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நிறுவன பெயரின் முதல் சில எழுத்துக்களை நிரப்பி 'கோ' பட்டனை கிளிக் செய்யவும்

DiGiSPICE Technologies Ltd. இன் கணக்கு குறிப்புகள்

Mar 31, 2023

a. The Building has been acquired in pursuance to Scheme of Arrangement, in earlier years, which became applicable from appointment date 1st April, 2017, is pending for transfer in the name of the Compnay.

b. There was no time overrun and/or cost overrun for the projects as at 31st March, 2023 and 31st March, 2022.

b. The Company''s investment properties as on 31st March, 2023 and 31st March, 2022 consist of two office property situated at Kolkata and Mumbai and one factory land and building situated at Rampur in Uttarpradesh. The management has determined the classification of investment properties based on nature, characteristics and risks of each property.

c. The Company has no restrictions on the realisability of its investment properties and no contractual obligation to purchase, construct or develop investment properties.

d. Measurement of fair value

The fair value of investment properties situated at Mumbai and Kolkata has been determined in May, 2022 by external independent registered valuer defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. The Company has considered fair value of balance investment properties determined on 30th March, 2019 by external independent registered valuer, in the opinion of management, there is no material change in the fair value of investment properties since then.

The fair value measurement for investment properties has been categorised as a level 3 fair value based on inputs to valuation techniques used (refer note 4 (e)). Fair value hierarchy disclosures have been given in note 39A.

The market approach uses prices and other relevant information generated by market transactions involving identical or complete assets. Valuation techniques consistent with the market approach often use market multiples derived from a set of comparable. Multiples might be in ranges with a different multiple for each comparable. The selection of the appropriate multiple within range requires judgement, considering qualitative and quantitative factors specific to the remeasurement.

Depreciated replacement cost method represents amount that would be required to replace carrying value of building i.e. current replacement cost.

per the projections, the Company expects to utilise the MAT Credit and Business losses within precribed period. In view of unabsorbed depreciation and MAT credit entilement, the Company has not exercised option under sestion 115 BAA of the Income Tax Act, 1961 and continue to recognise the taxes on income for the year as per the normal tax rate at which management expect to recover or settle the deferred tax. Company reviews the above position at each year end.

(b) Terms/ rights attached to equity shares

# The Company has single class of equity shares having a par value of I 3 per share. Accordingly, all equity shares rank equally with regard to dividends and share in the Company''s residual assets on winding up. 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 his/its share of the paid-up equity share capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable has not been paid. Failure to pay any amount called up on shares may lead to their forfeiture.

In pursuance to Section 115BAA of the Income Tax Act, 1961 notified by Government of India through Taxation Laws (Amendment) Act 2019, the Company has an irrevocable option of shifting to lower tax rate foregoing other tax incentives.The Company is having unabsorbed depreciation and unutilised MAT Credit and Business Losses accumulation as on the reporting date. MAT credit shall be available for utilization during FY 2024-25 to 2032-33. As

(e) Paid up share capital includes 38,083 equity shares allotted on 14th June, 2019 pursuant to Scheme of Arrangement (refer note 38) without payment being received in cash. No share has been allotted by way of bonus shares during the period of five years immediately preceding the balance sheet date.

As per the terms of the contract with its customers, all performance obligations are completed at point of time since the Company has a right to receive consideration from its customers for all completed performance obligations. Accordingly, the Company has availed the practical expedient available under paragraph 121 of Ind AS 115 and dispensed with the additional disclosures with respect to performance obligations that remained unsatisfied (or partially unsatisfied) at the balance sheet date. Further, since the terms of the contracts directly identify the transaction price for each of the completed performance obligations, in all material respects, there are no elements of transaction price which have not been included in the revenue recognised in the Financial Statement. Also, there is no difference between the contract price and the revenue from contract with customers.

a) For contract liabilities, refer Note No. 20.

b) The above revenues have been recongnised at point of time.

c) Payment terms with customers generally ranges between 30 to 60 days from the completion of performance obligation. Considering the same, the Company elects to use practical expedient as given in IND AS 115 "Revenue from contracts with customers", hence there are no significant financing component in any transaction with the customers.

d) Revenue from the sale of the products and services is mainly within India and are mainly earned directly.

32 Earnings per share (EPS)

Basic EPS amounts are calculated by dividing the profit/(loss) for the year attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit/(loss) attributable to equity holders (after adjusting impact on profit of dilutive potential equity shares) by the aggregate of weighted average number of equity shares outstanding during the year and the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.

B. Defined Benefit Plan

The Company has a defined benefit gratuity plan. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months. The level of benefits provided depends on the member''s length of service, without any upper limit and salary at the time of departure.

The following tables summarises the components of net benefit expense recognised in the statement of profit or loss and the funded status and amounts recognised in the balance sheet for the plans:

34B. Commitments and contingencies

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) I Nil (31st March, 2022: I Nil).

34C. Contingent liabilities

Claims against the Company not acknowledged as debts

2. Company as a lessor

The Company has leased out a portion of the office premises on operating lease. The lease term is for 11 months and thereafter renewable on mutual agreement. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. The Company is not required to make any adjustments on transition to Ind AS 116 for leases in which it acts as a lessor, except for a sub-lease. The Company accounted for its leases in accordance with Ind AS 116 from the date of initial application. The Company does not have any significant impact on account of sub-lease on the application of this standard. The details of the right-of-use asset held by the Company is as follows:

Particulars

As at

31st March, 2023

As at

31st March, 2022

1. Demands and claims from government authorities A. Demand from excise/ service tax authorities

a) Demand Includes penalty I Nil (31st March, 2022: I 56.96 Lakhs)in respect of non-registration of corporate office as a input service distributor and availment of input service CENVAT credit.

B. Demand raised by income tax authorities

233.58

a) Income Tax Demand of Nil (31st March, 2022: I 246.28 Lakhs) (including interest) on enhancement of income by AO under Section 40(a)(ia) of the Income tax Act, 1961 for not deducting TDS under Section 194C of the Act on reimbursement of expenses for the assessment year 2009-10 against which the Company has filled SLP in the Supreme Court.

2. Others

246.28

a) Demand of Interest on late payment by one of the vendor, disputed by the Company

-

113.29

b) One Vendor has filed a recovery suit against Spice Labs Pvt Ltd. (since merged with DigiSpice Technologies Limited) for terminating the Master Service Agreement for getting the premises on lease for its office space ,during the lock-in period.The Company has disputed the claim of vendor and contended that the termination has been made by vendor, not by Company.

54.88

54.88

54.88

648.03

* Include payment made towards compensated absences of 10.64 Lakhs (31st March, 2022: 11.55 lakhs) during the year against the provisions made in earlier years.

**The Company has granted Stock Options to eligible employees, including Executive Directors and certain KMPs, under its Employee Stock Option Schemes, 2018 [within the meaning of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (refer Note No. 38). Since such Stock Options are not tradeable, no perquisite or benefit is immediately conferred upon the employee by grant of such Stock Options and accordingly the said grants have not been considered as remuneration. However, in accordance with Ind AS -102 '' Share-based Payment'', the Company has recorded employee benefits expense by way of share based payments to employees and above disclosure is attributable to Executive Directors and certain KMPs.

**During the year, the Company has granted 4,50,000 options (Till 31st March, 2022, 12,00,000 options) to persons who were KMP at any time during the financial year ended 31st March, 2023, out of which Nil options has been lapsed (Till 31st March, 2022 - Nil lapsed) during the year, value of which shall be disclosed at the time of exercise of options.

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free (except for loan given) and settlement occurs in cash. This assessment for impairment of receivables relating to amounts owed by related parties is undertaken each financial year through examining the financial position of the related parties.

37. Segment information

Information about geographical areas

The board of directors of the Company which have been identified as being the chief operating decision maker (CODM), evaluate the Company''s performance. Based on identical services the Company deals in, which have similar risks and rewards, the entire business has been considered as a single segment i.e. Digital Technology Services (DTS) which includes Technology services and Value Added Services, in terms of Ind AS-108 on segment reporting.

The following table provides an analysis of the Company''s sales by geography in which the customer is located, irrespective of the origin of the goods.

38. Share-based payments

The Company has granted stock options under the DTL - Employee Stock Option Plan 2018 (ESOP) to the eligible employees of the Company. Under ESOP, the Company has granted 21,381,000 options on 18th September, 2018, 3,439,000 options on 5th February, 2019 and 25,25,000 options on 1st August, 2022. 40%, 30% and 30% of total options granted would vest in after one year, two years and three years from the date of respective grant subject to fulfilment of vesting conditions. The maximum period for exercise of options is five years from the date of vesting. Also, the Nomination and Remuneration Committee approved the increase in exercise period to 5 (Five) years from the respective vesting from 3 (Three) years earlier, in relations to options granted on 18th September, 2018 and 5th February, 2019 which still remain unexercised on 1st August, 2022. Each option when exercised would be converted into one fully paid-up equity share of 13 each of the Company. The options granted under ESOP carry no rights to dividends and voting rights till the date of exercise.

The fair value of the options are estimated at the grant dates using Black and Scholes Model, taking into account the terms and conditions upon which the options were granted.

39B. Fair value hierarchy

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1 inputs are quoted prices /net asset value (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;

Level 2 inputs are inputs, other than quoted prices (unadjusted) included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3 inputs are unobservable inputs for the asset or liability.

The Company has assessed that the fair value of trade receivables, cash and cash equivalents, other bank balances, other current financial assets, trade payables and other current financial liabilities approximate to their carrying amounts largely due to the short-term maturities of these instruments. Where such items are non-current in nature, the same has been classified as Level 3 and fair value determined present value. Similarly, unquoted equity instruments in subsidiary companies and associate Company has been considered at cost less impairement, if any, and has been excluded in the fair value measurement disclosed below.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

♦ Borrowings are evaluated by the Company based on parameters such as interest rates and specific country risk factors.

♦ The fair value of other financial liabilities, is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

♦ The fair values of the Company''s interest-bearing borrowings and loans are determined by using DCF method using discount rate that reflects the issuer''s borrowing rate as at the end of the reporting period. No own non- performance risk as at 31st March, 2023 was assessed.

The following table provides the fair value measurement hierarchy of the Company''s assets and liabilities.

40. Financial risk management objectives and policies

The Company''s principal financial liabilities, comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance and support the Company''s operations. The Company''s principal financial assets include loans, trade and other receivables, cash and cash equivalents and other bank balances that derive directly from its operations. The Company also holds FVTPL investments and investment in subsidiary companies, associates and a joint venture measured at cost , unless otherwise as stated.

The Company is exposed to market risk, credit risk and liquidity risk. The senior management of the Company advises on financial risks and the appropriate financial risk governance framework. The senior management provides assurance that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The Board of Directors reviews and agrees on policies for managing each of these risks, which are summarised below.

1) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTPL investments. The Company is not effected by commodity risk.

The sensitivity analysis in the following Sections relate to the position as at 31st March, 2023 and 31st March, 2022.

- 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 loan given, Security deposits received/paid and borrowing.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of borrowings affected, with all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, present rate is 7.12% (P.Y. Nil), the impact of change in rate is as follows:

Fair value sensitivity analysis for fixed-rate instruments:

The Company does not account for any financial liabilities at fair value through profit or loss. Therefore, the Company shall not be affected due to change in interest rates at the reporting date.

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''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities (when revenue or expense is denominated in a foreign currency) and the Company''s net investments in foreign subsidiaries.

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in USD, AFN, Dirahm, NPR and BDT exchange rates, with all other variables held constant. The impact on the Company''s profit before tax due to changes in the fair value of monetary assets and liabilities is given below. The Company''s exposure to other foreign currency is not material.

- Equity price risk

The Company''s investment in unlisted equity securities are mainly in subsidiary companies which is susceptible to impairement test as applicable. The Company does not engage in active trading of equity instruments. The Board of Directors of Company reviews and approves all equity investment decisions.

