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Notes to Accounts of Forbes & Company Ltd.

Mar 31, 2016

1. Corporate Information

Forbes & Company Limited is one of the oldest companies of the world that is still in existence. The Company traces its origin to the year 1767 when John Forbes of Aberdeenshire, Scotland started his business in India. Over the years, the Management of the Company moved from the Forbes Family to the Campbells to the Tata Group and now finally to the well known Shapoorji Pallonji Group. The Company is mainly engaged in the Engineering, Real estate and Shipping & Logistics business; and is listed on the Bombay Stock Exchange.

2. Capital and other commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.423.04 Lakhs; (Previousyear:Rs.188.61 Lakhs) [against which advance paid aggregating Rs.148.85 Lakhs; (Previousyear:Rs.125.38Lakhs)]

(b) For commitments relating to lease arrangements, see Note 34(a).

The estimates of future salary increases, considered in the actuarial valuation, take into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The contribution expected to be made by the Company during the financial year 2016-17 is Rs.105.18 Lakhs (Previousyear:Rs.101.57Lakhs).

Other Post Retirement Benefits

The information in respect of medical cost trend rates and the effect of an increase / decrease of 1% point in the assumed medical cost trend rates on current service cost, interest cost, accumulated post employment benefit cost and experience adjustment is not available; during the year, medical cost of Rs.1.59 Lakhs (Previousyear:Rs.13.98Lakhs) is recognised to the statement of profit and loss based on actuarial valuation.

The Company has charged amounts aggregating '' (6.46) Lakhs; (Previousyear: Rs.86.33 Lakhs) to the statement of profit and loss based on actuarial valuation [Present value of future obligation as at 31st March, 2016 Rs.350.13 Lakhs; (Previousyear: Rs.411.57Lakhs)] and paid Rs.54.98 Lakhs (Previous year: Rs.58.92Lakhs), towards the post retirement arrangements to former Managing Directors and other Directors.

3. Segment reporting

The Company has identified business segments as its primary segment and geographical segment as its secondary segment. Business segments are primarily "Engineering", "Real estate" and "Energy Solution" segment. The "Shipping and logistics services" segment has been discontinued. The Company caters to the needs ofthe domestic and export markets.

Segment revenue, segment results, segment assets and segment liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.

4. (a) Related party disclosures

(A) Holding Company

Shapoorji Pallonji and Company Private Limited

(B) Subsidiary Companies

1 Eureka Forbes Limited and its subsidiaries:

a) Aquamall Water Solutions Limited and its subsidiary:

i) Aquadiagnostics Water Research & Technology Centre Limited

ii) Forbes Lux International AG and its subsidiaries:

- Lux International AG and its subsidiary:

- Lux Aqua Gmbh, Switzerland

- Lux Aqua Hungary KFT

- Lux Italia srl

- Forbes Lux Group AG Baar and its subsidiary:

- Lux / Sk / s.r.o

- Lux Schweiz AG

- Lux (Deutschland) GmbH and its subsidiaries:

- Lux Service GmbH

- Lux Norge A/s

- Lux Oesterreich GmbH

- Lux CZ s.r.o

- Lux Hungaria Kereskedelmi Kft

- LIAG Trading & Investment Limited

b) EFL Mauritius Limited

c) Euro Forbes Limited Dubai and its subsidiary:

i) Forbes Lux FZCO

d) Forbes Facility Services Pvt. Limited

e) Forbes Enviro Solutions Limited

f) Euro Forbes Financial Services Limited

2 Forbes Campbell Finance Limited and its subsidiaries

a) Forbes Bumi Armada Limited

b) Forbes Campbell Services Limited

c) Forbes Edumetry Limited ( Under voluntary winding up)

3 Forbes Technosys Limited

4 Forbes Bumi Armada Offshore Limited

5 Forbes Container Lines Pte. Limited and its subsidiary: a) Forbesline Shipping Services LLC

6 Shapoorji Pallonji Forbes Shipping Limited

7 Campbell Properties & Hospitality Services Limited

8 Volkart Fleming Shipping and Services Limited

9 Technext E-Payments & Services Limited (incorporated on 14th July, 2015 and sold on 28th March, 2016)

(C) Fellow Subsidiaries (where there are transactions):

1 Afcons Infrastructure Limited

2 Forvol International Services Limited

3 Gokak Textiles Limited

4 Shapoorji Pallonji Investment Advisors Pvt.Limited

5 Shapoorji Pallonji Oil and Gas Pvt. Limited (earlier known as Cosima Properties Pvt. Limited)

6 Sterling and Wilson Pvt. Limited

7 SP Fabricators Pvt. Limited

8 SP Architectural Coatings Pvt. Limited

(D) Associate Companies (where there are transactions):

1 The Svadeshi Mills Company Limited (refer Note 55)

2 Coromandel Garments Limited (Subsidiary of The Svadeshi Mills Company Limited)

3 Neuvo Consultancy Service Limited

(E) Joint Ventures (where there are transactions):

1 Edumetry Inc (Upto 28th October, 2015)

2 Forbes Aquatech Limited (Joint venture of Eureka Forbes Limited)

3 Nypro Forbes Products Limited (Joint venture of Forbes Campbell Finance Limited) (Upto 23 rd February, 2015)

(F) Key Management Personnel:

Managing Director, Mr. Ashok Barat

5. Leases

(a) Finance lease: Company as lessee

The Company has acquired Computer Hardware under finance lease for three years.

(i) The gross carrying amount and the accumulated depreciation at the balance sheet date are Rs.64.68 Lakhs; (Previousyear: Rs.120.38 Lakhs) and Rs.64.68 Lakhs; (Previousyear:Rs.119.36Lakhs) respectively.

(ii) Depreciation recognised in the statement of profit and loss is Rs.1.02 Lakhs; (Previousyear:Rs.44.71 Lakhs).

Future minimum aggregate lease payments (MLP) under finance leases together with the present value of future lease payments (PV of MLP), discounted at the interest rates implicit in the lease are as follows:

(b) Operating lease: Company as lessor

The Company has entered into operating lease arrangements, consisting of surplus space in buildings to others. The normal tenure of the arrangement is upto three years. The details ofthe premises leased are as follows:

6. Discontinuing operations

In January 2016, the Board had granted its approval for sale of the Shipping & Logistics Services business comprising Container Freight Station (CFS) and Logistics on a slump sale basis.

The CFS division at Veshvi is yet to be transferred for which a definitive agreement is in place.

The Company has completed the slump sale of Mundra CFS in April, 2016. The Company has executed an Agreement to transfer assets dated April 18, 2016 pertaining to its Logistics business and simultaneously completed the transaction.

7. Details of dues to micro and small enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006

The information as required under Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by Auditors, is as follows:-

8. Secured Loans and advances include interest free loans, relating to which full provision exists in books of accounts, aggregating Rs.4,391.78 Lakhs as at 31st March, 2016 (Previous year: Rs.4,716.78 Lakhs) granted to The Svadeshi Mills Company Limited (Previous year include its subsidiary Coromandel Garments Limited). The Company, being a secured creditor, with adjudicated dues by the Official Liquidator, expects to receive the dues when the matter is ultimately disposed off.

9. In respect of loans given to Coromandel Garments Limited, The Company had made full provision amounting to Rs.364.99 lakhs in an earlier year and had also stopped accruing interest thereon due to uncertainty as to recoverability of loans and interest, in view of ongoing liquidation process of Coromandel Garments Limited.

Subsequent to the year end, on the basis of order passed by Hon''ble High Court, Mumbai, the Company has received Rs.1,017.04 lakhs from Hon''ble Debt Recovery Tribunal, Mumbai as part satisfaction of amount due. The amount received by the Company is after setting aside amount for securing the claim of the workmen ofthe company in liquidation. The company''s status as a secured creditor is not disputed by the official liquidator.

Considering the above, management is of the view that possibility of amount becoming refundable upon final outcome of this matter is remote. The Company has therefore reversed the provision amounting to Rs.364.99 lakhs towards the loans and advances and accounted the balance amount of Rs.652.05 lakhs as interest income. This has been disclosed as an exceptional item at Note no. 28 to the statement of profit and loss account of the Company.

