Mar 31, 2023
15.2 The credit period towards trade receivables related to turnkey projects generally ranges between down to achievement of specified milestones (execution based) and average project execution cycle is around 6 to 18 months. General payment terms include process time with the respective customers ranging between 60 to 120 days from the date of invoices / achievement of specified milestones.
15.3 In determining the allowance for trade receivables the Company has used practical expedients based on financial condition of the customers, ageing of the customer receivables & over-dues, availability of collaterals and historical experience of collections from customers. The concentration of risk with respect to trade receivables is reasonably low as most of the customers are Government and large Corporate organisations though there may be normal delays in collections.
15.4 Above balance of trade receivable include recoverable form related party (refer note 52)
The Company has issued equity share of ''1/- each. On a show of hands, every holder of equity shares is entitled for one vote and upon a poll shall have voting rights in proportion to the shares of the paid up equity capital of the Company held by them. 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 amount in proportion to their shareholdings.
Information related to Employee Stock Option Plan, including details of options issued, exercised, expired and forfeited during the previous financial year and options outstanding at the end of the reporting period, is set out in note 57.
a. Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provision of the Companies Act, 2013.
b. Capital Redemption reserve is created to the extent of Preference Share Capital redeemed i.e. 80,50,000 (previous year 80,50,000) CRPSs of ''100/- each
c. Employee share based payment reserve is created as required by Ind AS 102 ''Share Based Payments'' on the Employee Stock Option Scheme operated by the Company for employees of the Group.
The Board of Directors and Shareholders of the Company at their meetings held on September 02, 2022 and September 30, 2022 respectively, has approved the issuance up to 1,41,00,000 (One crores forty one lakhs) warrants convertible into 1,41,00,000 equity shares at a price of ''80/- per equity share to one of the Promoters of the Company and certain persons belonging to non-Promoter category being senior leadership team. Subsequently, on receipt of warrant subscription price being ''20/- per warrant equivalent to 25% of the Warrant Exercise Price i.e., ''80/- per warrant, aggregating to ''28.20 crores, the Allotment Committee of the Board of Directors at its meeting held on October 15, 2022, has allotted 1,41,00,000 (One crores Forty-One Lacs) Warrants, being the entire issue, on preferential basis to aforesaid entity/persons. Balance consideration of ''60/- per warrant, being 75% of the Warrant Exercise Price shall be payable within 18 months from the allotment date, at the time of exercising the warrants to apply for fully paid-up equity share of ''1/- each of the Company, against each warrant held by the warrant holders.
a) Term Loan of ''86.67 crores (Previous year ''108.94 crore) from the Banks are secured by pari-passu first charge on entire Optical Fiber Project Assets at Hyderabad (Unit-1), both present and future, by way of equitable mortgage. The loan is further secured by personal guarantee of Managing Director of the Company and Corporate Guarantee of M/s MN Ventures Private Limited. Repayment of this term loan would be made in 28 structured quarterly instalments over a period of 7 years commencing after moratorium period i.e. 12 months after date of commencement of the project.
b) Term Loan of ''30.57 crores (Previous year ''13.34 crore) as disbursed against sanction of ''48.00 crores from the Bank, are secured by exclusive first charge on entire Optical Fiber Cable Project Assets at Hyderabad (Unit -2), both present and future, by way of equitable mortgage except land which is pari-passu charge with the lenders of Unit 1. The loan is further secured by personal guarantee of Managing Director of the Company and Corporate Guarantee of M/s MN Ventures Private Limited. Repayment of this term loan would be made in 28 structured quarterly instalments over a period of 7 years commencing after moratorium period i.e. 12 months after date of commencement of the project.
c) Working Capital Facilities (COVID -19 Emergency Credit line) of ''Nil (Previous year ''0.86 crore) are secured on pari passu basis by way of hypothecation of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. as well as by way of second charge on immovable properties except Hyderabad units of the Company and are also secured by personally guaranteed of Managing Director of the Company and further secured by way of corporate guarantee of M/s MN Ventures Private Limited.
d) Other Vehicle Loans of ''3.83 crores (Previous Year ''3.07 crore) from banks are secured by way of hypothecation of respective vehicle.
