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Notes to Accounts of Gati Ltd.

Mar 31, 2015

Terms/rights attached to equity shares

The Company has only one class of equity shares of par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share and ranks pari passu. The dividend proposed by the Board of Directors is subject to approval of the shareholders, except in case of interim dividend. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion of their share holding.

Shares reserved for issue under options and contracts/commitments

i) 16,03,990 equity shares of Rs.2/- each are reserved under employee stock option scheme as on 31st March 2015 (Previous Period 17,06,590). Of this 4,61,532 options, 6,08,326 Options, 3,97,332 options and 1,36,800 will vest in the year 2015-16, 2016-17, 2017-18 and 2018-19 respectively.

ii) On December 12, 2011, the Company issued 22,182 Zero Coupon Unsecured Foreign Currency Convertible Bonds of US$ 1,000 each for an amount of US$ 22,182,000. The Bonds are convertible at any time on and after December 31,2012 up to the close of business on November 13, 2016 by holders of the Bonds into fully paid equity shares with full voting rights with a par value of Rs 2/- each at an initial conversion price of Rs.38.51 per share with a fixed rate exchange on conversion of Rs.52.2285 to US$. Unless previously converted, redeemed or purchased and cancelled, the Bonds will be redeemed in US dollars at 132.8341 percent of principle amount on December 13, 2016 giving yield to maturity of 5.76 percent per annum calculated on semi-annual basis.

(i) On allotment of 2,13,450 ( Previous period 6,81,800) shares under Employee Stock Option Scheme and transferred from Stock Option Outstanding account.

(ii) Provision for Pro-rata Premium on redemption of Foreign Currency Convertible Bonds.

(iii) In respect of options granted under the Companies Employees Stock Options Scheme and in accordance with the guidelines issued by Securities and Exchange Board of India the accounting value of options(based on market value of share on the date of grant of options minus the option price) is accounted as deferred employees compensation which is amortised on a straight line basis over the vesting period. Consequently employee benefit expenses includes Rs.8.17 Mn (previous period credit of Rs.8.45 Mn) being amortisation of deferred employee compensation after adjusting for reversal on account of options refunds/lapsed and on account of re-imbursement of discount on option issued to Employees of the subsidiary.

2 The Hon''ble Andhra Pradesh High Court, vide its order dated 19th March, 2013 approved the Scheme of Arrangement for amalgamation of five wholly owned subsidiaries of Gati Limited (Transferee Company) with effect from 31st March, 2013, the appointed date.

The Scheme permits the Company to create a capital reserve to be called Special Reserve to which shall be credited excess of value of assets over value of liabilities in the books of the transferee Company amounting to Rs.5,555.43 Mn. which shall be utilized by the transferee Company to adjust there from any capital losses arising from transfer of assets and certain other losses, any balance remaining in the Special Reserve shall be available for adjustment against any future permanent diminution in the value of assets and exceptional items etc., as the Board of directors may deem fit.

In accordance with the Scheme

i) The loss of Rs.640 Mn. on sale of investment in 40,00,000 Nos Equity shares of subsidiary Gati Ship Limited was adjusted against Special Reserve in the year 2012-13.

ii) On professional advice, the Board of Directors carried out the following adjustments against Special Reserve during the year 2013-14.

a) The diminution in value of Investment in Gati Asia Pacific Pte Ltd of Rs. 275.05 Mn and in value of Investment in Gati Ship Limited of Rs.1,080.10 Mn has been adjusted against Special Reserve.

b) Irrecoverable advances to subsidiary Gati Ship Limited of Rs. 626.43 Mn and balance consideration receivable for Sale of Investments in shares of subsidiary Gati Ship Limited of Rs.48 Mn was adjusted against Special Reserve.

c) Irrecoverable other advances made in earlier years aggregating to Rs.126.11 Mn was adjusted against Special Reserve.

iii) During the year, 2014-15 on professional advice, the Irrecoverable advances to subsidiary Gati Ship Limited of Rs.238.44 Mn net of Rs3.02 Mn realised on sale of 12,10,000 equity shares of Gati Ship Limited has been adjusted against Special Reserve.

The above adjustment otherwise, required to be debited to the Statement of Profit and Loss and adjusted against Special Reserve are not in accordance with the Accounting Standard (AS) 13 ''Accounting for Investments'' and Accounting Standard (AS) 5 ''Net Profit or Loss for the year, prior period items and changes in accounting policies''. Had the Scheme not prescribed, the above accounting treatment the accounts would have reflected as follows:

3 On transfer of Express Distribution and Supply Chain and Shipping businesses to separate subsidiaries in the year 2011-2012 , the primary operating business of the Company sit in the Balance Sheet of the Company as investments and became major source of income by way of dividend.Accordingly, the Company has been advised that the dividend income of Rs.175 Mn during the year from subsidiaries (previous period Rs. 70 Mn), Net Profit of Rs NIL (previous period Rs. 16.80 Mn on sale of land and Management Fees of Rs. 23.30 Mn during the year (Previous period Rs.30 Mn) be considered as other operating income. This has no impact on the profit of the year.

4 The company has made investment in Share Capital of Rs. 3.62 Million and has other receivables of Rs. 14.76 Million (Previous period Rs.14.76 Million) due from the subsidiary Zen Cargo Movers Pvt. Ltd. The net worth of the subsidiary has fully eroded because of losses suffered from year to year. The business of Zen Cargo is clearing agency business and is very closely related to the freight forwarding business of the parent company. The same is in the process of stabilization. The subsidiary will continue to have the required support from the holding company.The performance of the subsidiary is expected to improve in the near future. Under the circumstances no provision is considered necessary by the management at present for any diminution in the value of investments and also in respect of possible losses that may arise from other receivables from the subsidiary.

