Notes forming part of the Financial Statements 1) GENERAL NOTE ON BUSINESS: Adlabs Entertainment Limited (the Company) is engaged in the business of development and operations of theme based entertainment destinations in India, including theme parks, water parks and associated activities including retail merchandising and food and beverages. The flagship project of the company is located at Khalapur, on Mumbai Pune Exbrssway and is branded ''Imagica - Theme Park" for the theme park component and "Imagica -Water Park" for the water park component. During the year the Company has launched its Hotel at the same location by the name "Novotel Imagica" with 116 rooms in first phase out of the 287 rooms. Balance rooms are expected to be operational during financial year 2016-17. Note No.2 NOTES TO THE ACCOUNTS ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH ,2016. 2) SIGNIFICANT ACCOUNTING POLICIES: 2.1 Basis Of Preparation Of Financial Statements The Company follows Mercantile System of Accounting. The financial statements have been brpared and brsented under the historical cost convention and in accordance with the accounting standards specified under section 133 of the Companies Act, 2013 read with rule 3(2) of the Companies (Indian Accounting Standard) Rules, 2015 and other relevant provisions to the extent applicable. All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - noncurrent classification of assets and liabilities. 2.2 Use of Estimates The Presentation of the financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and reported amount of revenues and expenses during the reporting year. Difference between the actual results and estimates are recognized in the year in which the results are known / materialized. 2.3 Fixed Assets & Debrciation Fixed assets are valued at cost less accumulated debrciation. All cost comprises of purchase price, duties levies attributable to the fixed assets are capitalized. Costs also include interest and financing costs, test and trial run cost till commencement of commercial operations of amusement park project, net charges on foreign exchange contracts (Buyers credit) and adjustments arising from exchange rate variations including mark to market provisions attributable to the fixed assets are also capitalized. Fixed assets retired from active use and held for disposal are stated at lower of their net book value and net realizable value and are disclosed separately 2.4 Revenue Recognition The Company has revenue recognition policies for its various operating segments that are appropriate to the nature of each business. Tickets Revenues from theme park/water park ticket sales are recognized when the tickets are issued. The accounting policy for recognizing revenue from sale of Open Pass/Gift Passes or Open Day Tickets with all days validity which are Non-Refundable in nature are recognised when Passes/ Tickets are utilized or expired. Food/Beverages Revenue is recognized when food/ drinks are supplied or served or services rendered. Merchandise Retail sale are recognized on delivery of the merchandise to the customer, when the property in goods and significant risk and rewards are transferred for a price and no effective ownership control is retained. Room Revenue Revenue recognized upon rendering of services. Others The revenue is recognized on accrual basis and when significant risk and rewards are transferred. 2.5 Inventories Inventories are valued at lower of cost and net realizable value. Cost is arrived in the following manner: Food items : Weighted Average Basis Merchandise : Cost Consumable & Spare Parts : Cost 2.6 Intangible Assets i) Intangible Assets are stated at Cost of Acquisition net of recoverable taxes less accumulated amortizations/deletions, ii) Debrciation is charged, based on the useful lives of the assets as estimated by the management. Sr. No- Nature of asset Estimated Useful Life 1. Trademarks and Logos -10 Years 2. Softwares- 6 Years 3. Films- 10 Years 2.7 Provisions, Contingent Liabilities and Contingent assets A provision is recognized when the company has a brsent obligation as a result of a past event, and is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are determined based on the best estimate required to settle the obligation at the balance sheet date. A contingent liability is disclosed unless the possibility of an outflow of resources embodying economics benefits is remote. A contingent asset is neither recognized nor disclosed. 2.8 Foreign Currency Transactions Foreign currency transactions are accounted at the exchange rates brvailing on the date of the transactions. Gains and losses, if any, at the year-end in respect of monetary assets and monetary liabilities not covered by the forward contracts are transferred to Profit & Loss Account except for Long Term Foreign Currency Monetary Items. The Company as per provisions under para 46A of AS-11 notification, has added/deducted from the Cost of Assets the Exchange Fluctuation including mark to market provisions arising on reporting of Long Term Foreign Currency Monetary Item utilized for acquiring the said Fixed Assets. The Company has also entered into derivative contracts for hedging the exchange fluctuation on such Long term Foreign Currency Monetary items utilized for acquiring fixed assets. The amount of Exchange Difference (after adjusted the gain on hedge) adjusted to Fixed Assets during the reporting year is Rs. 83.05 million (net) (Previous year: Rs. 88.20 million) 2.9 Borrowing Cost: (Interest and Finance Charges) Borrowing costs that are attributable to acquisition and construction of qualifying assets are capitalized till the asset is put to use. All other borrowing costs are recognized as expenditure in the year in which they are incurred. Borrowing cost incurred for qualifying assets is capitalised up to the date the asset is ready for intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset. Capitalized borrowing costs amounted to Rs. 94.18 million (brvious year: Rs. 106.60 million) and related to Fixed Assets. Average cost for capitalization & financial charges thereon of 7.6% to 12.75% (brvious year: 9.74%) was used as a basis for capitalization for assets which are still under Work in Progress. 