Exhibit 99.1 

 

Smaaash Entertainment Private Limited 

Consolidated statement of financial position at September 30, 2018 

All amounts are in Rs. ’000 unless otherwise stated

 

Particulars Notes As at September 30, 2018 As at March 31, 2018
  Assets        
             
I Non-current assets      
  (a) Property, plant and equipment 6 3,313,187                   3,242,266
  (b) Capital work-in-progress 6 393,261                     182,669
  (c) Goodwill 7 13,604                         13,604
  (d) Other intangible assets 8 442,026                     505,623
  (e) Intangible assets under development 8 84,537                         48,992
  (f) Investments 9 5,785                           6,496
  (g) Other financial assets 10 203,315                     206,192
  (h) Deferred tax assets (net) 11 488,766                    488,766
  (i) Non-current tax assets (net) 12 24,499                         18,949
  (j) Other non-current assets 13 226,630                     149,590
  Total non-current assets                     5,195,610                   4,863,144
             
II Current assets      
  (a) Inventories 14                     193,512                     160,594
  (b) Investments 9                         —                         11,012
  (c) Trade receivables 15                     162,896                     177,947
  (d) Cash and bank balances 16                     48,131                     119,840
  (e) Loans 17                              2,803                              412
  (f) Other financial assets 10                         108,436                         87,295
  (g) Other current assets 13                     493,724                     408,331
  Total current assets                       1,009,502                     965,430
             
  Total assets                     6,205,111                   5,828,580
             
  Equity and liabilities      
  Capital and reserves      
  (a) Issued capital and share premium 18                   4,039,790                   3,653,881
  (b) Other reserves 19                         50,317                         65,206
  (c) Accumulated deficit 20                 (1,514,292)                 (1,283,496)
  Total equity                     2,575,815                    2,435,593
             
  Liabilities      
I Non-current liabilities      
  (a) Borrowings 21                   1,367,161                   1,360,980
  (b) Other financial liabilities 22                     111,139                     194,270
  (c) Provisions 23                           2,991                           2,327
  (d) Other non-current liabilities 24                           7,772                           8,024
  Total non-current liabilities                     1,489,063                   1,565,601
             
II Current liabilities      
  (a) Borrowings 21                     193,840                     205,535
  (b) Trade payables 25                     266,082                     228,616
  (c) Other financial liabilities 22                   150,936                   1,314,196
  (d) Provisions 23                           8,444                           9,015
  (e) Other current liabilities 24                         162,558                         70,019
  Total current liabilities                     2,140,230                    1,827,381
             
  Total equity and liabilities                     6,205,111                   5,828,580

 

 

 

 

Smaaash Entertainment Private Limited

Consolidated statement of profit and loss and other comprehensive income for six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

Particulars Notes For the six months ended September 30, 2018 For the year ended March 31, 2018
I Revenue from operations 26 1,198,063 1,746,459
II Product sales   129,932 378,466
III Other income 27 17,054 18,959
IV Total revenue           1,345,048         2,143,884
V Expenses      
  (a) Cost of material consumed 28  127,019  224,832
  (b) Purchase of stock-in-trade    139,728  304,951
  (c) Change in inventories of stock-in-trade 29    (35,598)    (46,131)
  (d) Employee benefit expense 30  190,995  385,306
  (e) Finance costs 31  192,679  433,184
  (f) Depreciation and amortization expense 6&7  342,843  553,552
  (g) Pre-launch expenses 32      13,202      36,991
  (h) Other expenses 33  539,009  816,983
  Total expenses           1,509,877         2,709,668
VI Loss before exceptional items and tax(IV - V)   (164,829) (565,785)
  Exceptional Items 34      — 26,813
VII Loss before tax   (164,829) (592,598)
VIII Tax expense      
  (1) Current tax 35      —      (2,091)
  (2) Deferred tax 35 (260,723)
  Total tax expense   (262,814)
IX Loss for the period from continuing operations (VII - VIII)   (164,829) (329,784)
X Loss from discontinued operations before tax 36     —    34
XI Tax expense of discontinued operations        —
XII Loss from discontinued operations after tax (X - XI)       —    34
XIII Loss for the period (IX + XII)   (164,829) (329,750)
XIV Other comprehensive income      
  A Items that will not be reclassified subsequently to profit or loss:      
    Remeasurements of the defined benefit plans            239
    Equity instruments through other comprehensive income          717
    Income tax relating to items that will not be reclassified subsequently to profit or loss 35   74 (74)
  B Items that may be reclassified subsequently to profit or loss:      
    Exchange differences on translating foreign subsidiary 19      2,038
  Total other comprehensive income          74    2,920
XV Total comprehensive income for the period (XIII + XIV)   (164,755) (326,830)
XVI Total comprehensive income for the period attributable to:      
    Owners of the Company   (164,755) (326,830)
    Non-controlling interests        —      —

 

See accompanying notes to the consolidated financial statements

 

 

 

 

Smaaash Entertainment Private Limited

Consolidated statement of cash flows for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated 

   Particulars  For the six months ended September 30, 2018  For the year ended March 31, 2018
       
A.  Cash flows from operating activities    
   Consolidated loss for the year    (164,829)  (329,750)
   Adjustments for:      
   Income tax expense recognized in profit or loss (continuing and discontinued operations)  —  (262,814)
   Loss on disposal of property, plant and equipment   2,430   455
   Provision for expected credit loss recognized on trade receivables       (2,275)       —
   Exceptional items       —       26,813
   Bad debts       —       —
   Provision for doubtful advances         —         1,551
   Depreciation and amortization of non-current assets   342,843   553,553
   Depreciation and amortization of non-current assets (Discontinued)         —         7,443
   Finance Charges   192,330   432,542
   Other interest expenses   349   642
   Net gain/(loss) arising on financial assets carried at FVTPL       636       (1,681)
   Net gain/(loss) arising on financial liabilities carried at amortized cost         —         9,028
   Net gain/(loss) arising on financial liabilities carried at amortized cost         —         6,869
   Unwinding of security deposits       (7,465)       (9,056)
   Sundry credit balances written back         —         2,655
   Lease rent adjustment         —         7,487
   Interest Income       (1,071)       (2,456)
   Remeasurements of the defined benefit plans- gains/(losses)   —   239
   Operating profit before working capital changes   362,948   443,520
   Movements in working capital:    
   Increase in trade and other receivables  (107,197)  (427,942)
   (Increase) / decrease in inventories     (32,918)     (90,620)
   (Increase) / decrease in trade receivables  15,050  (152,946)
   Increase / (decrease) in provisions         94         4,411
   Increase / (decrease) in trade payables       37,466       92,472
   Increase / (decrease) in other payables       92,506       (9,083)
   Increase / (decrease) in temporary overdrawn bank balance   173,556   990
   Cash generated from operations  541,504  (139,198)
   Income taxes paid       —       (3,879)
   Net cash generated by/(used in) operating activities  541,504  (143,077)
       
B.  Cash flows from investing activities    
   Net proceeds from investments in mutual funds and others       12,360       19,041
   Interest income         8,535         2,456
   Proceeds from sale of property, plant and equipments and intangibles         (2,430)         9,412
   Purchase of property, plant and equipments and intangibles  (826,405)  (2,182,344)
   Net cash generated by/(used in) investing activities  (807,938)  (2,151,435)
       
C.    Cash flows from financing activities    
   Interest paid  (170,780)  (534,181)
   Repayment of borrowings  (5,514)  (2,336,234)
   Proceeds of borrowings 3,211,081
   Issue of Share Capital   106,409   869,309
   Share premium received (net of share issue expenses) 279,500 1,036,809
   Increase / (decrease) Other reserves       14,890       34,039
   Net cash generated by/(used in) financing activities 194,724 2,280,823
       
   Net increase in cash and cash equivalents (A+B+C)     (71,710)     (13,689)
   Cash and cash equivalents at the beginning of the year   119,841   133,529
       
   Cash and cash equivalents at the end of the year   48,131   119,841
       
   Components of cash and cash equivalents    
   Cash / Cheques on hand         14,810         9,065
   With Banks -  on Current account/Balance in Cash Credit Accounts   33,321   110,775
       
      48,131   119,840
       

 

 

 

 

Smaaash Entertainment Private Limited

Consolidated statement of changes in equity for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

(a) Equity Share Capital    
Particulars Number of shares Equity share capital
     
 As at April 1, 2017 114,849,740 1,148,497
     
 Issue of shares 23,397,500 233,975
 As at March 31, 2018 138,247,240 1,382,472
     
 Issue of shares
 Conversion of optional convertible preference shares into equity shares
 As at September 30, 2018 138,247,240 1,382,472

 

 

(b) Compulsorily convertible preference shares    
Particulars Number of shares Preference share capital
 As at April 1, 2017
     
 Issue of shares
 As at March 31, 2018
     
 Issue of shares 10,640,966 106,410
 As at September 30, 2018 10,640,966 106,410

 

 

 

 

Smaaash Entertainment Private Limited

Consolidated statement of changes in equity for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

 (c) Other Equity

  Share application money pending allotment Reserves & Surplus Other comprehensive income Total
Securities premium reserve Foreign Currency Translation Reserve Contribution from promotors/ shareholders Accumulated deficit Reserve for equity instruments through other comprehensive income
 As at April 1, 2017 32,000 1,402,101 (17,089) 49,578 (1,283,495) 717 (183,811)
               
 Addition during the year 32,000 32,000
 utilized during the year towards share issue expenses (0)
 Created during the year  2,038 2,038
 Total comprehensive income for the year            
 -Loss for the year  (329,750) (329,750)
 -Other comprehensive income net of income tax 165 717 882
 As at March 31, 2018 64,000 1,402,101 (15,051) 49,578 (1,613,079) 1,433 111,018
               
 Addition during the year (32,000) 32,000
 utilized during the year towards share issue expenses (17,596) (17,596)
 Created during the year  17,827 17,827
 Total comprehensive income for the year            
 -Loss for the year  (164,829) (164,829)
 -Other comprehensive income net of income tax 74 74
 As at September 30, 2018 32,000 1,384,504 2,776 49,578 (1,777,834) 1,433 (307,542)

 

 

 

 

Notes to consolidated financial statements for the six months ended September 30, 2018

 

General information

 

Smaaash Entertainment Private Limited (’Smaaash’ or the ‘Company’) was incorporated as a private limited company in India on November 30, 2009. The Company is engaged in the business of operating entertainment centers. Smaaash presents a various range of games that offer a superlative virtual-reality experience and combines the best of sports, music and dining into a highly immersive, interactive, innovative and involved entertainment experience. The Company also involved in the Product sales i.e. sale of in-house developed games with the help of innovative ideas and cutting edge technology.