5 There are other amounts due from subsidiaries of Rs. 223.56 Mn (previous period Rs.202.34 Mn) and from an Associate Rs.13.24 Mn (previous period 13.22 Mn). The above includes Rs 190 Mn represented by land acquired by a subsidiary. The management is confident of full recovery of other amounts in due course and no provision is considered necessary for any possible losses that may arise in this behalf.

6 In an earlier year the Company has granted unsecured loan of Rs. 100 Million to a body corporate out of which Rs.17.5 Million was realised during the year leaving a balance Rs 82.5 Million along with interest receivable of Rs. 39 Milliion.The net worth of the body corporate has fully eroded because of losses suffered from year to year. However, the management is confident of full recovery of the balances due and interest receivable and therefore no provision is considered necessary for any possible losses that may arise in this behalf.

7 During the year the company sold 12,10,000 equity shares (12.09%) in Gati Ship Ltd. For Rs. 3.02 Mn. Consequently Gati Ship Ltd. ceased to be a subsidiary from May 16, 2014 and is now an associate. Gati Ship Limited has since closed it''s operations.

8 During the year, in compliance with the requirements of Schedule II of the Companies Act 2013 effective 1st April 2014, the company has revised useful life of its fixed assets. In case of asset whose useful life has expired as on 31st March 2014 the carrying value (net of deferred tax of Rs. 1.52 Mn) of the assets amounting to Rs. 2.95 Mn has been adjusted with the opening balance of retained earnings. Accordingly depreciation for the year is higher by Rs. 14.47 Mn and the profit after Tax is lower by the same amount.

9 Pursuant to the notification issued by the Ministry of Corporate Affairs dated 29th December 2011 on Accounting Standard 11, the company has opted to adjust the carrying cost of depreciable fixed assets/ to amortize the exchange differences on the Long term Foreign Currency Monetary Items over their tenure. Accordingly as on March 31,2015 Rs.113.97 Mn has been carried forward in the "Foreign Exchange Monetary Item Translation Difference Account" (FCMITDA). Consequently the net profit is lower by Rs.11.73 Mn for the year ended 31st March 2015.

10 Loans and Advances includes Rs.265.98 Mn due from Air India Limited. The matter was referred to arbitration of the Arbitral Tribunal appointed by the parties. The Arbitral tribunal passed an Award dated 17th September 2013, whereby, it has, inter alia, directed Air India Limited to pay an amount of Rs.268.20 Mn to the Company and to pay interest @18% per annum on the awarded amount. Air India has preferred an application before the Hon''ble Delhi High Court seeking setting aside of the Award and the matter is pending disposal. In the circumstances, the dues from Air India Limited included in Loans and Advances, are considered good for recovery by the management.

11 In veiw of the various deductions admissible under the Income-tax Act, no liability for current tax is estimated for the year. Provision for Deferred tax liability for the year has been made.

12 The Board of Directors of the company has allotted 1,17,450 equity shares on exercise of options by the employees under the employee stock option scheme and 96,000 equity shares to Non-Executive Directors at a premium of Rs.26 per share. Consequently the Equity Share Capital of the company increased from 8,72,64,087 equity shares of Rs 2/- each to equity shares 8,74,77,537 of Rs 2/- each during the year.

13 In response to company''s application to Reserve Bank of India (RBI) seeking permission for part repurchase of FCCBs, RBI vide its letter dated 27th September, 2013 accorded permission while stating that the Company was not eligible borrower under the automatic route and the borrowing be treated as a Foreign Debt. The Company was levied a compounding fee of Rs. 29.59 Mn, which the Company has deposited during the year and is disclosed as an exceptional item in the Statement of Profit and Loss.

14 The company is awaiting clarification from the Reserve Bank of India on various matters pertaining to Foreign Currency Convertible Bonds issued by the company. In the meanwhile the trustee of the bond holders has filed a civil suit in the Secunderabad Court for specific performance, which the company is contesting on various grounds. The matter is subjudice.

15 Particulars 31st March 31st March 2015 2014

a) Contingent Liability not provided for in respect of

(i) Bank Guarantees 11.40 90.33

(ii) Guarantees and Counter Guarantees outstanding 1,040.62 1,379.66

(iii) Income Tax demands disputed in appeals 560.91 -

(iv) Estimated amount of contracts remaining to be - 7.11 executed on capital account and not provided for

16 Related Party Disclosures

Related parties with whom transactions have taken place during the year

i Directors / Key Management Personnel:

1.Mr. Mahendra Agarwal (Founder & CEO)

2.Mr. Sanjeev Kumar Jain (Director - Finance)

3.Mr.V.S.N. Raju (Company Secretary)

ii Associates of the Company

1.Gati (Thailand) Co. Ltd.

2.Gati Ship Ltd. (Formerlly known as Gati Ship Private Limited)

iii Others

1.TCI Finance Ltd.

2.Giri Roadlines & Commercial Trading Pvt. Ltd.

3.Jubilee Commercials & Trading Pvt. Ltd

4.TCI Hi-ways Pvt. Ltd.

5.TCI Industries Ltd.

6.Mahendra Kumar Agarwal & Sons ( HUF)

7.Mahendra Investment Advisors Pvt.Ltd.

8.Amrit Jal Ventures Private Ltd.

9.Gati Academy

10.TCI Infrastructure Finance Limited

11.Gati Infrastructure Sada Mangder Pvt. Ltd.

iv Subsidiaries / Step Down Subsidiaries

1.Gati Asia Pacific Pte Ltd.

2.Gati Hong Kong Ltd.

3.Gati Cargo Express(Shanghai) Co.Ltd.

4.Gati Kausar India Ltd. (Formerlly known as Kausar India Limited)

5.Gati Import Export Trading Ltd.

6.Zen Cargo Movers Pvt. Ltd.

7.Gati Kintetsu Express Pvt Ltd

8.Gati Logistics Parks Private Ltd.

9.Gati Projects Private Ltd.


