1 Corporate Information
Wall Street Finance Limited (“the Company”) is a premier financial services company with forex and money remittance as its core activities. The Company engages in the buying and selling of foreign currencies, travellers’ cheques and various forex-related services. During the year the Company has sold its money remittance business as slump sale. The Reserve Bank of India (RBI) has granted license to operate as an Authorised Dealer Category-II.
2 Significant Accounting Policies and Key Accounting Estimates and Judgements
2.1 Basis of preparation of Financial Statements
a) Compliance with Ind AS
These financial statements are the separate financial statements of the Company (also called standalone financial statements) prepared in accordance with Indian Accounting Standards (‘Ind AS’) notified under Section 133 of the Companies Act, 2013, read together with the Companies (Indian Accounting Standards) Rules, 2015.
For all periods up to and including the year ended 31st March, 2017, the Company had prepared its financial statements in accordance with Accounting Standards notified under the Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (‘Previous GAAP’). Detailed explanation on how the transition from previous GAAP to Ind AS has affected the Company’s Balance Sheet, financial performance and cash flows is given under Note 36
b) Historical Cost Convention
These financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting except for :
- Certain Financial Assets and Liabilities that are measured at fair value
- Defined Benefits Plans - Plan assets measured at fair value
2.2 Current / Non-Current Classification
For the purpose of current/non-current classification of assets and liabilities, the Company has ascertained its normal operating cycle as twelve months and certain criteria set out in the Schedule III to the Act. This is based on the nature of services and the time between the acquisition of assets or inventories for processing and their realization in cash and cash equivalents.
3A Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with the Ind AS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities and disclosures as at date of the financial statements and the reported amounts of the revenues and expenses for the years presented. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates under different assumptions and conditions.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical Judgements
In the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the financial statements:
Discount rate used to determine the carrying amount of the Company’s defined benefit obligation
In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
Contingencies and commitments
In the normal course of business, contingent liabilities may arise from litigations and other claims against the Company. Where the potential liabilities have a low probability of crystallizing or are very difficult to quantify reliably, we treat them as contingent liabilities. Such liabilities are disclosed in the notes but are not provided for in the financial statements. Although there can be no assurance regarding the final outcome of the legal proceedings, we do not expect them to have a materially adverse impact on our financial position or profitability.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
Useful lives of Property, Plant and Equipment
As described in Note 3, the Company reviews the estimated useful lives and residual values of property, plant and equipment at the end of each reporting period. During the current year, the management determined that there were no changes to the useful lives and residual values of the property, plant and equipment.
Allowances for doubtful debts
The Company makes allowances for doubtful debts based on an assessment of the recoverability of trade and other receivables. The identification of doubtful debts requires use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and doubtful debts expenses in the period in which such estimate has been changed.
4 First Time adoption of Ind AS
For all periods up to and including the year ended 31st March, 2017, the Company had prepared its financial statements in accordance with the accounting standards notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (‘Previous GAAP’). This note explains the principal adjustments made by the Company in restating its financial statements prepared under Previous GAAP for the following :
a) Balance Sheet as at 1st April, 2016 (Transition date);
b) Balance Sheet as at 31st March, 2017;
c) Statement of Profit and Loss for the year ended 31st March, 2017; and
d) Statement of Cash flows for the year ended 31st March, 2017.
Exemptions Availed :
Ind AS 101- First-time adoption of Indian Accounting Standards, allows first-time adopters, exemptions from the retrospective application and exemption from application of certain requirements of other Ind AS. The Company has availed the following exemptions as per Ind AS 101:
i) The Company has elected not to apply Ind AS 103- Business Combinations, retrospectively to past business combinations that occurred before 1st April, 2016. Consequent to use of this exemption from retrospective application:
a) the carrying amount of assets and liabilities acquired pursuant to past business combinations are recognised in the financial statements Also, there is no change in classification of such assets and liabilities; prepared under Previous GAAP, are considered to be the deemed cost under Ind AS, on the date of acquisition. After the date of acquisition, measurement of such assets and liabilities is in accordance with respective Ind AS. Also, there is no change in classification of such assets and liabilities;
b) the company has not recognised assets and liabilities that neither were recognised in the financial statements prepared under Previous GAAP nor qualify for recognition under Ind AS in the Balance Sheet of the acquiree;
c) the company has excluded from its opening Ind AS Balance Sheet (as at 1st April, 2016), those assets and liabilities which were recognised in accordance with Previous GAAP but do not qualify for recognition as an asset or liability under Ind AS; and
d) use of these exemption from retrospective application of Ind AS 103 - Business Combinations requires that the carrying amount of goodwill as per financial statements prepared under Previous GAAP should be recognised in the opening Ind AS Balance Sheet after adjusting for impairment, if any. The Company has therefore tested goodwill for impairment as at the date of transition to Ind AS and accordingly, no goodwill impairment was deemed necessary.
