Notes to the Financial Statement S for the year ended March 31, 2015 1. Corporate information Westlife Development Limited is a public limited company and having its registered office at Mumbai. The Company has interests in trading and in quick service restaurant business through its subsidiaries. 1.1. Basis of Preparation The financial statements of the Company have been brpared and brsented in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention on an accrual basis. The Company has brpared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year, except for the change in accounting policy explained below. 1.2. Summary of significant accounting policies (a) Change in accounting policy I. Debrciation on fixed assets Till the year ended 31 March 2014, Schedule XIV to the Companies Act, 1956, brscribed requirements concerning debrciation of fixed assets. From the current year, Schedule XIV has been replaced by Schedule II to the Companies Act, 2013. The applicability of Schedule II has resulted in the following changes related to debrciation of fixed assets. Unless stated otherwise, the impact mentioned for the current year is likely to hold good for future years also. Useful lives/ debrciation rates Till the year ended 31 March 2014, debrciation rates brscribed under Schedule XIV were treated as minimum rates and the Company was not allowed to charge debrciation at lower rates even if such lower rates were justified by the estimated useful life of the asset. Schedule II to the Companies Act 2013 brscribes useful lives for fixed assets which, in many cases, are different from lives brscribed under the erstwhile Schedule XIV. However, Schedule II allows companies to use higher/ lower useful lives and residual values if such useful lives and residual values can be technically supported and justification for difference is disclosed in the financial statements. Considering the applicability of Schedule II, the management has re-estimated useful lives of fixed assets. The management believes that debrciation rates currently used fairly reflect its estimate of the useful lives, though these rates in certain cases are different from lives brscribed under Schedule II. However, this change in accounting policy did not have any material impact on financial statements of the Company. II. Employee stock compensation cost Till 27 October 2014, the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, dealt with the grant of share-based payments to employees. Among other matter, these guidelines brscribed accounting for grant of share-based payments to employees. Hence, the Company being a listed entity was required to comply with these Guidelines as well as the Guidance Note on Accounting for Employee Share-based Payments, issued by the Institute of Chartered Accountants of India (ICAI) with regard to accounting for employee share-based payments. Particularly, in case of conflict between the two requirements, the SEBI guidelines were brvailing over the ICAI Guidance Note. For example, in case of equity settled option expiring unexercised after vesting, the SEBI guidelines required expense to be reversed through the Statement of Profit and Loss whereas the reversal of expense through the Statement of Profit and Loss is prohibited under the ICAI Guidance Note. In these cases, the Company was brviously complying with the requirement of SEBI guidelines. From 28 October 2014, the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 have been replaced by the SEBI (Share Based Employee Benefits) Regulations, 2014.The new regulations don't contain any specific accounting treatment; rather, they require ICAI Guidance Note to be followed. Consequent to the application of the new regulations, the Company has changed its accounting for equity settled option expiring unexercised after vesting in line with accounting brscribed in the Guidance Note, i.e., expense is not reversed through the Statement of Profit and Loss. The management has decided to apply the revised accounting policy prospectively from the date of notification of new regulation, i.e., 28 October 2014. Since there are no equity settled options expiring unexercised after 28 October 2014, the change in accounting policy did not have any material impact on financial statements of the Company for the current year. However due to application of the regulation, the manner of brsentation of "Employee Stock Option Outstanding Account" under the head "Reserves and Surplus" has changed. The Company has changed this brsentation for the current as well as brvious year. (b) Use of estimates Preparation of financial statements in conformity with Indian GAAP requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, actual results could differ from the estimates. (c) Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Sale of Goods Revenue is recognised when significant risks and rewards of ownership of goods have passed to the buyer, usually on delivery of the goods and are shown net of VAT. Income from Services Revenues from services are recognised pro-rata over the period of contracts as and when services are rendered or in accordance with the terms and conditions of the contracts. Interest and Dividend Income Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend income is recognised when the Company's right to receive dividend is established by the balance sheet date. (d) Tangible Fixed Assets and Debrciation Fixed assets are stated at cost less accumulated debrciation and impairment losses, if any. Cost comprises purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Debrciation on fixed assets is provided on the written down value method based on useful lives of the assets which concide with the useful lives brscribed in Schedule II of the Companies Act, 2013. (e) Intangible Assets and amortisation Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Software is debrciated over a period of 5 years. (f) Impairment of Fixed Assets The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their brsent value using a br-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. (g) Inventory Inventory of traded goods is valued at lower of cost and net realisable value. Cost includes all expenses incurred to bring the inventory to its brsent location and condition. Cost is determined on a First-In-First-Out (FIFO) basis. Net realisable value is the estimated selling price in ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. (h) Investments Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in value of the investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. (i) Foreign Currency Transactions i) Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency at the date of a transaction. ii) Conversion Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in foreign currency are reported using the exchange rate at the date of the transaction. Non-monetary items which are carried at fair value or other similar valuation denominated in foreign currency are reported using the exchange rates that existed when the values were determined. iii) Exchange Differences Exchange differences arising on settlement of monetary items, or on reporting such monetary items at rates different from those at which they were initially recorded during the year, or reported in brvious financial statements, are recognised as income or as expense in the year in which they arise. (j) Taxation Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Deferred income tax reflect the impact of current year timing difference between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed debrciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised. Carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which the deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority. Minimum alternate tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognises MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognises MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the Statement of Profit and Loss and shown as "MAT Credit Entitlement" The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period. (k) Employee Benefits The Company is not covered under the Payment of Gratuity Act, 1972 and the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The liability towards employee benefits is provided based on contractual terms with employees, if any. (l) Leases Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items, are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term. (m) Earnings Per Share Basic earnings per share is calculated by dividing net profit or loss for the period attributable to equity shareholders (after deducting brference dividends and attributable tax) by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. (n) Provisions A provision is recognised when the Company has a brsent obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are not discounted to their brsent value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. (o) Contingent Liabilities A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a brsent obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements. (p) Cash & Cash Equivalents Cash and cash equivalents for the purpose of cash flow statement comprise of cash at bank and in hand and short-term investments with an original maturity of three months or less. (q) Segment Reporting Identification of Segments The Company's operating businesses are organised and managed separately according to the nature of products and services provided, with each segment rebrsenting a strategic business unit that offers different products and serves different markets. Analysis of geographical segments is based on the areas in which major operating divisions of the Company operate. Allocation of Common Costs Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. Unallocated Items Unallocated items include general corporate income and expense items which are not allocated to any business segment. Segment Accounting Policies The Company brpares its segment information in conformity with the accounting policies adopted for brparing and brsenting the financial statements of the Company as a whole. (r) Employee stock compensation cost The Company measure compensation cost relating to Employee Stock Option using the "intrinsic value" method. Discount on equity shares as compensation expenses under the Employee Stock Option Scheme, is amortised in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 issued by the Securities and Exchange Board of India and the Guidance Note on Accounting for Employee Share-based payments, issued by the Institute of Chartered Accountants of India (s) Measurement of EBITDA As permitted by the Schedule III of the Companies Act, 2013, the Company has opted to brsent earnings before interest, tax, debrciation and amortisation (EBITDA) as a separate line item on the face of the statement of profit and loss. The Company measures EBITDA on the basis of profit from continuing operations. In its measurement, the Company does not include debrciation and amortisation expenses, finance costs and tax expense but includes other income. 2. Contingent Liabilities Contingent liabilities as at March 31, 2015 Rs. Nil (Previous Year Rs. Nil). 3. Operating Leases a) Operating lease payments recognised in Statement of Profit and Loss is Rs. 2,348,000 (Previous Year Rs. 4,886,400). b) Payments received for sub-leases recognised as Income in Statement of Profit and Loss is Rs. 2,420,000 (Previous Year Rs. 5,040,000). c) General description of leasing arrangements: (i) Leased Assets: Office brmises taken on lease (ii) At expiry of the lease term, the Company has an option either to return the asset or extend the term by renewing the contract. (iii) There is no escalation clause in the lease agreement. There are no restrictions imposed by the lease arrangement. 4. Composite Scheme of Arrangement a) Amalgamation of Westpoint Leisureparks Private Limited (WLPL) During the brvious year, pursuant to the composite scheme of arrangement ('the scheme'), the erstwhile WLPL had been amalgamated with the Company under section 391 to 394 of the Companies Act, 1956 sanctioned by the Hon'ble High Court of Bombay on July 19, 2013 and the assets and liabilities of WLPL were transferred and vested in the Company with effect from October 1, 2012. Accordingly, the scheme had been given effect to in these financial statements. The operations of WLPL include carrying out the business activities of promotion, development, setting up, management of investments in and operation of quick service restaurants, hotels, resorts, leasing of immovable properties, providing human resource, investing in shares and mutual fund units, trading in goods. The amalgamation had been accounted for under the "pooling of interest" method as brscribed by Accounting Standard-14 "Accounting for amalgamation". Accordingly, the accounting treatment had been given as under 1) The assets, liabilities, reserves and debit balance in the Statement of Profit and Loss account of WLPL as at October 1, 2012 had been incorporated at their book values in the financial statements of the Company. 