At the reporting date, the exposure to unlisted equity securities at fair value is not material (excluding investment in subsidiaries).

- Other risk

The Company operates in a service sector on revenue sharing model. There is downward revision of revenue shares frequently, as a result, the revenue of Company may reduce depending upon percentage decrease in revenue share of Company with the telecom operators.

2) Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including Loans, deposits with banks and financial institutions and other financial instruments.

- Trade receivables

Customer credit risk is managed by the Company''s established credit policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment and also based upon agreement/ terms with respective customers. Outstanding customer receivables are regularly monitored.

An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are categorised into homogenous trade receivables and assessed for impairment collectively. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as generally low, as its customers are located in several jurisdictions and industries and operate in largely independent markets except in case of few specific customers for which full loss allowances have been made.

The Company has used a practical expedient and analysed the recoverable amount of the receivables on an individual basis. The Company provide for expected loss allowance for financial assets based on historical credit loss experience and adjustments for forward looking information''s.

- Excessive risk concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company performance to developments affecting a particular industry.

In order to avoid excessive concentrations of risk, the Company policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.

- Collateral

The Company has pledged part of its fixed deposits with bank as margin money against issuance of bank/corporate guarantees in order to fulfil the collateral requirements for its various contracts. At 31st March, 2023 and 31st March, 2022, the fair values of fixed deposits pledged were I 2,541.59 Lakhs and I 877.03 Lakhs respectively. The Company has an obligation to repay the deposit to the counterparties upon settlement of the contracts. There are no other significant terms and conditions associated with the use of collateral (refer note 11).

3) Liquidity risk

The Company monitors its risk of a shortage of funds using a liquidity planning tool.

The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of working capital facility including bill discounting facility. Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due.

41. Capital management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximise the shareholders'' value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. 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 cash equivalents.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current year.

No changes were made in the objectives, policies or processes for managing capital during the years ended

31st March, 2023 and 31st March, 2022.

42. As on 31st March, 2023, Independent Non-Promoter (Spice Employee Benefit) Trust (''EBT'') holds 10,155,067 (31st March, 2022: 10,155,067) equity shares of the Company, for the benefit of the employees of the Company, its associates and subsidiaries and Independent Non-Promoter Trust (''NPT'') holds 15,912,776 (31st March, 2022: 15,912,776) equity shares of the Company for the benefit of the Company. These equity shares were transferred to the Trusts pursuant to the Scheme of amalgamation of Spice Televentures Private Limited (''STPL''), the erstwhile holding Company, with the Company, duly approved by High Court, Allahabad, at a value at which these equity shares were held in the books of STPL. During the year the Company has received Nil (31st March, 2022: I Nil ), as a beneficiary, from the Independent Non-Promoter Trust including surplus arising from sale of its shares. The surplus fund would be utilised by the Company as per the terms of the Trust deed of Independent Non-Promoter Trust. Further, the Company has received I Nil (31st March, 2022: INil) against receivables, from the Independent Employee Benefit Trust and includes surplus arising from sale of its shares .The above receipts are shown as part of the Trust Reserve. Taking a conservative interpretation of "Ind AS 32" face value of shares held by these trusts has been deducted from equity and amount over and above face value has been shown as deduction under the head "Trust shares" separately in other equity.

43. Disclosure required under Schedule V read with Regulation 34 (3) and 53 (f) of the SEBI (Listing Obligation and Disclosure Requirement) Regulation, 2015 and disclosure required under Section 186 (4) of the Companies Act, 2013

46. Significant accounting judgements, estimates and assumptions

The preparation of the Company''s standalone financial statements requires management to make judgements, 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 periods.

- Judgements

In the process of applying the Company''s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

A) Lease liability and Right of Use assets

The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Group uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.

- Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting 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) Impairment of non-financial assets

I mpairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for future years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.

B) Share based payments

The Company measures the cost of equity-settled transactions with employees using Black Scholes model to determine the fair value of options. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions relating to vesting of the grant. This estimate also

requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 38.

C) Taxes

The Company recognises MAT credit available as an asset only to the extent that there is convincing evidence that recognised MAT credit will be utilised against normal tax liability within specified period for which MAT Credit allowed to be carried forward.

The tax assets of I 58.49 Lakhs (31st March, 2022: I 58.49 Lakhs) recognised in earlier years as ''MAT Credit Receivable'' under ''Deferred Tax assets''in respect of MAT payment for earlier years, represents that portion of MAT liability which can be recovered and set off in subsequent years based on the provisions of Section 115JAA of the Income Tax Act, 1961. The management based on the present trend of profitability and also the future profitability projections, is of the view that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilise MAT credit assets.

The Company has recognised Deferred tax assets on unabsorbed depreciation and carry forward business losses. The Company has concluded that the deferred tax assets on unabsorbed depreciation and carry forward business lossess will be recoverable using the estimated future taxable income based on the approved business plans and budgets. The Company is expected to generate taxable income in near future. The unabsorbed depreciation and carry forward losses can be carried forward as per local tax regulation and the Company expects to recover the same in due course. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

The Company has short term and long term capital losses under the Income Tax Act, 1961 and certain provision for loss allowances against doubtful debts, loans & other receivable and impairment of investment which allowability under Income Tax Act is ambiguous. These losses may not be used to offset taxable income within prescribed time. 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

recognise deferred tax assets on these tax losses carried forward.

D) Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

E) Defined benefit plans (gratuity benefits)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation 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 reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.

Further details about gratuity obligations are given in Note 33.

F) Intangible asset under development

The Company capitalises intangible asset under development for project in accordance with the accounting policy. Initial capitalisation of costs is based on management''s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits.

G) Provision and contingent liability

On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognised until the contingency has been resolved and amounts are received or receivable.

H) Allowance for expected credit loss

Trade receivables do not carry any interest and are stated at their amortised cost as reduced by appropriate allowances for estimated irrecoverable amounts. Individual trade receivables are written off when management deems them not to be collectible. Impairment is made on the expected credit losses, which are the present value of the cash shortfall over the expected life of the financial assets.

I) Useful lives of depreciable assets

The management estimates the useful life and residual value of depreciable assets based on technical assessment. These assumptions are reviewed at each reporting date.

J) Investment in equity instruments of subsidiary and associates companies

During the year, the Company assessed the investment in equity instrument of subsidiary and associates companies carried at cost for impairment testing. Detailed analysis has been carried out on the future projections and the Company is confident that investments do not require any further impairment.

47. Additional regulatory information required by Schedule III to be disclosed in the financial statements:

i) The Company has no transaction and/or outstanding balance with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of the Companies Act, 1956 as identified to the extent of struck off companies details available on the public domain.

ii) No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Amendment Act, 2016 and rules made thereunder.

iii) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

iv) The Company has complied with the number of layers prescribed under the Companies Act, 2013.

v) There is no undisclosed income under the tax assessments under the Income Tax Act, 1961 for the year ending 31st March, 2023 and 31st March, 2022 which needs to be recorded in the books of account.

vi) The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

vii) Utilisation of borrowed funds and share premium:-

a) The Company during the year has 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 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 provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

b) 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 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 provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

viii) Borrowings obtained by the Company from banks and financial institutions have been applied for the purposes for which such loans were was taken.

48. Sp ice Digital Bangladesh Limited, wholly owned subsidiary Company has issued Equity shares of BDT 830,239 at par aggregating BDT 83,023,900 equivalent

to I 678.94 lakhs in the Financial year 2017-2018 against the overdue trade receivables towards technical fees. The Company has applied with RBI for the approval. Pending approval from RBI, the Company has not accounted the same and continue to disclose above dues under Trade Receivables .In earlier year, the Company has accounted for dividend of equivalent I 56.30 Lakhs declared by above subsidiary on above shares, which is yet to be repatriated to the Company.

49. ''The following charge is appearing on the website of the Ministry of Corporate Affairs (''MCA''), against which the Company has no loan outstanding as at reporting date. The charge stood satisifed as per records of the Company and the Company is taking up with the MCA to record satisfaction of this charge on its website.

Sr. Amount Location of the

Lender Name

No. (I In lakhs) Registrar

1 L.I.C. OF INDIA 100.00 DELHI

50. The Company has been sanctioned working capital limit from bank on the basis of security of current assets. The quarterly returns/ statements filed by the Company with the bank, are in agreement with the books of accounts of the Company of the respective quarters and differences, if any are not material.

51. The Company is not covered under the provisions of Sec 135 of the Companies Act, 2013, therefore the disclosure required under CSR is not applicable on the Company during the financial year.

52. The Board of directors of DiGiSpice Technologies Limited, in its meeting held on 7th April, 2023 has approved, in principle, to exit Digital Technology Services Business. This is in keeping with the repositioning of the overall group strategy to focus on Financial Technology Services opportunities, mainly through its subsidiary Spice Money Limited (''Spice Money'') and other group entities.


Mar 31, 2018

NOTES TO THE STANDALONE FINANCIAL STATEMENT as at and for the year ended 31 March 2018

Quantitative disclosures fair value measurement hierarchy for assets as at 31 March 2017:

Date of valuation

Total

Quoted prices in active markets (Level I)

Significant observable inputs (Level 2)

Significant unobservable inputs (Level 3)

Assets measured at fair value:

Assets for which fair values are

disclosed (note 36):

Investment properties (note 4):

31 March 2017

5,543.19

-

-

5,543.19

Investment in equity/other instruments

31 March 2017

5.50

-

-

5.50

Loan and receivables

Loans

31 March 2017

0.73

-

-

0.73

Other Assets

31 March 2017

77.07

-

-

77.07

There have been no transfers between Level I and Level 2 during the year.

Quantitative disclosures fair value measurement hierarchy for liabilities as at 31 March 2017:

Date of valuation

Total

Quoted prices in active markets (Level I)

Significant observable inputs (Level 2)

Significant unobservable inputs (Level 3)

Labilities measured at fair value: Borrowings Other financial liabilities

31 March 2017

135.81

135.81

There have been no transfers between Level I and Level 2 during the year. 38. Financial risk management objectives and policies

The Company''s principal financial liabilities comprise trade payables and other financial liabilities. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include Loans, other financial assets, trade receivables, cash and cash equivalents and other bank balances that derive directly from its operations.The Company also holds FVTPL investments and investment in subsidiary companies measured at cost.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management advises on financial risks and the appropriate financial risk governance framework. The senior management provides assurance that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The Board of Directors reviews and agrees on policies for managing each of these risks, which are summarised below.

I) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTPL investments. Company is not effected by commodity risk.

The sensitivity analysis in the following sections relate to the position as at 3 I March 2018 and 31 March 2017.

The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt instruments are all constant.

The analysis exclude the impact of movements in market variables on the carrying values of gratuity and other post-retirement obligations, provisions.

The following assumptions have been made in calculating the sensitivity analyses:

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2018 and 31 March 2017.

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 loan given, security deposits received/paid and borrowings.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows:

Increase/ (decrease) in basis points

Effect on profit/(Loss) before tax

As at 31 March 2018

Rs in ''lakhs''

50

4.86

Rs in ''lakhs''

-50

(4.86)

As at 31 March 2017

Rs in ''lakhs''

50

2.34

Rs in ''lakhs''

-50

(2.34)

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.

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''s does not have a significant foreign currency risk.

Foreign currency sensitivity

The Company''s exposure to foreign currency fluctuation is not material. Equity price risk

The Company''s investment in unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities.The Company don''t engage in active trading of equity instruments. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.

At the reporting date, the exposure to unlisted equity securities at fair value is not material. 2) Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments. Trade receivables

Customer credit risk is managed subject to the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed and limits are defined in accordance with this assessment. At 31 March 2018, the Company had net outstanding of Nil (31 March 2017 : Rs 309.56 lakh) after allowance for bad and doubtful trade receivable.

