Exhibit 13.1
REDIFF.COM INDIA LIMITED
20THANNUAL REPORT
2014-2015
(UNDER COMPANIES ACT, 2013)
CORPORATE INFORMATION
Board of Directors
Ajit Balakrishnan (Chairman & Managing Director)
Arun Nanda
Sunil Phatarphekar
Ashok Narasimhan
Sridar Iyengar
M. Madhavan Nambiar
Chief Financial Officer
Swasti Bhowmick
Company Secretary
Pooja Lohade
Auditors
M/s. Deloitte Haskins & Sells LLP
Chartered Accountants
Indiabulls Finance Centre, Tower 3,
27th-32nd Floor, Elphinstone Mill
Compound, Senapati Bapat Marg,
Elphinstone (West), Mumbai – 400013
India
Registered Office
First Floor, Mahalaxmi Engineering Estate
L. J. First Cross Road
Mahim (West)
Mumbai 400 016
India
Corporate Identity Number
U22100MH1996PLC096077
Contents
Particulars | Page Nos. |
Documents as required under Companies Act, 2013 | |
Notice of Annual General Meeting | 1-5 |
Directors Report | 6-22 |
Consolidated Financial Statements | |
Consolidated Independent Auditors’ report | 23-29 |
Consolidated Balance Sheet | 30 |
Consolidated Statement of Profit and Loss | 31 |
Consolidated Cash Flow Statement | 32 |
Notes to Consolidated Financial Statements | 33-60 |
Unconsolidated Financial Statements | |
Independent Auditors’ report | 61-66 |
Balance Sheet | 67 |
Statement of Profit and Loss | 68 |
Cash Flow Statement | 69 |
Notes to Financial Statements | 70-96 |
Proxy Form and Attendance Slip | 97-99 |
NOTICE
Notice is hereby given that the Twentieth Annual General Meeting of the Members of Rediff.com India Limited will be held on 29, September, 2015, at 2.00 p.m. (IST) at the Registered Office of the Company situated at First Floor, Mahalaxmi Engineering Estate, L. J. First Cross Road, Mahim (West), Mumbai 400016, to transact the following business:
ORDINARY BUSINESS
1. | To receive, consider and adopt the Audited financial Statements Balance Sheet as at March 31, 2015 and Profit & Loss Account for the year ended as on that date both standalone and consolidated and the reports of the Auditors and Directors’ thereon. |
2. | To appoint a Director in place of Mr. Diwan Arun Nanda, Director retiring by rotation and being eligible, offers himself for reappointment. |
3. | To appoint a Director in place of Mr. M. Madhavan Nambiar, Director retiring by rotation and being eligible, offers himself for reappointment. |
4. | To appoint a Director in place of Mr. Ashok Narsimhan, Director who vacated his office as required under Section 167 of the Companies Act 2013 and being eligible, offers himself for reappointment. |
5. | To appoint Auditors and fix their remuneration by passing the following resolution as an Ordinary Resolution with or without modification(s); |
“RESOLVED THAT the appointment of M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Reg. no. 117366W), Mumbai as auditors of the Company for a term of 5 years i.e. till the conclusion of the 23rd Annual General Meeting which was subject to ratification at every AGM ,be and is hereby ratified as Statutory Auditors of Rediff.com India Limited and to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting at a remuneration to be decided by the Board of Directors/Audit Committee of the Directors of the Company.”
6. | Approval of ESOP |
“RESOLVED THAT pursuant to the provisions of Companies Act 2013, as applicable and subject to the other permissions and approvals as may be required, the 2015 Stock option Plan including Schedule 1 to the 2015 Stock option Plan, as adopted by the Board of Directors on 27th January 2015 (a copy being available for inspection at a request at the Annual General Meeting), be and is hereby adopted and approved.
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RESOLVED FURTHER THAT the Board of Directors or a Committee thereof, be and hereby are authorised and directed to operate and implement the 2015 Stock option Plan and authorised to grant Stock option under, and in accordance with the terms of the 2015 Stock option Plan, to employees and directors of the Company/ Subsidiaries of the Company (whether incorporated in India or outside India).
RESOLVED FURTHER THAT the Board of Directors or a Committee thereof, may grant stock options under the 2015 Stock option plan up to a maximum of such number of stock options as are convertible in to 1,03,000 equity shares of the Company.
RESOLVED FURTHER THAT the stock option hereto granted by authorisation of the Board of Directors or a Committee thereof pursuant to the 2015 Stock option Plan be and hereby approved.
RESOLVED FURTHER THAT the Board of Directors or a Committee thereof, be and hereby are authorised and directed to do all such acts, deeds, matters and things as may be necessary expedient or desirable to give effect to the foregoing resolutions including, without limitation making any and all filings, submissions and registrations with NASDAQ Market and the Securities and Exchange Commission.”
SPECIAL BUSINESS
7. | To consider and if thought fit, to pass with or without modification, the following resolution as SPECIAL resolutions: |
“RESOLVED THAT pursuant to Section 42,62,71 and other applicable provisions , if any, of the Companies Act 2013, and the rules made thereunder (including any amendments thereto or any statutory modifications and/or re-enactment thereof for the time being in force (the “ACT”) and all other laws and regulations as may be applicable and in accordance with the enabling provisions in the Memorandum and Articles of Associations of the Company and subject to such approvals, consent permissions and sanctions, if any, of the GOI, SEBI, RBI Stock Exchanges and any other relevant statutory/ governmental/regulatory authorities (the “concerned authorities”) as may be required and applicable and further subject to such terms and conditions as may be prescribed or imposed by any of the concerned authorities while granting such approvals, consent, permissions and sanctions as may be necessary, which may be agreed upon by the Board of Directors of the Company as deemed appropriate (hereinafter referred to as the “Board” which terms shall include any committee (s) constituted/ to be constituted by the Board to exercise the powers conferred on the Board by this Resolution), consent of the Company be and is hereby accorded to the Board for a period of 36 months to create, issue, offer and allot Equity Shares and/or Equity Shares through depository receipts including American Depository Receipts (ADRs) or any other instruments or securities of any type in the course of offerings to eligible investors, whether existing shareholders of the Company or not, through a public issue and/or on a private placement basis, or by way of circulation of an offering circular or prospectus or any other document or any process, which, upon allotment or conversion of all Securities so issued or allotted, as the case may be, could give rise to the issue of up to 7 million equity shares of the Company to be issued for an aggregate offering price to be determined at a later time by the Board and such issue and allotment to be made at such time or times, in such tranche or tranches, in such manner as the Board may, in its sole discretion think fit, on such terms and conditions as may be decided and deemed appropriate by the Board at the time of such issues or allotments.
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RESOLVED FURTHER THAT the Equity shares to be allotted in terms of this resolution shall rank pari passu in all respect with the existing Equity Shares of the Company.
RESOLVED FURTHER THAT for the purpose of giving effect to the foregoing and without being required to seek any further consent or approval of the members of the Company, the members shall be deemed to have given their approval thereto expressly by the authority of this resolution to the Board and the Board be and is hereby authorized for and on behalf of the members of the Company:
a) | To do all such acts, deeds, matters and things as the Board may at its discretion deem necessary or desirable for such purpose, including without limitation filing a Registration Statement and other documents with the SEC, listing the securities on the New York Stock Exchange or Nasdaq Small Cap Market, entering into depository arrangements, appointments of and finalising terms with Lead Managers, Merchant Bankers, Underwriters, Guarantors, Financial Advisors, Depositories, Custodians, Principal Paying/Transfer/Conversion Agents, Listing Agents, Registrars, Trustees and all other agencies, whether in India or abroad, as they may in their absolute discretion think fit, to make applications, sign and execute documents with various Indian and US regulatory authorities, etc. as maybe necessary in this regard.” in relation to the Issue of Equity Shares through depository receipts including American Depository receipts (ADRs) and to remunerate any of the Agencies in any manner including payment of commission, brokerage or fee for their services; |
b) | To settle any questions, difficulties or doubts that may arise in regard to the Issue of Equity Shares through depository receipts including American Depository receipts (ADRs) |
c) | To seek and obtain the listing of the Securities, as may arise, or as may be legally required and as the Board may consider necessary or expedient, in the best interest of the Company; |
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d) | To delegate from time to time, all or any of the powers conferred herein upon the Committee of Directors or the Chairman or the Director/s or any other Officer/s of the Company.” |
By Order of the Board | |
PLACE: MUMBAI | /s/ Pooja Lohade |
DATE: 4th September, 2015 | Company Secretary & Manager Legal |
NOTES:
1. | A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF/HERSELF AND SUCH A PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES TO BE EFFECTIVE MUST BE RECEIVED BY THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE COMMENCEMENT OF THE ANNUAL GENERAL MEETING. |
2. | The explanatory statement pursuant to the provisions of sections 42, 62 and 71 of the Companies Act, 2013 for item no 7 is enclosed and form part of this notice. |
REDIFF.COM INDIA LIMITED
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EXPLANATORY STATEMENT PURSUANT TO THE PROVISIONS OF SECTION 42, 62 & 71 OF THE COMPANIES ACT, 2013
The Special Resolution contained in the Notice under item No. 7 relates to a resolution by the Company enabling the Board to create, offer, issue and allot any securities convertible into equity shares at the option of the Company and/or at the option of the holder of the security and/or securities linked to equity shares through American Depository Shares / Receipts and/or any other instruments or securities of any type inclusive of any such equity shares issuable upon exercise of an over allotment option by any underwriter, debentures whether partly/fully convertible and/or securities linked to Ordinary Shares and/or foreign currency convertible bonds and/or bonds with Share Warrants attached, (hereinafter referred to as the “Securities”), in the course of offerings to eligible investors, whether existing shareholders of the Company or not, through a public issue and/or on a private placement basis, or by way of circulation of an offering circular or prospectus or any other document or any process, which, upon allotment or conversion of all Securities so issued or allotted, as the case may be, could give rise to the issue of up to 7 million equity shares of the Company to be issued for an aggregate offering price to be determined at a later time by the Board and such issue and allotment to be made at such time or times, in such tranche or tranches, in such manner as the Board may, in its sole discretion think fit, on such terms and conditions as may be decided and deemed appropriate by the Board at the time of such issues or allotments. These resolutions are being recommended in order to enable the Board to issue such equity shares of the Company at such time and on such terms as they deem fit in their discretion, without creating any obligation on the Board to issue such shares. The Company, in accordance with applicable rules and regulations (“Sponsored ADS Regulations”), may propose to sponsor an issue of ADSs with an overseas Depositary against existing equity shares held by the all the shareholders of the Company (“the Scheme”) in terms of the Offer Letter for the Scheme.
The explanatory statement to the aforesaid resolution specified that the allotment of equity shares under the aforesaid resolution would be made within 36 months of the date of the resolution.
The Special Resolution as set out at Resolution No. 7 if passed, will have the effect of permitting the Board to issue and allot securities to investors, who may or may not be existing members of the Company in the manner as set out in resolution no. 7.
The Board believes that the proposed Special Resolution is in the interest of the Company and therefore recommends the resolution for your approval.
The directors of the Company, to the extent of the equity shares held by them in the Company, if any, may be deemed to be interested in the aforesaid resolutions in Item no.7 of the Notice, solely in their capacity as equity shareholders to whom the Scheme proposed for approval of the shareholders, would provide an option to participate in the therein, on a pari passu basis with all other shareholders of the Company. The Board recommends all the resolutions under Item no.7 in this Notice for the approval of the shareholders as special resolutions.
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Rediff.Com India Limited
CIN: U22100MH1996PLC096077
DIRECTORS’ REPORT
To,
The Members,
Your directors have pleasure in presenting their 20th Annual Report on the business and operations of the company together with the Audited Statement of Accounts for the year ended 31st March, 2015.
1. | Financial Highlights (Standalone and Consolidated): |
During the year under review, performance of your company as under:
(₹in millions)
Particulars | Year ended 31st March, 2015 | Year ended 31st March, 2014 | ||||||
Turnover | 742.32 | 784.38 | ||||||
(Loss) before taxation | (432.98 | ) | (305.21 | ) | ||||
Less : Tax Expense | - | - | ||||||
(Loss) after tax | (787.27 | ) | (726.35 | ) | ||||
Add : Balance B/F from the previous year | (2,344.49 | ) | (1,618.13 | ) | ||||
(Loss) C/F to the next year | (3,131.76 | ) | (2,344.49 | ) |
The consolidated performance of the group as per consolidated financial statements is as under:
Particulars | Year ended 31st March, 2015 | |||
Turnover | 937.92 | |||
(Loss) before taxation | (835.74 | ) | ||
Add : Tax Expense | (0.904 | ) | ||
(Loss) after tax | (836.64 | ) | ||
Add : (Loss) B/F from the previous year | (2,455.62 | ) | ||
(Loss) C/F to the next year | (3,292.26 | ) |
2. | Details of Subsidiaries: |
i) | Rediff Holdings Inc., USA |
Rediff Holding Inc. is the wholly owned Subsidiary of the Company. Rediff Holding Inc. is a cost centre taking care of all corporate related expenditure for the Rediff Group in the USA and does not generate any revenue.
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Loss of the Year is US $ 383,669/-. After giving effect to the taxes, net loss of US $ 397,331/- was carried in the Balance Sheet.
ii) | Value Communications Corporations (“Valucom”), USA |
Valucom is the wholly owned Subsidiary of the Company. Following the sale of its long distance phone card business in April 2004, the Company is not engaged in any business. Since there was no business activity, we did not incur any expenses during the year.
iii) | Vubites India Private Limited (“Vubites”) |
Vubites is the wholly owned Subsidiary of the Company. The Company booked Revenue amounting to₹ 60,965,573/- for the year and the Loss for the year is₹ 112,907,467/- .
iv) | India Abroad Publications Inc.USA |
India Abroad Publications Inc. USA, a weekly newspaper publishing unit, which is a wholly owned subsidiary of Rediff Holding Inc. which in turn is a wholly owned subsidiary of Rediff.com India Ltd. The Profit and Loss account is set out along with this report and shows that during the year the Company earned gross income of US$ 1,893,681/-. Gross Loss (before depreciation and amortisation) is US$ 1,018,236/-. After giving effect to other adjustments, the net loss of US$ 1,023,901/- was carried to the Balance Sheet.
v) | India Abroad Publications (Canada) Inc. |
India Abroad Publications (Canada) Inc. a weekly newspaper publishing unit, which is a wholly owned subsidiary of India Abroad Publications Inc. The Profit and Loss account is set out along with this report and shows that during the year the Company earned Net Loss of C$ 9,537/- was carried to the Balance Sheet.
vi) | India in New York Inc. |
India in New York Inc., a weekly newspaper publishing unit, which is a wholly owned subsidiary of India Abroad Publications Inc. The Profit and Loss account is set out along with this report and shows that during the year the Company earned gross income of US$ 64,434/- was carried to Balance Sheet.
vii) | Rediff.com INC. |
Rediff.com Inc is a wholly owned subsidiary of Rediff Holdings Inc. Rediff.com Inc. derives revenue from a website targeted at the Indian American community. The Profit and Loss account is set out along with this report and shows that during the year the Company earned gross income of US$ 284,955/-. After giving effect to other adjustments, the net loss of US$ 257,357/- was carried to the Balance Sheet.
The detailed disclosure is annexed as Form AOC-1 as a part of this Director’s Report. (Refer Annexure 1)
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3. | Dividend: |
During the financial year 2014-15, your Board does not recommend any dividend.
4. | Amounts Transferred to Reserves: |
There was no transfer to any reserves during the financial year 2014-15.
5. | Transfer of Unclaimed Dividend to Investor Education and Protection Fund: |
The provisions of Section 125(2) of the Companies Act, 2013 do not apply as there was no dividend declared and paid during previous years.
6. | Shares: |
a. | Changes in Share Capital, if any |
During the financial year 2014-15, there was no change in the share capital of the Company
b. | Buy Back of Securities |
The Company has not bought back any of its securities during the year under review.
c. | Sweat Equity |
The Company has not issued any Sweat Equity Shares during the year under review.
d. | Bonus Shares |
No Bonus Shares were issued during the year under review.
e. | Employees Stock Option Plan |
The Company granted 119,100 options (equivalent to 59,550 Equity Shares) under various Employees Stock Option Plans, during the year under review.
7. | Material Changes Affecting the Financial Position of the Company: |
The following material changes and commitment occurred after the Balance Sheet date i.e. 31st March 2015:
On July 29, 2015, the Company entered into a Purchase Agreement with Lincoln Park Capital Fund, LLC, an Illinois limited liability company (“Investor”). The Purchase Agreement provides that the Company has the right to sell to the Investor, and the Investor has the obligation to purchase from the Company, up to an aggregate of US$15 Million of the Company’s American Depositary Shares (“ADSs”) over the 36-month term of the Agreement in amount as described in the Purchase Agreement.
(Refer Note 33 of the Standalone Financial Statement for further details.)
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8. | Extract of Annual Return: |
The extract of Annual Return, in format MGT - 9, for the financial year 2014-15 is being enclosed with this report. (Refer Annexure 2)
9. | Number of Board Meetings: |
The Board of Directors of your Company met five times during the year under review. The maximum time gap between any two consecutive meetings did not exceed one hundred and twenty days.
10. | Particulars of Loan, Guarantees and Investments under Section 186: |
a. | Details of Loans |
During the financial year 2014-15 the Company has given Loan to its wholly owned subsidiary Vubites India Private Limited amount aggregating to₹104,047,362 (Rupees Ten crores forty lakhs forty seven thousand three hundred sixty two only) in more than one trenches which were duly approved in the various Board meetings.
b. | Details of Investments & Guarantee |
There were no guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable.
11. | Particulars of Contracts or Arrangements with Related Parties: |
The particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act 2013 for the financial year 2014-15 in the prescribed format, AOC-2 is being enclosed with this report. (Refer Annexure 3)
12. | Statutory Auditors: |
M/s Deloitte Haskins & Sells LLP, Chartered Accountants, (Reg. no. 117366W), were appointed as Statutory Auditors for a period of 5 years in the Annual General Meeting held on 29th September 2014 .Their continuance of appointment and payment of remuneration are to be confirmed and approved in the ensuing Annual General Meeting. The Company has received a certificate from the above Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.
13. | Explanation to Auditor’s Remarks and the Practicing Company Secretary in their reports: |
There are no qualifications, reservations or adverse remarks made by the Auditors in their report.
The provisions relating to submission of Secretarial Audit Report is not applicable to the Company.
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14. | Details of Directors and Key Managerial Personnel (KMP): |
In accordance with the provisions of the Companies Act, 2013, M. Madhavan Nambiar Diwan Arun Nanda and Ashok Narsimhan, Directors retire by rotation at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Necessary resolutions for the re-appointment of the aforesaid Directors have been included in the Notice convening the ensuing AGM and details of the proposal for re-appointment are mentioned in the Explanatory Statement to the Notice.
At the annual general meeting held on September 24, 2008, the members of the Company re-appointed Mr. Ajit Balakrishnan for a period of five (5) years w.e.f. 23rd August, 2008. Accordingly, Mr. Balakrishnan held the office till 22nd August, 2013. The Board of Directors at their meeting held on July 23, 2013 approved the re-appointment of Mr. Balakrishnan as the Managing Director of the Company for a period of five (5) years with effect from August 22, 2013, which was duly approved by the members in its meeting held on September 30, 2013.
The Board at its meeting held on 27th January 2015 appointed Ms. Pooja Lohade as Company Secretary of the Company.
Mr. Ajit Balakrishnan Chairman and Managing Director of the Company, Mr. Swasti Bhowmick Chief Financial officer and Ms. Pooja Lohade Company Secretary are the KMPs of the Company as per the provisions of the Act.
15. | Receipt of any commission by MD / WTD from a Company or for receipt of commission / remuneration from its Holding or subsidiary: |
The below directors of the Company are in receipt of the remuneration from its US Subsidiary Rediff Holding Inc.
Directors | Designation | Amount in US$ | ||
Ajit Balakrishnan | Chairman & MD | 200,000 p.a. | ||
Sunil Phatarphekar | Director | 20,000 p.a. | ||
M. Madhavan Nambiar | Director | 20,000 p.a. | ||
Sridar Iyengar | Director | 25,000 p.a |
16. | Company’s policy relating to Directors appointment, payment of remuneration and discharge of their duties: |
The provisions of Section 178(1) relating to constitution of Nomination and Remuneration Committee are not applicable to the Company and hence the Company has not devised any policy relating to appointment of Directors, payment of Managerial remuneration, Directors qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013. |
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17. | Declaration by Independent Director: |
Declaration of Independent Director is not applicable to the Company.
18. | Corporate Governance: |
The various committees constituted by the Company including the Audit Committee and Compensation Committee have been functioning satisfactorily during the year. The present Board comprises of eminent professionals from various fields, in addition to Chairman and Managing Director who looks after the day to day affairs of the Company.
