2.13 Provisions and contingent liabilities
Provisions are recognized when there is a present obligation 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 there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date.
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.
Contingent liabilities are disclosed in the financial statements as notes to accounts, unless possibility of an outflow of resources embodying economic benefit is remote.
2.14 Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Earnings considered in ascertaining the Company's earnings per share is the net profit or loss for the year after any attributable tax thereto for the year. The • 1 weighted average number of equity shares outstanding during the year and for all the years presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. 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.
2.15 Employee Benefits
(a) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the year in which the employees render the related service are recognized in respect of employees' services up to the end of the year and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet and • are recognized in the Profit and Loss Account as an expense at the undiscounted amount on an accrual basis.
(b) Other long-term employee benefit obligations
(i) Defined contribution plan
Provident Fund: Contribution towards provident fund is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis which are charged to the Statement of Profit and Loss.
Employee's State Insurance Scheme: Company's contribution to defined contribution plans such as Group Mediclaim Insurance Policy, Employees' state insurance scheme, Labour welfare fund is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations. Said contributions are recognized in the Profit and Loss Account on an accrual basis.
(ii) Defined benefit plans
Gratuity: The Company provides for gratuity, a defined benefit plan (the 'Gratuity Plan”) covering eligible employees in accordance with the Payment of Gratuity Act, 1972 through an independent professional entity.
The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary. The Company's liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the other comprehensive income in the year in which they arise.
The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
2.16 Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. Acquisition-related costs are recognised in the Statement of Profit and Loss as incurred.
At the acquisition date, the identifiable assets acquired, and the liabilities and contingent liabilities assumed are recognised at their acquisition date fair values. However, certain assets and liabilities i.e., deferred tax assets or liabilities, assets or liabilities related to employee benefit arrangements, liabilities or equity instruments related to share-based payment arrangements and assets or disposal groups that are classified as held for sale, acquired or assumed in a business combination are measured as per the applicable Ind AS. , *
Judgement is applied in determining the acquisition date and determining whether control is transferred from one party to another. Control exists when the Company is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through power over the entity. In assessing control, potential voting rights are considered only if the rights are substantive.
At the acquisition date, goodwill on business combination is initially measured at cost, being the excess of the sum of the consideration transferred, the amount recognised for any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net identifiable assets acquired and the liabilities assumed.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the Company's cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
A cash generating unit to which goodwill has been allocated is tested for impairment annually as at reporting date. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
3 Material accounting judgments, estimates and assumptions
The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future years.
A. Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the year end date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
(a) Taxes
• Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be
• available against which the losses can be utilized. Significant management judgment is required to determine the
amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
The Company neither have any taxable temporary difference nor any tax planning opportunities available that could partly support the recognition of these losses as deferred tax assets. On this basis, the Company has determined that it cannot recognize deferred tax assets on the tax losses carried forward.
(b) Defined benefit plans (gratuity benefits)
The cost of the defined benefit plans such as gratuity are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each year end.
The principal assumptions are the discount and salary growth rate. The discount rate is based upon the market yields available on government bonds at the accounting date with a term that matches that of liabilities. Salary increase rate takes into account of inflation, seniority, promotion and other relevant factors on long term basis.
(c) Impairment of non-financial assets
In assessing impairment, management estimates the recoverable amount of each asset or cash-generating units based on expected future cash flows and uses an interest rate to discount them.
(d) Going concern assumption
The books of accounts have been prepared on a going concern basis. Management believes that the Company will be able to continue as a 'going concern' in the foreseeable future from the date of this financial statement based on the following:
i) Expected future operating cash flows based on business projections, and
ii) Available credit facilities with its bankers.
(e) Contingencies
In the normal course of business, contingent liabilities may arise from litigations and other claims against the Company. There are certain obligations which management have concluded based on all available facts and circumstances that are not probable of payment and such obligations are treated as contingent liabilities and are disclosed in the notes (unless the probability of payment is remote) but are not provided for in the financial statements.
(f) Impairment of trade receivables
The Company estimates the probability of collection of accounts receivable by analyzing historical payment patterns, customer status, customer credit-worthiness and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required.