 

The address of its registered office is 2nd Floor, Trade wing building, Oasis complex, P B Marg, Lower Parel, Mumbai 400 013 and principal place of business is Mumbai, India.

 

Basis of preparation and significant accounting policies

 

1.Basis of preparation

 

The financial statements of the Company, entities controlled by the Company and its subsidiaries (together ‘the Group’) have been prepared in accordance with International Financial Reporting Standards (‘IFRS’).

 

The aforesaid consolidated financial statement have been prepared in Indian Rupee (INR) and denominated in Thousands.

 

1.1Historical cost convention

 

These consolidated financial statements have been prepared and presented on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.

 

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statement is determined on such a basis, except for leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in IAS 2 or value in use in IAS 36.

 

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

 

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3 inputs are unobservable inputs for the asset or liability.

 

1.2Classification of current/non-current assets and liabilities

 

The consolidated balance sheet presents current and non-current assets, and current and non-current liabilities, as separate classifications. For this purpose, an asset is classified as current if:

 

It is expected to be realized, or is intended to be sold or consumed, in the normal operating cycle; or

It is held primarily for the purpose of trading; or

It is expected to realize the asset within 12 months after the reporting period; or

 

 

 

 

The asset is a cash or equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

All other assets are classified as non-current.

 

Similarly, a liability is classified as current if:

 

It is expected to be settled in the normal operating cycle; or

It is held primarily for the purpose of trading; or

It is due to be settled within 12 months after the reporting period; or

The Group does not have an unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. Terms of a liability that could result in its settlement by the issue of equity instruments at the option of the counterparty does not affect this classification.

 

All other liabilities are classified as non-current.

 

2.Basis of consolidation

 

The consolidated financial statements incorporated the financial statement of the Company and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company:

 

has power over the investee;

is exposed, or has rights, to variable returns from its involvement with the investee; and

has the ability to use its power to affect its returns.

 

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

 

List of entities that are being are been consolidated:

 

Name of Subsidiaries Country of incorporation/ Principal Place of Business Effective percentage of shareholding
As at September 30, 2018 As at March 31, 2018
Smaaash Innovation Private Limited India 100% 100%
Adrenaline Foods Private Limited India 100% 100%
Smaaash Entertainment USA Limited USA 100% 100%
Smaaash Village Private Limited India 100% 100%
Smaaash Leisure Limited (Formerly known as PVR BluO Entertainment Limited) India 100%  —

 

When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:

 

the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

potential voting rights held by the Company, other vote holders or other parties;

rights arising from other contractual arrangements; and

any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

 

 

 

 

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit and loss from the date the Company gains control until the date when the Company ceases to control the subsidiary.

 

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

 

All intragroup assets and liabilities, equity, income, expenses, and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

 

2.1Changes in the Group’s ownership interests in existing subsidiaries

 

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company.

 

When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognized in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRS). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39, or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

 

3.Significant accounting policies

 

3.1Revenue recognition

 

3.1.1Rendering of Services

 

Revenue from rendering of services is measured at fair value of consideration received or receivable. Revenue is recognized over of the life of the contract using percentage completion method and when the outcome of the transaction is estimated reliably.

 

The outcome of a transaction is estimated reliably when all the following conditions are satisfied:

 

the amount of revenue can be measured reliably;

it is probable that the economic benefits associated with the transaction will flow to the entity;

the stage of completion of the transaction at the end of the reporting period can be measured reliably; and

the costs incurred for the transaction and the costs to complete the transaction can be measured reliably

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be recognized only to the extent of the expenses recognized that are recoverable.

 

Rendering of services include:

a)Revenue from the gaming service is recognized as and when games are played by patrons.

 

 

 

 

b)Revenue from banquet, corporate events and others is recognized as and when event takes place.

 

3.1.2Sale of goods

 

Revenue from the sale of goods is recognized when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:

 

the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

the amount of revenue can be measured reliably;

it is probable that the economic benefits associated with the transaction will flow to the Group; and

the costs incurred or to be incurred in respect of the transaction can be measured reliably.

 

Revenue from sale of goods is measured at fair value of the consideration received or receivable, net of returns and trade discounts and includes excise duty but excludes sales tax, value added tax and Goods and Service Tax (GST). 

 

Revenue from sale of goods include:

a)Product sales - Revenue from sale of gaming products is recognized upon their delivery.

 

b)Revenue from Sale of food and beverages is recognized upon their delivery to customers.

 

3.1.3Bonus Points:

 

The fair value of the consideration on gaming services that result in bonus point credits for customers, under the Group’s bonus point schemes, is allocated between the normal points supplied and the bonus point credit granted. The consideration allocated to the bonus point credits is measured by reference to fair value from the standpoint of the holder and is recognized as revenue on redemption and / or expected redemption after breakage.

 

3.1.4Dividend and interest income

 

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably).

 

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

 

3.2Business Combination

 

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests (if any) issued in exchange of control of the acquiree. Acquisition-related costs are generally recognized in profit or loss as incurred.

 

 

 

 

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except that:

 

deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively; and

assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

 

Goodwill is measured as the excess of the sum of the consideration transferred, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

 

3.3Goodwill

 

Goodwill represents the cost of acquired business as established at the date of acquisition of the business in excess of the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities less accumulated impairment losses, if any. Goodwill is tested for impairment annually or when events or circumstances indicate that the implied fair value of goodwill is less than its carrying amount.

 

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

 

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

 

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

 

3.4Leasing

 

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

 

3.4.1Group as a lessee:

 

Finance leases are capitalized at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

 

The Group’s significant operating leasing arrangements are in respect of office premises and warehouse at various locations. Rental expense from operating leases is generally recognized on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the Group’s expected inflationary cost increases, such increases are recognized in the year in which such benefits accrue. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term.

 

3.4.2Group as a lessor:

 

Rental income from operating leases is generally recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term.

 

 

 

 

3.5Foreign currencies

 

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.

 

Exchange differences on monetary items are recognized in profit or loss in the period in which they arise.

 

For the purposes of presenting these consolidated financial statements, the assets and liabilities of the Group’s foreign subsidiary are translated into Indian Rupees (INR) using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity.

 

3.6Borrowing costs

 

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

 

All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

 

3.7Government grants

 

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

 

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis.

 

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they become receivable.

 

3.8Non-current asset held for sale

 

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

 

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

 

3.9Employee benefits

 

3.9.1Retirement benefit costs and termination benefits

 

Employee benefits include provident fund, employee state insurance scheme, gratuity fund and compensated absences. 

 

 

 

 

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

 

For defined retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in accumulated deficit and is not reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:

 

a)service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);

b)net interest expense or income; and

c)re-measurement

 

The Group presents the first two components of defined benefit costs in profit or loss in the line item ‘Employee benefits expense’. Curtailment gains and losses are accounted for as past service costs.

 

The present value of the defined benefit plan liability is calculated using a discount rate, which is determined by reference to market yields at the end of the reporting period on government bonds.

 

The retirement benefit obligation recognized in the balance sheet represents the actual deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

 

A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.

 

3.9.2Short-term and other long-term employee benefits

 

A liability is recognized for benefits accruing to employees in respect of salaries, wages and other short term employee benefits in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.

 

Provision for leave benefits to employees is based on actuarial valuation done by projected accrued benefit method at the reporting date.

 

3.10 Taxation

 

Income tax expense represents the sum of the tax currently payable and deferred tax.

 

3.10.1Current tax

 

The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax’ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

 

 

 

 

3.10.2Deferred tax

 

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statement and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.

 

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

 

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

 

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

 

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

 

3.10.3Minimum alternate tax

 

Minimum alternate tax (MAT) paid in a year is charged to Consolidated statement of profit and loss as current tax. The Group recognizes the MAT credit available as an asset only to the extent that there is convincing evidence that the Group will pay normal income tax during the specified period i.e. the period for which the MAT credit is allowed to be carried forward. In the year in which the Group recognizes the MAT credit as an asset in accordance with the Guidance note on Accounting for Credit available in respect of Minimum Alternate Tax under the Income tax Act, 1961, the said asset is created by way of credit to the consolidated statement of profit and loss and shown as MAT Credit Entitlement under the deferred tax assets. The Group reviews the MAT Credit Entitlement asset at each reporting date and writes down the asset to the extent the Group does not have convincing evidence that it will pay normal tax during the specified period.

 

3.10.4Current and deferred tax for the year

 

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

 

3.11Property, plant and equipment

 

Property, plant and equipment held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at their cost less accumulated depreciation and accumulated impairment losses. The cost of property, plant and equipments includes freight, duties, taxes (to the extent not recoverable from tax authorities) and any directly attributable expenditure for making the assets ready for its intended use. It also includes initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Replacement cost of an item of property, plant and equipment is capitalized if replacement meets the recognition criteria.

 

 

 

 

Depreciation is recognized so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

 

Estimated useful lives of the assets are as follows:

 

Plant and machinery 8 years - 15 years
Office equipments 5 years
Furniture and fixtures 5 years - 11 years
Vehicles 8 years
Computers 3 years
Electrical equipments 10 years

 

Leasehold Improvements are amortized over the unexpired period of lease on a straight-line basis.

 

Individual assets costing up to Rs.5,000 are depreciated at the rate of 100% prorata over a period of one year from the date of purchase.

 

Estimates of residual value of Property, plant and equipment is reviewed at least at each year-end.

 

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

 

3.12 Capital work-in-progress:

 

Projects under Property plant and equipment are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest. 

 

3.13 Intangible assets

 

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

  

Estimated Useful life is as below:

 

Software 2.5 years – 6 years
Trademarks 5 years- 8 years
Virtual reality games 8 years
Player right Over a period of contract with the player

 

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses from derecognition of intangible assets, measured at the difference between the net disposal proceeds and the carrying amount of the assets, and are recognized in profit or loss when the asset is derecognized.

 

3.14Impairment of tangible and intangible assets other than goodwill

 

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

 

 

 

 

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

 

When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

 

3.15 Inventories

 

Inventories are stated at the lower of cost and net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Cost is determined on the basis of weighted average method.

 

3.16 Provisions and contingent liabilities

 

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

 

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

 

A Contingent Liability is disclosed where there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Contingent Assets are not recognized. Information on contingent liabilities is disclosed in the notes to consolidated financial statements unless the possibility of an outflow of resources embodying economic benefits is remote.