10. Details of costs and revenue in respect ofProject in progress:

Methods used to determine the project revenue : Percentage Completion Method

Methods used to determine the stage of completion : The proportion that Project costs incurred for work performed upto the balance sheet date bear to the estimated total project costs.

11. The Management is in the process of identifying and appointing a Chief Financial Officer as required under Section 203 of the Companies Act, 2013.

12. Assets of The Svadeshi Mills Company Limited (Svadeshi) continued to be in the hands of the Official Liquidator, High Court, Bombay. An application to get Svadeshi out of liquidation was filed with the Hon''ble High Court, Bombay, which was dismissed and the Official Liquidator was directed to proceed expeditiously for winding up of Svadeshi. The Company filed an appeal before the Division Bench which was dismissed. The Company filed a Special Leave Petition (SLP) before Hon''ble Supreme Court (SC) which too was dismissed. Thereafter, a Review Petition has been filed before the Hon''ble Supreme Court and the same is pending hearing. The records of the Svadeshi are in the custody of the Official Liquidator. In view of the current status of the court matter, management has not considered Svadeshi as an associate from the current year.

13. Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classificaton / disclosure.


Mar 31, 2015

1. Corporate Information

Forbes & Company Limited is one of the oldest companies of the world that is still in existence. The Company traces its origin to the year 1767 when John Forbes of Aberdeenshire, Scotland started his business in India. Over the years, the Management of the Company moved from the Forbes Family to the Campbells to the Tata Group and now finally to the well known Shapoorji Pallonji Group. The Company is mainly engaged in the Engineering, Real estate and Shipping & Logistics business; and is listed on the Bombay Stock Exchange.

2. Contingent liabilities:

(a) Claims against the Company not acknowledged as debts

As at As at 31st March, 31st March, 2015 2014 Rs. in Lakhs Rs. in Lakhs

1) Tax matters:-

(i) Excise demand (Advance paid against the demand Rs. 29.36 Lakhs; Previous year Rs. 29.13 Lakhs) 4,774.54 4,723.51

ii) Sales tax (Advance paid against the demand Rs. 225.16 Lakhs; Previous year Rs. 94.91 Lakhs) 2,297.83 809.49

iii) Income-tax (Advance paid against the demand Rs. 1,347.30 Lakhs; Previous year Rs. 981.18 Lakhs) 4,136.46 1,243.88

iv) Service-tax 732.68 691.01

v) Entry-tax (Advance paid Rs. 38.45 Lakhs; Previous year Rs. 38.45 Lakhs) 76.90 38.45

vi) Customs duty (Advance paid Rs. 0.18 Lakhs; Previous year Rs. Nil) 2.00 -

vii) Wealth tax (Advance paid Rs. 14.95 Lakhs; Previous year Rs. 36.12 Lakhs) 14.95 36.12

viii) Property tax 451.61 551.61

2) Labour matters in dispute 9.00 6.00

3) Claim of Madhya Gujarat Vij Co. Ltd. for alleged diversion of fraction of the power consumed and contested by the Company in the Court 188.29 188.29

4) Customer claims (Advance paid against the demand Rs. 50.18 Lakhs; Previous year Rs. Nil) 3,042.26 2,582.93

5) Supplier claims - 15.00

6) Other legal matters 6.20 6.20

(b) Guarantees:-

i) Guarantees given on behalf of Shipping Principals including subsidiary and Surety Bonds jointly executed with third parties in favour of customs and other parties 12,404.50 14,193.93

ii) Guarantee on behalf of a subsidiary company 2,801.55 2,676.52

iii) Corporate Guarantee on behalf of a subsidiary company 16,920.00 11,920.00

Note:

In respect of items mentioned above, till the matters are finally decided, the timing of outflow of economic benefits cannot be ascertained.

3. Capital and other commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 188.61 Lakhs; (Previous year: Rs. 311.72 Lakhs) [against which advance paid aggregating Rs. 125.38 Lakhs; (Previous year: Rs. 114.50 Lakhs)]

(b) For commitments relating to lease arrangements.

(c) The Company has agreed to provide continuing financial support to Forbes Container Lines Pte. Ltd. a wholly owned subsidiary, to meet all its obligation, to the extent the subsidiary is unable to meet its obligations.

Defined-benefits plans:

In terms of the guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of provident fund liability based on the assumptions listed below and determined a shortfall of Rs. Nil (Previous year Rs. 10.54 Lakhs) as at 31st March, 2015 and the same is recognised to the statement of profit and loss based on actuarial valuation.

The information in respect of medical cost trend rates and the effect of an increase / decrease of 1% point in the assumed medical cost trend rates on current service cost, interest cost, accumulated post employment benefit cost and experience adjustment is not available; during the year, medical cost of Rs. 4.34 Lakhs (Previous year: Rs. (12.05) Lakhs) is recognised to the statement of profit and loss based on actuarial valuation.

The Company has charged amounts aggregating Rs. 86.33 Lakhs; (Previous year: Rs. 78.29 Lakhs) to the statement of profit and loss based on actuarial valuation [Present value of future obligation as at 31st March, 2015 Rs. 411.57 Lakhs; (Previous year: Rs. 384.17 Lakhs)] and paidRs. 58.92 Lakhs (Previous year: Rs. 53.96 Lakhs), towards the post retirement arrangements to former Managing Directors and other Directors.

4. Segment reporting

The Company has identified business segments as its primary segment and geographical segment as its secondary segment. Business segments are primarily "Engineering", "Shipping and logistics services", "Real estate" and "Energy Solution" segment. The Company caters to the needs of the domestic and export markets.

Segment revenue, segment results, segment assets and segment liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.

5. (a) Related party disclosures

(A) Holding Company

Shapoorji Pallonji and Company Private Limited (Formerly known as Shapoorji Pallonji and Company Limited)

(B) Subsidiary Companies

1 Eureka Forbes Limited and its subsidiaries:

a) Aquamall Water Solutions Limited and its subsidiary:

i) Aquadiagnostics Water Research & Technology Centre Limited

ii) Forbes Lux International AG and its subsidiary:

- Lux International AG and its subsidiaries:

- Lux del Paraguay S.A (Formerly known as Hogar Paraguay Electrodomesticos S.A)

- Lux Italia srl

- Forbes Lux Group AG Baar and its subsidiary: * Lux / Sk / s.r.o

- Lux Schweiz AG

- Lux (Deutschland) GmbH and its subsidiaries:

* Lux Service GmbH

* Lux Norge A/s

* Lux Oesterreich GmbH

* Lux CZ s.r.o

* Lux Hungaria Kereskedelmi Kft

- LIAG Trading & Investment Limited (w.e.f. 4th February, 2015)

b) EFL Mauritius Limited

c) Euro Forbes Limited Dubai and its subsidiary: i) Forbes Lux FZCO

d) Forbes Facility Services Pvt. Limited

e) Forbes Enviro Solutions Limited

f) Waterwings Equipments Pvt.Ltd.

g) Radiant Energy Systems Pvt.Ltd.

h) Euro Forbes Financial Services Limited

2. Forbes Campbell Finance Limited and its subsidiaries

a) Forbes Bumi Armada Limited

b) Forbes Campbell Services Limited

c) Forbes Edumetry Limited (Under voluntary winding up)

d) Forbes Technosys Limited

3. Forbes Bumi Armada Offshore Limited

4. Forbes Container Lines Pte. Limited and its subsidiary: *

a) Forbesline Shipping Services LLC *

5. Shapoorji Pallonji Forbes Shipping Limited (Formerly known as SCI Forbes Ltd. w.e.f. 1st December, 2014)

6. Campbell Properties & Hospitality Services Limited (w.e.f. 30th December, 2014)

7. Volkart Fleming Shipping and Services Limited

(C) Fellow Subsidiaries (where there are transactions):

1. Afcons Infrastructure Limited

2. Forvol International Services Limited

3. Gokak Textiles Limited

4. Shapoorji Pallonji Investment Advisors Pvt.Limited

5. Shapoorji Pallonji Energy (Gujarat) Pvt. Limited

6. Sterling and Wilson Pvt. Limited

7. SP Fabricators Pvt. Limited

8. SP Architectural Coatings Pvt. Limited

(D) Associate Companies (where there are transactions):

1. The Svadeshi Mills Company Limited

2. Coromondal Garments Limited (Subsidiary of The Svadeshi Mills Company Limited)

3. Neuvo Consultancy Service Limited

(E) Joint Ventures (where there are transactions):

1 Edumetry Inc

2 Nypro Forbes Products Limited (Joint venture of Forbes Campbell Finance Limited) (Upto 23rd February, 2015)

3 SCI Forbes Limited (Now known as Shapoorji Pallonji Forbes Shipping Limited) (Upto 30th November, 2014)

(F) Key Management Personnel:

Managing Director, Mr. Ashok Barat

* For the purpose of Companies Act, 2013, this will be treated as an Associate Company.

