Notes to the Financial Statements 1. The Hon'ble Andhra Pradesh High Court, approved the Scheme of Arrangement for amalgamation. (The Scheme) vide its order dated 19th March, 2013 which interalia, permits creation of a capital reserve to be called Special Reserve to which shall be credited excess of value of assets over value of liabilities on amalgamation of the subsidiaries amounting to Rs.5555.43 Mn to be utilized by the Company to adjust therefrom any capital losses arising from transfer of assets and certain other losses, any balance remaining in the Special Reserve shall be available for adjustment against any future permanent diminution in the value of assets and exceptional items etc. as specified in the scheme as the Board of directors may deem fit. In accordance with the Scheme an aggregate sum of Rs.3034.10 Mn has been adjusted with the Special Reserve till the year 2014-15. 2. On transfer of Exbrss Distribution and Supply Chain and Shipping businesses to separate subsidiaries in the year 2011-2012 , the primary operating business of the Company sit in the Balance Sheet of the Company as investments and became major source of income by way of dividend. Accordingly, the Company has been advised that the dividend income of Rs.84.0 Mn during the year from subsidiary (brvious year Rs. 175.0 Mn) and Management Fees of Rs. 24.9 Mn during the year (Previous year Rs. 23.3 Mn) be considered as other operating income. This has no impact on the profit of the year. 3. The company has made investment in Share Capital of Rs. 3.62 Mn and has other receivables of Rs. 12.26 Mn (Previous year Rs.14.76 Mn) due from the subsidiary Zen Cargo Movers Pvt. Ltd. The net worth of the subsidiary has been fully eroded because of losses suffered from year to year. The business of Zen Cargo is clearing agency business and is very closely related to the freight forwarding business of the parent company. The same is in the process of stabilization. The subsidiary will continue to have the required support from the holding company. The performance of the subsidiary is expected to improve in the near future. Under the circumstances no provision is considered necessary by the management at brsent for any diminution in the value of investments and also in respect of possible losses that may arise from other receivables from the subsidiary. 4. There are other amounts due from subsidiaries of Rs. 219.86 Mn (brvious year Rs. 223.56 Mn) and from an Associate Rs.16.75 Mn (brvious year Rs. 13.24 Mn). The above includes Rs. 190.0 Mn utilised by the subsidiary for acquiring land. The management is confident of recovery of the amounts in due course and no provision is considered necessary for any possible losses that may arise in this behalf. 5. In an earlier year the Company has granted unsecured loan of Rs. 100 Mn to a body corporate out of which Rs. 82.50 Mn along with interest receivable of Rs. 39.0 Mn is receivable as on 31.03.2016. The net worth of the body corporate has fully eroded because of losses suffered from year to year. However, the management is confident of recovery of the balances due and interest receivable and therefore no provision is considered necessary for any possible losses that may arise in this behalf. 6. The company has investment of Rs. 399.25 Mn in equity share capital of the subsidiary Gati Kausar India Limited. On account of continuous losses incurred by the said company the value of investment by the company is eroded to a considerable extent. The performance of the subsidiary is expected to improve in the near future. Under the circumstances no provision is considered necessary by the management at brsent for any diminution in the value of investments and also in respect of possible losses that may arise from other receivables from the subsidiary. 7. Pursuant to the notification issued by the ministry of Corporate Affairs dated 29th December 2011 on Accounting Standard 11, the company has opted to adjust the carrying cost of debrciable fixed assets to amortize the exchange differences on the Long term Foreign Currency Monetary Items over their tenure. Accordingly as on March 31,2016 Rs.80.88 Mn has been carried forward in the “Foreign Exchange Monetary Translation Difference Account” (FCMITDA). Consequently the net profit is lower by Rs.83.01 Mn for the year ended 31st March 2016. 8. Loans and Advances include Rs.265.98 Mn due from Air India Limited. The matter was referred to arbitration of the Arbitral Tribunal and the Arbitral tribunal passed an Award dated 17th September 2013, directing Air India Limited to pay an amount of Rs.268.20 Mn to the Company and to pay interest @18% per annum on the awarded amount. Air India brferred an application before the Hon’ble Delhi High Court seeking setting aside of the Award which directed Air India to deposit Rs. 220 Mn. Pending disposal of the appeal an amount of Rs. 220 Mn has since been made over to the company after the end of the year pursuant to the order of the division bench of the Honorable High Court of Delhi. In the circumstances, the dues from Air India Limited of Rs. 266.0 Mn included in Loans and Advances, are considered good for recovery by the management. 9. The Board of Directors of the company has allotted 1,17,400 equity shares on exercise of options by the employees under the employee stock option scheme and 1,28,000 equity shares to Non-Executive Directors at a brmium of Rs.26 per share. Consequently the Equity Share Capital of the company increased from 8,74,77,537 equity shares of Rs. 2/- each to equity shares 8,77,22,937 of Rs. 2/- each during the year. 10. The company is awaiting clarification from the Reserve Bank of India on various matters pertaining to Foreign Currency Convertible Bonds issued by the company. In the meanwhile the trustee of the bond holders has filed a civil suit in the Secunderabad Court for specific performance, which the company is contesting on various grounds. The matter is subjudice. 