* a) Working Capital Loans from banks aggregating to ''230.76 crores (Previous year: ''218.81 crore) are secured on pari passu basis by way of hypothecation of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. and all other current assets of the company as well as by way of first pari passu charge on enitre fixed assets of the company (both present and future) excluding fixed assets of manufacturing facility at Telangana and are also personally guaranteed by Managing Director of the Company and further secured by way of corporate guarantee of M/s MN Ventures Private Limited.
b) Working Capital Loans from Banks aggregating to ''73.64 crores (Previous year: ''73.37 crore) are secured by way of first pari passu charge on all current assets, movable & immovable fixed assets (both present & future) of IPMPLS back bone Project for Network for Spectrum (NFS). The loan is further secured by first pari passu charge on enitre fixed assets of the company (both present and future) excluding fixed assets of manufacturing facility at Telangana, personal guarantee by Managing Director of the Company, corporate guarantee of M/s MN Ventures Private Limited, first pari passu charge of cash flows of the project for working capital consortium.
c) Quarterly returns/statements of current assets filed by the Company with banks are in agreement with the books of accounts.
i) While disclosing the aggregate amount of transaction price yet to be recognised as revenue towards unsatisfied (or partially satisfied) performance obligations, along with the broad time band for the expected time to recognise those revenues, the Company has applied the practical expedient in Ind AS 115.
ii) Unsatisfied (or partially satisfied) performance obligations are subject to variability due to several factors such as terminations, changes in scope of contracts, periodic revalidations of the estimates, economic factors (changes in currency rates, tax laws etc.). The aggregate value of transaction price allocated to unsatisfied (or partially satisfied) performance obligations is '' Nil (Previous year ''Nil) which is expected to be recognised as revenue in the next year.
40. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The following are the key assumptions concerning the future, and other key sources of estimated uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life.
The useful lives and residual values of Company''s assets are determined by management at the time the asset is acquired. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.
Capitalisation of cost in intangible assets under development is based on management''s judgement that technological and economic feasibility is confirmed and asset under development will generate economic benefits in future. Based on evaluations carried out, the management has determined that there are no factors which indicates that these assets have suffered any impairment loss.
Defined benefit plans and other long-term benefits are evaluated with reference to uncertain events and based upon actuarial assumptions including among others discount rates, expected rates of return on plan assets, expected rates of salary increases, estimated retirement dates, mortality rates. The significant assumptions used to account for Employee benefits are described in Note 45.
The Company assesses the services promised in a contract and identifies distinct performance obligations in the contract. Judgement is also required to determine the transaction price for the contract. The Company allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations. The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics. Ind AS 116 requires assessment of whether an underlying asset is of low value, if lessee opts for the option of not to apply the recognition and measurement requirements of Ind AS 116 to leases where the underlying asset is of low value. For the purpose of determining low value, the Company has considered nature of assets and concept of materiality as defined in Ind AS 1 and the conceptual framework of Ind AS which involve significant judgement.
The Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Company considered current and anticipated future economic conditions relating to industries the company deals with and the countries where it operates. In calculating expected credit loss, the Company has also considered credit reports and other related credit information for its customers to estimate the probability of default in future.
Deferred tax assets are recognised for unused tax credits to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies and obligations. Obligations relating to Project Executions is largely depends upon performance of services by respective contractors. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognised until the contingency has been resolved and amounts are received or receivable.
In order to arrive at the fair value of unquoted investments (other than subsidiaries and associates), the Company obtains independent valuations. The techniques used by the valuer is Asset approach - Net assets value method and Income approach-discounted cash flow method. The Company reviews its carrying value of investments carried at cost (net of impairment, if any) annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for in the statement of profit and loss.
42. DIVIDEND DISTRIBUTION MADE AND PROPOSED
The amount of dividend recognised as distributions to equity shareholders during the year ended March 31,2023 is @ 18 %, i.e. ''0.18/- per equity share of face value of ''1/- each (Previous Year ''0.15 per equity share). The Board of Directors at its meeting held on April 29, 2022 had recommended such dividend of 18% for the financial year ended March 31,2022 which was approved by the shareholders at the Annual General Meeting held on September 30, 2022. The aforesaid dividend was paid during the year ended March 31,2023.