The composition of the Audit Committee of the Board is as follows:-
Name | Designation in the Committee | |
Sridar Iyengar | Chairman | |
M. Madhavan Nambiar | Member | |
Sunil Phatarphekar | Member |
The composition of the Compensation Committee of the Board is as follows:-
Name | Designation in the Committee | |
Ajit Balakrishnan | Chairman | |
Diwan Arun Nanda | Member | |
Sunil Phatarphekar | Member |
19. | Listing Agreement Compliance: |
The Company’s ADRs are listed on NASDAQ Stock Exchange. The company duly complies with the Listing Agreement requirement of NASDAQ.
20. | Corporate Social Responsibility (CSR) Policy: |
The Company has not developed and implemented any Corporate Social Responsibility initiatives as the said provisions are not applicable to the Company.
21. | Deposits: |
The Company has neither accepted nor renewed any deposits during the year under review.
22. | Conservation of Energy, Technology, Absorption, Foreign Exchange Earnings and Outgo: |
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Pursuant to Section 134 and any other applicable sections of the Companies Act, 2013 following disclosures and information is furnished to the Shareholders:
1. Conservation of Energy
The operation of your Company is not energy intensive. Adequate measures have however been taken to reduce energy consumption by using energy efficient computer equipments incorporating latest technologies.
2. Technologies Absorption
Since technology related to internet portal business is constantly evolving, continuous investments and improvements are being made to the content, community and commerce offerings made to the customers. The investments are classified as deferred revenue expenditure and amortized.
3. Foreign Exchange Earnings and outgo
Foreign exchange earned by the Company in the fiscal year ended March 31, 2015 was₹69 million (Previous year₹83 million) and the foreign exchange outgo in the same period was₹71 million (Previous year₹ 73 million).
23. | Details of significant & material orders passed by the regulators or courts or tribunal: |
There was no order passed by the regulators or courts or tribunal during the financial year 2014-15.
24. | Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013: |
The Company has in place a Prevention of Sexual Harassment policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
During the year 2014-2015, no complaints were received by the Company related to sexual harassment
25. | Risk Management Policy: |
The Company does not have Risk Management Policy. However the Company has a Risk control matrix in place.
26. | Management Discussion and Analysis Report: |
a. | Industry structure and developments |
We are a leading internet platform for content sharing and e-commerce in India. Our websites and Mobile apps offer a variety of internet-based consumer and enterprise services. Through our subsidiary company Vubites, we provide a platform for targeting TV advertising.
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According to ComScore, in March 2015, India had 80 million unique individuals accessing the internet using PCs from home and the office, of which 17.5 million, or 20%, visited our website www: rediff.com.
In addition to our Indian business we operate a subsidiary in the United States, “India Abroad”, which operates both a weekly print newspaper as well as an online website providing news and information services to users in the United States.
b. | Opportunities |
i) | We were an early entrant in the Indian Internet market and our brand continues to be recognized and trusted by Indian Internet users. |
ii) | We offer services based on contemporary technology, thus making them easy to use and accessible through PCs, smart phones and tablet-based devices that have Internet capabilities. |
iii) | We expect the growth of e-commerce in India to be fuelled by anticipated improvements in broadband access, online payment infrastructure and distribution and fulfilment facilities, an increase in credit and debit card penetration rates, and the development of alternative payment mechanisms for online purchases, such as cash on delivery; and |
iv) | We expect the growth in Internet access in India through PCs, smart phones and other mobile devices such as tablets to be further fuelled by the recent issuance of 3G licenses in India and the expected roll out of both 3G and 4G services. |
c. | Internal control systems and their adequacy |
Your Company has an adequate internal control system. There is a system of continuous Internal Audit which aims at ensuring effectiveness and efficiency of systems and operations.
d. | Human Resources |
Your Company gives utmost importance to human resource. It considers "Human Resource as Human Capital" and believes in the development of Human Resource. The Company strongly believes in the Performance Management System and always tries to explore and tap high potential at the Group level to meet new challenges and competition.
27. | Directors Responsibility Statement: |
In accordance with the provisions of Section 134(5) of the Companies Act 2013, your directors confirm that:
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a) | in the preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures; |
b) | the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit /loss of the Company for that period; |
c) | the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; |
d) | the directors had prepared the annual accounts on a going concern basis; |
e) | the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively; and |
f) | the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. |
28. | Acknowledgements: |
Your Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Companies activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on your Company.
For and on behalf of the Board of Directors | |
Place: Mumbai | |
Date: 4th September 2015 | /s/Ajit Balakrishnan |
Chairman & Managing Director |
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Annexure 1
Form AOC-1
(Pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 of Companies (Accounts) Rules, 2014
Statement containing salient features of the financial statement of Subsidiaries/Associate Companies/Joint Ventures
Part “A”: Subsidiaries
(₹in millions except % of Shareholding)
Name of the Subsidiary | Financial Year ended | Share Capital | Reserve & Surplus | Total Assets | Total Liabilities (Excluding Share Capital & Reserve & Surplus) | Turnover | Investment | Profit before tax | Provision for taxation | Profit after tax | % of shareholding | |||||||||||||||||||||||||||||||
Rediff Holding Inc. USA | March 31,2015 | 0 | 311 | 539 | 227 | 0 | 337 | (24 | ) | 1 | (25 | ) | 100 | % | ||||||||||||||||||||||||||||
India Abroad Publications Inc | March 31, 2015 | 2 | (177 | ) | 86 | 261 | 118 | 8 | (64 | ) | 0 | (64 | ) | 100 | % | |||||||||||||||||||||||||||
India in NewYork Inc. | March 31, 2015 | 0 | 115 | 116 | 1 | 4 | 0 | 4 | 0 | 4 | 100 | % | ||||||||||||||||||||||||||||||
India Abroad Publications (Canada) Inc. | March 31, 2015 | 0 | (50 | ) | 0 | 50 | 0 | 0 | (1 | ) | 0 | (1 | ) | 100 | % | |||||||||||||||||||||||||||
Rediff.com Inc | March 31, 2015 | 0 | 344 | 347 | 3 | 18 | 0 | (16 | ) | 0 | (16 | ) | 100 | % | ||||||||||||||||||||||||||||
Value Communications Corporations | March 31,2015 | 0 | (155 | ) | 13 | 168 | 0 | 0 | 0 | 0 | 0 | 100 | % | |||||||||||||||||||||||||||||
Vubites India Private Limited | March 31,2015 | 1 | (497 | ) | 41 | 537 | 58 | 0 | (108 | ) | 0 | (108 | ) | 100 | % |
Note:
Exchange rate used for translating financial position of overseas subsidiaries is USD 1 =₹ 62.59
Part “B”: Joint Venture & Associates Companies -Not Applicable
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Annexure 2
Form No. MGT-9
EXTRACT OF ANNUAL RETURNAS ON THE FINANCIAL YEAR ENDED ON
[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the
Companies (Management and Administration) Rules, 2014]
I. REGISTRATION AND OTHER DETAILS:
i. | CIN | U22100MH1996PLC096077 |
ii. | Registration Date | January 9, 1996 |
iii. | Name of the Company | Rediff.com India Limited |
iv. | Category / Sub-Category of the Company | Information Technology and its enabling Services |
v. | Address of the Registered office and contact details | MAHALAXMI ENGINEERING ESTATE, L. J. ROAD NO. 1, MAHIM (WEST), MUMBAI 400 016 |
vi. | Whether listed company | NO |
vii. | Name, Address and Contact details of Registrar and Transfer Agent, if any | - |
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY
All the business activities contributing 10 % or more of the total turnover of the company shall be stated:-
Sr. No. | Name and Description of main products / services | NIC Code of the Product/ service | % to total turnover of the company | |||||||
1 | Data processing, hosting and related activities; web portals | 631 | 100 | % |
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES
Sr. No. | Name And Address Of The Company | CIN/GLN | Holding/ Subsidiary /Associate | % of shares held | Applicable Section | |||||||
1. | Rediff Holding Inc.USA | - | Subsidiary | 100 | % | Section 2(87) | ||||||
2. | Value Communications Corporations USA | - | Subsidiary | 100 | % | Section 2(87) |
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3. | Vubites India Private Limited | U72900MH2007PTC168009 | Subsidiary | 100 | % | Section 2(87) | ||||||
4. | India Abroad Publications Inc | - | Subsidiary | 100 | % | Section 2(87) | ||||||
5. | India in NewYork Inc. | - | Subsidiary | 100 | % | Section 2(87) | ||||||
6. | India Abroad Publication (Canada) Inc. | - | Subsidiary | 100 | % | Section 2(87) | ||||||
7. | Rediff.com Inc | - | Subsidiary | 100 | % | Section 2(87) |
IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)
i. Category-wise Share Holding
Category of Shareholders | No. of Shares held at the beginning of the year | No. of Shares held at the end of the year | % Change during the year | |||||||||||||||||||||||||||
Demat | Physical | Total | % of Total Shares | Demat | Physical | Total | % of Total Shares | |||||||||||||||||||||||
A. Promoter | ||||||||||||||||||||||||||||||
1) Indian | ||||||||||||||||||||||||||||||
a) Individual/ HUF | 2350938 | 2350938 | 15.87 | 2350938 | 2350938 | 15.87 | NIL | |||||||||||||||||||||||
b) Central Govt | ||||||||||||||||||||||||||||||
c) State Govt(s) | ||||||||||||||||||||||||||||||
d) Bodies Corp | 4590262 | 4590262 | 31.00 | 4590262 | 4590262 | 31.00 | NIL | |||||||||||||||||||||||
e) Banks / FI | ||||||||||||||||||||||||||||||
f) Any Other | ||||||||||||||||||||||||||||||
Sub-total(A)(1):- | 6941200 | 6941200 | 46.87 | 6941200 | 6941200 | 46.87 | NIL | |||||||||||||||||||||||
2) Foreign | ||||||||||||||||||||||||||||||
g) NRIs-Individuals | 6000 | 6000 | 0.04 | 6000 | 6000 | 0.04 | NIL | |||||||||||||||||||||||
h) Other-Individuals | ||||||||||||||||||||||||||||||
i) Bodies Corp. | 2200000 | 2200000 | 14.86 | 2200000 | 2200000 | 14.86 | NIL |
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j) Banks / FI | ||||||||||||||||||||||||||||||
k) Any Other | ||||||||||||||||||||||||||||||
Sub-total(A)(2):- | 2206000 | 2206000 | 14.90 | 2206000 | 2206000 | 14.90 | NIL | |||||||||||||||||||||||
B. Public Shareholding | ||||||||||||||||||||||||||||||
1. Institutions | ||||||||||||||||||||||||||||||
a) Mutual Funds | ||||||||||||||||||||||||||||||
b) Banks / FI | ||||||||||||||||||||||||||||||
c) Central Govt | ||||||||||||||||||||||||||||||
d) State Govt(s) | ||||||||||||||||||||||||||||||
e) Venture Capital Funds | ||||||||||||||||||||||||||||||
f) Insurance Companies | ||||||||||||||||||||||||||||||
g) FIIs | ||||||||||||||||||||||||||||||
h) Foreign Venture Capital Funds | ||||||||||||||||||||||||||||||
i) Others (specify) | ||||||||||||||||||||||||||||||
Sub-total (B)(1) | ||||||||||||||||||||||||||||||
2. Non Institutions | ||||||||||||||||||||||||||||||
a) Bodies Corp. (i) Indian (ii) Overseas | 1015000 | 1015000 | 6.85 | 1015000 | 1015000 | 6.85 | NIL | |||||||||||||||||||||||
b) Individuals | ||||||||||||||||||||||||||||||
(i) Individual shareholders holding nominal share capital upto₹ 1 lakh |
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(ii) Individual shareholders holding nominal share capital in excess of Rs 1 lakh | ||||||||||||||||||||||||||||||
c) Others(Specify) | ||||||||||||||||||||||||||||||
Sub-total (B)(2) | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
Total Public Shareholding (B)=(B)(1)+ (B)(2) | 1015000 | 1015000 | 6.85 | 1015000 | 1015000 | 6.85 | NIL | |||||||||||||||||||||||
C. Shares held by Custodian for GDRs & ADRs | 4647978 | 4647978 | 31.38 | 4647978 | 4647978 | 31.38 | NIL | |||||||||||||||||||||||
Grand Total (A+B+C) | 14810178 | 14810178 | 100 | 14810178 | 14810178 | 100 | NIL |
ii. Shareholding of Promoters
Sr. No | Shareholder’s Name | Shareholding at the beginning of the year | Shareholding at the end of the year | |||||||||||||||||||||
No. of Shares | % of total Shares of the company | % of Shares Pledged / encumbered to total shares | No. of Shares | % of total Shares of the company | % of Shares Pledged / encumbered to total shares | % change in share holding during the year | ||||||||||||||||||
1. | Ajit Balakrishnan | 1100190 | 7.43 | NIL | 1100190 | 7.43 | NIL | NIL | ||||||||||||||||
2. | Arun Nanda | 1244740 | 8.40 | NIL | 1244740 | 8.40 | NIL | NIL | ||||||||||||||||
Total | 2344930 | 15.83 | NIL | 2344930 | 15.83 | NIL | NIL |
iii. Change in Promoters’ Shareholding ( please specify, if there is no change
There is no change in the Promoter’s Shareholding.
V. INDEBTEDNESS
Indebtedness of the Company including interest outstanding/accrued but not due for payment. The Company has not availed any Loan during the Year.
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VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
A. Remuneration to Managing Director, Whole-time Directors and/or Manager
(in US$ millions)
Sl. No. | Particulars of Remuneration | Name of MD/WTD/ Manager Ajit Balakrishnan | Total Amount | |||||||
1. | Gross salary | |||||||||
(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961 | 0.2 | 0.2 | ||||||||
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961 | - | - | ||||||||
(c) Profits in lieu of salary under section 17(3) Income- tax Act, 1961 | - | - | ||||||||
2. | Stock Option | - | - | |||||||
3. | Sweat Equity | - | - | |||||||
4. | Commission | - | - | |||||||
- as % of profit | ||||||||||
- others, specify… | ||||||||||
5. | Others, please specify | - | - | |||||||
6. | Total (A) | 0.2 | 0.2 | |||||||
Ceiling as per the Act |
B. Remuneration to other directors:
(in US $ million)
Sl. No. | Particulars of Remuneration | Name of MD/WTD/ Manager | ||||||||||||||||
Sunil Phatarphekar | Sridar Iyengar | Madavan Nambiar | Total Amount | |||||||||||||||
Independent Directors | ||||||||||||||||||
· Fee for attending board committee meetings | ||||||||||||||||||
· Commission | ||||||||||||||||||
· Others, please specify | ||||||||||||||||||
0.02 | 0.02 | 0.02 | 0.06 | |||||||||||||||
Total (1) | 0.02 | 0.02 | 0.02 | 0.06 |
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Other Non-Executive Directors | ||||||||||||||||||
· Fee for attending board committee meetings | ||||||||||||||||||
· Commission | ||||||||||||||||||
· Others, please specify | ||||||||||||||||||
Total (2) | - | - | - | - | ||||||||||||||
Total (B)=(1+2) | 0.02 | 0.02 | 0.02 | 0.06 | ||||||||||||||
Total Managerial Remuneration | 0.02 | 0.02 | 0.02 | 0.06 | ||||||||||||||
Overall Ceiling as per the Act |
C. Remuneration to Key Managerial Personnel Other Than MD /Manager /WTD
(in Rs million)
Sl. no. | Particulars of Remuneration | Key Managerial Personnel | ||||||||||||||||
CEO | Company Secretary | CFO | Total | |||||||||||||||
1. | Gross salary | 0.29 | 7.92 | 8.21 | ||||||||||||||
(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961 | ||||||||||||||||||
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961 | - | 0.87 | 0.87 | |||||||||||||||
(c) Profits in lieu of salary under section 17(3) Income-tax Act, 1961 | ||||||||||||||||||
2. | Stock Option | |||||||||||||||||
3. | Sweat Equity | |||||||||||||||||
4. | Commission - as % of profit - others, specify… | |||||||||||||||||
5. | Others, please specify | |||||||||||||||||
6. | Total | 0.29 | 8.79 | 9.08 |
VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:
There were no Penalties/Punishment/Compounding of offences for the year ending 31st March 2015
21
Annexure 3
Form No. AOC-2
(Pursuant to clause (h) of sub-section (3)of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)
Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso Thereto:
1. | Details of contracts or arrangements or transactions not at arm’s length basis - NIL |
2. | Details of material contracts or arrangement or transactions at arm’s length basis: |
Name of the Related party | Transactions | 2014-15 | 2013-14 | |||||||
India abroad Publications, Inc. | Collection made by the Company during the year on behalf of IA | 15,554,659 | 17,231,612 | |||||||
Expenses incurred and other reimbursements by the Company on behalf of IA | 3,598,598 | 1,746,176 | ||||||||
Collection made by IA on behalf of the Company | 343,819 | 4,754,960 | ||||||||
Amount remitted to IA | 12,630,100 | 13,932,500 | ||||||||
Rediff Holdings, Inc. | Provision for diminution in value of Long Term Investment | 54,922,395 | NIL | |||||||
Vubites India Private Limited | Expenses incurred and other reimbursements by the Company on behalf of Vubites India Private Limited | 3,457,082 | 4,917,552 | |||||||
Loan given during the year (Interest free) | 104,200,000 | 91,400,000 | ||||||||
Provision for doubtful loan | 107,657,082 | 407,984,968 |
22
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF REDIFF.COM INDIA LIMITED
Report on the Consolidated Financial Statements
1. | We have audited the accompanying consolidated financial statements ofREDIFF.COM INDIA LIMITED(hereinafter referred to as “the Holding Company”), and its subsidiaries (the Holding Company and its subsidiaries together referred to as “the Group”), comprising of the Consolidated Balance Sheet as at 31st March, 2015, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the consolidated financial statements”). |
Management’s Responsibility for the Consolidated Financial Statements
2. | The Holding Company’s Board of Directors is responsible for the preparation of these consolidated financial statements in terms of the requirements of the Companies Act, 2013 (hereinafter referred to as “the Act”) that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. The respective Board of Directors of the Companies included in the Group are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid. |
Auditors’ Responsibility
3. | Our responsibility is to express an opinion on these consolidated financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. |
23
4. | We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. |
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company’s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on whether the Holding Company has an adequate internal financial controls system over financial reporting in place and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Holding Company’s Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements.
5. | We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their report referred to in paragraph (8) under the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements. |
Opinion
6. | In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at 31st March, 2015, and their consolidated loss and their consolidated cash flows for the year ended on that date. |
Other Matters
7. | We did not audit the financial statements of eight subsidiaries, whose financial statements reflect the Group’s share of total assets of₹ 94,960,517 as at 31st March, 2015, and the Group’s share of total revenues of₹ 195,616,211 and net cash outflows amounting to₹ 82,703,876 for the year ended on that date, as considered in the consolidated financial statements. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us by the management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, and our report in terms of sub-sections (3) and (11) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries, is based solely on the reports of the other auditors. |
24
8. | Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the financial statements certified by the management. |
Report on Other Legal and Regulatory Requirements
9. | As required by the Companies (Auditor’s Report) Order, 2015 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, based on the comments in the auditors’ reports of the Holding company and the subsidiary company incorporated in India, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. |
10. | As required by Section 143(3) of the Act, we report, to the extent applicable, that: |
(a) | We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements. |
(b) | In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the report of the other auditors. |
(c) | The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss, and the Consolidated Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements. |
(d) | In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. |
(e) | On the basis of the written representations received from the directors of the Holding Company as on 31st March, 2015 taken on record by the Board of Directors of the Holding company and the reports of the statutory auditors of its subsidiary company incorporated in India, none of the directors of the Group companies incorporated in India is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act. |
(f) | With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditor’s) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: |
i) | The consolidated financial statements disclose the impact of pending litigations on the consolidated financial position of the Group in accordance with the generally accepted accounting practice - also refer Note 26 to the consolidated financial statements. |
25
ii) | The Group did not have any material foreseeable losses on long-term contracts including derivative contracts. |
iii) | There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Holding Company and its Subsidiary company incorporated in India. |
For Deloitte Haskins & Sells LLP
Chartered Accountants
(Firm’s Registration No. 117366W/W-100018)
/s/ Shyamak R Tata
Partner
Mumbai, September 7, 2015 | (Membership No. 38320) |
26
ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
(Referred to in paragraph 10 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)
Our reporting on the Order includes one subsidiary company incorporated in India, to which the Order is applicable, which have been audited by other auditor and our report in respect of this company is based solely on the report of the other auditor, to the extent considered applicable for reporting under the Order in the case of the consolidated financial statements.
(i) | In respect of the fixed assets of the Holding Company and a subsidiary company incorporated in India: |
(a) | The respective companies have maintained proper records showing full particulars, including quantitative details and situation of fixed assets. |
(b) | The fixed assets have not been physically verified by the Management during the year but the Holding company and a subsidiary company incorporated in India has a system of verifying the fixed assets once in every three years. In our opinion and the opinion of the other auditor, the frequency of verification is at reasonable intervals. According to the information and explanations given to us and the other auditor, no material discrepancies were noticed on such verification. |
(ii) | In respect of the inventories of the Holding Company and a subsidiary company incorporated in India: |
The Holding company’s and a subsidiary company’s business does not involve any physical inventories and accordingly, the requirements under paragraph 4(ii) of the Order are not applicable and hence not commented upon.