An impairment analysis is performed at each reporting date on an individual basis for trade customers. The Company has not evaluated the concentration of risk with respect to trade receivable as there are no trade receivable balance as on date.

Financial instruments and cash deposits

Credit risk from balances with banks in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and based on the Investment Policy of the Company. All investments are reviewed by the Company''s Board of Directors on a quarterly basis.

3) Liquidity risk

The Company monitors its risk of a shortage of funds using a liquidity planning tool.

The Company''s objective is to maintain a low debt exposure and at the reporting date as the Company did not have any borrowings.

The table below summarises the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments.

(Amount in ''lakhs'']

Particulars

On Demand

Less than 3 Months

3-12 Months

1-5 Years

> 5 years

Total

As at 31 March 2018

Other financial liabilities

-

.

.

43.38

.

43.38

(non-current)

Other financial liabilities

45.97

56.94

.

-

.

102.91

(current)

Trade and other payables

-

318.47

-

-

-

318.47

Total

45.97

375.41

-

43.38

-

464.76

Particulars

On Demand

Less than 3 Months

3-12 Months

1-5 Years

> 5 years

Total

As at 31 March 2017

Other financial

.

-

.

135.81

-

135.81

liabilities(non-current)

Other financial

59.40

89.33

.

-

-

148.73

liabilities(current)

Trade and other payables

-

711.77

-

-

-

711.77

Provision for liability payout of step down Subsidiary Company*

3,350.00

3,350.00

Total

59.40

4,151.10

-

135.81

-

4,346.31

* Based on the maximum amount that can be called for under the financial guarantee contract. Excessive risk concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company''s performance to developments affecting a particular industry.

In order to avoid excessive concentrations of risk,the Company''s policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.

Collateral

The Company has pledged part of its margin money deposits in order to fulfil the collateral requirements for the subsidiaries of the Company. At 31 March 2018 and 31 March 2017, the fair values of the deposits pledged were Rs. 200.00 lakh and Rs. 175.00 lakh respectively. The Counterparties have an obligation to return the security to the Company upon settlement of obligation by the subsidiary Company. There are no other significant terms and conditions associated with the use of collateral.

39. Capital management

For the purpose of the Company''s capital management, capital includes issued equity share capital and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximise the shareholder Vajue.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants.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. The Company''s policy is to keep the gearing ratio less than 50%.The Company includes within net debt, trade and other payables, less cash and cash equivalents.

Particulars

As at 31 Mar 2018

As at 31 Mar 2017

Rs. ''lakhs

Rs. ''lakhs

Trade payables

318.47

711.77

Other financial liabilities-current

102.91

148.73

Less: Cash and cash equivalents

1,098.75

170.45

Total debt

(677.37)

690.05

Equity share capital

6,052.49

5,420.43

Other equity

5,228.60

2,435.48

Total capital

11,281.09

7,855.91

Gearing ratio (debt / equity)

(6%)

9%

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2018 and 3 I March 2017.

40. Information pursuant to G.S.R. 308 ( E) dated 30 March 2017 issued by Ministry of corporate affairs:

Particulars (Amount in lakhs)

SBNs*

Other denomination notes

Other denomination notes

Closing cash in hand as on 08.11.2016

0.35

0.03

0.38

( )Permitted receipts

2.14

2.14

(-) Permitted payments

2.02

2.02

(-) Amount deposited in Banks

-

-

-

Closing cash in hand as on 30.12.2016

0.15

0.15

* For the purpose of this disclosure, the term ''Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016."

The disclosures regarding details of specified bank notes held and transacted during 8 November 2016 to 30 December 2016 has not been made in the current year since the requirement does not pertain to financial year ended 3 I March 2018. Corresponding amounts as appearing in the audited financial statements for the year ended 31 March 2017 have been disclosed.

41. Loans in the nature of loans given to subsidiaries and companies in which directors are interested

Name of the Company

Balance as at 31 March 2018 (Rs. ''lakhs)

Balance as at 31 March 2017 (Rs. ''lakhs)

Maximum amount outstanding during the year ended 31 March 2018 (Rs. ''lakhs)

Maximum amount outstanding during the year ended 31 March 2017 (Rs. ''lakhs)

New Spice Sales and Solutions Limited

-

-

-

1,508.48

The loan given to New Spice Sales and Solutions Limited in previous year was for business purposes.

42. As on 31st March, 2018, Independent Non-Promoter (Spice Employee Benefit) Trust (''EBT'') holds 10,201,417 (March 3 1, 2017: 11,901,752) equity shares of the Company, for the benefit of the employees of the Company, its associates and subsidiaries and Independent Non-Promoter Trust (''NPT'') holds 15,912,776 (March 31, 2017: 35,281,215) equity shares of the Company for the benefit of the Company. These equity shares were transferred to the Trusts pursuant to the Scheme of amalgamation of Spice Televentures Private Limited (''STPL''),the erstwhile holding company, with the Company,_duly approved by High Court, Allahabad, at a value at which these equity shares were held in the books of STPL.

During the year the Company has received Rs.3450 lakh including surplus of Rs. 1399.12 lakh as a beneficiary,from the Independent Non-Promoter Trust including surplus arising from sale of its shares.The surplus fund would be utilised by the Company as per the terms of the Trust deed of Independent Non-Promoter Trust. Further, the Company has received Rs.342 lakh against receivables, from the Independent Employee Benefit Trust and includes surplus arising from sale of its shares .The above receipts are shown as part of the Trust Reserve.

Taking a conservative interpretation of "Ind AS 32" face value of shares held by these trusts has been deducted from equity and amount over and above face value has been shown as deduction under the head "Trust shares" separately in other equity.

43. Disclosure required under Section 186(4) of the Companies Act 2013

Particulars of corporate guarantees given as required by Section 186(4) of Companies Act, 2013

Particulars

As at 31 March 2017

Guarantees Given

Guarantees Withdrawn

As at 31 March 2018

Rs. ''lakhs

Rs. ''lakhs

Rs. ''lakhs

Rs. ''lakhs

Hotspot Sales and Solutions Private Limited

2,500.00

-

1,000.00

1500.00*

* Also refer (note 33C)

The Company has given corporate guarantee of Rs 1,000 Lakhs (3 I March 2017: Rs 2,600 Lakhs) and pledged fixed deposits of Rs 200 Lakhs (3 I March 2017: Rs 175 Lakhs) in respect of bill discounting/bank guarantee/overdraft facility taken by Hotspot Sales & Solutions Private Limited / Spice Online Private Limited (erstwhile subsidiaries of the Company)to the extent of Rs 600 Lakhs outstanding as on 3 I March 2018 where the Company is jointly and severally liable . Company has fully provided possible obligation against the said outstanding.

Details of Investments made (At cost or FVTPL):

Particulars

Opening investments as at 31 March 2017

Investments made during the year

Investments sold during the year

Closing investments as at 31 March 2018

Rs. ''lakhs

Rs. ''lakhs

Rs. ''lakhs

Rs. ''lakhs

Spice Digital Limited

889.74

6,340.68

-

7,230.42

43,339,475 (31 March 2017: 35,470,674) equity shares of Rs. 10 each fully paid up

Hindustan Retail Private Limited

39288.00*

2,950.00

-

42,238.00

422,380,000 (31 March 2017: 382,980,000) equity shares of Rs. 10 each fully paid up

Kimaan Exports Private limited (refer note 44(a))

4,562.12

-

4,562.12

-

Nil (31 March 2017: 20,000) equity shares of Rs. 10 each fully paid up

S Mobility (HK) Limited

0.64

-

-

0.64

10,000 (31 March 2017: 10,000) equity shares of HKD 1 each fully paid up

-

S Mobile Devices Limited

5.00

-

-

5.00

50,000 (31 March 2017: 50,000) equity shares of Rs. 10 each fully paid up

Omniventures Private Limited

1.00

-

1.00

-

Nil (31 March 2017: 10,000) equity shares of Rs. 10 each fully paid up

Spice IOT Solutions Private Limited

1.00

-

-

1.00

10,000 (31 March 2017: 10,000) equity shares of Rs. 10 each fully paid up

44,747.50

9,290.68

4,563.12

49,475.06

* The balance as at 3 I March 2017 includes share application money of Rs. 990 lakh paid by company against which shares have been alloted before signing of financial statements.

44. Deferred tax

The Company has carried out its deferred tax computation in accordance with Ind AS 12 ''Income Taxes'' notified under the Companies (Indian Accounting Standards) Rules, 2015.

Significant components & classification of deferred tax assets and liabilities are as follows:

Amount in Rs. Lakhs

Particulars

As at 31 March 2018

As at 31 March 2017

Deferred tax liabilities

Related to depreciation of fixed assets

72.47

364.35

Fair vale of financial assets

4.88

-

Total deferred tax liability (a)

77.35

364.35

Deferred tax assets

Provision for bonus

7.05

10.90

Provision for gratuity

8.70

7.85

Provision for leave encashment

7.80

7.73

Fair vale of fianncial laibilities

5.12

-

Provision for bad and doubtful debts

995.25

1,182.96

Carry forward losses

693.84

527.03

Carry forward Unabsorbed depreciation

541.38

565.94

Total deferred tax assets (b)

2,259.14

2,302.41

Net deferred tax assets/ (liabilities) (b-a)

2,181.79

1,938.06

Having regard to the accumulated losses. the Company has not recognised the net deferred tax assets in the absence of reasonable certainty at this stage that there will be sufficient future taxable income available to realize such assets.

(b) Reconciliation of effective tax rate

Particulars

As at 31 March 2018

As at 31 March 2017

Profit before tax

(366.82)

(8,763.74)

Income tax expense calculated at domestic tax rates applicable to profits

26.00%

(95.37)

30.90%

(2,708.00)

Tax effects of:

Effect related to Long term Capital Gains

121.48%

(445.61)

0.04%

(3.42)

Provision on expected liability reversed

-14.18%

52.00

-29.81%

2,612.26

Expenditure of capital nature

0.00%

-

-0.01%

0.72

Sales tax demanded paid

-2.66%

9.77

0.00%

-

Changes in tax rates related to prior years

-83.52%

306.36

0.00%

-

Others

19.32%

(70.87)

-9.78%

857.02

Deferred tax asset not recognised in statement of profit and loss

66.44%

(243.72)

-8.66%

758.58

(c ) Tax losses

As at 31 March 2018

Expiry date

As at 31 March 2017

Expiry date

Loss from business

2,668.63

31 March 2019 to 31 March 2027

1,705.59

31 March 2012 to 31 March 2020

Unabsorbed depreciation

2,082.24

Carried forward indefinitely

1,831.51

Carried forward indefinitely

Total

4,750.87

3,537.10

Potential tax benefit

1,235.23

1,092.96

45. (a) During the previous year Spice Mobility Limited has entered in the Share Purchase Agreement with Spice Digital Limited,

a subsidiary of the Company, to transfer the entire stake in Kimaan Exports Private Limited. Consequent to this Kimaan Exports Private Limited has ceased to be a wholly owned subsidiary of the Company and become a step down subsidiary. The Company has sold its investment in shares of Kimaan Limited of Rs 4562.12 lakh for Rs 6276.00 lakh and earned profit of Rs 1713.88.

(b) During the year the Board of Directors of the Company has approved the sale of entire stake in Omniventures Pvt Ltd. (OVPL), a wholly owned subsidiary of the Company, subsequently, the shareholders of the Company have also approved the same through postal ballot. Consequent to sale of stake in OVPL, OVPL and its subsidiary companies i.e. Spice Online Pvt. Limited and Hotspot Sales & Solutions Private Limited have ceased to be the subsidiaries of the Company with effect from 13 February, 2018.