Mar 31, 2014

1. (Note 28 of Annual Accounts) The Hon''ble Andhra Pradesh High Court, vide its order dated March 19, 2013 approved the Scheme of Arrangement for amalgamation (The Scheme) between the erstwhile wholly owned subsidiaries namely Newatia Commercial & Trading Private Limited, Trymbak Commercial and Trading Private Ltd , Ocimum Commercial and Trading Private Limited, Sumeru Commercial and Trading Private Limited and Gati Express Distribution Limited (Transferor Companies) with Gati Limited (Transferee Company) with effect from March 31,2013, the appointed date.

The Scheme permits the Company to create a capital reserve to be called Special Reserve to which shall be credited excess of value of assets over value of liabilities in the books of the transferee Company amounting to Rs.5555.43 Mn. which shall be utilized by the transferee Company to adjust there from any capital losses arising from transfer of assets and certain other losses, any balance remaining in the Special Reserve shall be available for adjustment against any future permanent diminution in the value of assets and exceptional items etc., as the Board of directors may deem fit.

In accordance with the Scheme

i)The loss of Rs. 640.00 Mn. on sale of investment in 4.00 Mn. Nos Equity shares of subsidiary Gati Ship Limited was adjusted against Special Reserve in the year 2012-13.

ii) During the period, on professional advice, the Board of Directors have carried out the following further adjustments against Special Reserve.

a) The diminution in value of Investment in Gati Asia Pacific Pte Ltd of Rs. 275.04 Mn. and in value of Investment in Gati Ship Limited of Rs. 1080.10 Mn has been adjusted against Special Reserve.

b) Irrecoverable advances to subsidiary Gati Ship Limited of Rs. 626.43 Mn and balance consideration receivable for Sale of Investments in shares of subsidiary Gati Ship Limited of Rs. 48.00 Mn has been adjusted against Special Reserve.

c) Irrecoverable other advances made in earlier years aggregating to Rs. 126.11 Mn has been adjusted against Special Reserve.

2 (Note 29 of Annual Accounts): The Opening Balance of Rs 7.47 Mn. in the provision for contingencies account has been fully adjusted by Write off/Adjustments: (a) Interest Receivable - Rs. 2.57 Mn. (Previous year Rs. 7.59Mn.) (b) Trade Receivables - Rs 4.90Mn. (Previous year Rs. 35.32 Mn.).

3 (Note 30 of Annual Accounts): a) On transfer of Express Distribution and Supply Chain and Shipping businesses to separate subsidiaries in the year 201 1-2012, the primary operating business of the Company sit in the Balance Sheet of the Company as investments and became major source of income by way of dividend.

b) The Company has surplus land which it plans to dispose off in parcels over a period of two to three years as a continuous activity. Accordingly, the Company has been advised that the dividend income of Rs. 70.00 Mn during the period from subsidiaries (previous year Rs. 104.00 Mn) and net profit of Rs. 16.80 Mn on sale of land during the period (previous year Rs. 67.60 Mn) and

c) Management Fees of Rs. 30.00 Mn during the period (Previous year Rs. 33.2 Mn) be considered as other operating income. This has no impact on the profit of the period.

4 (Note 3 I of Annual Accounts): The company has made investment in Share Capital of Rs. 352.27 Mn. and has other receivables of Rs.26.38 Mn. (Previous year Rs 4.06 Mn.) due from the subsidiary Gati Kausar India Ltd. (Formerly known as Kausar India Ltd.) The net worth of the subsidiary has significantly eroded because of losses suffered from year to year. The business of Gati Kausar India Limited is the cold chain solutions which has a lot of potential. Gati Kausar India Limited has always been making cash profits and the losses are only on account of depreciation. The subsidiary will continue to have the required support from the holding company. The performance of the subsidiary is expected to improve in the near future. Under the circumstances no provision is considered necessary by the management at present for any diminution in the value of investments and also in respect of possible losses that may arise on account of other receivables from the subsidiary.

5 (Note 32 of Annual Accounts): The company has made investment in Share Capital of Rs. 3.62 Mn. and has other receivables of Rs. 14.76 Mn (Rs. 13.56 Mn) due from the subsidiary Zen Cargo Movers Pvt. Ltd. The net worth of the subsidiary has fully eroded because of losses suffered from year to year. The business of Zen Cargo is clearing agency business and is very closely related to the freight forwarding business of the parent company. The same is in the process of stabilization. The subsidiary will continue to have the required support from the holding company. The performance of the subsidiary is expected to improve in the near future. Under the circumstances no provision is considered necessary by the management at present for any diminution in the value of investments and also in respect of possible losses that may arise from other receivables from the subsidiary.

6 (a) (Note 33 (a) of Annual Accounts): (a) In an earlier year the Company has granted unsecured loan of Rs. 100.00 Mn to a body corporate which is outstanding as on March 31,2014 along with interest receivable of Rs. 39.00 Mn. The net worth of the body corporate has fully eroded because of losses suffered from year to year. However, the management is confident of full recovery of the dues and interest receivable and therefore no provision is considered necessary for any possible losses that may arise in this behalf. 6(b) (Note 33 (b) of Annual Accounts): There are certain overdue loans and advances from subsidiaries Rs. 202.3 Mn (previous year Rs. 159.1 Mn) and from an Associate Rs. 13.2 Mn (previous year Rs. 13.2 Mn). These loans and advances became overdue on account of the sluggish market conditions and the resultant difficulty in repayment. The management is actively continuing to pursue options for recovery of these dues. The management is confident of full recovery of all dues in due course and no provision is considered necessary for any possible losses that may arise in this behalf.

7 (Note 34 of Annual Accounts): Pursuant to the notification issued by the ministry of Corporate Affairs dated December 29, 2011 on Accounting Standard 11, the company has opted to adjust the carrying cost of depreciable fixed assets/ to amortize the exchange differences on the Long term Foreign Currency Monetary Items over their tenure. Accordingly as on March 31, 2014 Rs. 12.57 Mn. has been carried forward in the "Foreign Exchange Monetary Translation Difference Account" (FCMITDA). Consequently the net profit is lower by Rs.26.01 Mn.forthe period ended March3l20l4.

