l) Provisions and contingent liabilities
The Company creates a provision when there exists a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are not recognized in financial statements.
ID. Other accounting policies a Borrowings
Borrowing is initially recognised at net of transaction costs incurred and measured at amortised cost using effective interest method. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.
Effective interest method:
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest expenses over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payment (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount on initial recognition.
b) Earnings Per Share
Basic Earnings per Share
Basic earnings per share is calculated by dividing the profit attributable to owners of the company by the weighted average number of equity shares outstanding during the financial year. Earnings considered in ascertaining the Company’s earnings per share is the net profit for the year.
Diluted earnings per share
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares.
c) Business combination
In accordance with Ind AS 103 "Business Combination”, the Company accounts for the business combinations using the acquisition method when control is transferred to the Company. The consideration transferred for the business combination is generally measured at fair value as at the date the control is acquired (acquisition date), as the identifiable assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on bargain purchase is recognised directly in equity as capital reserve. Transaction cost are expensed
as incurred, except to the extent related to the issue if debt or equity securities.
d) Foreign currency transactions and balances
i. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies at the year-end are restated at the closing rate of exchange prevailing on the reporting date.
ii. Any exchange difference arising on account of settlement of foreign currency transactions and restatement of monetary assets and liabilities denominated in foreign currency is recognised in the Statement of Profit and Loss.
iii. Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded using the exchange rates at the date of the transaction. Nonmonetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in Other Comprehensive Income or the Statement of Profit and Loss are also recognised in Other Comprehensive Income or the Statement of Profit and Loss, respectively).
1E. Recent accounting pronouncements
Ministry of Corporate Affairs ("MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31st March, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the company.
Goodwill is tested for impairment at least annually or whenever there is an indication that goodwill may be impaired. For impairment testing, goodwill is allocated to the cash generating units (CGUs) which represents the lowest level within the company at which goodwill is monitored for internal management purposes.
The recoverable amount of the cash generating units has been assessed using a value-in-use model. Value in use is calculated as the net present value of the projected pre-tax cash flows plus a terminal value of the cash generating unit to which the goodwill is allocated. Initially a pretax discount rate is applied to calculate the net present value of the pre-tax cash flows. Key assumptions upon which the Company has based its determinations of value in use includes:
a) The Company prepares its cash flow forecast for operating five years based on management’s projections.
b) A terminal value is arrived at by extrapolating the last forecasted year cashflows to perpetuity, using a constant long-term growth rate 5%.
c) Growth rates: The growth rates are based on industry growth forecasts. Management determines the budgeted growth rates based on past performance and its expectations of market development. The growth rates used were 8%.
d) Discount rates: Management estimates discount rates that reflect current market assessments of the risks specific to the CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Company and its operating Industry and is derived from its weighted average cost of capital (WACC) 18.50%.
e) Sensitivity: Reasonable sensitivities in key assumptions consequent to the change in estimated growth rate and discount rate is unlikely to cause the carrying amount to exceed the recoverable amount of the cash generating units.
The Company reviews it carrying value of investments in material subsidiaries carried at cost (net of impairment, if any) annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for in the statement of profit and loss.
The recoverable amounts of the respective investments in such subsidiaries have been assessed using a value in use model. Value in use is generally calculated as the net present value of the projected post-tax cash flows plus a terminal value of the respective subsidiaries to which the Investment is allocated. Initially, a post-tax discount rate is applied to calculate the net present value of the post-tax cash flows.
Key assumptions upon which the Group has based its determinations of value in use includes:
a) The Company prepares its cash flow forecast for operating five years based on management’s projections.
b) A terminal value is arrived at by extrapolating the last forecasted year cash flows to perpetuity, using a constant longterm growth rate 5%.
c) Growth rates: The growth rates are based on industry growth forecasts. Management determines the budgeted growth rates based on past performance and its expectations of market development. The growth rates used were ranging from 5% to 15%.
d) Discount rates: Management estimates discount rates that reflect current market assessments of the risks specific to the subsidiaries, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the subsidiaries and its operating Industry and is derived from its weighted average cost of capital (WACC) ranging from 17% to 19%.
e) Sensitivity: Reasonable sensitivities in key assumptions consequent to the change in estimated growth rate and discount rate is unlikely to cause the carrying amount to exceed the recoverable amount of the subsidiaries.
c) Terms/Rights Attached to Equity Shares
The Company has only one class of equity shares having a par value of ' 1/- per share. Each holder of equity shares is entitled to one vote per share. 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.
The Company declares and pays dividends in Indian Rupees. The Directors have recommended, subject to approval of the shareholders at the ensuing Annual General Meeting, a Final Dividend for the year ended on 2024 : 125% (2023: 125%). Total dividend including interim dividend for the financial year 2024 is 125% (2023: 125%).
