(p) PROVISIONS AND CONTINGENT LIABILITIES & ASSETS
Provisions are recognised 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. If the effect of the time value of money is material, provisions are discounted using equivalent period government securities interest rate. Unwinding of the discount is recognised in the Standalone Statement of Profit and Loss as a finance cost. Provisions are reviewed at each Balance Sheet date and are adjusted to reflect the current best estimate.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Information on contingent liability is disclosed in the Notes to the Standalone Ind AS Financial Statement.
Contingent assets are not recognised. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognised as an asset.
(q) OPERATING SEGMENTS
The Company is exclusively engaged in the business of manufacture and marketing of UAV systems which are used for security and surveillance. The ancillary business of providing training and maintenance service revolve around the main business of manufacture and marketing of UAV systems. Based on Management Approach , the Chief Operating Decision Maker evaluates the Company's performance and allocates the resources based on an analysis of overall country level performance indicators.
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the Financial Statement of the Company as a whole."
RECENT PRONOUNCEMENT
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, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
(b) Rights, preferences and restrictions attached to Equity shares:
The Company has a single class of Equity shares. Accordingly, all Equity shares rank equally with regard to dividends and share in the Company's residual assets. The Equity shares are entitled to receive dividend as declared from time to time. The voting rights of an Equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up Equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.
Failure to pay any amount called up on shares may lead to forfeiture of the shares.
On winding up of the Company, the holders of Equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of Equity shares held and after payment to the secured and unsecured loan.
(d) Rights, preferences and restrictions attached to Preference shares: (Series A1)
Compulsorily Convertible Cumulative Preference Shares were issued at par in December, 2016. All Preference shares carry voting rights as per the provision of the Companies Act, 2013. These Preference shares are convertible in to Equity shares upon the earlier of (i) 6th (sixth) anniversary of the date of allotment of each such Series A1 CCPS, or (ii) in connection with an IPO/QIPO, prior to the filing of a prospectus (or equivalent document, by whatever name called) by the Company with the competent authority. The Preference shares are entitled to cumulative dividend @ 0.01% in preference to Equity shares, as and when declared. Where dividend on Cumulative Preference shares is not declared for a Financial Year, the entitlement thereto is carried forward. Each Preference share is convertible in to 1 Equity share of INR 10 each in accordance with the Securities Subscription Agreement.The Series A1 CCPS shall have the voting rights, prescribed under applicable Law.
(e) Rights, preferences and restrictions attached to Preference shares: (Series A)
Compulsorily Convertible Cumulative Preference Shares were issued at par in December, 2017. All Preference shares carry voting rights as per the provision of the Companies Act, 2013. These Preference shares are convertible in to Equity shares upon the earlier of (i) 1 (one) day prior to the expiry of 20 (twenty) years from the date of allotment or (ii) in connection with an IPO/QIPO, prior to the filing of a prospectus (or equivalent document, by whatever name called) by the Company with the competent authority or such later date as may be permitted under applicable Law, or (iii) a decision by vote or written consent of the holders of a majority of the Series A CCPS that all the Series A CCPS must be converted. The Preference shares are entitled to cumulative dividend @ 0.001% in preference to Equity shares, as and when declared. Where dividend on Cumulative Preference shares is not declared for a Financial Year , the entitlement thereto is carried forward. Each Preference share is convertible in to 1 Equity share of INR 10 each in accordance with the Securities Subscription Agreement. Holders of the Series A CCPS are entitled to vote on all matters that are submitted to the vote of the Shareholders.
(f) Rights, preferences and restrictions attached to Preference shares: (Series B)
Compulsorily Convertible Cumulative Preference Shares were issued at par in April, 2022. All Preference shares carry voting rights as per the provision of the Companies Act, 2013. These Preference shares are convertible in to Equity shares upon the earlier of (i) 1 (one) day prior to the expiry of 20 (twenty) years from the date of allotment or (ii) in connection with an IPO/QIPO, prior to the filing of a prospectus (or equivalent document, by whatever name called) by the Company with the competent authority or such later date as may be permitted under applicable Law, or (iii) a decision by vote or written consent of the holders of a majority of the Series B CCPS that all the Series B CCPS must be converted. The Preference shares are entitled to cumulative dividend @ 0.001% in preference to Equity shares, as and when declared. Where dividend on Cumulative Preference shares is not declared for a Financial Year, the entitlement thereto is carried forward. Each Preference share is convertible in to 1 Equity share of INR 10 each in accordance with the Securities Subscription Agreement. Holders of the Series B CCPS are entitled to vote on all matters that are submitted to the vote of the Shareholders.
