The following discussion is intended to convey our managements perspective on our financial condition and results of our operations. Our Financial Year commences on April 1 and ends on March 31 of the following year, so all references to a particular Financial Year or a Fiscal are to the twelve months ended March 31 of that year.
You should read the following discussion in conjunction with the Restated Standalone Financial Information and the Proforma Consolidated Financial Information included in this Draft Red Herring Prospectus as at and for 6 months ended September 30, 2023, and as at and for the Financial Years ended March 31, 2023, March 31, 2022 and March
31, 2021 including the related notes, schedules, and annexures. For further information, see ‘Restated Standalone Financial Information and ‘Proforma Consolidated Financial Information on pages 205 and 258.
The Restated Standalone Financial Information included in this Draft Red Herring Prospectus are prepared and presented in accordance with requirements of Section 26 of the Companies Act, the SEBI ICDR Regulations and the
Guidance Note on ‘Reports in Company Prospectuses (Revised 2019) issued by the ICAI, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries, and our assessment of the factors that may affect our prospects and performance in future periods. This discussion may include certain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors or contingencies, including those described below and elsewhere in, this Draft Red Herring Prospectus. For further information, see ‘Forward-Looking Statements on page
20. Also read ‘Risk Factors and ‘Principal factors affecting our financial condition and results of operations on pages 31 and 288, respectively, for a discussion of certain factors or contingencies that may affect our business, financial condition or results of operations. The Proforma Consolidated Financial Information of our Company included in this Draft Red Herring Prospectus has been prepared to show retroactively the impact of the acquisition of Crizac UK, our Subsidiary, on our restated standalone balance sheet as at and for 6 months ended September 30, 2023, and financial years ended March 31, 2023, March 31, 2022 and March 31, 2021, as if such transaction was completed on September 30, 2023, March 31, 2023, March 31, 2022 and March 31, 2021, respectively, For further information, see ‘Proforma Consolidated Financial Information on page 258.
Unless otherwise indicated, industry and market data used in this section has been derived from the report titled ‘‘Assessing the overseas education market dated March 20, 2024 prepared by F&S which has been commissioned and paid for by our Company in connection with the Offer. Unless otherwise indicated, all financial, operational, industry and other related information derived from the F&S Report and included herein with respect to any particular year, refers to such information for the relevant calendar year. F&S was appointed by our Company and is not connected to our Company, our Directors, our Promoters, our Key Managerial Personnel, Senior Management or BRLMs. A copy of the F&S Report shall be available on the website of our Company at www.crizac.com/investors from the date of the Draft Red Herring Prospectus till the Bid/ Offer Closing Date. The data included herein includes excerpts from the F&S Report and may have been re-ordered by us for the purposes of presentation. Unless otherwise indicated, financial, operational, industry and other related information derived from the F&S Report and included herein with respect to any particular calendar year/ Fiscal refers to such information for the relevant calendar year/ Fiscal. For further information, see ‘Risk Factor - This Draft Red Herring Prospectus contains information from an industry report prepared by F&S which our Company has commissioned and paid for. on page 47. Also see, ‘Certain
Conventions, Presentation of Financial, Industry and Market Data and Currency of Presentation on page 16.
OVERVIEW
We are one of the leading education platforms offering international student recruitment solutions to global institutions of higher education in United Kingdom, Canada, Republic of Ireland, Australia and New Zealand (ANZ). Our Company has over the time built strong relationships with global institutions of higher education in the United
Kingdom, and we are one of the largest student recruitment solutions providers from India into the United Kingdom with a market share of close to 13.0% in terms of the number of students going from India to the UK to pursue higher education in the year 2023. (Source: F&S Report) For the 6 month period ended September 30, 2023 and Fiscals March 31, 2023, March 31, 2022 and March 31, 2021, we sourced applications for enrolment into global institutions of higher education from over 72 countries through our agents globally who are registered on our proprietary technology platform. During the 6 month period ended September 30, 2023 and Fiscals 2021, 2022 and 2023, we processed over 3.82 lakh student applications while working with over 140 global institutions of higher education. As of December 31, 2023, we have over 5,300 agents globally who are registered on our proprietary technology platform and during Fiscal 2023, we had 1,819 active agents (i.e., agents to whom our Company has made payments during Fiscal 2023) (Active Agents) comprising 1,239 Active Agents in India and around 32% Active Agents i.e., 580 Active Agents in over 20 countries overseas including United Kingdom, Nigeria, Pakistan, Bangladesh, Nepal, Sri Lanka, Kenya, Vietnam, Canada and Egypt.
Students and parents are increasingly recognizing the value of acquiring a global perspective, accessing world-class educational institutions, and experiencing diverse cultures (Source: F&S Report), and since commencement of our operations in Fiscal 2011, we have worked with our agent network to enable the students and parents in fulfilling such aspirations. We also work in close collaboration with global institutions of higher education, which has helped us in developing expertise and understanding of their recruitment preferences and develop bespoke strategies that reflect and highlight their unique goals and strengths. This has enabled us to scale our business, and we have grown at a CAGR of 81.02% in terms of increase in our revenue from operations in Fiscal 2014 to our revenue from operations, based on Proforma Consolidated Financial Information, for Fiscal 2023.
During the 6 month period ended September 30, 2023 and Fiscals 2021, 2022 and 2023, we worked with over 140 global institutions of higher education primarily in United Kingdom, Republic of Ireland and Canada. Some of the global institutions of higher education with whom we work with include University of Birmingham, University of Surrey, University of Sunderland, Nottingham Trent University, University of Greenwich, University of West London, University of Portsmouth, De Montfort University, Glasgow Caledonian University, Aston University, University of Dundee, Dundalk Institute of Technology, Coventry University and Swansea University. We are based in India with co-primary operations in London, United Kingdom. In addition to extensive operations and employees in India, we have consultants in multiple countries including Cameroon, China, Ghana, and Kenya. As on December 31, 2023, we had a team of 210 employees and 10 consultants with extensive experience of the international educational landscape. Set out below is the geographic spread of our employees and consultants.
As of December 31, 2023, we have over 5,300 agents globally who are registered on our proprietary technology platform. We have developed an internal system to meticulously identify prospective agents, establishing connections and nurturing the relationship with agents. We seek to identify and work with agents whose objectives align with ours and foster a collaborative and symbiotic partnership. During Fiscal 2023, we had 1,819 Active Agents. Set out in the table below is a break-up of our agent network across geographies:
| Sr. No. | Geography | Number of Active Agents during Fiscal 2023 |
| 1. | India | 1,239 |
| 2. | Rest of the world | 580 |
| Total | 1,819 |
Based on our Proforma Consolidated Financial Information, set out below are details of our revenue from operations bifurcated based on the geographical location of the global institutions of higher education.
(in million)
| Country | 6 months ended September 30, 2023 | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 |
| The United Kingdom | 2,555.18 | 4,558.76 | 2,456.13 | 941.50 |
| Canada | 49.85 | 127.48 | 126.88 | 70.34 |
| Republic of Ireland | 2.16 | 17.45 | 35.03 | 55.47 |
| Others | 21.67 | 26.05 | 17.31 | 43.58 |
| Total | 2,628.86 | 4,729.74 | 2,635.35 | 1,110.89 |
We source applications for enrolment into global institutions of higher education from over 72 countries, through our agents globally who are registered on our proprietary technology platform. Set out below is a geographical representation of the countries from which we source applications for enrolment into global institutions of higher education:
The details of applications processed by us from different geographies is as under:
| Country | 6 months ended September 30, 2023 | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 |
| India | 86,041 | 1,52,539 | 68,260 | 32,360 |
| Asia (excluding India) | 11,223 | 9,971 | 356 | 84 |
| Africa | 10,839 | 9,728 | 78 | 3 |
| Others | 258 | 701 | 279 | 28 |
| Total | 1,08,361 | 1,72,939 | 68,973 | 32,475 |
Key Performance Indicators
Set out below are certain Key Performance Indicators of our Company, based on our Proforma Consolidated Financial Information:
| Particulars | 6 months and as at ended September 30, 2023 | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 |
| Revenue from operations (1) ( million) | 2,628.86 | 4,729.74 | 2,635.35 | 1,110.89 |
| Growth in Revenue from operations | N.A. | 79.47 | 137.23 | N.A. |
| during the period (2) (% ) | ||||
| Cost of Services (3) ( million) | 1,765.52 | 3,076.12 | 1,523.46 | 769.59 |
| Cost of Services as % of Revenues from | 67.16 | 65.04 | 57.81 | 69.28 |
| Operations (4) (%) | ||||
| EBITDA (5) ( million) | 598.53 | 1,072.85 | 885.01 | 273.18 |
| EBITDA Margin (6) (%) | 22.77 | 22.68 | 33.58 | 24.59 |
| Profit after tax (PAT) (7) ( million) | 896.06 | 1,121.39 | 677.64 | 209.39 |
| PAT Margin (8) (%) | 27.62 | 21.65 | 25.40 | 18.67 |
| ROE (9) (%) | 28.42* | 50.21 | 62.97 | 57.04 |
| Net Working Capital as # days of | (37.85)* | (19.96) | (16.26) | (1.14) |
| Revenues from Operations (10) (in days) |
*Not annualized
Notes:
(1) Revenue from Operations means the revenue from operations for the year.
(2) Growth in revenue from operations during the period indicate the % change in revenues from operations between the respective years/ periods.
(3) Cost of Services is the direct cost associated with providing services.
(4) Cost of Services as % of Revenues from Operations is calculated as cost of services during the period/ year divided by Revenues from Operations during the period/ year.
(5) EBITDA is calculated as profit for the year minus other income plus finance costs, depreciation and amortisation and total income tax expenses.
(6) EBITDA Margin is calculated as EBITDA divided by Revenue from operations. (7) Profit after tax (PAT) is the net profit for the year.
(8) PAT Margin is calculated as profit for the year divided by Total Income. (9) Return on Equity is calculated as profit for the year divided by total Equity.
(10) Net Working Capital as # days of Revenues from Operations is calculated as Trade Receivables minus Trade Payables divided by Revenue from Operations into number of days during the period.
PRINCIPAL FACTORS AFFECTING OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Maintaining, and expanding on, our entrenched relationship with network of global institutions of higher education
Our ability to grow our business is directly correlated to our ability to maintain and expand the entrenched relationship that we have with global institutions of higher education. We have over the years established long standing relationship with a global network of institutions of higher learning and for the period ended September 30, 2023 and Fiscals ended March 31, 2023, March 31, 2022 and March 31, 2021 we worked with over 140 global institutions of higher education predominantly across United Kingdom, Republic of Ireland and Canada. We are one of the leading education platforms offering international student recruitment solutions to global institutions of higher education in United Kingdom, Canada, Republic of Ireland, Australia and New Zealand (ANZ). Our Company has over the time built strong relationships with global institutions of higher education in the United Kingdom, and we are one of the largest student recruitment solutions providers from India into the United Kingdom with a market share of close to 13.0% in terms of the number of students going from India to the UK to pursue higher education in the year 2023. (Source: F&S Report) Out of our top 30 global institutions of higher learning, based on our revenue from operations, during 6 months ended September 30, 2023, and Fiscal 2023, Fiscal 2022 and Fiscal 2021, we have had longstanding relationship of over 5 years with more than 20 global institutions of higher learning. During the 6 month period ended September 30, 2023 and Fiscals 2021, 2022 and 2023, we processed over 3.82 lakh student applications while working with over 140 global institutions of higher education. During the 6 months ended September 30, 2023, and in Fiscal 2023, Fiscal 2022 and Fiscal 2021, our revenue from our 10 top global institutions of higher education, based on our Proforma Consolidated Financial Information was 2,377.30 million, 3,897.00 million, 2,011.01 million and
831.04 million, constituting 90.43%, 82.39%, 76.31% and 74.81% of our revenue from operations, respectively. While growth in new relationship with global institutions of higher education is key to increasing our revenue base, our revenue model also requires us to broad-base the services provided to future students. Accordingly, we intend to diversify our service offerings to include a wider range of services such as providing guidance on available financial aid options, and engaging in other aspects which form a part of the international study eco-system such as (i) student loans and foreign exchange facility for which are proposing to enter into tie-ups with financial institutions, (ii) Visa application assistance, and (iii) accommodation for which we will enter into tie-ups with property management services and accommodation providers across our focus geographies. We anticipate that offering a wider range of service offerings will make our service proposition more attractive to future students, while also broad-basing our revenue source.