(iii) | The Holding Company and a subsidiary company incorporated in India have not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013 by the respective companies. |
(iv) | In our opinion and the opinion of the other auditor and according to the information and explanations given to us and the other auditor, there is an adequate internal control system in the Holding Company and a subsidiary company incorporated in India, commensurate with the size of the respective company and the nature of their business for the purchase of fixed assets and for the sale of services. During the course of our and the other auditors audit, no continuing failure to correct major weaknesses in such internal control system has been observed. The activities of the Holding company and a subsidiary company incorporated in India do not involve purchase of inventory and sale of goods. |
(v) | According to the information and explanations given to us and the other auditor, the Holding Company and a subsidiary company incorporated in India have not accepted any deposit during the year and accordingly the question of complying with Sections 73 and 76 of the Companies Act, 2013 does not arise. |
27
(vi) | According to information and explanations given to us and the other auditor, in our opinion and the opinion of the other auditor, the Holding Company and a subsidiary company incorporated in India, has not been prescribed maintenance of cost records by the Central Government under clause sub section (1) of section 148 of the Companies Act, 2013. |
(vii) | According to the information and explanations given to us and the other auditor, in respect of statutory dues of the Holding Company and a subsidiary company incorporated in India: |
(a) | The respective companies have been generally regular in depositing undisputed statutory dues, including provident fund, sales-tax, wealth tax, duty of customs, duty of excise, service tax, cess and any other material statutory dues, as applicable, with the appropriate authorities. |
(b) | There were no undisputed amounts payable by the respective entities in respect of Provident Fund, Employees’ State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues in arrears as at 31st March, 2015 for a period of more than six months from the date they became payable. |
In respect of Service tax, the unpaid service tax (excluding interest) amounted to₹ 438,803 as on 31st March 2015 is outstanding for a period of more than six months from the date it became payable.
(c) | As at 31st March, 2015, the following are the particulars of dues on account of Income-Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax and Cess matters that have not been deposited on account of any disputes by the aforesaid companies: |
Name of statute | Nature of the dues | Period to which the amount relates | Forum where dispute is pending | Amount Involved (₹ In lacs) | ||||||
Income-tax Act, 1961 | Income Tax | Commissioner of Income Tax (Appeal) | 2009-10 and 2010-11 | 44.85 |
(d) | There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Holding company and a subsidiary company incorporated in India. |
(viii) | The consolidated accumulated losses of the Holding Company and a subsidiary company incorporated in India, at the end of the financial year are more than fifty percent of the consolidated net worth and the Holding Company and a subsidiary company incorporated in India have incurred cash losses on a consolidated basis during the financial year covered by our audit and in the immediately preceding financial year. |
28
(ix) | In our opinion and the opinion of the other auditor and on the basis of information and explanations given to us and the other auditor, the Holding Company and a subsidiary company incorporated in India have neither taken any loan from financial institution, banks nor issued any debentures. |
(x) | In our opinion and the opinion of the other auditor and according to the information and explanations given to us and the other auditor, the Holding Company and a subsidiary company incorporated in India has not given any guarantee for the loans taken by others from banks or financial institutions. |
(xi) | In our opinion and the opinion of the other auditor and according to the information and explanations given to us and the other auditor, the Holding Company and a subsidiary company incorporated in India has not availed any term loan. |
(xii) | To the best of our knowledge and according to the information and explanations given to us and the other auditor, no fraud by the Holding Company and its subsidiary company incorporated in India and no significant fraud on the Holding Company and its subsidiary company incorporated in India has been noticed or reported during the year. |
For Deloitte Haskins & Sells LLP
Chartered Accountants
(Firm’s Registration No. 117366W/W-100018)
/s/ Shyamak R Tata | |
Partner | |
Mumbai, September 7, 2015 | (Membership No. 38320) |
29
REDIFF.COM INDIA LIMITED
Consolidated Balance Sheet as at March 31, 2015
Note | As at March 31, 2015 | |||||||
₹ | ||||||||
I EQUITY AND LIABILITIES | ||||||||
1 Shareholders’ Funds | ||||||||
(a) Share Capital | 3 | 68,975,890 | ||||||
(b) Reserves and Surplus | 4 | 302,222,896 | ||||||
371,198,786 | ||||||||
2 Non - Current Liabilities | ||||||||
(a) Other Long Term Liabilities | 5 | 25,108,128 | ||||||
(b) Long - Term Provisions | 6 | 65,357,062 | ||||||
90,465,190 | ||||||||
3 Current Liabilities | ||||||||
(a) Short-term borrowings | - | |||||||
(a) Trade Payables | 6A | 253,457,416 | ||||||
(b) Other Current Liabilities | 7 | 160,165,658 | ||||||
(c) Short - Term Provisions | 8 | 7,890,011 | ||||||
421,513,085 | ||||||||
TOTAL | 883,177,061 | |||||||
II ASSETS | ||||||||
1 Non - Current Assets | ||||||||
(a) Fixed Assets | 9 | |||||||
(i) Tangible Assets | - | |||||||
(ii) Intangible Assets | - | |||||||
(iii) Intangible Assets under Development | - | |||||||
(b) Goodwill on Consolidation | - | |||||||
(c) Non - Current Investments | 10 | - | ||||||
(d) Long - Term Loans and Advances | 11 | 129,315,207 | ||||||
129,315,207 | ||||||||
2 Current Assets | ||||||||
(a) Trade Receivables | 12 | 154,967,399 | ||||||
(b) Cash and Cash Equivalents | 13 | 519,169,090 | ||||||
(c) Short-Term Loans and Advances | 14 | 44,750,317 | ||||||
(d) Other current assets | 14A | 34,975,048 | ||||||
753,861,854 | ||||||||
TOTAL | 883,177,061 | |||||||
-0 | ||||||||
III NOTES FORMING PART OF THE FINANCIAL STATEMENTS | 1-31 |
In terms of our report attached. | For and on behalf of the Board of Directors |
ForDeloitte Haskins & Sells LLP | |
Chartered Accountants |
/s/ Shyamak R Tata | /s/ Ajit Balakrishnan | /s/ Arun Nanda |
Partner | Chairman & Managing Director | Director |
DIN: 00073814 | DIN: 00034744 | |
/s/ Pooja Lohade | ||
Company Secretary | ||
Mumbai, India | ||
ACS 21584 | ||
Mumbai, September 7, 2015 | Mumbai, September 4, 2015 |
30
REDIFF.COM INDIA LIMITED
Consolidated Statement of Profit and Loss for the Year Ended March 31, 2015
Note | For the year ended March 31, 2015 | |||||||
₹ | ||||||||
I Revenue From Operations | 15 | 937,929,449 | ||||||
II Other Income (Net) | 16 | 75,393,903 | ||||||
TOTAL REVENUE | 1,013,323,352 | |||||||
III Expenses: | ||||||||
(a) Employee Benefit Expenses | 17 | 493,132,783 | ||||||
(b) Depreciation and Amortization Expense | 9 | 116,497,258 | ||||||
(c) Operation and Other Expenses | 18 | 1,042,995,156 | ||||||
TOTAL EXPENSES | 1,652,625,197 | |||||||
IVLOSS BEFORE EXCEPTIONAL ITEMS AND TAX | (639,301,845 | ) | ||||||
V Exceptional Item: | ||||||||
Impairment of Fixed Assets | 27 | 196,442,056 | ||||||
Total | 196,442,056 | |||||||
VI Provision for Tax | 904,493 | |||||||
VIILOSS FOR THE YEAR | (836,648,394 | ) | ||||||
VIII Earnings Per Equity Share (Face Value of₹ 5 each ) - Basic and Diluted | (60.65 | ) | ||||||
IXNOTES FORMING PART OF THE FINANCIAL STATEMENTS | 1-31 |
In terms of our report attached. | For and on behalf of the Board of Directors |
ForDeloitte Haskins & Sells LLP | |
Chartered Accountants |
/s/ Shyamak R Tata | /s/ Ajit Balakrishnan | /s/ Arun Nanda |
Partner | Chairman & Managing Director | Director |
DIN: 00073814 | DIN: 00034744 | |
/s/ Pooja Lohade | ||
Company Secretary | ||
Mumbai, India | ||
ACS 21584 | ||
Mumbai, September 7, 2015 | Mumbai, September 4, 2015 |
31
REDIFF.COM INDIA LIMITED
Consolidated Cash Flow Statement for the Year Ended March 31, 2015
For the year ended March 31, 2015 | ||||||||
₹ | ||||||||
Cash Flow from Operating Activities | ||||||||
(Loss) Before Taxes | (835,743,901 | ) | ||||||
Adjustments for: | ||||||||
Depreciation and Amortisation Expense | 116,497,258 | |||||||
impairment of Fixed Assets | 196,442,056 | |||||||
Employee Stock Option Expenses | 3,674,638 | |||||||
Interest Income | (63,761,070 | ) | ||||||
(Write Back)/ Write Off of Provision of Doubtful Receivables | 2,538,223 | |||||||
(Profit) / Loss on Sale of Investment | ||||||||
(Profit) / Loss on Sale of Fixed Assets | 123,609 | |||||||
Unrealised Exchange Difference | 5,262,726 | |||||||
Operating Loss Before Working Capital Changes | (574,966,461 | ) | ||||||
Changes in Working Capital: | ||||||||
Trade Receivables | 27,605,279 | |||||||
Loans and Advances | 3,834,941 | |||||||
Trade Payables, Current Liabilities and Provisions | 7,882,814 | |||||||
Other Current Assets | 4,576,381 | |||||||
Cash used in Operating Activities | (531,067,046 | ) | ||||||
Taxes Refund, Net of (Paid) | 27,447,586 | |||||||
Net Cash used in Operating Activities (A) | (503,619,460 | ) | ||||||
Cash Flow From Investing Activities | ||||||||
Payments to Acquire Fixed Assets | (74,086,471 | ) | ||||||
Proceeds from Sale of Fixed Assets | �� | 177,722 | ||||||
Proceeds from Sale of long term Investment | 9,322,134 | |||||||
Interest Income Received | 54,429,406 | |||||||
Net Cash (used in)/from Investing Activities (B) | (10,157,209 | ) | ||||||
Net (Decrease) in Cash and Cash Equivalents (A+B) | (513,776,669 | ) | ||||||
Cash and Cash Equivalents at the Beginning of the Year | 1,029,286,466 | |||||||
Cash and Cash Equivalents at the End of the Year | 515,509,797 | |||||||
Note ; | ||||||||
Cash and Cash Equivalents Include: | ||||||||
Cash on Hand | 5,211 | |||||||
Bank Balances | 519,163,879 | |||||||
Fixed deposits with banks (maturity less than 3 months) | ||||||||
Cash and Cash Equivalents as above | 515,509,797 | |||||||
Effect of Exchange Rate Changes | 3,659,293 | |||||||
Cash and Cash Equivalents as per Note 13 | 519,169,090 | |||||||
NOTES FORMING PART OF THE FINANCIAL STATEMENTS | 1-31 |
In terms of our report attached. | For and on behalf of the Board of Directors |
ForDeloitte Haskins & Sells LLP | |
Chartered Accountants | |
/s/ Ajit Balakrishnan | |
Chairman & Managing Director | |
/s/ Shyamak R Tata | DIN: 00073814 |
Partner | |
/s/ Arun Nanda | |
Director | |
DIN: 00034744 | |
/s/ Pooja Lohade | |
Company Secretary | |
Mumbai, India | |
ACS 21584 | |
Mumbai, September 7, 2015 | Mumbai, September 4, 2015 |
32
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
1. | CORPORATE INFORMATION |
Rediff.com India Limited (“Rediff”) was incorporated as a private limited company in India on January 9, 1996 under the Indian Companies Act, 1956 and was converted to a public limited company on May 29, 1998. Rediff’s American Depository Shares (“ADSs”) are listed on the NASDAQ Global Market.
In February 2001, Rediff established Rediff Holdings, Inc. (“RHI”), a Delaware Corporation, as a wholly-owned subsidiary to be a holding company for certain investments in the United States of America. In March 2001, Rediff acquired Value Communication Corporation (“ValuCom”). On February 27, 2001, RHI acquired thinkindia.com, Inc (“thinkindia”), later renamed Rediff.com Inc. On April 27, 2001, RHI acquired India Abroad Publications, Inc. (“India Abroad”), a print and online news company.
On November 26, 2010, Rediff acquired Vubites India Private Limited (“Vubites”) from the Chairman and Managing Director of Rediff (referred to as “the CMD”) and a principal shareholder in Rediff. Vubites enables small and local businesses to advertise on national TV channels within their city to reach their target audiences.
Rediff with its branch and subsidiaries (“the Group”) is in the business of providing online internet based services, focusing on India and the global Indian community. Its websites consists of channels relevant to Indian interests such as cricket, astrology, matchmaker and movies, content on various matters like news and finance, search facilities, a range of community features such as e-mail, chat, messenger, e-commerce, broadband wireless content and mobile value-added services to mobile phone subscribers in India. The Company also enables its customers to insert localized advertisements on national television channels by providing a platform to create an advertisement and prepare a media plan. Additionally, the Company publishes weekly newspapers ‘India Abroad’ in North America.
2. | SIGNIFICANT ACCOUNTING POLICIES |
a) | Basis of preparation of financial statements |
The Consolidated Financial Statements relate to REDIFF.COM INDIA LIMITED (REDIFF, the Company) and its subsidiaries. The Company’s wholly owned subsidiaries include Vubites India Private Limited incorporated in India, Rediff.com Holding Inc. and Value Communication Inc. incorporated in USA. Rediff Holding Inc. has further two wholly owned subsidiaries viz. India Abroad Publications Inc. and Rediff.com Inc. and further step down subsidiaries viz. India New York Inc. and India Abroad Publication (Canada) Inc. The Consolidated financial statements also include Rediff.com India Limited Employee Trust as the Company has the control by way of appointment and determination of composition of Trustees to obtain economic benefits from its activities. The Company has equity investment in associate companies viz. Tachyon Technologies Private Limited and BigSlick Infotech Private Limited as of March 31, 2015, however, the said the Company has in past made other than temporary diminution in the total value of its investment in such associates.
33
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
The Consolidated Financial Statements have been prepared in accordance with Accounting Standard 21 (AS 21) “Consolidated Financial Statements” notified by the Companies (Accounting Standard) Rules, 2006.
In the year ended March 31, 2015, the Group incurred a net loss of₹ (836,648,394)/-. Accumulated losses of₹ (3,292,269,578)/- and net cash outflows of₹ 513,776,669. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
The Company has carried out a review of its group cash flow forecast for a period of twelve months from the date of these financial statements considering historical cash requirements and has taken the assumption that there will not be any significant decline in advertising revenues and an increase in e-commerce marketplace fees. As described in Note 30, the Company has entered into an arrangement with an investor in accordance with which the Company, at its option, has the right to obtain financing subject to certain conditions, in exchange for issuance of ADS.
On the basis of the factors stated in the preceding paragraph, the Company believes it will have sufficient resources to meets its obligations as they become due within one year from the date of these consolidated financial statements.
b) | Principles of Consolidation |
The consolidated financial statements have been prepared on the following basis:
i) | The financial statements of the Company and its subsidiary companies have been combined on a line-by-line basis by adding together the book value of like items of assets, liabilities, income and expenses. Intra-group balances and transactions and unrealised profits or losses have been fully eliminated. |
ii) | The difference between the costs of investment in the subsidiaries and the Company’s share of equity at the time of acquisition ofshares in the subsidiaries is recognised in the Financial Statements as Goodwill on consolidation or Capital Reserve on consolidation. |
iii) | The difference between the proceeds from disposal of investment in a subsidiary and the carrying amount of its assets less liabilities as of date of disposal is recognised in the Statement of Profit and Loss as profit or loss on disposal of investment in subsidiaries. |
iv) | The Financial Statements of the subsidiaries are drawn up to 31st March, 2015. |
The subsidiaries (which along with Rediff.com India Limited, the parent, constitute the group) considered in the presentation of these Consolidated Financial Statements are
34
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
Name of the Subsidiary Company | Country of Incorporation | Portion of ownership Interest as at March 31, 2015 | ||||
Indian Subsidiaries | ||||||
Vubites India Private Limited | India | 100 | % | |||
Foreign Subsidiaries including step down subsidiaries. | ||||||
Rediff Holdings, Inc. | USA | 100 | % | |||
India Abroad Publications Inc | USA | 100 | % | |||
India New York Inc. | USA | 100 | % | |||
India Abroad Publication (Canada) Inc. | Canada | 100 | % | |||
Value communication corporation Inc. | USA | 100 | % |
c) | Use of estimates |
The preparation of financial statements in conformity with generally accepted accounting principles in India requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.
d) | Revenue recognition |
India Online business
India Online business includes revenues from advertising, sponsorship and fee based services. Advertisement and sponsorship income is derived from customers who advertise on our website or from targeted mailers to Rediffmail subscribers. Fee based services include fee we earn from our e-commerce marketplace, subscription fees for our email services and our share of revenues from mobile value added services.
Revenue from display advertisement is recognized as impressions of or clicks on display advertisements are delivered or broadcast. Impressions are delivered when a sold advertisement appears in pages viewed by users. Clicks are delivered when a user clicks on the advertisement. Revenues are also derived from sponsor links placed in specific areas of the Company’s website, which generally provide users with direct links to sponsor websites. Revenue from sponsor link is recognized ratably over the period in which the advertisement is displayed, provided that no significant Company obligations remain and collection of the resulting receivable is probable. Company obligations may include guarantees of a minimum number of impressions, or times, that an advertisement appears in pages viewed by users of the Company’s website. To the extent that minimum guaranteed impressions are not met, the Company defers recognition of the corresponding revenues until the guaranteed impression levels are achieved. The Company also earns revenues from the sending of mail shots to its users on behalf of advertisers and such revenues are recognized on delivery. We report our online advertisement revenues on a gross basis principally because we are the primary obligor to our advertisers.
35
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
E-commerce marketplace fee, which is comprised of the commission and shipping revenue is recognized after receipt of confirmation that the online customer has accepted delivery of the goods. The cost of incentives provided to online customers like coupons and promo codes are reduced from revenue and where such incentives exceed the revenue amount, the excess is recognized as cost of revenue.
Subscription service revenue which is comprised of subscription fees for email and related services provided to small and large enterprises is deferred and recognized pro rata over the terms of such subscription.
Mobile value-added services revenues are derived from providing value added short messaging services (“SMS”), ring tones, picture messages, logos, wallpapers and other related services to mobile phone users. The Company contracts with third-party mobile phone operators for sharing revenues from this service. Mobile value- added services revenue is recognized when this service is rendered.
US Publishing business
US Publishing business primarily include advertising and sponsorship revenues and consumer subscription revenues earned from the publication of India Abroad, a weekly newspaper distributed primarily in the United States. It also includes the advertising revenues of Rediff India Abroad, the website catering to the Indian community in the United States.
Advertising revenues are recognized at the time of publication of the related advertisement. Subscription income is deferred and recognized pro rata as fulfilled over the terms of such subscription.
Revenues from banners and sponsorships are recognized over the contractual period of the advertisement, commencing when the advertisement is placed on the website, provided that no significant obligations remain and collection of the resulting receivable is probable. Obligations may include guarantee of a minimum number of impressions, or times that an advertisement appears in pages viewed by users of the Company’s website. To the extent that minimum guaranteed impressions are not met, the Company defers recognition of the corresponding revenues until the guaranteed impression levels are achieved.
e) | Tangible assets, intangibles, depreciation and amortisation |
Tangible Assets
Tangible assets are stated at cost less accumulated depreciation less impairment loss, if any. The Company depreciates tangible assets using the straight-line method, over the estimated useful lives of assets. The estimated useful lives of assets are as follows:
Furniture and fixtures | 10 years |
Computer equipment | 1 to 3 years |
Office equipment | 3 to 10 years |
Vehicles | 8 years |
Leasehold improvements | 6 years |
36
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
The effective rates of depreciation based on the estimated useful life of the tangible assets is higher than the rates as prescribed under Schedule II to the Companies Act, 2013.
Individual assets costing less than₹ 5,000 are depreciated in full in the year of acquisition.
Intangible Assets
Intangible Assets are stated at cost less accumulated amortization less impairment loss, if any. Software includes costs incurred in the operations stage that provides additional functions or features to the Company's website, accounting and monitoring software. These are amortised over their estimated useful life of one to five years. Maintenance expenses or costs that do not result in new features or functions are expensed as product development costs, when incurred.
f) | Impairment of assets |
The carrying values of assets/cash-generating units at each balance sheet date are reviewed for impairment or more often if there is an indication of decline in value. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment loss is recognised, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor.
g) | Investments |
Investments classified as long-term investments are stated at cost. Provision is made to recognise a decline, other than temporary, in the value of such investments.
h) | Employee benefits |
(i)Short term
Short term employee benefits are recognised as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Group.
