NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016 1. General Information Info Edge (India) Ltd (the Company) is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed in two stock exchanges in India. The Company was converted to a public limited company and its name was changed to Info Edge (India) Limited with effect from April 27, 2006. 2. Significant Accounting Policies 2.1 Basis of Preparation of Financial Statements These financial statements have been brpared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to section 133 of the Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rules, 2014, till the standards of accounting or any addendum thereto are brscribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been brpared to comply in all material aspects with the accounting standards notified under Section 211(3C) [Companies (Accounting Standards) Rule, 2006, as amended] and other relevant provisions of the Companies Act, 2013. All assets and liabilities have been classified as current or non-current as per the Company's operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of services and the time between the rendering of service and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current-non current classification of assets and liabilities. 2.2 Fixed Assets Tangible Assets are stated at cost of acquisition along with related taxes, duties and incidental expenses related to these assets, net of accumulated debrciation and accumulated impairment losses, if any. Intangible assets are stated at their cost of acquisition, net of accumulated amortisation and accumulated impairment losses, if any. Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its brviously assessed standard of performance. Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realisable value and are shown separately in the financial statements. Any expected loss is recognised immediately in the Statement of Profit and Loss. Losses arising from the retirement of, and gains or losses arising from disposal of fixed assets which are carried at cost are recognised in the Statement of Profit and Loss. 2.3 Debrciation and amortisation Tangible Assets Debrciation is provided on a pro-rata basis on the straight line method over the estimated useful lives of assets, based on internal assessment and independent technical evaluation done by Management expert which are equal to, except in case of Plant and Machinery, Furniture and Fixtures and Vehicles where useful life is lower than life brscribed under Schedule II to the Companies Act, 2013, in order to reflect the actual usage of the assets. Assets Estimated useful life (Years) Building 60 Computers 3 Plant and Machinery 10 Furniture and Fixtures 8 Office Equipment 5 Vehicles 6 Leasehold land and leasehold improvements are amortized over the lease period or useful lives of the related assets whichever is lower Intangible Assets Intangible Assets are amortised under straight line Method over the estimated useful lives of the assets, which are as follows: Assets Estimated useful life (Years) Enterprise resource planning software 5 Operating and Marketing rights 5 Other software licenses 3 Assets costing less than or equal to Rs. 5,000 are fully debrciated 0 100% pro-rata from date of acquisition 2.4 Impairment of Assets Assessment is done at each balance sheet date as to whether there is any indication that an asset (tangible and intangible) may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset/cash generating unit is made. Recoverable amount is higher of an asset's or cash generating unit's net selling price and its value in use. Value in use is the brsent value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. For the purpose of assessing impairment, the recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. The smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets, is considered as a cash generating unit (CGU). An asset or CGU whose carrying value exceeds its recoverable amount is considered impaired and is written down to its recoverable amount. Assessment is also done at each balance sheet date as to whether there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased. 2.5 Investments Investments that are readily realisable and are intended to be held for not more than one year from the date, on which such investment are made, are classified as current investments. All other investments are classified as long term investments. Current investments are carried at cost or fair value, whichever is lower Long-term investments are carried at cost. However, provision for diminution is made to recognise a decline, other than temporary, in the value of investments, such reduction being determined and made for such investment individually. 2.6 Foreign Currency Transactions Initial Recognition On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Subsequent Recognition As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. All non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. All monetary assets and liabilities in foreign currency are restated at the end of accounting period. Exchange differences on restatement of all other monetary items are recognized in the Statement of Profit and Loss. Translation of foreign operations Foreign operations are classified as 'integral' operation. The financial statements of an integral foreign operation are translated using the principles and procedures as if the transactions of the foreign operation are those of the Company itself. 