6. Leases

(a) Finance lease: Company as lessee

The Company has acquired Office Equipments under finance lease for four years.

(i) The gross carrying amount and the accumulated depreciation at the balance sheet date are Rs. 120.38 Lakhs; (Previous year: Rs. 122.14 Lakhs) and Rs. 119.36 Lakhs; (Previous year: Rs. 76.17 Lakhs) respectively.

(ii) Depreciation recognised in the statement of profit and loss is Rs. 44.71 Lakhs; (Previous year: Rs. 38.01 Lakhs).

7. Derivative instruments and unhedged foreign currency exposures

The Company enters into Foreign Exchange Contracts being derivative instruments, which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date.

8. Loans and advances to related parties includes interest free loans, relating to which full provision exists in books of accounts, aggregating Rs. 4,756.77 Lakhs (Secured Rs. 4,716.78 Lakhs) as at 31st March, 2015 [Previous year: Rs. 4,756.77 Lakhs (Secured Rs. 4,716.78 Lakhs)]granted to The Svadeshi Mills Company Limited and its subsidiary Coromandal Garments Limited. The Company, being a secured creditor, with adjudicated dues by the official Liquidator, expects to receive the dues when the matter is ultimately disposed off.

9. Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.


Mar 31, 2014

As at As at 31st March, 31st March, 2014 2013 Rs. in Lakhs Rs. in Lakhs



1. Contingent liabilities:

(a) Claims against the Company not acknowledged as debts

1) Taxes in dispute:-

(i) Excise demand 4,723.51 4,723.51

(ii) Sales tax 809.49 790.54

(iii) Income-tax 1,243.88 1,352.05

(iv) Service-tax 691.01 254.21

(v) Entry-tax 38.45 76.90

(vi) Wealth tax 36.12 36.12

(vii) Property tax 551.61 551.60

2) Labour matters in dispute 6.00 16.50

3) Claim of Madhya Gujarat Vij Co. Ltd. for alleged diversion of fraction of the power consumed and contested by the Company in the Court 188.29 188.29

4) Customer claims 2,582.93 2,404.32

5) Supplier claims 15.00 15.00

6) Other legal matters 6.20 6.20

(b) Guarantees:-

(i) Guarantees given on behalf of Shipping Principals including subsidiary and Surety Bonds jointly executed with third parties in favour of customs and other parties 14,193.93 6,620.00

(ii) Guarantee on behalf of a subsidiary company 2,676.52 3,533.37

(iii) Corporate Guarantee on behalf of a subsidiary company 11,920.00 3,420.00

Note:

In respect of item mentioned above, till the matters are finally decided, the timing of outflow of economic benefits cannot be ascertained.

2. Capital and other commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 311.72 Lakhs; (Previous year: Rs. 424.45 Lakhs) [against which advance paid aggregating Rs. 114.50 Lakhs; (Previous year: Rs. 54.38 Lakhs)]

(b) For commitments relating to lease arrangements, see Note 35(a) and for derivative contracts, see Note 39(a).

(c) The Company along-with other joint venturers, has entered into a "Sponsor Support Deed" with Natixis, Security Trustee, on 15th July, 2011 by which the Company irrevocably and unconditionally undertaken to the Security Trustee and each of other creditors, to the extent of its shareholding (i.e. 25%) in the Borrower, namely SCI Forbes Limited, a joint venture company, to pay dues if the Borrower does not pay or discharge any of its obligations.

(d) The Company has agreed to provide continuing financial support to Forbes Container Lines Pte. Ltd. wholly owned subsidiary to meet all its obligation, to the extent the subsidiary is unable to meet its obligations.

Defined-benefits plans:

In terms of the guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of provident fund liability based on the assumptions listed below and determined a shortfall of Rs. 10.54 Lakhs (Previous year Rs. 10.77 Lakhs) as at 31st March, 2014 and the same is recognised to the statement of profit and loss based on actuarial valuation.

The estimates of future salary increases, considered in the actuarial valuation, take into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The contribution expected to be made by the Company during the financial year 2014-15 is Rs. 58.70 Lakhs (Previous year: amount not ascertainable).

Other Post Retirement Benefits

The information in respect of medical cost trend rates and the effect of an increase / decrease of 1% point in the assumed medical cost trend rates on current service cost, interest cost, accumulated post employment benefit cost and experience adjustment is not available; during the year, medical cost of Rs. (12.05) Lakhs (Previous year: Rs. 2.21 Lakhs) is recognised to the statement of profit and loss based on actuarial valuation.

The Company has charged amounts aggregating Rs. 78.29 Lakhs; (Previous year: Rs. 76.62 Lakhs) to the statement of profit and loss based on actuarial valuation [Present value of future obligation as at 31st March, 2014 Rs. 384.17 Lakhs; (Previous year: Rs. 359.84 Lakhs)] and paid Rs. 53.96 Lakhs (Previous year: Rs. 55.64 Lakhs), towards the post retirement arrangements to former Managing Directors and other Directors.

3. Segment reporting

The Company has identified business segments as its primary segment and geographical segment as its secondary segment. Business segments are primarily "Engineering", "Shipping and logistics services", "Real estate" and "Energy Solution" segment. The Company caters to the needs of the domestic and export markets.

Segment revenue, segment results, segment assets and segment liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.

4. (a) Related party disclosures

(A) Holding Company

Shapoorji Pallonji & Company Limited

(B) Subsidiary Companies

1 Eureka Forbes Limited and its subsidiaries:

a Aquamall Water Solutions Limited and its subsidiary:

- Aquadiagnostics Water Research & Technology Centre Limited

b Forbes Lux International AG and its subsidiaries: (w.e.f.

23rd May, 2013)

(i) Lux International AG and its subsidiary: (w.e.f. 5th June, 2013)

- Hogar Paraguay Electrodomesticos S.A. (w.e.f. 5th June, 2013)

(ii) Forbes Lux Group AG Baar and its subsidiary: (w.e.f. 5th June, 2013)

- Lux / Sk / s.r.o (w.e.f. 5th June, 2013) (iii) Lux Italia srl (w.e.f. 5th June, 2013)

(iv) Lux Schweiz AG (w.e.f. 5th June, 2013)

(v) Lux (Deutschland) GmbH and its subsidiaries: (w.e.f. 5th June, 2013)

- Lux Service GmbH (w.e.f. 5th June, 2013)

- Lux Norge A/s (w.e.f. 5th June, 2013)

- Lux Oesterreich GmbH (w.e.f. 5th June, 2013)

- Lux CZ s.r.o (w.e.f. 5th June, 2013)

- Lux Hungaria Kereskedelmi Kft (w.e.f. 5th June, 2013)

c Euro Forbes International Pte. Limited

d Forbes Facility Services Pvt. Limited

e E4 Development & Coaching Limited

f Forbes Enviro Solutions Limited

g Waterwings Equipments Pvt.Ltd.

h Radiant Energy Systems Pvt.Ltd.

i EFL Mauritius Limited and its subsidiary:

- Euro Forbes Mauritius Limited (Upto 19th December, 2013)

j Euro Forbes Financial Services Limited

k Euro Forbes Limited Dubai and its subsidiary:

- Forbes Lux FZCO

2 Forbes Campbell Finance Limited and its subsidiaries a Forbes Bumi Armada Limited

b Forbes Campbell Services Limited

c Forbes Edumetry Limited

d Forbes Technosys Limited

3 Forbes Bumi Armada Offshore Limited

4 Forbes Container Lines Pte. Limited and its subsidiary:

- Forbesline Shipping Services LLC (w.e.f. 10th January, 2013)

5 Volkart Fleming Shipping and Services Limited

(C) Fellow Subsidiaries (where there are transactions):

1 Forvol International Services Limited

2 Gokak Textiles Limited

3 Shapoorji Pallonji Investment Advisors Pvt. Limited

4 Shapoorji Pallonji Energy (Gujarat) Pvt. Limited

5 SP Fabricators Pvt. Limited

(D) Associate Companies (where there are transactions):

1 The Svadeshi Mills Company Limited

2 Coromondal Garments Limited (Subsidiary of The Svadeshi Mills Company Limited)

3 Neuvo Consultancy ServiceLimited

(E) Joint Ventures (where there are transactions):

1 Edumetry Inc

2 Nypro Forbes Products Limited (Joint venture of Forbes Campbell Finance Limited)

3 SCI Forbes Limited

(F) Key Management Personnel:

Managing Director, Mr. Ashok Barat

5. Leases

(a) Finance lease: Company as lessee

The Company has acquired Office Equipments under finance lease for four years.

(i) The gross carrying amount and the accumulated depreciation at the balance sheet date are Rs. 122.14 Lakhs; (Previous year: Rs. 212.31 Lakhs) and Rs. 76.17 Lakhs; (Previous year: Rs.128.32 Lakhs) respectively.

(ii) Depreciation recognised in the statement of profit and loss is Rs. 38.01 Lakhs; (Previous year: Rs. 53.09 Lakhs).

6. Derivative instruments and unhedged foreign currency exposures

The Company enters into Foreign Exchange Contracts being derivative instruments, which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date.

7. Loans and advances to related parties includes interest free loans, relating to which full provision exists in books of accounts, aggregating Rs. 4,756.77 Lakhs (Secured Rs. 4,716.78 Lakhs) as at 31st March, 2014 [Previous year: Rs. 4,756.77 Lakhs (Secured Rs. 4,716.78 Lakhs)] granted to The Svadeshi Mills Company Limited and its subsidiary Coromandal Garments Limited. The Company, being a secured creditor, with adjudicated dues by the official Liquidator, expects to receive the dues when the matter is ultimately disposed off.

8. Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2013

1. Corporate Information

Forbes & Company Limited is one of the oldest companies of the world that is still in existence. The Company traces its origin to the year 1767 when John Forbes of Aberdeenshire, Scotland started his business in India. Over the years, the Management of the Company moved from the Forbes Family to the Campbells to the Tata Group and now finally to the well known Shapoorji Pallonji Group. The Company is mainly engaged in the Engineering, Real estate and Shipping & Logistics business; and is listed on the Bombay Stock Exchange.

2. Capital and other commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 424.45 Lakhs; (Previous year: Rs. 468.71 Lakhs) [against which advance paid aggregating Rs. 54.38 Lakhs; (Previousyear: Rs. 103.35Lakhs)]

(b) For commitments relating to lease arrangements, see Note 35(a) and for derivative contracts, see Note 39(a).

(c) The Company along-with other joint venturers, has entered into a "Sponsor Support Deed" with Natixis, Security Trustee, on 15 th July, 2011 by which the Company irrevocably and unconditionally undertaken to the Security Trustee and each of other creditors, to the extent of its shareholding (i.e. 25%) in the Borrower, namely SCI Forbes Limited, a joint venture company, to pay dues if the Borrower does not pay or discharge any of its obligations.

(d) The Company has agreed to provide continuing financial support to Forbes Container Lines Pte. Ltd. wholly owned subsidiary to meet all its obligation, to the extent they are unable to meet their obligations.

3. Segment reporting

The Company has identified business segments as its primary segment and geographical segment as its secondary segment. Business segments are primarily "Engineering", "Shipping and logistics services" and "Real estate" segment. The Company caters to the needs of the domestic and export markets.

Segment revenue, segment results, segment assets and segment liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.

4. Related party disclosures

(A) Holding Company

Shapoorji Pallonji & Company Limited

(B) Subsidiary Companies

1 Eureka Forbes Limited and its subsidiaries a Aquamall Water Solutions Limited

b Aquadiagnostics Water Research & Technology Centre Limited (Subsidiary of Aquamall Water Solutions Limited)

c Euro Forbes Financial Services Limited (w.e.f. 2nd April, 2011)

d Euro Forbes International Pte. Limited

e Euro Forbes Limited Dubai (w.e.f. 10th June, 2011)

f Euro Forbes Mauritius Limited

g E4 Development & Coaching Limited

h EFL Mauritius Limited

i Forbes Aquamall Limited (w. e.f. 9th August, 2011 amalgamated with Aquamall Water Solutions Limited)

j Forbes Lux FZCO (w.e.f. 26th June, 2011 subsidiary of Euro Forbes Limited)

k Forbes Facility Services Pvt. Limited

l Forbes Enviro Solutions Limited

m Radiant Energy Systems Pvt. Ltd.

n Waterwings Equipments Pvt. Ltd.

2 Forbes Campbell Finance Limited and its subsidiaries

a Forbes Bumi Armada Limited

b Forbes Campbell Services Limited

c Forbes Edumetry Limited

d Forbes Technosys Limited

3 Forbes Bumi Armada Offshore Limited

4 Forbes Container Lines Pte. Limited and its subsidiary, namely Forbesline Shipping Services LLC

5 Volkart Fleming Shipping and Services Limited

(C) Fellow Subsidiaries (where there are transactions):

1 Afcons Infrastructure Limited

2 Forvol International Services Limited

3 Gokak Textiles Limited

4 Neuvo Consultancy Services Limited (w.e.f. 29th April, 2011)

5 Shapoorji Pallonji Investment Advisors Pvt. Limited

6 Shapoorji Pallonji Energy (Gujarat) Pvt. Limited

7 SP Fabricators Pvt. Limited

(D) Associate Companies (where there are transactions):

1 Euro P2P Direct (Thailand) Co. Limited (Associate of Eureka Forbes Limited)

2 Forbes Lux Group AG, BAAR (Associate of Eureka Forbes Limited)

3 Lux International AG (Associates of Eureka Forbes Limited)

4 The Svadeshi Mills Company Limited

5 Coromondal Garments Limited (Subsidiary of The Svadeshi Mills Company Limited)

6 Nuevo Consultancy Services Limited (w.e.f. 29th April, 2011)[up to 28th April, 2011 joint venture, w.e.f. 29th April, 2011 also fellow subsidiary]

(E) Joint Ventures (where there are transactions):

1 Edumetry Inc

2 Forbes Aquatech Limited (Joint venture of Eureka Forbes Limited)

3 Forbes Concept Hospitality Services Pvt. Limited (Joint venture of Eureka Forbes Limited)

4 Forbes G4S Solutions Pvt. Ltd (Joint venture of Eureka ForbesLimited)

5 Infinite Water Solutions Pvt. Limited (Joint venture of Eureka Forbes Limited)

6 Nypro Forbes Moulds Limited (w.e.f. 1st April, 2011 amalgamated with Nypro Forbes Products Limited) [Joint venture of Forbes Campbell Finance Limited]

7 Nypro Forbes Products Limited (Joint venture of Forbes Campbell Finance Limited)

8 SCI Forbes Limited

(F) Key Management Personnel:

Managing Director, Mr. Ashok Barat

5. Leases

(a) Finance lease: Company as lessee

The Company has acquired Office Equipments under finance lease for four years.

(i) The gross carrying amount and the accumulated depreciation at the balance sheet date are Rs. 212.31 Lakhs; (Previous year: Rs. 212.78 Lakhs) and Rs. 128.32 Lakhs; (Previousyear: Rs. 75.30 Lakhs) respectively.