(ii)Long term
The Group has both defined-contribution and defined-benefit plans.
o | Defined-contribution plans |
These are plans in which the Group pays pre-defined amounts to separate funds. These comprise of contributions to the employees’ provident fund and family pension fund. The Group’s payments to the defined-contribution plans are reported as expenses during the period in which the employees perform the services that the payment covers.
37
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
o | Defined-benefit plans |
The obligation for the unfunded defined-benefit gratuity is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gain and losses are recognised in full in the Statement of Profit and Loss for the period in which they occur.
(iii)Other employee benefits
Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encashed or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on availment of encashment of such accrued benefit or where the availment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method
i) | Foreign currency transactions and translations. |
Transactions in foreign currency are recorded at the original rates of exchange in force at the time transactions are effected.
Monetary items of assets and liabilities denominated in a foreign currency are translated using the exchange rates prevailing at the date of Balance Sheet. Exchange gains / losses on account of exchange difference either on settlement or translation are recognised in the Statement of Profit and Loss.
Non-monetary items such as investments denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
j) | Stock based compensation |
The Group accounts for compensation expense under the Employee Stock Option schemes using the intrinsic value method as per the Guidance Note “Accounting for Employee Share-based Payments” issued by the Institute of Chartered Accountants of India.
k) | Earnings per share |
Basic earnings per equity share is computed by dividing the net profit/loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit/loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all potential equity shares on account of stock options outstanding. For the purpose of Earnings Per Share calculations, ADRs (American Depository Receipts) are converted to equity shares.
38
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
l) | Taxes |
Income taxes comprise both current and deferred tax.
Current income tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable tax rates and laws. Deferred tax is accounted for by computing the tax effect of timing differences, which arise during the year and reverse in subsequent periods. Deferred tax assets on account of accumulated losses, unabsorbed depreciation and other items are recognised only to the extent that there is virtual certainty of realisation of such assets in future.
Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and the Company intends to settle the asset and liability on a net basis.
m) | Cash and cash equivalent |
The Group considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.
Cash and cash equivalents consist of cash on hand, balances in current accounts, deposits with banks which are unrestricted as to withdrawal and use.
n) | Research and development expenses |
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product’s technological feasibility has been established, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilised for research and development are capitalised and depreciated in accordance with the policies stated for Tangible Fixed Assets and Intangible Assets.
o) | Leases |
Leasing of assets whereby the lessor essentially remains the owner of the asset is classified as operating leases. The payments made by the Group as lessee in accordance with operational leasing contracts or rental agreements are expensed proportionally during the lease or rental period respectively. Any compensation, according to agreement, that the lessee is obliged to pay to the lessor if the leasing contract is terminated prematurely is expensed during the period in which the contract is terminated.
p) | Provisions and Contingencies |
A provision is recognized when the Group has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognized but are disclosed in the notes to the financial statement. A contingent asset is neither recognized nor disclosed
39
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
q) | Segment Reporting |
The accounting policies adopted for segment reporting are in line with the accounting policies of the Group. Segments are identified having regard to the dominant source and nature of risks and returns and internal organisation and management structure. Revenues and expenses have been identified to the segments based on their relationship to the business activity of the segment. Income/Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated corporate income/expenses.
3. | SHARE CAPITAL |
As at March 31, 2015 | ||||||||
Number | ₹ | |||||||
Authorised | ||||||||
Equity Shares of₹ 5 each | 24,000,000 | 120,000,000 | ||||||
Issued, Subscribed and Fully Paid up | ||||||||
Ordinary Equity Shares of₹5 each fully paid | 14,810,178 | 74,050,890 | ||||||
Less: | ||||||||
Treasury Shares (Refer note 3(d) below) | 1,015,000 | 5,075,000 | ||||||
Adjusted: Issued and Subscribed Share Capital | 13,795,178 | 68,975,890 |
a. | Reconciliation of ordinary shares outstanding at the beginning of the reporting period: |
Issued and Subscribed | As at March 31, 2015 | |||||||
Number | ₹ | |||||||
At the beginning of the year | 14,810,178 | 74,050,890 | ||||||
Shares issued during the year (on account of Stock Options exercised) | - | - | ||||||
14,810,178 | 74,050,890 | |||||||
Less: Treasury Shares (Refer note 3(d) below): | 1,015,000 | 5,075,000 | ||||||
Outstanding at the end of the period - Adjusted | 13,795,178 | 68,975,890 |
b. | Details of ordinary shares held by each shareholder holding more than 5% shares: |
As at March 31, 2015 | ||||||||
Name of shareholder | Number | % Holding | ||||||
Rediffusion Holdings Private Limited | 2,200,002 | 14.85 | % | |||||
Draper International India LP | 2,178,000 | 14.71 | % | |||||
Edelwiess Finance & Investments Limited. | 1,523,000 | 10.28 | % | |||||
Diwan Arun Nanda | 1,244,740 | 8.40 | % | |||||
Ajit Balakrishnan | 1,100,190 | 7.43 | % | |||||
Rediff.com India Limited Employee Trust (Refer note 3(d) below) | 1,015,000 | 6.85 | % |
40
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
c. | Terms / rights attached to equity shares: |
In respect of every ordinary share, voting right shall be in the same proportion as the capital paid upon such Ordinary share bears to the total paid up ordinary capital of the company.
Holders of ADRs are not entitled to attend or vote at shareholders meetings. Holders of ADRs may exercise voting rights with respect to ordinary shares represented by ADRs only in accordance with the provisions of the Company’s deposit agreement and Indian Law.
Each ADRs represents one half of an equity share.
d. | During the financial year ended March 31, 2010 the Company formed Rediff.com India Limited Employee Trust (“Trust”). The Trust is controlled and administrated by senior employees of the Company. The Company is the primary beneficiary of the Trust and, accordingly has consolidated the Trust. The Trust acquired 1,015,000 shares for a consideration of₹ 199,790,530 and reserved these shares for benefit of Company’s employees and directors. |
e. | Issued and Subscribed Share Capital includes an aggregate of 194,378 Ordinary (Equity) Shares of₹ 5 each allotted as fully paid-up pursuant to various ESOP Scheme with payment having been received in cash, for a period of five years immediately preceding the end of the financial year. |
4. | RESERVES AND SURPLUS |
Reserves and surplus consist of the following:
As at March 31, 2015 | ||||
₹ | ||||
Securities premium account | ||||
Opening balance | 3,430,862,460 | |||
Addition during the year (on account of Stock Options exercised) | - | |||
Total | 3,430,862,460 | |||
Less : Treasury Shares (Refer note 3(d) above) | (194,715,530 | ) | ||
Closing balance | 3,246,146,930 | |||
Stock option outstanding account | ||||
Opening balance | 134,751,815 | |||
ESOP Compensation Cost | 3,674,638 | |||
Closing balance | 138,426,453 | |||
(Deficit) in the statement of profit and loss | ||||
Opening balance | (2,455,621,192 | ) | ||
Deficit during the year | (836,648,386 | ) | ||
Closing balance | (3,292,269,578 | ) | ||
Foreign Currency Translation Reserve | ||||
Opening balance | 216,523,560 | |||
Addition during the year | 3,395,531 | |||
Closing balance | 219,919,091 | |||
Total | 302,222,896 |
41
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
5. | OTHER LONG-TERM LIABILITIES (UNSECURED) |
Other long-term liabilities consist of the following:
As at March 31, 2015 | ||||
₹ | ||||
Income received in advance | 20,628,499 | |||
Other | 4,479,629 | |||
Total | 25,108,128 |
6. | LONG – TERM PROVISIONS |
Long –term provisions consist of following:
As at March 31, 2015 | ||||
₹ | ||||
Provision for employee benefits: | ||||
Gratuity (unfunded) | 35,156,086 | |||
Compensated absence (unfunded) | 30,200,976 | |||
Total | 65,357,062 |
6A TRADE PAYABLE
As at March 31, 2015 | ||||
₹ | ||||
Total outstanding dues to Micro and small Enterprises | - | |||
Others for Goods and Services | 253,457,416 | |||
Total | 253,457,416 |
The information regarding Micro Enterprises and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.
42
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
7. | OTHER CURRENT LIABILITIES |
Other current liabilities consist of the followings:
As at March 31, 2015 | ||||
₹ | ||||
Capital creditors | 12,583,839 | |||
Deposits from employees | 3,849,887 | |||
Advance received from customers | 14,793,730 | |||
Income received in advance | 96,830,135 | |||
Statutory liabilities | ||||
Tax deducted at source Payable | 9,331,524 | |||
Service Tax Payable | - | |||
Others | 19,236,392 | |||
Others | 3,540,151 | |||
Total | 160,165,658 |
8. | SHORT – TERM PROVISIONS |
Short-term provisions consist of the followings:
As at March 31, 2015 | ||||
₹ | ||||
Provision for employee benefits: | ||||
Gratuity (unfunded) | 2,375,977 | |||
Compensated absence (unfunded) | 5,514,034 | |||
Total | 7,890,011 |
43
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
9. | FIXED ASSETS |
Fixed assets consist of the followings: (Amount in₹)
Description | Gross Block as at April 1, 2014 | Additions | Deletions | Gross Block as at March 31, 2015 | Accumulated Depreciation as at April 1, 2014 | Depreciation for the Year | Translation difference | Deletions | Accumulated Depreciation as at March 31, 2015 | Net Block Value before Impairment as at March 31, 2015 | Impairment as at 31st March 2015 | Net Block after impairment as at 31st March 2015 | ||||||||||||||||||||||||||||||||||||
Tangible assets | ||||||||||||||||||||||||||||||||||||||||||||||||
Furniture and fixture | 22,132,900 | - | (7,781,614 | ) | 14,351,286 | (20,350,898 | ) | (474,688 | ) | (5,072 | ) | 7,781,614 | (13,049,044 | ) | 1,302,242 | 1,302,242 | - | |||||||||||||||||||||||||||||||
Computer | 1,032,812,262 | 52,388,360 | (183,171,054 | ) | 902,029,568 | (960,717,454 | ) | (60,511,058 | ) | (4,231 | ) | 183,171,054 | (838,061,689 | ) | 63,967,879 | 63,967,879 | - | |||||||||||||||||||||||||||||||
Office equipment | 16,594,499 | 861,471 | (1,732,636 | ) | 15,723,334 | (11,799,515 | ) | (1,032,416 | ) | - | 1,573,898 | (11,258,033 | ) | 4,465,301 | 4,465,301 | - | ||||||||||||||||||||||||||||||||
Vehicle | 15,106,840 | - | (775,216 | ) | 14,331,624 | (7,100,365 | ) | (1,785,777 | ) | - | 632,623 | (8,253,519 | ) | 6,078,105 | 6,078,105 | - | ||||||||||||||||||||||||||||||||
Leasehold Improvement | 26,712,491 | - | - | 26,712,491 | (20,110,417 | ) | (2,009,806 | ) | - | - | (22,120,223 | ) | 4,592,268 | 4,592,268 | - | |||||||||||||||||||||||||||||||||
Total tangible assets | 1,113,358,992 | 53,249,831 | (193,460,520 | ) | 973,148,303 | (1,020,078,649 | ) | (65,813,745 | ) | (9,303 | ) | 193,159,189 | (892,742,508 | ) | 80,405,795 | 80,405,795 | - | |||||||||||||||||||||||||||||||
Intangible assets | - | |||||||||||||||||||||||||||||||||||||||||||||||
Software | ||||||||||||||||||||||||||||||||||||||||||||||||
Internally Generated | 151,198,791 | - | - | 151,198,791 | (146,966,896 | ) | (3,276,880 | ) | - | - | (150,243,776 | ) | 955,015 | 955,015 | - | |||||||||||||||||||||||||||||||||
Acquired | 247,042,388 | 20,648,303 | - | 267,690,691 | (154,432,301 | ) | (47,406,632 | ) | - | - | (201,838,933 | ) | 65,851,758 | 65,851,758 | - | |||||||||||||||||||||||||||||||||
Total intangible assets | 398,241,178 | 20,648,304 | - | 418,889,482 | (301,399,196 | ) | (50,683,513 | ) | - | - | (352,082,709 | ) | 66,806,773 | 66,806,773 | - | |||||||||||||||||||||||||||||||||
Intangible assets under development (Internally Generated) | - | - | - | - | - | - | - | - | - | 49,229,488 | 49,229,488 | - | ||||||||||||||||||||||||||||||||||||
Grand Total | 1,511,600,170 | 73,898,135 | (193,460,520 | ) | 1,392,037,785 | (1,321,477,845 | ) | (116,497,258 | ) | (9,303 | ) | 193,159,189 | (1,244,825,217 | ) | 196,442,056 | 196,442,056 | - |
44
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
10. | NON-CURRENT INVESTMENTS |
Non – current investments consists of the following:
Face Value | No. of shares | As at March 31, 2015 | ||||||||||
₹ | ₹ | |||||||||||
Trade investments | ||||||||||||
A- Others, Fully paid equity shares (unquoted)- At cost | ||||||||||||
Traveljini.com Limited | 10 | 88,350 | 60,300,253 | |||||||||
Tachyon Technologies Pvt. Ltd. (Refer Note 2 below) | 10 | 13,177 | 41,700,000 | |||||||||
Vakow Technologies Pvt. Ltd. | 10 | 500,000 | 5,000,000 | |||||||||
BigSlick Infotech Pvt. Ltd. (Refer Note 2 below) | 1 | 59,230 | 4,000,000 | |||||||||
111,000,253 | ||||||||||||
Less : Provision for diminution in value of investments | 111,000,253 | |||||||||||
Net investments | - |
Book value of unquoted investments (net of provisions for diminution) –₹NIL
Notes:
1) | The provision for diminution in value of investment is as under (Amount in₹) : |
Name of the Company | 2014-15 | |||
Traveljini.com Limited | 60,300,253 | |||
Tachyon Technologies Pvt. Ltd. | 41,700,000 | |||
Vakow Technologies Pvt. Ltd. | 5,000,000 | |||
BigSlick Infotech Pvt. Ltd. | 4,000,000 | |||
TOTAL (Provision for diminution in value of investments) | 111,000,253 |
2) | The Company has investment in Tachyon Technologies Pvt. Ltd and BigSlick Infotech Pvt. Ltd. which represent 26 % and 37% of then equity capital. In view of the losses incurred by both these companies over the years, the holding company had made a provision for other than temporary diminution in their carrying value so as to reduce the carrying value to zero. No recent financial statements of these companies are available. Currently, there is no representation on the board of directors, or other participation in policy making process, the holding company (and “Group”) has no transactions with these companies. Accordingly, these companies are not accounted for investments in associates in the preparation and presentation of these consolidated financial statements. |
45
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
11. | LONG –TERM LOANS AND ADVANCES (Unsecured) |
Long – term loans and advances consists of the following:
As at March 31, 2015 | ||||
₹ | ||||
Considered Good | ||||
Rent deposits | 45,783,301 | |||
Loans to employees | 2,054,050 | |||
Recoverable taxes (net of provision of₹ 2,075,691) (Refer Note no. 25) | 73,371,371 | |||
Prepaid expenses. | 8,106,485 | |||
129,315,207 |
Notes :
1) | Loans given to employees as per the Company’s policy are not considered for the purposes of disclosure under Section 186(4) of the Companies Act, 2013. |
12. | TRADE RECEVABLES |
Trade receivables consist of the following:
As at March 31, 2015 | ||||||||
Outstanding for a period | ₹ | |||||||
(a) | Over six months from the date they were due for payments | |||||||
(i) Considered good# | 413,094 | |||||||
(ii) Considered doubtful | 33,026,389 | |||||||
33,439,483 | ||||||||
(b) | Others | |||||||
(i) Considered good | 154,554,328 | |||||||
(ii) Considered doubtful | 5,788,092 | |||||||
160,342,420 | ||||||||
Total (a+b) | 193,781,903 | |||||||
Less: Provision for doubtful debts | 38,814,504 | |||||||
154,967,399 |
#The amount has been received subsequent to balance sheet date
46
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
13. | CASH AND CASH EQUIVALENTS |
Cash and cash equivalent consist of the following:
As at March 31, 2015 | ||||||||
₹ | ||||||||
Cash and cash equivalents | ||||||||
(a) | Balances with banks | |||||||
In current account | 98,625,052 | |||||||
In EEFC account | 1,531,946 | |||||||
Cash on hand | 18,563 | |||||||
100,175,561 | ||||||||
(b) | Other | |||||||
In deposits account | 418,993,529 | |||||||
418,993,529 | ||||||||
Total (a+b) | 519,169,090 |
14. | SHORT-TERM LOANS AND ADVANCES (Unsecured, considered good) |
Short-term loans and advances consist of the following:
As at March 31, 2015 | ||||
₹ | ||||
Supplier advances | 13,815,839 | |||
Rent deposits | 1,259,602 | |||
Loan to employees | 3,152,681 | |||
Prepaid expenses | 25,916,053 | |||
Others | 606,142 | |||
Total | 44,750,317 |
14A OTHER CURRENT ASSETS
Other current assets consist of the following:
As at March 31, 2015 | ||||
₹ | ||||
Interest accrued but not due | 4,576,381 | |||
Deposit under lien | 1,500,000 | |||
Amount receivable on sale of investment | 28,898,667 | |||
Total | 34,975,048 |
47
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
15. | REVENUE FROM OPERATIONS |
Revenue from operations consists of the following:
For the year ended March 31, 2015 | ||||
₹ | ||||
Online advertising | 402,604,106 | |||
Fee based services | 398,162,820 | |||
US Publishing | 137,162,523 | |||
Total | 937,929,449 |
16. | OTHER INCOME (NET) |
Other income (net) consists of the following:
For the year ended March 31, 2015 | ||||
₹ | ||||
Interest income: | ||||
Interest on fixed deposits | 56,458,209 | |||
Interest on income-tax refund | 4,755,282 | |||
Interest others | 2,547,579 | |||
Miscellaneous Income | 11,632,833 | |||
Total | 75,393,903 |
17. | EMPLOYEE BENEFIT EXPENSES |
Employee benefit expenses consist of the following:
For the year ended March 31, 2015 | ||||
₹ | ||||
Salaries and wages | 440,941,305 | |||
Contribution to provident fund | 14,131,678 | |||
Gratuity | 9,359,670 | |||
ESOP compensation costs | 3,674,638 | |||
Staff welfare expenses | 25,025,492 | |||
Total | 493,132,783 |
48
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
18. | OPERATION AND OTHER EXPENSES |
Operation and other expenses consist of the following:
For the year ended March 31, 2015 | ||||
₹ | ||||
Content Charges | 24,047,818 | |||
Advertisement insertion charges | 66,538,212 | |||
Multi-System Operator charges | 24,333,497 | |||
Newspaper Printing and circulation | 69,280,553 | |||
Domain registration charges | 24,712,566 | |||
Subscription and SMS based costs | 8,364,859 | |||
E-Commerce – Courier, Freight and Forward | 151,059,529 | |||
Bandwidth | 141,618,694 | |||
Software Usage charges | 31,829,981 | |||
Product development charges | 17,257,341 | |||
Advertising | 103,775,764 | |||
Event cost (India Abroad) | 11,272,849 | |||
Market support | 84,534,245 | |||
Rent and amenities | 63,679,963 | |||
Electricity charges | 11,250,046 | |||
Telecommunication | 5,844,180 | |||
Repairs and maintenance: | ||||
Computers | 40,006,996 | |||
Others | 1,326,322 | |||
Insurance | 13,852,885 | |||
Travel and conveyance | 39,743,729 | |||
Rates and taxes | 246,061 | |||
Foreign exchange (gain)/ loss | 7,304,523 | |||
Bank Charges | 12,439,445 | |||
Provision for doubtful debts (net) | 2,538,223 | |||
Director Remuneration/Fees | 16,204,750 | |||
Legal and Professional Fees (Refer Note No. 19) | 41,795,730 | |||
Loss/(Gain) on sale of Fixed Assets | 123,609 | |||
Other Miscellaneous expenses | 28,012,786 | |||
Total | 1,042,995,156 |
49
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
19. | AUDITOR’S REMUNERATION |
2014-15 | ||||||
₹ | ||||||
(i) | For service as auditors | 2,350,000 | ||||
(ii) | For taxation matters | 740,000 | ||||
(iii) | For other services (US GAAP and SOX) | 10,719,000 | ||||
(iv) | For reimbursement of expenses | 277,565 | ||||
(v) | For service tax* | 1,741,099 | ||||
15,827,664 |
* Service tax credit has been availed.
20. | RETIREMENT BENEFIT PLAN |
Defined – Benefit Plans
The Company offers its employees unfunded defined-benefit plan in the form of gratuity. This plan provides for a lump-sum payment to be made to vested employees at retirement, death or termination of employment. Commitments are actuarially determined at year-end. Actuarial valuation is done based on “Projected Unit Credit” method. Gains and losses of changed actuarial assumptions are charged to the Statement of Profit and Loss.
