q) Provisions, Contingent Liabilities and Contingent Assets
Provisions: A provision is recognized when an enterprise has a present obligation as a result of past event and 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 their present values and are determined based on management estimates of the obligation required to settle at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.
Provision for warranties: The estimated liability for product warranties is recognised when products are sold. These estimates are established using historical information based on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures. The timing of outflows will vary as and when warranty claim will arise. The company accounts for the provision for warranties on the basis of information available to the management duly taking into account the current and past technical estimates.
Contingent Liabilities: Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of future events not wholly within the control of the Company.
When there is an obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent assets: Contingent assets are not disclosed in the financial statement unless an inflow of economic benefit is probable.
r) Cash and Cash Equivalents
Cash and Cash Equivalents in the balance sheet comprise cash at banks, cash in hand, term deposits, and fixed deposits kept as security/ margin money for more than 3 months but less than 12 months. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash in hand, bank balances in current accounts and bank deposits, as defined above, as they are considered an integral part of the Company's cash
management. The deposits maintained by the Company with banks comprise of deposits, which can be withdrawn by the Company at any point without prior notice or penalty on the principal.
s) Government Grants and Production Linked Incentives
Government grants: Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Where the grant relates to an asset the cost of the asset is shown at gross value and grant thereon is treated as capital grant. The capital grant will be recognised as income in the statement of profit and loss over the period and in proportion in which depreciation is charged. Revenue grants are recognised in the statement of profit and loss in the same period as the related cost, which they are intended to compensate are accounted for.'
Production Linked Incentive: Production Linked Incentives are recognised as income when, on the basis of the judgment of the management and based on the supporting data, as per which the mangement of the company feels that the company fulfils the eligibility conditions as per the approval letter. Accordingly, as per the judgment of management the incentive income has been recognised as same is fully recoverable.
t) Impairment of Assets
The Management periodically assesses, using external and internal sources, whether there is an indication that an asset may be impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount is the higher of the asset's net selling price or value in use, which means the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairment loss for an asset is reversed if, and only if, the reversal can be related objectively to an event occurring after the impairment loss was recognized. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
u) Research and Development Expenditure
Research and development expenditure that do not meet the criteria for the recognition of
intangible assets are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
v) Subsequent Expenditure
Subsequent expenditure is recognised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably.
w) Cash Flow Statement
Cash flows are reported using the indirect method as per Accounting Standard 3, Cash Flow Statements, whereby profit for the period is adjusted for the
effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from the operating, investing and financing activities of the company are segregated. The company considers all highly liquid investments that are readily convertible to known amounts of cash to be cash equivalents.
x) Investment in subsidiary
The company has invested in three subsidiaries which are carried in the books of accounts at cost. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognized in the Statement of Profit and Loss.
A. During last year, the Company has came up with an Initial Public Offering (IPO) of 40,75,200 equity shares of ' 10/-each issued at a premium of ' 102 per equity share. The Equity Shares of the Company got listed and admitted to the dealings on the NSE Emerge platform w.e.f. 13-10-2022. The purpose of IPO has been to finance the costs towards setting up a manufacturing facility at Sector 80, Noida. The funds received have mainly been utilized towards the IPO expenses and the cost of the project. The amount deposited with NSE has been refunded by NSE during the year, and such amount has been utilized for the project. Details of the funds received from IPO and its utilization as on the balance sheet date is as given below -
33. Government Grant/ Production Linked Incentives
During the financial year 2022-23, the Company has got the approval under Production Linked Incentive (PLI) Scheme to promote Telecom and Networking products manufacturing in India vide approval letter PLI/GSCV/OUT/17203/M4 dated 31-Oct-2022 wherein the Company is eligible for the incentives as a certain percentage of its Sales of eligible products subject to the fulfilment of the eligibility conditions as mentioned in the approval letter. This is valid for Financial Year 2022-23 to Financial year 2026-27. Against the amount of ' 214.87 lakhs receivable on 31st March 2023, the company has received amount of ' 211.61 lakhs during the year 2023-24.
As per the management, on the basis of the figures pertaining to the Sales Turnover and Investment made by the Company, the Company has also fulfilled the eligibility conditions for Financial Year 2023-24 and is eligible to claim the incentive for the same. Accordingly it has recognized amount of ' 276.27 lakhs,the incentive income based on the calculation of eligible amount of incentives as per the approval letter. The Company is regular in filing the quarterly returns to the concerned authority and filing of claim application before the Department of Telecommunication is under process.
34. Leases
Operating lease: Company as lessee
The Company entered into operating leases for office premises, rentals for which are charged to the statement of profit and loss for the year. These leases are not non cancellable and have an average life of between one to five years with renewal option included in the contracts at the option of the lessee. There are no restrictions placed upon the Company by entering into these leases. There is no contingent rent recognised in the P&L.
Lease rentals recognised in the statement of profit and loss during the period ended 31st March, 2024 is ' 48.23 lakhs (March 31, 2023: ' 171.34 lakhs).
