by MCA pursuant to amended Schedule III:
a) Crypto Currency or Virtual Currency
b) Benami Property held under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder
c) Registration of charges or satisfaction with Registrar of Companies
d) Relating to borrowed funds:
i. Wilful defaulter
ii. Utilisation of borrowed funds & share premium
iii. Borrowings obtained on the basis of security of current assets
iv. Discrepancy in utilisation of borrowings
v. Current maturity of long term borrowings
e) Merger/amalgamation/reconstruction, etc.
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