Widening the pool of agents in India and overseas
As of December 31, 2023, we have over 5,300 agents globally who are registered on our proprietary technology platform. We have developed an internal system to meticulously identify prospective agents, establishing connections and nurturing the relationship with agents. We seek to identify and work with agents whose objectives align with ours and foster a collaborative and symbiotic partnership. During Fiscal 2023, we had 1,819 active agents (i.e., agents to whom our Company has made payments during Fiscal 2023) (Active Agents) comprising 1,239 Active Agents in India and 580 Active Agents in over 20 countries overseas including United Kingdom, Nigeria, Pakistan, Bangladesh, Nepal, Sri Lanka, Kenya, Vietnam, Canada and Egypt. Our top 10 agents, based on our Proforma Consolidated
Financial Information, contributed 429.00 million, 700.08 million, 755.35 million and 180.64 million during the 6 months ended September 30, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021, constituting 16.32%, 14.80%, 28.66% and 16.26% of our revenue from operations, respectively. One of aspects that will be critical for our continued growth will be to deepen our ties with our existing agent network and to augment our agent network in India and globally. We will continuously seek to deepen our ties with existing agents and increasing the number of agents who avail of our services. Further, we propose to augment our network of agents in China. India and China are the top two sources of students going abroad for education and accounting for close to 40% of the total international higher education expenditure. While these countries have the maximum students outbound for studies abroad every year, they also have the maximum students (more than a million) studying abroad across various undergraduate and post graduate courses. In CY 2023, close to 1.48 million students were pursuing higher education globally from India, while the same for China stood at over a million (Source: F&S Report) These agents source for us aspiring students who are looking for higher education overseas and are, therefore, critical to our business. Based on our Proforma Consolidated Financial Information, in the 6 months ended September 30, 2023, Fiscal 2023, Fiscal 2022 and Fiscal
2021, our payments to agents was 1,765.52 million, 3,076.12 million, 1,523.46 million, and 769.59 million, constituting 67.16%, 65.04%, 57.81% and 69.28%, respectively, of our total revenue from operations. Since our revenue is directly related to the numbers of aspiring students who enrol with the global institutions of higher learning, and agents are the source of students, continuously deepening our ties with existing agents and augmenting the number of agents who avail of our services is essential to our business. Accordingly, we continually work on factors that increase the attractiveness of our services to agents and also provide access to our proprietary technological platform on which agents can avail our service offering. We also anticipate that augmenting our network in China will lead to greater applications from Chinese students being routed through us, which will in turn have a positive impact on our business and results of operation. Further, we expect that us establishing relationship with global institutions of higher education in the USA will be a crucial factor in deepening our existing agent network since it will increase the opportunities that students will have.
Expanding our geographic footprint with a particular focus on expanding our network of global institutions of higher education in Ireland, Canada and ANZ and establishing relationship with global institutions of higher education in the USA
We have over the years established long standing relationship with a global network of institutions of higher learning and for the period ended September 30, 2023 and Fiscals ended March 31, 2023, March 31, 2022 and March 31, 2021 we worked with over 140 global institutions of higher education predominantly across United Kingdom, Republic of Ireland and Canada. During the 6 month period ended September 30, 2023 and Fiscals 2021, 2022 and 2023, we processed over 3.82 lakh student applications while working with over 140 global institutions of higher education. We propose to expand our geographic footprint to include in particular global institutions of higher education in the Republic of Ireland, Canada and ANZ. India and China figure as the top source countries for students moving abroad for higher education, and both these countries are expected to witness a tremendous uptick in their disposable income. Further, in particular, the demand for affordable and accessible international education is on the rise in India, fueled by the expanding middle class and limited domestic options. (Source: F&S Report)
In academic year 2022-2023, ANZ witnessed an aggregate of 3,85,762 enrolment in higher education courses with a maximum number of students from China, India, Nepal, Vietnam, Hong Kong, South Korea and Malaysia. (Source: F&S Report) While we have established relationship with few global institutions of higher education in ANZ, we will augment our focus to increase our reach and forge new relationships with global institutions of higher education across ANZ. During Fiscal 2023, USA was the largest education market in the world, based on the number of students catered to by global institutions of higher education in USA. In CY 2023, international students are estimated to have spent USD 53 billion for higher education in the USA, as compared to USD 36 billion in United Kingdom, USD 33 billion in Canada and USD 18 billion in Australia. (Source: F&S Report) We have effectively commenced our recruitment journey in the US in Fiscal 2024. We have also entered into contracts with certain global institutions of higher education in US. We expect that partnership with global institutions of higher education in the USA and ANZ will heighten our visibility and increase our profile and, consequently, garner us more agents and increase the number of students who seek to apply to global institutions of higher education through us, all of which ought to have a positive effect on our reputation and business.
Expanding the range of our services by harnessing our proprietary technological platform
Currently, our service bouquet comprises primarily admission related services. We intend to diversify our service offerings to include a wider range of services. We anticipate that offering a wider range of service offerings will make our service proposition more attractive to future students, while also broad-basing our revenue source. While tuition fee is the largest componentof overseas education expenses, other aspects also contribute to theoverall education expenditure. We propose to provide guidance on available financial aid options, and engaging in other aspects which form a part of the international study eco-system such as (i) student loans and foreign exchange facility for which are proposing to enter into tie-ups with financial institutions, (ii) Visa application assistance, and (iii) accommodation for which we will enter into tie-ups with property management services and accommodation providers across our focus geographies. Currently, we are contemplating the viability of these added services on a ‘per-lead basis and, or, on a ‘commission model with entities providing these services. We view these offerings as ‘value added services which we expect will broaden our target audience and also give us a deeper connect with them, in particular when we venture into the B2C (i.e., catering directly to the student population without an agent in between) business model. We also propose to invest in continual market research to identify emerging study destinations, popular courses, and changing student preferences. This is expected to involve the use of data analytics to anticipate trends and tailor our services. We are also in the process of developing various new features in our proprietary technology platform which will make the process more technology enabled and hence more efficient. This will ensure that our proprietary technology platform is scalable and nimble, capable of being customised to suit the preferences of disparate global institutions of higher education while continuing to provide agents and students a seamless experience. Harnessing technology will, in addition to, augmenting the ‘look-and-feel of our brand will also enable us to engage with a much broader audience and garner greater attention.
MATERIAL ACCOUNTING POLICIES TO RESTATED STANDALONE FINANCIAL INFORMATION
2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE
The Restated Standalone Financial Information of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, Companies (Indian Accounting Standards) Amendment Rules, 2018, read with section 133 of the Companies Act, 2013 ("the Act") and presentation requirements of Division Il of Schedule Ill of the Act and other relevant provisions of the Act as applicable.
The Restated Standalone Financial Information have been prepared on accrual basis under the historical cost convention, except the following assets and liabilities, which have been measured at fair value as required by the relevant IND AS:
Certain financial assets and liabilities (refer accounting policy regarding financial instruments);
Defined employee benefit plans;
The Restated Standalone Financial Information has been prepared by the Management to comply in all material respects with the requirements of:
a. Section 26 of Part I of Chapter III of the Companies Act, 2013 ("the Act");
b. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended ("ICDR Regulations"); and
c. The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India (ICAI), as amended (the "Guidance Note").
The Restated Standalone Financial Information have been compiled by the management of the Company from:
a. The special purpose financial statements of the Company as at and for the six months ended September 30, 2023 and Audited Financial Statements as at and for the financial year ended March 31, 2023 prepared in accordance with Indian Accounting Standard specified under section 133 of the Act and other accounting principles generally accepted in India at the relevant time and which have been approved by the Board of Directors on February 21, 2024 and September 30, 2023 respectively.
b. The special purpose financial statements of the Company as at and for the financial year ended March 31, 2022 and March 31, 2021 prepared in accordance with the Indian Accounting Standards as prescribed under section 133 of the Act, read with Companies (Indian Accounting Standard) Rules 2015, as amended and other accounting principles generally accepted in India at the relevant time and both of which have been approved by the Board of Directors on February 16, 2024.
The Restated Standalone Financial Information as on and for the six months ended 30th of September, 2023; and as on and for the year ended March 31, 2023; March 31, 2022; & March 31, 2021 were approved by the Board of Directors in their meeting held on March 21, 2024.
Rounding off amounts
The Restated Standalone Financial Information are presented in Indian Rupee ( ) and all values are rounded to the nearest millions, except when otherwise indicated as required by General instructions for preparation of Financial Statements in Division II of Schedule III of the Companies Act, 2013, except number of shares, face value of shares, earning per shares, or wherever otherwise stated. Wherever the amount represented Rs 0.00 construes value less than Rupees Five Thousand.
2.1. Basis of measurement
The Company maintains accounts on accrual basis following the historical cost convention, except for the followings:
Certain Financial Assets and Liabilities are measured at Fair value/ Amortized cost (refer accounting policy regarding financial instruments);
Defined benefit plans as per actuarial valuation.
2.2. Functional and Presentation Currency
The Restated Standalone Financial Information are presented in Indian Rupee (INR), which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates. All amounts disclosed in Restated Standalone Financial Information and notes have been rounded off to the nearest millions (with two places of decimal) unless otherwise stated.
2.3. Use of Estimates and Critical Accounting Judgments
The preparation of Restated Standalone Financial Information in conformity with Ind AS which requires judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the Restated Standalone Financial Information and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.
2.4. Operating Cycle for current and non-current classification
All assets and liabilities have been classified as current or non-current as per the Companys normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 and Ind AS 1. The Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.
An asset is classified as current when it is:
Expected to be realized or intended to be sold or consumed in normal operating cycle;
Held primarily for the purpose of trading;
Expected to be realized within twelve months after the reporting period; or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All the other assets are classified as non-current.
A liability is current when:
It is expected to be settled in normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within twelve months after the reporting period; or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current. Deferred Tax Assets and Liabilities are classified as non-current assets and liabilities respectively.
2.5. Measurement of Fair Values
A number of the Companys accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participants ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the Restated Standalone Financial Information are categorised within the fair value hierarchy, described as follows, based on the input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable and
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
External valuers are involved for valuation of significant assets & liabilities. Involvement of external valuers is decided by the management of the company considering the requirements of Ind AS and selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.