The Board of Directors have recommended a dividend of 20% (i.e. ''0.20/- per equity share of face value of ''1/- each) for the financial year ended March 31,2023 which is subject to the approval of shareholders at the ensuing Annual General Meeting.
Interest on lease liabilities is ''2.30 crores and ''2.72 crores for the year ended March 31,2023 and March 31,2022 respectively.
Lease contracts entered by the Company majorly pertains for buildings taken on lease to conduct its business in the ordinary course. The Company does not have any lease restrictions and commitment towards variable rent as per the contract. The leases that the Company has entered with lessors towards properties used as ware houses/ offices are long term in nature.
i) During the previous year the Company had acquired voting right of 50% in Nimpaa Telecommunications Private Limited (Nimpaa), having its registered office at No. 16/38, Maharaja Surya Road, Teynampet, Chennai -600018, Tamil Nadu, at a total consideration of ''1 crore, thereby making it a Jointly Controlled Entity of the Company w.e.f. June 14, 2021. Nimpaa is engaged in the business of manufacture of equipment, component, accessories and cables for telecommunication systems, networks.
ii) During the previous year the Company had also acquired voting right of 50% in BigCat Wireless Private Limited (BigCat), having its registered office at New No. 21, Old No. 9, Flat C2, Dwarka Apartments, 1st Avenue, Shastri Nagar, Chennai-600020, Tamil Nadu, at a total consideration of ''8.50 crore, thereby making it a Jointly Controlled Entity of the Company w.e.f. 12th Nov, 2021. BigCat is engaged in the development of software and hardware products for wireless networking and other related technical, research and development activities.
45. During the year, Company has recognised the following amounts in the financial statements as per Ind AS - 19 "Employees Benefits" as specified in the Companies (Indian Accounting Standards) Rules, 2015:
The employees'' gratuity fund scheme is managed by HDFC Standard Life Insurance Company Limited which is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation and the obligation for leave encashment is recognised in the same manner as gratuity.
47. OPERATIONAL BUYERS'' CREDIT / SUPPLIERS CREDIT
Operational Buyers''/Suppliers'' Credit is availed in foreign currency from Indian banks through their offshor foreign branches at an interest rate ranging from 5.00%-6.00% per annum. These trade credits are generally repayable within 180 days from the date of draw down. Operational Buyers'' credit availed in foreign currency is partly backed by Standby Letter of Credit issued under working capital facilities sanctioned by Indian banks.
48. COMMITMENTS AND CONTINGENCIES
(a) Contingent Liabilities not provided for in respect of:
Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
(i) Unexpired Letters of Credit (margin money paid ''33.62 crore; Previous year ''72.89 crore) |
224.13 |
466.20 |
(ii) Guarantees given by banks on behalf of the Company (margin money kept by way of fixed deposits of ''140.40 crore; Previous year ''132.14 crore) |
869.89 |
868.37 |
(iii) Claims against the Company towards sales tax, income tax and others in dispute not acknowledged as debt (deposited under protest ''3.87 crores ; (Previous year ''3.87 crore) |
38.99 |
30.87 |
Notes:
i) The Company''s pending litigations comprise of claims against the Company and proceedings pending with Tax Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material impact on its financial position.
ii) The Company periodically reviews all its long term contracts to assess for any material foreseeable losses. Based on such review wherever applicable, the Company has made adequate provisions for these long term contracts in the books of account as required under any applicable law/accounting standard.
iii) The Company has provided guarantees to third parties on behalf of subsidiary and associates. The Company does not expect any outflow of resources in respect of such guarantees.
iv) We have perused the judgement of Hon''ble Supreme Court vide its ruling given in February 2019 and it has been opined that if any allowance is not paid across the board, it shall not be treated as basic wages for the purpose of Employee Provident Fund contribution under Employees'' Provident Funds and Miscellaneous Provisions Act, 1952, hence we understand that no further liability lies upon us.
v) The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come in to effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period when the Code becomes effective.
vi) As at March 31,2023 the Company has outstanding term derivative contracts as referred in Note 60.
vii) There has been no delay in transferring amounts, required to be transferred if any, to the Investor Education and Protection Fund by the Company.