 

3.17 Financial instruments

 

Financial assets and financial liabilities are recognized when an entity becomes a party to the contractual provisions of the instruments.

 

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

 

3.18 Financial assets

 

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

 

All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.

 

 

 

 

3.18.1Classification of financial assets

 

Debt instruments that meet the following conditions are subsequently measured at amortized cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):

 

the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

Dividend on financial assets at FVTPL is recognized when the Group’s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.

 

Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):

 

the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and

the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding 

 

Interest income is recognized in profit or loss for FVTOCI debt instruments. For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortized cost. Thus, the exchange differences on the amortized cost are recognized in profit or loss and other changes in the fair value of FVTOCI financial assets are recognized in other comprehensive income and accumulated under the heading of ‘Reserve for debt instruments through other comprehensive income’. When the investment is disposed of, the cumulative gain or loss previously accumulated in this reserve is reclassified to profit or loss.

 

All other financial assets are subsequently measured at fair value. 

 

For the impairment policy on financial assets measured at amortized cost, refer note 3.18.5.

 

3.18.2Amortized cost and Effective interest method

 

The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

 

Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognized in profit or loss and is included in the Other income line item.

  

3.18.3Investments in equity instruments at FVTOCI

 

On initial recognition, the Group can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in the reserve for ‘equity instruments through other comprehensive income’. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.

 

A financial asset is held for trading if:

 

it has been acquired principally for the purpose of selling it in the near term; or

 

 

 

 

on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.

 

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably. Dividends recognized in profit or loss are included in the ‘Other income’ line item.

 

3.18.4Financial assets at fair value through profit or loss (FVTPL)

 

Investments in equity instruments are classified as at FVTPL, unless the Group irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for equity instruments which are not held for trading.

 

A financial asset that meets the amortized cost criteria or debt instruments that meet the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. The Group has not designated any debt instrument as at FVTPL.

 

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in profit or loss. The net gain or loss recognized in profit or loss is included in the ‘Other gains and losses’ line item.

 

3.18.5Impairment of financial assets

 

The Group applies the expected credit loss model for recognising impairment loss on financial assets measured at amortized cost, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset.

 

Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Group estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.

 

The Group measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.

 

The Group measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.

 

 

 

 

However, for trade receivables, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.

 

When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Group uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.

 

Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Group has used a practical expedient as permitted under IFRS 9. This expected credit loss allowance is computed based on a provision matrix, which takes into account historical credit loss experience and adjusted for forward-looking information.

 

3.18.6Derecognition of financial assets

 

The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralised borrowing for the proceeds received.

 

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.

 

3.18.7Foreign exchange gains and losses

 

The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.

 

For foreign currency denominated financial assets measured at amortized cost and FVTPL, the exchange differences are recognized in profit or loss except for those, which are designated as hedging instruments in a hedging relationship.

 

3.18.8Cash and cash equivalents

 

Cash and cash equivalents comprise cash at bank and on hand, call deposits, and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

 

3.19Financial liabilities and equity instruments

 

3.19.1Classification as debt or equity

 

Debt and equity instruments issued by the entity are classified either as financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

 

3.19.2Equity instruments

 

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the entity are recognized at the proceeds received, net of direct issue costs.

 

 

 

 

Repurchase of the Group’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.

 

3.19.3Compound instruments

 

The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. A conversion option that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Group’s own equity instruments is an equity instrument.

 

At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recognized as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or at the instrument’s maturity date.

 

3.19.4Financial liabilities

 

All financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTPL.

 

Financial liabilities subsequently measured at amortized cost

 

Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting period. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the ‘Finance costs’ line item.

 

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

 

3.19.5Foreign exchange gains and losses

 

For financial liabilities that are denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of the instruments and are recognized in ‘Other income’ as ‘Net foreign exchange gains/(losses)’.

 

The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognized in profit or loss.

 

3.19.6Derecognition of financial liabilities

 

The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. An exchange with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

 

 

 

 

3.20  Offsetting financial instruments

 

Financial assets and liabilities are offset and the net amount is reported in the consolidated financial statement where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.

 

3.21 Segment accounting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

 

The Board of directors of the Group has been identified as being the chief operating decision maker. Refer to note 40 for segment information presented.

 

4. Critical accounting estimates and key sources of estimation uncertainty

 

The preparation of consolidated financial statement requires the use of accounting estimates, which, by definition, will seldom equal the actual results. This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items, which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the consolidated financial statement.

 

4.1Fair value measurements and valuation processes

 

Some of the Group’s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available.

 

4.2Bonus Point (Revenue recognition)

 

Bonus point credits having a predetermined life are granted to customers when they make payments for card balances. The fair value of the consideration on gaming services resulting in such bonus point credits is allocated between the normal points and the bonus point credits granted. The consideration allocated to the bonus point credits is measured by reference to fair value from the standpoint of the holder and revenue is deferred. The Group at the end of each reporting period estimates the number of points redeemed and that it expects will be further redeemed, based on empirical data of redemption/ lapses, and revenue is accordingly recognized.

 

4.3Contingencies:

 

In the normal course of business, contingent liabilities may arise from litigation and other claims against the Group. There are certain obligations which managements have concluded based on all available facts and circumstances are not probable of payment or difficult to quantify reliably and such obligations are treated as contingent liabilities and disclosed in the notes but are not provided for in the consolidated financial statement. Although there can be no assurance of the final outcome of the legal proceedings in which the Group is involved it is not expected that such contingencies will have material effect on its financial position or profitability.

 

4.4Useful lives of property, plant and equipment

 

As described at note 3.11 above, the Group reviews the estimated useful lives of property, plant and equipment and residual values at the end of each reporting period. There was no change in the useful life and residual values of property, plant and equipment as compared to previous year.

 

 

 

 

5.Application of new and revised International Financial Reporting Standards (IFRSs)

 

5.1Amendments to IFRSs that are mandatorily effective for the current year

 

In the current year, the Group has applied a number of amendments to IFRSs issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after January 1, 2017.

 

5.1.1Amendments to IAS 7 Disclosure Initiative

 

The Group has applied these amendments for the first time in the current year. The amendments require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both cash and non-cash changes.

 

The Group’s liabilities arising from financing activities consist of borrowings and certain other financial liabilities. A reconciliation between the opening and closing balances of these items is provided in note 21. Apart from the additional disclosure in note 21, the application of these amendments has had no impact on the Group’s consolidated financial statements.

 

5.1.2Amendments to IAS 12 Recognition of deferred tax assets for unrealized losses

 

The Group has applied these amendments for the first time in the current year. The amendments clarify how an entity should evaluate whether there will be sufficient future taxable profits against which it can utilize a deductible temporary difference.

 

The application of these amendments has had no impact on the Group’s consolidated financial statements as the Group already assesses the sufficiency of future taxable profits in a way that is consistent with these amendments.

 

5.1.3Annual Improvements to IFRSs 2014-2016 Cycle

 

The Group has applied the amendments to IFRS 12 included in the Annual Improvements to IFRSs 2014-2016 Cycle for the first time in the current year.

 

IFRS 12 states that an entity need not provide summarized financial information for interests in subsidiaries that are classified (or included in a disposal group that is classified) as held for sale.

 

The amendments clarify that this is the only concession from the disclosure requirements of IFRS 12 for such interests.

 

The application of these amendments has had no effect on the Group’s consolidated financial statements as none of the Group’s interests in these entities are classified, or included in a disposal group that is classified, as held for sale.

 

5.2New and revised IFRSs in issue but not yet effective

 

5.2.1The Group has early applied the IFRS 9 Financial Instruments that have been issued but are not yet effective:

 

In July 2014, the IASB finalized the reform of financial instruments accounting and issued IFRS 9 (as revised in 2014), which contains the requirements for:

 

a.the classification and measurement of financial assets and financial liabilities,

b.impairment methodology, and

c.general hedge accounting. IFRS 9 (as revised in 2014) will supersede IAS 39 Financial Instruments: Recognition and Measurement upon its effective date.

 

Transitional provisions

IFRS 9 (as revised in 2014) is effective for annual periods beginning on or after January 1, 2018 with earlier application permitted. IFRS 9 requires retrospective application (subject to some transitional provisions).

The entity elects to early adopt IFRS 9 from the annual period beginning from April 1, 2015 and it has applied all of the requirements in IFRS 9 at the same time.

 

 

 

 

5.2.2The Group has not early applied the following IFRSs that have been issued but are not yet effective:

 

IFRS 15 Revenue from Contracts with Customers (and the related Clarifications)1
IFRS 16 Leases2
IFRIC 22 Foreign Currency Transactions and Advance Consideration1

1Effective for annual periods beginning on or after January 1, 2018, with earlier application permitted. 

2Effective for annual periods beginning on or after January 1, 2019, with earlier application permitted. 

3Effective for annual periods beginning on or after a date to be determined.

 

IFRS 15 Revenue from Contracts with Customers

 

IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when it becomes effective.

 

The core principle of IFRS 15 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition:

• Step 1: Identify the contract(s) with a customer

• Step 2: Identify the performance obligations in the contract

• Step 3: Determine the transaction price

• Step 4: Allocate the transaction price to the performance obligations in the contract

• Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

 

Under IFRS 15, an entity recognizes revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer.

 

Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, IFRS 15 requires extensive disclosures.

 

In April 2016, the IASB issued Clarifications to IFRS 15 in relation to the identification of performance obligations, principal versus agent considerations, as well as licensing application guidance.

 

Apart from providing more extensive disclosures on the Group’s revenue transactions, the directors do not anticipate that the application of IFRS 15 will have a significant impact on the financial position and/or financial performance of the Group.

 

IFRS 16 Leases

 

IFRS 16 introduces a comprehensive model for the identification of lease arrangements and accounting treatments for both lessors and lessees. IFRS 16 will supersede the current lease guidance including IAS 17 Leases and the related interpretations when it becomes effective.

 

IFRS 16 distinguishes leases and service contracts on the basis of whether an identified asset is controlled by a customer. Distinctions of operating leases (off balance sheet) and finance leases (on balance sheet) are removed for lessee accounting, and is replaced by a model where a right-of-use asset and a corresponding liability have to be recognized for all leases by lessees (i.e. all on balance sheet) except for short-term leases and leases of low value assets.

 

 

 

 

The right-of-use asset is initially measured at cost and subsequently measured at cost (subject to certain exceptions) less accumulated depreciation and impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at that date. Subsequently, the lease liability is adjusted for interest and lease payments, as well as the impact of lease modifications, amongst others. Furthermore, the classification of cash flows will also be affected as operating lease payments under IAS 17 are presented as operating cash flows; whereas under the IFRS 16 model, the lease payments will be split into a principal and an interest portion, which will be presented as financing and operating cash flows respectively.