Defined benefit commitments:
2014-15 | ||||
₹ | ||||
Benefit obligation at the beginning of the year | 32,478,974 | |||
Actuarial loss/(gain) | 1,636,781 | |||
Current service cost | 4,515,667 | |||
Interest cost | 3,207,222 | |||
Benefits paid | (4,306,581 | ) | ||
Benefit obligation at the end of the year | 37,532,063 |
Current portion | ₹ | 2,375,977 |
Non-Current Portion | ₹ | 35,156,086 |
Expense on defined benefit plan:
2014-15 | ||||
₹ | ||||
Service cost | 4,515,667 | |||
Interest cost | 3,207,222 | |||
Recognised net actuarial loss/(gain) | 1,636,781 | |||
Net gratuity cost | 9,359,670 |
50
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
The actuarial calculations used to estimate defined benefit commitments and expenses are based on the following assumptions which if changed, would affect the defined benefit commitment’s size and expense:
2014-15 | |
Rate for discounting liabilities | 7.90% |
Salary escalation rate | 7.00% |
Expected rate of return on assets | 0.00% |
Mortality rates | Indian Assured live mortality table (2006-08) |
The estimate of future salary increase, considered in the actuarial valuation, take account of inflation, seniority, promotion, and other relevant factors. The above information is certified by the actuary.
Experience adjustment:
2014-15 | 2013-14 | 2012-13 | 2011-12 | 2010-11 | ||||||||||||||||
₹ | ₹ | ₹ | ₹ | ₹ | ||||||||||||||||
Defined benefit obligation | 37,532,063 | 32,478,975 | 30,903,456 | 24,414,296 | 21,390,558 | |||||||||||||||
(Deficit) | (37,532,063 | ) | (32,478,975 | ) | (30,903,456 | ) | (24,414,296 | ) | (21,390,558 | ) | ||||||||||
Experience adjustment on plan liabilities | (2,041,271 | ) | (1,236,957 | ) | (579,376 | ) | (56,872 | ) | (1,129,042 | ) |
Defined-Contribution Plans
The Company makes contribution towards provident fund and family pension fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund and pension fund are administered by the Government of India. Under the schemes, the Company is required to contribute a specified percentage of salary to the retirement benefit schemes to fund the benefits. A sum of₹13,957,625 has been charged to the revenue account in this respect.
21. | EMPLOYEE STOCK OPTION PLANS (ESOP) |
(a) 2002 Stock Option Plan (2002 ESOP)
In January 2002, the Board of directors of the holding company approved the 2002 Stock Option Plan (“2002 ESOP”) which provide for the grant of incentive stock options and non-statutory stock options to the Company’s employees. All options under these plans are exercisable for the ADRs of the Company. A total of 280,000 of the Company’s equity shares were reserved for issuance pursuant to 2002 ESOP plan. Of which 12,000 equity shares were reserved under 2015 Stock Option Plan.
51
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
2002 ESOP | ||||||||||||||||
Number of options granted, exercised and forfeited during the year ended March 31, | Options | Weighted average exercise price | Range of exercise price | Weighted average remaining contractual life | ||||||||||||
Options outstanding, beginning of period | 11,750 | |||||||||||||||
Expired | (3,500 | ) | ||||||||||||||
Options outstanding, end of period | 8,250 | 980.13 | 980 | 6.3 |
Options exercisable as at March 31, 2015, were 6,375 (Weighted average exercise price ₹1,381).
(b) 2004 Stock Option Plan (2004 ESOP)
In June 2004, the Board of directors of the holding company approved the 2004 Stock Option Plan (“2004 ESOP”) for grant of stock options to the Company’s employees. A total of 358,000 equity shares were reserved for issuance under the plan. Of which 91,000 equity shares were reserved under 2015 Stock Option Plan.
2004 ESOP | ||||||||||||||||
Number of options granted, exercised and forfeited during the year ended March 31, | Options | Weighted average exercise price | Range of exercise price | Weighted average remaining contractual life | ||||||||||||
Options outstanding, beginning of period | 131,237 | |||||||||||||||
Granted | 22,750 | |||||||||||||||
Expired | (55,112 | ) | ||||||||||||||
Forfeited | (1,500 | ) | ||||||||||||||
Options outstanding, end of period | 97,375 | 486.72 | 224 to 1,042 | 4.4 |
Options exercisable as at March 31, 2015, were 76,125 (Weighted average exercise price₹753).
52
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
(c) 2006 Stock Option Plan (2006 ESOP)
The 2006 Stock Option Plan (“2006 ESOP”) was adopted and approved by the Compensation committee of the holding company on June 20, 2006 in accordance with the approval granted by shareholders on March 31, 2006. A total of 670,000 equity shares were approved for issuance under the plan.
2006 ESOP | ||||||||||||||||
Number of options granted, exercised and forfeited during the year ended March 31, | Options | Weighted average exercise price | Range of exercise price | Weighted average remaining contractual life | ||||||||||||
Options outstanding, beginning of period | 490,563 | |||||||||||||||
Forfeited | (1,250 | ) | ||||||||||||||
Options outstanding, end of period | 489,313 | 403.02 | 10 to 1,279 | 3.8 |
Options exercisable as at March 31, 2015, were 477,313 (Weighted average exercise price₹530).
(d) 2015 Stock option plan (2015 ESOP)
The compensation committee of the holding company authorized the 2015 stock option plan in their meeting held on January 27, 2015. Under the plan 103,000 equity shares (comprising of 12,000 equity shares from 2002 Stock Option Plan and 91,000 equity shares from 2004 Stock Option Plan) were reserved. Unless terminated sooner, the grant under this plan will terminate automatically after expiry of 10 years from the date of grant.
2015 ESOP | ||||||||||||||||
Number of options granted, exercised and forfeited during the year ended March 31, | Options | Weighted average exercise price | Range of exercise price | Weighted average remaining contractual life | ||||||||||||
Granted | 36,800 | |||||||||||||||
Options outstanding, end of period | 36,800 | 229.86 | 234 | 9.8 |
(e) Method used for accounting for share based payment plan:
The Company has used the intrinsic value method to account for the compensation cost of stock option to employees of the company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. The Company’s equity shares are currently traded on the NASDAQ Global Market in the form of ADRs.
53
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
(f) Fair Value Methodology:
The fair value of options used to compute pro forma net income and earnings per equity share have been estimated on the date of grant using Black-Scholes model.
2014-15 | ||||
₹ | ||||
Net loss as reported | (836,648,394 | ) | ||
Less: Stock-based employee compensation | 3,674,638 | |||
Add: Stock- based compensation expenses determined under fair value method (Proforma) # | 26,093,028 | |||
Proforma net loss | (859,066,784 | ) | ||
Loss per share | ||||
Basic – as reported | (60.49 | ) | ||
– Proforma | (62.27 | ) | ||
Diluted – as reported | (56.49 | ) | ||
– Proforma | (58.01 | ) | ||
# includes stock based compensation cost in respect of stock options issued prior to implementation of Guidance Note on Accounting for Employee Share-based Payments adopted by the Company with effect from April 1, 2006.
The key assumptions used in Black-Scholes model for calculating fair value are: risk-free interest rate: 1.41% to 2.10%, expected life: 5.5 to 7 years, expected volatility of shares: 79.72% to 83.64% and expected growth life in dividend: 0 %.
22. | SEGMENT REPORTING |
Segment report for the year ended March 31, 2015:
Primary Segment Disclosure - Business Segment
(i) | India Online business, comprised of revenues from online advertising (which includes display, performance and sponsorship formats) and fee-based services (which includes e-commerce marketplace fees and revenues from subscription-based email services and mobile value added services). |
(ii) | US Publishing business, comprised of revenues from advertising and subscription for India Abroad print and online properties and online advertising revenue from the Rediff India Abroad website. |
54
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
2015 (Amount in₹) | ||||||||||||||||
Revenue from External Customers | India Online | US Publishing | Other | Total | ||||||||||||
Advertising | 402,604,106 | 127,511,082 | - | 530,115,188 | ||||||||||||
Fee Based Revenue | 398,162,821 | 9,651,441 | - | 407,814,261 | ||||||||||||
Total Revenue | 800,766,926 | 137,162,523 | - | 937,929,449 | ||||||||||||
Segment Results (Before Exceptional Item) | (616,335,281 | ) | (98,360,466 | ) | - | (714,695,748 | ) | |||||||||
Add: Exceptional items (Refer Note 27) | (196,394,053 | ) | (48,003 | ) | - | (196,442,056 | ) | |||||||||
Segment Results (After Exceptional Item) | 812,729,334 | ) | (100,217,455 | ) | (911,137,804 | ) | ||||||||||
Add: Interest Income | 59,000,916 | 25,553 | 228,468 | 59,254,937 | ||||||||||||
Add: Unallocated Corporate Income | 16,138,966 | |||||||||||||||
Loss Before Tax | (835,743,901 | ) | ||||||||||||||
Tax Expense | 904,493 | |||||||||||||||
Loss for the Year after Tax | (836,648,394 | ) |
Other Information- Segment Assets & Liabilities | 2015 (Amount in₹) | |||||||||||
India Online | US Publishing | Total | ||||||||||
Segment Assets | 235,630,653 | 50,429,566 | 302,396,140 | |||||||||
Unallocable Corporate Assets | 597,116,841 | |||||||||||
Total Assets | 883,177,061 | |||||||||||
Segment Liabilities | 418,620,734 | 64,789,626 | 483,410,360 | |||||||||
Unallocable Corporate Liabilities | 28,567,915 | |||||||||||
Total Liabilities | 511,978,275 |
Other Information | 2015 (Amount in₹) | |||||||||||
India Online | US Publishing | Total | ||||||||||
Capital Expenditure | 86,630,716 | 32,960 | 86,663,676 | |||||||||
Depreciation and Amortization | 116,142,686 | 354,572 | 116,497,258 | |||||||||
ESOP Charge | 3,674,638 | - | 3,674,638 |
55
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
Secondary Segment Disclosure-Geographical Segment
The geographical segments are considered for disclosure as secondary segment. Domestic Segment includes sales to customers located in India and service income accrued in India. Overseas Segment includes sales to customers located outside India.
Particulars | 2015 | |||||||||||
Domestic | Overseas | Total | ||||||||||
Revenue from external customers | 752,544,738 | 185,384,711 | 937,929,449 | |||||||||
Segment Assets | 251,966,574 | 50,429,566 | 302,396,140 | |||||||||
Capital Expenditure | 86,630,716 | 32,960 | 86,663,676 |
23. | OBLIGATION TOWARDS OPERATING LEASES |
The Company leases office space and residential apartments for employees under various operating leases. Operating lease expense that has been included in the determination of the net profit/loss is as follows:
2014-15 | ||||
₹ | ||||
Office Premises | 58,666,867 | |||
Residential flats for accommodation of employees | 5,013,095 | |||
Total | 63,679,962 |
The minimum annual rental commitments under operating leases are as follows:
2014-15 | ||||
₹ | ||||
Not later than one year | 30,142,969 | |||
Later than one year and not later than five years | 35,000,223 | |||
Total payments | 65,143,192 |
56
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
24. | EARNING PER EQUITY SHARES |
2014-15 | ||||||
A. | Net (loss) attributable to equity shareholders (₹) | (836,648,394 | ) | |||
B. | Weighted average number of equity shares outstanding during the year | 13,795,178 | ||||
C. | Potentially dilutive equity share equivalents (stock options) | - | ||||
D. | Weighted average number of equity shares and potentially dilutive equity share equivalents outstanding | 13,795,178 | ||||
E. | Nominal value of Equity Shares (₹) | 5.00 | ||||
Basic Earnings per Share (₹) | (60.65 | ) | ||||
Diluted Earnings per Share (₹) | (60.65 | ) |
25. | CONTINGENCIES AND CAPITAL COMMITMENTS |
Contingent liabilities:
During 2012-13, the holding Company had received a demand notice from Income Tax Authorities resulting in a contingent liability of interest u/s. 201 (1A) of₹ 8,524,108. This was mainly on account of disallowance of payment made for purchase of bandwidth on which tax had not been deducted at source for the assessment years 2010-11 and 2011-12. The Company has paid₹ 4,039,200 under protest and matter is pending with the Commissioner of Income Tax (Appeal).
The Income tax authorities in India have disallowed certain expenses claimed by the Company for certain years which if confirmed by the appellate authorities will be adjusted against the income tax carry forward losses claimed by the Company and not result in outflow of resources embodying economic benefits.
The Company has lodged appropriate proceedings with the relevant income tax authorities and expects to prevail in the appellate proceedings
The Group is also subject to other legal proceedings and claims, which have arisen in the ordinary course of its business. Those actions, when ultimately concluded and determined, will not, in the opinion of management, have a material effect on the results of operations, cash flows or the financial position of the Group.
The Group has not recognized any loss accrual for the litigation disputes as the Group believes that it is probable that it would be successful on resolution of the litigation. The maximum total loss relating to these disputes would be₹ 1,276,836 excluding any interest and penalty which amount cannot be reasonably estimated.
57
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
Capital Commitments :
2014-15 | ||||
₹ | ||||
Estimated amount of contracts remaining to be executed on capital account and not provided for | 26,570,510 |
26. | DERIVATIVE TRANSACTION |
The Group has not entered in to any derivative transaction during the year ended March 31, 2015.
Foreign exchange currency exposures not hedged by derivative instruments are:
2014-15 | ||||||||||
Sl. No. | Particulars | Amount | Amount | |||||||
$ | ₹ | |||||||||
1 | Amount receivable on account of sale of services | 377,277 | 23,613,743 | |||||||
2 | Creditors payable on account of foreign currency expenditure | (232,194 | ) | (14,533,024 | ) | |||||
3 | Foreign currency bank balances | 24,476 | 15,31,946 |
27. | IMPAIRMENT OF FIXED ASSETS |
At the year end, the Group has recognized an impairment loss of₹ 196,442,056 on its Fixed Assets relating to its India Online business which includes revenue from advertising and fee based services. The impairment was on account of significant decline in advertisement revenue as there has been a continued reduction in spends by customers which is consistent with industry trends. As a consequence the Company has been experiencing a decline in its display advertisement revenue, and incurring net operating cash losses. The net realizable value of the India Online business asset group is insignificant.
28. | DEFERRED TAX ASSET |
The items that could have resulted in deferred tax assets mainly include the net operating loss and unabsorbed depreciation carry-forward, depreciation, retirement benefits and provisions for bad and doubtful debts. Such deferred tax assets have not been recognised since there is no virtual/ reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.
58
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
29. | Additional information as required by schedule III to the Companies Act, 2013. |
Net Assets, i.e. total assets minus total liabilities | Share in profit or loss | |||||||||||||||
As % of consolidated net assets | Amount in (₹) | As % of consolidated profit or loss | Amount in (₹) | |||||||||||||
Rediff.com India Limited | 97 | % | 361,174,314 | 75 | % | (624,691,589 | ) | |||||||||
Indian Subsidiary | ||||||||||||||||
Vubites India Prt. Ltd. | 4 | % | 15,146,832 | 13 | % | (112,897,863 | ) | |||||||||
Foreign Subsidiaries (including step down subsidiaries) | ||||||||||||||||
Rediff Holdings, Inc. | 6 | % | 21,830,538 | 3 | % | (24,296,775 | ) | |||||||||
India Abroad Publications Inc | -8 | % | (31,419,789 | ) | 7 | % | (62,611,528 | ) | ||||||||
Rediff.com Inc | -1 | % | (2,097,514 | ) | 2 | % | (15,737,380 | ) | ||||||||
India New York Inc. | 1 | % | 3,085,106 | 0 | % | 3,940,139 | ||||||||||
India Abroad Publication (Canada) Inc. | 0 | % | (62,542 | ) | 0 | % | (581,858 | ) | ||||||||
Value communication corporation Inc. | 0 | % | (899,293 | ) | ||||||||||||
Rediff.com Employee Trust | 1 | % | 2,941,134 | 0 | % | 228,460 | ||||||||||
Total Consolidated Net Assets | 371,198,786 | |||||||||||||||
Total Consolidated Loss | (836,648,394 | ) |
59
REDIFF.COM INDIA LIMITED
Notes forming part of the Consolidated Financial Statements
30. | SUBSEQUENT EVENT |
On July 29, 2015, the Company entered into a Purchase Agreement with Lincoln Park Capital Fund, LLC, an Illinois limited liability company (“Investor”). The Purchase Agreement provides that the Company has the right to sell to the Investor, and the Investor has the obligation to purchase from the Company, up to an aggregate of US$15 Million of the Company’s American Depositary Shares (“ADSs”) over the 36-month term of the Agreement in amount as described in the Purchase Agreement. Upon shareholder approval and upon effectiveness of registration statement covering the resale of ADSs, the Company can elect its discretion to sell ADSs to the investor pursuant to either regular purchase amounts or accelerated purchase amounts. The amounts of ADSs which may be sold to the Investor pursuant to any regular purchase range from 40,000 ADSs to 100,000 ADSs, depending on the then current trading price of the Company’s ADSs on Nasdaq (but not to exceed US$500,000 on any single purchase date). In addition, the Company has the right, but not the obligation, to sell accelerated purchase amounts. The purchase price for any ADSs sold pursuant a regular purchase, will be 98% of the lower of the (a) the lowest sale price of the ADSs on Nasdaq on the regular purchase date or (b) the average of the three lowest closing sale prices over the preceding 10 trading-day period. The purchase price for any ADSs sold pursuant to an accelerated purchase, will be 98% of the lower of (a) the closing sale price of the ADSs on Nasdaq on the accelerated purchase date or (b) 94% of a volume weighted average purchase price on the accelerated purchase date. The Company will file an application with the Nasdaq to list the ADSs to be sold to the Investor pursuant to the Purchase Agreement. The Company is required to file a registration statement covering the resale of the ADSs, so that such ADSs may be sold by the Investor from time to time pursuant to a Registration Rights Agreement entered into between the Company and Investor. Under the Purchase Agreement, the Investor and its affiliates have a beneficial ownership limitation of 4.99% of the then issued and outstanding equity securities of the Company. The issuance of the shares underlying the ADSs must be approved by the Company’s shareholders prior to any purchases under the Purchase Agreement. The Purchase Agreement and Registration Rights Agreement also contain customary representations, warranties, conditions and indemnification provisions.
31. | The Company has prepared its consolidated financial statements for the first time and hence corresponding figures for the previous year have not been given. |
For and on behalf of the Board of Directors
/s/ Ajit Balakrishnan | /s/ Arun Nanda | |
Chairman & Managing Director | Director | |
DIN: 00073814 | DIN: 00034744 |
/s/ Pooja Lohade | |
Company Secretary | |
Mumbai, India | |
ACS 21584 | |
Date: September 4, 2015 |
60
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF REDIFF.COM INDIA LIMITED
Report on the Standalone Financial Statements
1. | We have audited the accompanying standalone financial statements ofREDIFF.COM INDIA LIMITED("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information. |
Management's Responsibility for the Standalone Financial Statements
2. | The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. |
Auditors’ Responsibility
3. | Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. |
4. | An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements. |
61
5. | We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements. |
Opinion
6. | In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its loss and its cash flows for the year ended on that date. |
Report on Other Legal and Regulatory Requirements
7. | As required by the Companies (Auditor’s Report) Order, 2015 (“the Order”) issued by the Central Government in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order. |
8. | As required by Section 143 (3) of the Act, we report that: |
(a) | We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. |
(b) | In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books. |
(c) | The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account. |
(d) | In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. |
(e) | On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act. |
(f) | With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: |
i. | The Company has disclosed the impact of pending litigations on its financial position in its financial statements in accordance with generally accepted accounting practice – also Refer Note 26 to the financial statements; |
ii. | The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. |
62
iii. | There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company. |
ForDeloitte Haskins & Sells LLP | |
Chartered Accountants | |
(Firm Registration No. 117366W/W-100018) | |
/s/ Shyamak R Tata | |
Partner | |
Mumbai, 7th September, 2015 | (Membership No. 38320) |
63
REDIFF.COM INDIA LIMITED
ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT
(Referred to in paragraph 7 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)
In our opinion and according to the information and explanations given to us, the nature of the Company’s business/activities during the year are such that clauses (ii) and (vi) of paragraph 3 of the Order are not applicable to the Company. In respect of the other clauses, we report as under:
(i) | In respect of its fixed assets; |
a) | The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. |
b) | The fixed assets have not been physically verified by the Management during the year but the Company has a system of verifying the fixed assets once in every three years. In our opinion the frequency of verification is at reasonable intervals. |
(ii) | The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013. |
(iii) | In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and nature of its business for the purchase of fixed assets and for the sale of services and during the course of our audit, we have not observed any continuing failure to correct major weaknesses in such internal control system. The nature of the Company’s business is such that it does not involve purchase of inventories and sale of goods. |
(iv) | According to information and explanations given to us, the Company has not accepted any deposit during the year. |
(v) | According to the information and explanations given to us, in respect of statutory dues: |
a) | The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees’ State Insurance, Income-tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. |
There were no undisputed amounts payable in respect of provident fund, employee state insurance, income tax, sales tax, wealth tax, customs duty, excise duty, service tax, value added tax, cess and other material statutory dues in arrears as at 31st March 2015 for a period of more than six months from the date they became payable.