(c) Previous year a step down subsidiary of the Company has discontinued its business operations. As the net worth of said company is fully eroded, the Company has made and impaired during the year an investment made through subsidiary of Rs 2,950.00 lakh (previous year : Rs 7,735.00) towards settlement of the liabilities of the step down subsidiary. The Company has reversed excess provision of Rs 400.00 lakh against provision of Rs.3,350.00 lakh made last year towards settlement of liabilities of the aforesaid step down subsidiary.

46. Details of dues to micro and small medium enterprises as defined under the MSMED Act, 2006

Particulars

As at 31 March 2018

As at 31 March 2017

a) the principal amount and the interest due thereon remaining unpaid to any supplier as at the end of each accounting year

NIL

NIL

b) the amount of interest paid by the buyer under MSMED Act 2006 along with the amounts of the payment made to the supplier beyond the appointed day during each accounting year

NIL

NIL

c ) the amount of interest due and payable for the period (where the principal has been paid but interest under the MSMED Act, 2006 not paid);

NIL

NIL

d) the amount of interest accrued and remaining unpaid at the end of each accounting year

NIL

NIL

e) the amount of further interest due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under Section 23 of the MSMED Act 2006

NIL

NIL

As per our report of even date

For and on behalf of the board of directors of Spice Mobility Limited

FOR B S R & CO. LLP

Dilip Modi

Subramanian Murali

Chartered Accountants

Executive Chairman

Director

ICAI Firm registration number: 101248W/W- 100022

DIN: 00029062

DIN: 00041261

Vikram Ad van!

Suman Ghose Hazra

Madhusudan V.

Partner

Director

Chief Financial Officer

Membership no.: 091765

DIN: 00012223

Place : Noida

M R Bothra

Date : 17 May 2018

Vice President- Corporate Affairs and Company Secretary


Mar 31, 2016

1. Leases

Operating lease: Company as lessee

An office building has been obtained on operating lease. There is no contingent rent in the lease agreement. The lease term is for 9 years and can be extended on mutual consent of both the parties. There are no restrictions imposed by lease arrangements. There are subleases and all the leases are cancellable in nature. The Company has recognized lease expenses of Rs. 2I,944 thousand for the year ended March 3I, 20I6 (Previous period Rs 25,27I thousand)

Operating lease commitments - Company as lessor

The Company has entered into lease of its leasehold improvement carried out at building located in Noida. The lease is cancellable. There are no restrictions imposed by lease agreement and there are no contingent rents.

Further, the Company has entered into lease of its Buildings in Bangalore, Kolkata & Mumbai for terms ranging from three to five years. The lease term can be extended by mutual consent of both the parties. The leases have a lock in periods between one to five years. The leases are cancellable after the lock in period by either party by serving a notice of at least 3 months.

2. Segment information

Primary segments: Business Segments

During the year, the Company was engaged mainly in telecommunications- Mobile business which represented the business of trading of mobile handsets. The entire business was considered as a single segment in terms of Accounting Standard-I7 on Segment Reporting issued by the Institute of Chartered Accountants of India.

Secondary Segments: Geographical Segment

As the Company’s business activity falls within a single geographical segment, there is no additional disclosure required to be provided for geographical segments in terms of Accounting Standard-I7 Segment Reporting.

3. Capital & other Commitments

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs.I,I49 thousand (Previous period Rs.4,604 thousand).

b) The Company has given comfort letter to its two subsidiary companies, whose net worth has been fully eroded, to provide financial support in the future to enable them to settle their obligation as and when they fall due and operate as a going concern.

4. Contingent Liabilities

Contingent Liabilities (excluding interest, wherever applicable) not provided for in respect of:

a) Income Tax Demands being disputed by the Company Rs.I,38,89I thousand (Previous period Rs. I,52,7I6 thousand).*

b) Penalty under Foreign Trade (Development and Regulation) Act, I992, on account of non fulfillment of export obligation being disputed by the Company - Rs. 40,860 thousand (Previous period Rs. 40,860 thousand).*

c) Demand raised by the Excise Authorities being disputed by the Company. The Company has deposited Rs. 2,000 thousand (Previous period Rs. 2,000 thousand) under protest and the same has been included in the note of Loans and Advances under balances with statutory / government authorities - Rs. 66,263 thousand (Previous period Rs. 66,263 thousand).*

d) The Company has given corporate guarantee and pledged fixed deposits of Rs.195,476 thousand (Previous period Rs. 180,562 thousand) in respect of letter of credit/ bill discounting facility taken by a subsidiary company to the extent of Rs. 2,550,000 thousand where the Company is jointly and severally liable. Further, the Company has an equitable mortgage of its properties situated at Bl 101, 106 and 107, Boomerang, Plot No. 4A and 4B, Sakivali Village, Chandivali farm road, Kurla (W), Mumbai & at Unit No. ESNT B050I, 5th Floor, IIF/11, New Town, Rajarhat, North 24 Parganas, Kolkata, West Bengal in respect of letter of credit facility (included in the above amount) taken by subsidiary company to the extent of Rs. 450,000 thousand & 500,000 thousand respectively, where the Company is jointly and severally liable.

e) The Company has pledged its fixed deposit of Rs. 7,500 thousand (Previous period Rs. 31,138 thousand) in respect of the overdraft facility taken by subsidiary of a subsidiary Company.

* As per the management, the Company has fair chances of success in all these cases and hence no provision in respect thereof has been made in the books.

31. The Company has receivable by way of loans of Rs. 150,848 thousand (Previous period Rs 440,630 thousand) including interest of Rs.17,804 thousand (Previous period Rs 25,555 thousand), trade receivables and advances of Rs. 495,177 thousand (Previous period Rs 75,210 thousand) from one of its subsidiaries. In view of the continuing losses of the said business, the Company has taken a decision to provide loan of Rs 150,848 thousand and receivables of Rs.481,287 thousand as doubtful. The provision for doubtful debts and advances has been shown under exceptional items in the financial statements. However, the management continues to focus on growing the retail business and making it profitable on an ongoing basis.

5. The Company follows Accounting Standard (AS-22) - “Accounting for taxes on Income, notified by Companies (Accounting Standards) Rules, 2006, (as amended). Due to unabsorbed depreciation, brought forward losses and other timing differences, the Company has net deferred tax assets. Since there is no convincing evidence which demonstrates virtual certainty of realization of such deferred tax assets in the near future, the Company has not recognized the same.

Note: The loan given to Spice Retail Limited is for business purposes. The loan is repayable till March 31, 2017 or earlier as and when demanded by the Company.

6. Independent Non-Promoter (Spice Employee Benefit) Trust (‘Trust’) holds 11,901,752 (Previous year 11,901,752) Equity Shares of the Company as on 31st March, 2016, for the benefit of the employees of the Company, its associates and subsidiaries. These equity shares were transferred to the Trust pursuant to the Scheme of amalgamation of Spice Televentures Private Limited (‘STPL’), at a value at which these equity shares were held in the books of STPL and the same was recorded as receivable from the Trust in the books of the Company. Amount recoverable from Employee Benefit Trust is in respect of these shares (net of amount received till date) as on March 31, 2016 Rs. 69,200 thousand (Previous period Rs. 69,200 thousand).

Trust has framed Share Reward Rules whereby certain shares held by the Trust may be transferred to eligible employees. The Company has been legally opined that the Share Reward Rules framed by the Trust are not covered under the ambit of employee welfare schemes of the Company as the said Rules have been framed by the Trust and not by the Company. Hence, the disclosure requirement under the Guidance Note on Accounting for Employee Share based payments issued by the Institute of the Chartered Accountants of India is not applicable to the Company.

7. During the year ended March 3I, 20I6, the Company has entered into an agreement with S Mobile Devices Ltd, a wholly owned subsidiary, Itel Mobile Ltd and Cloud Ranger Ltd to engage in the business of selling “Itel” Brand Mobile handsets in India. Pursuant to the agreement and equity infusion by Itel Mobile Ltd and Cloud Ranger Ltd, S Mobile Devices Ltd has ceased to be a subsidiary of the Company.

8. Current year’s accounts have been prepared for the full year i.e. from April I, 20I5 to March 3I, 20I6. Previous year accounts were prepared for the nine months period, i.e., from July I, 20I4 to March 3I, 20I5. Hence, current year’s figures are not comparable with those of the previous period. Previous period’s figures have been regrouped / reclassed wherever considered necessary to conform to current year’s figures.


Mar 31, 2015

1. Segment information

Primary segments: Business Segments

During the period the Company did not have any business operations. During the previous year, the Company was engaged mainly in telecommunications- Mobile business which represented the business of trading of mobile handsets.The entire business was considered as a single segment in terms of Accounting Standard-17 on Segment Reporting issued by the Institute of Chartered Accountants of India.

Secondary Segments: Geographical Segment

2. Capital & other Commitments

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 4,604 thousand (Previous year Rs. Nil thousand).

b) The Company has given comfort letter to its two subsidiary companies, whose net worth has been fully eroded, to provide financial support in the future to enable them to settle their obligation as and when they fall due and operate as a going concern (Refer note 33 below).

3. Contingent Liabilities

Contingent Liabilities (excluding interest, wherever applicable) not provided for in respect of:

a) Income Tax Demand being disputed by the Company Rs.152,716 thousand (Previous year Rs. 150,167 thousand).*

b) Penalty under Foreign Trade (Development and Regulation) Act, 1992, on account of non fulfilment of export obligation being disputed by the Company - Rs. 40,860 thousand (Previous year Rs. 40,860 thousand).*

c) Demand raised by the Excise Authorities being disputed by the Company. The Company has deposited Rs. 2,000 thousand (Previous year Rs. 2,000 thousand) under protest and the same has been included in the note of Loans and Advances under balances with statutory / government authorities - Rs. 66,263 thousand (Previous year Rs. 66,263 thousand).*

d) The Company has given corporate guarantee and pledged fixed deposits of Rs. 180,562 thousand (Previous year Rs. 566,731 thousand in respect of letter of credit/ bill discounting facility taken by a subsidiary company to the extent of Rs. 2,050,000 thousand where the Company is jointly and severally liable. Further, the Company has an equitable mortgage of its property situated at B1 101, 106 and 107, Boomerang, Plot No. 4A and 4B, Sakivali Village, Chandivali farm road, Kurla (W), Mumbai in respect of letter of credit facility (included in the above amount) taken by subsidiary company to the extent of Rs. 450,000 thousand, where the Company is jointly and severally liable.

e) The Company has pledged its fixed deposit of Rs. 31,138 thousand (Previous year Rs. 30,000 thousand) in respect of the overdraft facility taken by subsidiary of a subsidiary company

*As per the management, the Company has fair chances of success in all these cases and hence no provision in respect thereof has been made in the books.

Notes:

1. No amount has been provided as doubtful debts or advances / written off or written back in respect of debts due from / to above parties except as disclosed above.

2. The Company has given corporate guarantee and pledged fixed deposits of Rs. 180,562 thousand (Previous year Rs. 566,731 thousand) in respect of letter of credit/ bill discounting facility taken by a subsidiary company to the extent of Rs. 2,050,000 thousand where the company is jointly and severally liable. Further, the Company has an equitable mortgage of its property situated at B1 101, 106 and 107, Boomerang, Plot No. 4A and 4B, Sakivali Village, Chandivali farm road, Kurla (W), Mumbai in respect of letter of credit facility (included in the above amount) taken by subsidiary company to the extent of Rs. 450,000 thousand, where the company is jointly and severally liable.

3. The Company has given comfort letter to its two subsidiary companies, whose net worth has been fully eroded, to provide financial support in the future to enable them to settle their obligation as and when they fall due and operate as a going concern.

4. The Company has pledged its fixed deposit of Rs. 31,138 thousand (Previous year Rs. 30,000 thousand) in respect of the overdraft facility taken by subsidiary of a subsidiary company

# The final dividend was paid to the shareholders in Feb'14 and pertained to FY 2012-13. ## The interim dividend was paid to the shareholders in Nov'13 and pertained to FY 2013-14.