 

In contrast to lessee accounting, IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17, and continues to require a lessor to classify a lease as either an operating lease or a finance lease.

 

Furthermore, IFRS 16 requires extensive disclosures.

 

IFRIC 22 Foreign Currency Transactions and Advance Consideration

 

IFRIC 22 addresses how to determine the ‘date of transaction’ for the purpose of determining the exchange rate to use on initial recognition of an asset, expense or income, when consideration for that item has been paid or received in advance in a foreign currency which resulted in the recognition of a non-monetary asset or non-monetary liability (e.g. a non-refundable deposit or deferred revenue).

 

The Interpretation specifies that the date of transaction is the date on which the entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. If there are multiple payments or receipts in advance, the Interpretation requires an entity to determine the date of transaction for each payment or receipt of advance consideration.

 

The Interpretation is effective for annual periods beginning on or after January 1, 2018 with earlier application permitted. Entities can apply the Interpretation either retrospectively or prospectively. Specific transition provisions apply to prospective application.

 

The directors of the Group do not anticipate that the application of the amendments in the future will have an impact on the Group’s consolidated financial statements. This is because the Group already accounts for transactions involving the payment or receipt of advance consideration in a foreign currency in a way that is consistent with the amendments.

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

6 Property, plant and equipment

Description of assets Plant and machinery Office equipment Furniture & fixtures Vehicles Computers Electrical equipments Leasehold improvements Total
 Cost                
 As at April 1, 2017 824,854 5,772   77,430 1,373   33,854 163,112  1,180,906  2,287,301
 Additions 626,839 6,564   21,593   — 4,222   28,879 395,174  1,083,271
 Acquired on business combination 600,015   21,384   40,667 1,456 1,665 8,685 274,008 947,880
 Disposals/ reclassifications (20,052)   —   (7,178)   (773)   — (20) (26,046) (54,069)
 As at March 31, 2018  2,031,656   33,720 132,512 2,055   39,741 200,656  1,824,042  4,264,383
 Additions 219,864 149   2,591   1 5,168   12,983 101,502  342,258
Acquired on business combination Adjustments   —   —   —   —   —   —   —   —
 Disposals/ reclassifications (13,985)   —   —   —   — (13,985)
 As at September 30, 2018  2,237,534   33,869 135,104 2,056   44,910 213,639  1,925,543  4,592,655
 Depreciation                
 As at April 1, 2017   81,290 873   11,387 449   22,535   35,758 275,662 427,954
 Depreciation expense for the year   111,921 4,248   13,078 233 8,250   20,401 275,027 433,158
 Acquired on business combination 104,615   14,552 9,414   —   —   —   55,344 183,925
 Eliminated on disposal of assets/ reclassifications   (8,150)   —   (6,484) (19)   — (20)   (8,245) (22,918)
 As at March 31, 2018 289,676   19,673   27,395 663   30,785   56,139 597,788  1,022,119
 Depreciation expense for the year   73,252 1,787   6,000 129 5,141   14,561 156,478 257,347
 Acquired on business combination   —   —   —   —   —
 Adjustments   —   —   —   —   —   —   —   —
 Eliminated on disposal of assets/ reclassifications   —   —   —   —   —
 As at September 30, 2018 362,929   21,460   33,395 792   35,926   70,700 754,266  1,279,468
                 
 Net book value                
 As at September 30, 2018  1,874,605   12,409 101,708 1,264 8,984 142,940  1,171,278  3,313,187
 As at March 31, 2018  1,741,980   14,047 105,117 1,393 8,956 144,517  1,226,254  3,242,264

  

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

6.1 The Group has imported certain capital equipment under Export Promotion of Capital Goods scheme of the central government at a concessional rate of customs duty. During the F.Y 2015-16, the Group has undertaken export obligation to the extent of Rs. 46,632 thousands to be fulfilled during the period of 6 years commencing from April 8, 2015, failing which the Group will be liable to pay the differential customs duty, together with interest and penalties if imposed.

 

Since, the procurement of goods during the period were done by availing the exemption from payment of aforesaid duties, the amount capitalized for the said plant and machinery as on the put to use date, is cost of property, plant and equipment (PPE) net-off tax and duty benefit availed. In compliance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance’, the Group has grossed up the value of its PPE by the amount of duty benefit availed by the Group is after considering the same as government grant.

 

The amount of grant capitalized will be depreciated as per useful life of plant and machinery. The amount of deferred liability shall be amortized based of the fulfilment of export obligation with credit to consolidated statement of profit and loss under the head ‘Other operating income’. The Group has recognized Government grant of Rs. 7,772 thousands from the date of capitalization of plant.

 

6.2 Adjustments represent VAT credit claimed on assets capitalized in earlier year. 

 

6.3  Capital work-in-progress    
   Particulars  As at September 30, 2018  As at March 31, 2018
       
  Capital work-in-progress 393,261 182,669
       
    393,261 182,669
       

 

7Goodwill

 

Particulars  As at September 30,
2018
 As at March 31,
2018
     
Cost 13,604 13,604
Less: Accumulated impairment losses
Total 13,604 13,604

 

Particulars  For the six months ended September 30, 2018  For the year ended March 31, 2018
Cost    
Opening balance 13,604
Additional amounts recognized from business combinations occurring during the year (note 44) 13,604
Balance at end of year 13,604 13,604
Goodwill on consolidation    
Accumulated impairment losses    
Opening balance
Impairment losses recognized in the year
Closing balance at the end of year

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

8Intangible assets

 

Description of assets Software Trademarks Players rights Virtual reality games Non-compete arrangement Brands  Total
               
Cost              
As at April 1, 2017 36,877 4,721 112,479      343,772 497,849
Additions 7,574 1,434 64,008 102,180 175,196
Adjustments 4,924 14,271 74,797 94,605 188,597
Disposals/ reclassifications
As at March 31, 2018 49,375 20,426 176,487 445,952 74,797 94,605 861,642
Additions 2,480 944 13,769 4,705 21,898
Acquired on business combination         —      —
Adjustments
Disposals/ reclassifications
As at September 30, 2018 51,855 21,370 190,255 450,657 74,797 94,605 883,539
               
Amortization              
As at April 1, 2017         22,456   2,047         62,757      140,920         —      228,180
amortization expense for the year         11,873   2,292         40,423         48,745         11,522        5,539      120,394
Adjustments   2,902   4,541         —   7,443
Eliminated on disposal of assets/ reclassifications
As at March 31, 2018 37,231 8,880 103,180 189,665 11,522 5,539 356,017
amortization expense for the year 4,575 1,104 32,902 29,272 8,710 8,933 85,496
Acquired on business combination       —
Adjustments
Eliminated on disposal of assets/ reclassifications
As at September 30, 2018 41,806 9,984 136,082 218,937 20,232 14,472 441,513
               
Net book value              
As at September 30, 2018 10,049 11,386 54,173 231,720 54,565 80,132 442,026
As at March 31, 2018 12,144 11,546 73,307 256,287 63,275 89,066 505,625

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

8.1Intangible assets under development

Particulars  As at September 30, 2018  As at March 31, 2018
     
Intangible assets under development                  84,537                     48,992   
     
                   84,537                     48,992  
     

Intangible assets under development comprises of the cost related to assets or projects that are not yet ready for their intended use at the reporting date.

 

9Investments

 

Particulars  As at September 30, 2018  As at March 31, 2018
 Quantity  Amount  Quantity  Amount
 Non-current        
 I. Amortized cost        
 Unquoted        
- National saving certificates (lien to Sales Tax Dept.)                            —                          35                            —                          30
 Total investments carried at amortized cost [a]                         35                         30
         
 II. Investment at fair value        
 i) Fair value through other comprehensive income (FVTOCI)        
 Unquoted investments (fully paid)        
 Investments in equity instruments        
 - AFK Gaming Private Limited                                      5,750                      —                           —
 ii) Fair value through profit and loss (FVTPL)        
 Quoted investments (fully paid)        
 Investments in mutual funds        
 - Kotak Medium Term Fund - DP-Growth Option (Refer note 9.1)                          —                          —                         6,466
 Total investments carried at fair value [b]                   5,750                 6,466
         
 Total investments carrying value [a+b]                    5,785                  6,496
         
 Current        
 Fair value through profit and loss (FVTPL)        
 Quoted Investments (fully paid)        
 Investments in mutual funds        
 - Kotak Floater short Term Fund - DP-Growth Option                          —                           —                                    
 - Mahindra Liquid Fund-Dir-Gr                                   —                          —                               11,012
 Total investments                   —                   11,012
         
 Other disclosures        
 Aggregate amount of quoted investments and market value thereof                                   17,478
 Aggregate amount of unquoted investments                   5,785                         30
 Aggregate amount of impairment in value of investments                            —                            —

 

9.1Investment in units of Kotak Medium Term Fund were pledge as security against the debenture issued to Piramal Enterprises Limited.

