Notes to Financial Statements for the year ended March 31, 2016 Note 1 Significant Accounting Policies The Financial Statements have been brpared on the basis of historical cost convention on the basis of a going concern following the accrual system of accounting and comply with the applicable mandatory accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013. Use of Estimates: The brparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities as on the date of the financial statements and the reported amounts of revenues and expenses during the period reported. Although, these estimates are based upon management's knowledge of current events and actions, actual results could differ from those estimates and revisions, if any, are recognized in the current and future periods. a) Revenue Recognition Revenue comprises sale of rooms, food and beverages, allied services relating to hotel operations, including net income from telecommunication services and management and operating fees. Revenue is recognised upon rendering of the service. b) Export Benefit Entitlement Benefits arising in the nature of Duty Free Scrips are recognised upon the actual utilisation of Duty credit Scrips for the purchase of Fixed Assets and Inventories and are adjusted against the cost of the related assets. Benefits under Services Exports from India Scheme will be recognised in the year in which the license is received. c) Fixed Assets Fixed Assets are stated at cost less accumulated debrciation/ amortisation. Costs include all expenses directly attributable to bring the assets to its brsent location and condition. None of the Assets were revalued during the course of the year. d) Debrciation/Amortisation Debrciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Debrciation on tangible fixed assets has been provided on the straight-line method as per the useful life brscribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been re-assessed as under based on technical evaluation, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc. The component accounting to the extent applicable has considered in providing debrciation. Asset description Useful life Plant and machinery 10- 20 Years Electrical installations and equipment 20 years Hotel Wooden Furniture 15 years EndUser devices-Computers,Laptops,etc 6 years Asset costing less than Rs.5000 4 years In respect of improvements to leasehold brmises debrciation is provided at the rates arrived at based on the number of years of the total lease or at the rates arrived at based on useful life whichever is earlier. Intangible assets - computer software including licenced software is being amortised over a period of 6 years. e) Investments Long Term Investments are carried at cost. Provision for decline in the value, other than temporary, has been made wherever necessary. Current Investments are carried at lower of cost and market value / net asset value. f) Inventories Inventories are valued at cost on weighted average basis. g) Transactions in Foreign Exchange Foreign Currency transactions are recorded at the exchange rate brvailing on the date of the transactions. Monetary items denominated in foreign currency and outstanding at the Balance Sheet date are translated at the exchange rate brvailing on the date of balance sheet date. Exchange differences arising on settlement and conversion of foreign currency transactions are recognised as income or expense in the period in which they arise, except in cases where they relate to long term monetary items utilized for acquisition of qualifying assets. Consequent to the notification No.F.No.17/133/2008 - CL V dated 29th December, 2011 revising Accounting Standard (AS) 11 "The Effects of Changes in Foreign Exchange Rates", the company has exercised the option in terms of paragraph 46A. Accordingly the exchange differences arising on settlement / translation of long term monetary items utilised for acquisition of debrciable fixed assets are adjusted to the carrying cost of fixed assets. Non-monetary items denominated in foreign currency are carried at the exchange rate in force at the date of the transaction. h) Employee Benefits In respect of defined contributions schemes, contributions to Provident Fund and Family Pension are charged to profit and loss account as incurred. In respect of defined benefit schemes, the post - retirement benefits such as gratuity, leave encashment and other retirement benefits are accounted for based on valuations, as at the balance sheet date, made by an independent actuary.Gratuity in respect of certain employees is covered by Group Gratuity scheme with the Life Insurance Corporation of India and the balance employees contribution is made to a recognised fund and is managed by the TATA AIA Life Insurance. In respect of other employee benefits, provision for such benefits are provided in terms of Accounting Standard - 15 (Revised) - "Employee Benefits". i) Borrowing Cost Borrowing costs incurred on acquiring qualifying assets (i.e assets that necessarily take a substantial period of time to get ready for their intended use) are capitalised at the weighted average rate at which the funds have been borrowed for such acquisition. Other borrowing costs are recognised as an expense in the year in which they are incurred. Debenture issue costs and the brmium