4. The Company has over the years invested Rs.3,328,375 thousand in its Multi brand Mobile Retail Store Business as investment in the equity share capital of two subsidiaries and the same was being carried in its books at cost. In view of the continuing losses of the said business and as a prudent accounting practice, the Company has taken a decision to provide fully for the said investment as diminution in value. The provision for diminution in the value of investments has been shown under exceptional items in the financial statements. However, the management continues to focus on growing the retail business and making it profitable on an ongoing basis.

The Company also has receivable by way of loans of Rs. 440,630 thousand (including interest of Rs.25,555 thousand) (Previous year Rs 2,424,090), trade receivables and advances of Rs. 75,210 thousand (Previous year Rs. 170,933 thousand) from these companies.The management is hopeful of realising the above amounts and accordingly no provision has been made there against.

5. The Company follows Accounting Standard (AS-22) - "Accounting for taxes on Income, notified by Companies (Accounting Standards) Rules, 2006, (as amended). Due to unabsorbed depreciation, brought forward losses and other timing differences, the Company has net deferred tax assets. Since there is no convincing evidence which demonstrates virtual certainty of realization of such deferred tax assets in the near future, the Company has not recognized the same.

6. Independent Non-Promoter (Spice Employee Benefit) Trust ('Trust') holds 11,901,752 (Previous year 11,901,752) Equity Shares of the Company as on 31st March, 2015, for the benefit of the employees of the Company, its associates and subsidiaries.These equity shares were transferred to the Trust pursuant to the Scheme of amalgamation of Spice Televentures Private Limited ('STPL'), at a value at which these equity shares were held in the books of STPL and the same was recorded as receivable from the Trust in the books of the Company. Amount recoverable from Employee Benefit Trust is in respect of these shares (net of amount received till date) as on March 31,2015, Rs. 69,200 (Previous Year Rs. 73,200).

Trust has framed Share Reward Rules whereby certain shares held by the Trust may be transferred to eligible employees. The Company has been legally opined that the Share Reward Rules framed by the Trust are not covered under the ambit of employee welfare schemes of the Company as the said Rules have been framed by the Trust and not by the Company. Hence, the disclosure requirement under the Guidance Note on Accounting for Employee Share based payments issued by the Institute of the Chartered Accountants of India is not applicable to the Company.

7. Current year's accounts are prepared for the nine months period from July 1, 2014 to March 31, 2015. Previous year accounts were for the full year, i.e., from July 1, 2013 to June 30, 2014. Hence, current period's figures are not comparable with those of the previous year. Previous year's figures have been regrouped / reclassed wherever considered necessary to confirm to current period's figures.


Jun 30, 2014

1. Leases

Operating lease: Company as lessee

An office building has been obtained on operating lease. There is no contingent rent in the lease agreement. The lease term is for 9 years and can be extended on mutual consent of both the parties. There are no restrictions imposed by lease arrangements. There are subleases and all the leases are cancellable in nature except for lease of one warehouse in previous year where there was a lock in period of three years. The Company has recognised lease expenses of Rs. 33,696 thousand (Previous year Rs 70,843 lacs)

Operating lease commitments - Company as lessor

The Company has entered into lease of its leasehold improvement carried out at building located in Noida. The lease is cancellable. There are no restrictions imposed by lease agreement and there are no contingent rents.

2. Segment information

Primary segments: Business Segments

During the year, the Company is engaged mainly in telecommunications- Mobile business which represents the business of trading of mobile handsets. The entire business has been considered as a single segment in terms of Accounting Standard-17 on Segment Reporting issued by the Institute of Chartered Accountants of India.

Secondary Segments: Geographical Segment

The analysis of geographical segment is based on geographical location of the customers.

The following table shows the distribution of the Company''s consolidated revenue and trade receivables by geographical market:

Note: All assets other than trade receivables as disclosed above are located in India.

3. Capital & other Commitments

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Nil (Previous year Rs. 1975 thousand).

b) For commitments relating to lease arrangements, (refer note 28 above).

c) The Company has given comfort letter to its two subsidiary companies, whose net worth has been fully eroded, to provide financial support in the future to enable them to settle their obligation as and when they fall due and operate as a going concern (Refer note 43 below).

4. Contingent Liabilities

Contingent Liabilities (excluding interest, wherever applicable) not provided for in respect of:

a) Various Sales Tax Demands being disputed by the Company Nil thousand (Previous year Rs. 26,265 thousand).*

b) Income Tax Demand being disputed by the Company Rs.150,167 thousand (Previous year Rs. 210,501 thousand).*

c) Penalty under Foreign Trade (Development and Regulation) Act, 1992, on account of non fulfilment of export obligation being disputed by the Company - Rs. 40,860 thousand (Previous year Rs. 40,860 thousand).*

d) Demand raised by the Excise Authorities being disputed by the Company. The Company has deposited Rs. 2,000 thousand (Previous year Rs. 2,000 thousand) under protest and the same has been included in the note of Loans and Advances under balances with statutory / government authorities - Rs. 66,263 thousand (Previous year Rs. 66,263 thousand).*

e) Various other claims against the Company not acknowledged as debts (based on management estimate) - Nil (Previous year Rs. 4,575 thousand)*.

f) The Company has given corporate guarantee in respect of letter of credit/ bill discounting facility taken by a subsidiary company to the extent of Rs. 2,050,000 thousand where the company is jointly and severally liable.

* As per the management, the Company has fair chances of success in all these cases and hence no provision in respect there has been made in the books.

5. Related Parties

Names of related parties where control exists irrespective of whether transactions have occurred or not:

Utlimate Holding Company : Spice Global Investments Private Limited

Holding Company : Smart Ventures Limted (Converted into limited company w.e.f. 29.11.2013) (Formerly S i2i Mobility Private Limited)

Subsidiary including step down subsidiaries companies :

Spice Digital Limited

Spice Retail Limited

Hindustan Retail Private Limited

Kimaan Exports Private Limited

Spice Labs Private Limited

Cellucom Retail India Private Limited

S Retail Middle East FZE

Spice Online Retail Private Limited (w.e.f. July 24, 2012)

Mobisoc Technology Private Limited

S GIC Pte Ltd.

Spice VAS (Africa) Pte. Ltd.

Spice Digital Nigeria Limited

Beoworld Sdn. Bhd

Spice VAS Uganda Ltd.

Spice VAS Kenya Limited

S Mobility (HK) Ltd.

S Mobile Devices Ltd.

S Mobility Pte Ltd.

Spice VAS Ghana Ltd.

Spice VAS Zambia Ltd.

Spice Digital South Africa (Pty) Ltd.

Spice VAS Tanzania Limited

Spice Digital (Bangladesh) Limited (w.e.f. November 8, 2012)

Names of other related parties with whom transactions have taken place during the year:

Individual having significantly influence on the Company and relatives or such individuals :

Mr. Dilip Modi - Director

Enterprises directly or indirectly through one or more intermediaries are under common control with the Company :

Spice Enfotainment Limited

Wall Street Finance Limited

Smartvalue Ventures Private Limited (Formerly Spice Investments & Finance Advisors Pvt. Ltd.)

Spice Innovative Technologies Private Ltd.

IO Systems Limited

Saket City Hospitals Pvt. Ltd. (Formerly G M Modi Hospitals

Corporation Pvt. Ltd.)

Smart Global Ventures Private Limited

Key Management Personnel : Mr. Subramanian Murali - President Finance Mr. R S Desikan -CEO (w.e.f.February 9,2012

Relatives of key management personnel : Mrs. Jananki Desikan

Enterprises over which individuals having significant influence over the Company is able to exercise significant influence :

Plus Paper Foodpac Ltd.

Bharat IT Services Limited

V Corp Mercantile Private Limited

PT Selular Media Infotama

The amounts of foreign currency exposure that are not hedged by a derivative instrument are Nil (Previous year Nil).

(B) A sum of Nil (Previous year Rs.5,281 thousand) on account of unamortized foreign exchange premium on outstanding forward exchange contracts is being carried forward to be charged to Statement of Profit and Loss of subsequent year.

for the year ended June 30, 2014

# The final dividend has been paid to the shareholders in Feb''14 and pertains to FY 2012-13.

## The interim dividend has been paid to the shareholders in Nov''13 and pertains to FY 2013-14.

6 (a) The board of directors in the meeting held on June 19, 2013 had approved the buy back of the Company''s fully paid up equity shares of face value of Rs 3/- each from the open market through Stock Exchange mechanism at a price not exceeding Rs 75/- per share for an aggregate amount not exceeding Rs 600,000 thousand, subject to a maximum of 11,000 thousand equity shares. In pursuance to above approval, buy back commenced on July 10, 2013 and closed on May 13, 2014, the Company has bought back and extinguished 10,222,303 equity shares of face value of Rs 3 each. Out of the total extinguished shares, interim dividend has not been paid on 3,896,634 equity shares and final dividend has not been paid to 10,221,003 shares (including 6,416,587 equity shares bought back after finalisation of last year''s accounts ) being the shares extinguished prior to the respective record dates. Accordingly proposed final dividend has been reversed on 6,416,587 equity shares.

(b) The Company has, pursuant to share buy back offer, approved by the Board of Directors in the meeting held on June 19, 2013, bought back 10,222,303 equity shares of Rs 3/- each and accordingly:-

(i) The paid up Equity Share Capital has been reduced to that extent.

(ii) As required under the provisions of the Companies Act, 1956, Rs 30,666 thousand have been transferred to Capital Redemption Reserve.

(iii) Out of the price over and above face value of these shares, Rs 288,070 thousand has been adjusted from Securities Premium account and Rs 48,413 thousand has been adjusted from General Reserve.

42. In pursuance to the approval obtained from the members of Company by way of postal ballot, the Mobile Handset Business of the Company was transferred to Spice Retail Limited (SRL), a wholly owned Subsidiary of the Company, as a going concern w.e.f. 1st July, 2013 by way of slump sale at book value of Rs. 354,000 thousand.

The following statement shows the revenue and expenses of discontinued operations, i.e., Mobile Handset Division (Undertaking) of the Company which was discontinued We.f. July 1, 2013 as per Business transfer agreement dated July 1, 2013

7. The Company has invested a sum of Rs. 878,375 thousand (Previous year Rs 878,375 thousand) in the equity shares of two of the subsidiaries. Further, the Company has receivable by way of interest free loans of Rs. 2,424,090 thousand (Previous year Rs 2,405,590 ), trade receivables and advances of Rs. 170,933 thousand (Previous year Rs 369,469 thousand) from these companies. The company has given corporate guarantee in respect of the letter of credit/bill discounting facility taken by one subsidiary to the extent of Rs. 2,050,000 thousand. As per the latest audited financial statements of these subsidiaries, accumulated losses of these subsidiaries have resulted in erosion of their net worth.

These being long term investments and also in view of the projected profitable operations of the above companies and / or fair value of the companies as at June 30, 2014, management is of the view that the diminution in the value of these investments is temporary in nature and hence no provision is required to be made against the investments made, loans given and outstanding receivables.

8. The Company follows Accounting Standard (AS-22) - "Accounting for taxes on Income, notified by Companies (Accounting Standards) Rules, 2006, (as amended). Due to unabsorbed depreciation, brought forward losses and other timing differences, the Company has net deferred tax assets. Since there is no convincing evidence which demonstrates virtual certainty of realization of such deferred tax assets in the near future, the Company has not recognized the same.

9. Loans and advances in the nature of loans given to subsidiaries and companies in which directors are interested

Note: Loans are repayable on demand and are interest free.