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

9.2Category-wise other investments - as per IFRS 9 classification

 

  As at September 30, 2018 As at March 31, 2018
Financial assets carried at fair value through other comprehensive income (FVTOCI)    
Investment in unquoted equity shares 5,750
  5,750
Financial assets carried at fair value through profit or loss (FVTPL)    
Investment in mutual funds 17,478
  17,478
Financial assets carried at amortized cost    
Investment in national saving certificates (lien to Sales Tax Dept.) 35 30
  35 30
     
Total 5,785 17,508

 

10Other financial assets

 

Particulars  As at September 30, 2018  As at March 31, 2018
     
Non-current    
Bank deposit with more than 12 months maturity 27,059 25,033
     
Security deposits    
 - Unsecured, considered good 176,257 181,159
     
 Total 203,315 206,192
     
Current    
Security deposits    
 - Unsecured, considered good                     3,100                     3,100
     
Other receivables    
- Unbilled revenue                  34,655                  19,105
- Contractually reimbursable expenses                  70,681                  65,083
     
 Total                                       87,288

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

11Deferred tax assets

 

11.1Movement in deferred tax balances

Particulars  For the six months ended September 30, 2018
 Opening Balance  On acquisition  Recognized in profit and Loss  Recognized in OCI  Closing
Balance
 Deferred tax (liabilities)/assets in relation to:          
 Property, plant and equipment 7,931       (7,387)
 Other intangible assets 5,743         4,891
 Investments (74)               (4)
 Other financial assets 4,808         9,104
 Other assets (2,871)       (6,964)
 Borrowings (1,485)                   (17,882)
 Provisions 2,806       (3,229)
 Other financial liabilities 11,582          (312)
 Other liabilities (14,671)         3,138
 Unused tax losses 220,980                   497,904
 MAT credit         9,507
           
 Net tax asset/(liabilities) 488,766 488,766

 

11.2Movement in deferred tax balances

Particulars  For the year ended March 31, 2018
 Opening Balance  Recognized in profit and Loss  Recognized in OCI  Closing Balance
 Deferred tax (liabilities)/assets in relation to:        
 Property, plant and equipment 7,931 (19,956)   4,638          —
 Other intangible assets 5,743    (852)          —
 Investments (74)        70          —
 Other financial assets 4,808   4,297          —
 Other assets (2,871) (4,093)          —
 Borrowings (1,485)             (16,397)          —
 Provisions 2,806 (5,961)       (74)
 Other financial liabilities 11,582              (11,894)          —
 Other liabilities (14,671) 3,811                13,998          —
 Unused tax losses 220,980 276,924          —
  9,513         (6)          —
 Net tax asset/(liabilities)        
  234,749 (6,632) 260,723 (74)

 

12Non-current tax assets (net)
Particulars As at September 30,
2018
As at March 31,
2018
     
Advance Income Tax/TDS receivable (Net-off provision for tax) 24,499 18,949
     
Total 24,499 18,949
     

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

13Other assets

Particulars  As at September 30,
2018
 As at March 31,
2018
 Non-current    
 Capital advances                  165,117                  90,980
     
 Advances other than capital advances    
 a) Balances with government authorities (other than income taxes)    
 - Deposits                     852                     3,352
 b) Deferred lease rentals                  56,633                  51,851
 c) Advance to gratuity trust                     4,208                     3,407
     
 Total               226,630               149,590
     
 Current    
 Advances other than capital advances    
 a) Advances to suppliers               145,047               151,299
 b) Balances with government authorities (other than income taxes)    
 - Service Tax                  523                  29,663
 - Goods and Service Tax (GST)               237,801               136,239
 - Served from India scheme (SFIS) credit                        114                        114
 - Value Added Tax (VAT)                        668                        668
 - Others                            —                            —
 c) Deferred lease rentals                  22,004                  14,570
 d) Prepaid expenses                  87,562                  75,777
 e) Advances to employees                             6                             5
     
 Total               493,724               408,335

 

14Inventories
Particulars  As at September 30,
2018
 As at March 31,
2018
 Inventories (lower of cost and net realisable value)    
 (a) Food and beverages                         32,801                        34,290
 (b) Consumables                           6,861                        11,879
 (c) Stores and spares                         49,225                        45,398
 (d) Trading goods                      104,625                        69,027
 Total                        193,512                      160,594

 

15Trade receivables

15.1 Refer to note 37 for disclosures related to financial instruments.

 

Particulars  As at September 30, 2018  As at March 31, 2018
Trade receivables    
Unsecured, considered good                      162,896                      177,947
Doubtful                           1,423                          2,739
                       164,320                      180,686
Less: Allowance for credit losses                         (1,423)                         (2,739)
 Total                      162,896                      177,947

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

15.2 The average credit period provided to trade receivables is 30 days.

 

15.3Movement in the allowance for doubtful debts

 

Particulars  As at September 30, 2018  As at March 31, 2018
Balance at beginning of the year                           1,551                                 —
Acquired on business combination                                  —                                 —
Impairment losses recognized on receivables                                  —                          1,551
 Balance at end of the year                           1,552                          1,551

 

16Cash and bank balances

 

Particulars As at September 30, 2018 As at March 31, 2018
     
a) Balances with banks 32,038 108,648
b) Cash on hand 14,810 9,065
C) Bank deposits 1,283 2,127
 Total   48,131 119,840

 

17Loans

 

Particulars As at September 30,
2018
As at March 31,
2018
 Current    
 Loans to employees    
 - Unsecured, considered good 2,803 412
     
 Total 2,803 412

 

18Issued capital and share premium

Particulars  As at September 30, 2018  As at March 31, 2018
 No. of shares  Amount  No. of shares  Amount
 A. Authorised:          
 a) Equity shares of Rs.10 each with voting rights 225,000,000 2,250,000 225,000,000 2,250,000
 b) Redeemable preference shares of Rs.10 each 50,000,000 500,000 50,000,000 500,000
 Total   2,750,000   2,750,000
         
 B. Issued, Subscribed and Fully Paid:        
 a) Equity shares of Rs.10 each with voting rights 185,734,979 1,857,350 185,734,979 1,857,350
 b) Compulsorily convertible preference shares of Rs. 10 each 50,083,966 500,840 39,443,000 394,430
 Total   2,358,189   2,251,780
         
 C. Share premium        
Balance as at the beginning of the period   1,402,101   365,291
Add: Additions during the period   297,096   1,101,249
Less: Utilized during the period towards share issue expenses   (17,596)   (64,439)
Balance as at the end of the period   1,681,600   1,402,101
         
Total (B+C)   4,039,790   3,653,881

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

18.1Rights, preferences and restrictions attached to equity shares

The Company is having only one class of Equity Shares having a par value of Rs. 10/- each. Each holder of Equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of the Equity shares will be entitled to receive remaining assets of the company. The distribution will be in proportion to the number of Equity shares held by shareholders. 

 

18.2Rights, preferences and restrictions attached to preference shares

Compulsorily convertible preference shares, which have a par value of Rs. 10 each, are entitled to receive a discretionary non-cumulative 0.01% preference dividend before any dividends are declared to the equity shareholders. The convertible preference shares can be converted into equity shares on a one-for-one basis at any time during 20 years from the date of issuance and allotment at the option of the holder or if the Company goes for IPO. Convertible preference shares have no right to share in any surplus assets or profits. The preference shareholder will have a right to vote only on resolutions placed before the company which directly affect the rights attached to the preference shares and, any resolution for the winding up of the company or for the repayment or reduction of its equity or preference share capital and his voting right on a poll will be in proportion to his share in the paid-up preference share capital of the Company.

 

18.3Details of shares held by each shareholder holding more than 5% shares:

Class of shares / Name of shareholder    As at September 30, 2018  As at March 31, 2018
 Number of shares
held
 % holding in that class of shares    Number of shares
held
 % holding in that class of shares  
 A. Equity shares with voting rights        
 a) Aha Holdings Private Limited 79,217,442 42.65% 79,217,442 42.65%
 b) FW Metis Limited   69,088,409 37.20% 69,088,409 37.20%
 c) Mitesh Gowani 21,821,451 11.75% 21,821,451 11.75%
         
 B. Compulsorily Convertible Redeemable Preference Shares        
 a) Sixth Sense India Opportunities-I 6,065,400 12.11% 6,065,400 15.38%
 b) Hero Enterprise Partner Ventures   5,274,261 10.53% 5,274,261 13.37%
 c) Jignesh N Pandya 3,401,371 6.79% 3,401,371 8.62%
 d) Adventz Finance Pvt Ltd 2,637,130 5.27% 2,637,130 6.69%
 d) Shubham Enterprises 2,637,130 5.27%    
         

 

18.4Securities Premium:

Securities premium account is created when shares are issued at premium. The reserve can be utilized in accordance with the provisions of the Indian Companies Act, 2013.  

 

18.5Reconciliation of the number of shares outstanding at the beginning and at the end of the period.

Equity shares with voting rights  For the six months ended September 30, 2018  For the year ended March 31, 2018
Particulars  No. of shares  Amount  No. of shares  Amount
         
 Balance as at beginning of the year 138,247,240 1,382,472 138,247,240 1,382,472
Issue of shares on right basis 26,221,451 262,215 26,221,451 262,215
Conversion of optional convertible preference shares into equity shares 21,266,288 212,663 21,266,288 212,663
 Balance as at the end of the year 185,734,979 1,857,350 185,734,979 1,857,350

 

Compulsorily convertible preference shares  For the six months ended September 30, 2018  For the year ended March 31, 2018
Particulars  No. of shares  Amount  No. of shares  Amount
         
 Balance as at beginning of the year
 Issue of shares 39,443,000 394,430 39,443,000 394,430
         
 Balance as at the end of the year 39,443,000 394,430 39,443,000 394,430

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

18.6  Authorized Share Capital of the Company has been increased from Rs. 1,750,000 thousands divided into 140,000,000 Equity Shares of Rs. 10 each and 35,000,000 Redeemable Preference Shares Rs. 10 each to Rs. 2,750,000 thousands divided into 225,000,000 Equity Shares of Rs. 10 each and 50,000,000 Redeemable Preference Shares Rs. 10 each on July 27, 2017. 

 

18.7  During the current year, Company has issued 39,443,000 Compulsorily Convertible Redeemable Preference Shares of Rs. 10 each fully paid at a premium of Rs 27.92 each shares aggregating to Rs 1,495,679 thousands. 

 

18.8  During the last financial year, Company has converted 21,266,288 Optionally Convertible Preference Shares issued to AHA Holdings Private Limited into 21,266,288 Equity shares of Rs. 10 each on September 15, 2017. 

 

19Other reserves
Particulars  As at September 30, 2018  As at March 31, 2018
     
Foreign currency translation reserve  738  (17,089)
Contribution from promotors/ shareholders 49,578 49,578
Share application money pending allotment   32,000
Reserve for equity instruments through other comprehensive income   717
     
Total 50,317 65,206

 

19.1Movement in reserves
Particulars  For the six months ended September 30,
2018
 For the year ended March 31,
2018
     
A). Foreign currency translation reserve    
Balance as at the beginning of the period  (17,089)  (19,127)
Add: Additions during the period 17,827 2,038
Less: Deletion during the period
Balance as at the end of the period  738  (17,089)
     
B). Contribution from promotors/ shareholders    
Balance as at the beginning of the period 49,578 49,578
Add: Additions during the period
Less: Deletion during the period
Balance as at the end of the period 49,578 49,578
     
C). Share application money pending allotment    
Balance as at the beginning of the period 32,000
Add: Additions during the period (32,000) 32,000
Less: Deletion during the period
Balance as at the end of the period 32,000
     
D). Reserve for equity instruments through other comprehensive income    
Balance as at the beginning of the year
Net fair value gain on investments in equity instruments at FVTOCI 717
Income tax on net fair value gain on investments in equity instruments at FVTOCI
Balance as at the end of the period 717

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

19.2Nature and purpose of other reserves:

 

a). Foreign currency translation reserve:

Exchange differences relating to the translation of the results and net assets of the foreign subsidiary from their functional currency to the Group’s presentation currency (i.e. INR) are recognized directly in other comprehensive income and accumulated in the foreign currency translation reserve. Exchange differences previously accumulated in the foreign currency translation reserve will be reclassified to profit or loss on the disposal of the foreign subsidiary. 