4 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 31 March 2025, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
(v) On 02 February 2023, the Company had allotted 60,00,000 warrants convertible into Equity Shares, each convertible ! into one equity share of face value of INR 10/- each, on preferential basis, at an issue price of INR 212.05/- each
• amounting to INR 1,272.30 million. Application money of INR 53.02/- per warrant equivalent to 25% of the issue price as warrant subscription money, amounting to INR 318.12 million was received by the Company and the balance 75% of the issue price of INR 159.03/- per warrant, amounting to INR 954.18 million was to be received from the warrant holders on or before 01 August 2024. During the warrant exercise period till 01 August 2024, an amount of INR 203.24 million as balance 75% of Warrant Exercise Price for 12,78,000 warrants was received for conversion on various dates, accordingly 12,78,000 equity shares have been allotted by the Company. The application money of INR 53.02/- per warrant for 47,22,000 warrants amounting INR 250.36 million is forfeited due to non-exercise of warrants within the 18 months from the date of allotment of warrants.
(vi) The company has not issued fully paid-up shares without payment being received in cash during the period of 5 years immediately preceding the date of Balance Sheet.
(vii) The company has no shares reserved for issue under the Share based payment plan.
• (viii) The company has not bought back shares of any class during the period of five years immediately preceding the date
of Balance Sheet.
(b) Corporate Social Responsibility
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are as defined under the CSR Policy of the Company. A CSR committee has been formed by the company as per the Act. The funds are utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013.
B Defined benefit plans - Gratuity payable to employees
The gratuity scheme is a defined benefit plan that provides for a lump sum payment to the employees on exit either by way of retirement, death, disability or voluntary withdrawal. Under the scheme, the employees are entitled to a lump sum amount aggregating to 15 days final basic salary for each year of completed service payable at the time of retirement/resignation, provided the employee has completed 5 years of continuous service. The defined benefit plan is administered by a third-party insurer. The third-party insurer is responsible for the investment policy with regards to the assets of the plan. The employees of the Company are assumed to retire at the age of 58 years.
(i) The plan exposes the Company to actuarial risks such as: investment risk, interest rate risk and salary risk.
Investment risk: The return on investments will impact the position of the defined benefit plan liability. If the return falls, net benefit obligation will increase the value of the liability.
Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. All other aspects remaining same, if bond yields fall, the defined benefit obligation will increase the value of the liability.
Salary Inflation risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary in higher proportion of the plan participants will increase the plan's liability.
h) Sensitivity analysis
Method used for sensitivity analysis:
Gratuity is a lump sum plan and the cost of providing these benefits is typically less sensitive to small changes in demographic assumptions. The key actuarial assumptions to which the defined benefit obligation results are particularly sensitive to are the discount rate and the future salary escalation rate. The following table summarizes the impact on the reported defined benefit obligation at the end of the reporting period arising on account of an increase or decrease in the reported assumption by 50 basis points.
36 Leases
Leases where Company is a lessee
The company has entered into certain arrangements in the form of leases for business of operating casual dining restaurants outlets and confectionary outlets. As per terms, the company's obligation could be fixed or purely variable or variable with minimum guarantee payment for use of property.
The Company's leases mainly comprise of stores and buildings. The Company leases buildings for the purpose of business operations.
Set out below are the carrying amounts of lease liabilities and the movements during the year:
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.
The Company has applied a single discount rate to a portfolio of leases of a similar assets in similar economic environment with similar end date.
The Company has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Company's business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised.
37 Related Party Disclosures:
In accordance with the requirements of Ind AS - 24 'Related Party Disclosures', names of the related parties, related party relationship, transactions and outstanding balances including commitments where control exits and with whom transactions have taken place during reported periods are:
(i) Post retirement benefits is determined by the Group as a whole for all employees put together and hence disclosures of post employment benefits of Key management personnel is not separately available.
(ii) All the related party transactions entered during the year were in ordinary course of business and are on arm's length price.
38 Financial Instruments 38.1 Capital management
The Company's objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through equity and operating cash flows generated. The Company is not subject to any externally imposed capital requirements.