10. Independent Non-Promoter (Spice Employee Benefit) Trust (''Trust'') holds 11,901,752 Equity Shares of the Company as on 30th June, 2014, for the benefit of the employees of the Company, its associates and subsidiaries. These equity shares were transferred to the Trust pursuant to the Scheme of amalgamation of Spice Televentures Private Limited (''STPL''), at a value at which these equity shares were held in the books of STPL and the same was recorded as receivable from the Trust in the books of the Company. Amount recoverable from Employee Benefit Trust is in respect of these shares (net of amount received till date). Trust has framed Share Reward Rules whereby certain shares held by the Trust may be transferred to eligible employees. The

Company has been legally opined that the Share Reward Rules framed by the Trust are not covered under the ambit of employee welfare schemes of the Company as the said Rules have been framed by the Trust and not by the Company. Hence, the disclosure requirement under the Guidance Note on Accounting for Employee Share based payments issued by the Institute of the Chartered Accountants of India is not applicable to the Company."

11. Current year''s accounts are prepared for the period from July 1, 2013 to June 30, 2014. However, Mobile Handset division of the Company has been transferred to Spice Retail Limited (SRL), a wholly owned Subsidiary of the Company, as a going concern w.e.f. 1st July, 2013 by way of slump sale. Hence, current year''s figures are not comparable with those of the previous year.


Jun 30, 2013

1. Nature of Operations

S Mobility Ltd ("the Company") is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company is primarily engaged in the trading of Mobile handset and accessories.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies have been consistently applied by the Company and are consistent with those of previous period.

3. Capital & other Commitments

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs.1,975 thousand (Previous period Rs. 787 thousands).

b) For commitments relating to lease arrangements, refer note 27 above.

c) The Company has given comfort letter to its two subsidiary companies, whose net worth has been substantially eroded, to provide financial support in the future to enable them to settle their obligation as and when they fall due (Refer note 42 below).

4. Contingent Liabilities

Contingent Liabilities (excluding interest, wherever applicable) not provided for in respect of:

a) Various Sales Tax Demands being disputed by the Company Rs. 26,265 thousand (previous period Rs. 29,234 thousand).*

b) Income Tax Demand being disputed by the Company Rs. 210,501 thousand (previous period Rs. 27,078 thousand).

c) Penalty under Foreign Trade (Development and Regulation) Act, 1992, on account of non fulfilment of export obligation being disputed by the Company - Rs. 40,860 thousand (previous period Rs. 40,860 thousand).*

d) Demand raised by the Excise Authorities being disputed by the Company. The Company has deposited Rs. 2,000 thousand (Previous period Rs. 2,000 thousand) under protest and the same has been included in the note of Loans and Advances under balances with statutory / government authorities - Rs. 66,263 thousand (Previous period Rs. 66,263 thousand).*

e) Various other claims against the Company not acknowledged as debts (based on management estimate) - Rs. 4,575 thousand (Previous period Rs. 4,327 thousand)*.

* As per the management, the Company has fair chances of success in all these cases and hence no provision in respect thereof has been made in the books.

5. During the year, the Company has revised the estimated useful life of certain plant and machinery w.e.f. January 1, 2013 based on technical estimates made by the management. Accordingly additional depreciation of Rs 9,671 thousand has been accounted for in the financial statement. Had the Company continued to use the earlier basis of providing depreciation, the charge to the statement of profit and loss for the current year would have been lower by Rs 7,644 thousand (net of tax of Rs 2,027 thousand) and the net block of fixed assets would correspondingly have been higher by Rs 9,671 thousand.

6. The board of directors in the meeting held on June 19, 2013 have approved the buy back of the Company''s fully paid up equity shares of face value of Rs 3/- each from the open market through Stock Exchange mechanism at a price not exceeding Rs 75/- per share for an aggregate amount not exceeding Rs 600,000 thousand, subject to a maximum of 11,000 thousand equity shares. In persuance to above approval, buy back has commenced on July 10,2013, Company has bought back 3,817,037 equity share of face value of Rs 3 each and out of them 3,804,416 equity shares of face value of Rs 3 each has been extinguished till date. For the purpose of providing dividend at the year end, these extinguished shares have not been considered.

7. In pursuance to the approval obtained from the members of Company by way of postal ballot, the Board of Directors of the Company in its meeting dated June 28,2013 has decided to sell/transfer the Mobile Handset Business of the Company to Spice Retail Limited(SRL), a wholly owned Subsidiary of the Company, as a going concern w.e.f. 1st July, 2013 by way of slump sale.

8 The Company has invested a sum of Rs. 878,375 thousand (Previous period Rs 808,375 thousand) in the equity shares of two of the subsidiaries. Further, the Company has receivable by way of interest free loans of Rs. 2,405,590 thousand (Previous period Rs. 2,382,090 thousand), trade receivables and advances of Rs. 369,469 thousand (Previous period Rs 208,942 thousand) from these companies. As per the latest audited financial statements of these subsidiaries, accumulated losses of these subsidiaries have resulted in erosion of their net worth substantially.

These being long term investments and also in view of the projected profitable operations of the above companies and / or fair value of the companies as at June 30, 2013, management is of the view that the diminution in the value of these investments is temporary in nature and hence no provision is required to be made against the investments made, loans given and outstanding receivables.

9. The Company follows Accounting Standard (AS-22) - "Accounting for taxes on Income, notified by Companies (Accounting Standards) Rules, 2006, (as amended). Due to losses incurred during the previous period, the Company has net deferred tax assets. Since there is no convincing evidence which demonstrates virtual certainty of realization of such deferred tax assets in the near future, the Company has not recognized the same.

10. The Board of Directors in its meeting held on June 28, 2013 decided to close down both the manufacturing units of the Company (i.e Unit I & Unit II) at Baddi (Himachal Pradesh), which were predominantly for manufacturing feature phone handsets, with immediate effect.

11. The Company has entered into an agreement to sale for Land and Building at Baddi at a consideration of Rs 35,000 thousand, having net written down value of Rs. 16,485 thousand as on June 30,2013. Company has received Rs.17,500 thousand as advance against such sale as at year end.

12. Independent Non-Promoter (Spice Employee Benefit) Trust (''Trust'') holds 11,901,752 Equity Shares of the Company as on 30th June, 2013, for the benefit of the employees of the Company, its associates and subsidiaries. These equity shares were transferred to the Trust pursuant to the Scheme of amalgamation of Spice Televentures Private Limited (''STPL''), at a value at which these equity shares were held in the books of STPL. During the year, the Trust has framed Share Reward Rules whereby certain shares held by the Trust may be transferred to eligible employees. The Company has been legally opined that the Share Reward Rules framed by the Trust are not covered under the ambit of employee welfare schemes of the Company as the said Rules have been framed by the Trust and not by the Company. Hence, the disclosure requirement under the Guidance Note on Accounting for Employee Share based payments issued by the Institute of the Chartered Accountants of India is not applicable to the Company.

13. Current year''s accounts are prepared for the twelve months period from July 1, 2012 to June 30, 2013. However, the Statement of profit and loss and cash flow of the Company for the last year was of fifteen months period from April 1,2011 to June 30,2012. Hence, current year''s figures are not comparable with those of the previous period.


Jun 30, 2012

1. Nature of operations

The Company is primarily engaged in the trading and manufacturing of Mobile handset and accessories. The Company has set up a plant at its facility in Baddi, in the state of Himachal Pradesh, for manufacturing of mobile handsets. On June 7, 2011, the name of the Company was changed from Spice Mobility Limited to S Mobility Limited.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies have been consistently applied by the Company and are consistent with those of previous year, except for the change in accounting policy as explained below:

(a) Terms/ rights attached to equity shares

The Company has only one class of equity shares having par value of Rs. 3 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the period ended 30 June 20I2, the amount of dividend per share recognized as distributions to equity shareholders is Rs. I.50 (3I March 20II: Rs. I.50).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

* Refer note no.40.

** Independent non-promoter trust which holds 35,301,215 equity shares of the Company has waived off its right to receive entire dividend on the equity shares proposed during the current period and previous year. Accordingly, provision made in the previous year for proposed dividend of Rs. 52,952 thousand in respect of these shares and tax thereon of Rs 8,590 thousand has been reversed during the period and no dividend has been provided on these shares in the current period.

Provision for warranties

A provision is recognized for expected warranty claims on products sold during last one year, based on past experience of level of customer service expenses. It is expected that significant portion of these costs will be incurred in the next financial year. Assumptions used to calculate the provision for warranties are based on past trend of sales of mobile handsets and customer service expenses incurred.

** Pursuant to amalgamation of Spice Distribution Limited (SDL) with Spice Retail Limited (SRL) with effect from July 31,2012 (appointed date April I, 2011), the Company has since received 794,262 equity shares against the shares of SDL in the ratio of I share of SRL for every 5 shares held in SDL.

*** The trust is holding 35,301,215 equity shares of the Company, the sole beneficiary of which is the Company.

3.1 Exceptional items

Exceptional item of Rs 23,514 thousand in the current period represents the provision made for dimunition in the value of long term investment in two companies.

Exceptional item of Rs 94,898 thousand in the previous year represented profit on sale of 35,818,763 equity shares of face value of Rs 10 each of Spice Distribution Limited, a 100% subsidiary of the company to Hindustan Retails Private Limited, another 100% subsidiary of the Company in view of internal restructuring of the Company.

b) Details of employee benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summaries the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the gratuity plans:

4. Leases

operating lease: company as lessee

Office premises and office equipments are obtained on operating lease.There are no contingent rents in the lease agreements. The lease terms are for I-I0 years and renewable by mutual agreement of both the parties or at the option of the Company. There are no restrictions imposed by lease arrangements. There are no subleases and all the leases are cancellable in nature except for lease of one warehouse where there is a lock in period of three years.

operating lease commitments - Group as lessor

The company has entered into commercial property leases on its factory building at Baddi in the state of Himachal Pradesh & leasehold improvement carried out at building located in Noida. These non-cancellable leases have remaining terms between I - 20 years. There are no restrictions imposed by lease agreement and there are no contingent rents.

5. Segment information

Primary segments: Business Segments

During the period, the Company is engaged mainly in telecommunications- Mobile business which represents the business of trading / manufacturing of mobile handsets. The entire business has been considered as a single segment in terms of Accounting Standard-17 on Segment Reporting issued by the Institute of Chartered Accountants of India.

Secondary Segments: Geographical Segment

The analysis of geographical segment is based on geographical location of the customers.

The following table shows the distribution of the Company's consolidated revenue and trade receivables by geographical market:

Note: The Company has common assets for producing goods for Domestic Market and Overseas Markets. Hence, separate figures for assets/ additions to fixed assets cannot be furnished.

6. Capital & other commitments

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 787 thousand (Previous year Rs. 137,835 thousands).

b) For commitments relating to lease arrangements, refer note 27 above.

c) The Company has given comfort letter to its two subsidiary companies, whose net worth has been substantially eroded, to provide financial support in the future to enable them to settle their obligation as and when they fall due.(Refer note 42 below)

7. Contingent Liabilities

Contingent Liabilities (excluding interest, wherever applicable) not provided for in respect of:

a) Various Sales Tax Demands being disputed by the Company Rs. 29,234 thousands (previous year Rs. I5,563 thousands).*

b) Income Tax Demand being disputed by the Company Rs. 27,078 thousands (previous year Rs. Nil thousands).The Income Tax Department has adjusted refund of subsequent year with the demanded amount.*

c) Penalty under Foreign Trade (Development and Regulation) Act, I992, on account of non fulfilment of export obligation being disputed by the Company - Rs. 40,860 thousands (previous year Rs. 40,860 thousands).*

d) Demand raised by the Excise Authorities being disputed by the Company. The Company has deposited Rs. 2,000 thousand (Previous year Rs. 2,000 thousand) under protest and the same has been included in the note of Loans and Advances under balances with statutory / government authorities - Rs. 66,263 thousands (Previous year Rs. 66,263 thousands).*

e) Various other claims against the Company not acknowledged as debts - Rs. 4,327 thousands (Previous year Rs. 4,380 thousands)*.