 

b). Contribution from promotors/ shareholders: 

During the financial year 2014-15 and 2015-16, the Company has received duty credit entitlement certificate issued by Director General of Foreign Trade (DGFT) under Served from India Scheme (SFIS) aggregating Rs. 30,797 thousands and Rs.18,781 thousands respectively from a related party for Rs. Nil and thus the same is accounted as deemed contribution in the financial statements of the Group.

 

c). Share application money pending allotment: 

Share application money pending allotment represents the share application money received to the extent not refundable and against which allotment of the preference shares is pending.

 

The Company has received Rs. 32,000 thousands as share application money from investors. Subsequent to the year-end, the Company has issued 843,883 fully paid-up Compulsorily Convertible Preference Shares (CCPS) of Rs. 10/- each at a premium of Rs. 27.92 per CCPS aggregating to Rs. 32,000 thousands.

 

d). Reserve for equity instruments through other comprehensive income: 

This reserve represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net of amounts reclassified to accumulated deficit when those assets have been disposed of. 

 

20Accumulated deficit
Particulars  As at September 30, 2018  As at March 31, 2018
     
Accumulated deficit  (1,514,292)  (1,283,494)
     
Total  (1,514,292)  (1,283,494)

 

20.1Movement in accumulated deficit
Particulars  For the six months ended September 30,
2018
 For the year ended March 31,
2018
     
Balance as at the beginning of the period  (1,349,537)  (953,910)
Add: Loss for the period  (164,829)  (329,749)
Add: Other comprehensive income arising from remeasurement
of defined benefit obligation net of income tax
74 165
Balance as at the end of the period  (1,514,292)  (1,283,494)

 

20.2 Accumulated deficit represents the surplus. The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the separate financial statements of the Company. Thus, the amounts reported above are not distributable in entirety.  

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended March 31, 2018

All amounts are in Rs. ’000 unless otherwise stated 

 

21Borrowings

Particulars As at September 30, 2018 As at March 31, 2018
Non-current    
Secured Borrowings at amortized cost:    
 a) Non-convertible debentures (refer note I) 1,048,892 1,046,657
 b) Term loans- from banks (refer note II) 79,160 79,160
 c) Term loans- from financial institutions (refer note III) 235,163 235,163
Total 1,360,980 1,360,980
     
Current    
A. Secured borrowings at amortized cost:    
 a) Term loans- from banks (refer note II)
 b) Term loans- from financial institutions (refer note III) 200,000 200,000
 c) Optional convertible preference share (refer note IV)
     
B. Unsecured borrowings    
 Loans from related parties (refer note V) (6,160) 5,535
Total 193,840 205,535

 

21.1The details of security, repayment terms and interest are as follows:

 

I: Non-convertible debentures

(i) Unlisted, secured, redeemable, non-convertible debenture issued to Piramal Enterprises Limited (Piramal):

Security:

a) Pledge of shares of 26.13% held by Promoters in the Company on fully diluted basis.

b) Creation of exclusive charge on all fixed, movable and current assets of the Company.

c) Exclusive charge by way of mortgage on certain immovable properties owned by the promoter / relatives of promoter in favour of debenture trustee.

d) Personal guarantee from Promoters.

Repayment:

Issuer is required to repay to debenture holder 20%, 20% and 60% of investment amount at the end of 3rd, 4th and 5th anniversary from the allotment date August 03, 2016.

Interest:

Minimum IRR of 16% per annum calculated on XIRR basis.

Prepayment:

The Company prepays the entire NCD on August 30, 2017.

 

(ii) Unlisted, secured, redeemable, non-convertible debenture issued to ECL Finance Limited (ECL):

Security:

1. A-2/5, A-2/6 in building no. A known as Prithvi Apartments of Prithvi Apartments Co-op. Hsg. Soc. Ltd. situated at Altamount Road, Mumbai- 400 026 property owned by Mrs. Kalpana Morakhia

2. Plot No. 10, Survey No 108 & 109, Village – Kunenama, Taluka – Maval, Dist – Pune 410401, property owned by AHA Holdings Private Limited.

3. SAM Family Trust to create mortgage over its immovable properties situated at Plot No. 1, Survey No 108 & 109, Village – Kunenama, Taluka – Maval, District Pune 410401

4. B-4501, B4601 at Lodha Bellissimo, Lodha Pavillion, Apollo Mill Compound, Mahalaxmi, Mumbai – 400011 owned by AHA Holding Private Limited

5. Mr. Sushil Karalkar and Elements Learning Centre Private Limited to create mortgage over its immovable properties situated at Gut No. 219A & 219B at Village Atone, Tal. Sudhagad, Dist. Raigad.

6. Pledge 100% shareholding of AHA Holdings Private Limited.

7. Pledge 78.40% shareholding of Elements Learning Centre Private Limited.

8. Pledge 100% shareholding of Gir Holiday Resorts Private Limited.

9. Pledge 100% shareholding of Smaaash Leisure Limited (Formerly known as PVR BluO Entertainment Limited).

10. Pledge over equity shares of Smaaash Entertainment Private Limited held by AHA Holdings Private Limited.

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated 

 

11. Charge on investments held in Kotak India Venture Fund – I, Kotak India Growth Fund – II and Kotak Alternate Opportunities (India) Fund held by AHA Holdings Private Limited

12. Exclusive charge over all fixed, movable & current assets of Smaaash Entertainment Private Limited

13. Charge over warrants of Yoboho New Media Private Limited held by AHA Holdings Private Limited.

14. Mr. Paresh Patel to create mortgage over its immovable properties situated at Survey No – 361, Village Gadhiya, Taluka Dhari, District Amreli, Gujarat.

15. Corporate Guarantee by AHA Holdings Private Limited

16. Personal Guarantee by Mr. Shripal Morakhia & Mrs. Kalpana Morakhia

17. Corporate Guarantee by SMAAASH Entertainment USA Limited

18. Corporate Guarantee by Elements Learning Centre Private Limited.

Repayment:

Issuer is required to repay to debenture holder 50%, 4%, 13% 15% and 18% of investment amount in F.Y 2019, F.Y. 2020, F.Y. 2021, F.Y. 2022 and F.Y. 2023 respectively.

Interest:

11% p.a. from the date of disbursement to end of 12 months,

12% p.a beginning of 13th month to end of 24 months,

14.75% p.a beginning of 25th month to end of tenure of the facility. 

 

II: Term loan from banks

(i) Term loan from Yes bank

Term loan 1 and 2

Security:

a) Exclusive hypothecation charge on current and movable fixed assets of the Company both present and future including sponsorship money for Gurgaon and Noida center to be routed through the Yes Bank.

 

b) Also guaranteed by corporate guarantee of Aha Holdings Private Limited and personal guarantee of Mr.Shripal Morakhia (Director).

Repayment:

Loan repayable in equal quarterly instalment as follows: 

 

Particulars As at September 30, 2018 As at March 31, 2018
Repayable within 1 year  
Repayable within 2-3 years  
Repayable within 4-5 years  
More than 5 years  
 Total  

Interest:

The term loan will bear interest at 13.50% p.a with immediate reset and the same is payable monthly.

 

Term loan 3

Security:

- Personal guarantee of Mr.Shripal Morakhia (Director).

- Exclusive charge on current asset and moveable fixed assets of the Company both present and future including sponsorship money from PVR Limited to be routed through Yes Bank account.

Repayment:

Loan repayable in equal quarterly instalment as follows:

Particulars As at September 30, 2018 As at March 31, 2018
Repayable within 1 year 54,000 54,000
Repayable within 2-3 years 81,000 81,000
Repayable within 4-5 years
More than 5 years
 Total 135,000 135,000

Interest:

The term loan will bear interest at 2.50% (Spread) over and above the 6M YBL MCLR with half-yearly reset and the same is payable monthly. 

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

III: Term loans from financial institutions

(i) Term loan from Tata Capital Financial Services Limited (TCFSL):

Primary Security:

Mortgage of certain immovable property owned by promoter associates (situated at 1230,31,32,33,34,35,36,37,38,39,40,41,42,43,44,45,46,47 and 1248 Police station Bhangar, Sonapore, 24 Parganas (South)). having clear and marketable title standing in the name of Borrower / Mortgagor.

Collateral Security:

Security in form of fixed deposit of Rs 6 Crores with bank as acceptable and same provided by Aha Holding Private Limited.

Repayment:

Principal will be repaid in 36 months after the moratorium period of 12 months and the same will be repayable in balance 24 equated monthly instalments start from date of first tranche disbursement.

Interest:

The term loan will bear interest of long term reference rate of TCFSL +/- prevailing spread, present effective rate being 12.25% p.a. and the interest is payable every month.

 

(ii) Small Industries Development Bank of India (SIDBI):

Term loan 1

Primary Security:

First pari passu charge over the movable and current assets of Smaaash pertaining to the Bangalore, Ludhiana and Mumbai go-karting projects.

Collateral security:

First charge by way of mortgage of all immovable properties owned by Shri Nitya Gopal Bank situated at Harihar Para, Gobindapur, Baruipur road, Harinabhi, P.S. Sonarpur District 24, Parganas (South), Kolkata, bearing survey/block/plot no. JL no. 76, Touzi no. 70/71, Khatian no. 30,31,627,325,329,330,327, Plot no. 602, 619, 607, 620, 644, 597, 598, 497, 623,500,585,625,621,586,622,617,P.S Sonarpur district 24 Pargana (South), admeasuring 4 acres.

Guarantee:

Irrevocable and unconditional guarantee of Shripal Morakhia, Ami Javeri, Nitya Gopal Banik, Aha holding Private Limited and Mrs Kalpana Morakhia. The guarantee shall be joint and several.

Repayment:

Loan is required to be repaid in 72 monthly instalments after a moratorium of 24 month commencing from April 10, 2018.

Interest:

The term loan will bear interest at 12.95% p.a (fixed) with monthly reset and the same is payable monthly. 

 

Term loan 2

Security:

The loan amount is secured by second charge on all movables assets including current assets of the Company. The charge would be subservient to all the existing and prospective charges created/to be created by the Company on the said assets in favour of those banks/ financial institution which have extended/would extend business loans (viz. term loans for machineries, business premises and working capital) to the Company for the same business for which SIDBI has extended this sub-debt. All such aforesaid lenders would be referred to as ’senior secured lenders’.

