1. Corporate information
Quick Heal Technologies Private Limited the Company is a private limited Company domiciled in India and incorporated in August 1995 under the provisions of the Companies Act 1956 The Company is engaged in the business of providing Internet Security solutions The Company caters to both domestic and international market The CIN number of the Company is U72200MH1995PTC091408
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 principle generally accepted in India including the accounting standards notified under the Companies Act 1956 read with general circular no82014 dated April 4 2014 issued by the Ministry of Corporate Affairs The financial statements have been brpared on an accrual basis under the historical cost convention
The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year
2.1 Summary of significant accounting policies
(a) Use of estimates
The brparation of the financial statements in conformity with Indian GAAP requires the management to make judgments estimates and assumptions that affect the reported amounts of revenue expenses assets and liabilities and disclosure of contingent liabilities at the end of reporting period Although these estimates are based on the managements 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
(b) Tangible fixed assets
Tangible 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 for the intended use Any trade discounts and rebates are deducted in arriving at the purchase price Capital workinprogress includes cost of fixed assets that are not ready to be put to 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 daytoday 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 recognized in the statement of profit and loss when the asset is derecognized
(c) Debrciation on tangible fixed assets
Debrciation on fixed assets is calculated on a written down value WDV basis using the rates arrived at based on the useful lives estimated by the management or those brscribed under the Schedule XIV to the Companies Act 1956 whichever is higher The Company has used the following rates to provide debrciation on its fixed assets
| Rates WDV | Schedule XIV Rates WDV |
Buildings | 500 | 500 |
Computers | 4000 | 4000 |
Office equipment | 1391 | 1391 |
Electrical installation | 2000 | 1391 |
Furniture and fixtures | 1810 | 1810 |
Vehicles | 2589 | 2589 |
Leasehold brmises are amortized on a straight line basis over the period of lease ie 30 years The assets whose acquisition cost is less than Rs. 5000 are debrciated fully in the year of acquisition
(d) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost Following initial recognition intangible assets are carried at cost less accumulated amortization and accumulated impairment losses if any
Intangible assets ie softwares are amortized on a straight line basis over the period of expected future benefits ie over their estimated useful lives of three years Such intangible assets and intangible assets not yet available for use are tested for impairment annually either individually or at the cashgenerating unit level All other intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired
The amortization period and the amortization 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 amortization period is changed accordingly If there has been a significant change in the expected pattern of economic benefits from the asset the amortization method is changed to reflect the changed pattern Such changes are accounted for in accordance with AS 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 recognized in the statement of profit and loss when the asset is derecognized
Research and development costs
Research costs are expensed as incurred Development expenditure incurred on an individual project is recognized as an intangible asset when the Company can demonstrate all the following
The technical feasibility of completing the intangible asset so that it will be available for use or sale
Its intention to complete the asset
Its ability to use or sell the asset
How the asset will generate future economic benefits
The availability of adequate resources to complete the development and to use or sell the asset
The ability to measure reliably the expenditure attributable to the intangible asset during 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 It is amortized on a straight line basis over the period of expected future benefit from the related project ie the estimated useful life Amortization is recognized in the statement of profit and loss During the period of development the asset is tested for impairment annually
A summary of the amortization policy applied to the Companys intangible assets is as below
| Rates SLM | Life years |
Computer software | 3333 | 3 |
(e) Impairment of tangible and intangible assets
The carrying amounts of assets are reviewed at each balance sheet if there is any indication of impairment based on internalexternal factors An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount The recoverable amount is the greater of the assets net selling price and value in use In assessing value in use the Company makes a reasonable estimate of value in use
