Notes to Financial Statements for the year ended 31st March 2015 Background Global Vectra Helicorp Limited ('the Company') was incorporated in 1998 as a private limited company and was subsequently listed on the stock exchange on 27 October 2006. The Company is listed on the Bombay Stock Exchange Limited and the National Stock Exchange Limited. The Company is mainly engaged in helicopter charter services for offshore transportation, servicing the oil and gas exploration and production sector in India. The Company is also engaged in helicopter charter services for onshore transportation. 1 Significant accounting policies The accounting policies set out below have been applied consistently to the periods brsented in these financial statements. 1.1 Basis of brparation of financial statements These financial statements are brpared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis, except for certain fixed assets which were revalued (at fair value) during the year ended 31 March 2009. GAAP comprises mandatory accounting standards as brscribed under Section 133 of the Companies Act, 2013 ('the Act') read with Rule 7 of the Companies (Accounts) Rules, 2014. Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The financial statements are brsented in Indian rupees. 1.2 Use of estimates The brparation of financial statements in conformity with the generally accepted accounting principles (GAAP) in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. The estimates and assumptions used in the accompanying financial statements are based upon management's evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis; any revision to accounting estimates is recognised prospectively in current and future periods. 1.3 Current non current classification All assets and liabilities are classified into current and non current. Assets An asset is classified as current when it satisfies any of the following criteria: a) it is expected to be realised in, or is intended for sale or consumption in, the Company's normal operating cycle; b) it is held primarily for the purpose of being traded; c) it is expected to be realised within 12 months after the reporting date; or d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date. Current assets include the current portion of non current financial assets. All other assets are classified as non current. Liabilities A liability is classified as current when it satisfies any of the following criteria: a) it is expected to be settled in the Company's normal operating cycle; b) it is held primarily for the purpose of being traded; c) it is due to be settled within 12 months after the reporting date; or d) the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. Current liabilities include current portion of non current financial liabilities. All other liabilities are classified as non current. Operating cycle Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. 1.4 Tangible Fixed assets Fixed assets are stated at cost of acquisition, less accumulated debrciation/amortisation and impairment losses, if any. The cost of an item of tangible fixed asset comprises its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price. During the year ended 31 March 2009, the Company revalued all its leased and owned helicopters to reflect the current reinstatement cost / market value of the same. These assets are carried at fair value less accumulated debrciation. Expenditure incurred on acquisition / constructions of fixed assets which are not ready for their intended use at each balance sheet date are disclosed under capital work in progress. Debrciation on tangible fixed assets (including assets acquired under finance leases) except leasehold improvements is provided on the straight-line method over the useful lives of assets as brscribed under Schedule II of the Act which in management's opinion reflects the estimated useful economic lives of fixed assets (refer note 10). Leasehold improvements in the nature of hangar and administrative building are amortised over the primary lease period or the useful life of the assets, whichever is shorter. Major component parts of a helicopter which require replacement at regular intervals are identified and debrciated separately over their respective estimated remaining useful life. Accordingly, rotor heads are segregated from the helicopters and are debrciated over 5,000 hours, being their estimated useful life. Debrciation for the year is recognised in the statement of profit and loss; however, where debrciable assets are revalued, till 31 March 2014, the additional debrciation on the revalued amount was being transferred from the revaluation reserve to the statement of profit and loss; with effect from 1 April 2014, the amount corresponding to the additional debrciation on the revalued asset is being transferred from the revaluation reserve to the general reserve. The useful life of assets are reviewed by the management at each financial year end and revised if appropriate. In case of a revision, the unamortised debrciable amount is charged over the remaining useful life. 1.5 Impairment of assets: Where there is an indication of impairment of the Company's assets, the Company estimates the recoverable amount of the asset or a group of assets. The recoverable amount of the asset (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. In assessing value in use, the estimated future cash flows are discounted to the brsent values based on an appropriate discount factor. If such recoverable amount of the asset or the recoverable amount of the cash-generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date there is an indication that a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of debrciated historical cost. 1.6 Maintenance expenditure Helicopter maintenance checks including overhaul and repairs and maintenance that are required to be performed at regular intervals as enforced by the Director General of Civil Aviation (DGCA) and in accordance with the maintenance programme laid down by the manufacturers are debited to the statement of profit and loss as and when incurred. 