ii) For financial instruments, wherein fair market values are not available (viz. interest free and below market rate security deposits or loans) the Company has elected to adopt fair value recognition prospectively to transactions entered after the date of transition.
iii) The Company has elected to consider the carrying value of all its items of property, plant and equipment and intangible assets recognised in the financial statements prepared under Previous GAAP and use the same as deemed cost in the opening Ind AS Balance Sheet.
iv) The carrying amounts of the Company’s investments in its subsidiary and associate companies as per the financial statements of the Company prepared under Previous GAAP, are considered as deemed cost for measuring such investments in the opening Ind AS Balance Sheet.
v) The requirements of Ind AS 20 - Accounting for Government Grants and Disclosure of Government Assistance and Ind AS 109- Financial Instruments, in respect of recognition and measurement of interest free loans from government authorities is opted to be applied prospectively to all grants received after the date of transition to Ind AS. Consequently, the carrying amount of such interest free loans as per the financial statements of the Company prepared under Previous GAAP is considered for recognition in the opening Ind AS Balance Sheet.
Footnotes:
1. Depreciation / Amortisation Expense for the year includes RS. 3.29 Lakhs (PY NIL) capitalised during the year. Thus, the net amount of RS. 60.85 Lakhs has been considered in Statement of Profit and Loss.
2. The Company has elected to consider the carrying value of all its items of property, plant and equipment and intangible assets recognised in the financial statements prepared under Previous GAAP and use the same as deemed cost in the opening Ind AS Balance Sheet. Accordingly, the accumulated deprecation in the opening Ind AS Balance Sheet is Nil.
3. Refer Note No 4 for exemptions availed
Note 1:
S Global Insurance Advisory Limited (SGIAL), a whole owned subsidiary of Wall Street Finance Limited, was in the business of issuing travel policy for travelers going out of India. The said business now is being done by Wall Street Finance Limited (holiding Company) and currently there is no further business in S Global Insurance Advisory Limited. Since there is no revene / business opportunity, the investment held in subsidiary has been provided for in the current financial year.
Note 2:
The Company had invested RS. 25.00 Lakhs in redeemable preference shares of the erstwhile subsidiary company, Wall Street Commodities Private Limited (WSCPL), which were due for redemption in DecembeRs. 2011. In absence of such redemption by WSCPL, the Company had initiated legal recourse to recover the amount of investments and filed a winding up petition in the High Court as well as a civil suit. The High Court has passed order of winding up and appointed an Official Liquidator for liquidation.
As per the proceedings of winding up with liquidator, the recovery of aforesaid amount from WSCPL remains restricted as WSCPL had stopped filing its audited accounts since financial year 2012-13 and does not retain any fixed assets for realization. The Company has written off the amount of Rs 25 lakhs from the books this year considering the developments
Premises Deposit includes deposits aggregating to RS. 186.93 Lakhs which are disputed. After adjustment of lease rentals, already due, an amount of RS. 186.93 Lakhs is recoverable.
The Company had initiated legal proceedings in an earlier year comprising of a legal recovery suit for RS. 167.72 Lakhs, which has been referred by the court to an arbitrator, and another suit and winding up petition for recovery of deposits RS. 19.21 Lakhs. In view of the above, the Company is confident of recovery of such deposits and therefore no provision is considered necessary.
(d) Terms / rights attached to equity shares:
The Company has one class of equity shares having a par value of RS. 10 per share. Each holder of equity shares is entitled to one vote per share.
The Cash Credit / overdraft limits are secured by way of lien on fixed deposits, hypothecation of stock of foreign currencies and receivables of the Company.
Based on the information of status of suppliers to the extent received by the Company, there are no micro and small enterprises included in trade payables to whom the payments are outstanding for a period of more than 45 days. Further, the Company has not received any Memorandum (as required to be filed by the suppliers with the notified authority under the Micro, Small and Medium Enterprises Development Act, 2006) claiming their status. Consequently, the amount paid / payable to these during the year is R Nil; ( Previous year: R Nil)]
5. 1 As per Indian Accounting Standard 19 “Employee benefits”, the disclosures as defined are given below
a) Defined Contribution Plan
The Company makes contribution towards provident fund to a defined contribution retirement benefit plan for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit scheme to fund the benefit.
b) Defined Benefit Plan
The Company makes annual contributions to the Employees’ Gratuity Scheme of the Max New York Life Insurance Co. Ltd., and Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees.
