NOTES TO THE STANDALONE FINANCIAL STATEMENT .S FOR YEAR ENDED 31 MARCH 2016 1 company overview MEP Infrastructure Developers Limited ('MEPIDL' or 'the Company') (formerly known as MEP Infrastructure Developers Private Limited) is into the business of collection of toll as per the contracts entered with various authorities and also in providing road, repair and maintenance services to its subsidiaries. The Company has undertaken following contracts for toll collection: Maharashtra State Road Development Corporation Limited, 'MSRDC' at Katai & Gove 2 significant accounting policies 2.1 Basis of brparation of stanalone financial statements These standalone financial statements have been brpared and brsented under the historical cost convention, on the accrual basis of accounting in accordance with the accounting standards specified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules,2014 and other accounting principles generally accepted in India ('Indian GAAP') and relevant provisions of the Companies Act 2013 ('the Act'), to the extent notified and applicable. The standalone financial statements are brsented in Indian rupees in lakhs, rounded off to two decimal points. 2.2 Current/non-current classification The Schedule III to the Act requires assets and liabilities to be classified as either Current or Non-current 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 entity's normal operating cycle; (b) it is expected to be realised within twelve months after the Balance Sheet date; or (c) it is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for atleast twelve months after the Balance Sheet date. All other assets are classified as non-current. A liability is classified as current when it satisfies any of the following criteria: (a) it is expected to be settled in, the entity's normal operating cycle; (b) it is due to be settled within twelve months after the Balance Sheet date; or (c) the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the Balance Sheet date. All other liabilities are classified as non-current. Operating cycle Based on the nature of activity and the time between the acquisition of assets and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current, non-current classification of assets and liabilities. 2.3 Use of estimates The brparation of financial statements in conformity with Indian GAAP requires the 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 amounts of revenues and expenses during the reporting period. Management believes that the estimates made in the brparation of the financial statements are prudent and reasonable. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods. 2.4 Revenue recognition Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Toll collection Revenue from toll collection is recognised on actual collections of toll and in case of contractual terms with certain customers the same is recognised on an accrual basis. Road repair and maintenance Revenue from road repair and maintenance work is recognised upon completion of services as per contractual terms. 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 on investment is recognised when the right to receive dividend is established. 2.5 Fixed assets Tangible fixed assets Tangible assets are stated at cost less accumulated debrciation and impairment loss, if any. Cost comprises of purchase price and any attributable cost such as duties, freight, borrowing costs, erection and commissioning expenses incurred in bringing the asset to its working condition for its intended use. When parts of an item of fixed assets have different useful lives they are accounted for as separate items ( major components) of fixed assets. Expenditure incurred on acquisition / construction of fixed assets which are not ready for their intended use as at the Balance Sheet date are disclosed under capital work -in -progress. 2.6 Debrciation Debrciation is provided on the written down value method, at useful lives brscribed in Schedule II of the Companies Act 2013. Debrciation on addition/deletion of fixed assets during the year is provided on pro-rata basis from / to the date of addition/deletion. Fixed assets costing up to Rs. 5,000 individually are fully debrciated in the year of purchase. 2.7 Impairment of 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 is recognised wherever the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is the greater of assets value in use and net selling price. After impairment if any, debrciation is provided on the revised carrying amount of the asset over its remaining useful life. Previously recognised impairment loss is increased or reversed on changes in internal /external factors. 2.8 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consists of interest and other cost that an entity incurs in connection with the borrowing of funds. 2.9 Investments Long term investments are valued at cost, less provision for other than temporary diminution in value, if any. Current investments are valued at the lower of cost and fair value. 2.10 Employee benefits i) 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 etc. and the expected cost of ex-gratia are recognized in the period in which the employee renders the related service. ii) Post employment benefits Defined contribution plans The Company's contribution to defined contribution plans such as Provident Fund, Employees' State Insurance and Maharashtra Labour Welfare Fund are recognised in the Statement of Profit and Loss on an accrual basis. Defined benefit plans Gratuity 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. The brsent value of the obligation under such defined benefit plan is determined based on actuarial valuation by an independent actuary, using the projected unit credit method, which recognizes 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. When the calculation results in a benefit to the Company, the recognized asset is limited to the net total of any unrecognized actuarial losses and past service costs and the brsent value of any future refunds from the plan or reductions in future contributions to the plan. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss. 2.11 Operating leases Assets acquired under leases other than finance leases are classified as operating leases. The total lease rentals (including scheduled rental increases) in respect of an asset taken on operating lease are charged to the Statement of Profit and Loss on a straight line basis over the lease term unless another systematic basis is more rebrsentative of the time pattern of the benefit. 2.12 Taxation Income tax and deferred tax Income tax expense comprises current income 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 year) and reversal of timing differences of earlier years. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however; where there is unabsorbed debrciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed 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 alternate tax (MAT) Minimum alternate tax (MAT) credit is recognised as an asset only when, and only to the extent there is convincing evidence that the Company will pay normal income tax during the specified period for which the MAT credit can be carried forward or set off against the normal tax liability. MAT credit entitlement is reviewed at each Balance Sheet date and written down to the extent there is no convincing evidence to the effect that the Company will pay normal income tax during the specified period. 