1.7 Inventories Inventories comprising of consumables, spares and shop supplies, are valued at lower of cost and net realisable value. Cost is determined on the basis of weighted average method. Cost of inventory comprises of all cost of purchase and other incidental cost incurred in bringing the inventories to their brsent location and condition. 1.8 Revenue recognition Service income and reimbursement of expenses is recognised as and when services are rendered in accordance with the terms of the specific contracts, net of all contractual deductions. Revenue is recognised net of all taxes and levies. Interest income is recognised on time proportion basis. 1.9 Employee benefits (a) Short term employee benefits All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages and short term compensated absences, etc. and the expected cost of ex-gratia are recognised in the period in which the employee renders the related service. (b) Post employment benefits Defined contribution plans: The Company makes specified monthly contributions towards employee provident fund and employees' state insurance corporation ('ESIC'). The Company's contribution paid / payable under the scheme is recognised as an expense in the statement of profit and loss during the period in which the employee renders the related service. Defined benefit plan: The Company's gratuity benefit scheme is a defined benefit plan. The Company's net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its brsent value, and the fair value of any plan assets is deducted. The brsent value of the obligation under such defined benefit plan is determined based on actuarial valuation at the balance sheet date using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the brsent value of the estimated future cash flows. The discount rates used for determining the brsent value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognised immediately in the statement of profit and loss in accordance with Accounting Standard (AS) 15 'Employee Benefits'. (c) Long term employment benefits: The Company's net obligation in respect of long term employment benefits i.e. compensated absences is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated based on actuarial valuation at the balance sheet date using the projected unit credit method and is discounted to its brsent value. The discount rates used for determining the brsent value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date. 1.10 Foreign exchange transactions Foreign exchange transactions are recorded at the spot rates on the date of the respective transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the statement of profit and loss of the year, except for exchange fluctuations arising on settlement of long term foreign currency monetary assets or liabilities. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated into Indian Rupees at the closing exchange rates on that date. The resultant exchange differences are recognised in the statement of profit and loss; except that exchange differences pertaining to long term foreign currency monetary items that are related to acquisition of debrciable assets are adjusted in the carrying amount of the related fixed assets. A foreign currency monetary item is classified as long term if it has original maturity of one year or more 1.11 Borrowing costs 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. All other borrowing costs are recognised as an expense in the period in which they are incurred. 1.12 Taxation Income tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period). Current tax is measured at the amount expected to be paid to (recovered from) the taxation authorities, using the applicable tax rates and tax laws. Deferred tax is recognised in respect of timing differences between taxable income and accounting income i.e. differences that originate in one period and are capable of reversal in one or more subsequent periods. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed debrciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised. Minimum Alternative Tax ('MAT') under the provisions of the Income-tax Act, 1961 is recognised as current tax in the Statement of Profit and Loss. The credit available under the Act in respect of MAT paid is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set-off against the normal tax liability. MAT credit recognised as an asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists. 1.13 Leases Assets acquired under leases other than finance lease are classified as operating leases. Lease rentals (including scheduled rental increases) in respect of assets acquired under operating lease are charged off to the statement of profit and loss on a straight line basis with reference to the lease term and other contractual consideration as incurred. Initial direct cost incurred specifically for an operating lease are deferred and charged to the statement of profit and loss over the lease term. Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance lease. Such assets acquired on or after 1 April 2001 are capitalised at fair value of the assets or brsent value of the minimum lease payments at the inception of the lease, whichever is lower. A corresponding amount is recorded as a lease liability. The principal amount in the lease rentals paid is adjusted against the lease liability and the balance charged to the statement of profit and loss as finance cost. 1.14 Earnings per share ('EPS') Basic EPS is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year except where the result would be anti dilutive. 