1. COMPANY BACKGROUND:
ABM Knowledgeware Limited (the 'Company’) is a public limited Company domiciled and incorporated in India under the Indian Companies Act, 1956. The registered office of the Company is located at, ABM House, Bandra West, Mumbai, India. The company has its primary listing on the Bombay Stock Exchange (BSE). The Company is one of the few information technology (IT) services companies with exclusive focus on e governance since 1998.
# Above Overdrafts are payable on demand and are secured by:-
(a) Hypothecation of book debts of the company.
(b) Collateral:
i) EMT of Office premises at Swastik Chambers, Office No.514 and 515,5th floor, Umarshi Bappa Chowk, Chembur, Mumbai - 400071 Standing in the name of the company.
ii) EMT of Office Premises at Prabhadevi Unique Industrial Premises Co-op Soc. Ltd, Unit No.5,Ground Floor, Off Veer Savarkar Marg, Prabhadevi, Mumbai - 400025 standing in the name of the company.
iii) Three Fixed deposits in Canara Bank amounting to Rs.313 thousand representing maturity value of 3 LIC policies which were earlier hypothecated to the bank.
iv) 5 KDR's having face value of Rs. 2.60 lac in the personal names of directors Mr.Prakash Rane and Mrs. Supriya Rane (Pledge).
v) Personal Guarantees from director -Mr. Prakash B. Rane.
Note 2. (iv) Rights, preferences and restrictions attached to Equity shares
The Company has a only one class of Equity Shares having par value of Rs. 5 per share . Each Shareholder of equity share is entitled to one vote per share held. 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 liquidation, the Equity Shareholders are entitled to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.
Note 3. (i)
The amount mentioned pertains to the margin money paid to court against the Unique Value Case with interest at 9% p.a. against the court order received in June, 2005. Since the decision of the court is pending hence the same is shown as contingent laibility.
Note 4. (ii)
The Overdrafts and Bank Gaurantee facility availed by the Company are payable on demand and are secured by:-
(a) Hypothecation of book debts of the company.
(b) Collateral:
i) EMT of Office premises at Swastik Chambers, Office No.514 and 515,5th floor, Umarshi Bappa Chowk, Chembur, Mumbai - 400071 Standing in the name of the company.
ii) EMT of Office Premises at Prabhadevi Unique Industrial Premises Co-op Soc. Ltd, Unit No.5, Ground Floor, Off Veer Savarkar Marg, Prabhadevi, Mumbai - 400025 standing in the name of the company.
iii) Three Fixed deposits in Canara Bank amounting to Rs.313 thousand representing maturity value of 3 LIC policies which were earlier hypothecated to the ban k.
iv) 5 KDR's having face value of Rs.2.60 lac in the personal names of directors Mr. Prakash B. Rane and Mrs. Supriya Rane (Pledge).
(c) Personal Guarantees from director - Mr. Prakash B. Rane.
Note 5. (iii)
The service tax amount shown of ' 4881 thousand pertains to the show cause notices received by the company for disallowances of cenvat credit for the F.Y. 2010-11 to 2016-17. The Company has contested or filed appeals in respect of the aforesaid disputed matters before the authorities. The management is hopeful that matters will be decided in favour of the Company.
Note 6. (iv)
The Company at a Board Meeting held on 23rd January,2017 approved a strategic investment in InstaSafe Technologies Private Limited ("Instasafe"). Instasafe Provides innovative cloud based security-as-a-service solutions. ABM has executed definitive agreements including Share Purchase Agreement and Share Subscription & Shareholders' Agreement. The transactions will be completed subject to satisfactory fulfillment of certain conditions precedent. The aggregate investment would be upto INR 13.32 crore. As of 31st March, 2018 the Company completed an aggregate investment of Rs. 9.32 Cr in Instasafe Technologies Pvt Limited. Pursuant to the rights confered on ABM under the Shareholder's agreement and nomination of two Non-executive Directors on the Board of Directors of Instasafe, the said Company has became a subsidiary of the Company.
Notes on Financial Statements for the Year ended 31st March, 2018
Note 7.
During the year management has analysed the remaining useful life of asset and based on the technical valuation of the one class of property, plant and equipment viz. building and premises, life expectation has been changed from previous estimates. The changes in the life expectation has been changed from previous estimates. The changes in the life expectation has been accounted as per Para 38 of Ind AS 8, Accounting Policies, change in Accounting Estimates and Errors.