* As per the management, the Company has fair chances of success in all these cases and hence no provision in respect thereof has been made in the books.

*Relates to Mr R S Desikan in the current period, the appointment of which is subject to approval of shareholders in the ensuing general meeting.

**The Company had paid remuneration aggregating to Rs. 28,574 thousand to two directors which was in excess of the limit laid down under Schedule XIII of the Companies Act,I956 by Rs 18,974 thousand. The directors have agreed to refund the excess remuneration to the Company. accordingly, the excess remuneration has been debited to the accounts of respective directors. Note: As the liabilities for gratuity and leave encashment are provided on an actuarial basis for the Company as a whole, the amounts pertaining to the Whole Time Director are not included above.

*An amount of Rs I5,049 thousand (Previous year Rs I3,228 thousand) has been paid as dividend to the Non Resident shareholders (including Foreign Institutional Investors).

8. Pursuant to the Scheme of Amalgamation ["the Scheme"] U/s 39I/394 of the Companies Act I956, Spice Televentures Private Limited (Transferor Company), the erstwhile Holding Company of the Company, was merged with the Company w.e.f. January 0I, 20I0 ["the appointed date"] in terms of the Orders dated November 2, 20I0 and October 8, 20I0 of the Hon'ble High Courts of judicature at Allahabad and New Delhi respectively, sanctioning the Scheme and was effective from November 4, 20I0. With effect from the appointed date, all the business undertaking, assets, liabilities, rights and obligations of the Transferor Company stood transferred to and vested in the Company.The accounting of said scheme of amalgamation was carried out in the last years' accounts.

9. Subsequent to financial year end, the members of the Company has accorded their approval with requisite majority by Postal Ballot for sale/transfer of mobile handset business of the Company to "S Mobile Devices Limited" a wholly subsidiary Company of the Company.

10. The Company has investment a sum of Rs. I,264,587 thousand in the equity shares of some of the subsidiaries. Further, the Company has receivable by way of loans, trade receivables and advances of Rs. 2,68I,376 thousand from these companies. As per the latest audited financial statements of these subsidiaries, accumulated losses of these subsidiaries have resulted in erosion of their net worth fully/ substantially.

These being long term investments and also in view of the projected profitable operations of the above companies and / or fair value of the companies as at June 30, 20I2, management is of the view that the diminution in the value of these investments is temporary in nature and hence no provision is required to be made against the investments made, loans given and outstanding receivables.

11. The Company follows Accounting Standard (AS-22) - "Accounting for taxes on Income, notified by Companies (Accounting Standards) Rules, 2006, (as amended). Due to losses incurred during the current period, the Company has net deferred tax assets. Since there is no convincing evidence which demonstrates virtual certainty of realization of such deferred tax assets in the near future, the Company has not recognized the same.

12. In an earlier year the asset of Rs. 8,978 thousand (net of Rs.50,802 thousand utilised during the previous year) recognized by the Company as 'MAT Credit Entitlement' under 'Loans and Advances', in respect of MAT payment by Spice Televentures Private Limited, amalgamated with the Company w.e.f. the appointed date January I, 2010, for the year 2009-10, represents that portion of MAT liability which can be recovered and set off in subsequent years based on the provisions of Section II5JAA of the Income Tax Act, I96I. The management based on future profitability projections, is of the view that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilize MAT credit assets.

13. Till the year ended March 3I, 20II, the Company was using pre-revised ScheduleVI of the Companies Act, I956 for the preparation and presentation of its financial statements. During the period ended June 30, 20I2, the Revised Schedule VI notified under the Companies Act, I956 has become applicable to the Company. The Company has reclassified the previous year figures to conform to this year's classification. The adoption of Revised Schedule VI does not impact recognition and measurement principles followed for the preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of the balance sheet.

Current year's accounts are prepared for the fifteen months period April I, 20II to June 30, 20I2. However, the Statement of profit and loss of the Company for the last year was for the year ended March 3I, 20II. Hence, current period's figures are not comparable with those of the previous period.


Mar 31, 2011

1. Nature of Operations

The Company is primarily engaged in the trading and manufacturing of Mobile handsets and accessories. The Company has plant at its facility in Baddi, in the state of Himachal Pradesh, for manufacturing of mobile handsets.

2. Segment Information

Primary segments: Business Segments

During the current year, the Company is primarily engaged in telecommunications– Mobile business which represents the business of trading and manufacturing of mobile handsets and accessories.

In the last year, the Company was also engaged in Information Technology business which represented the business of manufacturing, trading, installation/erection and networking of computer hardware including maintenance and servicing thereof. During the year, as there is no activity in this segment and there are insignificant assets and liabilities related to this segment, the said business has been merged with mobiles business.

Secondary Segments: Geographical Segment

The analysis of geographical segment is based on geographical location of the customers.

Secondary Segment Reporting (by Geographical Segments)

3. Related parties :

List of related parties (As certified by the management)

Relation Name of the related party

Ultimate Holding Company : Spice Global Investments Private Limited (w.e.f. July 11, 2009, till December 31, 2009)

Holding Company : Spice Televentures Private Ltd. (till Dec 31,2009)

Spice Global Investments Private Limited (w.e.f. Jan 1, 2010 pursuant to Scheme of Amalgamation)

Subsidiaries including step down subsidiaries and enterprises where there is control.

: Spice Digital Limited

Hindustan Retail Private Limited

Kimaan Exports Private Limited (w.e.f. December 24, 2010)

Spice Retail Limited (Subsidiary of Hindustan Retail Private Limited)

Spice Distribution Limited (Subsidiary of Hindustan Retail Private Limited)

Spice Labs Pvt. Ltd. (Subsidiary of Spice Digital Limited)

Cellucom Retail India Private Limited (Subsidiary of Spice Retail Limited)

Mobisoc Technology Private Limited (Subsidiary of Spice Digital Limited)

Spice Mobile VAS Pte. Ltd. (Subsidiary of Spice Digital Limited)

Spice VAS (Africa) Pte. Ltd. (Subsidiary of Spice Mobile VAS Pte. Limited)

Spice Digital Nigeria Limited (Subsidiary of Spice VAS (Africa) Pte. Limited.)

Beoworld Sdn. Bhd (w.e.f. December 2, 2010) (Subsidiary of Spice Mobile VAS Pte. Limited.)

Spice VAS Uganda Ltd. (w.e.f. November 11, 2010) (Subsidiary of Spice VAS (Africa) Pte. Limited.)

Spice VAS Kenya Ltd. (w.e.f. March 31, 2011) (Subsidiary of Spice VAS (Africa) Pte. Limited.)

Fellow Subsidiaries : IO System Limited

Mudaliar & Sons Hotels Private Limited

Kimaan Exports Private Limited (Till December 24, 2010)

Spice Innovative Technologies Pvt. Ltd.

Spice Solar Technology Pvt. Ltd.

Spice Internet Service Provider Pvt. Ltd.

Spice Wimax Service Provider Pvt. Ltd.

Spice Investments & Finance Advisors Pvt. Ltd.

Spice Enfotainment Limited

Wall Street Finance Limited

Goldman Securities Pvt. Ltd.

Bharat Towers Private Limited

Spice Commodities Private Limited

Spice Stock Broking Private Limited

Spice Insurance Services Private Limited

Nutshell Technology Private Limited

Spice Solar Technology Rajasthan Private Ltd. (w.e.f. April 9, 2010)

Spice Online Retail Private Limited (w.e.f. December 20, 2010)

M Pictures Distribution Ltd. (till April 12, 2010)

G M Modi Hospitals Corporation Pvt Ltd

Harjas Logic Systems Private Limited

Individual having significant influence over the Company

: Mr. Dilip Modi Mrs. Veena Modi

Key Management Personnel (KMP) and their relatives

: Mr. Kunal Ahooja– CEO

Ms. Preeti Malhotra– Executive Director

Mr. Subramanian Murali – Group President, Finance

Mrs. Usha Murali (Wife of Mr. Subramanian Murali)

Enterprises over which individuals having significant influence over the Company is able to exercise significant influence

: Tuberose Investments Pvt. Ltd.

Spice i2i Limited (Formly Media Ring)

VCorp Mercantile Pvt Ltd

Prospective Infrastructures Pvt Ltd

Plus Paper Foodpac Ltd.

Duro International Rubber Pvt Ltd.

Plus Pac Holding Private Limited

Superior Information Technology Private Limited

Gcorp FZE– Sharjah

Ridh International FZE– Sharjah

Shenzhen Shibashi Catering Management Co.Ltd.

Spice Global Holding Pte Ltd.

Mcorp Investments Pte Ltd.

Spice Global Pte Ltd.

Spice Circle Pte Ltd.

Hollywood Travels & Tours Pte Ltd.

Spice Bulls Pte Ltd.

Spice Studio Pte Ltd.

Spice Investment Services Pte Ltd.

Spice Telnet Pte Ltd.

Innovative Management Pte Ltd.

Silvergram Ltd. ( A BVI Company)

Scorp Investments Ltd. ( A BVI Company)

Melodist Holdings Ltd. ( A BVI Company)

4. Amalgamation

a. Pursuant to the Scheme of Amalgamation ["the Scheme"] U/s 391/394 of the Companies Act 1956, Spice Televentures Private Limited (Transferor Company), the erstwhile Holding Company of the Company, stands merged with the Company w.e.f. January 01, 2010 ["the appointed date"] in terms of the Orders dated November 2, 2010 and October 8, 2010 of the Hon'ble High Courts of judicature at Allahabad and New Delhi respectively, sanctioning the Scheme and is effective from November 4, 2010. With effect from the appointed date, all the business undertaking, assets, liabilities, rights and obligations of the Transferor Company stood transferred to and vested in the Company.

c. In terms of the said Scheme, 163,448,285 equity shares of Rs.3 each aggregating to Rs. 490,345 thousand have been allotted to the equity shareholders of the Transferor Company in the ratio of 791 equity shares of Rs.3/– of the Company for 100 equity shares of the Transferor Company held by the shareholders of Transferor Company at face value.

d. All the equity shares of the Company as were held by the Transferor Company ("Trust Shares") have not been cancelled but have been transferred to and vested in two separate trusts, ("Independent Non– Promoter Trusts") as follows:

i) 1,19,04,314 equity shares of the face value of Rs. 3 each (cost of Rs 126,052 thousand) to the Independent Non– Promoter (Spice Employee Benefit) Trust, to have and hold such trust shares, in trust together with all additions or accretions thereto, exclusively for the benefit of the employees of the Transferor Company (or its successors) and its associates and subsidiaries; and

ii) 3,53,01,215 equity shares of the face value of Rs. 3 each (cost of Rs 373,799 thousand) to the Independent Non– Promoter Trust to have and hold such trust shares, in trust together with all additions or accretions thereto, exclusively for the benefit of the Transferor Company and its successors.

iii) As at March 31, 2011, the Trusts are still holding these shares. Further, the Employee Benefit Trust is yet to devise an employee benefit plan to give the benefit of the Trust shares to the employees.

e. Pursuant to the Scheme, an amount of Rs 4,282,816 thousand lying to the credit of Securities Premium Account in the books of the Transferor Company has been transferred to the General Reserves of the Company as free reserves, with effect from Jan 1, 2010.

f. The difference of Rs 469,681 thousand between the face value of equity shares allotted to the equity shareholders of the Transferor Company and the face value of equity shares of the Transferor Company of Rs. 20,664 thousand has been adjusted from the general reserves of the Company.

g. In terms of the Scheme, the Authorised Share Capital of the Transferor Company of Rs 120,000 thousand has merged with Authorised Share Capital of the Company.

h. As per the Scheme, during the period between Appointed Date and Effective Date, the Transferor Company has carried out the existing business in "trust" on behalf of the Company. Further, all profit or incomes earned and losses and expenses incurred by the Transferor Company during such period for all purposes is the profits or income or expenditure or losses of the Company. Accordingly, net losses after tax of Rs. 80,092 thousand incurred by the Transferor Company during the period from January 1, 2010 to March 31, 2010 have been shown in the financial statements of the Company of the current year.

i. Dividend amounting to Rs. 70,813 thousand paid to erstwhile holding company Spice Televentures Private Limited (STPL), has been reversed during the year, as the same has merged with the Company w.e.f the appointed date i.e. January 1, 2010 pursuant to the Scheme of Amalgamation.

j. The title deeds for leasehold, licenses, agreements, loan documents, etc of Spice Televentures Private Limited have been transferred/are in the process of being transferred in the name of the Company.

k. The audit /limited review of the accounts of the Transferor Company for the year ended March 31, 2010 and period ended December 31, 2009 was carried out by the previous statutory auditors i.e. Gupta, Garg & Agarwal. The Company has merged the accounts of the Transferor Company with the accounts of the Company w.e.f. January 1, 2010 i.e. the appointed date based on the accounts audited/reviewed by the previous auditors.