11. In accordance with terms of issue of Foreign Currency Convertible Bonds (FCCB) an amount of Rs.1471.40 Mn together with brmium on redemption thereof of Rs.407.60 Mn are due to be payable to the bondholders in December, 2016. The classification of the same as Long Term Liabilities /Provisions has been continued as in earlier years because of the pending litigation as explained in note 37 above 12. With respect to the amendment by Payment of Bonus(Amendment) Act' 2015 with retrospective effect from 01-Apr-2014, The company has been legally advised that in view of the interim orders of several high courts including that of the Andhra Pradesh High court the above amendment with retrospective effect is bad in law and in all likelihood the retrospective applicability may be struck down. In the circumstances no provision for additional liability , if any, has been considered necessary in this behalf in the accounts for the year . 13. Significant Accounting Policies: These financial statements have been brpared to comply with the Generally Accepted Accounting Principles in India (Indian GAAP), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013. Recognition of Income & Expenditure a) Income and expenditure are generally recognised on accrual basis in accordance with the applicable accounting standards and provision is made for all known losses and liabilities. b) Freight Income is accounted when goods are delivered by the Company to customers. c) Freight expenses are accounted when hired vehicles deliver goods to the Company at destination. d) Having regard to the size of operations and the nature and complexities of the company's business, freight received/paid in advance is accounted as income/expenses on payment and interdivisional transfers are eliminated. e) Year-end liability in respect of claims for loss and damages is provided as calculated by claims recovery agents. Gratuity and Leave Encashment A provision for gratuity liability to employees is made on the basis of actuarial valuation and paid to the approved Gratuity Fund and a provision for leave encashment is made on the basis of actuarial valuation Provident Fund Provident fund contribution is remitted to appropriate authority. Superannuation Fund Superannuation fund contribution is remitted to approved trust fund. Fixed Assets a) Fixed Assets are stated at cost and / or at revaluation. Cost includes borrowing cost and indirect expenditure capitalized to the extent it relates to the construction activity or incidental thereto. b) Debrciation is provided on straight line method at rates specified in Schedule II to the companies Act, 2013. Debrciation on addition /deduction is calculated prorata from /to date of addition / deduction. Individual assets cost upto Rs.5,000/- debrciated fully the year of acquisition. Investments Investment are stated at cost or at the fair value. Inventories Petroleum products are valued at lower of cost and net realisable value. Foreign Exchange Transaction a) Foreign currency transactions are recorded at average rate for the month. b) Monetary items in foreign currency at the year end are converted in Indian currency at the year end rates. In terms of the amendments to Accounting Standard II on The Effects of Changes in Foreign Exchange Rates, exchange differences relating to long-term monetary items are dealt with in the following manner: i) Exchange difference relating to the long term monetary items, arising during the year, in so far as they relate to the acquisition of a debrciable capital asset are added to/deducted from the cost of the assets and debrciated over the balance life of the asset. ii) In other cases such differences are accumulated in a “Foreign Currency Monetary Item Transaction Difference Account" and amortised over the balance life of the long-term monetary item, not beyond 31 March 2020. c) Any Income or expenses on account of exchange difference either on settlement or transaction recognized in the Statement of Profit & Loss d) In respect of forward exchange contracts, the difference between the forward rate exchange rate at the inception of the contract is recognised as income or expenses over the contract. Taxation Income tax provision for tax is made for both current and deferred taxes. Provision for current income made on the current tax rates based on the working results of the year. The company provides for deferred tax based on the tax effect of timing difference resulting from the recognition of items in the accounts and in estimating its current tax provision. The effect on deferred taxes of a change in tax rate is recognised in the year in which the change is effected. Impairment of Assets Impairment of Assets are assessed at each balance sheet date and loss is recognised whenever recoverable amount of an asset is less than its carrying amount In terms of our Report of even date For R.S. Agarwala & Co. Chartered Accountants Firm’s Regn No. : 304045E R. S. Agarwala Partner Membership No. 005534 For and on the behalf of the Board Sanjeev Jain Director Finance DIN:05325926 KL Chugh Chairman DIN: 00140124 Mahendra Agarwal Founder & CEO DIN: 00179779 VSN Raju Company Secretary M.No. A11701 N. Srinivasan Director DIN: 00004195 Camp: Hyderabad Date: April 27, 2016 |