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Notes to Accounts of Accel Transmatic Ltd.

Mar 31, 2015

1. Rights, preferences and restrictions attached to shares Equity shares

The company has one class of equity shares having a par value of Rs, 10 each. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion to their shareholding. Preference Shares

The company had issued 5,000,000 10% Cumulative Redeemable Preference Shares of a face value of Rs.10/- to the promoter company Accel Limited aggregating to Rs.50,000,000/-on August 14, 2013 against loan amount outstanding due to that Company as on that day. The Issue was approved by the share holders in the AGM held on August 14, 2013. The shares are redeemable after 7 years of the date of issue.

2. Details of Security

The Asset Backed Loan (ABL) from bank is secured by equitable mortgage of Company's immovable properties and corporate guarantee of its holding company M/s Accel Limited and personal guarantee of Mr N R Panicker, Promoter Director.

3. Terms of repayment

Asset Backed Loan (ABL) from bank carries interest @ 12.70% p.a and the amount outstanding as on date of balance sheet is repayable in 83 monthly instalments. The terms of repayment of loan from Holding Company is not stipulated yet.

4. Dyes to Micro, Small & Medium Enterprises

The company has initiated the process of identifying the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development: Act: 2006. Since no intimation has been received from the suppliers regarding their status under the said Act as at 31st March 2015, disclosures relating to amounts unpaid as at the year end, if any, have not been furnished. In the opinion of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act: is not expected to be material.

5. Capital Advance represents consideration received from an associated concern as advance towards proposed utilisation of infrastructural facilities situated at leased premises in KINFRA, Trivandrum. Since the proposal is at the intial stage and the approval from authorities is awaited, no adjustment is made in the book of accounts for the assets proposed to be so transferred as per arrangement.

6. Revaluation

The company has revalued its land and buildings at Trivandrum during the year ended 31.03,2004, at the fair values determined by an independent external valuer. The valuer determined the fair value by reference to market-based evidence.

The revaluation resulted in an increase in the value of freehold land and building by Rs. 1,09,39,354 and Rs.17,50,486, respectively. The revaluation of the building results an additional depreciation charge of Rs.58,466 every year. In accordance with the option given in the Guidance Note on Accounting for Depreciation in Companies, the company recoups such additional depreciation out of revaluation reserve.

7. Lease Hold Land

Land under Fixed Assets includes Rs.67.60 lacs being the value of land allotted and possession handed over by KIN FRA Film & Video Park (KIN FRA), a Government of Kerala Undertaking to the Company for construction of building to house its operations for which the registration formalities are yet to be completed. As per the agreement: with" the party", the said land Is on a 90 year lease and has to be developed within a period of 3 years from the date of allotment i.e. on or before 05.04.2010,. The said land could not be developed within the time frame agreed on account of the difficult scenario being faced by the Animation Industry in general and the company in particular. KIN FRA , in the meantime has changed the status of the SEZ from Animation to include IT/ITES also., This has been approved by the Ministry of Industries & Commerce vide its letter dated 7th February 2012 . The company's proposal to KIN FRA to change our status to a co developer is still pending.

8. Fixed assets, capital work in progress & Inventory of intangible assets

The animation division of the company Is engaged In the development of Animation contents, which can be under a service / co production contract or for creating its own IPR. The cumulative expenses incurred under co production and IPR creation activities are carried forward under capital work-in-progress, till the assets are ready for commercial exploitation. The expenses incurred under service contracts are carried forward as work in progress inventories till the milestone billing are achieved. As a result Rs. Nil (PY Rs.5,14,00)are carried forward in the Accounts as at the year end.

8. Impairment of Assets

In the opinion of the management there is no impairment as on the date of the balance sheet in the value of the carrying cost of fixed assets of the company within the meaning of Accounting Standard - 28 on Impairment of Assets issued under Companies (Accounting Standards) Rules 2006, considering the revenue earning potential of the company and based on the estimated future cash flows upon crystallization of enquiries received by the company for the intellectual property rights carried In the books as intangible assets.

9 Exceptional Item

The Company has adopted the revised estimates of useful life of Fixed Assets as stipulated in Schedule II of the Companies Act 2013 w.e.f 1st April 2014. The additional depreciation on such adoption has been charged to Statement of Profit & Loss which is not material. Further, an amount of Rs.51,74,084/- is charged to Revenue as exceptional Item being value of assets for which the useful! life hasexpired as on 1st April 2014 asa resuit of such change.

10. Taxation:

Provision for current tax is made on the basis of the assessable Income and /or Mat: Provisions, at the tax rate applicable to the relevant assessment year. Mo tax provision is made under normal as well under MAT considering the brought forward losses of the company as a whole. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date The net Deferred Tax Asset at the year end is not recognized as a matter of prudence.

11. Related Party Disclosures Controlling Company Accel Limited Associates

Accel Frontline Limited Accel IT Resources Limited Key Management Personnel:

N R Panleker Non Executive Chairman

K R Chandrasekaran Executive Director

Shoba Giridharan Company Secretary

12. Segment Reporting

The Company is engaged in the business providing animation services which is considered to be the only reportable business segment as per the Accounting Standard 17.

Previous year's figures have been regrouped , recasted and rearranged wherever necessary, to suit the current period layout.

13.Merger

The Board of Directors of the Company, in its meeting held on 27th March 2015 has approved a proposai for merger of the holding company M/s Accel Limited, with the company w.e.f 1st April 2014 (Appointed Date) subject to necessary statutory and other approvals. Accordingly, a scheme of amalgamation has been drawan up and submitted to BSE Ltd., (Stock Exchange), which is pending for their approval. Necessary adjustment in tha accounts would be incorported on approval of the scheme by appropriate authorities.