64
In respect of Service tax, the unpaid service tax (excluding interest) amounted to₹ 438,803 as on 31st March 2015 is outstanding for a period of more than six months from the date it became payable.
b) | Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess, as applicable, which have not been deposited as on 31st March, 2015 on account of disputes are given below: |
Name of Statute | Nature of Dues | Forum where Dispute is Pending | Period to which the Amount Relates | Amount Involved (₹) | ||||||
Income-tax Act, 1961 | Income Tax | Commissioner of Income Tax (Appeal) | 2009-10 and 2010-11 | 4,484,908 |
c) | There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company. |
(vi) | The accumulated losses of the Company at the end of the financial year are more than fifty per cent of its net worth and the Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year. |
(vii) | In our opinion and according to the information and explanations given to us, there were no loans taken by the Company from financial institutions and banks and the company has not issued any debentures |
(viii) | In our opinion and according to the information and explanations given to us, during the year the Company has not given any guarantee for loans taken by others from banks and financial institutions. |
(ix) | According to the information and explanations given to us, the Company has not availed any term loan. |
65
(x) | To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no significant fraud on the Company has been noticed or reported during the year. |
ForDeloitte Haskins & Sells LLP | |
Chartered Accountants | |
(Firm Registration No. 117366W/W-100018) | |
/s/ Shyamak R Tata | |
Partner | |
Mumbai, 7th September, 2015 | (Membership No. 38320) |
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REDIFF.COM INDIA LIMITED
Balance Sheet as at March 31, 2015
Note | As at March 31, 2015 | As at March 31, 2014 | |||||||||||||
₹ | ₹ | ||||||||||||||
I | EQUITY AND LIABILITIES | ||||||||||||||
1 | Shareholders’ Funds | ||||||||||||||
(a) | Share Capital | 3 | 74,050,890 | 74,050,890 | |||||||||||
(b) | Reserves and Surplus | 4 | 437,527,654 | 1,221,124,082 | |||||||||||
511,578,544 | 1,295,174,972 | ||||||||||||||
2 | Non - Current Liabilities | ||||||||||||||
(a) | Other Long Term Liabilities | 5 | 20,628,499 | 19,188,361 | |||||||||||
(b) | Long - Term Provisions | 6 | 61,608,736 | 55,929,812 | |||||||||||
82,237,235 | 75,118,173 | ||||||||||||||
3 | Current Liabilities | ||||||||||||||
(a) | Short-term borrowings | - | - | ||||||||||||
(a) | Trade Payables | 6A | 204,080,881 | 185,936,378 | |||||||||||
(b) | Other Current Liabilities | 7 | 183,932,709 | 161,358,335 | |||||||||||
(c) | Short - Term Provisions | 8 | 7,389,741 | 8,206,839 | |||||||||||
395,403,331 | 355,501,552 | ||||||||||||||
TOTAL | 989,219,110 | 1,725,794,697 | |||||||||||||
II | ASSETS | ||||||||||||||
1 | Non - Current Assets | ||||||||||||||
(a) | Fixed Assets | 9 | |||||||||||||
(i) | Tangible Assets | - | 80,922,082 | ||||||||||||
(ii) | Intangible Assets | - | 96,713,356 | ||||||||||||
(iii) | Intangible Assets under Development | - | 36,639,725 | ||||||||||||
- | 214,275,163 | ||||||||||||||
(b) | Non - Current Investments | 10 | - | 54,922,395 | |||||||||||
(c) | Long - Term Loans and Advances | 11 | 308,241,702 | 312,458,856 | |||||||||||
308,241,702 | 367,381,251 | ||||||||||||||
2 | Current Assets | ||||||||||||||
(a) | Trade Receivables | 12 | 127,190,017 | 165,542,874 | |||||||||||
(b) | Cash and Cash Equivalents | 13 | 508,366,738 | 939,308,715 | |||||||||||
(c) | Short-Term Loans and Advances | 14 | 39,344,272 | 37,786,694 | |||||||||||
(d) | Other current assets | 14A | 6,076,381 | 1,500,000 | |||||||||||
680,977,408 | 1,144,138,283 | ||||||||||||||
TOTAL | 989,219,110 | 1,725,794,697 | |||||||||||||
- | - | ||||||||||||||
III | NOTES FORMING PART OF THE FINANCIAL STATEMENTS | 1-34 |
In terms of our report attached. | For and on behalf of the Board of Directors | |
ForDeloitte Haskins & Sells LLP | ||
Chartered Accountants | ||
/s/ Shyamak R Tata | /s/ Ajit Balakrishnan | /s/ Arun Nanda |
Partner | Chairman & Managing Director | Director |
DIN: 00073814 | DIN: 00034744 | |
/s/ Pooja Lohade | ||
Company Secretary | ||
Mumbai, India | ||
ACS 21584 | ||
Mumbai, September 7, 2015 | Mumbai, September 4, 2015 |
67
REDIFF.COM INDIA LIMITED
Statement of Profit and Loss for the Year Ended March 31, 2015
Note | For the year ended March 31, 2015 | For the year ended March 31, 2014 | ||||||||||
₹ | ₹ | |||||||||||
I Revenue From Operations | 15 | 742,313,239 | 784,380,935 | |||||||||
II Other Income (Net) | 16 | 75,117,593 | 124,505,338 | |||||||||
TOTAL REVENUE | 817,430,832 | 908,886,273 | ||||||||||
III Expenses: | ||||||||||||
(a) Employee Benefit Expenses | 17 | 357,753,445 | 346,924,679 | |||||||||
(b) Depreciation and Amortization Expense | 9 | 104,790,430 | 139,709,101 | |||||||||
(c) Operation and Other Expenses | 18 | 787,867,136 | 727,468,348 | |||||||||
TOTAL EXPENSES | 1,250,411,011 | 1,214,102,128 | ||||||||||
IVLOSS BEFORE EXCEPTIONAL ITEMS AND TAX | (432,980,179 | ) | (305,215,855 | ) | ||||||||
V Exceptional Items: | ||||||||||||
Impairment of Fixed Assets | 31 | 191,711,410 | - | |||||||||
Diminution in Long Term Investments, etc. | 30 | 162,579,477 | 421,138,377 | |||||||||
Total | 354,290,887 | 421,138,377 | ||||||||||
VI Provision for Tax | - | - | ||||||||||
VIILOSS FOR THE YEAR | (787,271,066 | ) | (726,354,232 | ) | ||||||||
VIII Earnings Per Equity Share (Face Value of₹5 each ) - Basic and Diluted | (53.16 | ) | (49.04 | ) | ||||||||
IXNOTES FORMING PART OF THE FINANCIAL STATEMENTS | 1-34 |
In terms of our report attached. | For and on behalf of the Board of Directors | |
ForDeloitte Haskins & Sells LLP | ||
Chartered Accountants | ||
/s/ Shyamak R Tata | /s/ Ajit Balakrishnan | /s/ Arun Nanda |
Partner | Chairman & Managing Director | Director |
DIN: 00073814 | DIN: 00034744 | |
/s Pooja Lohade | ||
Company Secretary | ||
Mumbai, India | ||
ACS 21584 | ||
Mumbai, September 7, 2015 | Mumbai, September 4, 2015 |
68
REDIFF.COM INDIA LIMITED
Cash Flow Statement for the Year Ended March 31, 2015
Particulars | For the year ended March 31, 2015 | For the year ended March 31, 2014 | ||||||
₹ | ₹ | |||||||
Cash Flow from Operating Activities | ||||||||
(Loss) Before Taxes | (787,271,066 | ) | (726,354,232 | ) | ||||
Adjustments for: | ||||||||
Depreciation and Amortisation Expense | 104,790,430 | 139,709,101 | ||||||
Impairment of Fixed assets | 191,711,411 | - | ||||||
Employee Stock Option Expenses | 3,674,638 | 6,850,338 | ||||||
Interest Income | (63,484,760 | ) | (119,573,944 | ) | ||||
(Write Back)/ Write Off of Provision of Doubtful Receivables | 655,558 | 9,889,181 | ||||||
Provision for dimunition in long term investment etc. | 162,579,477 | 421,138,377 | ||||||
(Profit) / Loss on Sale of Fixed Assets | 123,609 | (28,326 | ) | |||||
Unrealised Exchange Difference | 5,444,484 | 8,702,461 | ||||||
Operating Loss Before Working Capital Changes | (381,776,218 | ) | (259,667,044 | ) | ||||
Changes in Working Capital: | ||||||||
Trade Receivables | 34,268,558 | 3,687,933 | ||||||
Loans and Advances | (1,792,664 | ) | 17,116,279 | |||||
Trade Payables, Current Liabilities and Provisions | 2,863,586 | 20,084,049 | ||||||
Other Current Assets | 4,576,381 | (1,500,000 | ) | |||||
Cash used in Operating Activities | (341,860,356 | ) | (220,278,783 | ) | ||||
Taxes Refund, Net of paid | 34,234,698 | 134,729,394 | ||||||
Net Cash used in Operating Activities (A) | (307,625,659 | ) | (85,549,389 | ) | ||||
Cash Flow From Investing Activities | ||||||||
Payments to Acquire Fixed Assets | (70,120,871 | ) | (86,310,732 | ) | ||||
Proceeds from Sale of Fixed Assets | 177,722 | 469,511 | ||||||
Loan given to Vubites India Pvt Ltd | (107,657,082 | ) | (96,317,552 | ) | ||||
Loan given to India abroad publication Inc. | - | (34,487,128 | ) | |||||
Repayment of Loan from India abroad publications Inc. | - | 83,666,293 | ||||||
Interest Income Received | 54,153,097 | 82,335,942 | ||||||
Net Cash (used in)/from Investing Activities (B) | (123,447,134 | ) | (50,643,666 | ) | ||||
Net (Decrease) in Cash and Cash Equivalents (A+B) | (431,072,793 | ) | (136,193,055 | ) | ||||
Cash and Cash Equivalents at the Beginning of the Year | 939,155,784 | 1,075,348,839 | ||||||
Cash and Cash Equivalents at the End of the Year | 508,082,991 | 939,155,784 | ||||||
Note ; | ||||||||
Cash and Cash Equivalents Include: | ||||||||
Cash on Hand | 5,211 | 5,211 | ||||||
Bank Balances | 508,077,780 | 939,150,573 | ||||||
Cash and Cash Equivalents as above | 508,082,991 | 939,155,784 | ||||||
Effect of Exchange Rate Changes | 283,747 | 152,931 | ||||||
Cash and Cash Equivalents per Note 13 | 508,366,738 | 939,308,715 | ||||||
- | ||||||||
NOTES FORMING PART OF THE FINANCIAL STATEMENTS | 1-34 |
In terms of our report attached. | For and on behalf of the Board of Directors | |
ForDeloitte Haskins & Sells LLP | ||
Chartered Accountants | ||
/s/ Shyamak R Tata | /s/ Ajit Balakrishnan | /s/ Arun Nanda |
Partner | Chairman & Managing Director | Director |
DIN: 00073814 | DIN: 00034744 | |
/s/ Pooja Lohade | ||
Company Secretary | ||
Mumbai, India | ||
ACS 21584 | ||
Mumbai, September 7, 2015 | Mumbai, September 4, 2015 |
69
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
1. | CORPORATE INFORMATION |
Rediff.com India Limited (“Rediff” or “the Company”) is in the business of providing online internet based services, focusing on India and the global Indian community. Its websites consists of matters relevant to Indian interests such as cricket, astrology, matchmaker and movies, content on various matters like news and finance, search facilities, a range of community features such as e-mail, chat, messenger, e-commerce, broadband wireless content and mobile value-added services to mobile phone subscribers in India.
2. | SIGNIFICANT ACCOUNTING POLICIES |
a) | Basis of preparation of financial statements |
The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP) and comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with rule 7 of the Companies (Accounts) Rules, 2014.
In the year ended March 31, 2015, the Company incurred a net loss of₹ 787,271,066/-. Accumulated losses of₹ 3,131,761,259/- and net cash outflows of₹ 431,072,793. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
The Company has carried out a review of its cash flow forecast for a period of twelve months from the date of these financial statements considering historical cash requirements and has taken the assumption that there will not be any significant decline in advertising revenues and an increase in e-commerce marketplace fees. As described in Note 33, the Company has entered into an arrangement with an investor in accordance with which the Company, at its option, has the right to obtain financing subject to certain conditions, in exchange for issuance of ADS.
On the basis of the factors stated in the preceding paragraph, the Company believes it will have sufficient resources to meets its obligations as they become due within one year from the date of these financial statements.
b) | Use of estimates |
The preparation of financial statements in conformity with generally accepted accounting principles in India requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.
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REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
c) | Revenue recognition |
Revenues comprise of revenues from online advertising and fee based services. Online advertising includes advertisement and sponsorships. Fee based services include e-commerce, subscription services and mobile value-added services. E-commerce revenues primarily comprise of commission earned on sale of items to customers who shop online while subscription services comprise of subscriptions received for using e-mail, matchmaker and other subscriber services. Mobile value-added services include revenues derived from mobile operators based on value added text messages received and sent by mobile subscribers over their mobile phones.
Online advertising
Advertisement and sponsorship income is derived from customers who advertise on the Company's website or to whom direct links from the Company's website to their own websites are provided.
Revenue from display of advertisement and sponsorships is recognised ratably based on the delivery over the contractual period of the advertisement, commencing when the advertisement is placed on the website. Revenues are also derived from sponsor buttons placed in specific areas of the Company's website, which generally provide users with direct links to sponsor websites. These revenues are recognised ratably over the period in which the advertisement is displayed, provided that no significant Company obligations remain and collection of the resulting receivable is probable. Company obligations may include guarantees of a minimum number of impressions or clicks or leads or times that an advertisement appears in pages viewed by users of the Company's website. To the extent that minimum guaranteed impressions are not met, the Company defers recognition of the corresponding revenues until the guaranteed impression levels are achieved. The Company earn revenues from the sending of email messages to its users on behalf of advertisers and such revenues are recognized ratably over the contracted period.
Fee based services
Online shopping (E-commerce) revenue primarily consists of commission from the sale of books, music, apparel, confectionery, gifts and other items to retail customers who shop at the Company's online store. The Company recognizes as revenues the commission earned on these transactions and shipping costs recovered from customers. The Company provides incentives to its customers in the form of coupons and promo codes. These incentives are treated as reductions in revenue and in cases where such incentives exceed the commission amount; the excess is recognized as cost of revenue.
Subscription service revenues primarily include income from various paid email, web hosting and other service products that cater to a cross section of the Company’s registered user base. The revenue for subscription based service products is deferred and recognised ratably over the period of subscription.
Subscription revenues are also derived from providing mobile value added services (MVAS) such as e-mail and other related products to mobile phone users. The Company contracts with third party mobile operators for sharing revenues from these services. SMS based revenues are recognised when the service is performed.
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REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
d) | Tangible assets, intangibles, depreciation and amortisation |
Tangible Assets
Tangible assets are stated at cost less accumulated depreciation and impairment loss, if any. The Company depreciates tangible assets using the straight-line method, over the estimated useful lives of assets. The estimated useful lives of assets are as follows:
Furniture and fixtures | 10 years |
Computer equipment | 1 to 3 years |
Office equipment | 3 to 10 years |
Vehicles | 8 years |
Leasehold improvements | 6 years |
The effective rates of depreciation based on the estimated useful life of the tangible assets is higher than the rates as prescribed under Schedule II to the Companies Act, 2013.
Individual assets costing less than₹ 5,000 are depreciated in full in the year of acquisition.
Intangible Assets
Intangible Assets are stated at cost less accumulated amortization and impairment loss, if any. Software includes costs incurred in the operations stage that provides additional functions or features to the Company's website, accounting and monitoring software. These are amortised over their estimated useful life of one to five years. Maintenance expenses or costs that do not result in new features or functions are expensed as product development costs, when incurred.
e) | Impairment of assets |
The carrying values of assets/cash-generating units at each balance sheet date are reviewed for impairment or more often if there is an indication of decline in value. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment loss is recognised, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor.
f) | Investments |
Investments classified as long-term investments are stated at cost. Provision is made to recognise a decline, other than temporary, in the value of such investments. Cost of investments in wholly owned subsidiaries comprise of purchase cost as increased by legal fees, due diligence fees and other direct expenses connected with such acquisition.
72
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
g) | Employee benefits |
(i)Short term
Short term employee benefits are recognised as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.
(ii)Long term
The Company has both defined-contribution and defined-benefit plans.
o | Defined-contribution plans |
These are plans in which the Company pays pre-defined amounts to separate funds. These comprise of contributions to the employees’ provident fund and family pension fund. The Company’s payments to the defined-contribution plans are reported as expenses during the period in which the employees perform the services that the payment covers.
o | Defined-benefit plans |
The obligation for the unfunded defined-benefit gratuity is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gain and losses are recognised in full in the Statement of Profit and Loss for the period in which they occur.
(iii)Other employee benefits
Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encashed or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on availment of encashment of such accrued benefit or where the availment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method
h) | Foreign currency transactions and translations. |
Transactions in foreign currency are recorded at the original rates of exchange in force at the time transactions are effected.
Monetary items of assets and liabilities denominated in a foreign currency are translated using the exchange rates prevailing at the date of Balance Sheet. Exchange gains / losses on account of exchange difference either on settlement or translation are recognised in the Statement of Profit and Loss.
Non-monetary items such as investments denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
73
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
i) | Stock based compensation |
The Company accounts for compensation expense under the Employee Stock Option schemes using the intrinsic value method as per the Guidance Note “Accounting for Employee Share-based Payments” issued by the Institute of Chartered Accountants of India.
j) | Earnings per share |
Basic earnings per equity share is computed by dividing the net profit/loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit/loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all potential equity shares on account of stock options outstanding. For the purpose of Earnings Per Share calculations, ADRs (American Depository Receipts) are converted to equity shares.
k) | Taxes |
Income taxes comprise both current and deferred tax.
Current income tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable tax rates and laws. Deferred tax is accounted for by computing the tax effect of timing differences, which arise during the year and reverse in subsequent periods. Deferred tax assets on account of accumulated losses, unabsorbed depreciation and other items are recognised only to the extent that there is virtual certainty of realisation of such assets in future.
Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and the Company intends to settle the asset and liability on a net basis.
l) | Cash and cash equivalent |
The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.
Cash and cash equivalents consist of cash on hand, balances in current accounts, deposits with banks which are unrestricted as to withdrawal and use.
m) | Research and development expenses |
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product’s technological feasibility has been established, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilised for research and development are capitalised and depreciated in accordance with the policies stated for Tangible Fixed Assets and Intangible Assets.
74
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
n) | Leases |
Leasing of assets whereby the lessor essentially remains the owner of the asset is classified as operating leases. The payments made by the Company as lessee in accordance with operational leasing contracts or rental agreements are expensed proportionally during the lease or rental period respectively. Any compensation, according to agreement, that the lessee is obliged to pay to the lessor if the leasing contract is terminated prematurely is expensed during the period in which the contract is terminated.
o) | Provisions and Contingencies |
A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognized but are disclosed in the notes to the financial statement. A contingent asset is neither recognized nor disclosed.
3. | SHARE CAPITAL |
As at March 31, 2015 | As at March 31, 2014 | |||||||||||||||
Number | ₹ | Number | ₹ | |||||||||||||
Authorised | ||||||||||||||||
Equity Shares of₹5 each | 24,000,000 | 120,000,000 | 24,000,000 | 120,000,000 | ||||||||||||
Issued, Subscribed and Fully Paid up | ||||||||||||||||
Ordinary Equity Shares of₹5 each fully paid | 14,810,178 | 74,050,890 | 14,810,178 | 74,050,890 |
a. | Reconciliation of ordinary shares outstanding at the beginning and at the end of the reporting period: | |
As at March 31, 2015 | As at March 31, 2014 | |||||||||||||||
Number | ₹ | Number | ₹ | |||||||||||||
At the beginning of the year | 14,810,178 | 74,050,890 | 14,810,178 | 74,050,890 | ||||||||||||
Shares issued during the year (on account of Stock Options exercised) | - | - | - | - | ||||||||||||
Outstanding at the end of the period | 14,810,178 | 74,050,890 | 14,810,178 | 74,050,890 |
b. | Details of ordinary shares held by each shareholder holding more than 5% shares: |
As at March 31, 2015 | As at March 31, 2014 | |||||||||||||||
Name of shareholder | Number | % Holding | Number | % Holding | ||||||||||||
Rediffusion Holdings Private Limited | 2,200,002 | 14.85 | % | 2,200,002 | 14.85 | % | ||||||||||
Draper International India LP | 2,178,000 | 14.71 | % | 2,178,000 | 14.71 | % | ||||||||||
Edelwiess Finance & Investments Limited. | 1,523,000 | 10.28 | % | 1,523,000 | 10.28 | % | ||||||||||
Diwan Arun Nanda | 1,244,740 | 8.40 | % | 1,244,740 | 8.40 | % | ||||||||||
Ajit Balakrishnan | 1,100,190 | 7.43 | % | 1,100,190 | 7.43 | % | ||||||||||
Rediff.com India Limited Employee Trust | 1,015,000 | 6.85 | % | 1,015,000 | 6.85 | % |
75
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
c. | Terms / rights attached to equity shares: |
In respect of every ordinary share, voting right shall be in the same proportion as the capital paid upon such Ordinary share bears to the total paid up ordinary capital of the company.