(g) Rights, preferences and restrictions attached to Preference shares: (Series B1)
Compulsorily Convertible Cumulative Preference Shares were issued at par in April, 2022. All Preference shares carry voting rights as per the provision of the Companies Act, 2013. These Preference shares are convertible in to Equity shares upon the earlier of (i) 1 (one) day prior to the expiry of 20 (twenty) years from the date of allotment or (ii) in connection with an IPO/QIPO, prior to the filing of a prospectus (or equivalent document, by whatever name called) by the Company with the competent authority or such later date as may be permitted under applicable Law, or (iii) a decision by vote or written consent of the holders of a majority of the Series B1 CCPS that all the Series B1 CCPS must be converted. The Preference shares are entitled to cumulative dividend @ 0.001% in preference to Equity shares, as and when declared. Where dividend on Cumulative Preference shares is not declared for a Financial Year, the entitlement thereto is carried forward. Each Preference share is convertible in to 1 Equity share of INR 10 each in accordance with the Securities Subscription Agreement. Holders of the Series B1 CCPS are entitled to vote on all matters that are submitted to the vote of the Shareholders.
34. SHARE BASED PAYMENT
EMPLOYEE STOCK OPTION SCHEME, 2018 (EMPLOYEE STOCK OPTION PLAN) (ESOS/ESOP)
By way of a resolution passed by the Board on April 10, 2018 and a resolution passed by Shareholders on May 2, 2018, ESOS or ESOP 2018 was instituted pursuant to a resolution. The ESOP 2018 was amended by our Company pursuant to a resolution of our Board on December 9, 2020 and resolution dated December 31, 2020 of our Shareholders.
The ESOP 2018 was subsequently amended by our Company pursuant to a resolution of our Board on March 25, 2022 and resolution dated April 28, 2022 of our Shareholders. The maximum number of options which can be granted under ESOP 2018 is 21,935 options (prior to any bonus issue or Split of equity shares).
The primary objective of the plan is to reward the key employee for his association, dedication and contributions to the goals of the company. The plan is established is with effect from May 2, 2018 on which the Shareholders of the Company have approved the plan by the way of special resolution and it shall continue to be in force until its termination by the Company as per provisions of Applicable laws, or the date on which all of the Options available for issuance under the plan have been issued and exercised , whichever is earlier
D. Details of guarantees of key management personnel and shares pledged:
Shares pledged details
i) Personal guarantee of Mr. Ankit Mehta, Mr. Rahul Singh, Mr. Ashish Bhat and Mr. Vipul Joshi given to Axis bank, HDFC bank and Export Import Bank of India in FY 2023-24.
ii) No shares are pledge as on reporting date.
E. Terms and conditions of transactions with Related Parties
There have been no guarantees provided or received for any related party receivables or payables other than those mentioned in note 35D
36. OPERATING SEGMENT
The Company is exclusively engaged in the business of manufacture and marketing of UAV systems which are used for security and surveillance. The ancillary business of providing training and maintenance service evolve around the main business of manufacture and marketing of UAV systems. Based on Management Approach, the Chief Operating Decision Maker evaluates the Company's performance and allocates the resources based on an analysis of overall country level performance indicators. The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the Financial Statement of the Company as a whole.
The Chief Executive Officer of the Company, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Operating Decision Maker (CODM).
37. CAPITAL MANAGEMENT
The Company defines capital as total Equity including issued Equity capital, share premium and all other Equity reserves attributable to Equity holders of the Company (which is the Company's net asset value). The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure of the Company is based on management's judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence.
The Company monitors capital using a ratio of 'adjusted net debt' to 'adjusted equity'. For this purpose, adjusted net debt is defined as total liabilities, comprising interest-bearing loans and borrowings less cash and cash equivalents. Adjusted equity comprises all components of equity.
Calculation of Fair Values
The fair values of the financial assets and liabilities are defined as the price that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended March 31, 2024 and March 31, 2023
Financial assets and liabilities measured at fair value as at Balance Sheet date:
The fair values of investments in mutual fund units is based on the net asset value ('NAV') as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.
Other financial assets and liabilities
Fair value of financial assets and liabilities measured at amortised cost (cash and cash equivalents, other bank balance, trade receivables, other financial assets, trade payables, borrowings, lease liabilities and other financial liabilities) is not materially different from the amortised cost. Further, impact of time value of money is not significant for the financial instruments classified as current. Accordingly, the fair value has not been disclosed separately as it approximates the carrying value.
39. FINANCIAL RISK MANAGEMENT
The Company's business activities are exposed to a variety of financial risks, namely liquidity risk, market risk and credit risk. The Company's senior management has the overall responsibility for establishing and governing the Company's risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Company's risk management policies. The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market
conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.
(A) Credit risk
Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or fail to pay amounts due causing financial loss to the Company. The potential activities where credit risks may arise include from cash and cash equivalents and security deposits and principally from credit exposures to customers relating to outstanding receivables. The maximum credit exposure associated with financial assets is equal to the carrying amount. Details of the credit risk specific to the company along with relevant mitigation procedures adopted have been enumerated below:
Trade Receivables
The Company's exposure to credit risk is the exposure that Company has major business dealings with few parties to whom sales are made on credit basis and the contracted consideration is yet to be received.