Mar 31, 2014

1. Measurement of EBITDA

As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the company has elected to present earnings before interest, tax, depreciation and amortization (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 depreciation and amortization expense, finance costs and tax expense.

2. Rights, preferences and restrictions attached to shares Equity shares

The company has one class of equity shares having a par value of Rs. 10 each. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion to their shareholding.

3. Preference Shares

The company had issued 5,000,000 10% Cumulative Redeemable Preference Shares to the promoter company Accel Limited, With a face value of Rs. 10/- aggregating to Rs.50,000,000/- on 27-09-2013 against loan amount outstanding due to that Company as on that day. The Issue was approved by the share holders in the AGM held on August 14, 2013. The shares are redeemable after 7 years after the date of issue.

4. Going concern

The company has suffered cash losses from its operations during the year. The accumulated losses as on the date of the balance sheet is more than 50% of its net worth. However, considering the expected future cash flows from the business and the intellectual property that the company is currently exploiting through global sales, the management is of the opinion that the company would be in a position to continue as a going concern and hence the accounts have been drawn up on such basis.

5.1: Details of Security : The Asset Backed Loan (ABL) from bank is secured by equitable mortgage of Companies immovable properties and corporate guarantee of its holding company M/s Accel Limited and personal guarantee of Mr N R Panicker, Promoter Director.

5.2: Terms of repayment: loans from related party carry an interest of 7.50% for the holding company and 13.75% for other associate companies and are repayable as per the loan agreement. ABL from bank carries interest @ 12.85% p.a and the amount outstanding as on the date of balance sheet is repayable in monthly installment over the next 83 months form the date of sanction.

6. Long term Provisions

a) Disclosure required under AS15 - "Employee Benefits" (Revised 2005)

1. Defined Contribution Plan

During the year, the company has recognized in the Profit and Loss Account, an amount of Rs. 1,84,660 (Previous Year Rs. 286,959) on account of defined contribution towards Provident Fund and Rs. (Previous Year 35,371) towards Employees State Insurance Scheme.

2. Defined Benefit Plans

Gratuity - Funded Obligation

The assumption of future salary increases takes into account of inflation, seniority, promotions and other relevant factors such as supply and demand in the employment market.

Note: The above disclosures and the break up of liability into long term and short term are based on valuation report of an independent actuary and relied upon by the auditors.

3. Long Term Employee benefits

Compensated absences (Leave encashment) - Unfunded Obligation

The assumption of future salary increases takes into account of inflation, seniority, promotions and other relevant factors such as supply and demand in the employment market.

Note: The above disclosures and the break up of liability into long term and short term are based on valuation report of an independent actuary and relied upon by the auditors.

7. Short term borrowings

The Cash Credit limits, Term Loan Limits and Non Funded Limits (The Limits) are secured by hypothecation of Intellectual property rights, receivables and hypothecation of assets created out of bank finance and carries interest @ 17.50% p.a and are repayable on demand.

The Limits are also secured by equitable mortgage of company''s immovable properties at Trivandrum & Chennai

The limits are further secured by assignment of lease deposit in favour of the bank in respect of leased property at Trivandrum. The loans are also secured by a corporate guarantee of Accel Limited and pledge of 7,50,000 equity shares of Accel Transmatic Limited held by Accel Limited, the holding company. Also refer note 5.3

The above loans were closed on 24-01-2014 after availing an Asset Backed Loan (ABL) (Refer Note 5.1 above)

8. Dues to Micro, Small Enterprises

The company has initiated the process of identifying the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act 2006. Since no intimation has been received from the suppliers regarding their status under the said Act as at 31st March 2014, disclosures relating to amounts unpaid as at the year end, if any, have not been furnished. In the opinion of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material.

9. Other Current Liabilities

Note :

i. Advances received includes Security deposit including interest accrued received from an associate company amounting to Rs. 16,246,726 (P.Y 23,771,806).

ii. Unclaimed dividend will be transferred to the Investor Protection and Education Fund if remains unclaimed, in the year 2014-15.

10.1. Revaluation

The company has revalued its land and buildings at Trivandrum during the year ended 31.03.2004, at the fair values determined by an independent external valuer. The valuer determined the fair value by reference to market-based evidence.

The revaluation resulted in an increase in the value of freehold land and building by Rs. 1,09,39,354 and Rs. 17,50,486, respectively. The revaluation of the building results an additional depreciation charge of Rs. 58,466 every year. In accordance with the option given in the Guidance Note on Accounting for Depreciation in Companies, the company recoups such additional depreciation out of revaluation reserve.

10.2: Lease Hold Land

Land under Fixed Assets includes Rs.67.60 lacs being the value of land allotted and possession handed over by KINFRA Film & Video Park (KINFRA), a Government of Kerala Undertaking to the Company for construction of building to house its operations for which the registration formalities are yet to be completed. As per the agreement with "the party" the said land is on a 90 year lease and has to be developed within a period of 3 years from the date of allotment i.e. on or before 05.04.2010. The said land could not be developed within the time frame agreed on account of the difficult scenario being faced by the Animation Industry in general and the company in particular. KINFRA, in the meantime has changed the status of the SEZ from Animation to include IT/ITES also. This has been approved by the Ministry of Industries & Commerce vide its letter dated 7th February 2012. The company''s proposal to KINFRA to change our status to a co developer is still pending.