Future minimum rentals payable under non-cancellable operating leases are as follows:
39. Corporate Social Responsibility (CSR)
The Company has constituted Corporate Social Responsibility Committee in accordance with the provisions of Section 135 of the Companies Act. The average net profits of the Company for the last three financial years 2020-2021,20212022 and 2022-2023 was ' 1653.05 lakhs calculated in accordance with the provisions of Section 198 read with other applicable provisions of the Companies Act 2013. Further, as per the requirement under Section 135 of the Companies Act 2013, at least 2% of the average net profits amounting to ' 33.06 lakhs were to be contributed for carrying out Corporate Social Responsibility activities. The CSR expenditure that the company overspent in previous years amounting to ' 2.94 lakhs has been carried forward to next financial year. During the year 2023-24, the company has spent a sum of ' 36.00 lakhs towards education development and the CSR committee is in the process of identifying the activities to discharge its CSR obligation.
Purpose to Section 135 of the companies Act, 2013, the details are as follows:-
1. Gross amount required to be spent during the year 2023-24'33.06 lakhs (previous year 2022-23'20.92 lakhs)
2. Amount spent during the year on:
40. Segment Reporting
As the Company collectively operates only in one business segment i.e. 'manufacturing and installation of in-building coverage solutions and mobile network accessories for mobile service providers and operators. There is no other Business or Geographical segment which fulfils the criteria of 10% or more of combined Revenue, thus Segment Reporting under Accounting Standard 17 'Segment Reporting' is not applicable to the Company.
A. Pursuant to the sanction of the scheme of merger or amalgamation, Shiva Profiles Private Limited (SPPL, the transferor company) is merged with the Frog Cellsat Limited (the transferee company) vide order dated 10th March 2023 by the Regional Director and the appointed date of 1st April 2021. SPPL was a wholly owned subsidiary of Frog Cellsat Limited and was engaged in manufacturing and trading of tele equipment and apart from that providing cellular services and other applications. The effect of the merger of SPPL with Frog Cellsat Limited has been accounted for under the pooling of interest method referred to in Accounting Standard 14, Accounting for Amalgamation.
44. Other Statutory Compliance
(i) No proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
(ii) There are no transactions with the companies whose names are struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956 during the year ended 31 March 2024.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
(vi) The company is not declared as a wilful defaulter by any bank or financial institution or any other lender.
(vii) The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.
(viii) The Company has utilised the borrowed funds for the purposes for which the fund is obtained.
(ix) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entities, including foreign entities ("Intermediaries"), with the understanding that the intermediary shall whether directly or indirectly lend or invest in other persons or entities identified in any manner by or on behalf of the company (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of ultimate beneficiaries;
(x) No funds have been received by the company from any person(s) or entities including foreign entities ("Funding Parties") with the understanding that such company shall whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (ultimate beneficiaries) or provide guarantee, security or the like on behalf of the Ultimate beneficiaries.
45. Previous year Figures
Previous year figures have been regrouped / reclassified, where necessary, to conform to this year's classification.
46. Legal Proceedings
The company has initiated legal proceedings against various parties for recovery of dues and such legal proceedings are pending at different stages as at the Balance sheet and are expected to materialize in recovering the dues in the future. Based on the review of these accounts by the management, adequate provision has been made for doubtful recovery. Management is hopeful for their recovery. In the opinion of the Management adequate balance is lying in General Reserve / Retained earnings to meet the eventuality of such accounts being irrecoverable.
47. Subsequent Event
Based on the evaluation, the Company is not aware of any subsequent events or transactions, that would require recognition or disclosure in the financial statements.
48. Employee Benefits
The company has made provisions for the employees benefits in accordance with the Accounting Standard (AS) - 15 "Employee Benefits". During the year , the company has recognised the following amounts in its financial statements:
b Defined Benefits Plan Gratuity
The Company provides gratuity benefit to employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on death/retirement/termination is the employee's last drawn basic salary per month computed proportionately for 15 days multiplied for the number of years of completed service. The gratuity plan is a unfunded plan. The Company has provided a provision of ' 167.37 lakhs at the end of the year (Previous year ' 137.98 lakhs) towards gratuity.
Leave Encashment
All employees will be entitled for 15 days of AL in a leave calendar year from the time they join the organization. If not availed, the balance number of annual leaves at the end of the year will be carried forward and added to the next year's AL balance. The maximum number of annual leave days that can be accumulated in a particular year will be 30. A separate actuarial valuation is carried out for which recognizes each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The Company has provided a provision of ' 12.48 lakhs (Previous year ' 3.01 lakhs) towards leave salary.
51.1 Reasons for variations more than 25% as compared to previous year
1 The decrease in current assets was due to a decrease in cash and cash equivalents, while the increase in current liabilities was a result of short-term borrowing (Cash Credit) taken during the year, leading to variance.
2 There was no debt at the end of the last financial year, and the company borrowed cash credit (short-term loan) for the current financial year.
3 Though the Average shareholder's Equity is increased for the FY 2023-24, reduction in the profit for the year as compared to previous year resulted in the variance.
4 Change in the trade payable turnover ratio is due to the better payable management by the company during the current financial year.
For Singhi Chugh and Kumar For and on behalf of the Board of Directors of
Chartered Accountants Frog Cellsat Limited
Firm Registration No. 013613N
Sd Sd Sd
Harsh Kumar Konark Trivedi Satish Bhanu Trivedi
Partner Director Director
Membership No.: 088123 DIN: 00537897 DIN: 02037127
Place: New Delhi Place: London Place: Noida
Date: 09-05-2024 Date: 09-05-2024 Date: 09-05-2024
Sd Sd
Charan Jeet Kalra Manisha Makhija
CFO Company Secretary
Place: Noida Place: Noida
Date: 09-05-2024 Date: 09-05-2024
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