on redemption of debentures are adjusted against the available Securities Premium Account in accordance with the provisions of Section 52 of the Companies Act 2013.All other borrowing costs are charged to Statement of Profit and Loss over the tenure of the borrowing. j) Taxes on Income : Income Tax including minimum alternate tax is computed in accordance with Accounting Standard 22 (AS-22) 'Accounting for Taxes on Income'. Tax expenses are accrued in the same period as the revenue and expenses to which they relate. Provision for current income tax is made on the tax liability payable on taxable income after considering tax allowances, deductions and exemptions determined in accordance with the brvailing tax laws. The differences between taxable income and the net profit /loss before tax for the year as per the financial statements are identified and the tax effect of the deferred tax asset or deferred tax liability is recorded for timing differences, i.e. differences that originate in one accounting period and reversed in another. The tax effect is calculated on accumulated timing differences at the end of the accounting year based on applicable tax rates. Deferred tax assets/ liabilities are reviewed as at each Balance Sheet date. Deferred tax assets, other than on unabsorbed debrciation and carried forward losses, are recognised only if there is reasonable certainty that they will be realised in future and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. In situations, where the company has unabsorbed debrciation and carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits. k) Impairment of Assets: Impairment is ascertained at each balance sheet date in respect of the Company's fixed assets. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value based on an appropriate discount factor. l) Accounting for Provisions, Contingent Liabilities and Contingent Assets: Provisions are recognised in terms of Accounting Standard 29 - 'Provisions, Contingent Liabilities and Contingent Assets', when there is a brsent legal or statutory obligation as a result of past events where it is probable that there will be outflow of resources to settle the obligation and when a reliable estimate of the amount of the obligation can be made. Contingent Liabilities are recognised only when there is a possible obligation arising from past events due to occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or where any brsent obligation cannot be made. Obligations are assessed on an ongoing basis and only those having a largely probable outflow of resources are provided for. Contingent Assets are not recognised in the financial statements. m) Assets taken on Lease: In respect of lease transactions, which are in nature of finance leases, Assets taken on lease after 1st April, 2001 are accounted as fixed assets at fair value in accordance with Accounting Standard 19 (AS-19) - "Leases". Lease payments are apportioned between finance charges and reduction of the lease liability based on the implicit rate of return. Assets taken on lease/licence under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognised as expenses in accordance with the respective lease/licence agreements. Key Management Personnel : Key managerial personnel comprise of Managing Director who has the authority and the responsibility for planning, directing and controlling the activities of the Company. The remuneration paid to such directors is Rs.93.04 Lakhs (Previous Year Rs.137.70 Lakhs) which includes the remuneration paid to Mr. Varada Reddy as the Managing Director up to November 10, 2015 and to Mr. Pramod Ranjan as the Managing Director from November 11, 2015. NOTE: Figures in brackets are in respect of Previous Year. 3 The Company has an investment of Rs.30 Lakhs and advances outstanding of Rs.560 Lakhs in Taj Karnataka Hotels and Resorts Limited (TKHRL) TKHRL has accumulated losses in excess of its networth.Considering the inherent value of the investee company's assets and proposed financial restructuring, the management is of the view that there is no permanent or long term diminution in the value of the investment and that outstanding will be fully recovered after the financial restructuring. 4 As per Accounting Standards 21 on "Consolidated Financial Statement", Accounting Standard 23 on "Accounting for investments in Associates in Consolidated Financial Statements and AS 27 on "Financial Reporting of Interests in Joint Ventures" referred to in Section 133 of the Companies Act, 2013, the company has brsented Consolidated Financial Statements separately, including that of its subsidiary, associates and joint venture entities in this annual report. 5 Previous year's figures have been re-grouped, reclassified wherever necessary so as to make them comparable with current year's figures. As per our Report attached For BRAHMAYYA & Co Chartered Accountants Firm Registration No 000511S R.NAGENDRA PRASAD Partner Membership No.203377 Mohan Jayaraman Chief Financial Officer For and on behalf of the Board For SNB ASSOCIATES Chartered Accountants Firm Registration No 015682N Rakesh Sarna Chairman DIN:01875340 R. SRIDHAR Partner Membership No.028317 Pramod Ranjan Managing Director DIN:00887569 Dr. G. Sundaram Director Tom Antony Company Secretary DIN : 00051093 Place: Chennai Date: May 12, 2016 |