10.3: Fixed assets, capital work in progress & Inventory of intangible assets

The animation division of the company is engaged in the development of Animation contents, which can be under a service /coproduction contract or for creating its own IPR. The cumulative expenses incurred under coproduction and IPR creation activities are carried forward under capital work-in-progress, till the assets are ready for commercial exploitation. The expenses incurred under service contracts are carried forward as work in progress inventories till the milestone billing are achieved. The following amounts are carried forward in the Accounts as at the year end.:-

1. Under Fixed Assets & Capital work in progress (net of amortization) Rs. 74,788,047 (Previous year Rs. 98,792,490)

10.4: Impairment of Assets

In the opinion of the management there is no impairment as on the date of the balance sheet in the value of the carrying cost of fixed assets of the company within the meaning of Accounting Standard - 28 on Impairment of Assets issued under Companies (Accounting Standards) Rules 2006, considering the revenue earning potential of the company and based on the estimated future cash flows upon crystallization of enquiries received b the company for the intellectual property rights carried in the books as intangible assets.

The confirmation of balances from concerned parties in respect of major accounts of sundry debtors, other receivables, loans and advances and sundry creditors outstanding as at the year-end is yet to be received. This also includes the revenue entitlement on the international recoupment on one of its coproduction work completed.

11. Trade Receivables

Th confirmation of balances from concerned parties in respect of major accounts of sundry debtors, other receivables, loans and advances and sundry creditors outstanding as at the year-end is yet to be received. This also inclueds the revenue entitlement on the international recoupment on one of its production work completed.

12. Other current assets

1) In the opinion of the Directors, the current assets, loans and advances have the value in which they are stated in the balance sheet, if realized in the ordinary course of business.

2) Unbilled revenue represents amount recognized based on services performed in advance of billing in accordance with contractual terms.

13. Exceptional items

During the previous year, The Company sold its Technology division (''transferred division'') along with its subsidiary in United States of America to Accel Frontline Limited, pursuant to a Business transfer agreement w.e.f. August 15th, 2011 on a slump sale basis for a cash consideration of Rs. 19.97 crores. The transaction was approved by the Board of Directors on its meeting held on August 2nd, 2011. The profit on sale of business of Rs. 1405.55 Lacs was credited to Profit and Loss account as exceptional item.

As per the terms of the BTA to transfer the Technology division to Accel Frontline Limited, the company received an additional amount of Rs. 2 Crores as incentive on achievement of an EBITDA of Rs. 5 crores for the twelve months ended 31st March 2012 as finalized by the audited accounts of the said division.

Capitalization of expenditure

During the previous year, the company has capitalized certain expenses to the cost of fixed asset classified under intangible assets/capital work-in-progress (CWIP) being the expenses relatable to development of such assets. Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the company. During the current year there is no such capitalization.

Taxation:

Provision for current tax is made on the basis of the assessable Income and/or Mat Provisions, at the tax rate applicable to the relevant assessment year. No tax provision is made under normal as well under MAT considering the brought forward losses of the company as a whole. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date The net Deferred Tax Asset at the year end is not recognized as a matter of prudence.

Related Party Disclosures

Controlling Company - Accel Limited

Associates

Accel Frontline Limited Accel IT Resources Limited

Key Management Personnel:

N R Panicker Non-Executive Chairman

K R Chandrasekaran Executive Director

S T Prabhu Company Secretary

Contingencies and commitments

(Rupees in Lacs)

March 31, March 31, 2014 2013

Outstanding bank guarantees/letter of Credits 1.10 1.10

Corporate Guarantee to a bank on behalf of an Associate Company - 350.00

Income Tax Demands 136.11 136.11

Customs 33.87 33.87

PF & Others 21.07 21.07

Estimated amount of Contracts remaining to be executed on Capital account and not provided for (Net of Advances) is Rs. Nil Lacs (Previous year Rs. Nil Lacs)

It is not practicable for the company to estimate the timings of cash flows, if any, in respect of the above pending resolutions of the respective proceedings. The company does not expect any reimbursement from third parties in respect of the above contingent liability.

Additional Information pursuant to Part II of Schedule VI of the Companies Act, 1956, to the extent applicable.

(a) Number of Non Resident Shareholders and dividends paid to them. (On payment basis)

Previous year''s figures have been regrouped, re-casted and rearranged wherever necessary, to suit the current period layout. Vide our report of even date.


Mar 31, 2013

Company Information:

Accel Transmatic Limited (the company) is a public limited company domiciled in India and is listed in the Bombay stock exchange (BSE). The company presently ofers animation services from its studios in Chennai and Trivandrum.

1.1 Rights, preferences and restrictions attached to shares

Equity shares

The company has one class of equity shares having a par value of Rs. 10 each. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion to their shareholding.

Preferential warrants

The company had issued 5,50,000 convertible warrants to a subscriber ( non promoter ) for a face value of Rs. 10/- each at a price of Rs 30.30 aggregating to Rs.16,665,000/- on December 31, 2010. The subscriber has remitted Rs. 41,66,250 being 25% of the issue consideration. The Issue was approved by the share holders in the EGM held on December 17, 2010. As per the terms of the issue, each of these warrants are to be converted into one Equity share of Rs. 10/- each at a price of Rs.30.30 each within a period of 18 months from the date of issue of warrants at the option of the subscriber. The subscriber did not exercise the option for such conversion before June 30, 2012 and hence the amount remitted has been forfeited and transferred to Reserves and Surplus account.