4. Leases

a) Assets taken under Operating Leases

Office premises and office equipments are obtained on operating lease. There are no contingent rents in the lease agreements. The lease terms are for 1–3 years and renewable by mutual agreement of both the parties. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements. There are no subleases and all the leases are cancellable in nature except for lease of one warehouse where there is a lock in period of three years.

b) Assets given on Operating Leases

The Company has given some portion of factory building at Baddi in the state of Himachal Pradesh on operating lease. The initial lease terms are for 3 years and renewable at the option of the lessee for a maximum renewal period of 6 years. There are no restrictions imposed by lease agreement and there are no contingent rents.

c) A sum of Rs.8,587 thousand (previous year Rs.7,434 thousand) on account of unamortized foreign exchange premium on outstanding forward exchange contracts is being carried forward to be charged to Profit and Loss Account of the subsequent period.

5. Capital commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 137,835 thousand (net of advances) [Previous year Nil].

6. i) In the opinion of the management, the decline in the market value of quoted investments by Rs. 2,415 thousand in the share capital of Spice Jet Limited at the year end is temporary and hence does not call for any provision there–against.

ii) The Company has an investment of Rs 68,060 thousand in the equity shares of Plus Paper Foodpac Limited (PPFL). As per the audited financial statements of PPFL for the year ended June 30, 2010, the value of one equity share as per net asset value is Rs 13.26; however, the Company has made the investments @ Rs 20 per share. The said company has earned profit during the financial years ended 31st March 2007, 31st March 2008 and 30th June 2010.

iii) The Company has invested a sum of Rs 1,358,137 thousand (including share application money of Rs 132,750 thousand) in the equity shares of some of the subsidiaries. Further, the Company has receivables by way of loans, debtors and advances of Rs 2,831,073 thousand from these companies. As per the latest audited financial statements of these subsidiaries, accumulated losses of these subsidiaries have resulted in erosion of their net worth fully / substantially.

These being long term investments and also in view of the projected profitable operations of the above companies and / or fair value of the companies as at March 31, 2011, management is of the view that the diminution in the value of these investments is temporary in nature and hence no provision is required to be made against the investments made, loans given and outstanding receivables.

7. Provisions and Contingencies

7.1 Provision for Warranty

A provision is recognized for expected warranty claims on products sold during last fourteen months, based on past experience of level of customer service expenses. It is expected that most of these payments would be made in the next financial year. Assumptions used to calculate the provision for warranties were based on past trend of sales of mobile handsets and customer service expenses incurred.

7.2 Contingent Liabilities (excluding interest, wherever applicable) not provided for in respect of:

(Amt. in Rs '000)

Year ended Year ended

March 31, 2011 March 31, 2010

(i) Various Sales Tax Demands being disputed by the Company. 15,563* 5,642*

(ii) Penalty under Foreign Trade (Development and Regulation) Act, 1992, 40,860* – on account of non fulfilment of export obligation being disputed by the Company.

(iii) Demand raised by the Excise Authorities being disputed by the Company. 66,263* 66,263* The Company has deposited Rs 2,000 thousand (Previous year Rs 2000 thousand) under protest and the same has been included in the Schedule of Loans and Advances.

(iv) Various other claims against the Company not acknowledged as debts. 4,380* –

* As per the management, the Company has fair chances of success in all these cases and hence no provision in respect thereof has been made in the books.

8. Details of employee benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summaries the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the gratuity plans.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

9. Exceptional item of Rs 94,898 thousand represents the profit on sale of 35,818,763 equity shares of the face value of Rs 10 each of Spice Distribution Limited, a 100% subsidiary of the Company, to Hindustan Retails Private Limited, another 100% subsidiary of the Company in view of internal restructuring of the Company.

10. The asset of Rs. 8,978 thousand (net of Rs.51,007 thousand utilised during the year) recognized by the Company as 'MAT Credit Entitlement' under 'Loans and Advances', in respect of MAT payment by Spice Televentures Private Limited, amalgamated with the Company w.e.f. the appointed date January 1, 2010, for the year 2009–10, represents that portion of MAT liability which can be recovered and set off in subsequent years based on the provisions of Section 115JAA of the Income Tax Act, 1961. The management based on the present trend of profitability and also the future profitability projections, is of the view that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilize MAT credit assets.

11. The Company has entered into a brand licensing agreement with licensed owner of the Brand, pursuant to which certain expenses promoting the brand like sponsorship of major tournaments, TV commercial and Media spends etc. have been agreed to be undertaken by said licensor. Accordingly an amount of Rs. 286,701 thousand spent by the Company in brand promotion exercise during the six months ended September 30, 2010 has been recovered from the said licensor by debiting his accounts. With effect from October 1, 2010, such expenses have been borne directly by the licensor.

12. Previous year comparatives

i) Previous year's figures have been regrouped where necessary to conform to current year's classification.

ii) The accounts for the current year include figures of the amalgamated company "Spice Televentures Private Ltd.". Accordingly, the current year figures are not strictly comparable with those of previous year.


Mar 31, 2010

1. Nature of Operations

The Company is primarily engaged in the trading and manufacturing of Mobile handset and accessories. During the year, the Company has set up a plant at its facility in Baddi, in the state of Himachal Pradesh, for manufacturing of mobile handsets.

2. Segment Information

Primary segments: Business Segments

The Company is engaged in the Telecommunications – Mobiles business and Information Technology business. Telecommunications–Mobiles segment represents the business of trading / manufacturing of mobile handsets and Information Technology business represents the business of manufacturing, trading, installation/erection and networking of computer hardware including maintenance and servicing thereof.

Secondary Segments: Geographical Segment

The analysis of geographical segment is based on geographical location of the customers.

Note: The Company has common assets for producing goods for Domestic Market and Overseas Markets. Hence, separate figures for assets/ additions to fixed assets cannot be furnished.

3. Merger

The Board of Directors of the Company approved amalgamation of Spice Televenture Private Limited, its holding company, with the Company in the meeting held on January 30, 2010. Pursuant to this approval, the Company has on 15th April 2010, fi led with Honourable High Court at Allahabad (U.P.), a scheme of amalgamation entailing merger of the holding company with the Company. As per the said scheme, with effect from the Appointed Date i.e. January 01, 2010, the undertaking of the holding company, pursuant to the provisions contained in Sections 391 to 394 and other applicable provisions of the Companies Act 1956, shall stand transferred to and vested in the Company on a going concern basis without any further act, deed or matter. However, the amalgamation shall be effective from the date offi ling of the certified copy of the Order of the Honourable High Court with Registrar of Companies of Uttar Pradesh and Uttranchal. Pending the approval of the said High Court, the effect of the amalgamation has not been given.

4. Leases

a) Assets taken under Operating Leases

Office premises and office equipments are obtained on operating lease. There are no contingent rents in the lease agreements. The lease terms are for 1–3 years and renewable by mutual agreement of both the parties. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements. There are no subleases and all the leases are cancellable in nature.

5. c) A sum of Rs.7,434 thousand (previous period Rs.3,230 thousand) on account of unamortized foreign exchange premium on outstanding forward exchange contracts is being carried forward to be charged to Profit and Loss Account of subsequent period.

6. Advances recoverable in cash or in kind or for value to be received as shown under Schedule 12 to the financial statements include Rs. 24,436 thousand (Previous period Rs. 26,044 thousand) receivable from a company with whom a binding sale agreement has been entered into for sale/transfer of some of the assets/liabilities of the IT Business.

7. Capital commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. Nil (net of advances) [Previous period Rs. 581 thousand].

8. The Company has an investment of Rs 68,060 thousand in the equity shares of Plus Paper Foodpac Limited (PPFL). As per the latest provisional financial statements of PPFL as certified by the management, the value of one equity share as per net asset value is Rs 13.98; however, the Company has made the investments @ Rs 20 per share. The said company has earned profit during the financial years ended 31st March 2007, 31st March 2008 and 31st March 2010. This being long term investment and also in view of the projected profi table operations of the Company, the management is of the view that the diminution in the value of this investment is temporary in nature and hence no provision is required to be made there against.

9. Provisions and Contingencies

9.1 Provision for Warranty

A provision is recognized for expected warranty claims on products sold during last one year, based on past experience of level of customer service expenses. It is expected that most of these payments would be made in the next financial year. Assumptions used to calculate the provision for warranties were based on past trend of sales of mobile handsets and customer service expenses incurred.

9.2 Contingent Liabilities (excluding interest, wherever applicable) not provided for in respect of:

(Amt. in Rs 000)

Year ended Period ended

March 31, 2010 March 31, 2009

(i) Various Sales Tax Demands for the assessment periods 5,642* 5,573*

1991-92 to 2004-05 being disputed by the Company.

(ii) Demand raised by the Excise Authorities being disputed 66,263* 66,263*

by the Company. The Company has deposited Rs 2,000 thousand (Previous period Rs Nil) under protest and the same has been included in the Schedule of Loans and Advances.

(iii) Various other claims against the Company not acknowledged - 2,810* as debts.

* As per the management, the Company has fair chances of success in all these cases and hence no provision in respect thereof is made in the books.

10. Details of employee benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summaries the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the gratuity plans.

Notes:

a. The actuarial valuation has been done from the year 2006–07 in accordance with the revised Accounting Standard 15, Employee benefi ts. Prior to that, the Actuarial valuation was done in accordance with the pre–revised Accounting Standard 15, Employee benefits. Accordingly, comparative numbers have been disclosed since the date of adoption.

b. Information relating to experience adjustments to plan assets and liabilities as required by Para 120 (n) (ii) of the Accounting Standard 15 (Revised) on Employee Benefits for earlier two periods is not available with the Company.

c. The Company has never had any obligation towards the provident fund trust except for the contributions due to the trust. Pending issuance of the Guidance Note from the Actuarial Society of India, the Companys actuary has expressed his inability to reliably measure the Provident Fund liability. Accordingly, no additional disclosures as required by paragraph 120 of AS 15 (revised 2005) have been furnished.

Note: As the liabilities for gratuity and leave encashment are provided on an actuarial basis for the Company as a whole, the amounts pertaining to the Manager / Whole Time Director are not included above.

Notes:

(1) As there are large numbers of items of IT peripheral and spare parts and spares parts of mobile handsets and there are no individual items accounting for 10 per cent or more of the value, the quantitative details in respect thereof have not been furnished.

(2) Purchase of mobile handsets are net of 26,030 units (Previous period 31,948 units) issued for warranty consumption.

(3) *Sales in value terms is included under the same of mobile handsets, being given under various schemes.

11. Previous period comparatives

i) Previous periods figures have been regrouped where necessary to conform to current periods classifi cation.

ii) The accounts for the current period have been prepared for 12 months and are not comparable with the previous period accounts prepared for 15 months.`

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