2.7 Revenue Recognition The Company earns revenue significantly from the following sources viz. a) Recruitment solutions through its career web site, Naukri.com:- Revenue is received primarily in the form of fees, which is recognized prorata over the subscription / advertising agreement, usually ranging between one to twelve months. b) Matrimonial web site, Jeevansathi.com Real Estate website, 99acres.com and Education classified website, Shiksha.com:- Revenue is received in primarily the form of subscription fees, which is recognized over the period of subscription / advertising agreement, usually ranging between one to twelve months. c) Placement search division, Quadrangle:- Revenue is received in the form of fees, for placements at various levels in a client's organization. Revenue is booked on the successful completion of the search and selection activity. d) Real Estate broking division:- Commission income on property bookings placed with builders/developers is accrued once the related services have been rendered by the Company. e) Resume Sales Service:- The revenue from Resume Sale Services is earned in the form of fees and is recognized on completion of the related service. Revenue in relation to rendering of the services mentioned in (a) & (b) above are measured under the proportionate completion method and rendering of the services mentioned in (c) to (e) above are measured under the completed service contract method. In respect of a) and b) above, the unaccrued amounts are reflected in the Balance sheet as Income received in advance (deferred sales revenue). All the above sources of revenue are shown net of service tax and is not recognized in instances where there is uncertainty with regard to ultimate collection. In such cases revenue is recognized on reasonable certainty of collection. 2.8 Other Income Interest Income Interest income is recognized on a time proportion basis taking into account the amount outstanding at the rate applicable and where no significant uncertainty as to measurability or collectability exists. Dividend Dividend from investments is recognized when the right to receive the payment is established and when no significant uncertainty as to measurability or collectability exists. 2.9 Employee Benefits The Company has Defined Contribution plan for the post-employment benefits namely Provident Fund which is administered through the Regional Provident Fund Commissioner and the contributions towards such fund are charged to the Statement of Profit and Loss. The Company's contribution to state plans namely Employee State Insurance Fund are also charged to the Statement of Profit and Loss. The Company does not carry any further obligations with respect to these funds, apart from contributions made on a monthly basis. The Company has Defined Benefit plan namely gratuity for eligible employees in accordance with the Payment of Gratuity Act, 1972 the liability for which is determined on the basis of an actuarial valuation (using the Projected Unit Credit method) at the end of each year The Gratuity Fund is recognized by the income tax authorities and is administered through Life Insurance Corporation of India under its Group Gratuity Scheme. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss as income or expense. Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end. Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the year are treated as other long term employee benefits. The Company's liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the Statement of Profit and Loss in the year in which they arise. Termination benefits are recognized as an expense immediately. 2.10 Employee Stock Option Based Compensation Stock options granted to the employees and till March 31, 2014 to the non-executive Directors who accepted the grant under the Company's Stock Option Plan are accounted for as per the accounting treatment brscribed by the Guidance Note on Employee Share-based Payments issued by the Institute of Chartered Accountants of India as required by the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. The intrinsic value of the option being excess of market value of the underlying share immediately prior to date of grant over its exercise price is recognized as deferred employee compensation with a credit to employee stock option outstanding account. The deferred employee compensation is charged to Statement of Profit and Loss on straight line basis over the vesting period of the option. The options that lapse are reversed by a credit to employee compensation expense, equal to the amortised portion of value of lapsed portion and credit to deferred employee compensation expense equal to the un-amortised portion. 2.11 Taxes on Income Tax expense for the year, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the year Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws brvailing in the respective jurisdictions. Deferred tax is recognized for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets. Deferred tax assets are recognized and carried forward only to the extent there is a reasonable/virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis. 2.12 Provisions and Contingent Liabilities Provisions are recognized when there is a brsent obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the brsent obligation at the Balance Sheet date and are not discounted to its brsent value. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a brsent obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. 2.13 Leases a) Operating leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease payments under an operating leases are recognised as an expense in the Statement of Profit and Loss on a straight line basis over the period of lease. b) Finance leases Assets acquired on lease where the Company has substantially all the risks and rewards incident to ownership are classified as finance leases. Such assets are capitalized at the inception of the lease at lower of the fair value of the leased asset at the inception of the lease and the brsent value of minimum lease payments and a liability is created for an equivalent amount. Each lease payment is apportioned between the finance charge and the reduction of the outstanding liability. The outstanding liabilities included in other long term borrowings. The finance charge is charged to the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. 