Nature and purpose of reserve:-
Capital Reserve on Business Combination
It represent the difference, between the amount recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of net asset value of the transferor company acquired by the company. Capital Redemption Reserves
As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve and it is a non-distributable reserve.
Securities Premium
Securities premium is used to record the premium on issue of shares. The reserve can be utilised in accordance with the provision of the Companies Act, 2013.
Share Options Outstanding Account
The Employee Stock Options Reserve represents reserve in respect of equity settled share options granted to the Company’s employees in pursuance of the Employee Stock Option Plan.
General Reserve
The Company created a General reserve in earlier years pursuant to the provisions of the Companies Act, 1956 wherein certain percentage of profits were required to be transferred to General Reserve before declaring dividends. As per Companies Act 2013, the requirements to transfer profits to General Reserve is not mandatory. General reserve is a free reserve available to the Company.
Notes:-
(i) The matter is with respect to disallowance of certain expenses and tax deducted at source. The same has been pending with various authorities. Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending with various forums/authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable.
(ii) On 27th September, 2023 the Company along with its two subsidiary companies had received show cause notices from the Directorate General of GST Intelligence, Hyderabad, for alleged short payment of Goods and Service Tax (GST) aggregating ' 16,822.98 Crores under Section 74(1) of the CGST Act, 2017 and Goa SGST Act, 2017 for the period from 1st July, 2017 to 31st March, 2022 and another subsidiary company has received show cause notice dated 28th October, 2023 for alleged short payment of Goods and Service Tax (GST) aggregating ' 6,384.32 Crores for the period from 1st July, 2017 to 30th November 2022 from Directorate General of GST Intelligence, Kolkata.
The amounts claimed under the above notices are inter alia based on the gross bet value/face value of all games played at the casinos/ online platform and short payment of GST on consideration received towards entry to the casino/gross rake amount collected from online platform during the above mentioned period. The demands made by the authorities on the gross bet value/ gross face value as against gross gaming revenue/gross rake amount has been an industry issue and multiple representations have been made by the industry participants to the Government in this regard.
The Holding Company / subsidiary companies have filed Writ petitions and have obtained Stay order from respective High Courts.
The Union of India had sought the transfer of all similar pending Writ Petitions from the High Courts to the Supreme Court and same has been admitted by Supreme court. Without prejudice, the Company, based on legal assessment is of the view that all the above notices and the tax demands are arbitrary in nature and contrary to the provisions of law. The Companies have pursue all the legal remedies available to them to challenge such tax demands and the related proceedings.
Further, the Company has made investments in equity shares aggregating to ' 777.52 Crores in aforesaid three subsidiaries who have received notices for alleged short payment of GST aggregating to ' 11,439.49 Crores. In addition to investments in equity shares, the Company has also provided short term loans aggregating ' 46.07 Croresss to these subsidiaries. Considering the fact that these subsidiaries have a good ground to defend against the said show cause notices, the management of the Company believes that until the GST matter gets effectively concluded, no provision for impairment is currently required towards investments made in equity shares and loans given to the three subsidiaries.
(iii) The Company has obtained licenses under the Export Promotion Capital Goods Scheme (EPCG) 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 within 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 has supplied the export of required value. Awaiting the required confirmation from the authorities, full duty saved amount under the above referred scheme has been disclosed as Contingent Liability.
34 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 has a defined benefit gratuity plan (funded). The Company’s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund.
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member’s length of service and salary at retirement age. The fund has the form of a trust and it is governed by the Board of Trustees. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy.
a) Interest Risk:- A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.
b) Mortality risk:- Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.
c) Salary Risk:- The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan’s liability.
d) Investment Risk:- The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.
e) Asset Liability Matching Risk:- The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.
f) Concentration Risk:- Plan is having a concentration risk as all the assets are invested with the insurance company.
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.
VIII. The Company expects to contribute ' 3.35 Crores (Previous Year : ' 2.26 Crores) to the gratuity trust during the financial year 2024-25.
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:
The Company’s lease asset classes primarily consist of leases for land and buildings. The lease period for these contracts varies from 11 months to 5 years, in certain cases, mainly relating to rent of (parts of) buildings, with extension options. The Right-of-use assets and Lease liabilities as disclosed below, do not include short term and low value leases. In general, as usual with leases, the Company’s obligations under its leases are secured by the lessor’s title to or legal ownership of the leased assets.
a. Right-of-Use Assets
The movement in Right-of-use assets has been disclosed in Note 2(i).
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 counterparty,
iii) Financial or economic conditions that are expected to cause a significant change to the counterparty’s ability to meet its obligations,
The Company measures the expected credit loss of trade receivables 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, additional loss on collection of receivable is recognised.
Trade Receivables:
The maximum exposure to the credit risk at the reporting date is primarily from trade receivable amounting to ' 6.44 Crores as on 31st March, 2024 (Previous Year : ' 4.18 Crores).
The expected credit loss analysis on these trade receivables is given in below table:
42 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 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 Non Current and Current 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.