2.10 Employee Benefit The company has provided for leave encashment and gratuity as per actuarial valuation done on projected unit credit method. Both the liabilities are non funded. 2.11 Income Tax Current Tax: Provision for current Income Tax is made on the estimated taxable income using the applicable tax rates and tax laws. Deferred Tax: Deferred Tax arising on the timing differences and which are capable of reversal in one or more subsequent year is recognized using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax asset is not recognized unless there is a virtual certainty as regards to the reversal of the same in future years. 2.12 Investments Long term investments are stated at cost less other than temporary diminution in value, if any. Current investments are stated at lower of cost and fair value. Fair value of investments in mutual funds is determined on a portfolio basis. 2.13 Lease (a) Where the company is a Lessor The Company has given on lease three brmises/place for period of 5 years to 15 years. The lease rentals received during the reporting year amount to Rs. 7.90 million. (b) Where the Company is a Lessee The Company has taken certain assets like Land, Office brmises, furniture and fixtures and apartments on lease. They are on rental lease term which range between 10 months to 7 years. The lease rentals paid during the year amount to Rs. 21.51 million. 2.14 Impairment of Asset An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An Impairment Loss is charged to the Profit & Loss Account in the year in which the asset is identified as impaired. The impairment loss recognized in prior accounting year is reversed if there has been a change in the estimate of recoverable amount. 2.15 Measurement of Earnings Before Interest, Tax, Debrciation and Amortization (EBITDA) As permitted by the Guidance Note the Company has elected to brsent 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 / (loss) from continuing operations. In its measurement, the Company does not include debrciation and amortization, finance costs, tax expense and, where applicable, prior period items. 3) Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 129.24 million as on 31st March, 2016. 4) The Current assets, Loans & Advances (including capital advances) have a value on realization in the ordinary course of business, at least equal to the amount at which they are stated in the balance sheet. Current assets, Loans & Advances (including capital advances) are subject to Confirmation and Reconciliation. Other known liabilities are adequate and not in excess of what are required. 5) The Term Loan facility availed by the Company is secured by pari passu first charge on movable and immovable fixed assets of the Company including mortgage of 298 acres of land to consortium lead by Union Bank of India in favour of IDBI Trusteeship Services Ltd. However, during the year the Company has transferred 137.33 acres of mortgaged land to wholly owned subsidiary with mortgage to continue in favour of lenders. The said loan is also secured by first pari passu charge on Current assets of the Company. Term Loan availed from Banks will be repaid over period of 7 to 10 years in unequal monthly installments starting from April 2017 to July 2018. Term Loan availed from Financial Institutions will be repaid over period of 10 years in unequal monthly installments starting from April 2015. Interest rate on term loan taken from Banks and Financial institutions varies from base rate plus 2.60 to 3.10. Interest rate on Loan taken in form of Buyers Credit varies from 0.48 to 3.00. 6) The Company equity shares are in dematerialized form with the Central Depository Services (India) Limited (CDSL) and with National Securities Depository Limited (NSDL) having ISIN No. INE172N01012. 7) The brvious year figures have been reworked, regrouped, rearranged and re-classified, wherever necessary. Amount and other disclosure for the brceeding year are included as an integral part of the current year financial statement and are to be read in relation to the amounts and other disclosures relating to that year. 8) During the year the Company has transferred the 137.33 acres of land to its 100% subsidiary Company on 10th March, 2016 for which the deed of conveyance is executed on 29th September, 2014 for a total consideration of Rs. 1,057.57 million. 9) The Company has executed an agreement to sale on 7th November, 2014 to sell 32.58 acres of land for a total consideration of Rs. 273.71 million to its 100% subsidiary Walkwater Properties Pvt. Ltd., subject to receipt of approval from the Directorate of Industries / Government of Maharashtra ("DIC") and a no objection (NOCs) from the lenders. 10) The company has suspended operation of Bandit of Robinhood ride on account of malfunctioning and it has filed with the vendor for damages including compensation for loss of business. The company has separately disclosed it as retired asset under fixed asset schedule and is carried at lower of Net Book Value or Net Realisable value. For A. T. JAIN & CO. Firm Registeration No : 103886W Chartered Accountants S. T. Jain Partner Membership No: 33809 For and on behalf of the Board of Directors of ADLABS Entertainment Limited Manmohan Shetty Chairman Rakesh Khurmi Chief Financial Officer Kapil Bagla Whole Time Director Madhulika Rawat Company Secretary Place: Mumbai Date: 24th May, 2016 |