8 (Note 35 of Annual Accounts): In the year 2009, the Company discontinued Freighter Aircraft operations as per the arrangement with National Aviation Company of India Ltd.( NACIL) (the erstwhile Indian Airlines Ltd., and now Air India Limited) due to continuous failure and defaults by NACIL. The matter was referred to arbitration of the Arbitral Tribunal appointed by the parties. The Arbitral tribunal passed an Award dated September 17,2013, whereby, it has, inter alia, directed Air India Limited to pay an amount of Rs. 268.2 Mn. to the Company and to pay interest @ 18% per annum on the awarded amount. Air India has preferred an application before the Hon''ble Delhi High Court seeking setting aside of the Award and the matter is pending disposal. In the circumstances, the dues from Air India Limited of Rs. 265.9 Mn. included in Loans and Advances, are considered good for recovery by the management.

9 (Note 36 of Annual Accounts): In veiw of the various deductions admissible under the Income-tax Act, there is no liability for current tax for the period. Provision for Deferred tax liability for the period has been made and Deferred tax liability provided in earlier years now found in excess has been reversed. The actual tax liability will be determined on the basis of tax accounting year ended March 31, 2014. (Assessment Year 2014-15).

10 (Note 37 of Annual Accounts): The Board of Directors of the company has allotted the equity shares on exercise of options at a premium of Rs. 33.05 per share granted to Employees 6,29,300 shares and Non-Executive Directors 52,500 shares. Consequently the Equity Share Capital of the company increased from 8,65,82,287 equity shares of Rs II- each to 8,72,64,087 equity shares of Rs II- each during the period.

11 (Note 38 of Annual Accounts): The Company has granted options under the Companies Employees Stock Options Scheme and 17,06,590 equity shares of Rs.2/- each are reserved under employee stock option scheme as on March 31,2014 (Previous year 18,02,716) of this 2,13,750 options, 5,83,227 options, 6,11,386 options and 2,98,227 options will vest in the year 2014-15, 2015-16, 2016-17 and 2017-18 respectively.

12 (Note 39 of Annual Accounts): The Board of Directors of the Gati Limited has allotted 22,182 Zero Coupon Unsecured Foreign Currency Convertible Bonds (FCCBs) of US$ 1,000 each, thereby raising US$ 22.18 Mn. on December 12,201 I. The Bonds are convertible pursuant to terms and conditions thereof, any time from December 12,2012 up to the close of business on November 13,2016 by holders of the Bonds into fully paid equity shares of the company. Unless previously converted, redeemed or purchased and cancelled, the Bonds will be redeemed in US dollars at 132.8341 percent of principle amount on December 13,2016 giving a Yield to Maturity of 5.76 percent per annum calculated on semi-annual basis.

13 (Note 40 of Annual Accounts): In response to company''s application to Reserve Bank of India (RBI) seeking permission for part repurchase of FCCBs, RBI vide its letter dated September 27, 2013 accorded permission while stating that the Company was not an eligible borrower under the automatic route and the borrowing be treated as a Foreign Debt. The company was levied a compounding fee of Rs. 29.6 Mn in this respect. While suspending the compounding orders of RBI, the Hon''ble High Court of Andhra Pradesh had passed an interim order directing the Company to deposit Rs. 0.74 Mn with Reserve Bank of India, out of the compounding fee of Rs. 29.6 Mn, which the Company has since deposited. The matter being subjudice and on the basis of written legal advice, the Company has not recognized the conversion notice from one of the bondholders in respect of the FCCBs.

14. (Note 41 of Annual Accounts): (Rs. In Mn)

Particulars 31 st March 2014 30th June 2013

a) Contingent Liability not provided for in respect of

Bank Guarantees 90.33 96.20

Guarantees and Counter Guarantees outstanding 1,379.66 1,913.50

Estimated amount of contracts remaining to be executed on capital account 7.11 2.65 and not provided for

Earning per share

(i) Net profit after tax available for equity shareholders - for Basic and Diluted EPS 205.59 253.55

(ii) Weighted average no. of ordinary shares for Basic EPS (Nos.) 86.75 86.58

Add: Adjustments for foreign currency convertible bonds and stock options (Nos.) 30.07 30.17

Weighted average no. of ordinary shares for Diluted EPS (Nos.) 116.82 116.75

(iii) Nominal value of Ordinary Shares (Rs.) 2.00 2.00

(iv) Basic Earning per Ordinary Share (Rs.) 2.37 2.93

(v) Diluted Earning per Ordinary Share (Rs.) 1.76 2.17

15. (Note 42 of Annual Accounts):

Related Party Disclosures

Related parties with whom transactions have taken place during the period

i Directors/ Key Management Personnel:

Mr. Mahendra Agarwal (Founder & CEO) Mr Sanjeev Kumar Jain

ii Associates of the Company

1. Gati Intellect Systems Ltd.

2. TCI Finance Ltd.

3. Giri Roadlines & Commercial Trading Pvt. Ltd.

4. Jubilee Commercials & Trading Pvt. Ltd

5. Coast to Coast Shipping Ltd.

6. Gati Cargo Management Services Ltd.

7. TCI Hi-ways Pvt Ltd.

8. TCI Industries Ltd.

9. Mahendra Kumar Agarwal & Sons ( HUF)

10. ITAG Infrastructure Ltd.

11. ITAG Business Solutions Ltd.

12. Gati (Thailand) Ltd.

13. Mahendra Investment Advisors Pvt. Ltd.

14. Amrit Jal Ventures Pvt. Ltd.

15. Gati Academy

III Subsidiaries / Step Down Subsidiaries

1. Gati Asia Pacific Pte Ltd.

2. Gati Hong Kong Ltd.

3. Gati China Holdings Ltd.

4. Gati Cargo Express(Shanghai) Co.Ltd.

5. Gati Cargo Malaysia SDN BHD.

6. Gati Kausar India Ltd.(Formerlly known as Kausar India Limited)

7. Gati Import Export Trading Ltd.

8. Zen Cargo Movers Pvt. Ltd.

9. Gati-Kintetsu Express Pvt Ltd

10. Gati Ship Ltd.(Formerlly known as Gati Ship Private Limited)

11. Gati Logistics Parks Private Ltd.

12. Gati Projects Private Ltd.

16. (Note 44 of Annual Accounts):