The present value of defined benefit obligation and the relevant current service cost were measured using Projected Unit Credit Method with actuarial valuations being carried out at each balance sheet date.
These plans typically expose the Company to actuarial risk such as: investment risk, interest rate risk, longevity risk and salary risk
Investment risk:
The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create plan deficit.
Interest risk:
A decrease in the bond interest rate will increase the plan liability; however, this will be partially off set by an increase in the plan assets.
Longevity risk:
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.
Salary risk:
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.
The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.
The Expected Rate of Return on Plan Assets is determined considering several applicable factors, mainly the composition of Plan Assets held, assessed risks, historical results of return on Plan Assets and the Company’s policy for Plan Assets Management.
VII) The expected contributions for Defined Benefit Plan for the next financial year will be in line with FY 2016-17.
Note 6: Related Parties Disclosure
Related party disclosures as required by Indian Accounting Standard 24, “Related Parties Disclosures”
I. RELATED PARTIES AND NATURE OF THEIR RELATIONSHIP
i. Holding Company
Smart Global Corporate Holding Private Limited (Smart Value Ventures Pvt. Ltd. got merged in SGCHPL vide order dated vide July 14, 2017)
ii. Subsidiary Companies
S Global Insurance Advisory Limited
Goldman Securities Private Limited (upto OctobeRs. 04, 2017)
iii. Entities Controlled by Directors and Relatives
a) Mobisoc Technology Pvt Ltd.
b) Modipur Devices Pvt. Ltd.
c) Plus Paper Foodpac Ltd.
d) Saket City Hospital Pvt. Ltd.
e) Smart Entertainment Ltd.
f) Smart Value Ventures Pvt. Ltd.
g) Spice Commodities Pvt. Ltd.
h) Spice Connect Pvt. Ltd.
i) Spice Digital Ltd. j) Spice Mobility Ltd. k) Spice Labs Pvt. Ltd.
l) G. M. Modi Hospital & Research Centre
iii. Key Management Personnel
a) Mr. N Srikrishna (From DecembeRs. 22, 2017)
b) Mr. Arun Ajmera (upto NovembeRs. 30, 2017)
c) Mr. Dipesh Dharod (From July 01, 2016)
d) Mr. Bharat Adnani (upto May 19, 2016)
e) Ms. Chaitali Desai
B) Demands relating to TDS agreegating to RS. 14.55 Lakhs are reflected on the TRACES Website. Such demands are mainly on account of Challan Mismatch, Invalid PAN error, PAN not available, Wrong deductee code mentioned in the TDS return etc. The Company is actively rectifying the defects in filling due to which such demand is likely to be substantially reduced on completion of rectification process. Pending completion of the process, no provision is considered neccessary.
C) Income Tax demands amounting to RS. 38.62 Lakhs (pending before various Appellate authorities in respect of which the Company / Department is in appeal). The company is hopeful of succeeding in appeals and does not expect any significant demands to materialise.
D) Bonus of RS. 8.17 Lakhs pertaining to FY 2014-15 as per the provisions of the payment of Bonus (Amendment) Act, 2015 has not been provided in the books based on the stay order of Kerela High Court.
Note 7: Service Tax Note
As per CBEC Circular dated 14th OctobeRs. 2014, Service Tax has been extended to MTSS commission income received by agents of foreign bank / company. As per the opinion of a legal expert, the company’s arrangement with Western Union is on a principal-to-principal basis and does not fall within the definition of the word ‘Intermediaries’ as defined in Rule 2(f) of the Place of Provision of Service Rules, 2012 (PSR).
Consequently, services rendered by WSFL will fall under Rule 3 of PSR and will qualify as export of service and therefore not chargeable to service tax.
Note 8: Financial Risk Management
The Company’s activities expose it to credit risk, market risk and liquidity risk. The company has an overall Enterprise Risk Management policy, approved by the Audit Committee of the Board of DirectoR The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The audit committee oversees how management monitors compliance with the company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
Market Risk
Interest Rate Risk Exposure
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to market risk for changes in interest rates relates to fixed deposits and borrowings from financial institutions/Banks.
Following table gives company’s short-term and long term loans and borrowings, including interest rate profiles:
Sensivity
Profit or loss is sensitive to higher / lower interest expense from borrowings as a result of changes in interest rates. Changes in interest rate are based on bank’s PLR. The impact on Profit / Loss due to such movement is as under:
Price Risk
The company’s exposure to equity securities price risk arises from investments held by the company and classified in the balance sheet either as fair value through OCI or at fair value through profit or loss. Since the company does not have material equity investments, the company does not have a material price risk exposure as of reporting period
Liqudity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company’s treasury maintains flexibility in funding by maintaining sufficient cash and bank balances available to meet the working capital requirements. Management monitors rolling forecasts of the company’s liquidity position (comprising the unused cash and bank balances along with temporary investments in fixed deposits and/ or liquid mutual funds) on the basis of expected cash flows.