2.1. Details of Security : The term loan from bank is secured by hypothecation of assets acquired out of that loan. The limits are further secured by assignment of lease deposit in respect of leased property at Trivandrum in favour of the bank. The loans are also secured by a corporate guarantee of Accel Limited and pledge of 7,50,000 equity shares of Accel Transmatic Limited held by Accel Limited, the holding company.

2.2 Terms of repayment: loans from related party carry an interest of 7.50% for the holding company and 13.75% for other associate companies and are repayable in monthly installments of Rs. 500,000 . Term loan from bank carries interest @ 17.50% p.a and the amount outstanding as on the date of balance sheet is repayable in quarterly installment of Rs 72,00,000 Public deposit carries interest @11% pa (P.Y 11%), and are repayable after 3 years from the respective dates of acceptance of deposits.

2.3. During the previous year the company had sold its technology division to Accel Frontline Limited (AFL ). As per the terms of the agreement the net assets of the division has been transferred to AFL including the Term Loan & Cash Credit accounts with State Bank of India pertaining to the division. However the confrmation received from the bank includes the loans pertaining to the transferred division amounting to Rs. 20,012,032.43 pending transfer of the loan & Cash credit limit allocated to the technology division of AFL by the bank. The company is pursuing with the bank for the transfer.

2.4 The company had defaulted in the payment of installments and interest in respect of the secured loans taken from bank and installment in respect of unsecured loans taken from holding and associate companies. The details of the same are as under.

3.1 Dues to Micro, Small Enterprises

The company has initiated the process of identifying the suppliers who qualify under the defnition of micro and small enterprises, as defned under the Micro, Small and Medium Enterprises Development Act 2006. Since no intimation has been received from the suppliers regarding their status under the said Act as at 31st March 2013, disclosures relating to amounts unpaid as at the year end, if any, have not been furnished. In the opinion of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material.

4.1 Advances received includes Security deposit including interest accrued received from an associate company for providing a corporate guarantee to a bank amounting to Rs. 23,771,806 (P.Y 25,268, 776) .

4.2 Unclaimed dividend will be transferred to the Investor Protection and Education Fund if remains unclaimed, in the year 2013-14 & 2014-15 respectively.

4.3 Revaluation

The company has revalued its land and buildings at Trivandrum during the year ended 31.03.2004, at the fair values determined by an independent external valuer. The valuer determined the fair value by reference to market-based evidence.

The revaluation resulted in an increase in the value of freehold land and building by Rs. 1,09,39,354 and Rs.17,50,486, respectively. The revaluation of the building results an additional depreciation charge of Rs.58,466 every year. In accordance with the option given in the Guidance Note on Accounting for Depreciation in Companies, the company recoups such additional depreciation out of revaluation reserve.

4.4 Lease Hold Land

Land under Fixed Assets includes Rs.67.60 lacs being the value of land allotted and possession handed over by KINFRA Film & Video Park (KINFRA), a Government of Kerala Undertaking to the

Company for construction of building to house its operations for which the registration formalities are yet to be completed. As per the agreement with " the party ", the said land is on a 90 year lease and has to be developed within a period of 3 years from the date of allotment i.e. on or before 05.04.2010,. The said land could not be developed within the time frame agreed on account of the difcult scenario being faced by the Animation Industry in general and the company in particular. KINFRA , in the meantime has changed the status of the SEZ from Animation to include IT/ITES also., This has been approved by the Ministry of Industries & Commerce vide its letter dated 7th February 2012 . The company has submitted its proposal to KINFRA to change our status to a co developer.

5.1 Fixed assets , capital work in progress & Inventory of intangible assets

The animation division of the company is engaged in the development of Animation contents, which can be under a service / co production contract or for creating its own IPR. The cumulative expenses incurred under co production and IPR creation activities are carried forward under capital work-in-progress, till the assets are ready for commercial exploitation. The expenses incurred under service contracts are carried forward as work in progress inventories till the milestone billing are achieved. The following amounts are carried forward in the Accounts as at the year end.:- 1. Under Fixed Assets & Capital work in progress (net of amortization) Rs.98,792,490 ( Previous year Rs. 130,414,971 )

5.2 Impairment of Assets

In the opinion of the management there is no impairment as on the date of the balance sheet in the value of the carrying cost of fxed assets of the company within the meaning of Accounting Standard – 28 on Impairment of Assets issued under Companies (Accounting Standards) Rules 2006, considering the revenue earning potential of the company and based on the estimated future cash fows upon crystallization of enquiries received b the company for the intellectual property rights carried in the books as intangible assets.

Note 6 : Exceptional items

During the previous year , The Company sold its Technology division (‘transferred division'') along with its subsidiary in United States of America to Accel Frontline Limited, pursuant to a Business transfer agreement w.e.f. August 15th, 2011 on a slump sale basis for a cash consideration of Rs.19.97 crores. The transaction was approved by the Board of Directors on its meeting held on August 2nd, 2011.. The proft on sale of business of Rs. 1405.55 Lacs was credited to Proft and Loss account as exceptional item.

As per the terms of the BTA to transfer the Technology division to Accel Frontline Limited, the company received an additional amount of Rs. 2 Crores as incentive on achievement of an EBITDA of Rs. 5 crores for the twelve months ended 31st March 2012 as fnalized by the audited accounts of the said division.

Note 7 Other Notes

7.1 Capitalization of expenditure

During the year, the company has capitalized the following expenses to the cost of fxed asset classifed under intangible assets/ capital work-in-progress (CWIP) being the expenses relatable to such assets. Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the company.