The Financial Results cover a period of nine months ended March 31, 2014 and the company would close the accounts on 31 st March each year. The figures for the current period are therefore not comparable with those of the previous year. Figures of the previous year/period have been regrouped /reclassified wherever necessary.


Jun 30, 2013

(1) (Note 28 of Annual Accounts)

The Hon''ble Andhra Pradesh High Court, vide its order dated March I9, 20I3 approved the Scheme of Arrangement for amalgamation (The Scheme) between the erstwhile wholly owned subsdiaries namely I) Ocimum Commercial and Trading Private Limited 2) Newatia Commercial & Trading Private Limited 3) Trymbak Commercial and Trading Private Ltd 4) Sumeru Commercial and Trading Private Limited and Gati Express Distribution Limited (Transferor Companies) with Gati Limited (Transferee Company) with effect from March 3I, 20I3, the appointed date. In terms of the said scheme the undertakings of the Transferor Companies including:

i) All the assets and properties both movable and immovable, investments, rights, title and interests comprised in the respective undertakings of the Transferor companies stand transferred to and vested in the Transferee company at their respective fair values.

ii) All the assets and liabilities recorded in the books of the respective transferor companies stand transferred to and vested in the Transferee company at their respective fair values.

iii) Book values of net assets of Ocimum Commercial and Trading Private Limited, Newatia Commercial & Trading Private Limited, Trymbak Commercial and Trading Private Limited, Sumeru Commercial and Trading Private Limited have been treated as fair value. The Book value of Rs. 3.5 Mn. of investment in 3,50,000 equity shares in Gati-Kintetsu Express Private Limited in the books of Gati Express Distribution Limited has been valued at Rs. 5,5I0 Mn., being the fair value ,as per the valuation report of an independent valuer.

v) All the erstwhile transferor companies are wholly owned subsidiaries of Gati Limited and on amalgamation there is no issue of shares and the entire share capital of the erstwhile transferor companies held by the Transferee company including through its nominees and the corresponding investment represented in the transferee company stand cancelled. The interse amount of deposits, loans and other receivables/payables also stand cancelled.

vi) The amalgamation has been accounted for under the ''Purchase Method'' as per the Accounting Standard I4 (AS-I4)" Accounting for Amalgamation".

vii) The excess of value of assets over value of liabilities amounting to Rs. 5555.4 Mn. has been credited to a Capital Reserve to be called Special Reserve as per the Scheme.

2. (Note 29 of Annual Accounts)

i) The Scheme of Arrangement permits the Company to create a capital reserve to be called Special Reserve to which shall be credited excess of value of assets over value of liabilities in the books of the transferee Company amounting to Rs. 5555.4 Mn. which shall be utilized by the transferee Company to adjust therefrom any capital losses arising from transfer of assets and certain other losses, any balance remaining in the Special Reserve shall be available for adjustment against any future permanent diminution in the value of assets and exceptional items etc as specified in the Scheme and as the Board of directors may deem fit .

ii) In accordance with the above, the loss of Rs. 640 Mn. on sale of investment in 4 Mn. equity shares of subsidiary Gati Ship Limited (being 40% of the equity capital) required to be debited to the Statement of Profit and Loss has been adjusted with Special Reserve which is not in accordance with the Accounting Standard (AS) I3 ''Accounting for Investments''. Had the Scheme not prescribed the above accounting treatment the accounts would have reflected as follows:

Profit on sale of investments of Rs. 891.8 Mn. in the previous year was credited to the Statement of Profit and Loss and classified under the head "Other Income".

3. (Note 30 of Annual Accounts)

a) On transfer of Express Distribution and Supply Chain and Shipping businesses to separate subsidiaries in the year 2011- 2012, the primary operating business of the Company sit in the Balance Sheet of the Company as investments and became major source of income by way of dividend.

b) The Company has surplus land which it plans to dispose off in parcels over a period of two to three years as a continuous activity. Accordingly, the Company has been advised that the dividend income of Rs. 104 Mn. during the year from subsidiaries (previous year Rs. Nil), net profit of Rs. 67.6 Mn. on sale of land and buildings during the year (previous year Rs. 72.3 Mn.) and

c) Management fees of Rs. 33.2 Mn. during the year (previous year Rs. Nil) be considered as "Other Operating Income". The corresponding previous year''s figures which were classified as Other Income have also been reclassified accordingly. This has no impact on profit of the year.

4. (Note 31 of Annual Accounts)

The company has made investment in Share Capital of Rs. 352.25 Mn.and has other receivables of Rs. 4.06 Mn. due from the subsidiary Gati Kausar India Ltd.(Formerly known as Kausar India Ltd.) The net worth of the subsidiary has significantly eroded because of losses suffered from year to year. The business of Gati Kausar India Limited is the cold chain solutions which has a lot of potential. Gati Kausar India Limited has always been making cash profits and the losses are only on account of depreciation. The subsidiary will continue to have the required support from the holding company. The performance of the subsidiary is expected to improve in the near future. Under the circumstances no provision is considered necessary by the management at present for any dimunition in the value of investments and also in respect of possible losses that may arise on account of other receivables from the subsidiary.

