18. Provisions
Provisions are recognized when the Company has
a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow
of resources embodying economic benefits will
be required to settle the obligation and a reliable
estimate can be made of the amount of the
obligation. When the Company expects some or all
of a provision to be reimbursed, the reimbursement
is recognized as a separate asset, but only when
the reimbursement is virtually certain. The expense
relating to a provision is presented in the statement
of profit or loss net of any reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre¬
tax rate that reflects, when appropriate, the risks
specific to the liability. When discounting is used,
the increase in the provision due to the passage of
time is recognized as a finance cost.
Contingencies
Provision in respect of contingencies relating to
claims, litigation, assessment, fines, penalties
etc. are recognized when it is probable that a
liability has been incurred and the amount can be
estimated reliably.
Contingent liabilities and contingent assets:
A contingent liability exists when there is a possible
but not probable obligation, or a present obligation
that may, but probably will not, require an outflow
of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities
do not warrant provisions, but are disclosed unless
the possibility of outflow of resources is remote.
Contingent assets are neither recognized nor
disclosed in the financial statements. However,
contingent assets are assessed continually and
if it is virtually certain that an inflow of economic
benefits will arise, the asset and related income
are recognized in the period in which the change
occurs.
19. Recent 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 March 31, 2025, MCA has notified Ind AS -
117 Insurance Contracts and amendments to Ind
AS 116 - Leases, relating to sale and leaseback
transactions, relevant to the Company w.e.f. April
1, 2024. The Company has reviewed the new
pronouncements and based on its evaluation has
determined that it does not have any significant
impact in its financial statements.
8.1. Terms/Rights attached to the equity shares
The Company has equity shares having a par value of Re.1 per share. All equity shares rank equally with regard to dividend and share
in the Company's residual assets in proportion of amount paid up. The equity shares are entitled to receive dividend as declared from
time to time. Each holder of the equity shares is entitled to one vote per share. On winding up of Company, the holder of equity shares
will be entitled to receive the residual assets of Company, remaining after distribution of all preferential amounts in proportion to
number of equity shares held. Terms attached to stock options granted to employees are described in note 26 regarding employee
share based payments
Employees stock options outstanding
The share based option outstanding account is used to recognize the grant date fair value of options issued to employees under
Company's employee stock option schemes.
Retained earnings:
Retained earnings comprises of prior and current year's undistributed earnings after tax.
Securities premium
Where the Company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the premium
received on those shares shall be transferred to "Securities Premium". The Company may issue fully paid-up bonus shares to its
Members out of the Securities Premium and the Company can use this reserve for buy-back of shares.
General reserve
General Reserve is created out of the profits earned by the Company by way of transfer from surplus in the Statement of Profit and
Loss as also on account of lapse of stock options. The Company can use this reserve for payment of dividend and issue of fully paid-
up bonus shares.
The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax
liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
In assessing the realizability of deferred income tax assets, management considers whether some portion or all of the deferred income
tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future
taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled
reversals of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.
Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred
income tax assets are deductible, management believes that the Company will realize the benefits of those deductible differences.
The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future
taxable income during the carry forward period are reduced.
Risk exposure
A. Actuarial risk:
It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:
Adverse salary Growth experience:
Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher
than expected.
Variability in mortality rates:
If actual mortality rates are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than
expected. Since there is no condition of vesting on the death benefit, the acceleration of cashflow will lead to an actuarial loss
or gain depending on the relative values of the assumed salary growth and discount rate.
Variability in withdrawal rates:
If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity Benefits will be paid earlier
than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.
B. Investment risk
For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value
of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This
can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during
the inter- valuation period.
C. Liquidity risk
Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of
such employees resign/retire from the company there can be strain on the cashflows.
D. Market risk (Interest Rate)
Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial
assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in
discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the
yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the
valuation date.
E. Legislative risk
Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/regulation.
The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees.
This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately
in the year when any such amendment is effective.