7.2 Taxation:

Provision for current tax is made on the basis of the assessable Income and /or Mat Provisions, at the tax rate applicable to the relevant assessment year. No tax provision is made under normal as well under MAT considering the brought forward losses of the company as a whole. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date The net Deferred Tax Asset at the yearend amounts to Rs 14,235,609/- (Previous Year Asset Rs. 84,54,064/-) and is not recognized as a matter of prudence.

7.3 Related Party Disclosures

Controlling Company – Accel Limited

Subsidiaries & Associates under common control :

Accel Frontline Limited Accel IT Resources Limited Accel Media Ventures Limited

Key Management Personnel:

N R Panicker Non Executive Chairman

Philip John Whole time Director Resigned WEF 14.08.2012

S T Prabhu Director WEF 14.08.2012

7.4 Contingencies and commitments

(Rupees in Lacs)

March 31, 2013 March 31, 2012

Outstanding bank guarantees / letter of Credits 1.10 1.10

Corporate Guarantee to a bank on behalf of an Associate Company @ 350.00 350.00

Income Tax Demands 136.11 135.95

Customs 33.87 33.87

PF & Others 21.07 26.87

@ The corporate guarantee was given to a bank for the limits enjoyed by an associate company, Accel IT Resources Limited while it was a subsidiary . This is backed by an interest bearing cash deposit of Rs. 230 Lakhs from the said company which is more than the exposure of that company with the bank as on the date of the balance sheet..

Estimated amount of Contracts remaining to be executed on Capital account and not provided for (Net of Advances) is Rs. Nil Lacs (Previous year Rs.Nil Lacs)

It is not practicable for the company to estimate the timings of cash fows, if any, in respect of the above pending resolutions of the respective proceedings. The company does not expect any reimbursement from third parties in respect of the above contingent liability.

Previous year''s fgures have been regrouped , recasted and rearranged wherever necessary, to suit the current period layout.


Mar 31, 2012

Company Information:

Accel Transmatic Limited (the company) is a public limited company domiciled in India and is listed in the Bombav stock exchange (BSE). The company presently offers anima- tion services from its studios in Chennai and Trivandrum.The company had demerged its technology business to its group company M/s Accel Frontline Limited (AFL) effective August 15,2011 (refer note 23)

1.1 Measurement of EBITDA

As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the company has elected to present earnings before interest, tax, depreciation and amortization (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 depreciation and amortization expense,finance costs and tax expense.

1.2 Presentation and disclosure of financial statements

During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements.The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

2.1 Rights, preferences and restrictions attached to shares Equity shares

The company has one class of equity shares having a par value of Rs. 10 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of an interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion to their shareholding.

Preferential warrants

The company had issued 5,50,000 convertible warrants to a subscriber (non promoter) for a face value of Rs. 10/- each at a price of Rs 30.30 aggregating to Rs.16,665,000/- on December 31, 2010. The subscriber has remitted Rs. 41,66,250 being 25% of the issue consideration. The Issue was approved by the share holders in the EGM held on December 17,2010. As per the terms of the issue, each of these warrants are to be converted into one Equity share of Rs. 10/- each at a price of Rs.30.30 each within a period of 18 months from the date of issue of warrants at the option of the subscriber. In case the subscriber does not exercise the option for such conversion within the prescribed period, the amount paid for, will be forfeited.The option has to be exercised on or before June 30, 2012.

3.1 Going concern

The company has suffered cash losses from its operations during the year, without considering the profit on transfer of its technologies division. The accumulated losses as on the date ofthe balance sheet is more than 50% of its net worth. However, considering the expected future cash flows from the business and the intellectual property that the company is currently exploiting through global sales , the management is of the opinion that the company would be in a position to continue as a going concern and hence the accounts have been drawn up on such basis.

4.1. Details of Security: The term loan from bank is secured by hypothecation of assets acquired out of that loan. The limits are further secured by assignment of lease deposit in respect of leased property at Trivandrum in favour ofthe bank.The loans are also secured by a corporate guarantee of Accel Limited and pledge of 7,50,000 equity shares of Accel Transmatic Limited held by Accel Limited, the holding company.

4.2 Terms of repayment: loans from related party carry an interest of 13.75% p.a. and are repayable in monthly installments of Rs. 500,000, beginning October 2012 .Term loan from bank carries interest @ 17.50% p.a and the amount outstanding as on the date of balance sheet is repayable in quarterly installment of Rs 72,00,000 lakhs . Hire purchase loans carry an interest of 9% p.a and the amount outstanding as on the date of balance sheet is repayable in 4 monthly installments of Rs. 21,991 each. Public deposit carries interest @11% pa (P.Y 10%),and are repayable after 3 years from the respective dates of acceptance of deposits.

4.3. During the year the company has sold its technology division to Accel Frontline Limited (AFL) with effect from 15/08/2011 .As per the terms ofthe agreement the net assets ofthe division has been transferred to AFL including the Term Loan & Cash Credit accounts with State Bank of India pertaining to the division. However the confirmation received from the bank includes the loans pertaining to the transferred division amounting to Rs. 2,12,59,363/- pending transfer of the loan & Cash credit limit allocated to the technology division of AFL by the bank.The company is pursuing with the bank for the transfer.

Note:The above disclosures and the break up of liability into long term and short term are based on valuation report of an independent actuary and relied upon by the auditors

The Cash Credit limits, Term Loan Limits and Non Funded Limits (The Limits) are secured by hypothecation of Intellectual property rights and receivables and hypothecation of assets created out of bank finance and carries interest @ 17.50% p.a and are repayable on demand.

