k. Provisions and Contingent Liabilities
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present values and are determined based on the best estimate required to settle the obligations at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognized in the Financial Statements and are disclosed in the Notes. A Contingent asset is neither recognized nor disclosed in the Financial Statements.
l. Business Combination
As part of the transition to IND AS, the company has decided to apply the IND AS 103, Business combinations, to only those business combinations that occurred on or after 1st April, 2015.
In respect of Business combinations, prior to 1st April, 2015, goodwill represents the amount recognised under the company’s previous accounting framework under Indian GAAP and the same is tested annually for impairment.
m. Financial Instruments
All Financial Assets and Liabilities are recognised and measured initially at fair value adjusted by transaction cost, except for those carried at fair value through Profit or Loss which are measured initially at fair value. For the purpose of subsequent measurement, Financial Assets are classified into following categories upon initial recognition:
Amortised cost
Financial assets at fair value through profit or loss (FVTPL)
Financial assets at fair value through Other Comprehensive Income (FVOCI)
> Financial assets Amortised Cost
A financial asset is measured at amortised cost using effective interest rates if both of the following conditions are met:
the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.
Financial assets at FVTPL
Financial assets at FVTPL include financial assets that either do not meet the criteria for amortised cost classification or are equity instruments held for trading or that meet certain conditions and are designed at FVTPL upon initial recognition. All derivative financial instruments also fall into this category. Assets in this category are measured at fair value with gains or losses recognised in profit and loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.
Financial assets at FVOCI
FVOCI financial assets are either debt instruments that are managed under hold to collect and sell business model or are non - trading equity instruments that are designated to this category. FVOCI financial assets are measured at fair value. Gains and losses are recognised in Other Comprehensive Income, except for interest and dividend income and foreign exchange differences on monetary assets, which are recognised in statement of profit and loss.
> Financial Liabilities
Initial recognition and measurement
All financial liabilities are initially recognised at Book value and in the case of loans and borrowings and payables, net of attributable transaction costs (example: Upfront processing fees).
The company’s financial liabilities include trade and other payables, loan and borrowings including bank overdrafts and financial guarantee contracts.
Classification and subsequent measurement of financial liabilities
Financial liabilities are measured subsequently at amortised cost using the effective interest method, except for financial liabilities held for trading or designated at FVTPL, that are carried subsequently at fair value with gains or losses recognised in profit or loss. All derivate financial instruments are accounted for at FVTPL.
29 Additional Requirement
a) There are no Immovable properties whose title deeds are not held in the name of the Company.
b) The Company does not have and investment property.
c) The Company has not revalued its Property, Plant and Equipment (including Right-of-Use Assets) or intangible assets.
d) The company has not granted any loans or advances in the nature of loans to promoters, Directors, KMPs and related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, either repayable on demand or without specifying any terms or period of repayment.
e) The Company does not have any Capital-Work-in Progress (CWIP).
f) The Company does not have any Intangible Assets under Development.
g) There have been no proceedings initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
h) In respect of borrowings from a bank on the basis of security of current assets, the periodic returns / statements of current assets filed by the Company with the bank are in agreement with the books of accounts. The Company does not have any borrowings from financial institutions on the basis of security of current assets.
i) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.
j) The company had no transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
k) There are no charges or satisfactions yet to be registered with the Registrar of Companies beyond the statutory period.
l) The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
n) Utilisation of Borrowed funds and share premium:
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.
30 Undisclosed Income:
There have been no transactions recorded in the books of account which have been surrendered or disclosed as income during the year. There has also not been any previously unrecorded income or related assets.
a. Credit Risk:
The Company is exposed to credit risk, which is the risk that counter party will default on its contractual obligation resulting in a financial loss to the Company. Credit risk arises from cash and cash equivalents, financial assets carried at amortized cost and deposits with banks and financial institutions, as well as credit exposures to trade customers including outstanding receivables.
(i) Credit risk management
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.
Trade Receivable
The Company closely monitors the credit-worthiness of the debtors and only sells goods to credit-worthy parties. The Company’s internal systems are configured to define credit limits of customers, thereby limiting the credit risk to pre-calculated amounts.
(ii) Expected Credit Loss
b. Liquidity risk:
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions.
The Company’s objective in relation to its existing operating business is to maintain sufficient funding to operate at an optimal level.
c. Market Risk:
Market risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because of volatility of prices in the financial markets. Market risk can be further segregated as:
iii) Foreign currency risk:
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company has exposure foreign currency risk in case of Trade and other payables.
iv) 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 main interest rate risk arises from long-term
borrowings with variable rates, which expose the Company to cash flow interest rate risk. During 31st March, 2022 the Company’s borrowings at variable rate were mainly denominated in Rupees. The Company’s fixed rate borrowings are carried at amortized cost. They are therefore not subject to interest rate risk as defined in Ind AS -107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
43. Previous Years Figures have been regrouped/reclassified wherever necessary to confirm to current years classification.
As per our Report of even date attached For and on behalf of the Board of Megasoft Limited
for N.C.Rajagopal & Co. Sunil Kumar Kalidindi Kalyan Vijay Sivalenka Anish Mathew
Chartered Accountants Executive Director & CEO Independent Director Independent Director
Firm Registration No: 003398 S DIN: 02344343 DIN: 06404449 DIN: 02545538
Arjun S. Shridhar Thathachary Srivalli Susarla
Membership No: 230448 Chief Financial Officer Company Secretary
Place: Hyderabad Date: 15th May, 2024
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