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 assets recoverable amount An assets recoverable amount is the higher of an assets or cashgenerating 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 brtax 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 transactions can be identified an appropriate valuation model is used
The Company bases its impairment calculation on detailed budgets and forecast calculations which are brpared separately for each of the Companys cashgenerating units to which the individual assets are allocated These budgets and forecast calculations are generally covering a period of five years For longer periods a long term growth rate is calculated and applied to project future cash flows after the fifth year
An assessment is made at each reporting date as to whether there is any indication that brviously recognized impairment losses may no longer exist or may have decreased If such indication exists the Company estimates the assets or cashgenerating units recoverable amount A brviously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the assets recoverable amount since the last impairment loss was recognized The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount nor exceed the carrying amount that would have been determined net of debrciation had no impairment loss been recognized for the asset in prior years Such reversal is recognized in the statement of profit and loss unless the asset is carried at a revalued amount in which case the reversal is treated as a revaluation increase
(f) Leases
Where the Company is a lessee
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases Operating lease payments are recognized as an expense in the statement of profit and loss on a straightline basis over the lease term
(g) Investments
Investments which are readily realizable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments All other investments are classified as longterm 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
Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis Longterm investments are carried at cost However provision for diminution in value is made to recognize 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
(h) Inventories
Raw materials are valued at lower of cost and net realizable value However materials and other items held for use in the production of inventories is not written down below cost of the finished product in which they will be incorporated are expected to be sold at or above cost Cost of raw material is determined on a weighted average basis
Finished goods are valued at lower of cost and net realizable value Cost includes direct material and labour and a proportion of manufacturing overhead based on normal operating capacity Cost of finished goods includes excise duty whenever applicable Cost is determined on a weighted average basis
Traded goods are valued at lower of cost and net realizable value Cost included cost of purchase and other costs incurred in bringing the inventories to brsent location and condition Cost is determined on weighted average basis
Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale
(i) Revenue recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured The following specific recognition criteria must also be met before revenue is recognized
(i) Sale of internet security products
Revenue from sale of internet security products is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer usually on dispatch of the goods to its customers The Company collects sales taxes and value added taxes VAT on behalf of the government and therefore these are not economic benefits flowing to the Company Hence they are excluded from revenue Excise duty deducted from revenue gross is the amount that is included in the revenue gross and not the entire amount of liability arising during the year
(ii) Income from services
Revenues from support services are recognized as and when services are rendered The Company collects service tax on behalf of the government and therefore it is not an economic benefit flowing to the Company Hence it is excluded from revenue
(iii) Interest
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate of applicable interest rate Interest income is included under the head other income in the statement of profit and loss
(iv) Dividends
Dividend income is recognized when the Companys right to receive dividend is established by the reporting date Dividend income is included under the head other income in the statement of profit and loss
(j) Foreign currency translation
Foreign currency transactions and balances
(i) 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 currency at the date of the transaction
(ii) Conversion
Foreign currency monetary items are retranslated using the exchange rate brvailing at the reporting date Nonmonetary 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 Nonmonetary items are translated using the exchange rates at the date when the values were determined
(iii) Exchange differences
Exchange differences arising on conversion settlement of foreign currency monetary items are recognized as income or expenses in the year in which they arise