38.2Fair value hierarchy
The following is the hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis:
• The above Investments excludes investments in subsidiaries and joint venture amounting to INR 116.56 million (31 March 2024: INR 116.56 million).
• The carrying amount of cash and cash equivalents, trade receivables, loans, bank balance other than covered in cash and cash equivalents, other financial assets (except security deposits), trade payables and other financial liabilities approximate the fair value due to short term nature of these financial instruments.
• The amortized cost using effective interest rate (EIR) of other financial assets consisting of security deposits and lease liabilities are not significantly different from the carrying amount.
• Financial assets that are neither past due nor impaired include cash and cash equivalents, trade receivables, loans, bank balance other than covered in cash and cash equivalents, other financial assets.
38.3 Financial risk management objectives and policies
The Company's principal financial liabilities, comprise trade and other payables. The main purpose of these financial liabilities is to support its operations. The Company's principal financial assets include trade and other receivables and cash and short-term deposits that are derived directly from its operations. Current investments are optimal deployment of excess funds.
The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk, market risk (including foreign currency risk). The Company's Board of Directors reviews and sets out policies for managing these risks and monitors suitable actions taken by management to minimize potential adverse effects of such risks on the Company's operational and financial performance.
(a) Liquidity Risk
• "The Company's principal sources of liquidity are cash and cash equivalents, cash flow generated from operations and
by churning of current investments. The Company does not have any borrowing outstanding as at the year end. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
The following tables detail the Company's remaining contractual maturity for its financial liabilities with agreed repayment periods. The table has been drawn up based on the undiscounted cash flows of the financial liabilities based on the earliest date on which the Company can be required to pay:
(b) 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. Credit risk arises principally from the Company's receivables from deposits with landlords and other statutory deposits with regulatory agencies and also arises from cash held with banks and financial institutions. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.
The Company limits its exposure to credit risk of cash held with banks by dealing with highly rated banks and institutions and retaining sufficient balances in bank accounts required to meet a month's operational costs. The Management reviews the bank accounts on regular basis and fund drawdowns are planned to ensure that there is minimal surplus cash in bank accounts. The Company does a proper financial and credibility check on the landlords before taking any property on lease and hasn't had a single instance of non-refund of security deposit on vacating the leased property. The Company also in some cases ensure that the notice period rentals are adjusted against the security deposits and only differential, if any, is paid out thereby further mitigating the non-realization risk. The Company does not foresee any credit risks on deposits with regulatory authorities.
Trade and other receivables: The Company's business is predominantly through cash and credit card collections. The credit risk on credit card collections is minimal, since they are primarily owned by customers' card issuing banks. The Company has adopted a policy of dealing with only credit worthy counterparties in case of franchisees and the credit risk exposure for them is managed by the Company by credit worthiness checks. The Company also carries credit risk on lease deposits with landlords for restaurant properties taken on leases, for which agreements are signed and property possessions timely taken for restaurant operations. The risk relating to refunds after vacating or restaurant shut down is minimal since the possession of the premises is retained till the refund is collected or there are liabilities outstanding against which the asset can be adjusted.
Financial instruments and cash deposits: The Company's treasury, in accordance with the board approved policy, maintains its cash and cash equivalents, deposits and investment in mutual funds and enters into derivative financial instruments - with banks, financial and other institutions, having good reputation and past track record, and high credit rating. Similarly, counter-parties of the Company's other receivables carry either no or very minimal credit risk. Further, the Company reviews the credit-worthiness of the counter-parties (on the basis of its ratings, credit spreads and financial strength) of all the above assets on an ongoing basis, and if required, takes necessary mitigation measures.
(c) Market Risk
The Company is exposed to market risks associated with foreign currency rates and commodity prices.
Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies. Consequently, exposures to exchange rate fluctuations arise. The exchange gains or losses are recognised in Statement of Profit or Loss on the date of settlement and restatement at quarterly intervals.
The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows.
required by the Company, the Company believes that there are sufficient other quality suppliers in the marketplace such that the Company sources of supply can be replaced as necessary.