Note : 8. Employee Benefits
A) Defined contribution Plans
Provident Fund:
The Company operated defined benefits contribution retirement benefits plans for all qualifying employees. The total expenses recognised in profit and loss of Rs.13,909 thousand (for the year ended March 31, 2017 : Rs.14448 thousand) represents contributions payable to Provident fund by the Company at rates specified in rules of the plans.
Sensitive Analysis:
Below is the sensitivity analysis determined for significant actuarial assumption for determination of defined benefit obligation and based on reasonably possible changes of the respective assumptions occurring at the end of the reporting
Note : 9. First-time adoption of Ind AS
B: Reconciliations between previous GAAP and Ind AS
Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.
1. Property, Plant and Equipment
The Company has availed the exemption available given under para D7AA of Ind AS 101 - First Time Adoption of IND AS to continue the carrying value for all of its Property, Plant and Equipment and intangibles as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition, however, as informed to us by the Management, Company has applied Exemption given under Para D5 of IND AS 101- First Time Adoption of IND AS and accordingly measured an item of Property, Plant and Equipment i.e. Building and Office Premises at the date of Transition to IND AS at Fair Value and used as Deemed Cost at that date. Consequently, there was an increase in the fixed assets by Rs. 2,26,671.4 thousand as on April 1, 2016 and an increase in the amount of depreciation by Rs. 18,733.46 thousand for the year ended March 2017 ,which has been charged to Profit and Loss Statement.
2. Defined Benefit Plans
Both under the previous GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plans on an actuarial basis. Under previous GAAP the entire cost, including actuarial gains and losses are charged to the Statement of Profit and Loss. Under Ind AS, remeasurement (comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability) are recognized immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income and the corresponding tax effect is also given in Other Comprehensive Income.
3. Proposed Dividend
Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend and related liability of Dividend Distribution tax of Rs 30093 thousand (Rs. 25003 thousand and Rs. 5090 thousand) as at April 01, 2016 included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.
4. Valuation of Investments
Under the previous GAAP, investments in equity shares and investment in mutual funds were classified as long-term investments or current investments based on the intended holding period and realizability. Long-term investments and Current investments were carried at cost less provision for other than temporary decline in the value of such investments. Under Ind AS, these investments are required to be measured at fair value/amortized cost. The resulting fair value changes/amortization of these investments have been recognized in retained earnings as at the date of transition and subsequently in the profit or loss or Other comprehensive Income for the year ended March 31, 2017.
5. Other comprehensive income
Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ‘ other comprehensive income’ includes remeasurements of defined benefit plans and fair value changes of investment in equity shares. The concept of other comprehensive income did not exist under previous GAAP.
Note 10. Capital Management Risk management
The group's objectives when managing capital are to
(i) 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
(ii) Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the group monitors capital on the basis of the following gearing ratio:
Net debt (total borrowings net of cash and cash equivalents) divided by Total 'equity' (as shown in the balance sheet, including non-controlling interests).
Note 11. Financial Instruments Method and assumptions used to estimate the fair value
"A number of the Company's accounting policies and disclosures require the determination of fair value, for both financial as well as non assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal market or the most advantageous market must be accessible to the Company."
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy Based on the lowest level input that is significant to the fair value measurement as a whole. The fair value hierarchy is described as below:
Level 1: unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2: Inputs other than prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability
Financial Risk Management
The board of director has overall responsibility for the establishment & oversight of the company's risk management framework. The Board of director has established a risk management policy to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risk and adherence to limits. Risk management systems are reviewed periodically to reflect changed market conditions and the company's activities. The audit committee oversees how management monitors compliances with the company's risk management policies and procedures, and reviews the risk management framework. The audit committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
Note 12. Corporate Social Responsibility
As per Section 135 of the Companies Act, 2013, a company meeting applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief, and rural development projects. A CSR committee has been formed by the company as per the act and the CSR funds are used in the areas mentioned above to some extent.
Note: 13.
Balance of Sundry Creditors, Debtors, Loans & Advances and Deposits are subject to confirmation and reconciliation if any. For the year, letters for confirmation of balances have been sent to various parties by the Company which have not been responded to. The Management however, does not expect any material changes therein. The balances are as per records available with the company.
Note:14.
Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.
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