2) 130,395 Equity shares of Re 1 each fully paid up of WLPL stands cancelled. Further investment in 99,000 equity shares of WLPL held by the company stands cancelled and 28,994,852 equity shares of Rs. 2 each of the Company had been issued to the remaining shareholders of WLPL. 3) The excess amount of Rs. 57,958,564 of the book value of the investment in the equity share capital of WLPL and consideration given by the Company over the face value of the cancelled shares as referred in note 2 above had been debited in Capital Reserve account. 4) The profit of WLPL for the period October 1, 2012 to March 31, 2013 amounting to Rs. 395,564 had been added to surplus/ (deficit) in Statement of Profit and Loss. b) Amalgamation of Triple A Foods Private Limited (TAF) During the brvious year, pursuant to the composite scheme of arrangement ('the scheme"), the erstwhile TAF had been amalgamated with the Company under section 391 to 394 of the Companies Act, 1956 sanctioned by the Hon'ble High Court of Bombay on July 19, 2013 and the assets and liabilities of TAF were transferred to and vested in the Company with effect from October 1, 2012. Accordingly, the scheme had been given effect to in these financial statements. The operations of TAF include carrying out the business activities of promotion, development, setting up, management of investments in and operation of quick service restaurants, hotels, resorts, leasing of immovable properties, providing human resource, investing in shares and mutual fund units, trading in goods. The amalgamation had been accounted for under the "pooling of interest" method as brscribed by Accounting Standard -14 "Accounting for amalgamation". Accordingly, the accounting treatment has been given as under 1) The assets, liabilities, reserves and credit balance in the Statement of Profit and Loss of TAF as at October 1, 2012 had been incorporated at their book values in the financial statements of the Company. 2) 126,250 Equity shares of Rs. 1000 each fully paid up of TAF stands cancelled. Further investment in 101,000 equity shares of TAF held by WLPL stands cancelled and 29,704,100 equity shares of H2 each of the Company had been issued to the remaining shareholders of TAF. 3) The excess amount of Rs. 2,306,408,200 of the book value of the investment in the equity share capital of TAF and consideration given by the Company over the face value of the cancelled shares as referred in note 2 above had been debited in Capital Reserve account. 4) The profit of TAF for the period October 1, 2012 to March 31, 2013 amounting to Rs. 92,062 had been added to surplus/ (deficit) in Statement of Profit and Loss. c) Demerger of Westlife Development Limited During the brvious year, pursuant to the composite scheme of arrangement ('the scheme'), under section 391 to 394 of the Companies Act, 1956 sanctioned by the Hon'ble High Court of Bombay on July 19, 2013, the trading, lending and investment business (transferred business) is transferred to the resulting company "West Leisure Resorts Private Limited" (WLR) w.e.f. October 1,2012 (appointed date). Accordingly the scheme had been given effect to in these financial statements. 1) All the assets and liabilities of the transferred business of the Company on the appointed date had been transferred to WLR. 2) Investment in 2,666,670 equity shares of WLR of Rs.10 each fully paid up held by the Company stands cancelled and the excess of assets over liabilities relating to the transferred business amounting to Rs. 157,578,402 transferred to WLR, had been debited to the Capital Reserve account. 3) The profit of transferred business for the period October 1, 2012 to March 31, 2013 amounting to Rs. 20,898,628 had been adjusted in "surplus/(deficit) in Statement of Profit and Loss" and transferred to WLR. 5. There are no Micro and Small Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues. This information has been determined on the basis of information available with the Company. 6. During the year, the Company has revised debrciation rate on certain fixed assets in accordance with the requirements of Schedule II of the Companies Act, 2013. Consequently, Rs. 3,566 (net of tax of Rs. 1,594) has been adjusted to opening balance of retained earnings on account of assets whose useful life is already exhausted as on April 01, 2014. 7. Promoter Group Mr. Banwari Lal Jatia is the promoter of the Company. The persons constituting the promoter group include individuals, HUF and corporate entities. The names of these persons are: Achal Exim Private Limited, Akshay Ayush Impex Private Limited, Acacia Impex Private Limited, Anand Veena Twisters Private Limited, Concept Highland Business Private Limited, Hardcastle & Waud Mfg Co. Limited, Hardcastle Petrofer Private Limited, Hawcoplast Investments & Trading Limited, Horizon Impex Private Limited, Houghton Hardcastle (India) Limited, Hawco Lubricants Limited, Saubhagya Impex Private Limited, Shri Ambika Trading Co. Private Limited, Subh Ashish Exim Private Limited, Vandeep Tradelinks Private Limited, Vishwas Investment & Trading Co. Private Limited, Winmore Leasing & Holdings Limited, West Pioneer (India) Private Limited, West Leisure Resorts Limited, Amit BL Properties Private Limited, Ridhhika Properties Private Limited, Hardcastle Restaturants Private Limited, Makino Holdings Limited, J K Speciality Chemicals LLP, Hawco Petrofer LLP, Smt. Lalita Devi Jatia, Smt. Usha Devi Jatia, Shri. Amit Jatia, Smt. Smita Jatia, Shri. Akshay Jatia, Shri. Ayush Jatia, Shri. Anurag Jatia, Smt. Shalini Jatia, Miss Ridhika Jatia, Banwarilal Jatia - HUF, Amit Jatia - HUF and Anurag Jatia - HUF. 8. Previous year figures Previous year's figures have been regrouped /reclassified wherever necessary to make them comparable with current year's figures. For S R B C & CO LLP Chartered Accountants Firm Registration No. 324982E per Jayesh Gandhi Partner Membership No. 37924 For and on behalf of the Board of Directors of Westlife Development Limited Amit Jatia Vice-Chairman S. Lakshminarayanan Chief Financial Officer Smita Jatia Director Dr. Shatadru Sengupta Company Secretary Place :- Mumbai Date :- May 08,2015 |