Notes to Financial Statements 1. CORPORATE INFORMATION Just Dial Limited ('the Company') was incorporated in India with limited liability by shares on December 20,1993. The equity shares of the Company are listed on The National Stock Exchange of India Limited, the BSE Limited and MCX Stock Exchange Limited. The Company provides local search and related services to users in India through multiple platforms such as the internet, mobile internet, overthetelephone (voice) andtext (SMS). 2. BASIS OF brPARATION The financial statements of the Company have been brpared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has brpared these financial statements to comply in all material respects with the accounting standards notified under sectionl33 the Companies Act, 2013, read togetheralong with paragraph 7 of the Companies (Accounts Rule) 2014. The financial statements have been brpared on an accrual basis and under the historical cost convention. The accounting policies adopted in the brparation of financial statementsare consistent with those of brvious year except for change in accounting policy explained below. 3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES 3.1 Change in accounting policy Employee stock compensation cost Till October 27, 2014, the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, dealt with the grant of share-based payments to employees. Among other matter, these guidelines brscribed accounting for grant of share-based payments to employees. Hence, the company being a listed entity was required to comply with these Guidelines as well as the Guidance Note on Accounting for Employee Share-based Payments with regard to accounting for employee share-based payments. Particularly, in case of conflict between the two requirements, the SEBI guidelines were brvailing over the ICAI Guidance Note. From October 28, 2014, the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 have been replaced by the SEBI (Share Based Employee Benefits) Regulations, 2014.The new regulations don't contain any specific accounting treatment ;rather, they require ICAI Guidance Note to be followed. Consequent to the application of the new regulations, the company has changed its accounting for equity settled option expiring unexercised after vesting in line with accounting brscribed in the Guidance Note, i.e., expense is not reversed through the statement of profit and loss. The management has decided to apply the revised accounting policy prospectively from the date of notification of new regulation, i.e 0ctober28, 2014. Since there are no equity settled options expiring unexercised after October 28, 2014, the change in accounting policy did not have any material impact on financial statements of the company for the current year. However due to application of the regulation, the manner of brsentation of "Employee Stock Option Outstanding Account" under the head "Reserves and Surplus" has changed. The company has changed this brsentation for the current as well as brvious year. 3.2 Change in accounting estimate Debrciation on fixed assets Effective from April 1, 2014, the Company has recomputed the debrciation based on the useful life of the assets as brscribed in Schedule II of the Companies Act, 2013. Due to this change in useful life the debrciation charge for assets having exhausted their useful life as at April 1, 2014, of Rs. 9,257,739 (net of deferred tax of Rs. 6,111,034) has been recognised in the opening balance of surplus in the statement of profit and loss in accordance with transitional provisions of Schedule II of the Companies Act, 2013. These rates are based on evaluation of useful life estimated by the management. As a result of this change in useful life of the assets, the debrciation charge for the year ended March 31, 2015 is higher by Rs. 33,132,75l(March 31, 2014: Rs. Nil). 3.3 Use of estimates The brparation of financial statements in conformity with generally accepted accounting principles requires management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent liabilities as at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. 3.4 Tangible fixed assets Fixed assets are stated at cost, net of accumulated debrciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition forthe intended use. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its brviously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred. Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised. 3.5 Debrciation on tangible fixed asset. Premium on leasehold land is amortized on a straight line basis over the period of 99 years of lease. Debrciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management. 3.6 Impairment The company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating units (CGU) net selling price and its value in use. 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 groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their brsent value using a br-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. 3.7 Intangible assets I ntangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost, net of accumulated amortisation and accumulated impairment losses, ifany. Research and Development Cost Research costs are expensed as incurred. Development expenditure incurred on an internally generated intangible assets are recognized as an intangible asset, when the Company can demonstrate all the following: (i) The technical feasibility of completing the intangible asset so that it will be available for use or sale; (ii) Its intention to complete the asset; (iii) Its ability to use or sell the asset; (iv) That the asset will generate future economic benefits; (v) The availability of adequate resources to complete the development and to use or sell the asset; and (vi) The ability to reliably measure the expenditure attributable to the intangible asset during its development. Following the initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. Intangible assets are amortised on a straight line basis over the estimated useful economic life. The Company uses a rebuttable brsumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use. If the persuasive evidence exists to the affect that useful life of an intangible asset exceeds ten years, the Company amortises the intangible asset over the best estimate of its useful life. Such intangible assets and intangible assets not yet available for use are tested for impairment annually, either individually or at the cash-generating unit level. All other intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired. The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, and otherwise when events or changes in circumstances indicate that the carrying value may not be recoverable. The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from brvious estimates, the amortisation period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortisation method is changed to reflect the changed pattern. Such changes are accounted for in accordance with Accounting standard 5: Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognized. A summary of amortisation policies applied to the Company's intangible assets is as below: Goodwill Goodwill is amortised on a straight line basis over a period of five years. Carrying value of goodwill is reviewed for impairment annually and otherwise when events or changes in circumstances indicate that the goodwill may be impaired. Software Application software acquired by the Company which provide long term benefits to the Company are capitalized at cost and amortised equally over a period of 5 years being the estimated useful life. Website development costs Website development costs are amortised on a straight line basis over a period offive years being the estimated useful life. Unique telephone numbers Unique telephone numbers are amortised on a straight line basis over a period offive years being the estimated useful life. Application development Application development cost capitalized are amortized on a straight line basis over the period of 3 years being the estimated useful life of the asset 3.8 Leases Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term. 3.9 Corporate Social Responsibility (CSR) Expenditure CSR spend are charged to the statement of profit and loss as an expense in the period they are incurred. 