Guarantee:

Irrevocable and unconditional guarantee of Shripal Morakhia, Kalpana Morakhia and Ms Ami Zaveri. The guarantee will be joint and several.

Repayment:

Loan is required to be repaid in 84 monthly instalments after a moratorium of 36 month commencing from February 10, 2018. After 36 month the loan amount will be repaid in 47 instalments of Rs 2100 thousands each and balance Rs 1300 thousands in last instalment.

Interest:

The term loan will bear interest at 15.50% p.a (fixed) with monthly reset and the same is payable monthly.

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated 

 

Repayment    
Particulars As at September 30,
2018
As at March 31,
2018
Repayable within 1 year                         155,600                            32,050
Repayable within 2-3 years                         154,889                         283,750
Repayable within 4-5 years                            60,400                            74,000
More than 5 years                            24,400                            50,200
 Total                         395,289                         440,000

 

(vi). Housing Development Financial Corporation Limited (HDFC):

Term loan 1

Security:

a) Mortgage of property situated at Khatian number LR-817 & RS-817, Tambuldaha-I, Bibirabad, Jibantala, 24 Parganas (South)

b) Charge on cashflows from Mumbai Lower Parel Smaaash, Convention center, Verbena Brew Pub & Sky Garden, Pravas Restaurant, Mumbai Go-Karting.

c) Corporate guarantee of Aha Holdings Private Limited

d) Personal Guarantee of Mr. Shripal Morakhia

Repayable Term: Principal will be repaid in 12 months and will be repayable in 4 equal monthly instalments starting 9th month.

Interest: Interest payable is linked to HDFC’s Corporate Prime Lending rate and is currently payable monthly at 12.50% p.a.

 

Term loan 2

Security:

a) Mortgage of property situated at Khatian number LR-817 & RS-817, Tambuldaha-I, Bibirabad, Jibantala, 24 Parganas (South)

b) Corporate guarantee of Aha Holdings Private Limited

c) Personal Guarantee of Mr. Shripal Morakhia

Repayable Term: Principal will be repaid in 12 months and will be repayable in 4 equal monthly instalments starting 9th month.

Interest: Interest payable is linked to HDFC’s Corporate Prime Lending rate and is currently payable monthly at 12.50% p.a.

 

Term loan 3

Security:

a) Mortgage of property situated at Khatian number LR-817 & RS-817, Tambuldaha-I, Bibirabad, Jibantala, 24 Parganas (South)

b) Corporate guarantee of Aha Holdings Private Limited

c) Personal Guarantee of Mr. Shripal Morakhia

Repayable Term: Principal will be repaid in 12 months and will be repayable in 4 equal monthly instalments starting 9th month.

Interest: Interest payable is linked to HDFC’s Corporate Prime Lending rate and is currently payable monthly at 12.50% p.a.

 

IV: Optional convertible preference shares

During the year 2016-17, the Company has entered into a Preference Shares subscription agreement (PSSA) with Aha holding Private Limited. In accordance with the PSSA, the Company has issued 21,266,288 0% Non-cumulative optionally convertible redeemable preference Shares of Rs. 10/- each (including conversion of outstanding loan aggregating to Rs. 12,663 thousands). The preference shares are convertible at any time into equal number of equity shares of face value of Rs. 10/- each until the date falling 18 months from the date of issuance of the preference shares, at the option of the holders, at Rs. 10/- per equity share and carry dividend @ 0% p.a. In the event of failure of the Company to convert in to equity shares and/or in the event to redeem the Preference shares upon exercise of the rights contempt above, the entire preference shares will become payable forthwith. The Optional convertible preference shares are converted into equity shares during the F.Y 2017-18.

Term loan 4 

Security    
- Personal guarantee of Mr.Shripal Morakhia (Director).
- Exclusive charge on current assets and movable fixed assets(Excluding Vehicle) of the company, both present & future.
-Exclusive charge on following 3rd party properties located in Kolkata with minimum value of INR 360 MN.
1.Land & Structure measuring 8 Acres located in District South 24, Parganas, Kolkata.
2.Land measuring 35 Acres located in Matla,District South 24, Parganas, Kolkata.
Repayment    
Loan repayable in equal quarterly instalment as follows:    
Particulars As at September 30, 2018 As at March 31,
2018
Repayable within 1 year
Repayable within 2-3 years 93,750
Repayable within 4-5 years 150,000
More than 5 years 56,250
 Total 300,000
Interest    
The term loan will bear interest at 1.95% (Spread) over and above the 6M YBL MCLR with half-yearly reset and the same is payable monthly.

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

V: Loans from related parties includes loans from Aha Holdings Private Limited and are unsecured, interest-free and repayable on demand.

 

VI: For the current maturities of long term borrowings, refer to note 22 other financial liabilities.

 

VII: Reconciliation of liabilities arising from financing activities

 

The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non–cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s consolidated statement of cash flows as cash flows from financing activities.

 

Particulars Non-convertible debentures Term loans from bank Term loans from financial institutions Optional convertible preference share Loans and advances from related parties
As at April 1, 2017                   1,195,828                     121,655                     798,162                                 —                        56,578
Financing cash flows          
Proceeds                  2,440,000                     135,000                  445,000                                 —                     191,081
Repayment  (1,440,000)  (95,895)  (389,710)                                 —                   (157,000)
Non-cash changes          
Converted into preference shares                      (40,966)
Transfer of current assets                                 —                                 —                                 —                                 —                         (7,645)
Amortization of borrowing  (49,171)                          4,396                          2,290                                 —                                 —
As at March 31, 2018                  2,146,657                     133,160                     590,763                                 —                          5,535
           
Financing cash flows          
Proceeds                       300,000                                   403,505                     12,000
Repayment    (28,500)  (127,084)                                 —                   23,700
Non-cash changes          
Converted into equity shares                                 —                                 —                                   —
Reimbursement of expenses                      —
Transfer of current assets                                 —                                 —                                   —                                 —
Amortization of borrowing  (2,.235)                            2,290                                 —                                 —
As at September 30, 2018                  2,099,722                     409,056                     590,763                     403,505                           41,236

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

22       Other financial liabilities

Particulars As at September 30, 2018 As at March 31, 2018
Non-current    
A. Interest accrued    
 - interest accrued but not due on debenture  
B. Security deposits 6,250 5,990
C. Other liabilities    
 - Payable on purchase of property, plant and equipment 104,933 188,280
Total 111,139 194,270
     
Current    
A. Current maturities of long term debt    
- from bank 54,000 54,000
- from financial institutions 155,600 155,600
- Non-convertible debentures 1,100,000 1,100,000
B. Interest accrued    
- on Term loan from bank 1,466 1,261
- on Term loan from financial institutions 23,504 2,159
C. Security deposits 190 186
D. Temporary overdrawn bank balance 174,545 990
Total 1,509,306 1,314,196

 

23       Provisions

Particulars As at September 30, 2018 As at March 31, 2018
Non-current    
Provision for employee benefits    
a) Post- employment benefit -gratuity liability  2,991  2,327
     
Total 2,991 2,327
Current    
Provision for employee benefits    
a) Leave encashment 8,444 8,512
b) Post- employment benefit -gratuity liability 503
     
Total 8,444 9,015

Notes: For other disclosures, refer note 39 on employee benefit plans. 

 

24       Other liabilities

Particulars As at September 30, 2018 As at March 31, 2018
Non-current    
A. Unearned income on discounted deposits   252
B. Deferred government grant (refer note 6.1) 7,772 7,772
  7,772 8,024
Current    
A. Advances received from customers 130,362 42,398
B. Unearned income on discounted deposits 588 673
C. Statutory dues  31,607  26,948
D. Deferred improvement credit
     
Total 162,558 70,019

  

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

25       Trade payables

Particulars As at September 30, 2018 As at March 31, 2018
Trade payables 266,082 228,616
 Total 266,082 228,616

 

Note: The average credit period on purchases of food and beverages is 30 to 45 days and for other goods and services is 60 to 90 days.

 

26       Revenue from operations

Particulars For the six months ended September 30, 2018 For the year ended March 31, 2018
a) Revenue from rendering of services    
- Gaming 644,910 801,526
- Food and beverages 311,612 477,646
- Banquet, corporate events and others 154,119 355,228
- Sponsorship fees 73,452 97,035
b) Other operating revenue    
- Professional charges 394 3,154
- Income from exhibits, merchandise and others 13,575 11,870
Total 1,198,063 1,746,459

 

27       Other income 

Particulars For the six months ended September 30, 2018 For the year ended March 31, 2018
a) Interest income:    
- Bank deposits 1,071 2,456
- Other financial assets carried at amortized cost                                —                                —
- Unwinding of security deposits 7,465 9,056
- Income tax refund                                —                                —
b) Sundry credit balances written back 12,449
c) Net foreign exchange gain/ (loss) 2,275 5,056
d) Other income:    
- Net gain/(loss) arising on financial assets carried at FVTPL 636 1,681
- Net gain/(loss) arising on financial liabilities carried at amortized cost  (9,028)
- Net gain/(loss) arising on financial liabilities carried at FVTPL  (6,869)
- Miscellaneous income 5,607 4,158
Total 17,054 18,959

 

28        Cost of materials consumed

Particulars For the six months  ended September 30, 2018 For the year ended March 31, 2018
 Opening stock      
  - Food and beverages 34,290 18,507
  - Less: Food and beverages (discontinuing operation)
  - Consumables 11,879 9,492
 Add: Purchases 120,512 243,002
  166,681 271,001
 Less: Closing stock      
 - Food and beverages 32,801 34,290
 - Consumables 6,861 11,879
Total cost of materials consumed 127,019 224,832

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended March 31, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

29 Changes in inventories of stock-in-trade 

Particulars For the six months ended September 30, 2018 For the year ended March 31, 2018
 Gaming products    
 Inventories at the beginning of the year 69,027 22,896
 Inventories at the end of the year  (104,625)  (69,027)
     
Increase/ (decrease)  (35,598)  (46,131)

 

30       Employee benefits expense

Particulars For the six months ended September 30, 2018 For the year ended March 31, 2018
     
a) Salaries and wages, including bonus 166,452 335,089
b) Contribution to provident and other funds 15,996 27,616
c) Gratuity (Refer note 39) 2,000 2,800
d) Staff welfare expenses 6,548 19,801
     
Total employee benefit expense 190,995 385,306

 