Holders of ADRs are not entitled to attend or vote at shareholders meetings. Holders of ADRs may exercise voting rights with respect to ordinary shares represented by ADRs only in accordance with the provisions of the Company’s deposit agreement and Indian Law.
Each ADRs represents one half of an equity share.
d. | Issued and Subscribed Share Capital includes an aggregate of 194,378 (Previous year 194,378) Ordinary (Equity) Shares of₹ 5 each allotted as fully paid-up pursuant to various ESOP Scheme with payment having been received in cash, for a period of five years immediately preceding the end of the financial year. |
4. | RESERVES AND SURPLUS |
Reserves and surplus consist of the following reserves:
As at March 31, 2015 | As at March 31, 2014 | |||||||
₹ | ₹ | |||||||
Securities premium account | ||||||||
Opening balance | 3,430,862,460 | 3,430,862,460 | ||||||
Addition during the year (on account of Stock Options exercised) | - | - | ||||||
Closing balance | 3,430,862,460 | 3,430,862,460 | ||||||
Stock option outstanding account | ||||||||
Opening balance | 134,751,815 | 127,901,477 | ||||||
ESOP Compensation Cost | 3,674,638 | 68,50,338 | ||||||
Closing balance | 138,426,453 | 134,751,815 | ||||||
(Deficit) in the statement of profit and loss | ||||||||
Opening balance | (2,344,490,193 | ) | (1,618,135,961 | ) | ||||
Deficit during the year | (787,271,066 | ) | (726,354,232 | ) | ||||
Closing balance | (3,131,761,259 | ) | (2,344,490,193 | ) | ||||
Total | 437,527,654 | 1,221,124,082 |
76
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
5. | OTHER LONG-TERM LIABILITIES (UNSECURED) |
Other long-term liabilities consist of the followings:
As at March 31, 2015 | As at March 31, 2014 | |||||||
₹ | ₹ | |||||||
Income received in advance | 20,628,499 | 19,188,361 | ||||||
Total | 20,628,499 | 19,188,361 |
6. | LONG – TERM PROVISIONS |
Long –term provisions consist of following:
As at March 31, 2015 | As at March 31, 2014 | |||||||
₹ | ₹ | |||||||
Provision for employee benefits: | ||||||||
Gratuity (unfunded) | 33,472,482 | 28,551,561 | ||||||
Compensated absence (unfunded) | 28,136,254 | 27,378,251 | ||||||
Total | 61,608,736 | 55,929,812 |
6A. TRADE PAYABLES
As at March 31, 2015 | As at March 31, 2014 | |||||||
₹ | ₹ | |||||||
Total outstanding dues to Micro and small Enterprises | - | - | ||||||
Others for Goods and Services | 204,080,881 | 185,936,378 | ||||||
Total | 204,080,881 | 185,936,378 |
The information regarding Micro Enterprises and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.
77
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
7. | OTHER CURRENT LIABILITIES |
Other current liabilities consist of the followings:
As at March 31, 2015 | As at March 31, 2014 | |||||||
₹ | ₹ | |||||||
Capital creditors | 12,583,839 | 177,000 | ||||||
Deposits from employees | 3,849,887 | 3,849,887 | ||||||
Advance received from customers | 5,325,993 | 13,687,487 | ||||||
Income received in advance | 80,299,102 | 67,600,485 | ||||||
Other Liabilities | 2,158,915 | 1,175,483 | ||||||
Statutory liabilities | ||||||||
Tax deducted at source Payable | 8,555,092 | 8,292,895 | ||||||
Service Tax Payable | - | 12,802,977 | ||||||
Others | 18,956,526 | 2,623,519 | ||||||
Other payables to related parties (unsecured): | ||||||||
India Abroad Publications Inc. | 105,054 | 1,122,912 | ||||||
Rediff.com Inc. | 39,382,289 | 37,815,555 | ||||||
Rediff Holding Inc. | 3,963,049 | 3,805,388 | ||||||
Value Communication Corporation | 8,752,963 | 8,404,747 | ||||||
Total | 183,932,709 | 161,358,335 |
8. | SHORT – TERM PROVISIONS |
Short-term provisions consist of the followings:
As at March 31, 2015 | As at March 31, 2014 | |||||||
₹ | ₹ | |||||||
Provision for employee benefits: | ||||||||
Gratuity (unfunded) | 2,244,316 | 2,614,680 | ||||||
Compensated absence (unfunded) | 5,145,425 | 5,592,159 | ||||||
Total | 7,389,741 | 8,206,839 |
78
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
9. | FIXED ASSETS |
Fixed assets consist of the followings: (Amount in₹)
Description | Gross Block as at April 1, 2014 | Additions | Deletions | Gross Block as at March 31, 2015 | Accumulated Depreciation as at April 1, 2014 | Depreciation for the Year | Deletions | Accumulated Depreciation as at March 31, 2015 | Net Block Value before Impairment as at March 31, 2015 | Impairment as at 31st March 2015 | Net Block after impairment as at 31st March 2015 | Net Block Value as at March 31, 2014 | ||||||||||||||||||||||||||||||||||||
Tangible assets | ||||||||||||||||||||||||||||||||||||||||||||||||
Furniture and fixture | 20,704,331 | - | (7,781,614 | ) | 12,922,717 | (19,137,814 | ) | (316,919 | ) | 7,781,614 | (11,673,119 | ) | 1,249,598 | 1,249,598 | - | 1,566,517 | ||||||||||||||||||||||||||||||||
20,542,335 | 161,996 | - | 20,704,331 | (18,542,998 | ) | (594,816 | ) | - | (19,137,814 | ) | 1,566,517 | - | 1,566,517 | 1,999,337 | ||||||||||||||||||||||||||||||||||
Computer | 934,963,415 | 48,493,571 | (183,171,054 | ) | 800,285,932 | (874,945,160 | ) | (49,083,779 | ) | 183,171,054 | (740,857,885 | ) | 59,428,047 | 59,428,047 | - | 60,018,255 | ||||||||||||||||||||||||||||||||
1,241,817,920 | 23,998,845 | (330,853,350 | ) | 934,963,415 | (1,124,616,248 | ) | (81,178,890 | ) | 330,849,978 | (874,945,160 | ) | 60,018,255 | - | 60,018,255 | 117,201,672 | |||||||||||||||||||||||||||||||||
Office equipment | 16,043,003 | 796,371 | (1,732,636 | ) | 15,106,738 | (11,314,235 | ) | (1,019,413 | ) | 1,573,898 | (10,759,750 | ) | 4,346,988 | 4,346,988 | - | 4,728,768 | ||||||||||||||||||||||||||||||||
17,387,912 | 803,488 | (2,148,397 | ) | 16,043,003 | (12,275,082 | ) | (1,133,511 | ) | 2,094,358 | (11,314,235 | ) | 4,728,768 | - | 4,728,768 | 5,112,830 | |||||||||||||||||||||||||||||||||
Vehicle | 15,106,840 | - | (775,216 | ) | 14,331,624 | (7,100,365 | ) | (1.785.777 | ) | 632,623 | (8,253,519 | ) | 6,078,105 | 6,078,105 | - | 8,006,475 | ||||||||||||||||||||||||||||||||
15,284,459 | 12,55,869 | (1,433,488 | ) | 15,106,840 | (6,275,260 | ) | (1,874,451 | ) | 1,049,346 | (7,100,365 | ) | 8,006,475 | - | 8,006,475 | 9,009,199 | |||||||||||||||||||||||||||||||||
Leasehold | 24,990,385 | - | - | 24,990,385 | (18,388,318 | ) | (2,009,806 | ) | - | (20,398,124 | ) | 4,592,261 | 4,592,261 | - | 6,602,067 | |||||||||||||||||||||||||||||||||
Improvement | 24,990,385 | 24,990,385 | (16,378,512 | ) | (2,009,806 | ) | - | (18,388,318 | ) | 6,602,067 | - | 6,602,067 | 8,611,873 | |||||||||||||||||||||||||||||||||||
Total tangible assets | 1,011,807,974 | 49,289,942 | (193,460,520 | ) | 867,637,396 | (930,885,892 | ) | (54,215,694 | ) | 193,159,189 | (791,942,397 | ) | 75,694,999 | 75,694,999 | - | 80,922,082 | ||||||||||||||||||||||||||||||||
Previous year | 1,320,023,011 | 26,220,198 | (334,435,235 | ) | 1,011,807,974 | (1,178,088,100 | ) | (86,791,474 | ) | 333,993,682 | (930,885,892 | ) | 80,922,082 | - | 80,922,082 | 141,934,911 | ||||||||||||||||||||||||||||||||
Intangible assets | ||||||||||||||||||||||||||||||||||||||||||||||||
Internally Generated | 247,042,388 | 20,648,303 | 267,690,691 | (154,432,301 | ) | (47,406,632 | ) | (201,838,933 | ) | 65,851,758 | 65,851,758 | - | 92,610,086 | |||||||||||||||||||||||||||||||||||
Acquired | 40,656,337 | - | 40,656,337 | (36,553,071 | ) | (3,168,104 | ) | (39,721,175 | ) | 935,162 | 935,162 | 4,103,266 | ||||||||||||||||||||||||||||||||||||
Total intangible assets | 287,698,724 | 20,648,303 | 308,347,027 | (190,985,368 | ) | (50,574,736 | ) | (241,560,104 | ) | 66,786,923 | 66,786,923 | - | 96,713,356 | |||||||||||||||||||||||||||||||||||
Previous year | 228,439,244 | 59,259,480 | - | 287,698,724 | (138,067,741 | ) | (52,917,627 | ) | - | (190,985,368 | ) | 96,713,356 | 96,713,356 | - | ||||||||||||||||||||||||||||||||||
Internally Generated | 187,782,907 | 59,250,480 | 247,042,388 | (111,671,524 | ) | (42,760,777 | ) | (154,432,301 | ) | 92,610,086 | 92,610,086 | |||||||||||||||||||||||||||||||||||||
Acquired | 40,656,337 | 40,656,337 | (26,396,218 | ) | (10,156,853 | ) | (36,553,071 | ) | 4,103,266 | 4,103,266 | ||||||||||||||||||||||||||||||||||||||
Intangible assets under development | - | - | - | - | - | - | - | - | 49,229,488 | 49,229,488 | - | 36,639,725 | ||||||||||||||||||||||||||||||||||||
(internally generated) | 36,639,725 | 36,639,725 | 46,761,840 | |||||||||||||||||||||||||||||||||||||||||||||
Grand Total | 1,299,506,698 | 69,938,245 | (193,460,520 | ) | 1,175,984,423 | (1,121,871,260 | ) | (104,790,430 | ) | 193,159,189 | (1,033,502,501 | ) | 191,711,410 | 191,711,410 | - | 214,275,163 | ||||||||||||||||||||||||||||||||
1,548,462,255 | 85,479,678 | (334,435,235 | ) | 1,299,506,698 | (1,316,155,841 | ) | (139,709,101 | ) | 333,993,682 | (1,121,871,260 | ) | 214,275,163 | - | 214,275,163 | 279,068,254 |
79
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
10. | NON-CURRENT INVESTMENTS |
Non – current investments consists of the following:
Face Value | No. of Shares. | As at March 31, 2015 | As at March 31, 2014 | |||||||||||||
₹ | ₹ | |||||||||||||||
Trade investments | ||||||||||||||||
A- Others, Fully paid equity shares (unquoted)- At Cost | ||||||||||||||||
Traveljini.com Limited | 10 | 88,350 | 60,300,253 | 60,300,253 | ||||||||||||
Tachyon Technologies Pvt. Ltd. | 10 | 13,177 | 41,700,000 | 41,700,000 | ||||||||||||
Vakow Technologies Pvt. Ltd. | 10 | 500,000 | 5,000,000 | 5,000,000 | ||||||||||||
BigSlick Infotech Pvt. Ltd. | 1 | 59,230 | 4,000,000 | 4,000,000 | ||||||||||||
111,000,253 | 111,000,253 | |||||||||||||||
B – Wholly Owned Subsidiary Companies, | ||||||||||||||||
Fully paid equity shares (unquoted) | ||||||||||||||||
Rediff Holding Inc., USA | $ | 0.0001 | 11,066,667 | 1,134,483,000 | 1,134,483,000 | |||||||||||
Value Communication Corporation, USA | No par value | 12,000,000 | 340,609,949 | 340,609,949 | ||||||||||||
Vubites India Pvt. Ltd. | 1 | 1,000,000 | 13,153,409 | 13,153,409 | ||||||||||||
1,488,246,358 | 1,488,246,358 | |||||||||||||||
Total (A+B) | 1,599,246,611 | 1,599,246,611 | ||||||||||||||
Less Provision for diminution in value of investments | 1,599,246,611 | 1,544,324,216 | ||||||||||||||
Net investments | - | 54,922,395 |
Book value of unquoted investments (net of provisions for diminution) –₹NIL
(Previous Year₹54,922,395)
Note : The provision for diminution in value of investment is as under (Amount in₹):
Name of the Company | 2014-15 | 2013-14 | ||||||
Traveljini.com Limited | 60,300,253 | 60,300,253 | ||||||
Tachyon Technologies Pvt. Ltd. | 41,700,000 | 41,700,000 | ||||||
Vakow Technologies Pvt. Ltd. | 5,000,000 | 5,000,000 | ||||||
BigSlick Infotech Pvt. Ltd. | 4,000,000 | 4,000,000 | ||||||
Rediff Holding Inc., USA | 1,134,483,000 | 1,079,560,605 | ||||||
Value Communication Corporation, USA | 340,609,949 | 340,609,949 | ||||||
Vubites India Pvt. Ltd. | 13,153,409 | 13,153,409 | ||||||
TOTAL (Provision for diminution in value of investments) | 1,599,246,611 | 1,544,324,216 |
80
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
11. | LONG –TERM LOANS AND ADVANCES (Unsecured) |
Long – term loans and advances consists of the following:
As at March 31, 2015 | As at March 31, 2014 | |||||||
₹ | ₹ | |||||||
Considered Good | ||||||||
Rent deposits | 40,302,171 | 40,836,191 | ||||||
Loans to employees | 1,859,496 | 2,856,976 | ||||||
Recoverable taxes (net of provision of₹ 2,075,691 as at March 31, 2015 and 2014) (Refer Note. No. 26) | 56,971,021 | 57,085,836 | ||||||
Prepaid expenses. | 8,106,484 | 10,677,323 | ||||||
Loans and advances to related parties:# | ||||||||
Rediff.com India Ltd. Employee Trust | 201,002,530 | 201,002,530 | ||||||
India Abroad Publication Inc. | - | - | ||||||
Considered Doubtful | ||||||||
Loans and advances to related parties: # | ||||||||
Vubites India Pvt. Ltd. 503,364,050 | ||||||||
Less: diminution 503,364,050 | - | - | ||||||
308,241,702 | 312,458,856 |
#Notes:
1) | Loans given to wholly owned subsidiaries are for funding its working capital requirements and Loan given to the Trust is for acquiring shares of the Company for the benefit of its employees. |
12. | TRADE RECEVABLES (Unsecured) |
Trade receivables consist of the following:
As at March 31, 2015 | As at March 31, 2014 | |||||||||
Outstanding for a period | ₹ | ₹ | ||||||||
(a) | Over six months from the date they were due for payments | |||||||||
(i) Considered good | - | - | ||||||||
(ii) Considered doubtful | 26,441,500 | 22,460,553 | ||||||||
26,441,500 | 22,460,553 | |||||||||
(b) | Others | |||||||||
(i) Considered good | 127,190,017 | 165,542,873 | ||||||||
(ii) Considered doubtful | 5,788,092 | 9,113,482 | ||||||||
132,978,109 | 174,656,355 | |||||||||
Total (a+b) | 159,419,609 | 197,116,908 | ||||||||
Less: Provision for doubtful debts | 32,229,592 | 31,574,034 | ||||||||
127,190,017 | 165,542,874 |
81
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
13. | CASH AND CASH EQUIVALENT |
Cash and cash equivalent consist of the following:
As at March 31, 2015 | As at March 31, 2014 | |||||||||
Cash and cash equivalents | ₹ | ₹ | ||||||||
(a) | Cash on hand | 5,211 | 5,211 | |||||||
Balances with banks | ||||||||||
In current account | 90,663,950 | 110,761,734 | ||||||||
In EEFC account | 1,531,946 | 4,777,355 | ||||||||
92,171,107 | 115,544,300 | |||||||||
(b) | Other | |||||||||
In deposits account | 416,195,631 | 823,764,415 | ||||||||
416,195,631 | 823,764,415 | |||||||||
Total (a+b) | 508,366,738 | 939,308,715 |
14. | SHORT-TERM LOANS AND ADVANCES (Unsecured, considered good) |
Short-term loans and advances consist of the following:
As at March 31, 2015 | As at March 31, 2014 | |||||||
₹ | ₹ | |||||||
Supplier advances | 11,187,282 | 3,715,561 | ||||||
Rent deposits | 1,259,602 | 2,070,000 | ||||||
Loan to employees (see note below) | 2,475,178 | 1,933,265 | ||||||
Prepaid expenses | 24,116,067 | 30,017,868 | ||||||
Other loans and advances | 306,143 | 50,000 | ||||||
Total | 39,344,272 | 37,786,694 |
Note:
1) | Loans given to employees as per the Company’s policy are not considered for the purposes of disclosure under Section 186(4) of the Companies Act, 2013. |
14A OTHER CURRENT ASSETS
Other Current Assets consist of the following:
As at March 31, 2015 | As at March 31, 2014 | |||||||
₹ | ₹ | |||||||
Interest accrued but not due | 4,576,381 | - | ||||||
Deposit under lien | 1,500,000 | 1,500,000 | ||||||
Total | 6,076,381 | 1,500,000 |
82
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
15. | REVENUE FROM OPERATIONS |
Revenue from operations consists of the following:
For the year ended March 31, 2015 | For the year ended March 31, 2014 | |||||||
₹ | ₹ | |||||||
Online advertising | 344,150,419 | 468,372,011 | ||||||
Fee based services | 398,162,820 | 316,008,924 | ||||||
Total | 742,313,239 | 784,380,935 |
16. | OTHER INCOME (NET) |
Other income (net) consists of the following:
For the year ended March 31, 2015 | For the year ended March 31, 2014 | |||||||
₹ | ₹ | |||||||
Interest income: | ||||||||
Interest on fixed deposits | 56,220,641 | 80,787,692 | ||||||
Interest on income-tax refund | 4,755,282 | 37,251,504 | ||||||
Interest others | 2,508,837 | 1,534,748 | ||||||
Miscellaneous Income | 11,632,833 | 4,931,394 | ||||||
Total | 75,117,593 | 124,505,338 |
17. | EMPLOYEE BENEFIT EXPENSES |
Employee benefit expenses consist of the following:
For the year ended March 31, 2015 | For the year ended March 31, 2014 | |||||||
₹ | ₹ | |||||||
Salaries and wages | 324,236,344 | 316,882,634 | ||||||
Contribution to provident fund | 12,346,476 | 12,385,149 | ||||||
Gratuity | 8,748,428 | 3,018,443 | ||||||
ESOP compensation costs | 3,674,638 | 6,850,338 | ||||||
Staff welfare expenses | 8,747,559 | 7,788,115 | ||||||
Total | 357,753,445 | 346,924,679 |
83
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
18. | OPERATION AND OTHER EXPENSES |
Operation and other expenses consist of the following:
For the year ended March 31, 2015 | For the year ended March 31, 2014 | |||||||
₹ | ₹ | |||||||
Content Charges | 19,080,715 | 16,571,389 | ||||||
Domain registration charges | 24,712,566 | 24,664,923 | ||||||
Subscription and SMS based costs | 8,364,859 | 14,340,124 | ||||||
E-Commerce – Courier, Freight & Forward | 151,059,529 | 116,345,249 | ||||||
Bandwidth | 139,085,795 | 129,566,079 | ||||||
Software Usage charges | 31,671,055 | 34,821,938 | ||||||
Product development charges | 17,257,341 | 21,432,364 | ||||||
Advertising | 102,718,212 | 24,467,840 | ||||||
Market support | 84,534,245 | 71,060,592 | ||||||
Rent and amenities | 47,168,327 | 48,938,073 | ||||||
Electricity charges | 9,462,284 | 9,315,670 | ||||||
Telecommunication | 3,887,274 | 3,761,659 | ||||||
Repairs and maintenance: | ||||||||
Computers | 39,550,730 | 35,477,938 | ||||||
Others | 1,262,125 | 1,479,941 | ||||||
Insurance | 13,332,082 | 14,905,967 | ||||||
Travel and conveyance | 31,382,818 | 27,006,621 | ||||||
Rates and taxes | 231,002 | 251,696 | ||||||
Foreign exchange (gain)/ loss | 5,335,011 | (4,432,741 | ) | |||||
Bank Charges | 9,896,697 | 8,940,325 | ||||||
Provision for doubtful debts (net) | 655,558 | 9,889,181 | ||||||
Legal and professional fees (Refer Note no. 19) | 28,234,066 | 35,317,761 | ||||||
Service Tax/Reversal of input credit | - | 60,596,163 | ||||||
Loss/(Gain) on sale of Fixed Assets | 123,609 | (28,326 | ) | |||||
Other Miscellaneous expenses | 19,094,896 | 22,777,922 | ||||||
Total | 787,867,136 | 727,468,348 |
84
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
19. | AUDITOR’S REMUNERATION |
2014-15 ₹ | 2013-14 ₹ | |||||||||||
(i) | For service as auditors | 2,000,000 | 2,000,000 | |||||||||
(ii) | For taxation matters | 200,000 | 200,000 | |||||||||
(iii) | For other services (US GAAP and SOX) | 7,050,000 | 7,050,000 | |||||||||
(iv) | For reimbursement of expenses | 277,565 | 82,523 | |||||||||
(v) | For service tax* | 1,177,607 | 1,153,500 | |||||||||
10,705,172 | 10,486,023 |
* Service tax credit has been availed.