2.14 Segment Reporting The accounting policies adopted for segment reporting are in conformity with the accounting policies for the Company. Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relates to the Company as a whole and are not allocable to segments on a reasonable basis, have been included under unallocated expenses/income. 2.15 Cash and cash equivalents In the cash flow statement, cash and cash equivalents include cash in hand and demand deposits with bank with original maturities of three months or less. 2.16 Earnings Per Share (EPS) Basic EPS is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Earnings considered in ascertaining the Company's EPS comprises of the net profit for the year after tax. The number of equity shares used in computing Basic EPS is the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year and for the brvious year is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholder and weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares. For the purpose of calculating basic EPS, shares allotted to ESOP trust pursuant to the employee share based payment plan are not included in the shares outstanding till the employees have exercised their right to obtain shares, after fulfilling the requisite vesting conditions. Till such time, the shares so allotted are considered as dilutive potential equity shares for the purpose of calculating diluted EPS. 2.17 Use of Estimates The brparation of financial statements in conformity with accounting principles generally accepted in India requires the Management to make estimates and assumptions that affect the reported amount of assets and liabilities as at the Balance Sheet date, reported amount of revenue and expenses for the year and disclosures of contingent liabilities as at the Balance Sheet date. The estimates and assumptions used in the accompanying financial statements are based upon Management's evaluation of the relevant facts and circumstances as at the date of the financial statements. Actual results could differ from these estimates. 1. During the year, the Company has issued 500,000 (Previous year- 300,000) and 200,000 (Previous year - 600,000) equity shares of Rs. 10/-(Previous year Rs. 10/-) each fully paid up at Rs. 10/- (Previous year Rs. 10/-) per share and Rs.100 (Previous year Rs. 250/-) per share respectively to Info Edge Employees Stock Option Plan Trust, which have been duly listed in the respective Stock Exchanges, ranking pari passu with the existing equity shares of the Company. Out of the above, dividend of Rs. 0.40 Mn (Previous year Rs. 0.90 Mn) was paid on 200,000 (Prevoius year 6000,000)equity shares for which no dividend was proposed as on March 31, 2015, since shares were issued subsequent to that date, ranking pari passu with the existing equity shares of the Company and were entitled to such dividends and corporate benefits. 2. During the year ended March 31, 2015 , the Company had issued 10,135,135 equity shares of Rs. 10/- each fully paid up at Rs. 740/- per share (including securities brmium of Rs. 730/- per share) to qualified institutional buyers on September 12, 2014 pursuant to Qualified Institutional Placement (QIP) document, dated September 10th, 2014, as per provisions of section 42 of Companies Act, 2013 read with rule 14 of the Companies (Prospectus and Allotment of Securities) Rules 2014, and Chapter VIII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 which have been listed in the respective Stock Exchanges on September 16, 2014. 3. During the year a) the Company has transferred its enitre shareholding (i.e. 34,711 equity shares & 532,216 brference shares) (Previous year Nil) of Canvera Digital Technologies Private Limited to its subsidiary Smartweb Internet Services Limited at book value amounting to Rs. 243.78 Mn (Previous year Nil) b) the Company has transferred its enitre shareholding (i.e. 275 equity shares & 6,635 brf shares) (Previous year Nil) of Happily Unmarried Marketing Private Limited to its wholly owned subsidiary Startup Investment (Holding) Limited at book value amounting to Rs. 113.49 Mn (Previous year Nil) c) the Company has transferred 13,429 equity shares & 249,974,932 brference share (Previous year Nil) of Applect Learning Systems Private Limited to its wholly owned subsidiary Startup Investment (Holding) Limited at book value amounting to Rs. 919.54 Mn.(Previous year Nil) d) the Company has transferred 34,651 brference shares (Previous year Nil) of Kinobeo Software Private Limited to its wholly owned subsidiary Startup Investment (Holding) Limited at book value amounting to Rs. 135 Mn.(Previous year Nil) e) the Company has transferred 1000 brference shares (Previous year Nil) of Smartweb Internet Services Limited to its wholly owned subsidiary Startup Investment (Holding) Limited at book value amounting to Rs. 0.01 Mn (Previous year Nil) The above transfers, which are duly approved by Audit Committee and Board of Directors, have been made in line with the decision of the Company about creating a corporate structure where under the Company's investments are to be transferred to and held by the different wholly owned subsidiaries of the Company which will ensure that the stakeholders are adequately appraised about each of these investments in a focused & timely manner. Further this segregation of main business of the Company from the cluster of investments held by the Company will result into effective communication about its entire portfolio to its stakeholders. 4. Previous year figures have been regrouped/rearranged to confirm to the current year classification. For Price Waterhouse & Co Bangalore LLP Registration Number: 007567S/S-200012 Chartered Accountants Abhishek Rara Partner Membership Number 077779 For and on behalf of the Board of Directors Hitesh Oberoi Managing Director Chintan Thakkar Director & CFO M.M. Jain Company Secretary Place : Noida Date : May 25, 2016 |