Investments
The Company invests its surplus funds in various mutual funds (debt fund, equity fund, liquid schemes and income funds etc.), corporate bonds and Infrastructure Investment trust (InvIT). In order to manage its price risk arising from investments, the Company diversifies its portfolio in accordance with the limits set by the risk management policies. 1% appreciation / depreciation of the respective financial instruments held by Company would result in increase / decrease in the company's profit before taxes by approximately INR 16.08 million for the year ended 31 March 2025 (31 March 2024: INR 16.97 million).
39 Segment reporting
• The principal business of the Company is operating casual dining restaurants outlets and confectionary outlets. All other activities of the Company revolve around its principal business. The Chairman & Managing Director (CMD) of the Company, has been identified as the Chief Operating Decision Maker (CODM). The CODM evaluates the Company's performance, allocates resources based on analysis of the various performance indicators of the Company as a single unit. Therefore, the management has concluded that there is only one operating reportable segment as defined by Ind AS 108 - Operating Segments. The Company predominantly operates in one geography, i.e., India.
43 Other disclosures
a. •The Company does not have any Benami property, where any proceeding has been initiated or pending against the
company for holding any Benami property.
b. »The Management confirms that the Company is not declared a wilful defaulter (as defined by RBI Circular) by Any bank
or financial Institution or other lender.
c. «The Company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013
or section 560 of Companies Act, 1956.
d. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
e. 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.
f. The Company does not have any undisclosed income which is not recorded in the books of account that has been surrendered or disclosed as income during the year (previous 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.
g. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
h. The Company has not borrowed any funds. Hence, disclosure pertaining to end use and the filing of quarterly statements with the banks is not applicable.
i. No Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013.
j. 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.
44 The Board of Directors (“the Board”) of the Company at its meeting held on 20th October, 2022 has inter alia, subject to requisite approvals/ consents, considered and approved the scheme of Demerger of Asset by and between Speciality Restaurants Limited (the “Transferee Company” or “Company”) and the wholly owned subsidiary namely Speciality Hotels India Private Limited (“Transferor Company”) under section 230 to 232 of the Companies Act, 2013 (“Scheme”). Appointed date for demerger is 01-10-2022 and the asset has been classified as “Assets held for Sale”.
45 Business Combination
On 18 February 2025, the Company has taken over the business of 'Mainland China' franchisee located at 'East Coast Road, Palavakkam, Chennai' from 'M/s Brydan Foods' at a purchase consideration of INR 23.00 million on slump sale basis.
As per Ind AS 103 on Business Combination, purchase consideration has been allocated on a basis of the fair value of the acquired assets and liabilities. The resulting differential has been accounted as goodwill. The financial statements include the profit and loss statement of the said business for the period from 18 February 2025 to 31 March 2025.
• 46 Dividends
Dividends paid by the Company during the year ended 31 March 2025 include an amount of INR 1.00 (10%) per equity share having face value of INR 10 each towards final dividend for the year ended 31 March 2024.
• On 12 May 2025, the Board of Directors of the Company have proposed a final dividend of INR 1.00 (10%) per equity share having face value of INR 10 each in respect of the year ended 31 March 2025 subject to the approval of shareholders at the Annual General Meeting. Dividends declared by the Company are based on profits available for distribution.
a 47 The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post- employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
48 Prior year comparatives are regrouped / reclassified wherever necessery to conform to current period presentation.
As per our report of even date attached For and on behalf of the Board of Directors
Speciality Restaurants Limited CIN: L55101WB1999PLC090672
For Singhi & Co
Chartered Accountants Anjanmoy Chatterjee Ullal Ravindra Bhat
FRN: 302049E Chairman and Managing Director Director
DIN : 00200443 DIN : 00008425
Milind Agal Rajesh Kumar Mohta Avinash Kinhikar
Partner Executive Director - Finance Company Secretary
Membership No.: 123314 & Chief Financial Officer & Legal Head
Place: Mumbai Place: Mumbai
Date: 12 May, 2025 Date: 12 May, 2025
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