20. | RETIREMENT BENEFIT PLAN |
Defined – Benefit Plans
The Company offers its employees unfunded defined-benefit plan in the form of gratuity. This plan provides for a lump-sum payment to be made to vested employees at retirement, death or termination of employment. Commitments are actuarially determined at year-end. Actuarial valuation is done based on “Projected Unit Credit” method. Gains and losses of changed actuarial assumptions are charged to the Statement of Profit and Loss.
Defined benefit commitments:
2014-15 | 2013-14 | |||||||
₹ | ₹ | |||||||
Benefit obligation at the beginning of the year | 31,166,241 | 29,493,163 | ||||||
Actuarial loss/(gain) | 1,572,248 | (4,216,225 | ) | |||||
Current service cost | 4,118,237 | 4,604,420 | ||||||
Interest cost | 3,057,943 | 2,630,248 | ||||||
Benefits paid | (4,197,872 | ) | (1,345,365 | ) | ||||
Benefit obligation at the end of the year | 35,716,797 | 31,166,241 | ||||||
Current Portion of Benefit Obligation | 2,244,316 | 2,614,680 | ||||||
Non-Current Portion of benefit Obligation | 33,472,481 | 28,551,561 |
Expense on defined benefit plan:
2014-15 ₹ | 2013-14 ₹ | |||||||
Service cost | 4,118,237 | 4,604,420 | ||||||
Interest cost | 3,057,943 | 2,630,248 | ||||||
Recognised net actuarial loss/(gain) | 1,572,248 | (4,216,225 | ) | |||||
Net gratuity cost | 8,748,428 | 3,018,443 |
The actuarial calculations used to estimate defined benefit commitments and expenses are based on the following assumptions which if changed, would affect the defined benefit commitment’s size and expense:
85
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
2014-15 | 2013-14 | ||||
Rate for discounting liabilities | 7.90 | % | 9.00 | % | |
Salary escalation rate | 7.00 | % | 7.00 | % | |
Expected rate of return on assets | 0.00 | % | 0.00 | % | |
Mortality rates | Indian Assured live mortality table (2006-08) | Indian Assured live mortality table (2006-08) |
The estimate of future salary increase, considered in the actuarial valuation, take account of inflation, seniority, promotion, and other relevant factors. The above information is certified by the actuary.
Experience adjustment:
2014-15 | 2013-14 | 2012-13 | 2011-12 | 2010-11 | ||||||||||||||||
₹ | ₹ | ₹ | ₹ | ₹ | ||||||||||||||||
Defined benefit obligation | 35,716,798 | 31,166,242 | 29,493,164 | 23,496,723 | 20,732,081 | |||||||||||||||
(Deficit) | (35,716,798 | ) | (31,166,242 | ) | (29,493,164 | ) | (23,496,723 | ) | (20,732,081 | ) | ||||||||||
Experience adjustment on plan liabilities | (1,888,252 | ) | (1,104,278 | ) | (544,577 | ) | (55,456 | ) | (1,058,058 | ) |
Defined-Contribution Plans
The Company makes contribution towards provident fund and family pension fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund and pension fund are administered by the Government of India. Under the schemes, the Company is required to contribute a specified percentage of salary to the retirement benefit schemes to fund the benefits. A sum of₹12,346,476(Previous Year₹ 12,385,149)has been charged to the revenue account in this respect.
21. | EMPLOYEE STOCK OPTION PLANS (ESOP) |
(a) 2002 Stock Option Plan (2002 ESOP)
In January 2002, the Board of directors approved the 2002 Stock Option Plan (“2002 ESOP”) which provides for the grant of incentive stock options and non-statutory stock options to the Company’s employees. All options under these plans are exercisable for the ADRs of the Company. A total of 280,000 of the Company’s equity shares were reserved for issuance pursuant to 2002 ESOP plan of which 12,000 equity shares were reserved under 2015 Stock Option Plan.
86
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
2002 ESOP | ||||||||||||||||
Number of options granted, exercised and forfeited during the year ended March 31, | Options | Weighted average exercise price | Range of exercise price | Weighted average remaining contractual life | ||||||||||||
Options outstanding, beginning of period | 11,750 | |||||||||||||||
Expired | (3,500 | ) | ||||||||||||||
Options outstanding, end of period | 8,250 | 980.13 | 980.13 | 6.3 |
Options exercisable as at March 31, 2015, were 6,375 (Weighted average exercise price₹980.13).
(b) 2004 Stock Option Plan (2004 ESOP)
In June 2004, the Board of directors approved the 2004 Stock Option Plan (“2004 ESOP”) for grant of stock options to the Company’s employees. A total of 358,000 equity shares were reserved for issuance under the plan of which 91,000 equity shares were reserved under 2015 Stock Option Plan.
2004 ESOP | ||||||||||||||||
Number of options granted, exercised and forfeited during the year ended March 31, | Options | Weighted average exercise price | Range of exercise price | Weighted average remaining contractual life | ||||||||||||
Options outstanding, beginning of period | 131,237 | |||||||||||||||
Granted | 22,750 | |||||||||||||||
Forfeited | (56,612 | ) | ||||||||||||||
Options outstanding, end of period | 97,375 | 486.72 | 223 to 1,042 | 4.4 |
Options exercisable as at March 31, 2015, were 76,125 (Weighted average exercise price₹560.07).
(c) 2006 Stock Option Plan (2006 ESOP)
The 2006 Stock Option Plan (“2006 ESOP”) was adopted and approved by the Compensation committee on June 20, 2006 in accordance with the approval granted by shareholders on March 31, 2006. A total of 670,000 equity shares were approved for issuance under the plan.
87
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
2006 ESOP | ||||||||||||||||
Number of options granted, exercised and forfeited during the year ended March 31, | Options | Weighted average exercise price | Range of exercise price | Weighted average remaining contractual life | ||||||||||||
Options outstanding, beginning of period | 490,563 | |||||||||||||||
Forfeited | (1,250 | ) | ||||||||||||||
Options outstanding, end of period | 489,313 | 403.02 | 10 to 1,279 | 3.8 |
Options exercisable as at March 31, 2015, were 477,313 (Weighted average exercise price₹397.45).
(d) 2015 Stock Option Plan (2015 ESOP)
In January 2015, the Board of directors approved the 2015 Stock Option Plan (“2015 ESOP”) for grant of stock options to the Company’s employees. A total of 103,000 equity shares (comprising of 12,000 equity shares from 2002 Stock Option Plan and 91,000 equity shares from 2004 Stock Option Plan) were reserved for issuance under the plan.
2015 ESOP | ||||||||||||||||
Number of options granted, exercised and forfeited during the year ended March 31, | Options | Weighted average exercise price | Range of exercise price | Weighted average remaining contractual life | ||||||||||||
Options outstanding, beginning of period | - | |||||||||||||||
Granted | 36,800 | |||||||||||||||
Forfeited | - | 229.86 | ||||||||||||||
Options outstanding, end of period | 36,800 | 229.86 | 9.8 |
There were no options exercisable as at March 31, 2015.
(e) Method used for accounting for share based payment plan:
The Company has used the intrinsic value method to account for the compensation cost of stock option to employees of the company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. The Company’s equity shares are currently traded on the NASDAQ Global Market in the form of ADRs.
88
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
(f) Fair Value Methodology:
The fair value of options used to compute pro forma net income and earnings per equity share have been estimated on the date of grant using Black-Scholes model.
2014-15 ₹ | 2013-14 ₹ | |||||||
Net loss as reported | (787,271,066 | ) | (726,354,232 | ) | ||||
Add: Stock-based employee compensation | 3,674,638 | 6,850,338 | ||||||
Less: Stock- based compensation expenses determined under fair value method (Proforma) # | 26,093,028 | 29,230,896 | ||||||
Proforma net loss | (809,689,456 | ) | (748,734,790 | ) | ||||
Loss per share | ||||||||
Basic – as reported | (53.16 | ) | (49.04 | ) | ||||
– Proforma | (54.67 | ) | (50.56 | ) | ||||
Diluted – as reported | (53.16 | ) | (49.04 | ) | ||||
– Proforma | (54.67 | ) | (50.56 | ) |
# includes stock based compensation cost in respect of stock options issued prior to implementation of Guidance Note on Accounting for Employee Share-based Payments adopted by the Company with effect from April 1, 2006.
The key assumptions used in Black-Scholes model for calculating fair value are: risk-free interest rate: 1.41% to 2.10%, expected life: 5.5 to 7 years, expected volatility of shares: 79.72% to 83.64% and expected growth life in dividend: 0 %.
22. | SEGMENT REPORTING |
The Company operates in a single business segment known as “India Online Business” and hence disclosure of segment information as per Accounting Standard 17 on Segment Reporting has not been presented.
23. | RELATED PARTY DISCLOSURES |
I. | Related parties where control exists: |
a. | Subsidiary Companies: |
Rediff Holdings, Inc., USA
Value Communications Corporation (“Valucom”), USA
Vubites India Private Limited (“Vubites”)
b. | Indirect subsidiaries: |
Rediff.com, Inc., USA
India Abroad Publication, Inc.
India in New York Inc.
c. | Rediff.com India Employee Trust (“ESOP Trust”) |
89
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
Transactions with Related Parties during the year and balances outstanding as at March 31, 2015:
Name of the Related party | Transactions | 2014-15 ₹ | 2013-14 ₹ | |||||||
Value Communications Corporation | Payable as at year end, net | 8,752,964 | 8,404,747 | |||||||
India abroad Publications, Inc. (IA) | Collection made by the Company during the year on behalf of IA | 15,554,659 | 17,231,612 | |||||||
Expenses incurred and other reimbursements by the Company on behalf of IA | 3,598,598 | 1,746,176 | ||||||||
Collection made by IA on behalf of the Company | 343,819 | 4,754,960 | ||||||||
Amount remitted to IA | 12,630,100 | 13,932,500 | ||||||||
Payable as at year end | 105,054 | 1,122,912 | ||||||||
Rediff.com, Inc. | Payable as at year end | 39,382,289 | 37,815,555 | |||||||
Rediff Holdings, Inc. | Provision for diminution in value of Long Term Investment | 54,922,395 | NIL | |||||||
Payable as at year end, net | 3,963,074 | 3,805,388 | ||||||||
Vubites India Private Limited | Expenses incurred and other reimbursements by the Company on behalf of Vubites India Private Limited | 3,457,082 | 4,917,552 | |||||||
Loan given during the year | ||||||||||
(Interest free) | 104,200,000 | 91,400,000 | ||||||||
Provision for doubtful loan | 107,657,082 | 407,984,968 |
90
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
Name of the Related party | Transactions | 2014-15 ₹ | 2013-14 ₹ | |||||||
Loan and advances as at year end (net of provision) | NIL | NIL | ||||||||
Provision for other than temporary diminution in long term investment | NIL | 13,153,409 | ||||||||
Rediff.com India Ltd Employee Trust | Loan and advances as at year end (Interest free) | 201,002,530 | 201,002,530 |
91
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
24. | OBLIGATION TOWARDS OPERATING LEASES |
The Company leases office space and residential apartments for employees under various operating leases. Operating lease expense that has been included in the determination of the net profit/loss is as follows:
2014-15 ₹ | 2013-14 ₹ | |||||||
Office Premises | 42,155,232 | 44,002,682 | ||||||
Residential flats for accommodation of employees | 5,013,095 | 4,935,391 | ||||||
Total | 47,168,327 | 48,938,073 |
The minimum annual rental commitments under operating leases are as follows:
2014-15 ₹ | 2013-14 ₹ | |||||||
Not later than one year | 16,425,312 | 19,585,513 | ||||||
Later than one year and not later than five years | 3,825,953 | 5,123,324 | ||||||
Total payments | 20,251,265 | 24,708,837 |
25. | EARNING PER EQUITY SHARES |
2014-15 | 2013-14 | |||||||||
A. | Net (loss) attributable to equity shareholders (₹) | (787,271,066 | ) | (726,354,232 | ) | |||||
B. | Weighted average number of equity shares outstanding during the year | 14,810,178 | 14,810,178 | |||||||
C. | Potentially dilutive equity share equivalents (stock options) | - | - | |||||||
D. | Weighted average number of equity shares and potentially dilutive equity share equivalents outstanding | 14,810,178 | 14,810,178 | |||||||
E. | Nominal value of Equity Shares (₹) | 5.00 | 5.00 | |||||||
Basic Earnings per Share (₹) | (53.16 | ) | (49.04 | ) | ||||||
Diluted Earnings per Share (₹) | (53.16 | ) | (49.04 | ) |
92
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
26. | CONTINGENCIES AND CAPITAL COMMITMENTS |
Contingent liabilities:
During 2012-13, Company had received a demand notice from Income Tax Authorities resulting in a contingent liability of interest u/s. 201 (1A) of₹ 8,524,108. This was mainly on account of disallowance of payment made for purchase of bandwidth on which tax had not been deducted at source for the assessment years 2010-11 and 2011-12. The Company has paid₹ 4,039,200 under protest and matter is pending with the Commissioner of Income Tax (Appeal).
The Income tax authorities in India have disallowed certain expenses claimed by the Company for certain years which if confirmed by the appellate authorities will be adjusted against the income tax carry forward losses claimed by the Company and not result in outflow of resources embodying economic benefits.
The Company has lodged appropriate proceedings with the relevant income tax authorities and expects to prevail in the appellate proceedings
The Company is also subject to other legal proceedings and claims, which have arisen in the ordinary course of its business. Those actions, when ultimately concluded and determined, will not, in the opinion of management, have a material effect on the results of operations, cash flows or the financial position of the Company.
The Company has not recognized any loss accrual for the litigation disputes as the Company believes that it is probable that it would be successful on resolution of the litigation. The maximum total loss relating to these disputes would be ₹ 1,276,836 (previous year₹2,251,040) excluding any interest and penalty which amount cannot be reasonably estimated.
Capital Commitments :
2014-15 ₹ | 2013-14 ₹ | |||||||
Estimated amount of contracts remaining to be executed on capital account and not provided for | 26,570,510 | 46,561,582 |
93
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
27. | DERIVATIVE TRANSACTION |
The Company has not entered in to any derivative transaction during the years ended March 31, 2015 and 2014.
Foreign exchange currency exposures not hedged by derivative instruments are:
2014-15 | 2013-14 | |||||||||||||||||
Sl. No. | Particulars | Amount $ | Amount ₹ | Amount $ | Amount ₹ | |||||||||||||
1 | Amount receivable on account of sale of services | 377,277 | 23,613,743 | 269,097 | 16,172,706 | |||||||||||||
2 | Creditors payable on account of foreign currency expenditure | (232,194 | ) | (14,533,024 | ) | (167,928 | ) | (10,092,464 | ) | |||||||||
3 | Foreign currency bank balances | 24,476 | 15,31,946 | 79,490 | 4,777,354 | |||||||||||||
4 | Amount (Payable) / Receivable (to)/from subsidiary companies | (832,374 | ) | (52,098,301 | ) | (832,374 | ) | (50,025,690 | ) |
28. | INCOME IN FOREIGN CURRENCIES |
2014-15 ₹ | 2013-14 ₹ | |||||||||
(i) | E-commerce services | 1,306,370 | 1,505,454 | |||||||
(ii) | Media, mobile and others services | 67,860,992 | 82,337,466 | |||||||
Total | 69,167,362 | 83,842,920 |
94
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
29. | EXPENDITURE IN FOREIGN CURRENCIES |
Particulars | 2014-15 ₹ | 2013-14 ₹ | ||||||||
(i) | Professional charges | 4,891,920 | 9,984,498 | |||||||
(ii) | Product development | 7,659,736 | 5,535,833 | |||||||
(iii) | Dataline/ internet charges | 6,230,723 | 4,014,196 | |||||||
(iv) | Listing fees | 1,382,850 | 450,750 | |||||||
(v) | Software usage charges | 29,442,403 | 29,931,999 | |||||||
(vi) | Purchase of email domains | 17,962,226 | 22,293,725 | |||||||
(vii) | Advertising expenses | 3,104,450 | 191,904 | |||||||
(viii) | Other matters | 1,154,411 | 705,839 | |||||||
Total | 71,828,719 | 73,108,744 |
30. | PROVISION FOR DIMINUTION OF INVESTMENT AND LOAN |
As at the year-end 2015, the Company made provisions to recognise the other-than-temporary decline in the value of its long term investment and loan to its subsidiary company Vubites India Private Limited amounting to₹ Nil (PY:₹13,153,409) and₹107,657,082 (PY₹ 407,984,968) respectively and other-than-temporary decline in the value of its long term investment in its subsidiary company Rediff Holding Inc. USA. amounting to₹ 54,922,395/- (PY: NIL).
31. | IMPAIRMENT OF FIXED ASSETS |
At the year end, the Company has recognized an impairment loss of₹ 191,711,410 on its Fixed Assets relating to its Online business which includes revenue from advertising and fee based services. The impairment was on account of significant decline in advertisement revenue as there has been a continued reduction in spends by customers which is consistent with industry trends. As a consequence the Company has been experiencing a decline in its display advertisement revenue, and incurring net operating cash losses. The net realizable value of the Online business asset group is insignificant.
32. | DEFERRED TAX ASSET |
The items that could have resulted in deferred tax assets mainly include the net operating loss and unabsorbed depreciation carry-forward, depreciation, retirement benefits and provisions for bad and doubtful debts. Such deferred tax assets have not been recognised since there is no virtual/ reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.
95
REDIFF.COM INDIA LIMITED
Notes forming part of the Financial Statements
33. | SUBSEQUENT EVENT |
On July 29, 2015, the Company entered into a Purchase Agreement with Lincoln Park Capital Fund, LLC, an Illinois limited liability company (“Investor”). The Purchase Agreement provides that the Company has the right to sell to the Investor, and the Investor has the obligation to purchase from the Company, up to an aggregate of US$15 Million of the Company’s American Depositary Shares (“ADSs”) over the 36-month term of the Agreement in amount as described in the Purchase Agreement. Upon shareholder approval and upon effectiveness of registration statement covering the resale of ADSs, the Company can elect its discretion to sell ADSs to the investor pursuant to either regular purchase amounts or accelerated purchase amounts. The amounts of ADSs which may be sold to the Investor pursuant to any regular purchase range from 40,000 ADSs to 100,000 ADSs, depending on the then current trading price of the Company’s ADSs on Nasdaq (but not to exceed US$500,000 on any single purchase date). In addition, the Company has the right, but not the obligation, to sell accelerated purchase amounts. The purchase price for any ADSs sold pursuant a regular purchase, will be 98% of the lower of the (a) the lowest sale price of the ADSs on Nasdaq on the regular purchase date or (b) the average of the three lowest closing sale prices over the preceding 10 trading-day period. The purchase price for any ADSs sold pursuant to an accelerated purchase, will be 98% of the lower of (a) the closing sale price of the ADSs on Nasdaq on the accelerated purchase date or (b) 94% of a volume weighted average purchase price on the accelerated purchase date. The Company will file an application with the Nasdaq to list the ADSs to be sold to the Investor pursuant to the Purchase Agreement. The Company is required to file a registration statement covering the resale of the ADSs, so that such ADSs may be sold by the Investor from time to time pursuant to a Registration Rights Agreement entered into between the Company and Investor. Under the Purchase Agreement, the Investor and its affiliates have a beneficial ownership limitation of 4.99% of the then issued and outstanding equity securities of the Company. The issuance of the shares underlying the ADSs must be approved by the Company’s shareholders prior to any purchases under the Purchase Agreement. The Purchase Agreement and Registration Rights Agreement also contain customary representations, warranties, conditions and indemnification provisions.
34. | The previous year figures have been regrouped/ rearranged as necessary to make them comparable with those of the current year |
For and on behalf of the Board of Directors
/s/ Ajit Balakrishnan | /s/ Arun Nanda | |
Chairman & Managing Director | Director | |
DIN: 00073814 | DIN: 00034744 |
/s/ Pooja Lohade | |
Company Secretary | |
Mumbai, India | |
ACS 21584 | |
Date: September 4, 2015 |
96