(k) 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 recognize contribution payable to the provident fund scheme as an expenditure when an employee renders the related services If the contribution payable to the scheme for services received before 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 contributions already paid exceeds the contribution due for services received before the balance sheet date then the excess recognized as an asset to the extent that the brpayment will lead to for example a reduction in future payment or cash refund
The Company operates a defined benefit plan for its employees viz gratuity The cost of providing benefits under the plan is determined on the basis of actuarial valuation at each yearend Actuarial valuation is carried out for the plan using the projected unit credit method Actuarial gain and losses for the defined benefit plan is recognized in full in the period in which it occurred in the statement of profit and loss
Accumulated leave which is expected to be utilized within the next twelve months is treated as shortterm 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 longterm employee benefit for measurement purposes Such longterm compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year end Actuarial gainslosses are immediately taken to the statement of profit and loss and are not deferred The Company brsents the leave as a current liability in the balance sheet to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date Where Company has the unconditional legal and contractual right to defer the settlement for a period beyond 12 months the same is brsented as noncurrent liability
(l) Income taxes
Tax expense comprises current and deferred tax Current incometax is measured at the amount expected to be paid to the tax authorities in accordance with the Incometax Act 1961 enacted in India The tax rates and tax laws used to compute the amount are those that are 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 reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years Deferred tax is measured using the tax rates and the tax laws 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 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
At each reporting date the Company reassesses unrecognized deferred tax assets It recognizes unrecognized deferred tax asset 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 reporting date The Company writesdown the carrying amount of 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 realized Any such writedown 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 tax liabilities relate to the same taxable entity and the same taxation authority
Minimum alternate tax MAT paid in a year is charged to the statement of profit and loss as current tax The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the period ie the period for which MAT credit is allowed to be carried forward In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Incometax Act 1961 the said asset is created by way of credit to the statement of profit and loss and shown as MAT Credit Entitlement The Company reviews the MAT credit entitlement asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period
(m) Employee stock compensation cost
Employees of the Company receive remuneration in the form of share based payment transactions whereby employees render services as consideration for equity instruments equitysettled transactions
In accordance with the Guidance Note on Accounting for Employee Sharebased Payments issued by Institute of Chartered Accountants of India ICAI the cost of equitysettled transactions is measured using the intrinsic value method and recognized together with a corresponding increase in the Stock options outstanding account in reserves The cumulative expense recognized for equitysettled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Companys 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
Where the terms of an equitysettled transaction award are modified the minimum expense recognized is the expense as if the terms had not been modified if the original terms of the award are met An additional expense is recognized for any modification that increase the total intrinsic value of the sharebased payment transaction or otherwise beneficial to the employee as measured at the date of modification
(n) Segment reporting
Identification of segments
The Companys operating businesses are organized and managed separately according to the nature of products and services provided with each segment rebrsenting a strategic business unit that offers different products and serves different markets The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate
(o) Earnings per share EPS
Basic earnings per share are calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue 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 for the year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares
(p) Provisions
A provision is recognized when the Company has 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 a reliable estimate can be made of the amount of the obligation Provisions are not discounted to its brsent value and are determined based on the best estimate required to settle the obligation at the reporting date These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates
Where the Company expects some or all of a provision to be reimbursed for example under an insurance contract the reimbursement is recognized as a separate assets but only when the reimbursement is virtually certain The expense relating to any provision is brsented in the statement of profit and loss net of any reimbursement
(q) Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future events beyond the control of the Company or a brsent obligation that is not recognized 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 recognized because it cannot be measured reliably The Company does not recognize a contingent liability but discloses its existence in the financial statements
(r) Cash and cash equivalents
Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short term investment with an original maturity period of three months or less
24. Gratuity
The Company has a defined benefit gratuity plan for its employees Under the gratuity plan every employee who has completed five years or more of service gets a gratuity on departure at 15 days of last drawn salary for each completed year of service The scheme is funded with an insurance Company in the form of a qualifying insurance policy
The following tables summarize the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the respective plans
Statement of profit and loss
Net employee benefit expense recognized in the employee cost
| Year ended March 31 2014 Rs. | Year ended March 31 2013 Rs. |
Current service cost | 4787477 | 3192276 |
Interest cost on benefit obligation | 1001231 | 880500 |
Expected return on plan assets | 775427 | 555970 |
Net actuarial lossgain recognized in the year | 472528 | 1463153 |
Past service cost | | |
Net benefit expense | 5485809 | 2053653 |
Actual return on plan assets | 833277 | 582822 |
Balance sheet
Benefit assetliability
| As at March 31 2014 Rs. | As at March 31 2013 Rs. |
Present value of defined benefit obligation | 18847536 | 12819162 |
Fair value of plan assets | 11033489 | 7031510 |
Plan assetliability | 7814047 | 5787652 |
Changes in the brsent value of the defined benefit obligation are as follows
| As at March 31 2014 Rs. | As at March 31 2013 Rs. |
Opening defined benefit obligation | 12819162 | 10534967 |
Interest cost | 1001231 | 880500 |
Current service cost | 4787477 | 3192276 |
Benefits paid | 290712 | 352280 |
Actuarial losses gains on obligation | 530378 | 1436301 |
Closing defined benefit obligation | 18847536 | 12819162 |
Changes in the fair value of plan assets are as follows
| As at March 31 2014 Rs. | As at March 31 2013 Rs. |
Opening fair value of plan assets | 7031510 | 5906204 |
Expected return | 775427 | 555970 |
Contributions by employer | 3459414 | 894764 |
Benefits paid | 290712 | 352280 |
Actuarial gains losses on plan assets | 57850 | 26852 |
Closing fair value of plan assets | 11033489 | 7031510 |
The Company expects to contribute Rs.7814047 to gratuity in the next year March 31 2013 Rs.5787652
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows
Nature of plan assets | March 31 2014 | March 31 2013 |
Investments with insurer | 100 | 100 |
The principal assumptions used in determining gratuity obligations for the Companys plan are shown below
| Year ended March 31 2014 | Year ended March 31 2013 |
| |
Discount rate | 910 | 790 |
Expected rate of return on plan assets | 900 | 900 |
Employee turnover | 1500 | 2000 |
Expected rate of increment in compensation levels | 900 | 900 |
The estimates of future salary increases considered in actuarial valuation take account of inflation seniority promotion and other relevant factors such as supply and demand in the employment market
The overall expected rate of return on assets is determined based on the market prices brvailing on that date applicable to the period over which the obligation is to be settled There has been no change in expected rate of return on assets
Amounts for the current and brvious periods are as follows
| As at March 31 2014 Rs. | As at March 31 2013 Rs. | As at March 31 2012 Rs. | As at March 31 2011 Rs. | As at March 31 2010 Rs. |
Defined benefit obligation | 18847536 | 12819162 | 10534967 | 7197899 | 5324635 |
Plan assets | 11033489 | 7031510 | 5906204 | 4261812 | 1851762 |
Surplus Deficit | 7814047 | 5787652 | 4628763 | 2936087 | 3472873 |
Experience adjustments on plan liabilities lossgain | 1844824 | 85635 | 215239 | 292072 | 288273 |
Experience adjustments on plan assets lossgain | 57850 | 26852 | 43179 | 47502 | 5196 |
25. Employee stock option plan
i. The Company has provided following sharebased payment schemes to its employees
Particulars | |
Date of grant | June 10 2010 and Feb 6 2014 |
Date of Board approval | June 10 2010 and Feb 6 2014 |
Date of Shareholders approval | June 10 2010 |
Number of options granted | 173118 net of forfeitures |
Method of settlement | Equity |
Vesting period | 4 years |
Exercise period | 5 Years from date of listing or date of vesting whichever is later |
Expected life | 528 –678 years to 357 650 years |
