Subex Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2017
Auditor and Management Disclosures and Notes for the annual results dated 31 Mar 2017
1. The above results have been reviewed by the Audit Committee and approved by the Board of Directors in their meeting held on May 25, 2017.
2. The financial results have been prepared in accordance with the recognition and measurement principles laid down in the applicable Indian Accounting Standards (“Ind AS”) prescribed under section 133 of the Companies Act, 2013, read with relevant rules thereunder and in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI Circular No. CIR/CFD/FAC/62/2016 dated July 5, 2016.
3. Reconciliation between previous GAAP and Ind AS
Consequent to transition from the previous GAAP to Ind AS, the reconciliation of profit/loss after tax for the corresponding three months and year ended March 31, 2016 and reconciliation of equity as on March 31, 2016 is provided below:
4[i] As at March 31, 2016, the Company had assessed the recoverability of its receivables and loans and advances from its overseas subsidiaries. Based on future operational plan, projected cash flows and the financial position of these subsidiaries, the Company had made a provision of Rs. 2,455 Lakhs (net off adjustment towards provision for expected credit loss of Rs. 5,907 Lakhs) and Rs. 1,960 Lakhs towards trade receivables and loans and advances respectively due from these subsidiaries. Further, the Company had also written off Rs. 10,476 Lakhs as bad debts towards trade receivables from these subsidiaries as at March 31, 2016. During the year ended March 31, 2017, provision for doubtful advances amounting to Rs. 1,579 Lakhs has been written back on collection of the aforesaid loans and advances.
4[ii] As at March 31, 2017, the Company had assessed the carrying value of it's investment in its wholly owned subsidiary viz., Subex Americas Inc., of Rs. 7,006 Lakhs (March 31, 2016: Rs. 12,496 Lakhs). Based on future operational plan, projected cash flows and valuation carried out by an external valuer, the Company has made an impairment provision of Rs. 6,070 Lakhs (March 31, 2016: Rs. 5,490 Lakhs) towards the carrying value of its investment in the said subsidiary. The management is of the view that, the carrying value of the aforesaid investment in in the said subsidiary of Rs. 936 Lakhs, as at March 31, 2017 is appropriate.
Also, during the current year the Company has made provision for impairment of Rs. 100 Lakhs (March 31, 2016: Rs. Nil) towards the carrying value of its investment in the Subex Technologies Limited as the said subsidiary is under liquidation.
5. As at March 31, 2017, the Company has assessed the carrying value of it's investment in its wholly owned subsidiary viz., Subex (UK) Limited of Rs. 64,739 Lakhs. Considering the future operational plan, projected cash flows and the valuation carried out by an external valuer, the management is of the view that, the carrying value of its aforesaid investment in Subex (UK) Limited as at March 31, 2017 is appropriate.
6. As at March 31, 2017, the Company has netted off Rs. 28,735 Lakhs of trade receivables from its subsidiaries against trade payables to the respective subsidiaries pursuant to approval from its Authorised Dealer.
7. Subsequent to balance sheet date, the Company has made an allotment of 55,094,999 equity shares of the Company on a preferential basis, at an issue price of Rs. 14 per equity share (Face value of Rs. 10 per equity share) amounting to Rs. 7,713 Lakhs.
8. (a) As at March 31, 2017, the Company has outstanding FCCBs III of USD 3.60 Million (Rs. 2,335 Lakhs) which are carried at fair value of USD 3.51 Million (Rs. 2,277 Lakhs) in the books of accounts, which are due for redemption on July 07, 2017. (b) The FCCB holders in their respective meetings have approved the deferral of aggregate interest of US$ 0.73 Million (Rs. 473 Lakhs) in respect of outstanding FCCBs III with face value of US$ 3.60 Million (Rs. 2,335 Lakhs) for the period July 6, 2012 to January 5, 2016 till redemption date of the bonds, being July 07, 2017.
9. The Company had remitted the withholding taxes on interest on FCCBs III in accordance with the provisions of the Income Tax Act, 1961 amounting to Rs. 1,052 Lakhs pertaining to FCCBs III which have been converted into equity shares of the Company. Pursuant to such conversion, the interest accrued but not due is considered no longer payable and the management basis expert advice, is of the view that the withholding taxes paid by the Company in respect of the aforesaid interest, are recoverable from income tax department and/or are adjustable against its other withholding taxes obligations. Accordingly, the Company has revised the returns of withholding taxes and adjusted withholding taxes of Rs. 205 Lakhs during the quarter ended March 31, 2017 (quarter ended December 31, 2016 and March 31, 2016 amounting to Rs. 377 Lakhs and Rs. Nil, respectively and that for the year ended March 31, 2017 and March 31, 2016 amounting to Rs. 1,037 Lakhs and Rs. Nil, respectively) on salary, professional services and others by write back of withholding taxes on interest on FCCBs paid earlier, and such write back is included under other income.
10. Employee benefits expenses for the quarters ended March 31, 2017, December 31, 2016 and March 31, 2016 are net of reversal of provision no longer required, in respect of employee incentives relating to sales and delivery commissions, amounting to Rs. 70 Lakhs, Rs. Nil and Rs. 30 Lakhs, respectively and that for the year ended March 31, 2017 and March 31, 2016 amounting to Rs. 70 Lakhs and Rs. 381 Lakhs, respectively.
11. The Company is engaged in the business of software products and related services. These, in the context of Ind AS 108 on Operating Segments Reporting are considered to constitute one segment and hence the Company has not made any additional segment disclosures.
12. The figures of last quarter of current and previous year are the balancing figures between the audited figures in respect of the full financial year and the published unaudited year to date figures of nine months of respective year.
13. Previous period figures have been regrouped/ reclassified, wherever necessary to confirm to current period’s/ year's classification.