Measurement of Fair Value Fair Value Hierarchy
"The fair value of investment property has been determined by the registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017 having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.
The fair value measurement for all of the investment property has been categorised as a Level 3 fair value based on the inputs to the valuation technique used.
Investment property comprises a number of commercial properties that are leased to third parties. No contingent rents are charged.
The primary objective of the Company’s Capital Management is to maximise shareholders value. The Company manages its capital to ensure that it will be able to continue as going concern while maximizing the return to stakeholders through the optimisation of the debt and equity balance. The Company’s policy is to maintain a strong capital base so as to maintain investors, creditors and market confidence to sustain future development of the business. For the purpose of the Company's capital management, capital includes issued capital and other equity reserves.
Note 25 : Financial instruments - Fair values and risk management A. Accounting Classification and Fair Values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy.
Fair Value Hierarchy
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
Level 1 hierarchy - Includes Financial Instruments measured using quoted prices in the active market.
Level 2 hierarchy - The Fair value of Financial Instruments that are not traded in an active market, is determined using valuation techniques which maximize the use of observable market data.
Level 3 hierarchy - Inputs are not based on observable market data. Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. An adjustment to a Level 2 input that is significant to the entire measurement results in a fair value measurement categorised within Level 3 of the fair value hierarchy if the adjustment uses significant unobservable inputs.
B. Measurement of fair values
Financial instruments fair valued under Level 3 hierarchy are measured using Market multiples method.
The carrying amount of trade receivables, cash and cash equivalents , trade payables and other financial liabilities are considered to be the fair value due to short term nature.
There are no transfers between level 1 and level 2 during the year.
The Company has exposure to the following risks arising from financial instruments:
• Liquidity risk ;
• Credit risk ; and
• Market risk
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.
(a) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are 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 and the actual cash flows to service the financial liabilities on a day-to-day basis through cash generation from business and by having adequate banking facilities.
The following table shows the maturity analysis of the Company’s financial liabilities based on contractually agreed undiscounted cash flows along with its carrying value as at the Balance sheet date.
(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, and arises principally from the Company's receivables from customers and loans and advances.
(i) Trade Receivables:
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer and the geography in which it operates. Concentration of credit risk with respect to trade receivables are limited as the customers are reviewed, assessed and monitored regularly on a monthly basis with pre-determined credit limits assessed based on their payment capacity. Our historical experience of collecting receivables demonstrates that credit risk is low.
(ii) Other Financial Assets:
The Company has exposure in Cash and cash equivalents,employee loans and investment carried at amortised cost. The Company’s maximum exposure to credit risk as at 31st March, 2024 is the carrying value of each class of financial assets as on that date.
(iii) Cash and Cash Equivalents
The Company held cash and cash equivalents of INR 16337.66 lakhs as on March 31, 2024 (March 31, 2023 : INR 57.72 lakhs). The cash and cash equivalents are held in hand and with bank. (Refer Note 1).
(c) Market Risk
Market risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market prices in case of equity investments and Net Asset Value (NAV) in case of mutual fund investments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
Company is having certain investments in unlisted companies where the valuation takes place based on certain market multiples of similar companies after duly adjusted for discounts to the same if any.
Risk Management Structure
Risk is an inherent and integral part of the business of investments and business process outsourcing. The Company aims to achieve an appropriate balance between risk and returns by establishing an efficient risk mitigation system. In order to mitigate risks, the Company has instituted a risk management framework, wherein, the Audit Committee under the supervision of the Board is tasked with regular assessment and laying down of policies for management of risks.In respect of certain investments, the Company has established systems to conduct due diligence of proposals received and to ensure that investments are in line with the overall objectives of the Company.
Note 27: Revenue Recognition Sale of Services:
The Company derives revenue from providing support services to our captive clients, which primarily include providing back office administration, data management, contact centre management and training. The Company recognizes revenue when the significant terms of the arrangement are enforceable, services are being delivered and the collectability is reasonably assured. The Company recognizes revenue on an accrual basis when services are performed.
