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Trigyn Technologies Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Dec 2018

Auditor and Management Disclosures and Notes for the quarterly results dated 31 Dec 2018

1. The unaudited Financial statement for quarter & nine month ending December 18 has been reviewed by the audit committee and approved by the Board of directors at their respective meetings held on February 5th, 2019.

The financial results of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended.

2. The Limited review of the financial results for the quarter & nine months ending December 31, 2018, pursuant to regulation 33 (C) (i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 has been carried out by the statutory auditors. The comparative figures have also been accordingly restated to confirm to the current period presentation.

3. The Company/Group is engaged in the business of “Communications and information technology staffing support services”. The company also carries out activity of erecting / commissioning /maintenance and supply of computer/peripherals and providing software solutions. However the operations of erecting / commissioning / maintaining and supply of computer/peripherals and providing software solutions is within the threshold limit stipulated under Ind AS 108- 'Operating Segments' and hence it does not require disclosure as a separate reportable segment.

4. The exceptional item for the quarter and year to date represents compounding charges (refer "note 9" below) & provision for bad debts pertaining to advance to group Companies and in comparative period includes permanent diminution in value of investment in Trigyn Technologies (India) Private Limited and Leading Edge Infotech Limited.

5. The company has provided for gratuity and leave encashment expenses on average basis.

6. In the light of Notification, No S.O. 4823 (E) dated 12.9.2018 the provision of section 66 to 70 of the Companies (Amendment) Act, 2017 have come into force with effect from 12th September 2018. Accordingly the company’s application to the Central Government pending under section 197 for Managerial remuneration which exceeded /is likely to exceed the limits as per Board resolution, AGM approval and as per limits provided under Schedule V to the Companies Act 2013 due to valuation of perquisites as per IT rules with respect to ESOPs exercised / to be exercised by the Whole Time Directors covering period FY 2016-17 and 2017-18 shall abate and company will take approval from shareholder through special resolution.

7. During the quarter ended Dec 31st, 2018, out of the stock options issued to Director and officers/ employees of the company and subsidiary, 740,000 ESOPs were exercised at a price of Rs.10/- each.

8. Effective April 1, 2018, the Company has adopted Ind AS 115 using the cumulative effect method. The standard is applied retrospectively for contracts that are not completed as the date of initial application and the comparative information is not restated. The effect of adoption of the standard did not have any significant impact on the financial statements of the Company for the nine months ended December 31st, 2018.

9. Investments, Receivables and Loans and advances include balances in the accounts relating to subsidiaries and step down subsidiaries which were wound-up/liquidated/under liquidation in the earlier years and are fully provided for, are as under :- (For Table, kindly refer Corporate Announcements on www.bseindia.com)

The company has carried forward in the book of accounts the balance of the above mentioned foreign subsidiary which has been wound up. The company is awaiting approval from Reserve Bank of India for the same.

Process for obtaining necessary approval and permissions from Reserve bank of India (RBI) under FEMA regulations are under progress. Out of the total estimated compounding charges of Rs. 4.55 Crores, the company during the quarter has provided for Rs. 2.27 Crore (to the extent of 50%) under head exceptional items as a matter of prudence. In view of this Investments, Loans advances and provision for doubtful debts and impairment in the value of investments, are retained and other entries are given effect to in the books of account are subject to approval of RBI. Post necessary approvals received from RBI during the previous year, the investment in Applisoft Inc and the corresponding provision has been written off in the books of accounts.

10. In respect of a composite works contract entered by the company wherein (he terms of billing for work done is linked to the milestone achievement, the company has reached the second milestone in January 2019. The company is awaiting in-principle approval from the concerned authorities about the completion of the milestone. On receipt of the in-principle approval/confirmation, the revenue will be booked. In view of above, the following expenditure has been carried forward as unbilled as on 31st December 2018

Purchase of materials - Rs. 3,546.69 lacs.

Overheads - Rs. 287.88 lacs.

The company has given bank guarantee of Rs. 800 Lacs and EMD amounting to Rs. 50 lacs.

11. The company was awarded work order on 4th July, 2018 in respect of Smart Parking Solution for On-Street and Off-Street Parking locations in Nashik City on PPP model. The company has given bank guarantee of Rs. 1.19 Crores as performance security. The contract will be for a period of 10 years and 9 months from the appointed date. Commissioning period will be 9 months from the appointed date to the commercial operations date. The company has incurred cumulative Rs. 4.72 Crores till 31st December 2018 for the procurement of equipment/machinery/hardware for the project and the same has been included under the head “Nashik Project Advance”. The company is required to pay monthly Rs. 17.60 lakhs as Concession fee to Nashik Municipal Smart City Development Corporation Limited (NMSCDCL) from the date of commissioning of the project.

12. In pursuance of rectification order passed for AY 2009-10, company has received refund from income tax to the tune of Rs. 7.39 Crores in the month of October 20 i 8 (including interest of Rs, 1.51 Crores). Owing to undisputed additions for which there was short provision in the books of accounts, as a matter of prudence the company has provided, in the quarter ended 30th September 2018 - Rs. 2.29 Crores and in the current quarter - Rs. 2.26 Crores (in regards to assessment years 2010-11, 2013-14 and 2014-15). Also the company has debited to profit and loss account towards interest on this demand to the tune of Rs. 2.05 Crores.

The company has been advised to account interest paid to the tax department net off interest received on income tax refund as the interest received from and paid to is in the same financial year and from the same party i.e. Government of India. Therefore, both the transactions should be taken together.

The company has disputed certain additions/disallowables made for earlier years. The tax on these disputed additions/disallowables is estimated at Rs. 2.10 Crores which is yet to be provided. The external consultants and subject matter experts are of the opinion that the company holds good ground on merits against the disputed additions/disallowables.

13. Under Section 132 of Income Tax Act, 1961, Income Tax Authorities had carried out search and seizure proceedings at the premises of the Company on August 29, 2018 and August 30, 2018. The Company continues to operate in normal course of business and there is no further notice from the Income Tax department.

14. In the current quarter the company has received Dividend from its wholly owned subsidiary Trigyn Technologie INC amounting to $ 8,50,000 (Gross $ 1000,000 less withholding tax in USA $ 150,000) USD 991 per share (equivalent to 991%).

15. Figures of previous quarter/period/year have been regrouped and reclassified, wherever considered necessary to correspond with current period presentation.

R Ganapathi
Chairman & Executive Director