The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice Maturities of Financial Liablites
The table below analyses the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities for:
* all non derivative financial liabilities.
* net and gross settled derivative financial instruments for which the contractual maturities are essential for the understanding of the timing of the cash flows.
The amounts disclosed in the table are the contractual undiscounted cash fl ows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant
(i) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are
(a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
The fair value of financial instruments as referred to in note above have been classified into three categories depending on the inputs used in the valuation technique. The hierarachy gives the highest priority to quoted prices in active market for identical assets or liabilities (level 1 measurements) and lowest priority to unobservable inputs (carrying amount measurements). The categories used are as follows :
Level 1 : Level 1 hierarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-thecounter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. Considering that all significant inputs required to fair value such instruments are observable, these are included in level 2.
Carrying Amount: If one or more of the significant inputs is not based on observable market data, the instrument is included in carrying amount.
(iii) Valuation technique used to determine fair value
The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date. For Assets and liabilities not discounted:
The carrying amounts of trade receivables, loans, cash and bank balances,trade payable and other financial liabilites are considered to be the same as their fair values, due to their short-term nature.
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values. Note 36: First Time Adoption of IND-AS
For all periods up to and including the year ended 31st March, 2017, the Company had prepared its financial statements in accordance with the accounting standards notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (‘Previous GAAP’). This note explains the principal adjustments made by the Company in restating its financial statements prepared under Previous GAAP for the following :
a) Balance Sheet as at 1st April, 2016 (Transition date);
b) Balance Sheet as at 31st March, 2017;
c) Statement of Profit and Loss for the year ended 31st March, 2017; and
d) Statement of Cash flows for the year ended 31st March, 2017.
A. Exemptions and exceptions availed
Ind AS 101- First-time adoption of Indian Accounting Standards, allows first-time adopters, exemptions from the retrospective application and exemption from application of certain requirements of other Ind AS. The Company has availed the following exemptions as per Ind AS 101:
The Company has elected to consider the carrying value of all its items of property, plant and equipment and intangible assets recognised in the financial statements prepared under Previous GAAP and use the same as deemed cost in the opening Ind AS Balance Sheet.
The Company has elected to consider the carrying value of its Investment in Subsidiaries recognised in the financial statements prepared under Previous GAAP and use the same to value its investment in subsidiaries in its separate financial statements.
B. Reconciliations between previous GAAP and Ind AS
Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following reconciliations provide the explanations and quantification of the differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101:
a. Reconciliation of Balance Sheet as at 01 April 2016 and 31 March 2017,
b. Reconciliation of Statement of Profit and Loss for the year ended 31 March 2017, and
c. The impact on cash flows from operating, investing and financing activities for the year March 31, 2017.
Reasons for Reconciliation
The reconciliation is on account of fair valuation of financial instruments.
Note 9: Segment Reporting
The Company is engaged primarily in the business of forex and money transfer, which now stands sold as slump sale and hence, there is no separate reportable segment within the criteria defined under Indian Accounting Standard 108 - Operating Segment. The nature of Company’s activities is such that geographical segments are not separately identified.
Note 10: Details of loans given, investments made and guarantee given covered Under Section 186 (4) of the Companies Act, 2013
Loans given and investments made are given under the respective heads.
There are no corporate guarantees given by the company which are covered u/s 186(4) of the Companies Act, 2013 Note 39: Forward Contracts Outstanding
The Company uses forward exchange contracts to hedge against its foreign currency exposures related to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading or speculative purposes.
The forward exchange contracts outstanding as at March 31, 2018 are as under Currency exchange USD/INR
(a) Number of sale contracts = 0 ( PY = 14 Contracts)
(b) Aggregate amount (R lakhs) = 0 ( PY RS. 3,952.95 lakhs)
Note 11: Corporate Social Responsibility Expenditure
a. Gross amount required to be spent by the company during the year. - RS. 2.73 Lakhs
b. Amount spent during the year : 5.76 lakhs (including shortfall of the previous year)
Note 12: Previous Year Figures
Previous year’s figures have been regrouped/reclassified to make them comparable with those of the current year.
Note 13: Approval of Financial Statements
The Financial Statements we approved for issue by the Board of Directors on May 14, 2018
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