NOTES TO FINANCIAL STATEMENTS Company Overview Allcargo Logistics Limited (the 'Company') was incorporated on 18 August 1993 and is a leading multinational Company engaged in providing integrated logistics solutions and offers specialized logistics services across Multimodal Transport Operations, Inland Container Depot, Container Freight Station Operations, Contract Logistics Operations and Project and Engineering Solutions. The Company is listed on Bombay Stock Exchange and National Stock Exchange of India. summary of significant accounting policies 2.1 Basis of brparation of financial statements The financial statements of the Company have been brpared in accordance with the generally accepted accounting principles in India (Indian GAAP). The Company has brpared these financial statements to comply in all material respects with the accounting standards specified under section 133 of the Companies Act, 2013 (the 'Act'), read with Rule 7 of the Companies (Accounts) Rules, 2014. The financial statements have been brpared on an accrual basis and under the historical cost convention. The accounting policies have been consistently applied by the Company and are consistent with those used in brvious year. 2.2 Use of estimates The brparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, 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, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. 2.3 Tangible assets and debrciation on tangible assets Tangible assets and capital work in progress are stated at cost, net of accumulated debrciation and accumulated impairment losses, if any. Cost comprises the purchase price and any cost attributable to bringing the asset to its working condition for its intended use. Borrowing cost relating to acquisition of tangible assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. The Company adjusts entire exchange differences arising on translation / settlement of long-term foreign currency monetary items pertaining to the acquisition of a debrciable asset to the cost of the asset and debrciates the same over the remaining life of the asset. The Company identifies and determines cost of each component / part of the asset separately, if the component / part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset. Debrciation The Company provides debrciation on tangible assets using the Straight Line Method, based on the useful lives estimated by the management. The identified components are debrciated separately over their useful lives; the remaining components are debrciated over the life of the principal asset. The management has estimated the useful lives of all its tangible assets (other than some assets classified under "Heavy Equipment", "Office Equipment") as per the useful life specified in Part 'C' of Schedule II to the Act. For class of assets categorised under "Heavy Equipment" and "Office Equipment", based on internal assessment, the management believes that these assets have useful life of 12 and 5 years, which are lower and different from the useful lives as brscribed under Part C of Schedule II of the Act. Leasehold land are debrciated on a straight line basis over the period of lease specified in agreements restricted to the expected economic useful life of asset, i.e. lease period which ranges from 30 years to 999 years. Leasehold improvements are debrciated on a straight line basis over the shorter of the estimated useful life of the asset or the lease term, which does not exceed 10 years. Tangible assets held for sale is valued at lower of their carrying amount and net realizable value. Any write-down is recognized in the Statement of Profit and Loss. 2.4 Intangible assets and amortisation Intangible assets comprises of computer software. They are recognized only when the asset is identifiable, is within the control of the Company, it is probable that the future economic benefits that are attributable to the asset will flow to the Company and cost of the asset can be reliably measured. Computer software are amortized on a straight-line basis over six years, which in management's estimate rebrsents the period during which economic benefits will be derived from their use. Such estimate is reviewed at the end of each financial year. 2.5 Impairment of tangible and intangible assets The carrying amounts of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors. An impairment loss, if any, is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of asset's net selling price and value in use. 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. The Company bases its impairment calculation on detailed budgets and forecast calculations. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year. After impairment, debrciation is provided on the revised carrying amount of the asset over its remaining useful life. 2.6 Investments Investments, which are readily realizable 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. On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss. Profit/loss on sale of current investments is computed with reference to their average cost. 2.7 Inventories Inventories of stores and spares are valued at cost or net realisable value whichever is lower. The cost is determined on first in first out basis and includes all charges incurred for bringing the inventories to their brsent condition and location. Net realisable value is the estimated selling price in the ordinary course of business, less estimated cost necessary to make sale. 2.8 Investment property An investment in land or building, which is not intended to be occupied substantially for use by, or in the operations of, the Company, is classified as investment property. Investment properties are stated at cost, net of accumulated debrciation and accumulated impairment loss, if any. The cost comprises purchase price, borrowing costs if capitalisation criteria are met and directly attributable cost of bringing the investment property to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. Debrciation on building component of investment property is calculated on a straight-line basis using the rate arrived at based on the useful life estimated by the management which is 60 years. On disposal of an investment property, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss. 2.9 Borrowing costs Borrowing costs includes interest, amortisation of ancillary cost over the period of loans which are incurred in connection with arrangements of borrowings. Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are treated as direct cost and are considered as part of cost of such assets. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. Capitalization of borrowing costs is suspended in the period during which the active developmentisdelayed beyond reasonable time due to other than temporary interruption. All other borrowing costs are charged to the Statement of Profit and Loss as incurred. 2.10 Retirement and other employee benefits (a) Short- term employee benefits Employee benefits payable wholly within twelve months of availing employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short term employee benefits such as salaries and wages, bonus and ex-gratia to be paid in exchange of employee services are recognized in the period in which the employee renders the related service. (b) Post employment benefits Defined contribution plans: A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards Provident Fund and Employees State Insurance Corporation ('ESIC'). The Company's contribution is recognized as an expense in the Statement of Profit and Loss during the period in which employee renders the related service. There are no other obligations other than the contribution payable to the Provident Fund and Employee State Insurance Scheme. Defined benefit plan: The Company's gratuity benefit scheme is a defined benefit plan. Gratuity liability is provided for on the basis of an actuarial valuation done as per projected unit credit method, carried out by an independent actuary at the end of the year. The Company makes contributions to a trust administered and managed by an Insurance Company to fund the gratuity liability. Under this scheme, the obligation to pay gratuity remains with the Company, although the Insurance Company administers the scheme. Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. The Company brsents the leave as a short-term provision in the balance sheet to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Where Company has the unconditional legal and contractual right to defer the settlement for a period beyond 12 months, the same is brsented as long-term provision. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. 2.11 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. The amount recognised as revenue is exclusive of service tax / sales tax / VAT. Multimodal transport income: Export revenue is recognised on sailing of vessel and import revenue is recognised upon rendering of related services. Container freight station income: Income from Container Handling is recognised as related services are performed. Income from Ground Rent is recognised for the period the container is lying in the Container Freight Station. However, in case of long standing containers, the income is accounted on accrual basis to the extent of its recoverability. Contract logistic income: Contract logistic service charges and management fees are recognised as and when the service is performed as per the contractual terms. Project and equipment income: Revenue for project division includes rendering of end to end logistics services comprising of activities related to consolidation of cargo, transportation, freight forwarding and customs clearance services. Income and fees are recognized on percentage of completion method. Percentage of completion is arrived at on the basis of proportionate costs incurred to date of total estimated costs, milestones agreed or any other suitable basis, provided there is a reasonable completion of activity and provision of services. Equipment division earns revenue from hiring of cranes, trailers and other fleets. Income from hiring of fleets is recognised on the basis of actual usage of the Company's fleets, as per the contractual terms. Others: Reimbursement of cost is netted off with the relevant expenses incurred, since the same are incurred on behalf of the customers. Interest income is recognised on time proportion basis. Dividend income is recognised when the right to receive dividend is established by the date of the balance sheet. 2.12Taxation 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 taxes reflects the impact of current year timing differences 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 substantially 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, unrecognized deferred tax assets of earlier years are re-assessed and recognised to the extent that it has become reasonably 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. The 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 or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write down is reversed to the extent that it becomes reasonably or virtually certain, as the case may be, that sufficient future taxable income will be available. Minimum alternate tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognizes 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 recognizes 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. 2.13 Foreign currency transactions 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 the transaction. Conversion Foreign currency monetary items are retranslated using the exchange rate brvailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined. Exchange differences The Company accounts for exchange differences arising on translation / settlement of foreign currency monetary items as below: - Exchange differences arising on long-term foreign currency monetary items related to acquisition of a fixed asset are capitalized and debrciated over the remaining useful life of the asset. - Exchange differences arising on other long-term foreign currency monetary items are accumulated in the 'Foreign Currency Monetary Item Translation Difference Account' and amortised over the remaining life of the concerned monetary item. - All other exchange differences are recognised as income or as expenses in the period in which they arise. The Company treats a foreign currency monetary item as 'long-term foreign currency monetary item', if it has a term of 12 months or more at the date of its origination. In accordance with Ministry of Corporate Affairs' circular dated August 09, 2012, exchange differences for this purpose, are total differences arising on long-term foreign currency monetary items for the period. In other words, the Company does not differentiate between exchange differences arising from long-term foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other exchange difference. Forward exchange contracts entered into hedge foreign currency risk of an existing asset / liability The brmium or discount arising at the inception of forward exchange contract is amortised and recognised as an expense / income over the life of the contract. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward exchange contract is also recognised as income or as expense for the period. 2.14 Operating lease Where the Company is the lessee Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item 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. Where the Company is the lessor Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on an operating lease is recognised in the Statement of Profit and Loss on a straight-line basis over the lease term. Costs, including debrciation, are recognised as expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Statement of Profit and Loss. 2.15 Earnings per share (EPS) Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting brference dividends and attributable taxes, if any) by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year are adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders, share split, and reverse share split (consolidation of shares) (if any). For the purpose of calculating diluted earnings per share, the net profit 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. 2.16 Provisions and contingent liabilities A provision is recognised when the Company has a brsent obligation as a result of past event, 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 its 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. 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. 2.17 Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand and short term investments with an original maturity of three months or less. 2.18 Cash flow statement Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated in the Cash flow Statement 2. Proposed slump sale The Board of Directors has given its in-principal approval for acquisition of Container Freight Station (CFS) business of Transindia Logistic Park Pvt. Ltd., a wholly owned subsidiary of the Company, through slump sale subject to determination of valuation by an independent valuer and receipt of requisite statutory and regulatory approvals. 3. The Board at its meeting held on 20 May, 2016 granted its approval to sale and transfer its Contract Logistics Business to Avvashya CCI Logistics Private Limited (ACCI) (formerly known as CCI Integrated Logistics Private Limited) as a going concern on a slump sale basis for a total consideration of Rs. 1,962 Lakhs. The sales consideration shall be discharged by ACCI by issue of further equity shares resulting to 6.63% of the expanded capital. In order to gain controlling stake of ACCI, the Board of Directors further approved acquisition of additional 43.93% stake from the Promoter Shareholders of ACCI for an aggregate consideration of Rs. 130 Crore. 4. Prior year comparatives Previous year's figure has been regrouped where necessary to this year's classification. As per our report of even date attached. For S.R. Batliboi & Associates LLP ICAI Firm Registration No: 101049W/E300004 Chartered Accountants per Kalpesh Jain Partner Membership No: 106406 As per our report of even date. For Appan & Lokhandwala Associates For and on behalf of Board of Directors of Allcargo Logistics Limited CIN:L63010MH2004PLC073508 ICAI Firm Registration No: 117040W Chartered Accountants per M.Subramanian Partner Membership No: 111106 Shashi Kiran Shetty Chairman and Managing Director DIN:00012754 Keki Elavia Director DIN:00003940 Jatin Chokshi Chief Financial Officer M.No: 035018 Shailesh Dholakia Company Secretary M.No: A14316 Place :Mumbai Date : 20 May 2016 |