49 EVENT OCCURRING AFTER BALANCE SHEET DATE
The Board of Directors has recommended final Equity dividend of ' 1.25 per equity share (Previous year : ' 1.25 per equity share) for the financial year 2023-24.
50 BUSINESS COMBINATION
In Previous Year, Pursuant to the Scheme of Amalgamation (‘The Scheme’) between Delta Corp Limited ("the Company”) ("Transferee Company”) and Daman Hospitality Private Limited and Daman Entertainment Private Limited ("Transferor Companies”), approved by the respective shareholders and by the National Company Law Tribunal ("Ahmedabad”) vide its order dated 30th November, 2022 (received on 23rd December, 2022) and National Company Law Tribunal ("Mumbai”) vide its order dated 29th September, 2022 (received on 10th November, 2022) has approved the respective Schemes. Accordingly, the Company has accounted for the Schemes of Amalgamation under the pooling of interests’ method in accordance with Appendix C of Ind AS 103 ‘Business Combinations’.
Pursuant to the Schemes, all assets and liabilities pertaining to Transferor Companies have been transferred to the Company without any consideration and the carrying amount of inter-company balances between the Transferor companies and the Company appearing in the books have been eliminated.
51 SHARE-BASED PAYMENTS
a) Details of the Employee Share Option Plan of the Company
Pursuant to the approval of Board of Directors and the Shareholders of the Company a Scheme called "Delta Corp Employee Stock Options Scheme - 2009 (" DELTACORP ESOS 2009"), the company grants benefits to eligible employee by granting Stock Options ( "Options”).
Options granted under DELTACORP ESOS 2009 would vest not less than one year and not more than five years from the date of grant of such options. Vesting of options would be subject to continued employment with the Company and thus the options would vest on passage of time.
The options are granted at the price determined by the Nomination Remuneration Compensation Committee. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of ' 1/- each. The Option granted in Financial Year 2017-18 and 2018-19 shall vest in three installments. On 23rd September, 2019, terms of option granted in FY 2018-19 have been modified, repriced and vesting period reduced to three years from four years. Accordingly fair value recalculated with modified terms. Details of options granted during the financial year 2017-18 & 2018-19 duly approved by the Nomination Remuneration Compensation Committee under the said scheme are given below.
56 OTHER STATUTORY INFORMATION:
(i) No proceedings have been initiated on or are pending against the company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.
(ii) The Company has identify, there is no parties having status as struck off companies in current year and previous year. Total value of purchase of goods & services from these struck off companies amounts to ' Nil (Previous Year : Nil) and having Closing balance of ' Nil (Previous Year : Nil) payable at the year end.
(iii) There are no charges or satisfactions which are yet to be registered with Registrar of Companies beyond the statutory period.
(iv) The company has not traded or invested in crypto currency or virtual currency during the current year or previous year.
(v) No funds have been advanced or loaned or invested by the Company to or in any person(s) or entity(ies), including foreign entities (‘the intermediaries’), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (‘the Ultimate Beneficiaries’) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries.
(vi) No funds have been received by the Company from any person(s) or entity(ies), including foreign entities (‘the Funding Parties’), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (‘Ultimate Beneficiaries’) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vii) There is no income surrendered or disclosed as income during the current or previous year in the tax assessment under the Income Tax Act, 1961, that has been recorded in the books of accounts.
(viii) The company has not revaluated its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
(ix) The company has not given any loans or advances in the nature of loans to the promoters, Directors and KMPs as defined under Companies Act, 2013
(x) The company has not been defined as willful defaulter by any bank or financial institution or government or any government authority.
(xi) The company has not entered into any scheme of arrangement which has an accounting impact on current year.
(xii) The company has complied with the number of layers prescribed under Companies Act, 2013.
57 AUDIT TRAIL
The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled. The Company uses accounting software for maintaining its books of account which does not have a feature of recording audit trail (edit log) facility. Based on management assessment, the non-availability of audit trail functions will not have any impact on the performance of the accounting software, as management has all other necessary controls in place which are operating effectively.
(*) The fair valuation of the investment is based on the perception about the macro and economic factors, affecting the investee company, existing market condition and market participants assumption and other data available.
The accompanying material accounting policies and notes are an integral part of these Standalone financial statements
As per our report of even date For and on behalf of Board
For Walker Chandiok & Co LLP Jaydev Mody Chairman DIN : 00234797
Chartered Accountants Ashish Kapadia Managing Director DIN : 02011632
Firm Regn. No. 001076N/N500013 Ravinder Jain Director DIN : 00652148
Director DIN : 00021311
Director DIN : 00046853
Partner Chetan Desai Director DIN : 03595319
Membership No. 042423 Alpana Chinai Director DIN : 00136144
President & CFO
Company Secretary FCS No : 7750
Mumbai: 7th May, 2024 Mumbai: 7th May, 2024
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