Fair value of shares on date of grant | 300 86519 |
Vesting conditions | Continued employment and performance of employee as per contract |
Note Pursuant to the bonus issue of shares during the year each option holder would be eligible to 8 equity shares of the Company on exercise of the options |
ii. The vesting pattern of scheme is as follows
Time Period from the Date of Grant | Cumulative Percentage of Share Vesting |
12 Months | 25 |
24 Months | 50 |
36 Months | 75 |
48 Months | 100 |
The details of activities under the scheme have been summarized below
| Year ended 2014 | Year ended 2013 |
Number of options | Weighted average exercise price Rs. | Number of options | Weighted average exercise price Rs. |
Outstanding at the beginning of the year | 172650 | 30000 | 177203 | 30000 |
Granted during the year | 13000 | 77000 | | |
Forfeited during the year | 12532 | 30000 | 4553 | 30000 |
Exercised during the year | | | | |
Expired during the year | | | | |
Outstanding at the end of the year | 173118 | 33529 | 172650 | |
Exercisable at the end of the year | | | | |
There was no exercise of options during the year
iii. The details of exercise price for stock options outstanding at the end of the year are
| As at March 31 2014 | As at March 31 2013 |
Exercise price Rs. | 300770 | 300 |
Number of options outstanding | 173118 | 172650 |
Weighted average remaining contractual life of options in years | 587 | 628 |
Weighted average exercise price Rs. | 33529 | 300 |
iv. Stock options granted
The weighted average fair value of stock options granted during the year was Rs. 35268 March 31 2013 not applicable since no options were granted During the brvious year the Company has not granted any options The Black and Scholes valuation model has been used for computing the weighted average fair value considering the following inputs
| March 31 2014 |
Weighted average share price Rs. | 86519 |
Exercise Price Rs. | 77000 |
Expected Volatility | 0 |
Historical Volatility | 0 |
Life of the options granted Vesting and exercise period in years | 357 – 650 years |
Average riskfree interest rate | 882 |
Dividend yield | 029 |
v. Effect of the employee sharebased payment plans on the statement of profit and loss and on its financial position
Compensation expense arising from equitysettled employee share based payment plans for the year ended March 31 2014 amounted to Rs. 95285 March 31 2013 Nil The liability for employee stock options outstanding as at March 31 2014 is Rs. 95285 March 31 2013 Nil
vi. Proforma disclosures by applying fair value method
The Company measures the cost of ESOP using the intrinsic value method as required by the Guidance Note on Accounting for Employee Sharebased Payments issued by the ICAI the impact on reported net profit and Earnings per Share by applying the fair value method is set out as follows
| Year ended |
March 31 2014 | March 31 2013 |
Profit after tax as reported | 615532406 | 775368660 |
Add Employee stock compensation under intrinsic value method | 95285 | |
Less Employee stock compensation under fair value method | 786743 | 2755746 |
Proforma profit after tax | 614840948 | 772612914 |
Earnings Per Share | | |
Basic | | |
As reported | 1008 | 1270 |
Pro forma | 1007 | 1265 |
Diluted | | |
As reported | 994 | 1251 |
Pro forma | 993 | 1247 |
26. Leases
Operating lease Company as lessee
The Company has obtained office brmises under operating lease agreements These are generally cancellable and are renewable by mutual consent on mutually agreed terms There are no restrictions imposed by lease arrangements There are no subleases The details are as follows
| Year ended March 31 2014 | Year ended March 31 2013 |
Lease rent recognized in statement of profit and loss | 15203586 | 15242771 |
27. Segment information
Primary segment
The Company is brdominantly engaged in providing Internet Security Solutions Based on similarity of activitiesproducts risk and reward structure organization structure and internal reporting systems the Company has structured its operations into one reportable business segment
Geographical segment
Secondary segment reporting is performed on basis of location of customers All business assets and liabilities of the Company except trade receivables are situated in India
Revenue from operations
| Year ended March 31 2014 | Year ended March 31 2013 |
Within India | 2371016511 | 2005608425 |
Outside India | 68025243 | 43239810 |
Total | 2439041754 | 2048848235 |
Allocable segments assets are as follows
Trade receivables
| As at March 31 2014 | As at March 31 2013 |
Within India | 665970280 | 751156275 |
Outside India | 36732233 | 21773698 |
Total | 702702513 | 772929973 |
Other assets and liabilities used in the Companys business or liabilities contracted cannot be identified to any geographical segment as they are used interchangeably between geographical segments and a meaningful segregation is not possible
28. Related party disclosures
i. Names of related parties and related party relationship
Related parties where control exists |
Wholly owned subsidiaries | i. Quick Heal Technologies America Inc ii. Quick Heal Technologies Japan KK iii. Quick Heal Technologies Africa Limited iv. Quick Heal Technologies MENA FZE |