1.15 Provisions and contingencies The Company creates a provision where there is brsent obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. Provisions are recognised at the best estimate of the expenditure required to settle the brsent obligation at the balance sheet date. The provisions are measured on an undiscounted basis. A disclosure for a contingent liability is made when there is a possible or a brsent obligation that may, but probably will not require an outflow of resources. When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Provision in respect of loss contingencies arising from claims, litigation, assessment, fines, penalties, etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. 1.16 Derivatives In compliance with the announcement dated 29th March, 2008 by ICAI regarding Accounting for Derivatives, the loss arising out of marking each class of derivative contracts to market price is recognised in the statement of profit and loss. Income, if any, arising out of marking each class of derivative contracts to market price is not recognised in the statement of profit and loss. 2 Segment reporting The Company is engaged in providing helicopter services in India, which is considered as one business segment. The secondary segment reporting based on geographical risk factor which may be brsent in different countries is also not applicable, as the Company's revenue from overseas business is less than 10% of the total business. Hence, there are no separate reportable segments, as required by the Accounting Standard 17 on "Segment Reporting" as notified under section 133 of the Act. 3 Demand notice issued by the Customs authorities During the year ended 31 March 2009, the Office of the Commissioner of Customs (Preventive) has seized three helicopters for alleged non-compliance of the duty waivers given to non-scheduled operators (passenger). The Company has received a Show Cause Cum Demand Notice (SCN) citing an amount of Rs 237,924,458 (brvious year: Rs 237,924,458) towards custom duty under Section 28 of the Customs Act, 1962 and applicable interest and penalty thereon. Pursuant to the receipt of the said SCN, the Commissioner of Customs (Preventive) has confirmed a demand of Rs 262,195,030 (brvious year: Rs 262,195,030) towards differential duty of customs and penalty thereon for two helicopters. The management believes that the Company is in compliance with the relevant customs and other regulatory guidelines in this respect, based on recent decision from Custom Excise and Service Tax Appellate Tribunal (CESTAT) West Zonal Bench, in favour of the Company on a similar matter and on an opinion from an external legal expert and the demand being contested by the Company will be set aside by a higher appellate tribunal. An amount aggregating Rs 53,826,044 (brvious year: Rs 53,826,044) has been paid as duty under protest during the year ended 31 March 2010. 4 Transfer Pricing The Company's international transactions with related parties are at arms length as per the independent accountants report for the year ended 31 March 2014. Management believes that the Company's international transactions with related parties post 31 March 2014 continue to be at arm's length and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expenses and that of provision of taxation. Management is in the process of obtaining the transfer pricing study / report for the year ended 31 March 2015. 5 Suspension of Non-Scheduled Operator's Permit The Director General of Civil Aviation (DGCA) vide its order dated 7 May 2012 suspended the Company's Air Operator's Permit (AOP). Consequently, the operations of the Company were suspended. The Company filed a Writ Petition with the single-judge bench of the Delhi High Court against the order of DGCA. Delhi High Court vide its judgment dated 11 June 2012 granted an interim relief to the Company and stayed the operation of the above mentioned order. Consequently, DGCA vide its order dated 20 June 2012 stayed its order of 7 May 2012, accordingly, the Company resumed its operations of flying aircrafts. On 19 September 2012 the DGCA has filed an appeal which is pending before the divisional bench of the Delhi High Court seeking the interim order passed by the single-judge bench to be set aside. Pursuant to the said appeal, the Company's AOP has been renewed and is subject to the outcome of the above court matters. Management believes that the Company is in compliance with relevant DGCA and other applicable regulations and continues as a going concern. 6 Exceptional items During the year ended 31 March 2015, pursuant to the approval of the Board, the Company has sold one helicopter. This sale has resulted into a profit of Rs 49,976,012 which has been recorded as an exceptional item for the year ended 31 March 2015. 7 Prior period items In past period certain customers of the Company have retained an amount aggregating Rs 90,264,239 (31 March 2014: Rs 90,264,239) in respect of taxes levied by the Company. The Company is currently in discussion with these customers for recovering the retained amount and the Company believes that it has a strong case to collect the outstanding amounts. However, the Company pursuant to advice received from Securities and Exchange Board of India (SEBI) in the letter dated 27 April 2015, has recorded a provision aggregating Rs 90,264,239 as at 31 March 2015 against these outstandings. As per our report of even date attached For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Vijay Mathur Partner Membership No : 046476 For and on behalf of the Board of Directors of Global Vectra Helicorp Limited CIN: L62200DL1998PLC093225 Lt. Gen. (Retd.) SJS Saighal Chairman DIN: 01518126 Dr. Gautam Sen Independent Director DIN: 02420312 Ashvin Bhatt Chief Financial Officer Mumbai Raakesh D. Soni Company Secretary Mumbai 26 May 2015 |