1 iStreet Network Ltd is a public limited company and listed on BSE stock Exchange (ISTRNETWK - 524622). The company is an Internet & Retail Catalogue company and sells products and services through its Internet Retail Stores known as 'iStreet Bazaar'. iStreet Bazaar - the Internet Retail Store is a physical store in a neighborhood area which runs on virtual inventory. Common people who have constraints in buying products online, can do so at these stores.
iStreet Bazaar Stores solves issues like - price, access, experience and assortments. It puts a face to the online transaction which increases the level of trust that is important particularly in Indian scenario.
The Company has setup 5,756 such Internet Retail Stores across the India. The network of Internet Retail Stores is a backbone intangible asset for the company to run the business. The network is much more than just shops, it gives to customer eCommerce shopping experience based on trust and familiarity relationship. It is integral to the customer's experience in dealing with the company.
Typically, research shows that there are four business models - Asset Builders, Service Providers, Technology Creators and Network Orchestrators. We are Network Orchestrators. What is a Network Orchestrator company? A Company, which creates a network of peers where in all participants interact and have share in the value creation in one way or the other. They may sell products or services, build relationships, share advice, give reviews, collaborate, co-create, and more.
Network Orchestrators rely on intangibles such as knowledge or relationships or other people's assets as well as new “non-management" and “non-ownership" competencies related to facilitating a network of individuals and their individual assets and relationships.
2 Significant Accounting Policies
(a) Basis of Preparation of Financial Statement
The financial statements are prepared under historical cost convention on the accrual basis and in accordance with the mandatory accounting standards prescribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Institute of Chartered Accountants of India to the extent applicable.
All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of current - noncurrent classification of assets and liabilities.
(b) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosure relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expenses during the reporting period.
Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
(c) Fixed Assets
(i) Tangible Fixed Assets are stated at the cost of acquisition less accumulated depreciation. Cost includes inward freight, duties, finance costs incurred during the Pre-operative period and other expenses incidental to acquisition and installation of assets.
(ii) Capital work in progress is valued at cost incurred regarding pre-operative/installation period.
(iii) Intangible assets are stated at cost less accumulated amortization and net of impairments, if any. An intangible asset is recognized if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Company and its cost can be measured reliably, in lines with AS -26 issued by the ICAI .
(d) Depreciation and Amortization
(i) The company has adopted useful lives of the assets method as provided in Part C of Schedule II of the Companies Act 2013 and depreciated the assets on pro-rata basis over the useful lives of the assets.
(ii) Intangible assets having finite useful lives are amortized on a straight-line basis over next 4 years, from the year during which it was incurred.
(e) Investments
(i) Investments that are readily realizable and are 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 long term investments. However, the part of long term investments which is expected to be realized within 12 months after the reporting date is also presented under 'current assets' as "current portion of long term investments" in consonance with the current/non-current classification. Current investments are carried at the lower of cost and fair value of each investment individually. Long term investments are stated at cost less provisions, if any, for permanent diminution in value of such investments.
(ii) On Disposal of Investment, gain/(loss) is recognized on FIFO basis.
(f) Foreign Currency Transactions
Foreign currency transactions are recorded into Indian rupees by applying to the foreign currency amount the exchange rate between Indian rupees and the foreign currency on/or closely approximating to the date of the transaction. Monetary assets and liabilities denominated in foreign currencies as at the Balance Sheet date are translated into Indian rupees at the closing exchange rates on that date. The resultant exchange differences are recognized in the Statement of Profit and Loss.
(g) Inventories
(i) Stock in Trade is valued at the lower of cost or market value.
(h) Retirement Benefit
Gratuity: Liabilities in respect of gratuity to Employees were covered under the Group Gratuity Scheme of Life Insurance Corporation of India and premium thereof charged to revenue.
(i) Borrowing Cost
Borrowing costs incurred in relation to the acquisition, construction of assets are capitalized as the part of the cost of such assets up to the date when such assets are ready for intended use. Other borrowing costs are charged as an expense in the year in which these are incurred.
(j) Revenue Recognition
(i) Sales are stated net of trade discounts, sales return, sales tax and all such sales generating expenses charges by various eCommerce platforms.
(ii) Activation Fees is recognized on accrual basis.
(k) Taxes on Income
(i) 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.
(ii) Deferred tax is recognized, subject to consideration of prudence on timing difference, being the difference between the taxable and accounting income/expenditure that originate in one year and are capable of reversal in one or more subsequent year(s). Deferred tax assets are not recognized unless there is virtual certainty that sufficient future taxable income will be available, against which such deferred tax asset will realize.
(iii) Minimum Alternative Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the ICAI, the said asset is created by way of a credit to the Profit and Loss account and shown as MAT Credit Entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.
(l) Earnings Per Share
Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the profit after tax by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value which is the average market value of the outstanding shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.
(m) Provisions, Contingent Liabilities And Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statement.
(v) Rights, preferences and restrictions in respect of equity shares issued by the Company
The Equity shareholders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 2013.
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