|
|
Related parties with whom transactions have taken place during the reporting period |
Key management personnel | i. Kailash Katkar Joint Managing Director and Chief Executive Officer |
ii. Sanjay Katkar Joint Managing Director and Chief Technical Officer iii. Abhijit Jorvekar Executive Director and Vice President Sales and Marketing iv. Rajesh Ghonasgi Chief Financial Officer From September 2 2013 |
Relatives of key management personnel | i. Anupama Katkar Wife of Kailash Katkar |
ii. Chhaya Katkar Wife of Sanjay Katkar |
| |
Enterprises owned by directors or major shareholders | i. Kailash Sahebrao Katkar HUF ii. Sanjay Sahebrao Katkar HUF iii. Ripplewave Equity Private Limited |
ii. Transactions with related parties
| Name of the related party | Year ended |
March 31 2014 Rs. | March 31 2013 Rs. |
Remuneration paid | Kailash Katkar | 8540000 | 7127000 |
Sanjay Katkar | 8540000 | 7155800 |
Abhijit Jorvekar | 7704500 | 5972750 |
Anupama Katkar | 1853000 | 1376450 |
Rajesh Ghonasgi | 4413300 | |
| | 31050800 | 21632000 |
Rent paid | Kailash Katkar | 960000 | 960000 |
Anupama Katkar | 203843 | 185250 |
Chhaya Katkar | 203843 | 185250 |
Kailash Sahebrao Katkar HUF | 679520 | 617500 |
Sanjay Sahebrao Katkar HUF | 679520 | 617500 |
| | 2726726 | 2565500 |
Sale of internet security software | Quick Heal Technologies America Inc | 1490776 | 134531 |
Quick Heal Technologies Japan KK | 13003185 | 860636 |
Quick Heal Dubai MENA FZE | 591774 | |
Quick Heal Technologies Africa Ltd | 8382436 | |
| | 23468171 | 995167 |
Consultancy fees | Ripplewave Equity Private Limited | 202248 | |
| | 202248 | |
Investment | Quick Heal Technologies America Inc | | 1661973 |
Quick Heal Technologies Japan KK | 14317936 | 6882185 |
| Quick Heal Dubai MENA FZE | 6700000 | |
| Quick Heal Technologies Africa Limited | 10908854 | |
| | 31926790 | 8544158 |
iii. Balances outstanding
| Name of the related party | As at |
March 31 2014 Rs. | March 31 2013 Rs. |
Remuneration payable | Kailash Katkar | 491800 | 592250 |
Sanjay Katkar | 494000 | 592250 |
Abhijit Jorvekar | 388106 | 367000 |
Anupama Katkar | 122320 | 115000 |
| | 1496226 | 1666500 |
Rent payable receivable | Anupama Katkar | | 13275 |
Chhaya Katkar | | 13275 |
Kailash Sahebrao Katkar HUF | | 15750 |
Sanjay Sahebrao Katkar HUF | | 15750 |
| | | 4950 |
Trade receivable | Quick Heal Technologies America Inc Maximum Balance Outstanding 1584374 March 312013 131104 | 1584374 | 131104 |
Quick Heal Technologies Japan KK Maximum Balance Outstanding 13615115 March 312013 702525 | 13615115 | 702525 |
Quick Heal Dubai MENA FZE Maximum Balance Outstanding 591774 March 312013 Nil | 591774 | |
Quick Heal Technologies Africa Ltd Maximum Balance Outstanding 8211033 March 312013 Nil | 8211033 | |
| | 24002296 | 833629 |
Advances receivable Payable | Quick Heal Technologies Japan KK Maximum Balance Receivable 491923 March 312013 491923 | 486469 | 491923 |
Quick Heal Technologies Japan KK Maximum Balance Payable 156924 | 156924 | |
Quick Heal Dubai MENA FZE Maximum Balance Receivable 561465 | 561465 | |
Quick Heal Technologies Africa Ltd Maximum Balance Receivable 868267 | 868267 | |
| | 1759277 | 491923 |
Note 1 The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave benefits as they are determined on an actuarial basis for the Company as a whole Further the remuneration to key managerial personnel does not include employee stock compensation expense
29. Capital and other commitments
| As at March 31 2014 | As at March 31 2013 |
Estimated amount of contracts remaining to be executed on capital account and not provided | 61738973 | 39078064 |
For lease related commitment refer note 26
30. Contingent liabilities
| As at | As at |
| March 31 2014 | March 31 2013 |
Claims against the Company not acknowledged as debts | | |
Income Tax Note i Excise Act Note ii HP VAT Act Note iii | 3504300 | 15000 230633013 |
Total | 3504300 | 230648013 |
i. This rebrsents disputed income tax demand under section 156 of the Income tax Act 1961 related to AY 201011 The Company has filed appeals against assessment order with relevant authorities The management is confident that the matter would be decided in favour of the Company Consequently no provision has been made in the books of account in respect of such disputed income tax demands
ii. This rebrsents disputed excise duty demand arising from delay in filing of ER6 returns under Central Excise Rules
The Company has filed appeals against assessment order with relevant authorities The management is confident that the matter would be decided in favour of the Company Consequently no provision has been made in the books of account in respect of such disputed income tax demands in FY 1213
During the year the Company has received the order not in favour and hence paid the disputed amount and recognize the sum in the financial statement in July 2013