The Limits are also secured by equitable mortgage of company's immovable properties at Trivandrum & Chennai

The limits are further secured by assignment of lease deposit in favour of the bank in respect of leased property at Trivandrum. The loans are also secured by a corporate guarantee of Accel Limited and pledge of 7,50,000 equity shares of Accel Transmatic Limited held by Accel Limited, the holding company. Also refer note 5.3.

5.1 Dues to Micro, Small Enterprises

The company has initiated the process of identifying the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act 2006. Since no intimation has been received from the suppliers regarding their status under the said Act as at 31 st March 2012, disclosures relating to amounts unpaid as at the year end, if any, have not been furnished. In the opinion of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material.

6.1 Advances received includes Security deposit including interest accrued received from an associate company for providing a corporate guarantee to a bank amounting to Rs. 25,268,776 (P.Y Rs. 22,936,562).

6.2 Unclaimed dividend will be transferred to the Investor Protection and Education Fund if remains unclaimed, in the year 2012-13 & 2013- 14 respectively.

6.3 Revaluation

The company has revalued its land and buildings at Trivandrum during the year ended 31.03.2004, at the fair values determined by an independent external valuer.The valuer determined the fair value by reference to market-based evidence.

The revaluation resulted in an increase in the value of freehold land and building by Rs. 1,09,39,354 and Rs.17,50,486, respectively. The revaluation ofthe building results an additional depreciation charge of Rs.58,466 every year. In accordance with the option given in the Guidance Note on Accounting for Depreciation in Companies,the company recoups such additional depreciation out of revaluation reserve.

6.4 Lease Hold Land

Land under Fixed Assets includes Rs.67.60 lacs being the value of land allotted and possession handed over by KINFRA Film & Video Park (KINFRA), a Government of Kerala Undertaking to the Company for construction of building to house its operations for which the registration formalities are yet to be completed. As per the agreement with" the party",the said land is on a 90 year lease and has to be developed within a period of 3 years from the date of allotment i.e. on or before 05.04.2010,. The said land could not be developed within the time frame agreed on account ofthe difficult scenario being faced by the Animation Industry in general and the company in particular. KINFRA, in the meantime has changed the status ofthe SEZ from Animation to include IT/ITES also., This has been approved by the Ministry of Industries & Commerce vide its letter dated 7th February 2012 .The company has submitted its proposal to KINFRA to change our status to a co developer.

6.5 Fixed assets, capital work in progress & Inventory of intangible assets

The animation division of the company is engaged in the development of Animation contents, which can be under a service / co production contract or for creating its own IPR. The cumulative expenses incurred under co production and IPR creation activities are carried forward under capital work-in-progress, till the assets are ready for commercial exploitation. The expenses incurred under service contracts are carried forward as work in progress inventories till the milestone billing are achieved. The following amounts are carried forward in the Accounts as at the year end.:- 1 .Under Fixed Assets & Capital work in progress (net of amortization) Rs.130,414,971 ( Previous year Rs.13,160,051 )

6.6 Impairment of Assets

In the opinion ofthe management there is no impairment as on the date of the balance sheet in the value of the carrying cost of fixed assets of the company within the meaning of Accounting Standard - 28 on Impairment of Assets issued under Companies (Accounting Standards) Rules 2006. Considering the revenue earning potential of the company and based on estimates, of the cash generation unit of the company.

The Company has sought for confirmation of balances from concerned parties in respect of major accounts of sundry debtors, other receivables, loans and advances and sundry creditors outstanding as at the year-end, which, however is received in some of the cases.

1) In the opinion of the Directors, the current assets, loans and advances have the value in which they are stated in the balance sheet, if realized in the ordinary course of business.

2) Unbilled revenue represents amount recognized based on services performed in advance of billing in accordance with contractual terms.

Note 7: Exceptional items

The Company sold its Technology division ('transferred division') along with its subsidiary in United States of America to Accel Frontline Limited, pursuant to a Business transfer agreement w.e.f. August 15th, 2011 on a slump sale basis for a cash consideration of Rs.19.97 crores.The transaction was approved by the Board of Directors on its meeting held on August 2nd, 2011. As per the terms of the above said BTA, the company is eligible for an additional amount upto Rs.2 Crores as incentive if the said division achieves an EBITDA of Rs. 5 crores for the twelve months period ended 31st March 2012 as finalized by the audited accounts of the said division. Since the audit of the accounts and approval /adoption of the same by the Board of Directors of Accel Frontline Limited has not been completed as on date of finalization of this company's accounts, the company has not recognized any amounts towards the incentive for the year ended 31st March 2012.

During the previous year , the company divested 100000 equity shares of Rs. 10 each representing 10% of Share Capital of Accel IT Resources Limited (Formerly Accel Academy Limited) for a consideration of Rs. 120 Lakhs.The profit on sale of investments of Rs.60 Lacs was credited to Profit $nd Loss account as exceptional item.

Capitalization of expenditure

During theyear.thecompany has capitalized thefollowing expenses to the cost of fixed asset classified under intangible assets/ capital work-in-progress (CWIP) being the expenses relatable to such assets. Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the company.

Taxation:

Provision for current tax is made on the basis of the assessable Income and /or Mat Provisions, at the tax rate applicable to the relevant assessment year. No tax provision is made under normal as well under MAT for the income arising out of the discontinued business considering the brought forward losses of the company as a whole. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date The net Deferred Tax Asset at the yearend amounts to Rs 84,54,064/- (Previous Year Asset Rs.1, 14,83,124) and is not recognized as a matter of prudence.

Related Party Disclosures Controlling Company - Accel Limited

Subsidiaries & Associates under common control:

Accel Frontline Limited

Accel Frontline Services Limited

Accel IT Resources Limited

Accel Media Ventures Limited

Accel North America Inc - Subsidiary Upto 15.08.2011

Accel Systems Group Inc.

Key Management Personnel:

N R Panicker Non Executive Chairman

Philip John Whole time Director

@ The corporate guarantee was given to a bank for the limits enjoyed by an associate company, Accel IT Resources Limited while it was a subsidiary .This is backed by an interest bearing cash deposit of Rs. 230 Lakhs from the said company which is more than the exposure of that company with the bank as on the date ofthe balance sheet..

Estimated amount of Contracts remaining to be executed on Capital account and not provided for (Net of Advances) is Rs. Nil Lacs (Previ- ous year Rs.144.68 Lacs)

It is not practicable for the company to estimate the timings of cash outflows, if any, in respect of the above pending resolutions of the respective proceedings.The company does not expect any reimbursement from third parties in respect ofthe above contingent liability.

Previous year's figures have been regrouped, recasted and rearranged wherever necessary, to suit the current period layout.


Mar 31, 2010

1. Inter Segment Transfer Pricing

Segment Revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negoti- ated basis.

(2) Accounting for provisions, contingent liabilities & contingent assets

A provision is recognized where the enterprise has a present obligation as a result of past event and is probable that an outfow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obli- gation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to refect the correct Man- agement estimates.

Contingent Liabilities are disclosed by way of notes to the Balance Sheet. Provision is made in the accounts in respect of those liabilities which are likely to materialize after the year- end, till the fnalization of accounts and have material effect on the position stated in the Balance sheet.

Contingent Assets are not recognized in the fnancial state- ments as a matter of prudence.

3.1 Impairment of assets

In the opinion of the Management based on estimates of the value in use of the various cash generating units of the company, there is no impairment in the value of the carrying cost of fxed assets of the company within the meaning of Ac- counting Standard – 28 on Impairment of Assets issued under Companies (Accounting Standards) Rules 2006.

3.2 Current assets, loans and advances

(a) The Company has sought for confrmation of balances from concerned parties in respect of major accounts of sundry debtors, loans and advances and sundry creditors outstand- ing as at the year-end, which, however is received in some of the cases.

(b) During the year, the company entered into an agreement with Kahani world Inc. Canada to acquire the IPR “ Raju, the rick- shaw” under a 15 year license for further development and ex- ploitation as 78 X 7 minute episodes for worldwide TV broad- cast. The company felt there is a potential to develop this into a large product and the Canadian company was not having immediate plans to develop this further. The Digital content was earlier being developed as 7 X 7 minutes episodes for DVD under a co production agreement with them and the company. The company had raised an invoice on them for Rs.142 lacs. Consequent to the acquisition of this IPR, the com- pany has carried forward this amount due from Kahani World including further development cost incurred as Capital Work in Progress. The amount so far incurred by Kahani world inc in developing this property is to be treated as their share of pro- duction cost to be recouped by them at an agreed percent- age of the revenue over the period of 15 years on commercial exploitation of this Digital Asset.

(c) In the opinion of the Directors, the current assets, loans and advances have the value in which they are stated in the bal- ance sheet, if realized in the ordinary course of business.

(d) Bank balances include Rs. 45.55 Lacs In Current account & De- posit accounts in respect of Systems & Services Division (SSD) business transferred w.e.f 1st April 2009 as stated in note no. 21.8 below, which is yet to be transferred in the transferee’s name by the Bank as at the year end.

3.3 Taxation

(A) Current taxes

Provision for current taxes have been made on the basis of completed assessments and in other cases on the basis of re- turn fled / management computation.

3.4 Investments

Provision has been made for the diminution in the value of long-term investments to the extent considered doubtful by the management. In the opinion of the management the diminution in net worth of the subsidiary in United States of America is considered to be temporary in nature on account of the future business potential of the company and hence no provision is considered necessary at this stage.

3.5 Preferential warrants

The company had, during the year ended 31.03.2008, issued 25,50,000 convertible warrants of Rs. 10/- each at a premium of Rs 23 aggregating to Rs.8, 41,50,000/-. on payment of 10% of the aggregate amount payable. As per the terms of the is- sue, each of these warrants are to be converted into one Eq- uity share of Rs. 10/- each at a premium of Rs.23/ each within a period of 18 months from the date of issue of warrants at the option of the subscribers. In case any subscriber did not exer- cise the option for such conversion within the prescribed pe- riod, the amount paid for was to be forfeited. As no subscriber exercised the option within the prescribed period, the amount received as advance of Rs. 84,15,000 has been forfeited during the year and carried to Capital Reserve under Reserves and Surplus.

3.6 Secured loans

A. The Federal Bank Limited:

The unexpired Bank Guarantees issued by the bank and out- standing at the year end amounting to Rs.12.42 lacs is secured by counter guarantee by the company and also by way of a corporate guarantee of Accel Limited.

B. The State Bank of India:

a) The Cash Credit limits, Term Loan Limits and Non Funded Limits ( The Limits ) are secured by hypothecation of Raw Materials, Semi fnished goods , fnished goods, Intellectual property rights and receivables and hypothecation of assets created out of bank fnance.

b) The Limits are also secured by equitable mortgage of com- pany’s immovable properties at Trivandrum & Chennai

c) The limits are further secured by assignment of lease de- posits with Chennai & Trivandrum Landlords. The loans are also secured by Corporate Guarantee of Accel Limited and pledge of 750000 shares of Accel Transmatic Limited held by Accel Limited.

d) Secured loans include Rs. 502.92 lacs being Cash credit availed from State Bank of India for Systems & Services Divi- sion of the company which was hived off and sold during the year as stated in note no. 21.8. The transaction in the bank ac- count for the year refects the transactions of erstwhile Sys- tems & Services Division. The Cash Credit account has since been closed.

C. Hire purchase loans

Hire Purchase loans are secured by hypothecation of the fxed assets acquired out of such loans.

3.7 (a) Contingencies and commitments

(Rupees in Lacs)

March 31, 2010 March 31, 2009

Outstanding bank guarantees / letter 148.15 129.19

of Credits - $

Corporate Guarantee to a bank on 350.00 200.00

behalf of an Associate Concern @

Claims Against the company not Nil 4.20

acknowledged as debts.

Sales tax Demands Nil Nil

Others 21.67 13.76



$ Includes Rs.147.05 being Guarantees / Letter of Credits issued by banks on behalf of Systems and Services division (sold as of 01.04.2009) which is yet to be transferred in their name.

@ Also, Counter guaranteed by M/s Accel Limited.

(b) Estimated amount of Contracts remaining to be executed on Capital account and not provided for (Net of Advances) is Rs. 24.66 Lacs (Previous year Rs.Nil)

3.8 Exceptional Items

(a) During the year the company, pursuant to the approval of the members by way of a special resolution by postal ballot, transferred its Systems & Services Division carrying a Net As- set Book Value of Rs.788.30 Lacs as on April 1st 2009, to Accel Frontline Services Ltd with effect from 01.04.2009, on a slump sale basis for a total consideration of Rs 927.29 Lakhs. The prof- it on sale of the Systems & Services division representing the sale consideration over and above the net asset value adjust- ed in the books of accounts as on 01st April 2009 amounting to Rs. 138.99 lacs (net of tax Rs.138.99 lacs) is credited to proft and loss account as ‘proft on transfer of Business’. The details of the assets and liabilities transferred are as follows:

(b) During the year the company divested 390000 equity shares of Rs. 10 each representing 39% of investment in Accel IT Resources Limited (Formerly Accel Academy Limited) for a consideration of Rs. 468 Lakhs, as per the decision taken by the board of directors in its meeting held on 31.10.2009. Con- sequent to this sale, Accel IT Resources Limited ceased to be a associate of this company with effect from 01.10.2009. The proft on sale of investments of Rs.234 Lacs (Previous year Nil) has been credited to Proft and Loss account.

(c) The company during the year sold 60 Equity Shares held in its subsidiary Accel Solutions Inc, Japan for a consideration of Rs.3.64 Lacs. The resultant loss on such disinvestment amount- ing to Rs.7.94 Lacs is recognized in the Proft & Loss account.

3.9 (a) Payment to Directors

Details of managerial remuneration u/s 198 ( Minimum remuneration within the limits of schedule XIII to the Companies Act payable to whole time Directors.)

3.10 Dues to micro, small & medium enterprises

The company has initiated the process of identifying the sup- pliers who qualify under the defnition of micro and small en- terprises, as defned under the Micro, Small and Medium En- terprises Development Act 2006. Since no intimation has been received from the suppliers regarding their status under the said Act as at 31st March 2010, disclosures relating to amounts unpaid as at the year end, if any, have not been furnished. In the opinion of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material.

3.10 Segmental reporting

Geographical Segment: The management has identifed the following geographical segments as its secondary reporting segments.

D) Related parties with whom transactions have taken place during the year:

Subsidiaries & Associates:

1. Accel North America Inc - Subsidiary

2. Accel IT Resources Limited - $

3. Accel Limited - $

4. Accel Systems Group Inc. - $

5. Accel Frontline Services Limited - $

6. Accel Frontline Limited – Group Company $ Entities under common control.

E) Key Management Personnel:

N R Panicker Chairman

Philip John Whole time Director

3.11 Employee Benefts

a) Consequent to Accounting Standards 15 of Companies (Accounting Standards) Rules, 2006 becoming effective, the company has adopted the said standard with effect from 1st April 2007. In the absence of balance in Reserves and Surplus as on that date, the difference in opening liability computed in accordance with the revised standard amounting to Rs.21.15 lacs is being expensed on a straight line basis over a period of fve years from that date. The balance amount remaining unrecognized as on 31st March 2009 is Rs.8.46 lacs. The Amount recognized in the accounts of the current year is Rs.4.23 lacs.

b) Disclosure required under AS15 – "Employee Benefts" (Revised 2005)

1. Defned Contribution Plan

During the year, the company has recognized in the Proft and Loss Account, an amount of Rs.29.42 lacs (Previous Year Rs.48.28 lacs) on account of defned contribution towards Provident Fund and Rs.3.88 lacs (Previous Year 8.84 lacs) towards Employees State Insurance Scheme.

* The assumption of future salary increases takes into account of infation, seniority, promotions and other relevant factors such as supply and demand in the employment market.

Note: The above disclosures are based on valuation report of an independent actuary and relied upon by the auditors.

* The assumption of future salary increases takes into account of infation, seniority, promotions and other relevant factors such as supply and demand in the employment market.