Note 27 : Segment reporting
Based on the "management approach" as defined in Ind AS-108 - "Operating Segments" and evaluation by the Chief Operating
Decision Maker, the Company operates in one business segment, which is primarily related to Software development, maintenance
and other ancillary services.
A. Geographical Information
Segment revenue is analysed based on the location of customers regardless of where the services are provided from. The
following provides an analysis of the Company's sales by Geographical Markets. For management purpose, the Company
operates in three principal geographical areas of the world, in India, in UAE and other countries. As the Company does not
operate in more than one business segment, disclosures for primary segment as required under Ind AS 108 have not been given.
B. Unallocated items:
Domestic geographical segment includes certain assets which are common to both the geographical segment (i.e. Domestic
and Export). Non-current assets exclude deferred tax assets and tax assets.
C. Segment policies:
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting
the financial statements of the Company as a whole.
slote 28 : Lease
V. Operating lease - current
The Company has taken commercial premises under operating leases. The leases period is of less than 1 year. These
leasing arrangements are cancellable, and are renewable on a periodic basis by mutual consent on mutually accepted terms
including escalation of lease rent. Total expense incurred under the cancellable operating lease agreement recognized
as an expense in the Statement of Profit and Loss during the year is Rs. 70.84 Lakhs (previous year Rs. 97.63 Lakhs)
}. Operating lease - non-current
The Company's lease asset primarily consist of leases of vehicles having the various lease terms. Accordingly, the Company has
adopted IND AS 116 "Leases" to all lease contracts.
The Company had total cash out flows for leases of Rs. 17.39 Lakhs in the current year (year ended March 31, 2024 Rs. 18.06
Lakhs). The entire amount is in the nature of fixed lease payments. The Company had non-cash addition to right of use assets of Rs.
NIL in the current year (year ended March 31, 2024 Rs. 26.72 Lakhs) and lease liabilities of Rs. NIL in the current year ( year ended
March 31, 2024 Rs. 26.72 Lakhs) on account of acquisition of right of use assets.
The weighted average incremental borrowing rate applied to lease liabilities is 8%
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.
Note 29 : Financial instruments - Fair values and risk management
A. Accounting classification and fair values
The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which
income and expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are
disclosed in Note 2 to the Financial Statements.
Risk management framework
The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk management
framework. The Company manages market risk through a treasury operations, which evaluates and exercises independent control
over the entire process of market risk management. The finance team recommends risk management objectives and policies. The
activities of these operations include management of cash resources, borrowing strategies, and ensuring compliance with market
risk limits and policies.
The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate
risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly
to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards
and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles
and obligations.
The audit committee oversees how management monitors compliance with the company's risk management policies and procedures,
and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.
i. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Company's receivables from customers and investments in debt securities. The carrying
amount of following financial assets represents the maximum credit exposure:
Financial instruments and cash deposits
The credit risk from balances/deposits with Banks, current investments and other financial assets are managed in accordance with
company's policy. Investment of surplus funds are primarily made in Liquid/Short Term Plan of Mutual Funds and in Bank Deposits
which carry a high external rating.
Trade receivables
Trade receivables of the company are typically unsecured. Credit risk is managed through credit approvals and periodic monitoring
of the creditworthiness of customers to which company grants credit terms in the normal course of business. The allowance for
impairment of Trade receivables is created to the extent and as and when required, based upon the expected collectability of accounts
receivables.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign
exchange rates. The Company transacts business in local currency and in foreign currency, primarily in USD. The Company has foreign
currency trade payables and receivables and is, therefore, exposed to foreign exchange risk. The Company does not use any derivative
instruments to hedge its risks associated with foreign currency fluctuations.
Foreign currency sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD, AUD and EUR rates to the functional currency
of respective entity, with all other variables held constant. The Company's exposure to foreign currency changes for all other currencies
is not material. The impact on the Company's profit before tax is due to changes in the fair value of monetary assets and liabilities.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's long-term
debt obligations with floating interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed plus
variable rate borrowings.