The Company provides for allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a simplified provision matrix.
The Company has considered an assessment of past history and has taken into account various factors including future forecast conditions for determination of allowance for expected credit loss.
Refer to note 9 for ageing for trade receivables from the due date of payment.
The provision for impairment of trade receivables, movement of which has been provided in note 9
Other financial assets
The Company maintains exposure in cash and cash equivalents and term deposits with banks. The Company has set counter-party limits based on multiple factors including financial position, credit rating, etc. The Company's maximum exposure to credit risk as at March 31, 2024 and March 31, 2023 is the carrying value of each class of financial assets.
(B) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are proposed to be settled by delivering cash or other financial asset. The Company's financial planning has ensured, as far as possible, that there is sufficient liquidity to meet the liabilities whenever due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short-term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.
43. OTHER STATUTORY DISCLOSURES
(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company have not traded or invested in Crypto currency or Virtual Currency during reporting periods.
(iii) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) 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
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(iv) The Company have 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:
(a) 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
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(v) The Company does not have any 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)
(vi) The Company does not have any borrowings from banks and financial institutions that are used for any other purpose other than the specific purpose for which it was taken at the reporting Balance Sheet date.
(vii) 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.
(viii) The Company is not declared as a wilful defaulter by any bank or financial institution or other lender during the any reporting period.
(ix) The Company shall disclose as to whether the fair value of investment property (as measured for disclosure purposes in the financial statements) is based on the valuation by a registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. Since, the Company does not have any investment property during any reporting period, the said disclosure is not applicable.
(x) Section 8 of the Companies Act, 2013 companies are required to disclose grants or donations received during the year. Since, the Company is not covered under Section 8 of the Companies Act, 2013, the said disclosure is not applicable.
(xi) There are no scheme of arrangements which have been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013 during the reporting periods.
(xii) The Company has not identified any transactions or balances in any reporting periods with companies whose name is struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
(xiii) The company has no unrecorded transactions in 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)
(xiv) There are no charge or satisfaction yet to be registered with ROC beyond the statutory period by the company as at the reporting periods.
(xv) The Company has neither declared nor paid any dividend during the reporting period.
44. MANAGERIAL REMUNERATION
The remuneration paid by the Company to its Chief Executive Officer and two whole time directors during the current year, is in accordance with the provisions of Section 197 read with Schedule V to the Act. The remuneration paid to the Chief Executive Officer and two whole time directors is as per the limits laid down under Section 197 read with Schedule V to the Act and as approved by the shareholder's through special resolution in the Extra Ordinary General Meeting held on February 4, 2023.
45. UTILISATION OF IPO PROCEEDS
During the quarter ended September 30, 2023, the Company has completed its Initial Public Offer ("IPO") of 8,441,764 Equity shares of face value of INR 10 each at an issue price of INR 672 per share (including share premium of INR 662 per share) consisting of a fresh issue of 3,572,052 Equity shares aggregating to INR 2,400 Millions and an offer for sale of 4,869,712 Equity shares aggregating to INR 3,272.45 Millions. The Equity shares of the Company were listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) w.e.f. July 07, 2023. Expenses incurred by the Company in connection with the IPO have been recovered from the selling shareholders.
46. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The aggregate amount of expenditure incurred during the year by the Company on Corporate Social Responsibility (CSR) is INR 5.02 Million (previous year INR 1.20 Million) and is shown separately under note 31 based on Guidance Note on Accounting for Expenditure on CSR Activities issued by the ICAI.
As per section 135 of the Companies Act, 2013, the Following year wise amount was utilized as financial contribution towards CSR Activities:
47. SUBSEQUENT EVENTS
The Company evaluates events and transactions that occur subsequent to the Balance Sheet date but prior to the approval of Financial Statements to determine the necessity for recognition and/or reporting of subsequent events and transactions in the Financial Statements. As of May 14, 2024, there were no subsequent events and transactions to be recognized or reported that are not already disclosed.
Material Accounting Policies and Notes on Accounts form an integral part of the Standalone Financial Statements
As per our report of even date attached
For B S R & Co. LLP For and on behalf of the Board of Directors of
Chartered Accountants ideaForge Technology Limited
Firm's Registration No: 101248W/W-100022 (Formerly known as ideaForge Technology Private Limited)
CIN : U31401MH2007PLC167669
Mansi Pardiwalla Ankit Mehta Rahul Singh
Partner Chief Executive Officer and Whole Time Director Whole Time Director
Membership No: 108511 DIN: 02108289 DIN: 02106568
Vipul Joshi Sonam Gupta
Chief Financial Officer Company Secretary
Place: Navi Mumbai Place: Navi Mumbai Membership No: A53881
Date: May 14, 2024 Date: May 14, 2024
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