5. (Note 32 of Annual Accounts)

The company has made investment in Share Capital of Rs. 3.62 Mn. and has other receivables of Rs. 13.55 Mn. due from the subsidiary Zen Cargo Movers Pvt. Ltd. The net worth of the subsidiary has fully eroded because of losses suffered from year to year. The business of Zen Cargo is clearing agency business and is very closely related to the freight forwarding business of the parent company. The same is in the process of stabilization. The subsidiary will continue to have the required support from the holding company. The performance of the subsidiary is expected to improve in the near future. Under the circumstances no provision is considered necessary by the management at present for any diminution in the value of investments and also in respect of possible losses that may arise from other receivables from the subsidiary.

6. (Note 33 of Annual Accounts)

The Opening balance of Rs. 100 Mn in the provision for contingencies account has been adjusted by Write off/reversals/Adjustments : (a)Interest income of earlier year Rs. 7.59 Mn (b) Advances/Deposits not recoverable Rs. 16.93 Mn

(c) Loan to a Subsidiary Rs. 11.40 Mn (d)Trade Receivables Rs. 35.32 Mn and (e)Unreconciled Inter-divisional balances Rs. 21.29 Mn aggregating to Rs. 92.53 Mn leaving a balance of Rs. 7.47 Mn.

7. (Note 34 of Annual Accounts)

Pursuant to the notification issued by the Ministry of Corporate Affairs dated December 29, 2011 on Accounting Standard 11, the company has opted to adjust the carrying cost of depreciable fixed assets/ to amortize the exchange differences on the Long term Foreign Currency Monetary Items over their tenure. Accordingly as on June 30, 2013 an amount Rs.151.71 Mn. has been carried forward in the "Foreign Exchange Monetary Item Translation Difference Account" (FCMITDA). Consequently the net profit is higher by Rs. 63.60 Mn. for the year ended June 30, 2013.

8. (Note 35 of Annual Accounts)

In the year 2009, the Company discontinued Freighter Aircraft operations as per the arrangement with National Aviation Company of India Ltd (NACIL)(the erstwhile Indian Airlines Ltd., and now Air India Limited,) due to continuous failure and defaults by NACIL. The matter was referred to arbitration of the Arbitral Tribunal appointed by the parties. The Company had filed its statement of Claim before the Arbitral Tribunal for the losses suffered against which NACIL has made counter claims. The hearing of the Arbitration has been concluded and the Award of the Arbitral Tribunal is awaited. Pending decision of the Arbitral Tribunal, a sum of Rs. 266 Mn. is included in loans and advances being the difference between the amount of Bank Guarantee invoked by NACIL and claims acknowledged by the Company. In the Company''s view there are fair chances of recovery of Rs. 266 Mn. as well as the legal expenses of Rs. I0.2 Mn. as per the legal advice received by the Company, endorsed by another eminent jurist, no liability is contemplated to arise in the matter and no provision is considered necessary in these accounts in this behalf.

9.(Note 36 of Annual Accounts)

Tax provision in these accounts has been made considering the working results for the year ended June 30, 20I3. The actual tax liability will be determined on the basis of tax accounting year ended March 3I, 20I3. (Assessment Year 20I3-I4).

10. (Note 37 of Annual Accounts)

The Company has granted options under the Companies Employees Stock Options Scheme and I8,02,7I6 Options are outstanding(Previous year I9,48,I4I) as at 30th June 20I3. Of this I0,84,2I6 Options will vest in 20I3-I4, 2,I5,550 options in 20I4-I5, 2,87,400 options in 20I5-I6 and 2,I5,550 options in 20I6-I7.

11. (Note 38 of Annual Accounts)

The Board of Directors of the Company has allotted 22,I82 Zero Coupon Unsecured Foreign Currency Convertible Bonds(FCCB) of US$I,000 each, thereby raising US$ 22,I82,000 on December I2, 20II. The bonds are convertible any time from December I2, 20I2 upto the close of business on November I3, 20I6 by holders of the Bonds into fully paid equity shares of the company with a par value of Rs. 2 each with full voting rights at an initial conversion price of Rs. 38.5I per share with USD/INR reference exchange rate that is fixed at Rs. 52.2285 per US$. Unless previously converted, redeemed or purchased and cancelled , the Bonds will be redeemed in US dollars at I32.834I percent of principle amount on December I3, 20I6 giving a Yield to Maturity of 5.76 percent per annum calculated on semi-annual basis.

13. (Note 40 of Annual Accounts)

Related Party Disclosures

Related parties with whom transactions have taken place during the year

i Directors / Key Management Personnel:

1. Mr. Mahendra Agarwal (Managing Director & CEO)

2. Mr.Sanjeev Kumar Jain (Director -Finance)

ii Relative of Key Management Personnel:

I. Mr. Anand Kumar Agarwal (Brother of Mr. Mahendra Agarwal)

14. ( Note 41 of Annual Accounts)

Segment Information Primary Business Segment

Express Distribution & Supply Chain :Covers integrated cargo services - Road, Rail and Air Transportation.

Coast-to-Coast (Shipping) : Covers Sea Transportation

Fuel Stations: Covers Fuel Stations dealing in petrol, diesel and lubricants etc.

15. (Note 43 of Annual Accounts)

The previous year''s figures have been regrouped/reclassified/restated wherever necessary. However the current year figures are not readily comparable with those of the previous year due to:

a) Implementation of Scheme of Arrangement with effect from March 3I, 20I3.

b) The previous year financials reflect the operations of EDSC and Shipping Division upto March 3I, 20I2, since those businesses were transferred to two separate subsidiaries with effect from that date.


Jun 30, 2012

Terms/rights attached to equity shares

The Company has only one class of equity shares of par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share and ranks pari passu. The dividend proposed by the Board of Directors is subject to approval of the shareholders, except in case of interim dividend. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion of their share holding.