3. MATERIAL ACCOUNTING POLICIES
3.1. Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of change in value.
For the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand, term deposits and other short-term highly liquid investments, as they are considered an integral part of the Companys cash management. Bank overdrafts are shown within short term borrowings in the balance sheet.
3.2. Income Tax
Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit in the Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity or other comprehensive income. Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.
Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized.
The Company offsets current tax assets and current tax liabilities; deferred tax assets and deferred tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
3.3. PROPERTY, PLANT AND EQUIPMENT
3.3.1. Property, plant, and equipment are restated at cost, less accumulated depreciation and impairment, if any.
Costs directly attributable to acquisition are capitalized until the property, plant, and equipment are ready for use, as intended by the management. The charge in respect of periodic depreciation is derived after determining an estimate of an assets expected useful life and the expected residual value at the end of its life. The company depreciates property, plant, and equipment over their estimated useful lives using the Written Down Value Method.
3.3.2. Impairment
Property, plant, and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e., the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in the Statement of Profit and Loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the Statement of Profit and Loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated depreciation) had no impairment loss been recognized for the asset in prior years.
3.4. INVESTMENT PROPERTY
3.4.1. Recognition and Measurement:
Investment properties are initially recognized at cost including transaction costs. Subsequently investment properties comprising buildings are carried at cost less accumulated depreciation and accumulated impairment losses, if any.
3.4.2. Depreciation and Amortization:
Depreciation on buildings are calculated using the written down value method to allocate their cost, net of their residual values, over their estimated useful lives. Depreciation is provided on useful life of assets as prescribed in Schedule II to the Companies Act, 2013.
3.5. LEASES
3.5.1. Company as lessor
Lease for which company is a lessor is classified as Finance or Operating Lease.
For Finance Lease
Leases which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item are classified and accounted for as finance lease.
All other leases are classified as operating lease. Lease rental receipts are apportioned between the finance income and capital repayment based on the implicit rate of return. Contingent rents are recognized as revenue in the period in which they are earned.
Operating Lease
Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease except where scheduled increase in rent compensates the Company with expected inflationary costs.
3.5.2. Company as lessee
The Companys lease asset classes primarily consist of leases for Buildings and Plant & Machinery. The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset;
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and;
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short term leases) and leases of low value assets. For these short term and leases of low value assets, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
As a lessee, the Company determines the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company assesses the expected lease term on a lease-by-lease basis and evaluates whether it is reasonably certain that any options to extend or terminate the contract will be exercised. Factors considered in evaluating the lease term include any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease, and the importance of the underlying asset to the Companys operations, considering factors such as the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that it reflects the current economic circumstances.
The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently re-measured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made.
A lease liability is re-measured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The re-measurement normally also adjusts the leased assets.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
3.6. REVENUE RECOGNITION
Revenues from customer contracts are considered for recognition and measurement when the contract has been approved in writing by the parties to the contract, the parties to the contract are committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon transfer of control of promised products or services ("performance obligations") to customers in an amount that reflects the consideration the Company has received or expects to receive in exchange for these products or services ("transaction price"). When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.
Revenue on work-based contracts are recognized as the related services are performed & completed. Revenue from contracts, where the performance obligations are satisfied over time, is recognized using the percentage-of-completion method.
The billing schedules agreed with customers include periodic performance-based billing and/or milestone-based progress billings. Revenues in excess of billing are classified as unbilled revenue while billing in excess of revenues are classified as contract liabilities (which we refer to as "unearned revenues").
3.7. EMPLOYEE BENEFITS
3.7.1. Short Term Benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related services are provided. Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognized in respect of employees services up to the end of the reporting period.
3.7.2. Post-Employment Benefits
The Company operates the following post-employment schemes:
Defined Contribution Plan
Defined contribution plans such as Provident Fund etc. are charged to the Restated Statement of Profit and Loss as and when incurred and paid to Authority.
Defined Benefit Plans
The liability or asset recognized in the Balance Sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The Companys net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods. The defined benefit obligation is calculated annually by Actuaries using the projected unit credit method.
The liability recognized for defined benefit plans is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. The benefits are discounted using the government securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of related obligation.
Remeasurements of the net defined benefit obligation, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling, are recognized in other comprehensive income. Remeasurements recognized in other comprehensive income are reflected immediately in retained earnings and will not be reclassified to the statement of profit and loss.
3.8. INVESTMENT IN BULLION
Investment in Bullion is measured and carried at Cost.
3.9. FINANCIAL INSTRUMENTS
3.9.1. Financial Assets
Recognition and Initial Measurement:
All financial assets are initially recognized when the company becomes a party to the contractual provisions of the instruments. All financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are added to the fair value on initial recognition. However, trade receivables that do not contain a significant financing component are measured at transaction price.
o Measured at Amortized Cost: A Financial Asset instrument is measured at the amortized cost if both the following conditions are met:
The asset is held within a business model whose objective is achieved by both collecting contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
o Measured at FVTOCI: A financial asset is measured at the FVTOCI if both the following conditions are met:
The objective of the business model is achieved by both collecting contractual cash flows and selling the financial assets; and
The assets contractual cash flows represent solely payments of principal & interest.
o Measured at FVTPL: A financial asset which is not classified in any of the above categories are subsequently are fair valued through profit and loss.
Impairment of Financial Assets:
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The company recognizes impairment loss for trade receivables that do not constitute a financing transaction using expected credit loss model, which involves use of a provision matrix constructed on the basis of historical credit loss experience. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
3.9.2. Financial Liabilities
Recognition and Initial Measurement:
All financial liabilities are initially recognized when the company becomes a party to the contractual provisions of the instruments. All financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are added to the fair value on initial recognition.
Subsequent Measurement:
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognised in a business combination which is subsequently measured at fair value through profit or loss.
Financial Guarantee Contracts:
Financial guarantee contracts issued by the company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirement of Ind AS 109 and the amount recognized less cumulative amortization.
Derecognition:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
3.9.3. Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the counterparty.
3.10. Earnings Per Share
Basic Earnings per share (EPS) amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders adjusted for the effects of potential equity shares by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.
3.11. Provisions, Contingent Liabilities and Contingent Assets
3.11.1. Provisions
Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.
3.11.2. Contingent Liabilities
Contingent liability is a possible obligation arising from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events but is not recognized because it is not possible that an outflow of resources embodying economic benefit will be required to settle the obligations or reliable estimate of the amount of the obligations cannot be made. The Company discloses the existence of contingent liabilities in Other Notes to Financial Statements.
3.12. Recent accounting pronouncements
The Ministry of Corporate Affairs ("MCA") notifies new Accounting Standards or amendments to the existing Accounting Standards. Ministry of Corporate Affairs notified amendments to the existing standards vide notification dated 31st March 2023 which amends certain accounting standards, and are effective 1 April 2023. These amendments are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions.
New Standards / Amendments applied during the year in respect of Companys Financial Statements:
a. Ind AS 1 Presentation of Financial Statements: The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general-purpose financial statements.
b. Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors: The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in Restated Standalone Financial Information that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in Restated Standalone Financial Information to be measured in a way that involves measurement uncertainty.
c. Ind AS 12 Income Taxes: The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.
d. Other Ind AS Amendments: There are also consequential or editorial amendments in Ind AS 101, 102, 103, 107, 109, 115.
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
3.13. Changes in Accounting Policies in the year / half year covered in Restated Standalone Financial Information:
The company has prepared the Financial statements in conformity with the rules prescribed in Companies Act, 2013. There has been no significant change in Accounting Policies in the Restated Standalone Financial Information.
4. SIGNIFICANT JUDGEMENTS AND KEY SOURCES OF ESTIMATION IN APPLYING ACCOUNTING POLICIES
Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances. Information about Significant judgements and Key sources of estimation made in applying accounting policies that have the most significant effects on the amounts recognized in the Restated Standalone Financial Information is included in the following notes:
Recognition of Deferred Tax Assets: The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Companys future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits.
Right-of-use assets and lease liability: The Company has exercised judgement in determining the lease term as the noncancellable term of the lease, together with the impact of options to extend or terminate the lease if it is reasonably certain to be exercised. Where the rate implicit in the lease is not readily available, an incremental borrowing rate is applied. This incremental borrowing rate reflects the rate of interest that the lessee would have to pay to borrow over a similar term, with a similar security, the funds necessary to obtain an asset of a similar nature and value to the right of-use asset in a similar economic environment. Determination of the incremental borrowing rate requires estimation.
Defined Benefit Obligation (DBO): Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.
Provisions and Contingencies: The assessments undertaken in recognising provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, ‘Provisions, Contingent Liabilities and Contingent Assets. The evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.
Impairment of Financial Assets: The Company reviews its carrying value of investments carried at amortized cost annually, or more frequently when there is indication of impairment. If recoverable amount is less than its carrying amount, the impairment loss is accounted for.
Allowances for Doubtful Debts: The Company makes allowances for doubtful debts through appropriate estimations of irrecoverable amount. The identification of doubtful debts requires use of judgment 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.
Fair value measurement of financial Instruments: When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques. The input to these models are taken from observable markets where possible, but where this not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
NON-GAAP MEASURES AS PER PROFORMA CONSOLIDATED FINANCIAL INFORMATION
Earnings before Interest, Taxes, Depreciation and Amortization Expenses (EBITDA)/ EBITDA Margin/ Return on Capital Employed / PAT Margin / Return on Equity / Gross Profit/ Gross Margin/ Net Working Capital as # days of Revenues from Operations
In addition to our results determined in accordance with Ind AS, we believe the following Non-GAAP measures are useful to investors in evaluating our operating performance and liquidity. We use the following Non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Non-GAAP financial information, when taken collectively with financial measures disclosed in the financial statements prepared in accordance with Ind AS, may be helpful to investors because it provides an additional tool for investors to use in evaluating our ongoing operating results and trends and in comparing our financial results with other companies in our industry because it provides consistency and comparability with past financial performance. However, our management does not consider these Non-GAAP measures in isolation or as an alternative to financial measures.
Gross Profit, Gross Margin, EBITDA, EBITDA Margin, PAT Margin, Return on Capital Employed, Return on Equity and Net Working Capital as # days of Revenues from Operations (Non-GAAP Measures) presented in this Draft Red Herring Prospectus is a supplemental measure of our performance and liquidity that is not required by, or presented in accordance with, Ind AS, IFRS or US GAAP. Further, EBITDA is not a measurement of our financial performance or liquidity under Ind AS, IFRS or US GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit/ (loss) for the year / period or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, IFRS or US GAAP. In addition, Non-GAAP Measures are not standardised terms, hence a direct comparison of Non-GAAP Measures between companies may not be possible. Other companies may calculate the Non-GAAP Measure differently from us, limiting its usefulness as a comparative measure. Although Non-GAAP Measures is not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that it is useful to an investor in evaluating us because it is a widely used measure to evaluate a companys operating performance. See ‘Risk Factors - Certain non-GAAP financial measures and certain other statistical information relating to our operations and financial performance like Gross Profit, Gross Margin, EBITDA, EBITDA Margin, PAT Margin, Return on Capital Employed, Return on Equity and Net Working Capital as # days of Revenues from Operations have been included in this Draft Red Herring Prospectus. These non-GAAP financial measures are not measures of operating performance or liquidity defined by Ind AS and may not be comparable on page 47.