3.10 Borrowing costs Borrowing cost includes interest, amortisation of ancillary costs incurred in connection with the arrangement of borrowings. All other borrowing cost are expensed in the period they occurred. 3.11 Investments Investments that are readily realisable and intended to be held for not more than a year from the date on which such investments are made, are classified as current investments. All other investments are classified as long term investments. On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties, as applicable. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long term investments are carried at cost unless otherwise stated. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss. 3.12 Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. 3.12.1 Income from Services Sale of Search related services Revenues from tenure based contracts are recognised pro-rata over the contract period and from lead based contracts when leads are provided to the customer. Search plus services Transaction service fee and commission income on search plus services is recognised in the period in which services are rendered or delivered. Other Operating revenue Other Operating revenue comprises revenue from reseller providing data collection services to the Company and Sale of Review and Rating Certification Services Revenue from resellers constitutes a one-time registration fee and an annual fee. The one-time registration fee is recognised when the contract with reseller is entered into and the annual fee is recognised on a prorata basis over the period of the contract. Revenues from sale of review and rating certification services are recognised at the time of issuance of the document to the customer 3.12.2 Interest Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. 3.12.3 Dividends Revenue is recognised when the shareholders' right to receive payment is established by the balance sheet date. 3.12.4 Service charges Revenue from service charges is recognised upon rendering of services. 3.13 Foreign currency translation 3.13.1 Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currencyat the date of the transaction. 3.13.2 Conversion Foreign currency monetary items are retranslated using the exchange rate brvailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined. 3.13.3 Exchange Differences Exchange differences arising on the settlement of monetary items or on reporting such monetary items of the Company at rates different from those, at which they were initially recorded during the year, or reported in brvious financial statements, are recognised as income or as expenses in the year in which they arise. 3.14 Retirement and other employee benefits Retirement benefit in the form of provident fund is a defined contribution scheme. The company has no obligation, other than the contribution payable to the provident fund. The company recognizes contribution payable to the provident fund scheme as an expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset Gratuity liability are defined benefit obligations and are provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year. Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company brsents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred 3.15 Income Taxes Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the yearand reversal oftiming differencesofearlieryears. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed debrciation or carry forward tax losses , all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. In situations where the company has carry forward tax losses on account of long term capital losses (which can be set-off only against the income arising under the head 'Capital gains'), deferred tax assets arising on such losses are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available under the head 'Capital gains' against which the loss can be set-off. At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority. 3.16 Employee Stock Compensation Cost Employees (including senior executives) of the company receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions). In accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014and the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the intrinsic value method. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the company's best estimate of the number of equity instruments that will ultimately vest. The expense or credit recognized in the statement of profit and loss for a period rebrsents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense. 3.17 Segment Reporting Policies The Company's activities are currently carried out in India and all the services provided by the Company fall in a single business segment of providing local search and related services. As there are no separate reportable primary and secondary segments, the disclosures required by Accounting Standard 17 -hence there are no separate disclosures on reportable Segments in the financial statements. 3.18 Earnings per Share Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting brference dividends and related attributable taxes) by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. 3.19 Provisions A provision is recognised when an enterprise has a brsent obligation as a result of past event;it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its brsent value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. 3.20 Contingent liabilities. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a brsent obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements. 3.21 Cash and Cash equivalents Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity ofthree months or less. 35. ACQUISITION OF BANGALORE LAND During the year ended March 31, 2015, the Company obtained the possession of 15 acres of leasehold land for 99 years from Karnataka Industrial Area Development Board (KIADB) to establish an IT/ITES BPO and Software development Centre at IT/ITES Park, Devanahalli Industrial Area in Bangalore and paid total consideration of Rs. 375,007,500 The Company is in process of execution of Leasehold land agreement and brparing the Project plan for the above project. Accordingly capital commitments in Note 28, does not include any amount towards this project. Further, the Company is required to comply with various conditions for the above project including time limit for beginning and completion of construction and utilisation of land. 36. ACQUISITION OF JUST DIAL INC. DELAWARE, UNITED STATES OF AMERICA During the year in October 2014, the Company has acquired entire shareholding in Just Dial Inc. Delaware, United States of America, from Just Dial Global Private Limited for a consideration of USD 72,385 (Rs. 4,467,964). Just Dial Inc is engaged in the business of providing necessary administrative support services for making available infrastructure, bill collection, database procurement and advertising activities to Just Dial Limited to enable it to serve the customer in the US. 37. EVENTS SUBSEQUENT TO MARCH 31, 2015 a) Subsequent to the year end on May 27, 2015 the compensation committee granted 117,660 options to employees under ESOP scheme 2014 and ESOP Scheme 2013 ( May 15). b) Subsequent to the year ended March 31, 2015, the Company has purchased office brmises at Mumbai at a consideration of Rs. 90,000,000from MrV. S. S. Mani (Managing Director and Chief executive officer) and Mrs Anita Mani (Director). 1. Previous year figures have been regrouped/ reclassified, whenever necessary to conform to current year classification. As per our report of even date Just Dial Limited For and on behalf of the board of directors of For S. R. Batliboi & Associates LLP ICAI Firm registration number: 101049W Chartered Accountants V. S. S. Mani Managing Director and Chief Executive Officer DIN:00202052 RamaniIyer Whole Time Director DIN:00033559 per Govind Ahuja Partner Membership no. 48966 Ramkumar Krishnamachari ChiefFinancial Officer Sachin Jain Company Secretary Date : May29, 2015 Place:Mumbai |