Shares reserved for issue under options and contracts/commitments

i) 19,48,141 equity shares of Rs.2/- each are reserved under employee stock option scheme as on 30th June 2012(Previous year 30,71,980). Of this 9,09,402 options, 7,84,539 options, 2,06,200 options and 48,000 options will vest in the year 2012-13,2013- 14,2014-15 and 2015-16 respectively.

ii) On December 12,2011, the Company issued 22,182 Foreign Currency Convertible Bonds of US$ 1,000 each for an amount of US$ 22.182 Mn. The Bonds are convertible at any time on and after December 31,2012 up to the close of business on November 13, 2016 by holders of the Bonds into fully paid equity shares with full voting rights with a par value of Rs 21- each at an initial conversion price of Rs 38.51 per share with a fixed rate of exchange on conversion of Rs 52.2285 to US$.

(i) On allotment of 577387 shares under Employee Stock Option Scheme and transferred from Stock Option Outstanding account.

(ii) Provision for Pro-rata Premium on redemption of Foreign Currency Convertible Bonds.

(iii) In respect of options granted under the Companies Employees Stock Options Scheme and in accordance with the guidelines issued by Securities and Exchange Board of India the accounting value of options(based on market value of share on the date of grant of options minus the option price) is accounted as deferred employees compensation which is amortised on a straight line basis over the vesting period. Consequently salaries, wages and bonus includes Rs. -4.98 Mn(previous year Rs. 15.96 Mn) being amortisation of deferred employee compensation after adjusting for reversal on account of options refunds/lapsed.

a) As per Business Transfer Agreements (Refer Note Nos. 26 & 27)

b) A part of Land & Buldings were revalued on 31 st December, 1997,29th June, 1999, and 31 st March, 2000 and the resultant increases in the value of assets by Rs.4.6 Mn Rs. 14.1 Mn and Rs. 14.84 Mn respectively and aggregating to Rs.33.56 Mn was transferred to Revaluation Reserve.

c) Depreciation forthe year includes Rs. 0.095 Mn in respect of above revaluations.

d) Deduction to Assets includes Rs. 10.71 Mn (previous year Rs.4.31 Mn) on account of exchange rate difference on restatement of foreign currency loans.

e) The increase/decrease in the rupee liability arising out of the restatement of foreign currency convertible bonds, has been adjusted to the carrying cost of respective fixed assets to be depreciated over their remaining depreciable life. The depreciation forthe current year includes Rs. 0.37 Mn (previous year - Rs.0.42 Mn) arising on account of this adjustment.

(1) With a view to restructure its business and operations

a) The company has entered into Business Transfer Agreement(BTA) with its wholly owned subsidiary Redsun Supply Chain Solutions Limited(Since renamed as Gati-Kintetsu Express Private Limited) for transfer of substantial part of its Express Distribution and Supply Chain business division on a going concern basis without payment of any monetary consideration effective at the close of business hours on 31 st March 2012.

c) The excess amount of liabilities over amount of assets of Rs. 1250.59 Mn has been accounted as surplus in these accounts.

d) No values have been assigned to any specific asset or liability comprised in the Business Division

(3) a) The company has also entered into Business Transfer Agreement(BTA) with its wholly owned subsidiary Gati Ship Private Limited for transfer of its shipping business division as a going concern on slump sale basis effective at the close of business hours on 31 st March 2012 for a consideration of Rs. 1800 Mn.

b) In discharge of the consideration amount, Gati Ship Private Ltd has allotted to the company One Crore Equity Share of Rs. 10 each fully paid at a premium of Rs. 170 per share aggregating to Rs. 1800 Mn pursuant to the BTA

d) No values have been assigned to any specific asset or liability comprised in the Business Division 28) The Company has made investment in Share Capital and has also given loans & advances to two subsidiairies Kausar India Ltd. and Zen Cargo Movers Pvt. Ltd., including receivables from the subsidiaries, aggregating to Rs.346.6 Mn & Rs. 14.4 Mn respectively. The net worth of these two subsidiaries has fully eroded because of losses suffered from year to year. The business in which Kausar India Limited is the cold chain solutions. This business has a lot of potential. Kausar India Limited has always being making cash profits and the losses are only on account of depreciation. The business of Zen Cargo is clearing agency very closely related to the freight forwarding business of the parent company. The same is in the process of stabilization. Both the subsidiaries will continue to have the required support from holding company. The performance of this subsidiaries is expected to improve in the near future. Under the circumstances no provision is considered necessary by the management at present for any diminution in the value of investments and also in respect of loss that may arise from other receivables from the two subsidiaries.

a) During an earlier year the Company discontinued Freighter Aircraft operations as per the arrangement with National Aviation Company of India Ltd (NACIL), (the erstwhile Indian Airlines Ltd.,) due to continuous failure and defaults by NACIL. The matter now stands referred to the arbitration of the Arbitral Tribunal appointed by the parties. Pending decision of the Arbitral Tribunal a sum of Rs.265.98 Mn is included in loans and advances being the difference between the amount of Bank Guarantee invoked by NACIL and claims acknowledged by the Company. In the Company's view there are fair chances of recovery of Rs.265.98 Mn. The Company has filed its statement of Claim before the Arbitral Tribunal for the losses suffered against which NACIL has made counter claims. As per the legal advice received by the company endorsed by another eminent jurist, no liability is contemplated to arise in the matter and no provision is considered necessary in these accounts in this behalf.

c) Pursuant to the notification issued by the ministry of Corporate Affairs dated 29th December 2011 on Accounting Standard 11, the company has opted to adjust the carrying cost of depreciable fixed assets/ to amortize the exchange differences on the Long term Foreign Currency Monetary Items over their tenure. Accordingly as on June 30, 2012, Rs.88.11 Mn has been carried forward in the " Foreign Exchange Monetary Translation Difference Account". Consequently the net profit is higher by Rs.88.11 Mn for year ended 30th June, 2012.