Reconciliation for Revenue from Operations to Gross Profit and Gross Margin
The table below reconciles revenue from operations to gross profit and gross margin:
| Particulars | 6 months period ended September 30, 2023 | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 |
( million, unless otherwise stated) |
||||
| Revenue from operations (I) | 2,628.86 | 4,729.74 | 2,635.35 | 1,110.89 |
| Cost of Services (II) | 1,765.52 | 3,076.12 | 1,523.46 | 769.59 |
| Gross Profit (III) = (I - II) | 863.34 | 1,653.62 | 1,111.89 | 341.30 |
| Gross Margin (%) (IV = III/I) | 32.84% | 34.96% | 42.19% | 30.72% |
Reconciliation of Profit for the 6 months/ year to EBITDA and EBITDA Margin
The table below reconciles profit for the year /period to EBITDA. EBITDA is calculated as Profit for the 6 months/ year less other income plus finance costs, depreciation and amortisation and total tax expenses, while EBITDA Margin is calculated as EBITDA divided by revenue from operations.
| Particulars | 6 months period ended September 30, 2023 | Fiscal 2023 | Fiscal 2022 |
Fiscal 2021 |
||
( million, unless otherwise stated) |
||||||
| Profit for the 6 | 896.06 | 1,121.39 | 677.64 |
209.39 |
||
| Months/Year (I) | ||||||
| Other income (II) | 615.42 | 448.73 | 32.29 |
10.51 |
||
| Finance costs (III) | 0.06 | 1.15 | 0.23 |
0.05 |
||
| Depreciation and | 12.95 | 21.53 | 9.92 |
2.45 |
||
| amortisation expense (IV) | ||||||
| Total tax expense (V) | 304.88 | 377.51 | 229.51 |
71.80 |
||
| Particulars | 6 months period ended September 30, 2023 | Fiscal 2023 |
Fiscal 2022 |
Fiscal 2021 | ||
( million, unless otherwise stated) |
||||||
| EBITDA (VI = I- | 598.53 | 1,072.85 |
885.01 |
273.18 | ||
| II+III+IV+V) | ||||||
| Revenue from operations | 2,628.86 | 4,729.74 |
2,635.35 |
1,110.89 | ||
| (VII) | ||||||
| EBITDA Margin (%) | 22.77% | 22.68% |
33.58% |
24.59% | ||
Reconciliation for Profit/ (loss) for the Year to Profit After Tax Margin (PAT Margin)
The table below reconciles profit/ (loss) for the year / period to PAT Margin:
| Particulars | 6 months period ended September 30, 2023 | 2023 | 2022 | 2021 |
( million, unless otherwise stated) |
||||
| Profit for the 6 months/ year (I) | 896.06 | 1,121.39 | 677.64 | 209.39 |
| Total Income (II) | 3,244.28 | 5,178.47 | 2,667.64 | 1,121.40 |
| PAT Margin (%) (III = I/II) | 27.62% | 21.65% | 25.40% | 18.67% |
Reconciliation of Total Equity to Capital Employed, Profit for the 6 months/ year to EBIT and Return on Capital Employed
The table below reconciles total equity to capital employed. Capital employed is calculated as total equity plus total borrowing while EBIT is calculated as profit for the 6 months/ year plus total tax expense plus finance costs. Return on Capital Employed is calculated as EBIT divided by capital employed.
| Particulars | 6 months period ended September 30, 2023 | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 |
( million, unless otherwise stated) |
||||
| Total equity (I) | 3,152.85 | 2,233.41 | 1,076.16 | 367.11 |
| Non-current borrowings and lease liabilities (II) | 0.83 | 0.83 | 0.83 | 0.83 |
| Current borrowings and lease liabilities (III) | - | - | - | 5.05 |
| Total Capital Employed (IV) = I+II+III | 3,153.68 | 2,234.24 | 1,076.99 | 372.99 |
| Profit for the 6 Months/Year (V) | 896.06 | 1,121.39 | 677.64 | 209.39 |
| Total tax expense (VI) | 304.88 | 377.51 | 229.51 | 71.80 |
| Finance costs (VII) | 0.06 | 1.15 | 0.23 | 0.05 |
| Earnings before interest and tax (EBIT) (VIII = V + VI + VII) | 1,200.99 | 1,500.06 | 907.38 | 281.24 |
| Return on Capital Employed (%) (IX = | 38.08%* | 67.14% | 84.25% | 75.40% |
| Particulars 6 months period ended September 30, 2023 | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 |
( million, unless otherwise stated) |
|||
| VIII/IV) | |||
* Not Annualized
Reconciliation of Total Equity to Return on Equity
The table below reconciles total equity to return on equity. Return on equity is calculated as profit for the 6 months/ year divided by total equity.
| Particulars | 6 months period ended September 30, 2023 Consolidated | Fiscal 2023 Consolidated | Fiscal 2022 Consolidated | Fiscal 2021 Consolidated |
( million, unless otherwise stated) |
||||
| Total equity (I) | 3,152.85 | 2,233.41 | 1,076.16 | 367.11 |
| Profit for the 6 months/ year (II) | 896.06 | 1,121.39 | 677.64 | 209.39 |
| Return on Equity (%) (III) = (II/I) | 28.42%* | 50.21% | 62.97% | 57.04% |
* Not Annualized
Reconciliation of Revenues from Operations to Net Working Capital as # days
The table below reconciles revenues from operations to net working capital as # days. Net Working Capital is calculated as trade receivables as reduced by trade payables. Net Working Capital as # days is computed as Net Working Capital divided by Revenues from Operations and multiplied by number of days during the period.
| Particulars | 6 months period ended September 30, 2023 | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 |
( million, unless otherwise stated) |
||||
| Trade Receivables (I) | - | 269.43 | 310.07 | 389.20 |
| Trade Payables (II) | 543.79 | 528.12 | 427.50 | 392.66 |
| Net Working Capital (III) | (543.79) | (258.69) | (117.42) | (3.46) |
| Revenues from Operations (IV) | 2,628.86 | 4,729.74 | 2,635.35 | 1,110.89 |
| Net Working Capital as # | ||||
| days (V = III/ IV * number of days during the period) | (37.85) | (19.96) | (16.26) | (1.14) |
PRINCIPAL COMPONENTS OF OUR STATEMENT OF PROFIT AND LOSS
Total Income
Total income comprises (i) revenue from operations; and (ii) other income.
Revenue from operations
Our revenue from operations comprises revenue from educational consultancy services (i.e. commission received on providing international student recruitment solutions to global institutions of higher education).
Other income
Our other income comprises (i) interest income; (ii) dividend income; (iii) rent income; (iv) income from derivatives instruments; (v) gain on fair valuation of investments measured at FVTPL (i.e., fair value through profit or loss); (vi) profit on sale of investments measured at FVTPL (i.e., fair value through profit or loss); (vii) profit on sale of property, plant and equipment; and (viii) miscellaneous income.
Total Expenses
Our total expenses comprise (i) cost of services; (ii) employee benefit expenses; (iii) finance costs; (iv) depreciation and amortization expenses; and (v) other expenses.
Cost of Services
Cost of services comprises payment to our agents.
Employee benefits expenses
Employee benefit expenses comprises salaries and wages (including remuneration of Directors), contribution to provident and other funds, gratuity expenses and staff welfare expenses.
Finance costs
Finance cost comprises interest expense on overdraft facilities, on lease liabilities and other expenses.
Depreciation and amortisation expense
Depreciation and amortisation expenses comprises depreciation on tangible assets, right of use assets and investment property.
Other expenses
Other expenses comprise technical fee and information technology related expenses, professional fees, rates and taxes, corporate social responsibility expenses, travelling and conveyance expenses, loss on fair value of investments measured at FVTPL (i.e., fair value through profit or loss), loss from derivatives instruments, repair and maintenance, electricity expenses, brokerage and other charges, sales promotion expenses, telephone expense, payment to auditors and miscellaneous expenses.
Tax expenses
Tax expense comprises current tax, deferred tax and income tax related to earlier years.
RESTATED STANDALONE FINANCIAL INFORMATION
RESULTS OF OUR OPERATIONS FROM OUR STATEMENT OF RESTATED STANDALONE PROFITS AND LOSSES
The following table sets forth select financial data from our statement of restated standalone profits and losses for the 6 months period ended September 30, 2023, and for Fiscal 2021, Fiscal 2022 and Fiscal 2023, the components of which are also expressed as a percentage of total income for such years / periods:
| Particulars | 6 months period ended |
Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | ||||
September 30, 2023 |
||||||||
| ( million) | As a % of Total Income | ( million) | As a % of Total Income | ( million) | As a % of Total Income | ( million) | As a % of Total Income | |
| Revenue from operations | 1,636.00 | 72.69% | 2,740.98 | 85.93% | 1,200.70 | 97.38% | 287.79 | 96.48% |
| Other income | 614.68 | 27.31% | 448.72 | 14.07% | 32.29 | 2.62% | 10.51 | 3.52% |
| Total Income | 2,250.68 | 100.00% | 3,189.70 | 100.00% | 1,232.99 | 100.00% | 298.30 | 100.00% |
| Cost of services | 786.97 | 34.97% | 1,138.83 | 35.70% | 164.02 | 13.30% | 3.74 | 1.25% |
| Employee benefits expense | 24.10 | 1.07% | 40.43 | 1.27% | 17.66 | 1.43% | 18.83 | 6.31% |
| Finance costs | 0.06 | 0.00% | 1.15 | 0.04% | 0.23 | 0.02% | 0.05 | 0.02% |
| Depreciation and amortisation expense | 12.95 | 0.58% | 21.53 | 0.67% | 9.92 | 0.80% | 2.45 | 0.82% |
| Other expenses | 238.26 | 10.59% | 513.92 | 16.11% | 153.85 | 12.48% | 3.09 | 1.04% |
| Total expenses | 1,062.34 | 47.20% | 1,715.86 | 53.79% | 345.68 | 28.04% | 28.16 | 9.44% |
| Profit before tax | 1,188.34 | 52.80% | 1,473.84 | 46.21% | 887.31 | 71.96% | 270.14 | 90.56% |
| Current tax | 206.88 | 9.19% | 333.30 | 10.45% | 217.29 | 17.62% | 64.51 | 21.63% |
| Income Tax related to earlier years | - | - | - | - | 0.73 | 0.06% | 0.17 | 0.06% |
| Deferred tax | 95.60 | 4.25% | 39.45 | 1.24% | 7.72 | 0.63% | 5.02 | 1.68% |
| Total Tax | 302.48 | 13.44% | 372.75 | 11.69% | 225.74 | 18.31% | 69.70 | 23.37% |
| Expense | ||||||||
| Profit for the 6 months / year | 885.86 | 39.36% | 1,101.09 | 34.52% | 661.57 | 53.66% | 200.44 | 67.19% |
| Other Comprehensive Income | ||||||||
| Item that will not be subsequently reclassified to profit or loss | ||||||||
| Re-measurement gains/(losses) on defined benefit obligations | (0.05) | 0.00% | (0.03) | 0.00% | (0.01) | 0.00% | - | 0.00% |
| Equity Instruments measured at FVTOCI | 30.24 | 1.34% | 51.51 | 1.61% | 47.15 | 3.82% | 134.48 | 45.08% |
| Income tax effect | (6.71) | -0.30% | (11.61) | -0.36% | (10.60) | -0.86% | (30.34) | -10.17% |
| on above items | ||||||||
| Total other comprehensive income/(loss), net of tax | 23.48 | 1.04% | 39.87 | 1.25% | 36.54 | 2.96% | 104.14 | 34.91% |
| Total comprehensive income for the 6 months/ year | 909.34 | 40.40% | 1,140.96 | 35.77% | 698.11 | 56.62% | 304.58 | 102.11% |
Results of operations for 6 month period ended September 30, 2023
Income
Total Income
Our total income during the period was 2,250.68 million which comprised revenue from operations and other income.
Revenue from operations
Our revenue from operations for the period was 1,636.00 million which comprised revenue from educational consultancy services.
Other Income
Our other income for the period was 614.68 million which primarily comprised (i) gain on fair valuation of investments measured at FVTPL (i.e., fair value through profit or loss) of 385.04 million; (ii) income from derivatives instruments of 109.32 million; (iii) profit on sale of investments measured at FVTPL (i.e., fair value through profit or loss) of 63.22 million; (iv) interest income of 36.98 million; (v) dividend income of 14.41 million; and (vi) rent income of 5.71 million.
Expenses
Total Expenses
Our total expenses during the period were 1,062.34 million which comprised (i) cost of services; (ii) employee benefit expenses; (iii) finance costs; (iv) depreciation and amortization expenses; and (v) other expenses.
Cost of services
Our cost of services for the period was 786.97 million which comprised payments to our agents. Our cost of services was 34.97% of our total income.
Employee Benefits Expense
Our employee benefits expense for the period was 24.10 million comprising payment of salaries and wages (including remuneration of Directors), contribution to provident and other funds, gratuity expenses and staff welfare expenses.
Finance Costs
Our finance costs were 0.06 million comprising interest expense on lease liabilities and other costs.
Depreciation and Amortisation Expenses
Our depreciation and amortisation expense for the period was 12.95 million comprising depreciation on tangible assets, right of use assets and investment property.
Other Expenses
Our other expense for the period were 238.26 million comprising technical fee and information technology related expenses of 200.04 million, professional fees of 3.34 million, rates and taxes of 2.37 million, corporate social responsibility expenses of 8.75 million, travelling and conveyance expenses of 5.60 million, repair and maintenance of 1.62 million, electricity expenses of 0.65 million, brokerage and other charges of 0.90 million, sales promotion expenses of 12.91 million, telephone expense of 0.41 million, payment to auditors of 0.50 million and miscellaneous expenses of 1.17 million. Our other expenses were 10.59% of our total income.
Total Income Tax Expense
Our total tax expenses for the period were 302.48 million.
Profit for the Period
As a result of the foregoing factors, our profit for the period was 885.86 million.
FISCAL 2023 COMPARED TO FISCAL 2022
Income
Total Income
Our total income increased by 158.70% from 1,232.99 million in Fiscal 2022 to 3,189.70 million in Fiscal 2023, due to an increase in our revenue from operations and other income as discussed below.
Revenue from operations
Our revenue from operations increased by 128.28% from 1,200.70 million in Fiscal 2022 to 2,740.98 million in
Fiscal 2023, due to an increase in the revenue from our education consultancy services.
Other income
Our other income increased by 1,289.50% from 32.29 million in Fiscal 2022 to 448.72 million in Fiscal 2023, primarily due to an increase in income from derivative instruments from nil in Fiscal 2022 to 253.02 million in
Fiscal 2023 and increase in gain on fair valuation of investment measured at FVTPL (i.e., fair value through profit or loss) from nil in Fiscal 2022 to 139.29 million in Fiscal 2023. The gain in fair valuation of investment measured at FVTPL is due to an increase in the market value of investment in equity shares. Further, our Companys interest income increased from by 363.70% from 4.92 million in Fiscal 2022 to 22.82 million in Fiscal 2023 primarily due to higher cash and cash equivalents, other bank balances and loans.
Expenses
Total Expenses
Our total expenses increased by 396.37% from 345.68 million in Fiscal 2022 to 1,715.86 million in Fiscal 2023, due to an increase in various expenses as discussed below.
Cost of services
Our cost of services increased by 594.31% from 164.02 million in Fiscal 2022 to 1,138.83 million in Fiscal 2023, due to an increase in payment to agents commensurate with increase in our revenues from operations and change in our business model.
Employee benefit expenses
Our employee benefits expense increased by 128.98% from 17.66 million in Fiscal 2022 to 40.43 million in Fiscal 2023 due to an increase in payment of salary and wages (including an increase in payment of Directors remuneration) from 16.77 million in Fiscal 2022 to 37.91 million in Fiscal 2023 and increase in contribution to provident and other funds from 0.81 million in Fiscal 2022 to 2.18 million in Fiscal 2023. The increase in payment of salary and wages and contribution to provident and other funds was due to the number of employees increasing from 26 in Fiscal 2022 to 114 in Fiscal 2023.
Finance Costs
Our finance costs increased by 391.55% from 0.23 million in Fiscal 2022 to 1.15 million in Fiscal 2023 primarily due to interest on the amount of shortfall in payment of advance income tax which increased from nil in Fiscal 2022 to 1.03 million in Fiscal 2023.
Depreciation and Amortisation Expenses
Our depreciation and amortisation expenses increased by 117.01% from 9.92 million in Fiscal 2022 to 21.53 million in Fiscal 2023 primarily due to increase in depreciation and amortisation expense on right of use assets (i.e. lease of buildings) which increased from 8.33 million in Fiscal 2022 to 14.50 million in Fiscal 2023 and increase in depreciation and amortisation expense on tangible assets which increased from 1.59 million in Fiscal 2022 to 5.88 million in Fiscal 2023 and the depreciation on investment property which increased from nil in Fiscal 2022 to
1.15 million in Fiscal 2023.
Other expenses
Our other expenses increased by 234.03% from 153.85 million in Fiscal 2022 to 513.92 million in Fiscal 2023, in aggregate, primarily due to increase in technical fee and information technology related expenses by 336.90% from
107.69 million in Fiscal 2022 to 470.49 million in Fiscal 2023. With the increase the scale of our operations, we have paid for further development of the technology platform which we had licensed for business use, and this has led to an increase in technical fee & IT related expenses. Further, there was an increase in corporate social responsibility expense by 280.95% from 2.10 million in Fiscal 2022 to 8.00 million in Fiscal 2023 and increase in travelling and conveyance expenses by 442.81% from 1.95 million in Fiscal 2022 to 10.60 million in Fiscal 2023.
Profit before tax
For the reasons discussed above, our profit before tax increased by 66.10% from 887.31 million in Fiscal 2022 to 1,473.84 million in Fiscal 2023.
Total tax expenses
Our total tax expenses increased by 65.12% from 225.74 million in Fiscal 2022 to 372.75 million in Fiscal 2023 due to an increase in our current tax expenses from 217.29 million in Fiscal 2022 to 333.30 million in Fiscal 2023 caused by an increase in profit before tax.
Profit for the year
For the reasons discussed above, our profit for the year increased by 66.44% from 661.57 million in Fiscal 2022 to
1,101.09 million in Fiscal 2023.
FISCAL 2022 COMPARED TO FISCAL 2021
Income
Total Income
Our total income increased by 313.35% from 298.30 million in Fiscal 2021 to 1,232.99 million in Fiscal 2022, due to an increase in our revenue from operations and other income as discussed below.
Revenue from operations
Our revenue from operations increased by 317.22% from 287.79 million in Fiscal 2021 to 1,200.70 million in
Fiscal 2022, due to an increase in the revenue from our education consultancy services.
Other income
Our other income increased by 207.36% from 10.51 million in Fiscal 2021 to 32.29 million in Fiscal 2022, primarily due to an increase in (i) dividend income from 0.17 million in Fiscal 2021 to 8.12 million in Fiscal 2022 and (i) the profit on sale of investments measured at FVTPL (i.e., fair value through profit or loss) from 1.95 million in Fiscal 2021 to 19.05 million in Fiscal 2022. The profit on sale of investments measured at FVTPL was due to the increase in the market value of investments in equity shares.
Expenses
Total Expenses
Our total expenses increased by 1,127.52% from 28.16 million in Fiscal 2021 to 345.68 million in Fiscal 2022, due to an increase in various expenses as discussed below.
Cost of services
Our cost of services increased by 4,287.33% from 3.74 million in Fiscal 2021 to 164.02 million in Fiscal 2022, due to an increase in payment to agents commensurate with increase in our revenues from operations and change in our business model.
Employee benefit expenses
Our employee benefits expense decreased by 6.25% from 18.83 million in Fiscal 2021 to 17.66 million in Fiscal 2022 pursuant to a decrease in payment of salary and wages from 18.17 million in Fiscal 2021 to 16.77 million in Fiscal 2022 despite an increase in our employees from 23 employees in Fiscal 2021 to 26 employees in Fiscal 2022, on account of a change in the mix of such employees and their average salaries.
Finance Costs
Our finance costs increased by 364.27% from 0.05 million in Fiscal 2021 to 0.23 million in Fiscal 2022 primarily due to an increase in interest expense on overdraft facilities and interest expense on lease liabilities incurred.
Depreciation and Amortisation Expenses
Our depreciation and amortisation expenses increased by 305.22% from 2.45 million in Fiscal 2021 to 9.92 million in Fiscal 2022 primarily due to depreciation expense on ROU asset increasing from 1.01 million in Fiscal 2021 to 8.33 million in Fiscal 2022.
Other expenses
Our other expenses increased by 4,879.09% from 3.09 million in Fiscal 2021 to 153.85 million in Fiscal 2022, in aggregate, primarily due to increase in technical fee & information technology related expenses from 0.02 million in Fiscal 2021 to 107.69 million in Fiscal 2022. As we scaled the size of operations, we have paid for incremental development of the technology platform that we had licensed for business use, which has led to an increase in technical fee & IT related expense.
Profit before tax
For the reasons discussed above, our profit before tax increased by 228.47% from 270.14 million in Fiscal 2021 to 887.31 million in Fiscal 2022.
Total tax expenses
Our total tax expenses increased by 223.86% from 69.70 million in Fiscal 2021 to 225.74 million in Fiscal 2022 due to an increase in our current tax expenses from 64.51 million in Fiscal 2021 to 217.29 million in Fiscal 2022 caused by an increase in profit before tax.
Profit for the year
For the reasons discussed above, our profit for the year increased by 230.06% from 200.44 million in Fiscal 2021 to 661.57 million in Fiscal 2022.
Liquidity and capital resources
As on September 30, 2023, our Company had a sum of 301.76 million in cash and cash equivalents (balance in current accounts, cash in hand and deposits with banks) and other bank balances of 527.50 million which are deposits with banks with maturity of more than 3 months but less than 12 months.
Historically, our Company has been able to finance the growth of our business through the funds generated from our operations, and we expect to continue to do so. Our Company believes that it will have sufficient capital to meet its anticipated capital requirements for working capital requirements for the 12 months following the date of this Draft Red Herring Prospectus.
CASH FLOWS
The following table sets forth certain information in relation to our cash flows with respect to operating activities, investing activities and financing activities for 6 month period ended September 30, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021 from our Restated Standalone Statement of Cash Flow:
( in million)
| Particulars | 6 month period ended September 30, 2023 | 2023 | Fiscal 2022 | 2021 |
| Net cash generated from (used in) operating activities (A) | 242.69 | 515.83 | 572.16 | 203.88 |
| Net cash generated from (used in) investing activities (B) | (97.94) | (460.81) | (468.69) | (205.72) |
| Net cash generated from (used in) financing activities (C) | (0.09) | (1.15) | (0.23) | (0.04) |
| Net increase / (decrease) in cash and cash equivalent (A+B+C) | 144.66 | 53.86 | 103.23 | (1.88) |
Net cash generated from operating activities
6 months period ended September 30, 2023
Our cash flow from operating activities was 242.69 million during 6 months period ended September 30, 2023.
During the period, our net profit before tax was 1,188.34 million. The primary adjustments consisted of gain on fair valuation of investments measured at FVTPL (i.e., fair value through profit or loss) of 385.04 million, income from derivative instruments of 109.32 million and profit on sale of investments measured at FVTPL (i.e., fair value through profit or loss) of 63.22 million.
Fiscal 2023
Our cash flow from operating activities was 515.83 million during Fiscal 2023. During the year, our net profit before tax was 1,473.84 million. The primary adjustments consisted of gain on fair valuation of investments measured at FVTPL (i.e., fair value through profit or loss) of 139.29 million, income from derivative instruments of 253.02 million and profit on sale of investments measured at FVTPL (i.e., fair value through profit or loss) of 15.24 million.
Fiscal 2022
Our cash flow from operating activities was 572.16 million during Fiscal 2022. During the year, our net profit before tax was 887.31 million. The primary adjustments consisted of loss from derivative instruments of 24.38 million, profit on sale of investments measured at FVTPL (i.e., fair value through profit or loss) of 19.05 million, and loss on sale of fair valuation of investments measured at FVTPL (i.e., fair value through profit or loss) of 2.99 million.
Fiscal 2021
Our cash flow from operating activities was 203.88 million during Fiscal 2021. During the year, our net profit before tax was 270.14 million. The primary adjustments consisted of gain on fair valuation of investments measured at FVTPL (i.e., fair value through profit or loss) of 6.50 million and profit on sale of investments measured at FVTPL
(i.e., fair value through profit or loss) of 1.95 million.
Net cash used in investing activities
6 months period ended September 30, 2023
Our net cash used in investing activities during 6 months period ended September 30, 2023 was 97.94 million primarily due to payment for acquisition of property, plant and equipment, CWIP (i.e., capital works-in progress) and intangible assets of 140.73 million and increase in other bank balances by 155.01 million which was partially offset by proceed from derivative instruments (net) of 109.32 million and sale of current investments of 60.47 million.
Fiscal 2023
Our net cash used in investing activities during Fiscal 2023 was 460.81 million primarily due to purchase of current investments of 185.58 million and increase in other bank balances by 545.01 million which was partially offset by proceed from derivative instruments (net) of 253.02 million.
Fiscal 2022
Our net cash used in investing activities during Fiscal 2022 was 468.69 million primarily due to purchase of current investments of 428.47 million and payment for derivative instruments (net) of 24.38 million.
Fiscal 2021
Our net cash used in investing activities during Fiscal 2021 was 205.72 million primarily due to payment of 210.52 million for acquisition of property, plant and equipment, CWIP (i.e., capital works-in progress) and intangible assets as set off from sale of current investments of 4.18 million.
Net cash used in financing activities
6 months period ended September 30, 2023
Our net cash used in financing activities during 6 month period September 30, 2023, was 0.09 million due to repayment of lease liabilities of 0.07 million and interest payment of 0.02 million.
Fiscal 2023
Our net cash used in financing activities during Fiscal 2023, was 1.15 million due to repayment of lease liabilities of 0.07 million and interest payment of 1.08 million.
Fiscal 2022
Our net cash used in financing activities during Fiscal 2022, was 0.23 million due to repayment of lease liabilities of 0.07 million and interest payment of 0.16 million.
Fiscal 2021
Our net cash used in financing activities during Fiscal 2021, was 0.04 million from interest payment.
SELECT ITEMS FROM OUR RESTATED STANDALONE BALANCE SHEET
Current Assets
(in million)
| Particulars | As at September 30, 2023 | As at March 31, 2023 | As at March 31, 2022 | As at March 31, 2021 |
| Financial Assets | ||||
| (i) Current Investments | 1,187.75 | 799.95 | 459.84 | 15.31 |
| (ii) Cash and cash equivalents | 301.76 | 157.10 | 103.23 | 0.00 |
| (iii) Other Bank Balances | 527.50 | 515.00 | 15.00 | 5.00 |
| (iv) Loans | 622.20 | - | - | - |
| (v) Other financial assets | 28.66 | 227.77 | 81.52 | 0.02 |
| Current tax assets (Net) | 30.58 | 34.84 | 14.04 | 1.07 |
| Other Current Assets | 75.90 | 56.47 | 6.57 | 0.28 |
| Total current assets | 2,774.35 | 1,791.13 | 680.20 | 21.68 |
Current Liabilities
(in million)
| Particulars | As at September 30, 2023 | As at March 31, 2023 | As at March 31, 2022 | As at March 31, 2021 |
| Financial Liabilities | ||||
| (i) Lease liabilities | 0.00 | 0.00 | 0.00 | 0.00 |
| (ii) Trade payables | ||||
| - Total outstanding dues of micro | - | - | - | - |
| enterprises and small enterprises | ||||
| - Total outstanding dues of creditors | 275.08 | 2.18 | 0.73 | 0.07 |
| other than micro enterprises and small enterprises | ||||
| (iii) Other financial liabilities | 3.89 | 3.62 | 1.27 | 4.12 |
| Other current liabilities | 1.76 | 5.65 | 1.32 | 1.30 |
| Provisions | 8.91 | 0.13 | 0.05 | 0.05 |
| Total current liabilities | 289.64 | 11.58 | 3.37 | 5.54 |
PROFORMA CONSOLIDATED FINANCIAL INFORMATION
MATERIAL ACCOUNTING POLICIES TO PROFORMA CONSOLIDATED FINANCIAL INFORMATION
2. Basis of preparation
The proforma consolidated financial information of the Company comprising the proforma consolidated balance sheet as at September 30, 2023, as at March 31, 2023, as at March 31, 2022 and as at March 31, 2021, the proforma consolidated statement of profit and loss for the six months period ended September 30, 2023, for the year ended March 31, 2023, for the year ended March 31, 2022, for the year ended March 31, 2021, read with the notes to the proforma financial information, have been prepared to reflect the acquisition Of Crizac Limited, UK. The proforma consolidated financial information of Company has been compiled based on audited special purpose financial statement as at and for the six months ended September 30, 2023 and as at and for the year ended March 31, 2022 and March 31, 2021 and audited financial statement as at and for the year ended March 31, 2023 of the Parent Company and the special purpose Ind AS Financial Statements of Crizac Limited, UK as at and for the six months ended
September 30, 2023 and as at and for the year ended March 31, 2023, March 31, 2022 and March 31, 2021 . Because of their nature, the proforma consolidated financial information addresses a hypothetical situation and therefore, do not represent the Groups actual consolidated financial position as at September 30, 2023, as at March 31, 2023, as at March 31, 2022 and as at March 31, 2021 nor does it represent the Groups consolidated financial results for the six months period ended September 30, 2023, for the year ended March 31, 2023, for the year ended March 31, 2022, for the year ended March 31, 2021.
The proforma consolidated financial information purports to indicate financial condition and the results of operations that would have resulted had the acquisition been completed at the beginning of the year presented i.e. April 1, 2020, but are not intended to be indicative of expected results or operations in the future periods or the future financial position of the Group. The adjustments made to the proforma consolidated financial information are included in the note 3 below.
The proforma consolidated financial information is based on:
a. the audited special purpose financial statement of the Parent Company as at and for the six months ended September 30, 2023, as at and for year ended March 31, 2022 and March 31, 2021;
b. the audited financial statement of the Parent Company as at and for the year ended March 31, 2023; and
c. the audited special purpose financial statements of Crizac Limited, UK as at and for the six months ended September 30, 2023 and as at and for the year ended March 31, 2023, March 31, 2022 and March 31, 2021.
The proforma adjustments listed in the proforma financial information are based upon available information and assumptions that the management of the Parent Company believes to be reasonable.
3. Proforma adjustments related to acquisition
The following adjustments have been made to the proforma consolidated balance sheet:
(i) Shareholders fund of the Parent Company and Crizac Limited, UK are as under:
(in million)
| Particulars | 01/04/2020 Equity Share Capital | Other Equity |
| Shareholders fund of the Parent Company | 0.20 | 55.86 |
| Shareholders fund of the Crizac Limited, UK | 0.01 | 18.68 |
| Cancellation of Equity of Crizac Limited, UK resulting out of proforma | 0.21 | 74.54 |
| adjustments | (0.01) | (18.68) |
| Net change in shareholders fund | (0.01) | (18.68) |
| Total shareholders funds | 0.20 | 55.86 |
(ii) Provisional purchase price allocation: The provisional allocation of the total purchase price on the basis of the fair value of the assets and liabilities taken over by the Parent Company are as follows:
(in million)
| Particulars | 01/04/2020 |
| Non current assets | - |
| Current assets | 374.50 |
| Total Assets | 374.50 |
| Non current liabilities | - |
| Current liabilities | 355.81 |
| Total Liabilities | 355.81 |
| Net Assets Acquired | 18.69 |
(iii) Goodwill arising on acquisition: While preparing the proforma consolidated balance sheet, the acquisition of Crizac Limited, UK was assumed to have taken place as at April 1, 2020. The goodwill and minority interest has been calculated as follows:
(in million)
| Particulars | 01/04/2020 |
| Consideration transferred (in cash) | 63.20 |
| Net asset acquired as at date of acquisition | 18.69 |
| % Stake acquired | 100% |
| Share of net assets | 18.69 |
| Goodwill arising on account of acquisition | 44.51 |
| Minority interest | - |
(iv) The cash consideration for share purchase of Crizac Limited, UK of 63.20 million is recorded as liability under the following:
(in million)
| Particulars | 01/04/2020 |
| Other Financial Liabilities | 63.20 |
(v) There are no proforma adjustment to proforma consolidated statement of profit and loss.
4. Proforma adjustment related to accounting policies
The proforma consolidated financial information has been compiled to reflect the respective accounting policies adopted by the Company and Crizac Limited, UK and hence, there are no adjustments related to the uniformity of accounting policies in this proforma consolidated financial information.
RESULTS OF OUR OPERATIONS FROM OUR STATEMENT OF PROFORMA CONSOLIDATED PROFITS AND LOSSES
The following table sets forth select financial data from our statement of Proforma Consolidated Profits and Losses for the 6 months period ended September 30, 2023, and for Fiscal 2021, Fiscal 2022 and Fiscal 2023, the components of which are also expressed as a percentage of total income for such years / periods:
| Particulars | 6 months period ended September 30, 2023 |
Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | ||||
| ( million) | As a % of Total Income | ( million) | As a % of Total Income | ( million) | As a % of Total Income | ( million) | As a % of Total Income | |
| Revenue from | 2,628.86 | 81.03% | 4,729.74 | 91.33% | 2,635.35 | 98.79% | 1,110.89 | 99.06% |
| operations | ||||||||
| Other income | 615.42 | 18.97% | 448.73 | 8.67% | 32.29 | 1.21% | 10.51 | 0.94% |
| Total Income | 3,244.28 | 100.00% | 5,178.47 | 100.00% | 2,667.64 | 100.00% | 1,121.40 | 100.00% |
| Cost of services | 1,765.52 | 54.42% | 3,076.12 | 59.40% | 1,523.46 | 57.11% | 769.59 | 68.63% |
| Employee | 24.10 | 0.74% | 40.97 | 0.79% | 20.06 | 0.75% | 25.06 | 2.23% |
| Particulars | 6 months period ended September 30, 2023 |
Fiscal 2023 | Fiscal 2022 | Fiscal 2021 |
||||
| ( million) | As a % of Total Income | (million) | As a % of Total Income | ( million) | As a % of Total Income | ( million) | As a % of Total Income | |
| benefits expense | ||||||||
| Finance costs | 0.06 | 0.00% | 1.15 | 0.02% | 0.23 | 0.01% | 0.05 | 0.00% |
| Depreciation and amortization expense | 12.95 | 0.40% | 21.53 | 0.42% | 9.92 | 0.37% | 2.45 | 0.22% |
| Other expenses | 240.71 | 7.42% | 539.80 | 10.42% | 206.82 | 7.75% | 43.06 | 3.84% |
| Total expenses | 2,043.34 | 62.98% | 3,679.57 | 71.06% | 1,760.49 | 65.99% | 840.21 | 74.93% |
| Profit Before | 1,200.94 | 37.02% | 1,498.90 | 28.94% | 907.15 | 34.01% | 281.19 | 25.07% |
| Tax | ||||||||
| Current tax | 209.27 | 6.45% | 338.06 | 6.53% | 221.06 | 8.29% | 66.61 | 5.94% |
| Income Tax related to earlier years | 0.01 | 0.00% | - | 0.00% | 0.73 | 0.03% | 0.17 | 0.02% |
| Deferred tax | 95.60 | 2.95% | 39.45 | 0.76% | 7.72 | 0.29% | 5.02 | 0.45% |
| Total Tax | 304.88 | 9.40% | 377.51 | 7.29% | 229.51 | 8.60% | 71.80 | 6.40% |
| Expense | ||||||||
| Profit for 6 | 896.06 | 27.62% | 1,121.39 | 21.65% | 677.64 | 25.40% | 209.39 | 18.67% |
| months / year | ||||||||
| Other Comprehensive Income | ||||||||
| Items that will not be subsequently reclassified to profit or loss | ||||||||
| Re-measurement gains/(losses) on defined benefit obligations | (0.05) | (0.00%) | (0.03) | (0.00%) | (0.01) | (0.00%) | - | - |
| Equity Instruments measured at | 30.24 | 0.93% | 51.51 | 0.99% | 47.15 | 1.77% | 134.48 | 11.99% |
| FVTOCI (i.e., fair value through other comprehensive income) | ||||||||
| Income tax effect on above items | (6.71) | (0.21%) | (11.61) | (0.22%) | (10.60) | (0.40%) | (30.34) | (2.71%) |
| Items that will be subsequently reclassified to profit or loss | ||||||||
| Changes in Foreign Currency Translation Reserve | (0.11) | 0.00% | 0.76 | 0.01% | (0.35) | -0.01% | 1.59 | 0.14% |
| Total other comprehensive income/(loss), net of tax | 23.37 | 0.72% | 40.63 | 0.78% | 36.19 | 1.36% | 105.73 | 9.43% |
| Total comprehensive income for the 6 Months/Year | 919.43 | 28.34% | 1,162.02 | 22.44% | 713.83 | 26.76% | 315.12 | 28.10% |
Results of operations for 6 month period ended September 30, 2023 Income
Total Income
Our total income during the period was 3,244.28 million which comprised revenue from operations and other income.
Revenue from operations
Our revenue from operations for the period was 2,628.86 million which comprised revenue from educational consultancy services which comprises commission on student admissions.
Other Income
Our other income for the period was 615.42 million which primarily comprised (i) gain on fair valuation of investments measured at FVTPL (i.e., fair value through profit or loss) of 385.04 million; (ii) income from derivatives instruments of 109.32 million; (iii) profit on sale of investments measured at FVTPL (i.e., fair value through profit or loss) of 63.22 million; (iv) interest income of 36.98 million; (v) dividend income of 14.41 million; and (vi) rent income of 5.71 million.
Expenses
Total Expenses
Our total expenses during the period were 2,043.34 million which comprised (i) cost of services; (ii) employee benefit expenses; (iii) finance costs; (iv) depreciation and amortization expenses; and (v) other expenses.
Cost of services
Our cost of services for the period was 1,765.52 million which comprised payments to our agents. Our cost of services was 54.42% of our total income.
Employee Benefits Expense
Our employee benefits expense for the period was 24.10 million comprising payment of salaries and wages (including remuneration of Directors), contribution to provident and other funds, gratuity expenses and staff welfare expenses.
Finance Costs
Our finance costs were 0.06 million comprising interest expense on lease liabilities and other costs.
Depreciation and Amortisation Expenses
Our depreciation and amortisation expense for the period was 12.95 million comprising depreciation on tangible assets, right of use assets and investment property.
Other Expenses
Our other expense for the period were 240.71 million comprising technical fee and information technology related expenses of 200.04 million, professional fees of 3.34 million, rates and taxes of 2.37 million, corporate social responsibility expenses of 8.75 million, travelling and conveyance expenses of 5.60 million, repair and maintenance of 1.62 million, electricity expenses of 0.65 million, brokerage and other charges of 0.90 million, sales promotion expenses of 12.91 million, telephone expense of 0.41 million, payment to auditors of 0.50 million and miscellaneous expenses of 3.62 million. Our other expenses were 7.42% of our total income.
Total Income Tax Expense
Our total tax expenses for the period were 304.88 million.
Profit for the Period
As a result of the foregoing factors, our profit for the period was 896.06 million.
FISCAL 2023 COMPARED TO FISCAL 2022
Income
Total Income
Our total income increased by 94.12% from 2,667.64 million in Fiscal 2022 to 5,178.47 million in Fiscal 2023, due to an increase in our revenue from operations and other income as discussed below.
Revenue from operations
Our revenue from operations increased by 79.47% from 2,635.35 million in Fiscal 2022 to 4,729.74 million in
Fiscal 2023, due to an increase in the revenue from our education consultancy services and increase in commission from university.
Other income
Our other income increased by 1,289.69% from 32.29 million in Fiscal 2022 to 448.73 million in Fiscal 2023, primarily due to an increase in income from derivative instruments from nil in Fiscal 2022 to 253.02 million in
Fiscal 2023, gain on fair valuation of investment measured at FVTPL (i.e., fair value through profit or loss) increased from nil in Fiscal 2022 to 139.29 million in Fiscal 2023. This gain in fair valuation of investment measured at FVTPL was due to the increase in the market value of investment in equity shares. Further, our interest income increased from 4.92 million in Fiscal 2022 to 22.82 million in Fiscal 2023 due an increase in cash and cash equivalents and other bank balances.
Expenses
Total Expenses
Our total expenses increased by 109.01% from 1,760.49 million in Fiscal 2022 to 3,679.57 million in Fiscal 2023, due to an increase in various expenses as discussed below.
Cost of services
Our cost of services increased by 101.92% from 1,523.46 million in Fiscal 2022 to 3,076.12 million in Fiscal 2023, commensurate with the increase in our revenues.
Employee benefit expenses
Our employee benefits expense increased by 104.24% from 20.06 million in Fiscal 2022 to 40.97 million in Fiscal 2023 due to an increase in payment of salary and wages from 19.17 million in Fiscal 2022 to 38.45 million in Fiscal 2023 and increase in contribution to provident and other funds from 0.81 million in Fiscal 2022 to 2.18 million in Fiscal 2023. The increase in payment of salary and wages and contribution to provident and other funds was due. to an increase in the number of employees from 28 as on March 31, 2022 to 115 as on March 31, 2023 to cater to the expanding scale of operations.
Finance Costs
Our finance costs increased by 393.16% from 0.23 million in Fiscal 2022 to 1.15 million in Fiscal 2023 primarily due to interest on the amount of shortfall in payment of advance income tax which increased from nil in Fiscal 2022 to 1.01 million in Fiscal 2023.
Depreciation and Amortisation Expenses
Our depreciation and amortisation expenses increased by 116.99% from 9.92 million in Fiscal 2022 to 21.53 million in Fiscal 2023 primarily due to increase in depreciation and amortisation expense on right of use assets (i.e. lease of buildings) which increased from 8.33 million in Fiscal 2022 to 14.50 million in Fiscal 2023 and increase in depreciation and amortisation expense on tangible assets which increased from 1.59 million in Fiscal 2022 to
5.88 million in Fiscal 2023 and the depreciation on investment property which was nil in Fiscal 2022 and increased to 1.15 million in Fiscal 2023.
Other expenses
Our other expenses increased by 161.00% from 206.82 million in Fiscal 2022 to 539.80 million in Fiscal 2023, in aggregate, primarily due to increase in technical fee and information technology related expenses from 160.42 million in Fiscal 2022 to 495.07 million in Fiscal 2023 due to increase in the scale of our operations and the payments for further development of the technology platform that we had licensed for business use.
Profit before tax
For the reasons discussed above, our profit before tax increased by 65.23% from 907.15 million in Fiscal 2022 to 1,498.90 million in Fiscal 2023.
Total tax expenses
Our total tax expenses increased by 64.49% from 229.51 million in Fiscal 2022 to 377.51 million in Fiscal 2023 due to an increase in our current tax expenses from 221.06 million in Fiscal 2022 to 338.06 million in Fiscal 2023 caused by an increase in profit before tax.
Profit for the year
For the reasons discussed above, our profit for the year increased by 65.49% from 677.64 million in Fiscal 2022 to
1,121.39 million in Fiscal 2023.
FISCAL 2022 COMPARED TO FISCAL 2021
Income
Total Income
Our total income increased by 137.89% from 1,121.40 million in Fiscal 2021 to 2,667.64 million in Fiscal 2022, due to an increase in our revenue from operations and other income as discussed below.
Revenue from operations
Our revenue from operations increased by 137.23% from 1,110.89 million in Fiscal 2021 to 2,635.35 million in
Fiscal 2022, due to an increase in the revenue from our education consultancy services.
Other income
Our other income increased by 207.29% from 10.51 million in Fiscal 2021 to 32.29 million in Fiscal 2022, primarily due to an increase in dividend income from 0.17 million in Fiscal 2021 to 8.12 million in Fiscal 2022 and the profit on sale of investments measured at FVTPL (i.e., fair value through profit or loss) increased by 876.92% from 1.95 million in Fiscal 2021 to 19.05 million in Fiscal 2022. The profit on sale of investments measured at
FVTPL increased due to enhancement in the market value of investments in equity shares.
Expenses
Total Expenses
Our total expenses increased by 109.53% from 840.21 million in Fiscal 2021 to 1,760.49 million in Fiscal 2022, due to an increase in various expenses as discussed below.
Cost of services
Our cost of services increased by 97.96% from 769.59 million in Fiscal 2021 to 1,523.46 million in Fiscal 2022, commensurate with the increase in our revenue from education consultancy services.
Employee benefit expenses
Our employee benefits expense decreased by 19.96% from 25.06 million in Fiscal 2021 to 20.06 million in Fiscal 2022 due to a decrease in payment of salary and wages from 24.40 million in Fiscal 2021 to 19.17 million in Fiscal
2022. The decrease in payment of salary and wages was despite increase in number of employees from 25 in Fiscal 2021 to 28 Fiscal 2022. This was led by a change in mix of such employees which led to a decrease in overall average salaries.
Finance Costs
Our finance costs increased by 350.00% from 0.05 million in Fiscal 2021 to 0.23 million in Fiscal 2022 primarily due to an increase in interest expense on overdraft facilities and interest expense on lease liabilities incurred.
Depreciation and Amortisation Expenses
Our depreciation and amortisation expenses increased by 305.39% from 2.45 million in Fiscal 2021 to 9.92 million in Fiscal 2022 primarily due to depreciation expense on right of use assets increasing from 1.01 million in Fiscal
2021 to 8.33 million in Fiscal 2022.
Other expenses
Our other expenses increased by 380.30% from 43.06 million in Fiscal 2021 to 206.82 million in Fiscal 2022, in aggregate, primarily due to increase in technical fee and information technology related expenses from 39.40 million in Fiscal 2021 to 160.42 million in Fiscal 2022 and loss from derivative instruments from nil in Fiscal 2021 to
24.38 million in Fiscal 2022. The increase in technical fee and information technology related expenses was in line with the increase in the scale of our operations and due to payments for further development of the technology platform that we had licensed for business use.
Profit before tax
For the reasons discussed above, our profit before tax increased by 222.62% from 281.19 million in Fiscal 2021 to 907.15 million in Fiscal 2022.
Total tax expenses
Our total tax expenses increased by 219.65% from 71.80 million in Fiscal 2021 to 229.51 million in Fiscal 2022 due to an increase in our current tax expenses from 66.61 million in Fiscal 2021 to 221.06 million in Fiscal 2022 caused by an increase in profit before tax.
Profit for the year
For the reasons discussed above, our profit for the year increased by 223.63% from 209.39 million in Fiscal 2021 to 677.64 million in Fiscal 2022.
Liquidity and capital resources
As on September 30, 2023, we had a sum of 712.71 million in cash and cash equivalents (balance in current accounts, cash on hand and deposits with bank with an original maturity of less than 3 months), and other bank balances (i.e. deposits with banks with maturity of less than 12 months) of 527.50 million.
Historically, we have been able to finance the growth of our business through the funds generated from our operations, and we expect to continue to do so. We believe that we will have sufficient capital to meet our anticipated capital requirements for our working capital requirements for the 12 months following the date of this Draft Red Herring Prospectus.
SELECT ITEMS FROM OUR PROFORMA BALANCE SHEET
Current Assets
(in million)
| Particulars | As at September 30, 2023 | As at March 31, 2023 | As at March 31, 2022 | As at March 31, 2021 |
| Financial Assets | ||||
| (i) Current Investments | 1,187.75 | 799.95 | 459.84 | 15.31 |
| (ii) Trade Receivables | - | 269.43 | 310.07 | 389.20 |
| (iii) Cash and cash equivalents | 712.71 | 589.84 | 353.98 | 57.89 |
| (iv) Other Bank Balances | 527.50 | 515.00 | 15.00 | 5.00 |
| (v) Loans | 622.20 | - | - | - |
| (vi) Other financial assets | 28.66 | 227.77 | 81.52 | 0.02 |
| Current tax assets (Net) | 30.58 | 34.84 | 14.04 | 1.07 |
| Other Current Assets | 88.59 | 56.47 | 6.57 | 0.28 |
| Total current assets | 3,197.99 | 2,493.30 | 1,241.02 | 468.77 |
Current Liabilities
(in million)
| Particulars | As at September 30, 2023 | As at March 31, 2023 | As at March 31, 2022 | As at March 31, 2021 |
| Financial Liabilities | ||||
| (i) Borrowings | - | - | - | 5.05 |
| (ii) Lease Liabilities | 0.00 | 0.00 | 0.00 | 0.00 |
| (iii) Trade payables | ||||
| - Total outstanding dues of micro enterprises and small enterprises | - | - | - | - |
| - Total outstanding dues of creditors other than micro enterprises and small enterprises | 543.79 | 528.12 | 427.50 | 392.66 |
| (iv) Other financial liabilities | 67.09 | 66.82 | 69.21 | 68.28 |
| Other current liabilities | 92.06 | 124.81 | 90.63 | 21.45 |
| Current tax liabilities | 2.14 | 4.67 | 3.88 | 3.17 |
| Provisions | 8.91 | 0.13 | 0.05 | 0.05 |
| Total current liabilities | 713.99 | 724.55 | 591.27 | 490.66 |
COMMITMENTS AND CONTINGENCIES
Our Company did not have any capital commitments or contingent liabilities as on September 30, 2023, March 31, 2023, March 31, 2022 and March 31, 2021.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, derivative instruments, swap transactions or relationships with affiliates or other unconsolidated entities or financial partnerships that would have been established for the purpose of facilitating off-balance sheet arrangements.
FINANCIAL INDEBTEDNESS
As of September 30, 2023, we had total lease liabilities of 0.83 million.
Related Party Transactions
We have engaged in the past, and may engage in the future, in transactions with related parties, including with our
Directors and Group Companies on an arms length basis, in compliance with applicable law. Such transactions could be for remuneration to directors, loans given, commission payable and interest income receivable. For further details of our related party transactions, please see ‘Restated Standalone Financial Information - Note 44 - Related Party Disclosures pursuant to Indian Accounting Standard - 24 on page 237, and ‘Proforma Consolidated Financial Information - Note 44 - Related Party Disclosures pursuant to Indian Accounting Standard - 24 on page 279.
Summary of reservations or qualifications or matters of emphasis or adverse remarks of auditors
Our Restated Standalone Financial Information and Proforma Consolidated Financial Information do not contain any qualifications or reservations.
Change in accounting policies
Other than as disclosed in the Restated Standalone Financial Information, there have been no changes in accounting policies in the last three Fiscals.
Quantitative and Qualitative Disclosures About Market Risk
Our business operations activities are exposed to a variety of financial risks. The key financial risks include credit risk, liquidity risk, foreign exchange risk, interest risk and other price risk. Our Companys Senior Management oversees the management of these risks. Our Companys management is responsible for formulating an appropriate financial risk governance framework for our Company and for periodically reviewing the same. The Senior Management ensures that financial risks are identified, measured and managed in accordance with our Companys policies and risk objectives. Our Board reviews and agrees policies for managing each of these risks, which are summarized below:
Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Our Company is exposed to credit risk from our operating activities (primarily trade receivables).
Liquidity risk
Liquidity risk is the risk that our Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. Our Companys objective is to maintain optimum levels of liquidity at all times to meet its cash and collateral requirements. Our Companys current committed lines of credit are sufficient to meet its short to medium/ long term expansion need and our company monitors rolling forecasts of its liquidity requirements to ensure it has sufficient cash to meet operational needs.
Market Risk
Foreign Exchange Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Our Companys business is transacted in Indian currency and foreign currencies. Our
Companys exposure to the risk of changes in foreign exchange rates relates primarily to our Companys operating activities. Our Company has a treasury department which monitors the foreign exchange fluctuations on the continuous basis and advises the management of any material adverse effect on our Company.
Interest Risk
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. Our Company has interest rate risk exposure mainly from changes in rate of interest on borrowings with floating interest rates. Our Company does not have any significant interest rate risk on its current borrowing due to its short tenure.
Other Price Risk
Our Company is exposed to equity price risk, which arises from equity shares measured at fair value through profit or loss. To spread the concentration of funds as well as risks, investments in equity shares are spread across multiple instruments to ensure credit worthiness of the investment and availability of such surplus invested funds to meet any unforeseen situation that may arise, in accordance with the investment and trading options evaluated within the parameters set by our Board.
Competitive Conditions
We operate in a competitive environment. For further information, please see ‘Risk Factors, ‘Industry Overview,
‘Our Business - Competition on pages 31, 115, and 164, respectively.
Seasonality / Cyclicality of business
Our Company operates in the educational consultancy services industry and as a service, we assist in enrolling students to global institutions of higher education. Enrolment into global educational institution is seasonal in nature and typically, enrolments are undertaken during specified intakes. Key intakes which are currently relevant to us occur during the months of January/ February, April/ May and September/ October. As a result of such seasonal variations, our sales and results of operations may vary for every quarter and may not be relied upon as indicators of the sales or results of operations of other fiscal quarters, or of our future performance. We have experienced, and expect to continue to experience, significant variability in our total revenue from operations, operating cash flows, operating expenses and net revenues on a seasonal basis. Please see, ‘Risk Factor - Our business operations are seasonal in nature.
Unusual or infrequent events or transaction
Except as set out in this Draft Red Herring Prospectus, there have been, to our knowledge, no unusual or infrequent events or transactions that have in the past, or may in the future, affect our business operations or future financial performance.
Segment Reporting
Our business activity primarily falls within a single business segment, i.e., educational consultancy services and we do not follow any segment reporting.
Extent to which material increases in net sales or revenue are due to increased sales volume, and increased sales prices
Not applicable.
Total turnover of each major industry segment in which our Company operated
Our Company operates only in the Education Consultancy Services industry and our entire revenue from operations is generated from this industry.
Significant dependence on a single or few suppliers or Customers
While revenue from any particular institution of higher education may vary between financial reporting periods depending on the nature and term of on-going contracts, historically, we have been dependent on a limited set of global institutions of higher education for a majority of our revenue from operations. During the 6 months ended September 30, 2023, and in Fiscal 2023, Fiscal 2022 and Fiscal 2021, our revenue from our 10 top global institutions of higher education, based on our Proforma Consolidated Financial Information was 2,377.30 million, 3,897.00 million, 2,011.01 million and 831.04 million, constituting 90.43%, 82.39%, 76.31% and 74.81% of our revenue from operations, respectively.
Significant economic changes that materially affect or are likely to affect income from continuing operations
Our business has been subject, and we expect it to continue to be subject, to significant economic changes that materially affect or are likely to affect income from continuing operations identified above in this chapter. For further details see ‘Risk Factors and ‘Industry Overview, on pages 31 and 115, respectively.
Known Trends or Uncertainties
Our business has been, and we expect will continue to be, subject to significant economic changes arising from the trends identified above under ‘Principal factors affecting our financial condition and results of operations and the uncertainties described in the section ‘Risk Factors on page 31. To our knowledge, except as has been described in this Draft Red Herring Prospectus, there are no known trends or uncertainties, that have or had or are expected to have a material adverse impact on our revenues from continuing operations.
Future Relationships between Costs and Income
Other than as described in ‘Risk Factors, ‘Our Business and ‘Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 31, 149 and 284, respectively, to our knowledge, there are no known factors that may have a material adverse impact on our business, results of operations and financial condition.
New Services or Business Segments
Except as disclosed in this Draft Red Herring Prospectus, we have not announced and do not expect to announce any new services or business segments in the near future.
Significant Developments after September 30, 2023 that may affect our results of operations
Except as disclosed in this Draft Red Herring Prospectus, there are, to our knowledge, no significant developments after the date of the last financial statements contained in this Draft Red Herring Prospectus which materially and adversely affects, or is likely to affect, our operations or profitability, or the value of our assets, or our ability to pay our material liabilities within the next 12 months.
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