iii. In the brvious year the Company had received a demand of VAT in the State of Himachal Pradesh for 230633013 VAT 74641679 Penalty 149283357 and Interest 6707977 on the grounds of dispute in the valuation of the antivirus products purchased from third party vendors The Company had appealed the same before the first level appellate authority and the Management had rebrsented that they have sufficient and strong arguments on facts as well as on point of law Accordingly no provision had been made in the accounts and the demand was disclosed as contingent liability in the brvious year
During the year the Company has received the order in its favour and the amount is no longer required to be disclosed as contingent liability
31. Particulars of unhedged foreign currency exposures as at the balance sheet date
| As at March 31 2014 | As at March 31 2013 |
| In foreign currency | Conversion Rate | | In foreign currency | Conversion Rate |
Bank balances | 2976292 | 49806 | 5976USD | 1578207 | 29035 | 5436USD |
Cash balances | 132687 | 1615 | 8216EUR | 76838 | 1103 | 6966EUR |
77220 | 1292 | 5976USD | 139747 | 2571 | 5436USD |
60238 | 3704 | 1626AED | 15978 | 1080 | 1479AED |
70096 | 1269 | 5524AUD | | | |
132 | 25000 | 001IDR | | | |
39010 | 67122 | 058JPY | | | |
37 | 54 | 069KES | | | |
6831 | 373 | 1831MYR | | | |
370 | 8 | 4625SGD | | | |
1623 | 826 | 196THB | | | |
Trade receivables | 21696822 | 363078 | 5976USD | 21042225 | 387126 | 5436USD |
13456099 | 23152269 | 058JPY | 702525 | 1218203 | 058JPY |
591773 | 36383 | 1626AED | | | |
6014508 | 8861806 | 069 KES | | | |
502590 | 9096 | 5524AUD | | | |
Trade payables | 877678 | 14687 | 5976USD | 3278041 | 60308 | 5436USD |
276282 | 5000 | 5524AUD | | | |
Investments | 21200121 | 33900000 | 063JPY | 6882185 | 9900000 | 069JPY |
6700000 | 400000 | 1675AED | | | |
1661973 | 30000 | 5540USD | 1661973 | 30000 | 5540USD |
10908854 | 15300000 | 071KES | | | |
Advances receivablepayable | 486469 | 837008 | 058JPY | 491923 | 854033 | 058JPY |
156924 | 270000 | 058JPY | | | |
561465 | 34499 | 1626AED | | | |
| 868267 | 1278874 | 069KES | | | |
32. Details of dues to micro and small enterprises as defined under MSMED Act 2006
There are no amounts that need to be disclosed pertaining to Micro and Small Enterprises under Micro Small and Medium Enterprises Development Act 2006 MSMED Act 2006
As at March 31 2014 March 31 2013 Nil no supplier has intimated the Company about its status as Micro or Small enterprises or its registration with the appropriate authority under The Micro Small and Medium Enterprises Development Act 2006
33. Value of imports calculated on CIF basis
| Year ended March 31 2014 | Year ended March 31 2013 |
Internet security devices | | 3644209 |
Purchase of software | 84189835 | 54782550 |
Total | 84189835 | 58426759 |
34. Expenditure in foreign currency accrual basis
| Year ended March 31 2014 | Year ended March 31 2013 |
Books membership and subscription fees | 636525 | 850783 |
Advertisement and sales promotion expenses | 4273746 | 5357311 |
Technology subscription charges | 41971272 | 21345258 |
Fees for technical services | 2390619 | 8127311 |
Travelling and conveyance | 743407 | 786755 |
Other expenses | 93501 | 5435 |
Total | 50109070 | 36472853 |
35. Earnings in foreign currency accrual basis
| Year ended March 31 2014 | Year ended March 31 2013 |
Sale of internet security products | 67321014 | 43198860 |
Total | 67321014 | 43198860 |
36. Net dividend remitted in foreign exchange
Interim dividend
| Year ended March 31 2014 | Year ended March 31 2013 |
Period to which it relates | 201213 | 20112012 |
Number of nonresident shareholders | 1 | 1 |
Number of equity shares on which dividend was due | 312748 | 312748 |
Amount remitted USD | 1300234 | 849859 |
Amount remitted Rs. | 781870 | 469122 |
37. Exceptional item
i. During the year under audit an employee of the Company used his area of influence to approve sales invoices with differential pricing terms amounting to 11426650 to certain companies formed by him and his relatives and trade receivables amounting to 18371033 with respect to such companies were outstanding and provided for as at the year end On completion of internal investigation by the Company the employee was dismissed and appropriate legal action has been initiated by the management Further the Company has filed a legal claim amounting to 50000000 for losses including breach of trust and loss of goodwill Further the amount of Rs. 9489055 has been provided in the current year which has been disclosed as exceptional item
ii. During the year one of the distributor of the company has defaulted payments and the Company has initiated the legal proceeding The Company has provided 163792154 in the current year which has been disclosed as exceptional item
38. Previous year figures
Previous year figures have been regroupedreclassified where necessary to conform to this years classification
For SVGHATALIA and ASSOCIATES For and on behalf of the Board of Directors of
ICAI Firm registration no 103162W Quick Heal Technologies Private Limited
Chartered Accountants
Per Vaibhav Kumar Gupta Kailash Katkar Sanjay Katkar
Partner Joint Managing Director Joint Managing Director
Membership No 213935 and Chief Executive Officer and Chief Technical Officer
Place Rajesh Ghonasgi Vijay Shirode
Date Chief Financial Officer Company Secretary
Place
Date