Equity price risk management
The Company's exposure to equity price risk arises from investment held by the Company and classified as FVTPL. In general, these
investments are strategic investments and are not held for trading purposes. Reports on the equity portfolio are submitted to the
Company's senior management on a regular basis.
Note 30 : Capital management
For the purpose of the Company's capital management, capital includes issued equity capital and all other equity reserves attributable
to the equity holders of the Company. The primary objective of the Company's capital management is to ensure that it maintains an
efficient capital structure and healthy capital ratios in order to support its business and maximise shareholder value.
The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions or its business
requirements. 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 short-term deposits
(including other bank balance).
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2025 and
March 31, 2024.
Note 31 : Dues to micro and small suppliers
The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated August 26, 2008 which recommends
that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum
Number as allocated after filling of the Memorandum in accordance with the ' Micro, Small and Medium Enterprises Development Act,
2006' (the MSMED Act') accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2025 and
March 31, 2024 has been made in the financial statements based on information received and available with the Company. Further
in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not
expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet date.
On basis of information and records available with the Company, the above disclosures are made in respect of amount due to the
micro, small and medium enterprises, which have been registered with the relevant competent authorities. The above information
takes into account only those suppliers who have submitted their registration details or has responded to the inquiries made by the
Company for this purpose.
Note 32: Transfer Pricing
The Company's transactions with associated enterprises are at arm's length. Management believes that company's domestic
transactions with associated enterprises post March 31, 2025 continue to be at arm's length and that the transfer pricing legislation
will not have any impact on the financial statements particularly on the amount of the tax expense for the year and the amount of the
provision for the taxation at the period end.
b. Others
1. There are no proceedings that have been initiated or pending against the Company for holding any benami property under
the Prohibition of Benami Property Transactions Act, 1988 (as amended from time to time) (earlier Benami Transactions
(Prohibition) Act, 1988) and the rules made thereunder.
2. The Company has not been declared wilful defaulter by any bank or financial institution or other lender.
3. The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with
Companies (Restriction on number of Layers) Rules, 2017, and there are no companies beyond the specified layers.
4. Utilisation of Borrowed funds and share premium;
The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources
or kind of funds) to any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding
(whether recorded in writing or otherwise) that the Intermediary shall
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
company ("Ultimate Beneficiaries"); or
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
The Company has not received any fund from any person(s) or entity(ies), including foreign entities ("Funding Party") with
the understanding (whether recorded in writing or otherwise) that the company shall
(i) 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
(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
5. Undisclosed Income : The Company do not have any transaction 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). Further, there was no previously unrecorded income
and no additional assets were required to be recorded in the books of account during the year.
6. Details of Crypto Currency or Virtual Currency : The Company has neither traded nor invested in Crypto currency or Virtual
Currency during the financial year ended March 31, 2025. Further, the Company has also not received any deposits or
advances from any person for the purpose of trading or investing in Crypto Currency or Virtual Currency.
7. Title deeds of Immovable Property not held in name of the Company
The company does not hold any immovable property not held in the name of the company.
8. Details of Relationship with Struck off Companies
As at March 31, 2025:
The company does not have closing balances with struck off companies as at March 31,2025
As at March 31, 2024:
The company does not have closing balances with struck off companies as at March 31,2024
As per our report of even date
For, Rajpara Associates For and on behalf of the board of directors of
Chartered Accountants DRC Systems India Limited
ICAI Firm's Registration No. 113428W CIN: L72900GJ2012PLC070106
Chandramaulin Rajpara Hiten Barchha Keyur Shah
Partner Managing Director Chairman
Membership No. 046922 DIN: 05251837 DIN: 03111182
Place: Ahmedabad Place: Gandhinagar Place: Gandhinagar
Date: 28th May 2025 Date: 28th May 2025 Date: 28th May 2025
Janmaya Pandya Jainam Shah
Chief Financial Officer Company Secretary
Place: Gandhinagar Place: Gandhinagar
Date: 28th May 2025 Date: 28th May 2025
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