(ii) Depreciation recognised in the statement of profit and loss is Rs. 53.09 Lakhs; (Previousyear: Rs. 37.69Lakhs).

6. Derivative instruments and unhedged foreign currency exposures

The Company enters into Foreign Exchange Contracts being derivative instruments, which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date.

A) The following are the outstanding Forward Exchange Contracts entered into by the Company as at 31st March, 2013

7. Details of dues to micro and small enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006

The information as required under Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by Auditors, is as follows:-

8. Loans and advances to related parties includes interest free loans, relating to which full provision exists in books of accounts, aggregating Rs. 4,756.77 Lakhs (Secured Rs. 4,716.78 Lakhs) as at 31st March, 2013 [Previous year: Rs. 4,756.77 Lakhs (Secured Rs. 4,716.78 Lakhs)] granted to The Svadeshi Mills Company Limited and its subsidiary Coromandel Garments Limited. Such loans having been granted, free of interest, as financial support to the companies in which the Company has substantial interest, the terms and condition of such loans are, in the opinion of the management, not prejudicial to the interests of the Company.

9. To secure the lenders of SCI Forbes Limited (SFL), a jointly controlled entity, amongst other undertakings, two of the joint venture partners, including the Company, had to, sign a standby charter agreement, under which, in the event the vessels were not on charter with a lender approved third party at anytime during the pendency of the loan, two vessels each would come on automatic charter to the joint venture partners at rates specified in the standby charter agreement. Immediately thereafter the global financial crisis occurred with shipping being badly hit with charter rates crashing. The lenders sought a change in some commercial terms for agreeing to approve charterers and other forms of vessel deployment. Whilst this negotiation was going on, the loan covenant had got activated and the Company (as also its other JV partner) had to take the vessels on charter at standby charter rates and deploy them on market rates resulting in the loss of Rs. 513 Lakhs during previous year ended 31st March, 2012. With effect from 1st July, 2011, the aforesaid standby charter agreement has been suspended and consequently the ships have been re-delivered by the Company as also by the joint venture partner to SFL. Non-provision of estimated loss arising from the aforesaid onerous standby charter agreements not being in accordance with the requirements of Accounting Standard 29, ''Provisions, Contingent Liabilities and Contingent Assets'' (AS-29) was a subject matter of a qualification in the audit report for the year ended 31st March, 2011.

10. Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classificaton / disclosure.


Mar 31, 2012

1. Corporate Information

Forbes & Company Limited is one of the oldest companies of the world that is still in business. The Company traces its origin to the year 1767 when John Forbes of Aberdeenshire, Scotland started his business in India. Over the years, the Management of the Company moved from the Forbes Family to the Campbells to the Tata Group and now finally to the well known Shapoorji Pallonji Group. The Company is mainly engage in the Engineering, Real estate and Shipping & Logistics business and listed on the Bombay Stock Exchange.

(a) Rights, preferences and restrictions attached to equity shares

The Company has only one class of shares referred to as equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(b) Equity shares held by holding company and subsidiary company 92,95,293 (Previous year: 92,95,293) equity shares are held by the holding company, Shapoorji Pallonji & Company Limited; and 1,66,398 (Previous year: 1,66,398) equity shares are held by a subsidiary of the Company, Forbes Campbell Finance Limited.

2. Contingent liabilities:

(a) In the year 1994-95, the Company had entered in to a Memorandum of Understanding giving sole and exclusive right for developing a part of its land at Chandivali, Mumbai. The Developer had filed a suit against the Company for recession of the said Memorandum of Understanding and has claimed a sum of Rs. 3,271.48 Lakhs and has asked interest at 21% per annum with effect from April, 1998. The Company had been contesting the aforesaid claim. This has been settled out of court on 22nd December, 2011 and the aforesaid claim is withdrawn by the developer.

As at As at 31st March, 31st March, 2012 2011 Rs.in Lakhs Rs.in Lakhs

(b) Taxes in dispute:-

(i) Excise demand 4,730.86 4,745.04

(ii) Sales tax 770.32 809.61

(iii)Income-tax 1,505.36 1,525.83

(iv) Customs duty 17.10 17.10

(v) Wealth tax 36.12 36.12

(vi) Property tax 1,075.85 934.07

(c) Labour matters in dispute 10.00 68.50

(d) Claim of Gujarat Electricity Board for alleged diversion of fraction of the power consumed and contested by the Company in the Court 188.29 188.29

(e) Customer claims 76.01 212.53

(f) Supplier claims 15.00 15.00

(g) Other legal matters 6.20 6.20

(h) Guarantees:-

(i) Guarantees given on behalf of Shipping Principals including subsidiary and Surety Bonds jointly executed with third parties in favour of customs and other parties 4,857.50 4,857.50

(ii) Guarantee on behalf of a subsidiary company 2,325.49 200.00

(iii) Guarantees issued by bank 317.83 308.34

(i) Other money for which the Company is contingently liable

Bills discounted 80.01 101.21

3. Capital and other commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 468.71 Lakhs; (Previous year: Rs. 582.48Lakhs) [net of advance paid aggregating Rs. 103.35 Lakhs; (Previousyear: Rs. 209.28Lakhs)]

(b) For commitments relating to lease arrangements, see Note 34(a) and for derivative contracts, see Note 40(a).

(c) The Company along-with other joint venturers, has entered into a "Sponsor Support Deed" with Natixis, Security Trustee, on 15th July, 2011 by which the Company irrevocably and unconditionally undertaken to the Security Trustee and each of other creditors, to the extent of its shareholding (i.e. 25%) in the Borrower, namely SCI Forbes Limited, a joint venture company, if the Borrower do not pay or discharge any of its obligations.

(d) The Company has agreed to provide continuing financial support to Forbes Container Lines Pte. Ltd. wholly owned subsidiary to meet all its obligation, to the extent they are unable to meet their obligations.

(e) Also see Note 49.

Defined-benefits plans:

In terms of the guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of provident fund liability based on the assumptions listed below and determined that there is no shortfall as at 31st March, 2012. During the previous year, the Company had made a provision of Rs. 21.35 lakhs towards interest shortfall on an estimated basis in the absense of actuarial valuation.

The assumptions used in determining the present value of obligation of the interest rate guarantee under deterministic approach are:- Remaining terms of maturity 17 years.

Expected guarantee interest rate 8.25%.

Discount rate for the remaining term to maturity of interest portfolio 8.15%.

The actuarial calculations used to estimate defined benefit commitments and expenses are based on the following assumptions which if changed, would affect the defined benefit commitment's size, funding requirements and expense.

* Figures in respect of Financial Year 2007-08 are not available.

The estimates of future salary increases, considered in the actuarial valuation, take into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The contribution expected to be made by the Company during the financial year 2012-13 has not been ascertained.

The information in respect of medical cost trend rates and the effect of an increase / decrease of 1% point in the assumed medical cost trend rates on current service cost, interest cost, accumulated post employment benefit cost and experience adjustment is not available; during the year, medical cost of Rs. 46.93 Lakhs (Previous year: Rs. 47.15Lakhs) recognised to the statement of profit and loss based on actuarial valuation.

The Company has charged amounts aggregating Rs. 74.30 Lakhs; (Previous year: Rs. 46.72 Lakhs) to the statement of profit and loss based on actuarial valuation [Present value of future obligation as at 31st March, 2012 Rs. 338.86 Lakhs; (Previous year: Rs. 315.90 Lakhs)] and paid Rs. 51.34 Lakhs (Previous year: Rs. 61.06Lakhs), towards the post retirement arrangements to former Managing Directors and other Directors.