d) Due to inadequacy of profits, the remuneration paid to the Managing Director and erstwhile Whole-time Director is in excess of the prescribed limits under the Companies Act, 1956 by Rs. 22.47 Mn which requires approval of the Shareholders and the Central Government.

e) Tax provision in these accounts has been made considering the working results for the year ended 30th June, 2012. The actual tax liability will be determined on the basis of tax accounting year ended 31 st March, 2012. (Assessment Year 2012-13).

f) Out of the 1,02,32,400 convertible warrants allotted to the promoter on 13th February, 2010, 8,50,000 warrants were converted into shares on 31 st March 2011.93,82,400 warrants lapsed on 12th August, 2011 and amount received on allotment of warrants of Rs. 16,40,58,800 was forfeited and transferred to Capital Reserve Account.

g) The Company has granted options under the Companies Employees Stock Options Scheme and 19,48,141 Options are outstanding(Previous year 30,71,980) as at 30th June 2012. Of this 9,09,402 Options will vest in 2012-13, 7,84,539 Options in 2013-14, 2,06,200 options in 2014-15 and 48,000 options in 2015-16.

h) The Board of Directors of the Company has allotted 22,182 Zero Coupon Unsecured Foreign Currency Convertible Bonds(FCCB) of US$ 1,000 each, thereby raising US$ 22.182 Mn on December 12,2011. The bonds are convertible anytime from December 12,2012 upto the close of business on November 13,2016 by holders of the Bonds into fully paid equity shares of the company with a par value of Rs.2 each with full voting rights at an initial conversion price of Rs. 38.51 per share with USD/INR reference exchange rate that is fixed at Rs. 52.2285 per US$. Unless previously converted, redeemed or purchased and canceled, the Bonds will be redeemed in US dollars at 132.8341 percent of principle amount on December 13, 2016 giving a Yield to Maturity of 5.76 percent per annum calculated on semi-annual basis. The FCCBs earlier issued which were listed on the Singapore Stock Exchange have been fully redeemed along with the redemption premium on 13th December 2011.

i) The Company has taken a ship on finance lease during the financial year 2008-09 and accordingly as per AS-l9, the asset has been capitalized with corresponding Liability.

The ships along with the other assets and liabilities have been transferred to its wholy own subsidiary Gati Ship Private Limited(refer note 27(c))

30th June 2012 30th june 20l1

j) Contingent Liability not provided for in respect of

Bank Guarantees 151.35 190.86

Guarantees and Counter Guarantees outstanding 471.35

Estimated amount of contracts remaining to be executed on capital account 25.73 36.00 and not provided for

k) Earning per share

(i) Net profit aftertax available for equity shareholders - for Basic and Diluted EPS (Rs. In Mn) 719.96 143.01

(ii) Weighted average no. of ordinary shares for Basic EPS (Nos. in Mn) 86.39 85.37

Add: Adjustments for foreign currency convertible bonds and stock options (Nos. in Mn) 30.23 18.12

Weighted average no. of ordinary shares for Diluted EPS (Nos. in Mn) 116.62 103.49

(iii) Nominal value of Ordinary Shares (Rs.) 2.00 2.00

(iv) Basic Earning per Ordinary Share (Rs.) 8.33 1.68

(v) Diluted Earning per Ordinary Share (Rs.) 6.17 1.38

I) Related Party Disclosures

Related parties with whom transactions have taken place during the year

i Directors / Key Management Personnel:

Mr. Mahendra Agarwal (Managing Director & CEO)

Mr. Lagad Himmat Singh Daulat Rao (Whole-Time Director)

ii Relative of Key Management Personnel:

Mr. Anand Kumar Agarwal (Brother of Mr. Mahendra Agarwal)

iii Associates

1. Gati Intellect Systems Ltd.

2. TCI Finance Ltd.

3. Giri Roadlines & Commercial Trading Pvt. Ltd.

4. Jubilee Commercials & Trading Pvt. Ltd.

5. Gati Shipping Ltd.

6. Gati Cargo Management Services Ltd.

7. TCI Hi-ways Pvt. Ltd.

8. TCI Industries Ltd.

9. Mahendra Kumar Agarwal & Sons (HUF)

10. ITAG Infrastructure Ltd.

11. ITAG Business Solutions Ltd.

12. Gati (Thailand) Ltd.

iv Subsidiaries I Step Down Subsidiaries

1. Gati Holdings Ltd.

2. Gati Asia Pacific Pte Ltd.

3. Gati Hong Kong Ltd.

4. Gati China Holdings Ltd.

5. Gati Middle East FZE Ltd.

6. Gati Cargo Express(Shanghai) Co.Ltd.

7. Gati Japan Ltd.

8. Gati Cargo Malaysia SDN BHD.

9. Newatia Commercial & Trading Pvt. Ltd.

10. Trymbak Commercial & Trading Pvt. Ltd.

11. Ocimum Commercial & Trading Pvt. Ltd.

12. Sumeru Commercial & Trading Pvt. Ltd.

13. Kausar India Ltd.

14. Gati Import Export Trading Ltd.

15. Zen Cargo Movers Pvt. Ltd.

16. Gati Kintetsu Express Pvt Ltd (Formerley known as REDSUN Supply Chain Solutions Ltd.)

17. Gati Ship Private Ltd.

18. Gati Logistics Parks Private Ltd.

19. Gati Projects Private Ltd.

20. Gati Express and Distribution Private Ltd.

o) The figures of the Current Year are not readily comparable with those of the previous year due to -

i) The current year financials reflect the operations of EDSC and Shipping Division upto to 31 st Mar 2012 only, since those business were transferred to two separate wholly owned subsidiaries with effect from that date.

ii) The previous year's figures have been reclassified/regrouped to confirm to Schedule Vl(as amended) of the Companies Act, 1956.

 
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