When the terms of the agreement specify service level parameters that must be met, the Company monitors such service level parameters and determine if there are any service credits or penalties that needs to be accounted for. The Company's revenue is significantly only from group companies, hence it is believed that there is no significant credit risk.
The Company invoices its clients depending on the terms of the arrangement, which include billing based on a per employee basis, a per transaction basis, a fixed price basis, an outcome-based basis or other pricing arrangements including cost-plus arrangements.
The Company's revenue is exclusive of taxes and includes reimbursements of communication costs, incentives, etc as defined in the terms of agreement.
Contracts with customers
There are no other revenue under Contract with Customers other than those which are accounted in Profit and Loss Account as revenue which comprises of Service income and Learning income. Refer Note 27.a for the details of income earned from contracts with customers.
Contract Balances
The Company classifies the right to consideration in exchange for deliverables as either a receivable or as unbilled revenue. Refer Note 27.a for the Trade Receivable balances.
Revenue from sale of services and the trade receivable for the year ended March 31, 2024 and March 31, 2023 is as follows:
The above sensitivity analyses are based on a 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 when calculating the defined benefit liability recognised in the balance sheet.
(iv) Risk Exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:
Asset volatility: The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets under perform this yield, this will create a deficit. Most of the plan asset investments is in fixed income securities with high grades and in government securities. These are subject to interest rate risk and the fund manages interest rate risk with derivatives to minimise risk to an acceptable level. A portion of the funds are invested in equity securities and in alternative investments which have low correlation with equity securities. The equity securities are expected to earn a return in excess of the discount rate and contribute to the plan deficit. The Company has a risk management strategy where the aggregate amount of risk exposure on a portfolio level is maintained at a fixed range. Any deviations from the range are corrected by rebalancing the portfolio. The Company intends to maintain the above investment mix in the continuing years.
Changes in bond yield: A decrease in bond yields will increase plan liabilities, although this will be partially offset by an yields increase in the value of the plans’ bond holdings.
Inflation risks: In the pension plans, the pensions in payment are not linked to inflation, so this is a less material risk. Life expectancy: The pension plan obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plan liabilities. This is particularly significant where inflationary increases result in higher sensitivity to changes in life expectancy.
There have been no transactions involving ordinary shares or potential ordinary shares between reporting date and date of completing financial statements which would require restatement of EPS.
30b: Dividend
The Board of Directors has recommended a final dividend of ' 2.05 per share (41%). In addition, the Board of Directors has declared a second interim Dividend of '3.65 per share (73%), which, together with the interim Dividend of ' 2 per share (40%) paid during the year will make a total Dividend of ' 7.70 per share (154%) for the FY 2023-24.
30c: Contingent Liabilities and Commitments
(i) Estimated amount of investment to be made in JM Financial yield enhancer (Distressed Opportunity ) Fund I - Series I for Capital Commitment - '31.39 Lakhs.
30g: Other Regulatory Disclosure as required under Schedule III of Companies Act,2013
(a) The Company does not have any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
(b) The Company is not declared as a willful defaulter 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 to be registered with ROC beyond stipulated statutory period.
(e) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(f) The company has not granted any loans or advances in nature of loans to promotors, directors, KMPs and the related parties (as defined under the Companies Act, 2013) either severally or jointly with any other persons. Hence disclosure under clause (v) of Schedule III of The Companies Act 2013, is not applicable.
(g) 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 intermediary shall directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (Ultimate Beneficiaries) except as disclosed.
The Company has not received any fund from any party(s) or entity(ies) including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall 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.
(h) There are no scheme of arrangements approved. Hence disclosure under clause (xv) of Schedule III of The Companies Act 2013, is not applicable.
(i) There are no transactions in the nature of undisclosed income or income surrendered which needs to be accounted in the books of accounts during the year in the tax assessments under the Income Tax Act, 1961.
30h: Gain on derecognition of financial instrument
During the year,the Company received '17,566.78 lakhs on account of redemption of Non convertible redeemable preference
shares of TVS Holdings Limited,which was earlier classified in OCI as Items that will be reclassified to P&L.
30i: Adoption of Financial Statements
The Board has adopted the financial statements at its meeting held on 21st May 2024.
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