4. Related party disclosures

(A) Holding Company / Ultimate Holding Company

1 Shapoorji Pallonji & Company Limited [Holding Company (Ultimate Holding Company upto 14th October, 2010)]

2 Sterling Investment Corporation Private Limited (Holding Company upto 14th October, 2010, merged with Shapoorji Pallonji & Company Limited w.e.f. 15th October, 2010)

(B) Subsidiary Companies

1 Eureka Forbes Limited and its subsidiaries a Aquamall Water Solutions Limited

b Aquadiagnostics Water Research & Technology Centre Limited (Subsidiary of Aquamall Water Solutions Limited)

c Euro Forbes Financial Services Limited (w.e.f. 2nd April, 2011)

d Euro Forbes International Pte. Limited

e Euro Forbes Limited Dubai (w.e.f. 10th June, 2011)

f E4 Development & Coaching Limited

g EFL Mauritius Limited (w.e.f. 2nd December, 2010)

h Forbes Aquamall Limited (w.e.f. 9th August, 2011 amalgamated with Aquamall Water Solutions Limited) i Forbes Lux FZCO ( w.e.f. 26th June, 2011 subsidiary of Euro Forbes Limited) j Forbes Facility Services Pvt. Limited k Forbes Enviro Solutions Limited l Radiant Energy Systems Pvt. Limited m Waterwings Equipments Pvt. Limited

2 Forbes Campbell Finance Limited and its subsidiaries a Forbes Bumi Armada Limited

b Forbes Campbell Services Limited c Forbes Edumetry Limited

d Forbes Smart Data Limited (Wound up on 30th March, 2011) e Forbes Technosys Limited

3 Forbes Bumi Armada Offshore Limited (w.e.f. 29th October, 2010)

4 Forbes Container Lines Pte. Limited

5 Volkart Fleming Shipping and Services Limited

(C) Fellow Subsidiaries (where there are transactions):

1 Afcons Infrastructure Limited

2 Forvol International Services Limited

3 Gokak Textiles Limited

4 Shapoorji Pallonji Investment Advisors Pvt. Limited (formerly Euphoria Properties Pvt. Limited)

5 Shapoorji Pallonji Energy (Gujarat) Pvt. Limited

6 Sterling and Wilson Limited

7 SP Fabricators Pvt. Limited

(D) Associate Companies (where there are transactions):

1 The Svadeshi Mills Company Limited

2 Coromondal Garments Limited (Subsidiary of The Svadeshi Mills Company Limited)

3 Nuevo Consultancy Services Limited (formerly Forbes Infotainment Limited) (w.e.f. 29th April, 2011)[up to 28th April, 2011 joint venture, w.e.f. 29th April, 2011 also fellow subsidiary]

(E) Joint Ventures (where there are transactions):

1 Edumetry Inc

2 Nuevo Consultancy Services Limited (formerly Forbes Infotainment Limited) (upto 28th April, 2011)[w.e.f. 29th April, 2011 associate and also fellow subsidiary]

3 Nypro Forbes Moulds Limited (formerly known as Nypro Forbes Moulds Pvt. Limited) [Joint venture of Forbes Campbell Finance Limited]

4 Nypro Forbes Products Limited (formerly known as Nypro Forbes Products Private Limited) [Joint venture of Forbes Campbell Finance Limited]

5 SCI Forbes Limited

(F) Key Management Personnel:

Managing Director, Mr. Ashok Barat

5. Leases

(a) Finance lease: Company as lessee

The Company has acquired Office Equipments under finance lease of four years.

(i) The gross carrying amount and the accumulated depreciation at the balance sheet date are Rs. 212.78 Lakhs; (Previous year: Rs. 90.16Lakhs) and Rs. 75.30 Lakhs; (Previous year: Rs. 37.61 Lakhs) respectively.

(ii) Depreciation recognised in the statement of profit and loss is Rs. 37.69 Lakhs; (Previous year: Rs. 22.54Lakhs).

Deferred tax asset has been recognised in respect of unabsorbed depreciation and other items to the extent that future taxable income will be available from future reversal of deferred tax liability recognised at the balance sheet date and is restricted to the extent of such liabilities. As a prudent measure, the excess deferred tax asset (net) has not been recognised in the accounts as there is no virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

6. Standby charter agreement

To secure the lenders of SCI Forbes Limited (SFL), a jointly controlled entity, amongst other undertakings, two of the joint venture partners, including the Company, had to, sign a standby charter agreement, under which, in the event the vessels were not on charter with a lender approved third party at anytime during the pendency of the loan, two vessels each would come on automatic charter to the joint venture partners at rates specified in the standby charter agreement. Immediately thereafter the global financial crisis occurred with shipping being badly hit with charter rates crashing. The lenders sought a change in some commercial terms for agreeing to approve charterers and other forms of vessel deployment. Whilst this negotiation was going on, the loan covenant had got activated and the Company (as also its other JV partner) had to take the vessels on charter at standby charter rates and deploy them on market rates resulting in the loss of Rs. 513.33 Lakhs (Previous year: Rs. 2,164.09 Lakhs). With effect from 1st July, 2011, the aforesaid standby charter agreement has been suspended and consequently the ships have been re-delivered by the Company as also by the joint venture partner to SFL. Non-provision of estimated loss arising from the aforesaid onerous standby charter agreements not being in accordance with the requirements of Accounting Standard 29, 'Provisions, Contingent Liabilities and Contingent Assets' (AS-29) was a subject matter of a qualification in the audit report for the year ended 31st March, 2011.

7. Derivative instruments and unhedged foreign currency exposures

The Company enters into Foreign Exchange Contracts being derivative instruments, which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date.

A) The following are the outstanding Forward Exchange Contracts entered into by the Company as at 31st March, 2012

8. The Company had signed an undertaking for non-disposal of shares held by it in Nypro Forbes Moulds Pvt. Ltd. under the promoter's / borrowing agreement. However, in an earlier year, the Company had transferred its shareholding in Nypro Forbes Moulds Pvt. Ltd. to Forbes Finance Limited, an erstwhile wholly owned subsidiary Company which has merged with Forbes Campbell Finance Limited, a wholly owned subsidiary company, pursuant to the scheme of amalgamation. The novation and assignment of joint venture agreement is still under process.

9. Loans and advances to related parties includes interest free loans aggregating Rs. 4,756.77 Lakhs (Secured Rs. 4,716.78 Lakhs) as at 31st March, 2012 [Previous year: Rs. 4,742.44 Lakhs (Secured Rs. 4,716.78 Lakhs)] granted to The Svadeshi Mills Company Limited and its subsidiary Coromandel Garments Limited. Such loans having been granted, free of interest, as financial support to the companies in which the Company has substantial interest, the terms and condition of such loans are, in the opinion of the management, not prejudicial to the interests of the Company.

10. The Company has investments in equity shares and preference shares aggregating Rs. 7,090 Lakhs in its Joint Venture Company, viz. SCI Forbes Limited, which has four chemical tankers (vessels) currently deployed on time charter. In the opinion of the management, the downturn in the shipping industry in the recent past is exceptional in nature and is considered to be a temporary event. The chemical business is expected to grow in near future and having regard to very low level of order position for new vessels, there would be better deployment of existing vessels which would improve the charter hire rates. Based on the present value of estimated future cash flow expected to arise from the continuing use of vessels and from its disposal at the end of its useful life, no provision for diminution in value of these investments, held as non-current, is required to be made.

11. Account balances of trade payables and other current liabilities aggregating to Rs. 2,386.15 Lakhs and trade receivables, long term / short term loans and advances and other current assets aggregating to Rs. 1,321.48 Lakhs relating to the Shipping and Logistics division are in the process of detailed review and reconciliation. This was a subject matter of qualification in the audit report for the year ended 31st March, 2011 and continues to be a subject matter of qualification in the audit report for the year ended 31st March, 2012. The Management expects that the net effect on the financial results would not be material on completion of this exercise.

12. The Revised Schedule VI has become effective from 1st April, 2011 for the preparation of financial statement. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.


Mar 31, 2011

1. Contingent Liability and Provision for Contingencies:

a) In the year 1994-95, the Company had entered in to a Memorandum of Understanding giving sole and exclusive right for developing a part of its land at Chandivali, Mumbai. The Developer had filed a suit against the Company for recession of the said Memorandum of Understanding and has claimed a sum of Rs.3,271.48 Lakhs and has asked interest at 21% per annum with effect from April, 1998. The Company has been legally advised that the aforesaid claim for Rs.3,271.48 Lakhs and interest at 21% per annum is unjustified and is legally untenable. The Company is contesting the aforesaid claim. The matter is sub-judice. Both parties are also in active discussion to reach an out of court settlement in the matter which will enable joint development of the property.

b) Other Contingent Liabilities not provided for:

(Rs. in Lakhs)

Current Previous Year Year

(A) Bills discounted 101.21 42.83

(B) Guarantees issued by bank 506.88 448.62

(C) Taxes in dispute :-

(i)Excise demand 4,745.04 4,745.04

(ii) Sales Tax 809.61 873.54

(iii) Income-tax 1,525.83 1,440.32

(iv) Customs duty 17.10 17.10

(v) Wealth tax 36.12 36.12

(vi) Property Tax 934.07 671.60

(D) Labour matters in dispute 68.50 63.25

(E) Claim of Gujarat Electricity Board for alleged diversion of fraction of the power consumed and contested by the Company in the Court 188.29 188.29

(F) Guarantees given on behalf of Shipping Principals and Surety Bonds jointly executed with third parties in favour of customs and other parties 3,577.50 3,593.58

(G) Guarantee on behalf of a subsidiary company 200.00 -

(H) Other demands contested by the Company :-

(i) Customer claims against the Company not acknowledged as debts 136.52 137.71

(ii) Supplier claims against the Company not acknowledged as debts 15.00 15.00

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.582.48 Lakhs; (Previous year Rs.59.69 Lakhs) (against which advances paid aggregate Rs.209.28 Lakhs; Previous year Rs.11.31 Lakhs).

3. The Company has charged amounts aggregating Rs.46.72 Lakhs; (Previous year Rs.18.70 Lakhs) to the profit and loss account based on actuarial valuation [Present value of future obligation as at 31st March, 2011 Rs.315.90 Lakhs; (Previous year Rs.330.23 Lakhs)] and paid Rs.61.06 Lakhs (Previous year Rs.48.81 Lakhs), towards the post retirement arrangements to former Managing Directors and other Directors.

4. The information as required under Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by Auditors, is as follows:- (a) The total amount of delayed payments during the year aggregated to Rs.137.94 Lakhs; (Previous year Rs.3.83 Lakhs) in respect of 40 parties;

(Previous year 4 parties) with amounts ranging from Rs.0.03 Lakh to Rs.61.80 Lakhs; (Previous year Rs.0.01 Lakh to Rs.0.20 Lakh).

(b) The amount of principal outstanding in respect of the above as at Balance Sheet date is Rs.137.11 Lakhs; (Previous year Rs.3.12 Lakhs) in respect of 40 parties; (Previous year 4 parties) with amount ranging from Rs.0.03 Lakh to Rs.61.42 Lakhs; (Previous year Rs.0.01 Lakh to Rs.0.20 Lakh).

(c) The total interest payable on account of delayed payment aggregates to Rs.0.83 Lakh; (Previous year Rs.0.71 Lakh) and this entire amount was outstanding as at the year end.

5 . Based on a legal opinion received, the Company has not deposited the dividend amount of Rs.Nil (Previous year Rs.1.29 Lakhs) to Investor Education and Protection Fund even though amounts are outstanding for more than seven years.

6. In accordance with the Accounting Standard on Leases (AS) 19, disclosures in respect of leases are made below :

A. The Company has acquired Plant and Machinery under finance lease of four years. The particulars in respect of such leases are as follows:

(a) (i) The gross carrying amount and the accumulated depreciation at the balance sheet date are Rs.90.16 Lakhs; (Previous year Rs.90.16 Lakhs) and Rs.37.61 Lakhs; (Previous year Rs.15.07 Lakhs) respectively.

7. The Company had signed an undertaking for non-disposal of shares held by it in Nypro Forbes Moulds Pvt. Ltd. under the promoter's / borrowing agreement. However, in an earlier year, the Company had transferred its share holding in Nypro Forbes Moulds Pvt. Ltd. to Forbes Finance Limited, an erstwhile wholly owned subsidiary Company which has merged with Forbes Campbell Finance Limited, pursuant to the scheme of amalgamation. The novation and assignment of joint venture agreement is still under process.

8. The Company has granted interest free loans aggregating Rs.4742.44 Lakhs (Secured Rs. 4,716.78 Lakhs) as at 31st March, 2011 [Previous year Rs.4,725.61 Lakhs (Secured Rs. 4,716.78)] to The Svadeshi Mills Company Limited and its subsidiary Coromandel Garments Limited. Such loans having been granted, free of interest, as financial support to the companies in which the Company has substantial interest, the terms and condition of such loans are, in the opinion of the management, not prejudicial to the interests of the Company.

9. (a) The Company, as part of a condition imposed by the lenders to SCI Forbes Limited (SFL), a joint venture entity, had entered into a standby charter agreement under which the Company (as also its joint venture partner Shipping Corporation of India (SCI)) committed to charter vessels from SFL at a defined charter rate specified in the agreement in the event the vessels are not on a 'approved' charter with a third party, until SFL repays its borrowings. Given the global financial crisis which impacted freight rates and volumes adversely, the lenders did not 'approve' the proposals by SFL to put the vessels into a pooling arrangement (which was more profitable than putting on long term charter) and hence the standby charter agreement got triggered.

Subsequent to the year end, with effect from 1st July, 2011, the aforesaid standby charter agreement has been suspended and consequently the ships have been re-delivered by the Company to SFL. The loss materialised from 1st April, 2011 to 30th June, 2011 is Rs.515.97 Lakhs which will be accounted in the period in which it materialises as the said stand by agreements are not to be treated as onerous contract as per AS-29 since the triggering of the agreement is dependant on the freight rate prevailing in the market and the discretion of the lenders.

(b) Account balances of sundry creditors / customers' credit balances / advances aggregating Rs.1,781.67 Lakhs; sundry debtors aggregating Rs.838.62 Lakhs and loans and advances aggregating Rs.953.88 Lakhs relating to the Shipping and Logistics segment are in the process of detailed review and reconciliation. The Management expect that the net effect on the profit and loss account would not be material on completion of exercise.

(c) In shipping and logistics due to teething problems in the new ERP system implemented with effect from 1st April, 2010 some of Tax Deducted at Source values were not generated & has resulted in delay in payment of said values.

10. During the previous year, the High Court of Mumbai had approved the demerger of the Shipping Agency Division of Volkart Fleming Shipping and Services Limited, a subsidiary company, into the Company w.e.f. 1st April, 2008. Accordingly, the scheme had been given effect to in the accounts of the previous year and the assets and liabilities of the Shipping Agency Division of Volkart Fleming Shipping and Services Limited, at their respective book values as appearing in the audited divisional balance sheet as at 31st March, 2009 had been transferred to and vested in the Company alongwith the profit for the year ended 31st March, 2009 (the appointed date of the scheme being 1st April, 2008).

Notes:

1 The above figures exclude contribution to Gratuity Fund and Provision for compensated absences provided on actuarial basis as separate figures are not available.

2 The managerial remuneration of Rs.50.33 Lakhs paid during the year is in excess of the limits specified in Schedule XIII of the Companies Act, 1956 and is subject to the approval of the Central Government. During the year, the Company has received approval of the Central Government in respect of managerial remuneration of Rs.37.35 Lakhs paid in excess of limits specified in the aforesaid Schedule XIII during the previous year.

11. Employee Benefit Obligations:- Defined-Contribution Plans:

The Company offers its employees defined contribution plan in the form of family pension fund and superannuation fund. Family pension fund cover substantially all regular employees while the superannuation fund covers certain executives. Contributions are paid during the year into separate funds under certain fiduciary-type arrangements. The contribution into the superannuation fund and Family Pension Fund are made only by the Company. The contributions are based on a certain proportion of the employee's salary.

Defined-Benefits Plans:

According to the Management, actuarial valuation can not be applied to reliably measure provident fund liabilities in respect of fund managed by the trust, set up by the Company. Accordingly, the Company is currently not in a position to provide other related disclosures as required by Accounting Standard (AS) 15 (Revised) on Employee Benefits notified by the Companies (Accounting Standards) Rules, 2006 read with the Guidance issued by the Accounting Standards Board of the Institute of Chartered Accountants of India. During the year, the Company has provided Rs.21.35 Lakhs (Previous year Rs.Nil) towards interest short fall.

The Company offers its employees defined-benefits plans in the form of a gratuity scheme (a lump sum amount), post retirement medical benefits and non compete fees. Benefits under the defined benefit plans are typically based either on years of service and the employee's compensation (generally immediately before retirement). The gratuity scheme covers substantially all regular employees, while post retirement medical benefit covers certain executives. In the case of the gratuity scheme, the Company contributes funds to a Gratuity Trust, which is irrevocable, while post retirement medical benefit and non compete fees are not funded. Commitments are actuarially determined at year end. Actuarial valuation is done based on "Projected Unit Credit" method. Gains and losses of changed actuarial assumptions are charged to the profit and loss account.

A sum of Rs.269.89 Lakhs (Previous Year Rs.235.78 Lakhs) has been charged to the profit and loss account in respect of the contribution to provident fund, family pension fund, superannuation fund and other funds.

12. (a) Related Party Disclosures

(i) Names of related parties and nature of related party relationship. (A) Holding Company / Ultimate Holding Company:

1 Shapoorji Pallonji & Company Limited [Holding Company (Ultimate Holding Company upto 14th October, 2010)]

2 Sterling Investment Corporation Private Limited (Holding Company upto 14th October, 2010, merged with Shapoorji Palonji & Company Limited w.e.f. 15th October, 2010)

(B) Subsidiary Companies:

1 Aquamall Water Solutions Limited (Subsidiary of Eureka Forbes Limited)

2 Aquadiagnostics Water Research & Technology Centre Limited (Subsidiary of Aquamall Water Solutions Limited)

3 Eureka Forbes Limited

4 Euro Forbes International Pte. Limited (Subsidiary of Eureka Forbes Limited)

5 E4 Development & Coaching Limited (Subsidiary of Eureka Forbes Limited)

6 EFL Mauritius Limited (Subsidiary of Eureka Forbes Limited w.e.f. 2nd December, 2010)

7 Forbes Aquamall Limited (Subsidiary of Aquamall Water Solutions Limited)

8 Forbes Bumi Armada Limited (Subsidiary of Forbes Campbell Finance Limited)

9 Forbes Bumi Armada Offshore Limited (w.e.f. 29th October, 2010)

10 Forbes Campbell Services Limited (Subsidiary of Forbes Campbell Finance Limited)

11 Forbes Container Lines Pte. Limited

12 Forbes Edumetry Limited (Subsidiary of Forbes Campbell Finance Limited)

13 Forbes Facility Services Pvt. Limited (Subsidiary of Eureka Forbes Limited)

14 Forbes Smart Data Limited [Subsidiary of Forbes Campbell Finance Limited (upto 30th March, 2011)]

15 Forbes Technosys Limited (Subsidiary of Forbes Campbell Finance Limited)

16 Forbes Enviro Solutions Limited (Subsidiary of Eureka Forbes Limited)

17 Forbes Campbell Finance Limited

18 Radiant Energy Systems Pvt. Limited (Subsidiary of Eureka Forbes Limited)

19 Waterwings Equipments Pvt. Limited (Subsidiary of Eureka Forbes Limited)

20 Volkart Fleming Shipping and Services Limited

(C) Fellow Subsidiaries (where there are transactions):

1 Forvol International Services Limited

2 Gokak Textiles Limited

3 Afcons Infrastructure Ltd.

4 Sterling and Wilson Limited

5 SP Fabricators Pvt. Limited

(D) Associate Companies (where there are transactions):

The Svadeshi Mills Company Limited

(E) Joint Ventures (where there are transactions):

1 Edumetry Inc

2 Forbes Infotainment Limited

3 Nypro Forbes Moulds Pvt. Limited (Joint venture of Forbes Campbell Finance Limited)

4 Nypro Forbes Products Pvt. Limited (Joint venture of Forbes Campbell Finance Limited)

5 SCI Forbes Limited

(F) Key Management Personnel:

Managing Director, Mr. Ashok Barat

27. (b) Related Party Disclosures

(i) Names of related parties and nature of related party relationship for the year ended 31st March, 2010.

(A) Holding Company / Ultimate Holding Company:

1 Shapoorji Pallonji & Company Limited (Ultimate Holding Company)

2 Sterling Investment Corporation Private Limited (Holding Company)

(B) Subsidiary Companies:

1 Aquamall Water Solutions Limited (Subsidiary of Eureka Forbes Limited)

2 Aquadiagnostics Water Research & Technology Centre Limited (Subsidiary of Aquamall Water Solutions Limited)

3 Eureka Forbes Limited

4 Euro Forbes International Pte. Limited (Subsidiary of Eureka Forbes Limited)

5 E4 Development & Coaching Limited (Subsidiary of Eureka Forbes Limited)

6 Forbes Aquamall Limited (Subsidiary of Aquamall Water Solutions Limited)

7 Forbes Bumi Armada Limited (Subsidiary of Forbes Campbell Finance Limited)

8 Forbes Campbell Services Limited (Subsidiary of Forbes Campbell Finance Limited)

9 Forbes Container Lines Pte. Limited

10 Forbes Doris and Naess Maritime Limited (wound up on 29th April, 2009)

11 Forbes Edumetry Limited (Subsidiary of Forbes Campbell Finance Limited)

12 Forbes Facility Services Pvt. Limited (Subsidiary of Eureka Forbes Limited)

13 Forbes Smart Data Limited (Subsidiary of Forbes Campbell Finance Limited)

14 Forbes Technosys Limited (Subsidiary of Forbes Campbell Finance Limited)

15 Forbes Tinsley Company Limited (wound up on 23rd June, 2009)

16 Forbes Enviro Solutions Limited (Subsidiary of Eureka Forbes Limited)

17 Forbes Campbell Finance Limited

18 Next Gen Publishing Limited (from 26th May, 2009 to 14th February, 2010)

19 Radiant Energy Systems Pvt. Limited (Subsidiary of Eureka Forbes Limited)

20 Waterwings Equipments Pvt. Limited (Subsidiary of Eureka Forbes Limited)

21 Volkart Fleming Shipping and Services Limited

(C) Fellow Subsidiaries (where there are transactions):

1 Afcons Infrastructure Limited

2 Forvol International Services Limited

3 Gokak Textiles Limited

4 SP Fabricators Pvt. Limited

(D) Associate Companies (where there are transactions):

The Svadeshi Mills Company Limited

(E) Joint Ventures (where there are transactions):

1 Edumetry Inc.

2 Forbes Infotainment Limited

3 Nypro Forbes Moulds Pvt. Limited (Joint venture of Forbes Campbell Finance Limited)

4 Nypro Forbes Products Pvt. Limited (Joint venture of Forbes Campbell Finance Limited)

5 SCI Forbes Limited

(F) Key Management Personnel:

Managing Director, Mr. Ashok Barat

Footnotes:

1 Installed capacity has been certified by the Management and accepted by Auditors without verification, this being a technical matter.

2 Production is derived after reducing the aggregate of opening stock and purchases from the aggregate of closing stock and sales.

3 Quantity whereof is not ascertainable. (comprise diverse products in respect of which quantities cannot be practicably aggregates.)

4 In arriving at the quantities disclosed in metric tonnes, standard conversion factors have been used.

29. (a) Segment Reporting

The Company has disclosed Business Segment as the primary segment. Segment have been identified taking into account the nature of the products, risks and returns, organisation structure and internal reporting system.

The Company's operations predominantly relate to "Engineering", "Motors", "Shipping and Logistics Services", "Personal Wear" and "Real Estate" The Company caters to the needs of the Domestic and Export Markets.

Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.

30. Figures of previous years have been regrouped wherever necessary.

 
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