31       Finance cost 

Particulars For the six months ended September 30, 2018 For the year ended March 31, 2018
     
a) Interest costs:    
 - on loans from banks 11,507 15,861
 - on loans from financial institutions 51,451 98,804
 - on debentures 122,975 305,740
 - other interest expenses 349 642
b) Processing fees and related costs 6,397 12,137
     
Total 192,679 433,184

 

32       Pre-launch expenses 

Particulars For the six months ended September 30, 2018 For the year ended March 31, 2018
     
 Marketing expenses 12,576 36,013
 Food trial expenses 625 978
     
Total 13,202 36,991

The above comprises costs associated with the opening and organising of new centers, including pre-opening utility and service related costs and other related costs for employees engaged in such pre-launch activities

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

33       Other expenses 

Particulars For the six months ended September 30, 2018 For the year ended March 31, 2018
Stores and spares consumed 14,246 33,885
Utility charges 83,600 117,285
Lease expenses 242,167 267,467
Repairs and maintenance charges 23,740 34,977
Insurance premium 5,139 11,826
Rates, taxes and license fee 17,618 69,935
Communication expenses 8,275 14,460
Travelling and conveyance expenses 17,166 35,725
Printing and stationery 2,384 4,415
Branding expenses
Advertisement and business promotion 40,474 80,021
Legal and other professional costs 33,316 76,457
Fund raising and related costs
Recruitment charges 2,814 2,326
Housekeeping charges 14,044 26,974
Hire charges 493 1,004
Labour and other related expenses 1,129 3,905
Security charges 4,505 13,813
Payment to auditors 4,913 4,707
Advances written off 284
Provision for doubtful debts 1,551
Donation 500 44
Loss on property, plant and equipment sold/ written off 2,430   455
Miscellaneous expenses 19,774    15,751
     
Total 539,009 816,983

 

34       Exceptional Items 

Particulars For the six months ended September 30, 2018 For the year ended March 31, 2018
     
Leasehold improvement written-off (Refer note 34.1) 15,201
W/off consumable crockery and glassware (In line with Smaaash policy-pursuant to business acquisition) (up to August 31, 2017) 11,612
     
Total 26,813

 

34.1       Due to a fire in one of the buildings situated near the company premises (Kamala Mills compound), the Bombay Municipal Corporation (BMC), demolished several bars, eateries and restaurants situated in the Kamala Mills compound and surrounding areas in Mumbai.

 

The BMC and its officers demolished the Pravas restaurant and part of the Smaaash centre being operated by the Company. The loss incurred on account of this demolition, net off Rs. 670 thousands recovered from the sale of scrap, aggregating to net loss of Rs. 15,201 thousands is recognized as exceptional items in the financial statements. The Company has lodged the insurance claim against this loss and also filed a writ petition in the Bombay High Court against the demolition.

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

35       Current tax and deferred tax 

35.1    Income Tax recognized in profit & loss

Particulars For the six months ended September 30, 2018 For the year ended March 31, 2018
A. Current Tax:    
In respect of current year  —  (2,091)
In respect of previous year (835)
Total  (2,091)
     
B. Deferred Tax:    
In respect of current year origination and reversal of temporary differences (260,723)
Total (260,723)
     
Total (A+B) (262,814)

 

35.2       Income tax recognized in other comprehensive income 

Particulars For the six months ended September 30, 2018 For the year ended March 31, 2018
Deferred tax:    
Remeasurement of defined benefit obligations  (74)
Total  (74)
     
Classification of income tax recognized in other comprehensive income    
Income taxes related to items that will not be reclassified to profit or loss  (74)
Income taxes related to items that will be reclassified to profit or loss                                       —
Total  (74)

 

35.3       Reconciliation of income tax expense and the accounting profit multiplied by Company’s domestic tax rate: 

Particulars For the six months ended September 30, 2018 For the year ended March 31, 2018
Profit before tax  (565,784)
     
Income tax expense calculated at 30% plus surcharge (2016-17: 30% and 2015-16: 30%)  (174,827)
Effect on different tax rates of subsidiary operating in other jurisdictions         68
Effects of expenses that are not deductible in determining taxable profits       792
Effect of income that is exempt from taxation 10,211
Effect of expenses deductible in determining taxable profits  
Effect of previously unrecognized and unused tax losses and deductible temporary difference now recognized as deferred tax assets (98,236)
Others         13
   (261,979)
     
Adjustments recognized in the current year in relation to the current tax of prior years     (835)
     
Income tax expense recognized In profit or loss (relating to continuing operations) (262,814)

The tax rate used for the year ended March 31, 2018, and March 31, 2017 in reconciliations above is the corporate tax rate of 30% (plus surcharge and cess as applicable) on taxable profits under Income Tax Act, 1961.

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018 

All amounts are in Rs. ’000 unless otherwise stated

 

36 Discontinued operations

 

36.1Sale of Quick Service Restaurants (QSR):

 

During the F.Y 2016-17, pursuant to the decision taken and approved by the Board of directors of Adrenaline Foods Private Limited (Subsidiary), the entity has decided to discontinue its Mall Food Court Quick Service Restaurant (QSR) business model effective March 17, 2017. The closing down and discontinuation of Mall Food court business model was due to the lack of business in mall.

 

36.2Analysis of profit for the year from discontinued operations

 

The combined results of the discontinued operations (i.e. QSR business) included in the profit for the year are set out below. The comparative profit and cash flows from discontinued operations have been presented as if these operations were discontinued in the prior year as well.

 

Particulars For the six months ended September 30, 2018 For the year ended March 31, 2018
Profit for the year from discontinued operations    
Revenue    
Food and Beverages  
Other Income   —
Total Revenue (A)   945
Expenses   945
Cost of materials consumed    
Employee Benefit expense   —
Depreciation/amortization     —
Other expenses   —
Total expenses (B) 912
    912
Loss  from discontinued operations before tax (A-B)  
Income tax expense 34
Loss  from discontinued operations after tax   —
    34

 

36.3Assets and liabilities from discontinued operations

 

The carrying amount of net asset Rs. 658 thousands (Total assets Rs. 668 thousands less total liabilities Rs.10 thousands) (previous year: net liabilities Rs. 1,568 thousands {Total assets Rs. 1,244 thousands less total liabilities Rs. 2,812 thousands}). The carrying amount of total assets and liabilities as at the balance sheet date relating to the discontinuing business are as under:

 

Particulars As at September 30, 2018 As at March 31, 2018
     
Assets for discontinued operation    
Short-term loans and advances 668
Total  —  668
     
Liabilities for Discontinued Operation    
Trade Payables   —   —
Other current liabilities 10
  10

 

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

36.4 Cash flows from (used in) discontinued operation 

Particulars For the six months ended September 30, 2018 For the year ended March 31, 2018
Loss before tax 34
Adjustments for:    
Depreciation and amortization expense   —
Operating loss before changes in working capital 34
Changes in working capital:    
Inventories   —
Trade receivables   —
Short term loans and advances 576
Long term loans and advances   —
Provision for employee benefits   —
Trade payables  (2,208)
Other current liabilities  (595)
Short-term provisions     —
Cash used in from operations  (2,193)

 

37Financial Instruments

 

37.1Capital management Policy

 

For the purpose of the Group’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Group. The primary objective of the Group’s capital management is to maximise the shareholder value.

 

The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, interest bearing loans and borrowings, trade payables, less cash and cash equivalents.

 

Gearing ratio:

 

 Particulars As at September 30, 2018 As at March 31, 2018
 Debt (i)  2,870,602  2,876,116
 Cash and bank balances    48,131    119,840
 Net debt  2,822,471  2,756,276
     
 Total equity 2,575,815 2,435,593
 Net debt to equity ratio  1.10  1.13

 

The gearing ratio at end of the reporting period was as follows:

 

In order to achieve this overall objective, the Group’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.

 

Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

 

No changes were made in the objectives, policies or processes for managing capital during the six month ended September 30, 2018 and March 31, 2018 and March 31, 2017.

  

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended September 30, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

37.2        Categories of financial instruments:

 

Particulars  Amortized Costs  FVTPL  FVTOCI  Total
 A. Non-current assets        
 a) Investments 35 5,750 5,785
 b) Other financial assets 203,315 203,315
 Total 203,350 5,750 209,100
         
 B) Current assets        
 a) Investments
 b) Trade receivables 162,896 162,896
 c) Cash and bank balances 48,131 48,131
 d) Loans 2,803 2,803
 e) Other financial assets 108,436 108,436
 Total 322,266 322,266
         
 C. Non-current liabilities        
 a) Borrowings 1,367,161 1,367,161
 b) Other financial liabilities 111,139 111,139
 Total 1,478,300 1,478,300
         
 D. Current Liabilities        
 a) Borrowings 193,840 193,840
 b) Trade payables 266,082 266,082
 c) Other financial liabilities 1,509,306 1,509,306
 Total 1,969,227 1,969,227

 

As at September 30, 2018

 

As at March 31, 2018

Particulars  Amortized Costs  FVTPL  FVTOCI  Total
 A. Non-current assets        
 a) Investments 30 6,466 6,496
 b) Other financial assets 206,192 206,192
 Total 206,222 6,466 212,688
         
 B) Current assets        
 a) Investments 11,012 11,012
 b) Trade receivables 177,947 177,947
 c) Cash and bank balances 119,840 119,840
 d) Loans 412 412
 e) Other financial assets 87,288 87,288
 Total 385,487 11,012 396,499
         
 C. Non-current liabilities        
 a) Borrowings 1,360,980 1,360,980
 b) Other financial liabilities 194,270 194,270
 Total 1,555,250 1,555,250
         
 D. Current Liabilities        
 a) Borrowings 205,535 205,535
 b) Trade payables 228,616 228,616
 c) Other financial liabilities 1,314,196 1,314,196
 Total 1,748,347 1,748,347

  

 

 

 

Smaaash Entertainment Private Limited

Notes to consolidated financial statements for the six months ended March 31, 2018

All amounts are in Rs. ’000 unless otherwise stated

 

37.3Financial risk management objectives

 

The Group’s principal financial liabilities, comprises of borrowing from banks and financial institutions, debentures and other payables. The main purpose of these financial liabilities is to support its operations and business expansion. The Group’s principal financial assets include trade and other receivables, investments and cash and deposits that derive directly from its operations.

 

The Group’s senior management oversees the management of these risks. The Group’s senior management is supported by a financial risk committee that advises on financial risks and the appropriate financial risk governance framework for the Group. This financial risk committee provides assurance to the Group’s senior management that the Group’s financial risk activities are governed by appropriate policies and procedure and that financial risks are identified, measured and managed in accordance with the Group’s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each risk, which are summarized as below: