india exposition mart ltd Management discussions
The following discussion is intended to convey the managements perspective on our financial condition and results of operations for the six months ended September 30, 2021 and Fiscals 2021, 2020 and 2019, and should be read in conjunction with our Restated Financial Statements. The Restated Financial Statements included in this Draft Red Herring Prospectus are prepared and presented in accordance with Ind AS, in each case restated in accordance with the requirements of the SEBI
ICDR Regulations and the Guidance Note on "Reports in Company Prospectus (Revised 2019)" issued by the ICAI (the
"Guidance Note"). Ind AS differs in certain respects from Indian GAAP, IFRS and US GAAP and other accounting principles with which prospective investors may be familiar. Please also see "Risk Factors Significant differences exist between Ind AS and other accounting principles, such as Indian GAAP, US GAAP and IFRS, which investors may be more familiar with and may consider material to investors assessments of our financial condition" on page 48.
Our fiscal year ends on March 31 of each year, and references to a particular fiscal year are to the twelve months ended March 31 of that year. Unless otherwise stated, or the context otherwise requires, the financial information included herein is based on our Restated Financial Statements for six months period ended September 30, 2021, and for the years ended March 31, 2021, 2020 and 2019 and included in this Draft Red Herring Prospectus.
This discussion contains 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, such as the risks and uncertainties set forth in the chapters entitled "Risk Factors" and "Forward-Looking Statements" on pages 29 and 16, respectively.
Unless otherwise indicated, industry data in this section section is obtained or extracted from the Mordor Report, VMR Report and EAC Report. The Mordor Report and the VMR Report have been commissioned by us exclusively in connection with the Offer for a fee. The EAC Report has not been commissioned by us exclusively for the purpose of this Offer. We have paid for obtaining and using the EAC Report in connection with this Offer.
Unless otherwise indicated, all financial, operational, industry information and other related information included herein with respect to any particular year refers to such information for the relevant Fiscal. For further details, see "Certain Conventions, Use of Financial Information and Market Data and Currency of Presentation" and "Risk Factors" on pages 13 and 29.
Overview
We are one of the leading venue planners and providers in India, that offers technology driven, world- class facilities and safety standards suitable for hosting international business-to- business exhibitions, conferences, congresses, product launches, and promotional events, amongst others. (Source: VMR Report)
We are amongst the top 4 Indias largest integrated exhibitions and conventions venue. We are located in Greater Noida, which is a prominent MICE destination in India and our exhibition centres and mart are spread across 58 acres of land, with a buildup complex of 2,34,453.29 square meters area, offering a combination of trade mart with exhibition and convention facilities. As of December 31, 2021, our Expo Centre and Mart has an exhibition area of 73,308 square meters. We are also engaged in managing and organising conventions, seminars, meetings, ramp shows and gala nights. On an average we managed and organised approximately170 events (including trade events) in the last five Fiscals and since April 1, 2021 up to December 31, 2021. We have also ventured into the virtual event route by managing and organising Indian Handicrafts and Gifts Fair- Delhi in July 2020, the first ever virtual show for exports market in India, with 4,150 selected business buyers, 1,300 sellers spread over a period of seven days. As of December 31, 2021, we have organised 24 virtual events spread over 113 days to ensure our clients are able to maintain continuity in outreach to their respective audience.
As on December 31, 2021, we have an order book aggregating to a value of 1,215.23 million from different exhibitions.
We have approximately 15 years of operating experience in the management and organization of exhibitions and trade fairs. We have also managed and organized various exhibitions and conventions including Indian Handicrafts and Gifts Fair, Elecrama, Auto Expo The Motor Show, CPHI&P-MEC and Print Pack, which are some of the most prominent events in India.
We have been the venue of choice for various ministries of the Government of India, statutory corporations, companies and renowned global agencies including Ministry of Finance, Ministry of Commerce & Industry, Ministry of Environment, Forest and Climate Change, Ministry of Health and Family Welfare, Export Promotion Council for Handicrafts, International Garment Fair Association, Trade Promotion Council of India, Indian Printing Packaging & Allied Machinery Manufactures Association (IPAMA), Messe Frankfurt Trade Fairs India Private Limited, Messe Muenchen India Private Limited, Dreamz India and Nurnberg Messe India Private Limited.
The India event and exhibition market was valued at USD 3,326.04 million in 2020, and it is expected to reach USD 6,740.63 million by 2026, at a CAGR of 12.91% during the period of 2021-2026. (Source: Mordor Report) We believe that with our sector expertise and operating history we are well positioned to capitalise on the growth in India event and exhibition market.
Our Expo Centre & Mart is strategically located at Greater Noida which is a prominent MICE destination in India. It is a world class venue with facilities for all kinds of business events in a covered area of 2,34,453.29square meters. As of December 31, 2021, India Expo Centre & Mart houses over 800 permanent show rooms of Indian exporters, and has 14 multi-purpose halls, 29 meeting rooms, 4 open areas and 4 speciality restaurants. It also has buyers lounge, foreign exchange outlet, logistic support, extensive parking and modern security and safety features. The entire facility is supplied by IBMS 3.00 MW Solar system and HVAC enabling us to undertake energy saving effectively and ensuring environmental safety. We have received ISO 9001:2015, 14001:2015 and 45001:2018 certifications for standalone MICE venue.
Our Company has over the years received various awards and recognitions. Some of our key recent awards and recognition are:
| S. Name of the Award | Date of Awards |
| 1. Winner in Indias Leading Exhibition Venue Category at EEA 2020 | 2020 |
| 2. Satte Award 2020 for Best Exhibition Venue | 2020 |
| 3. Brand Excellence Award in MICE Industry by ET Now | 2019 |
| 4. Brand Excellence in Hospitality Sector by ABP News | 2019 |
| 5. SATTE Initiative Recognition Exhibition Venue of the Year- SATTE Awards 2019 by UBM India | 2019 |
| 6. Best Stand-Alone Convention Centre-National Tourism Award 2017-18 by Ministry of Tourism, Government of India. | 2019 |
| 7. Best MICE Venue- 14th Annual International Hospitality India & Travel Awards- 2018 by DLK Publications Pvt Ltd. | 2018 |
| 8. Best MICE Venue of India by TravTour MICE Guide | 2018 |
| 9. Winner for "Big Venue" Category Exhibition Excellence Awards 2017 by Exhibition Showcase | 2017 |
| 10 Best Exhibition Centre by Safari India South Asia Travel | 2016 |
We also have memberships with leading global and national industry associations like UFI- The Global Association of the Exhibitions Industry, Confederation of Indian Industry, International Congress and Convention Association, India Convention Promotion Bureau, Entertainment Management Association, Indian Exhibition Industry Association, Federation of Indian Chambers of Commerce and Industry, PHD Chamber of Commerce and Industry and the Associate Chambers of Commerce and Industry of India. Memberships with such leading global and national industry associations enable us to organise and manage certain government of India events. A few such events organised and manged by us include 6th Regional Comprehensive Economic Partnership and United Nations Convention to Combat Desertification, Conference of Parties-14. Further, our membership in these associations help us leverage our visibility amongst our clients and provides us with a platform for networking and consensus building within and across sectors.
We also organise exhibitions such as India International Hospitality Expo and Ayuryog Expo which have been developed by us. India International Hospitality Expo was launched in August 2018 with the intention of being a preeminent and one of the most important hospitality sector show in India. India International Hospitality Expo currently includes participants from hospitality sector, food, beverages and allied products and services sectors. Ayuryog Expo was a platform created by us to enable stakeholders in sharing experience and knowledge on ayurveda, yoga and naturopathy.
For the six months ended September 30, 2021, Fiscal 2021, Fiscal 2020 and Fiscal 2019, our total revenue was 106.64 million, 133.04 million 1,544.06 million and 1,226.04 million, respectively.
Significant Factors Affecting Our Financial Condition and Results of Operations
Impact of the COVID-19 pandemic
Since first being reported in December 2019, the outbreak of COVID-19 has spread globally and the virus has mutated several times, though the vaccines developed have generally reduced infection rates and fatalities. The global impact of the COVID-19 pandemic has been rapidly evolving and public health officials and governmental authorities, including in India, where a significant majority of our operations are based, have responded by taking measures, such as prohibiting people from assembling in large numbers, instituting quarantines, restricting travel, issuing "stay-at-home" orders and restricting the types of businesses that may continue to operate, among many others. On March 14, 2020, India declared COVID-19 as a "notified disaster" for the purposes of the Disaster Management Act, 2005 and imposed a nationwide lockdown from March 25, 2020, which has also impacted business activities across the industry in which we and our customers operate. The nationwide lockdown lasted until May 31, 2020 and has since been extended periodically in varying degrees by state governments and local administrations. The lifting of the lockdowns across various regions had been regulated with limited and progressive relaxations being granted for movement of goods and people in other places and calibrated re-opening of businesses and offices. Similarly, we resumed our business activities on a gradual basis in line with the prevailing guidelines issued by the governmental authorities at that time. From March 2021 onwards, due to a "second wave" owing to increase in the number of daily COVID-19 cases, several state governments in India re-imposed lockdowns, curfews and other restrictions to curb the spread of the virus. This "second wave" and its associated lockdowns have affected us in terms of reducing our sales, revenues and store expansion plans, as well as disrupting our supply chains. More recently, the country experienced a sharp increase in cases on account of certain highly contagious variants of COVID-19, which also led to partial closure of certain organizations. There may be instances of other variants of COVID-19 in the future, which may have an adverse effect on our financial condition. We have monitored and are monitoring the situation closely and is operating its activities with the required workforce as permitted by governmental authorities. As a result of the detection of new mutated strains and subsequent waves of COVID-19 infections in several states in India as well as throughout various parts of the world, it is anticipated that we may be subject to further reinstatements of lockdown protocols or other restrictions, which may adversely affect our business and operations.
The COVID-19 pandemic has affected and may continue to affect our business, financial condition, results of operations and cash flows in a number of ways such as Government measures related to the COVID-19 pandemic, including restrictions on holding large-scale fairs and exhibitions including, travel and business operations, and advising or requiring individuals to limit their gathering and time outside of their homes, thereby affecting demand for our services, resulting in a significant decrease in the number of exhibitions that happen at our premises, as well as a reduction in revenue from operations. Our income from space rent for fairs and exhibitions decreased sharply to 47.78 million for the six months ended September 30, 2021 and 45.32 million for Fiscal 2021, from 1,363.05 million for Fiscal 2020 and 1,006.48 million for Fiscal 2019. Further, our income from conferences and other services for fair and exhibitions also saw a sharp decrease to 1.12 million for the six months ended September 30, 2021 and 6.60 million for Fiscal 2021, from 90.45 million for Fiscal 2020 and 128.57 million for Fiscal 2020, while we continued to incur costs for operating and maintaining our premises (for hosting exhibitions and fairs), as well as other fixed expenses such as housekeeping and technical expenses, repair and maintenance expenses, employee costs and other fixed costs. Accordingly, our profit for the year declined from 448.99 million in Fiscal 2020 to ( 164.55) million in Fiscal 2021, which was a decrease of 136.65%.
According to the Indian Exhibitions Industry Association (IEIA), Indias exhibition sector lost an estimated 3,570 crore on account of COVID-19. Numerous trade shows were cancelled for safety. According to IEIA President S Balasubramanian, as of April 2020, since the COVID-19 outbreak, over 90 shows have been reported to be either postponed or cancelled due to the pandemic, as the organized sector conducted annually about 550 shows enabling trade/business transactions of over 3,00,000 crore, cancellation took a significant toll. For instance, in April 2020, Export Promotion Council for Handicrafts (EPCH) cancelled the spring edition of the IHGF (Indian Handicrafts and Gift Fair) Delhi fair, which was the worlds largest congregation of handicrafts and gifts items. The event expected 7,000 overseas volume buyers and over 3,200 small and medium handicraft manufacturers and exporters as exhibitors from various parts of the country. According to IEIA, most shows were postponed or cancelled during the first and second quarter of 2020, causing tremendous impact and shutdown of the economy.
(Source: Mordor Report).
The full extent to which the COVID-19 pandemic, or any future pandemic or widespread public health emergency, impacts our business, financial condition and results of operations is uncertain. Such effects will depend on numerous evolving factors that we may not be able to accurately predict, including the scope, severity, and duration of the pandemic; actions taken by governments, businesses and individuals in response to the pandemic; disruptions or restrictions on our employees, ability to work, operate and travel as well as their business continuity plans; and any extended period of remote work arrangements. We continue to closely monitor developments relating to the COVID-19 pandemic and the effects they have on future economic conditions and on our business and operations closely. Any intensification of the COVID-19 pandemic or any future outbreak of another highly infectious or contagious disease may materially and adversely impact our business, financial condition, results of operations and cash flows.
Macroeconomic conditions and demographic patterns
Macroeconomic conditions in India are likely to affect exhibition and events markets, and consequently our results of operations. Exhibition and events are some of the key enablers and catalysts of the economy. With India being one of the fastest-growing economies, the government initiatives to help attract enterprises in different industries are expected further to increase the need for events and exhibitions in the country. For instance, according to Make in India, among the chosen 190 countries, India ranked at 63rd position in ease of doing business rank 2020, which was at 142 out of 190 in 2014, a significant improvement of 79 positions. India has a huge consumer market, and it is offering an unparalleled opportunity for enterprises to invest and expand in the country. According to the India Brand Equity Foundation and Retailers Association of India, the retail market size across India is expected to reach USD 1,750 billion by 2026. The countrys consumption and demand are increasing rapidly. For instance, according to IBEF, in May 2021, the countrys consumer durables output increased by 98.20%, significantly higher than that of a 70.30% decline during the same period in 2020. Such developments are expected to positively impact the industry-wide push to increase communication via different trade shows and events. The India event and exhibition market was valued at USD 3,326.04 million in 2020, and it is expected to reach USD 6,740.63 million by 2026, at a CAGR of 12.91% during the period of 2021-2026. (Source: Mordor Report). We believe that with our sector expertise and operating history we are well positioned to capitalise on the growth in India event and exhibition market. Some of the other general macro-economic factors that can affect our business include general levels of GDP growth and growth in personal income in India, demographic conditions and population dynamics, political measures and general political stability, fiscal and monetary dynamics such as volatility in interest rates, foreign exchange rates and inflation rates, and regulatory developments. Any decline in the macroeconomic conditions in India may have an adverse impact on our business, financial condition, results of operations and cash flows.
Infrastructure and onsite amenities including ability to provide a bouquet of services required for organizing exhibitions
We are strategically located at Greater Noida which is a prominent MICE destination in India. Much of our popularity as a preferred organizer for hosting large format exhibitions can be attributed to the geographical position and infrastructure of Greater Noida and its surrounding region. India Expo Centre & Mart is well connected by road, metro, rail and air. Our amenities and services at the India Expo Centre & Mart includes 360 degree road access with 12 entry and exit gates, large open exhibition space with load bearing and other support facility for holding heavy machinery, helipad, banking and foreign exchange services, high security centrally air-conditioned halls, housekeeping, internet, security, ATM, onsite bank, guest house, cafeteria, uninterrupted power supply, fire safety, parking, multiple branding storage and warehousing, in-house parking for 2,000 cars with adjacent parking for 10,000 Cars and 24 X 7 top class security surveillance. We also have the ability to host multiple events and large conferences simultaneously. Our large open exhibition space enables us to organise and manage construction related shows. We have also received ISO 9001:2015, 14001:2015 and 45001:2018 certifications for standalone MICE venue. Our income from space rent for fairs and exhibitions was 47.78 million for the six months ended September 30, 2021, 45.32 million for Fiscal 2021 and 1,363.05 million for Fiscal 2020 and 1,006.48 million for Fiscal 2019. We plan to continue to focus on and enhance our infrastructure and onsite amenities including ability to provide a bouquet of services required for organizing exhibitions. If Greater Noida loses its position as a prominent MICE destination in India due to other more developed locations gaining prominence as MICE destinations, it may have an adverse impact on our business, financial condition, results of operations and cash flows.
Strong relationships with exhibition organisers
As on December 31, 2022, we have 24 venue booking contracts/confirmation letters/advances/assurances with exhibition organisers for Fiscal 2022-23. We believe that our investment in the infrastructure and services provided at the India Expo Centre & Mart, together with the quality of services it offers to the exhibition organisers, have contributed to developing long-term relationships between our Company and certain exhibition organisers. These long-term relationships and contracts which typically cover two or more editions of exhibitions enable us to generate revenue streams which are predictable and allow us to plan future expenditure and investment, and have an impact on our business, financial condition, results of operations and cash flows.
Significant Accounting Policies
The accounting policies, as set out in the following paragraphs of this note, have been consistently applied to all the periods presented in this restated financial information.
Current versus non-current classification
The Group presents assets and liabilities in balance sheet based on current/non-current classification. 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 other assets are classified as non-current.
A liability is classified as 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 Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Group has identified twelve months as its operating cycle.
Measurement of fair values
The Groups 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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group has taken into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and / or disclosure purposes in these financial statements is determined on such a basis.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the assets or liabilities either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Trade receivables are initially recognised when they are originated. All other financial assets and liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.
A financial instrument is any contract that gives rise to a financial asset or a financial liability or equity instrument of the Group.
i. Recognition and initial measurement
A financial asset or financial liability is initially measured at fair value plus, for an item not recorded at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
ii. Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is measured at:
amortised cost, or;
Fair value through other comprehensive income (FVOCI) or;
Fair value through Profit or Loss (FVTPL)
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
the asset is held within a business model whose objective is to hold assets to collect 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 on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investments fair value in OCI (designated as FVOCI equity investment). This election is made on an investment-by-investment basis.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL.
Financial assets: Business model assessment
The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether managements strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;
how the performance of the portfolio is evaluated and reported to the Groups management;
the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
how managers of the business are compensated e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Groups continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, ‘principal is defined as the fair value of the financial asset on initial recognition. ‘Interest is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:
contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate, including variable interest rate features; prepayment and extension features; and
terms that limit the Groups claim to cash flows from specified assets (e.g. non-recourse features).
Financial assets: Subsequent measurement and gains and losses
Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are not reclassified to profit or loss.
Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
iii. Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Group enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Group also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.
iv. Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
Property Plant and Equipments (PPE):
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labour, any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in Statement of profit and loss.
i. Transition to Ind AS
On transition to Ind AS, the Group has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2020, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property, plant and equipment.
ii. Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.
iii. Depreciation
Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual values over their estimated useful lives using the written down value method, and is generally recognised in the statement of profit and loss.
The estimated useful lives of items of property, plant and equipment for the current and comparative periods are useful Life as per Schedule II of Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under:
Leasehold Improvements are amortised over the period of lease or 5 years, whichever is lower.
Assets individually costing up to INR 5,000 are fully depreciated on purchase.
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. The management believes that the useful lives as given above best represent the period over which management expects to use these assets.
Intangible assets
i. Intangible Assets
Intangible Assets are capitalised on the basis of costs incurred to acquire and bring the intangible asset to use. These are stated at acquisition costs, net of accumulated amortization and accumulated impairment losses, if any.
ii. Subsequent Expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in Statement of profit and loss as incurred.
iii. Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at 1 April 2020, measured as per the previous GAAP, and use that carrying value as the deemed cost of such intangible assets.
iv. Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values over their estimated useful lives using the straight-line method, and is included in amortisation in the statement of profit and loss.
Software and website are amortized on straight-line basis over a period of five years.
Amortisation method, useful lives and residual values are reviewed at the end of each financial year and adjusted if appropriate.
Impairment
i. Impairment of Financial assets
The Group recognises loss allowances for expected credit losses on financial assets measured at amortised cost.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is ‘credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
significant financial difficulty of the borrower;
a breach of contract such as a default or being past due for 90 days or more;
the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise; it is probable that the borrower will enter bankruptcy or other financial reorganisation; or the disappearance of an active market for a security because of financial difficulties.
The Group measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.
Loss allowances for trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115 - Revenue from contracts with customers are always measured at an amount equal to lifetime expected credit losses.
Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Group is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Groups historical experience and informed credit assessment and including forward-looking information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 90 days past due.
The Group considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held).
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive).
Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Groups procedures for recovery of amounts due.
ii. Impairment of non-financial assets
The Groups non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assets recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit and loss.
In respect of assets for which impairment loss has been recognised in prior periods, the Group reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Employee Benefits
i. Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid e.g., under short-term cash bonus, if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
ii. Defined contribution plans
In accordance with Provident Fund and Miscellaneous Provisions Act, 1952, employees of the Group are entitled to receive benefits under the provident fund, a defined contribution plan, in which, both the employee and the Group contribute monthly at a determined rate. These contributions are made to a recognised provident fund and administered by Regional Provident Fund Commissioner. The employee contributes 12% of their basic salary and the Group contributes an equal amount. The Group has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in Statement of Profit and Loss in the periods during which the related services are rendered by employees.
iii. Defined benefit plan
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. Every employee is entitled to a benefit equivalent to fifteen days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable at the time of separation from the Group or retirement, whichever is earlier.
The Groups net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan (‘the asset ceiling).
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in Statement of Profit and Loss
iv. Other long-term employee benefits
Compensated Absences: Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.
Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the year end are treated as other long term employee benefits. The Groups liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/ gains are recognised in the Statement of Profit and Loss in the year in which they arise.
Provisions (other than for employee benefits)
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle 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 recognised as finance cost.
Revenue recognition:
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
However, Goods and Services Tax (GST) is not received by the Company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognized.
The Company recognized revenue when (or as) a performance obligation was satisfied, i.e. when ‘control of the goods and services underlying the particular performance obligation were transferred to the customer.
Further, revenue from sale of goods and services is recognized based on a 5-Step Methodology which is as follows: Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligation in contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Revenue is measured based on the transaction price, which is the consideration, as specified in the contract with the customer. Revenue excludes taxes collected from customers on behalf of the government which are levied such as Goods and Services Tax.
The performance obligation is satisfied and recognized as revenue overtime, if one of the following criteria is met:
i) The performance does not create assets with an alternate use and has an enforceable right to payment for performance completed to date.
ii) The performance creates or enhances an asset that the customer controls as the asset is created or enhanced.
iii) The customer simultaneously receives and consumes the benefits provided.
For performance obligations where one of the above conditions are not met, revenue is recognized at the point in time at which the performance obligation is satisfied. When performance obligation is satisfied by delivering the promised goods or services it creates a contract-based asset on the amount of consideration earned by the performance. Where the amount of consideration received from a customer exceeds the amount revenue recognized this give rise to a contract liability.
Sale of services
Revenue from fairs and exhibitions primarily comprises income from exhibitors. Exhibition revenue is recognised on occurrence of the exhibition.
The Company charges maintenance from the mart owners to whom marts were sold and transferred in earlier years. Revenue from mart maintenance is recognized on accrual basis in accordance with the substance of the relevant agreement.
Revenue from conferences and other services is recognized on accrual basis in accordance with the substance of the relevant agreement.
Other Income
Interest income is recognized on time proportion basis taking into account the amount outstanding and applicable interest rates.
Revenue from rentals is recognized on accrual basis in accordance with the substance of the relevant agreement.
Revenue from electricity and other charges recovered from the lessees are recognized on accrual basis in the period in which related expenses are incurred.
The Company charges mart transfer charges for granting of permission on transfer of mart to new owners. Mart transfer charges are recognised in the year in which the said permission is granted for transfer of mart.
Income from vocational courses is recognised on time proportion basis for the duration of the course.
Recognition of interest income or expense and dividend income
Interest income or expense is recognised using the effective interest method.
The ‘effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:
the gross carrying amount of the financial asset; or the amortised cost of the financial liability.
In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset or to the amortised cost of the liability.
Dividend income is recognised in Statement of Profit and Loss on the date on which the Groups right to receive payment is established.
Leases i. Determining whether an arrangement contains a lease
The Group assesses whether a contract contains a lease at the inception of the 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 Group assesses whether: (1) the contract involves the use of an identified asset, (2) the Group has substantially all of the economic benefits from the use of the asset through the period of the lease, and (3) the Group has the right to direct the use of the asset.
ii. Assets held under leases
At the date of commencement of the lease, the Group recognizes a ROU asset and a corresponding lease liability for all lease arrangements under which it is a lessee, except for short-term leases and low value leases.
For short-term leases and low value leases, the Group recognizes the lease payments as an expense on a straight-line basis over the term of the lease. The lease arrangements include options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities include these options when it is reasonably certain that they will be exercised.
The ROU assets are initially recognized 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 incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the future lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Groups incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest.
Income Tax
Income tax comprises current and deferred tax. It is recognised in Statement of Profit and Loss except to the extent recognised directly in equity or in other comprehensive income.
i. Current Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
ii. Deferred Tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are recognised/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity and it is intended to settle the current tax assets and liabilities on a net basis or simultaneously.
Earnings Per Share:
Basic earnings per equity share are arrived at based on net profit or loss after tax for the period/ year divided by the weighted average number of equity shares outstanding during the year.
Diluted earning per equity share is determined after adjusting the above for dilutive potential equity shares.
Cash and Cash Equivalents:
In the cash flow statement, cash and cash equivalents include cash in hand, balance with banks, demand deposits with banks and other short-term highly liquid investments with original maturities of three months or less.
Contingent liabilities
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote.
Share Capital
Equity shares are classified as equity. Incremental costs directly attributable to the issuance of new equity shares are recognized as a deduction from equity.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM).
Foreign currency transactions and translations
The functional currency of the Group is Indian Rupees which represents the currency of the primary economic environment in which it operates.
Transactions in currencies other than the Groups functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are translated using mean exchange rate prevailing on the last day of the reporting period. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction.
Treatment of exchange differences
Exchange differences on monetary items are recognized in the Statement of profit and loss in the period in which they arise.
Government grants
Government grants related to depreciable fixed assets are recognized with deferred income approach.
Grants that compensate the Company for expenses incurred are recognized as income in the period in which the related costs are incurred.
Principal components of our Income and Expenses
Income
Revenue from Operations
Our total income comprises revenue from operations and other income. Revenue from operations constitutes the sale of services which primarily constitutes income from maintenance services and income from space rent for fair and exhibitions.
Other Income
Other income constitutes the interest income, rental income, electricity and other charges recovered, government grant for depreciable assets etc.
Expenses
Employee Benefit Expense
Employee benefit expenses primarily include salaries and wages, contribution to provident and other funds and staff welfare expenses.
Finance Costs
Finance cost includes interest paid on term loans, interest on finance lease and interest on others.
Depreciation and Amortization expenses
Depreciation and amortization expenses primarily include depreciation of property, plant and equipment, depreciation of right-of-use assets and amortisation of other intangible assets.
Other Expenses
Other expenses primarily comprise of fairs and exhibitions expenses, housekeeping and technical expenses, power and fuel expenses, marketing expenses, legal and professional expenses and advertisement and publicity expenses.
Tax Expense
Our tax expense or credit for the period represents the tax payable on the current periods taxable income adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
Profit/(loss) for the year
Profit/(loss) for the year represents profit after tax or loss for the year.
Results of Operations
The following table sets forth select financial data from our restated statement of profit and loss for the six months ended September 30, 2021 and for Fiscals 2021, 2020, and 2019, the components of which are also expressed as a percentage of total income for such periods.
| Particulars | Six months ended September 30, 2021 |
Fiscal 2021 |
Fiscal 2020 |
Fiscal 2019 |
||||
| (in million, except percentages) | ||||||||
| Income | ||||||||
| Revenue from Operations | 106.64 | 84.88% | 133.04 | 65.27% | 1,544.06 | 95.34% | 1,226.04 | 95.16% |
| Other Income | 18.99 | 15.12% | 70.79 | 34.73% | 75.41 | 4.66% | 62.30 | 4.84% |
| Total Income | 125.63 | 100.00% | 203.83 | 100.00% | 1,619.47 | 100.00% | 1,288.34 | 100.00% |
| Expenses | ||||||||
| Employee Benefits Expenses | 19.22 | 15.30% | 46.31 | 22.72% | 63.99 | 3.95% | 53.25 | 4.13% |
| Finance Costs | 5.48 | 4.36% | 13.42 | 6.58% | 22.55 | 1.39% | 29.23 | 2.27% |
| Depreciation and Amortization | 55.91 | 44.50% | 128.42 | 63.00% | 96.09 | 5.93% | 100.89 | 7.83% |
| Expenses | ||||||||
| Other Expenses | 112.80 | 89.79% | 220.74 | 108.30% | 821.65 | 50.74% | 686.70 | 53.30% |
| Total Expenses | 193.41 | 153.95% | 408.89 | 200.60% | 1,004.28 | 62.01% | 870.08 | 67.53% |
| Profit/Loss Before Tax | (67.78) | (53.95%) | (205.06) | (100.60%) | 615.19 | 37.99% | 418.27 | 32.47% |
| Tax Expenses | ||||||||
| Current tax | - | - | - | - | 156.92 | 9.69% | 126.37 | 9.81% |
| Tax for earlier years | 2.31 | 1.84% | 7.16 | 3.51% | 1.09 | 0.07% | 0.02 | 0.00% |
| Deferred tax expense / (credit) | (16.78) | (13.36%) | (47.68) | (23.39%) | 8.18 | 0.51% | (4.39) | (0.34%) |
| Total Tax Expense | (14.48) | (11.51%) | (40.51) | (19.88%) | 166.20 | 10.26% | 122.00 | 9.47% |
| Profit/(Loss) After Tax | (53.30) (42.44%) |
(164.55) | (80.72%) | 448.99 | 27.73% | 296.26 | 23.00% | |
Six Months Ended September 30, 2021
Income
Our total income was 125.63 million in the six months ended September 30, 2021, which primarily included revenue from operations of 106.64 million and other income of 18.99 million.
Revenue from operations
Our revenue from operations was 106.64 million in the six months ended September 30, 2021, which primarily included income from space rent for fair and exhibitions of 47.78 million and income from maintenance services of 57.74 million, amongst others.
Other Income
Our other income was 18.99 million in the six months ended September 30, 2021, which primarily included interest income of 5.70 million, electricity and other charges recovered of 4.36 million and government grant for depreciable assets of 4.78 million, amongst others.
Expenses
Our total expenses were 193.41 million, representing 153.95% of our total income for the six months ended September 30, 2021 which primarily included employee benefit expenses, finance costs, depreciation and amortization expenses and other expenses.
Employee Benefit Expense
Our employee benefit expense was 19.22 million for the six months ended September 30, 2021 which primarily included salaries and wages, contribution to provident and other funds and staff welfare expenses. As of September 30, 2021, our total on-roll employee count was 56.
Finance Costs
Our finance costs was 5.48 million for the six months ended September 30, 2021, which primarily includes interest paid on term loans, interest on finance lease and interest on others.
Depreciation and Amortization Expense
Our depreciation and amortization expense was 55.91 million for the six months ended September 30, 2021,which primarily included depreciation of property, plant and equipment and depreciation of right-of-use assets.
Other Expenses
Our other expenses was 112.80 million for the six months ended September 30, 2021,which primarily included expenses such as fairs and exhibitions expenses aggregating to 29.44 million, housekeeping and technical expenses aggregating to 24.21 million, power and fuel expenses aggregating to 16.27 million, marketing expenses aggregating to 3.05 million, legal and professional expenses aggregating to 12.61 million and advertisement and publicity expenses aggregating to 2.68 million.
Tax Expense
Our tax expense was (14.48) million for the six months ended September 30, 2021, which was attributable to tax for earlier years of 2.31 million offset by deferred tax credit of (16.78) million.
Profit/ Loss for the Six Months Ended September 30, 2021
As a result of the foregoing factors, our loss for the period was 53.30 million.
Fiscal 2021 Compared to Fiscal 2020
Income
Our total income decreased significantly by 87.41% to 203.83 million for Fiscal 2021 from 1,619.47 million for Fiscal 2020, primarily due to a decrease in our revenue from operations and other income as discussed below:
Revenue from operations
Our revenue from operations decreased significantly by 91.38% to 133.04 million for Fiscal 2021 from 1,544.06 million for Fiscal 2020, primarily due to the effect of the COVID-19 pandemic on our business and the temporary cancellations /postponement of fairs and exhibitions due to lockdowns imposed in various parts of India.
Other Income
Our other income decreased by 6.12% to 70.79 million in Fiscal 2021 from 75.41 million in Fiscal 2020, primarily as a result of reduction in interest on fixed deposits and rental income on the rented premises.
Expenses
Our total expenses decreased significantly by 59.28% to 408.89 million for Fiscal 2021 from 1,004.28 million for Fiscal 2020 due to the effect of the COVID-19 pandemic on our business and the temporary cancellations /postponement of fairs and exhibitions due to lockdowns imposed in various parts of India.
Employee Benefit Expenses
Our employee benefit expenses decreased by 27.62% to 46.31 million for Fiscal 2021 from 63.99 million for Fiscal 2020 as a result of decrease in the number of employees and annual increments.
Finance Costs
Our finance costs decreased by 40.48% to 13.42 million for Fiscal 2021 from 22.55 million for Fiscal 2020 due to due to reduction of principal amount as repayment of term loan by 63.30 million.
Depreciation and Amortisation Expenses
Our depreciation and amortization expenses increased by 33.64% to 128.42 million for Fiscal 2021 from 96.09 million for Fiscal 2020 due to addition of fixed assets in the last month of Fiscal 2020.
Other Expenses
Our other expenses accounted for 108.30% and 50.74% of our total income for Fiscal 2021 and 2020, respectively.
Our other expenses decreased significantly by 73.13% to 220.74 million for Fiscal 2021 compared to 821.65 million for Fiscal 2020, in aggregate, primarily due to adverse impact of COVID-19 as resources were required for lower usage.
Tax Expense
Our total tax expense were (40.51) million for Fiscal 2021 compared to 166.20 million for Fiscal 2020, primarily due to losses incurred by the Company as the adverse impact of COVID-19.
Profit/Loss for the Year
As a result of the foregoing factors, our loss for Fiscal 2021 was (164.55) million compared to profit of 448.99 million for Fiscal 2020.
Fiscal 2020 Compared to Fiscal 2019
Income
Our total income increased by 25.70% to 1,619.47 million for Fiscal 2020 from 1,288.34 million for Fiscal 2019, primarily due to an increase in our revenue from operations and other income as discussed below:
Revenue from operations
Our revenue from operations increased by 25.93% to 1,544.06 million for Fiscal 2020 from 1,226.04 million for Fiscal 2019, primarily due to growth of our revenue from space rent and services from fair and exhibitions. This has been a key driver of our growth.
Other Income
Our other income increased by 21.04% to 75.41 million in Fiscal 2020 from 62.30 million in Fiscal 2019, primarily as a result of increase in the amount of fixed deposits held by the Company with Scheduled banks.
Expenses
Our total expenses increased by 15.42% to 1,004.28 million for Fiscal 2020 from 870. 08 million for Fiscal 2019 due to due to increase in fair related expenses pertaining to increased number of exhibitions.
Employee Benefit Expenses
Our employee benefit expenses increased by 20.16% to 63.99 million for Fiscal 2020 from 53.25 million for Fiscal 2019 as a result of increase in the number of employees and annual increments.
Finance Costs
Our finance costs decreased by 22.85% to 22.55 million for Fiscal 2020 from 29.23 million for Fiscal 2019 due to due to reduction of principal amount as repayment of term loan by 85.50 million.
Depreciation and Amortisation Expenses
Our depreciation and amortization expenses decreased marginally by 4.75% to 96.09 million for Fiscal 2020 from 100.89 million for Fiscal 2019 due to written down method of depreciation.
Other Expenses
Our other expenses accounted for 50.74% and 53.30% of our total income for Fiscal 2020 and 2019, respectively.
Our other expenses increased by 19.65% to 821.65 million for Fiscal 2020 compared to 686.70 million for Fiscal 2019, in aggregate, primarily due to increase in variable expenses such as fair and exhibition expenses and power expenses.
Tax Expense
Our total tax expense were increased by 36.22% to 166.20 million for Fiscal 2020 compared to 122.00 million for Fiscal 2019, primarily due to increase in taxable profits of the Company.
Profit for the Year
As a result of the foregoing factors, our profit increased by 51.55% for Fiscal 2020 to 448.99 million compared to profit of 296.26 million for Fiscal 2019.
Liquidity and Capital Resources
Historically, we have been able to finance our capital requirements and the expansion of our business and operations through a combination of funds generated from our operations, equity infusions from shareholders and debt financing, and we expect to continue to do so. Our primary capital requirements are working capital for our operations and capital expenditures.
We believe that after taking into account the expected cash to be generated from our business and operations, the Net Proceeds from the Fresh Issue and the proceeds from our existing bank loans, we will have sufficient capital to meet our anticipated capital requirements for our working capital and capital expenditure requirements for the 12 months following the date of this Draft Red Herring Prospectus.
For the six months ended September 30, 2021 and Fiscals 2021, 2020 and 2019, we had cash and cash equivalents (comprising of cash on hand and balances with banks) of 34.66 million, 19.79 million, 107.41 million and 55.31 million, respectively as per our Restated Financial Statements; and trade receivables of 117.82 million, 112.05 million, 151.51 million and 165.10 million, respectively as per our Restated Financial Statements.
Further, for the six months ended September 30, 2021 and Fiscals 2021, 2020 and 2019, we had current borrowings of 34.49 million, 16.83 million, 66.37 million and 66.37 million, respectively as per our Restated Financial Statements; and other current liabilities of 123.89 million, 121.74 million, 132.70 million and 130.04 million, respectively as per our Restated Financial Statements.
In order to mitigate the impact of the COVID-19 pandemic on our operations, we have proactively taken various steps such as reducing some of our administrative and other fixed expenses and arranging for additional liquidity through working capital loans to manage our expenses and liquidity.
Cash Flows Based on Our Restated Financial Statements
The table below summarizes the statement of cash flows, as per our restated cash flow statements, for the periods indicated:
| Six months ended September 30, 2021 | Fiscal 2021 | Fiscal 2020 | Fiscal 2019 | |
| (in million) | ||||
| Net cash generated from operating activities | 10.20 | 29.68 | 504.35 | 430.27 |
| Net cash used in investing activities | (52.30) | (51.64) | (258.06) | (240.78) |
| Net cash (used in)/generated from financing activities | 56.97 | (65.66) | (194.20) | (147.05) |
| Cash and cash equivalents at the end of the year/ period | 34.66 | 19.79 | 107.40 | 55.31 |
Net cash generated from operating activities
Our net cash generated from operating activities was 10.20 million during the six months ended September 30, 2021. This was primarily due to a loss of 67.78 million, depreciation and amortization expense of 55.91 million, finance cost of 5.48 million and provision for expected credit loss on trade receivables of 7.08 million. Our adjustments for changes in working capital comprised primarily increase in trade receivables of (13.00) million, decrease in other financial assets of 27.72 million, increase in trade payables of 8.98 million and decrease in financial liabilities of (7.04) million.
Our net cash generated from operating activities was 29.68 million for Fiscal 2021. This was primarily due to a loss of 205.06 million, depreciation and amortization expense of 128.42 million, finance cost of 13.42 million and interest income of (32.82) million. Our adjustments for changes in working capital comprised primarily decrease in trade receivables of 40.32 million, decrease in other financial assets of 181.77 million, decrease in trade payables of (63.33) million and decrease in financial liabilities of (24.03) million.
Our net cash generated from operating activities was 504.35 million for Fiscal 2020. This was primarily due to a profit of 615.19 million, depreciation and amortization expense of 96.09 million, finance cost of 22.55 million and interest income of (33.06) million. Our adjustments for changes in working capital comprised primarily decrease in trade receivables of 5.76 million, increase in other financial assets of (84.33) million, increase in other assets of (10.86) million and increase in financial liabilities of 41.70 million.
Our net cash generated from operating activities was 430.27 million for Fiscal 2019. This was primarily due to a profit of 418.27 million, depreciation and amortization expense of 100.89 million, finance cost of 29.23 million and interest income of (23.56) million. Our adjustments for changes in working capital comprised primarily increase in trade receivables of (9.89) million, increase in trade payables of 27.58 million and increase in other liabilities of 42.31 million.
Net cash used in investing activities
Our net cash used in investing activities was 52.30 million during the six months ended September 30, 2021. This was primarily attributable to purchase of property, plant and equipment of 81.72 million, partially offset by proceeds from bank deposits of 20.76 million, rental income of 2.76 million and interest received of 5.90 million.
Our net cash used in investing activities was 51.64 million for Fiscal 2021. This was primarily attributable to purchase of property, plant and equipment of 163.56 million, partially offset by proceeds from bank deposits of 70.41 million, rental income of 6.16 million and interest received of 35.35 million.
Our net cash used in investing activities was 258.06 million for Fiscal 2020. This was primarily attributable to purchase of property, plant and equipment of 370.39 million, partially offset by proceeds from bank deposits of 71.18 million, rental income of 8.64 million and interest received of 32.31 million.
Our net cash used investing activities was 240.78 million for Fiscal 2019. This was primarily attributable to purchase of property, plant and equipment of 26.57 million and purchase of bank deposits of 242.90 million, partially offset by rental income of 5.70 million and interest received of 22.33 million.
Net cash (used in)/ generated from financing activities
Our net cash generated from financing activities was 56.97 million for the six months ended September 30, 2021. This was primarily attributed to proceeds from term loans of 66.70 million, partially offset by repayment of term loans of 11.72 million.
Our net cash used in financing activities was 65.66 million for Fiscal 2021. This was primarily attributed to repayment of term loans of 63.30 million and interest paid of 5.89 million.
Our net cash used in financing activities was 194.20 million for Fiscal 2020. This was primarily attributed to repayment of term loans of 85.50 million, interest paid of 13.56 million, and dividend paid of 77.70 million.
Our net cash used in financing activities was 147.05 million for Fiscal 2019. This was primarily attributed to repayment of term loans of 75.90 million, interest paid of 21.24 million, and dividend paid of 37.00 million.
Indebtedness
As of September 30, 2021, we had non-current borrowings of 47.86 million and current borrowings of 34.49 million, with a debt to equity ratio of 0.06:1.00as per our Restated Financial Statements due to prepayment of term loans. Some of our financing agreements include various conditions and covenants that require us to obtain lender consents prior to carrying out certain activities and entering into certain transactions. We cannot assure you that we will be able to obtain these consents and any failure to obtain these consents could have significant adverse consequences for our business. For further details, see "Risk
Factors Our inability to meet our obligations, including financial and other covenants under our debt financing arrangements could adversely affect our business, results of operations, cash flows and financial condition" on page 39. For further information on our agreements governing our outstanding indebtedness, see "Financial Indebtedness" on page 277.
Contractual Obligations, Contingent Liabilities and Commitments
Contractual Obligations
We have continuing payment obligations under borrowings, commercial contracts and finance leases. The following table sets forth our contractual obligations as of September 30, 2021:
| Particulars | Carrying Amount | Less than 1 Year | 1-2 Years | 2-3 years | More than 3 years | Total |
| (in million) | ||||||
| Borrowings | 82.35 | 40.82 | 50.71 | - | - | 91.53 |
| Lease liabilities | 105.94 | 6.74 | 7.10 | 7.10 | 2352.14 | 2,373.08 |
| Trade payables | 46.44 | 46.44 | - | - | - | 46.44 |
| Other financial liabilities | 37.16 | 37.16 | - | - | - | 37.16 |
Contingent Liabilities
As of September 30, 2021, our Restated Financial Statements disclosed the following contingent liabilities that have not been provided for were as follows:
| Details | Six months period ended September 30, 2021 | Fiscal 2021 | Fiscal 2020 | Fiscal 2019 |
| (in million) | ||||
| Service Tax Liabilities (FY 2005-2006 & 2006-2007) | Nil | Nil | Nil | 28.10 |
| Income Tax Liability (FY 2008-2009) | 15.37 | 15.00 | 14.26 | 13.52 |
| Work Contract Tax (FY 2006 - 2007) | 0.75 | 0.75 | 0.75 | 0.75 |
Commitments
The following table sets forth our commitments as of September 30, 2021 as per our Restated Financial Statements:
| Particulars | (in million) |
| Estimated amount of contracts remaining to be executed on capital account and not provided for | 364.25 |
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.
Related Party Transactions
We have engaged in the past, and may engage in the future, into various transactions with related parties. All the transactions with related parties are in compliance with the Companies Act, 2013, SEBI Listing Regulations, relevant accounting standards and other statuary compliances. For further information relating to our related party transactions, see Restated Financial Statements Note 39 Related Party Transactions" on page 216.
Quantitative and Qualitative Analysis of Market Risks
We are exposed to various types of market risks during the course of our business. Market risk is the risk of loss arising out of adverse changes in market prices, including interest rate risk, commodity risk, credit risk, inflation risk and foreign currency exchange risk. Market risk is attributable to all market risk sensitive financial instruments including investments, foreign currency payables and debt. We are exposed to various types of market risks, in the normal course of business. Some of these are mentioned below.
Market Risk
Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices such as foreign exchange rates, interest rates and equity prices will affect our income or the value of our holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. We are exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of investments. Thus, exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency. Our interest rate risks are covered by interest rate swaps. The objective of market risk management is to avoid excessive exposure in foreign currency revenues and costs.
Credit Risk
We are subject to the risk that our counterparties under various financial or customer agreements will not meet their obligations. If our customers do not pay us promptly, or at all, it may affect our working capital cycle and/or we may have to make provision for or write-off on such amounts.
Liquidity Risk
Liquidity risk is the risk that we will face in meeting our obligations associated with our financial liabilities. Our approach to managing liquidity is to ensure that we will have sufficient funds through an adequate amount of credit facilities to meet our obligations when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our reputation. A material and sustained shortfall in our cash flow could undermine our credit rating and impair investor confidence. We regularly monitor the rolling cash flow forecasts and maturity profiles of our financial assets and liabilities to ensure we have sufficient cash on an on-going basis to meet operational needs. This monitoring includes financial ratios and takes into account the accessibility of cash and cash equivalents and additional undrawn financing facilities.
Inflation
Inflationary factors such as increases in the input costs and overhead costs may adversely affect our operating results. There may be time lag in recovering the inflation impact from our customer and we may not be able to recover the full impact of such inflation. While we believe inflation has not had any material impact on our business and results of operations, inflation generally impacts the overall economy and business environment and hence could affect us.
Capital Expenditures
Our historical capital expenditures were, and we expect our future capital expenditures to be, primarily for building infrastructure for fair and exhibition services as the same is our key growth driver and major source of revenue. In the six months ended September 30, 2021 and Fiscals, 2021, 2020 and 2019, our capital expenditures (comprising of building, plant and equipment, furniture and fixtures, office equipment and computers were 51.71 million, 12.93 million, 262.30 million, 14.14 million, respectively as per our Restated Financial Statements.
Significant Economic Changes
Other than as described above under the heading titled "Significant Factors Affecting Our Financial Condition and Results of Operations," and the section titled "Our Business" on page 135 and to the knowledge of our management, there are no other significant economic changes that materially affect or are likely to affect income from continuing operations.
Unusual or Infrequent Events of Transactions
Except as described in this Draft Red Herring Prospectus, there have been no other events or transactions that, to our knowledge, may be described as "unusual" or "infrequent".
Known Trends or Uncertainties
Our business has been affected and we expect will continue to be affected by the trends identified above in the heading titled
"Significant Factors Affecting Our Financial Condition and Results of Operations" and the uncertainties described in the section titled "Risk Factors" beginning on page 29. To our knowledge, except as described or anticipated in this Draft Red Herring Prospectus, there are no known factors which we expect will have a material adverse impact on our revenues or income from continuing operations.
Future Relationship Between Costs and Revenues
Other than as described in this Draft Red Herring Prospectus, including disclosure regarding the impact of COVID-19 on our operations, to the knowledge of our management, there are no known factors that might affect the future relationship between costs and revenues.
New Products or Business Segments
Other than as described in "Our Business" on page 135 of this Draft Red Herring Prospectus, there are no new products or business segments in which we operate.
Competitive Conditions
We expect competition in our industry from existing and potential competitors to intensify. Please refer to "Our Business", "Industry Overview" and "Risk Factors" on pages 135, 102 and 29, respectively for further information on our industry and competition.
Significant dependence on single or few suppliers or customers
Given the nature of our business operations, we do not believe our business is dependent on any single or a few suppliers or customers.
Seasonality of Business:
Our business is not subject to seasonal variations.
Qualifications, reservations or adverse remarks included by Auditors
For details in relation to the emphasis of matter included in our Restated Financial Statements, see Risk Factors Our Statutory Auditor have included certain emphasis of matters/ other matters paragraphs in the audit reports" on page 30 and "Restated Financial Statements" on page 178.
Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices
Changes in revenue in the last three Fiscals are as detailed above in "Results of Operations Fiscal 2021 compared to Fiscal 2020" and "Results of Operations Fiscal 2020 compared to Fiscal 2019" above on page 268.
Recent Accounting Pronouncements
On March 24, 2021, the Ministry of Corporate Affairs ("MCA") through a notification, amended Schedule III of the Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from April 1, 2021. The amendments require to disclose additional information in financial statements, including lease liabilities, additional disclosures in the statement of changes in equity, specified format for disclosure of shareholding of promoters, specified format for aging schedule of trade receivables, trade payables, capital work-in-progress and intangible assets under development, use of funds borrowed from banks and financial institutions if they have not been used for the specific purposes for which they were borrowed, specific disclosure under "additional regulatory requirement", corporate social responsibility, undisclosed income and crypto or virtual currency. For details, please see "Restated Financial Statements" on page 178 of this Draft Red Herring Prospectus. The amendments are extensive, and we will evaluate the same to give effect to them as required by law.
Significant Developments After September 30, 2021
To our knowledge, except as stated below and as otherwise disclosed in this Draft Red Herring Prospectus, no circumstances have arisen since September 30, 2021, the date of the last financial statements contained in this Draft Red Herring Prospectus, to the date of filing of this Draft Red Herring Prospectus, which materially and adversely affect, or are likely to affect, our trading or profitability, or the value of our assets, or our ability to pay our liabilities within the next 12 months.
Incorporation of Joint Venture by Subsidiary Company ‘Expo Digital India Private Limited
Our Subsidiary ‘Expo Digital India Private Limited has incorporated on October 29, 2021, a Joint Venture Company ‘Expo Bazaar USA, Inc. in United States of America ("USA") (hereinafter known as "JV") to do business in the State of Texas. This is a joint venture company with M/s Nextt Consumer Products Company Inc. to provide B2B digital marketplace. The JV so proposed would primarily operate business in USA, apart from other parts of the globe as may be agreed.
Incorporation of Step-Down Subsidiary Company by Subsidiary Company ‘Expo Digital India Private Limited:
Our Subsidiary ‘Expo Digital India Private Limited has incorporated with effective date as November 10, 2021, a Step Down Subsidiary Company ‘Expo Digital SCM Inc. in United States of America ("USA") (hereinafter known as "SDS") with a principle business to work as Supply Chain Management Company for goods exported from India by the vendors and liaise with 3PL in USA for logistics, warehousing and fulfilment of goods exported to USA.
Approval of employee stock option plan:
Our Company has approved employee stock option plan namely ‘India Exposition Mart Ltd Employee Stock Option Plan 2021 ("ESOP 2021" / "Plan") which was approved by the Board of Directors in its meeting held on September 29, 2021, and subsequently approved by the Shareholders in its Extraordinary General Meeting held on October 25, 2021. The Board of Directors has approved 18,50,000 number of options (sub-divided into 37,00,000 number of options on Subdivision of equity shares as per para 4 below) under ESOP 2021 to the eligible employees, in one or more tranches, exercisable into not more than 18,50,000 Equity Shares (sub-divided into 37,00,000 equity shares on sub-division of equity shares as per para 4 below). Each such option confers a right upon such employee to apply for one Equity Share, in accordance with the terms and conditions as may be decided under the ESOP 2021. The ESOP 2021 contemplates a statutory minimum vesting period of one year to maximum of four years from the date of grant of options. The Nomination and Remuneration Committee administers the ESOP 2021 and is designated by the Company as the compensation committee as envisaged under the SEBI SBEB Regulations.
Sub-Division of Share Capital:
Sub division of each equity share of the Company of face value 10 each into 2 (Two) equity shares of face value 5 each has been approved by the Board of Directors vide resolution passed in the board of directors meeting held on September 29, 2021 which was subsequently approved by the Members of the Company vide Ordinary Resolution passed in the Extraordinary General Meeting held on October 25, 2021 and subsequently, the record date was approved by the board of directors in the minutes of board of directors meeting held on December 22, 2021 whereby members have received the equity shares as on the record date i.e. January 14, 2022. Subsequent to the subdivision of equity shares, the Authorised Share Capital consisting of 10,00,00,000 Equity Shares of Face Value of 10 each has been sub-divided into 20,00,00,000 Equity Shares of Face Value of 5 each from the record date without altering the aggregate amount of share capital.
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www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Risk Disclosure on Derivatives
- 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
- On an average, loss makers registered net trading loss close to Rs. 50,000.
- Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
- Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
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2024, IIFL Securities Ltd. All Rights Reserved
Follow us on
ATTENTION INVESTORS
- Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
- KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
- No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."
www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Risk Disclosure on Derivatives
- 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
- On an average, loss makers registered net trading loss close to Rs. 50,000.
- Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
- Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
We are ISO 27001:2013 Certified.
This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.