2.13 Earnings per share (EPS) Basic earnings per share is calculated by dividing the net profit/loss for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the period except where the result would be anti dilutive. 2.14 Provisions and contingencies The Company recognises a provision when there is a brsent obligation as a result of a past (or obligating) event that probably requires an outflow of resources and reliable estimate can be made of the amount of the obligation. A disclosure for the contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognised, nor disclosed in the standalone financial statements. 2.15 Cash and Cash equivalents In the cash flow statement, cash and cash equivalents include cash in hand, term deposits with banks and other short-term highly liquid investments with original maturities of three months or less. 5. long-term borrowings (contd...) e) pledge of 49% of the issued, paid up and voting equity share capital of Ideal Toll & Infrastructure Private Limited; f) first charge over the all bank accounts including but not limited to escrow account opened by MEP Highway Solutions Private Limited, subsidiary company; g) corporate guarantees jointly given by Ideal Toll & Infrastructure Private Limited; and personal guarantee given by Mr. J.D. Mhaiskar, Director of the Company The term loan carries an interest rate calculated on base rate of the bank plus a sbrad of 275 basis points. The term loan is repayable in 127 unequal monthly installments commencing from 1 September 2014. C) Term loan includes a loan from a bank amounting to Rs. 240.00 lakhs (brvious year : Rs. 610.00 lakhs) which is secured by way of assignment/ hypothecation of receivables to be generated from the Toll collection account of the projects financed. Further, the term loan is also secured by corporate guarantee given by Ideal Toll & Infrastructure Private Limited and personal guarantee given by Mr. J.D. Mhaiskar, Director of the Company. The term loan carries an interest rate of 13% p.a. The term loan is repayable in 35 unequal monthly installments commencing after one month from the date of first disbursement. D) Term loan includes a loan from a bank amounting to Rs. 275.42 lakhs (brvious year : Nil) which is secured as under : a) hypothecation / assignment of receivables to be generated from the Toll collection account & refund of performance security from authority of the projects financed; b) equitable mortgage(second charge) on the residential property situated at Mumbai owned by promoters of the Company; c) personal guarantee of Promoter Mr. Jayant Mhaiskar. The term loan carries an interest rate calculated on base rate of 13.00% p.a.(floating at monthly rest) The loan is repayable in 10 monthly installments from the date of disbursement & last installment in lumsum on or before 31st January 2017. E) Term loan includes a loan from a bank amounting to Rs. 1,483.71 lakhs (brvious year : Nil) which is secured as under : a) exclusive charge by way of equitable/registered mortgage on the commercial properties situated at Boomerang building, Chandivali farm road, Andheri East; b) pledge of 200% of demat shares of the Company (amount equivalent to remaining portion of term loan after considering the amount against the mortgage commercial properties of the Company); c) Personal guarantee of Promoter Mr. Jayant Mhaiskar; d) DSRA equivalent to 3 months EMI in form of undisbursed overdraft as sublimit of term loan. The term loan carries an interest rate calculated on base rate of 11.25 % p.a. i.e. Base rate plus 0.65% (annual reset) The loan is repayable in 72 monthly installments from the date of disbursement. F) Term loan includes a loan from a financial institution amounting to Rs. 5,000.00 lakhs (brvious year : Nil) which is secured as under : a) First pari -passu charge on approximately 21 acres of leasehold land of 99 years located at Baramati, District Pune, Maharashtra giving a security cover of 1.50 times over the loan facility; b) DSRA equivalent to 3 months interest servicing in form of FD with scheduled commercial bank lien marked; c) Subservient charge on all revenues & receivable of the Company; d) Pledge of such number of shares of the Company by the promoters by way of Non-Disposal Undertaking (NDU) mechanism along with Power of Attorney (POA) so as to give cover of 1.00 times on the loan amount; e) Personal guarantee of Promoter Mr. Jayant Mhaiskar; f) Corporate guarantee of Baramati Tollways private Limited (Land mortgagor). The term loan carries an interest rate calculated on base rate of 11.70 % p.a. plus sbrad of 1.80%. The loan is repayable in 36 equal monthly installments beginning from 25th month from the date of disbursement. II) Vehicle loans A) Vehicle loans from banks of Rs. 374.88 lakhs (brvious year : Rs. 314.74 lakhs) carry interest rates ranging from 9.76% - 12.38% p.a. The loans are repayable in 36 monthly installments along with interest. The loans are secured by way of hypothecation of the respective vehicles. B) Vehicle loans from various financial institutions of Rs.60.05 lakhs (brvious year : Rs. 28.31 lakhs) carry interest rate ranging from 9.75% - 12.34% p.a. The loans are repayable in 35 - 60 monthly installments along with interest. The loans are secured by way of hypothecation of the respective vehicles. 26.15 domestic transfer pricing The Indian Finance Bill, 2012 had sought to bring in certain class of domestic transactions in the ambit of the transfer pricing regulations with effect from 1 April 2012. The Company's management is of the opinion that its domestic transaction are at arm's length so that appropriate legislation will not have an impact on financial statements, particularly on the amount of tax expense and that of provision for taxation. The Company does not have any international transactions with related parties during the year. 26.16 prior period expense Prior period expense (net) in the Statement of Profit and Loss for the year ended 31 March 2015 comprises charge towards maintenance cost paid to Authority of Rs. 50.88 lakhs, professional fees of Rs. 14.78 lakhs, ESIC of Rs.1.50 lakhs, membership fees of Rs. 2.97 lakhs and prior period income of Rs. 40.89 lakhs towards reversal of share issue expenses charged in brvious year. 26.17 other matters Information with regards to other matters specified in Schedule III to the Act, is either nil or not applicable to the Company for the period. 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 Gokhale & Sathe Chartered Accountants Firm's Registration No: 103264W Yatin R. Vyavaharkar Partner Membership No: 033915 For and on behalf of the Board of Directors of MEP Infrastructure Developers Limited CIN: L45200MH2002PLC136779 Jayant D. Mhaiskar Managing Director DIN: 00716351 Anuya J. Mhaiskar Director DIN: 00707650 M. Sankaranarayanan Chief Financial Officer Shridhar Phadke Company Secretary Place : Mumbai Date: 24 May 2016 |