(b) Capital Commitments |
||
Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) |
267.43 |
102.42 |
Uncalled capital commitment pertaining to investments |
5.00 |
12.00 |
49. HTL Limited, Subsidiary Company, has proposed for allotment of 8% redeemable and non-convertible preference share capital of ''100.00 crores by way of conversion of outstanding loan and advances extended by HFCL Limited. The Subsidiary Company has submitted the proposal before the Department of Telecommunications (DoT) vide letter dated 22.03.2022 for seeking their administrative approval for the proposal so that the required formalities under the Companies Act can be taken up accordingly. In view of this, entire advances & loans receivable from HTL Limited have been classified under Non-Current Assets in the financial statements. (Refer Note 9 and 10).
50. In the opinion of the Board, all assets other than property, plant and equipment and non-current investments, have a realisable value in the ordinary course of business which is not significantly differ from the amount at which it is stated. Balances of various trade payables, trade receivables, loans and advances, security deposits and other parties are subject to confirmation/reconciliation and consequential adjustments, if any. In the opinion of the management, such adjustments, if any, will not have a material impact on the Financial Statements.
51. The Company''s Solan manufacturing facilities are having limited scale of operations due to rapid change in technology and other advancements. The said facilities are currently generating revenue from job work only. In view of the above and as a step towards cost optimisation, company''s Board had decided to shift the Plant and Machinery of Solan facilities and operations thereof to its Manufacturing Facility located at Hyderabad. The process of shifting of employees has already been started. The partial plant & machinery and other testing equipment would transfer to Hyderabad plant in due course of time. The management is also in the process of identifying prospective usages of its facilities at Solan post shifting of plant and machinery to other locations.
i) Transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions.
ii) The remuneration to Key Managerial Personnel are in line with the HR policies of the company.
iii) Loans and advances given to Directors/ KMPs have specified terms/ period of repayment and are in line with HR policies of the Company.
iv) The company makes advances to its associate companies to cater their short term business requirements. Such advances carry interest rates at the rate applicable to the term loans as per Company''s policy.
v) The interest and /or dividend paid to the Trusts and Key Managerial Personnel are on account of their investments in the equity shares of the Company and dividend paid on such securities is uniformally applicable to all the holders.
vi) Outstanding balances of group companies at the year-end are unsecured.
The Company publishes the Standalone financial statements of the Company along with the consolidated financial statements.
In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated
financial statements.
57. On October 15, 2018, pursuant to the approval by the shareholders, the Board has been authorised to introduce, offer, issue and allot share-based incentives to eligible employees of the Company and its subsidiaries under the Himachal Futuristic Communications Limited Employees'' Long Term Incentive Plan ("HFCL Plan 2017"). The maximum number of shares under the HFCL Plan 2017 shall not exceed 1,40,98,000 equity shares. Out of this, 70,49,000 equity shares will be issued against RSUs at par value and 70,49,000 equity shares will be issued against stock options at fair market price immediately prior to date of the grant i.e. ''20.65 per share. The Employee can exercise the vested options/units with in the maximum exercise period which shall be 5 years from the vesting date. The Stock options so granted shall vest over a period of 3 years and 70% RSUs granted will be vest at the end of 3rd year and remaining 30% RSUs shall vest at the end of 4th year from the date of grant.
The RSUs granted under the HFCL Plan 2017 are forfeited due to non-achievement of defined annual performance parameters as determined by the Nomination, Remuneration and Compensation Committee in its meeting held on April 23, 2022 and accordingly as on March 31,2022 the share based payment reserve was adjusted. During the previous year, this cancellation/ forfeiture of unvested options had resulted into a reversal of share based payment expense in the Standalone Statement of Profit and Loss.
I n respect of Options granted under the Employee Stock Option Plan the accounting is done as per requirements of Ind AS 102. Consequently, The Statement of Profit and Loss includes '' Nil (Previous Year: net income of ''8.26 crore) being expenses on account of share based payments, after adjusting for reversals on account of options forfeited. The amount excludes charged to its subsidiary for options issued to its employees.
The Nomination, Remuneration and Compensation Committee (''Committee'') of the Board of Directors which comprises a majority of Independent Directors is responsible for administration and supervision of the Stock Option Plans.
The expected life of the RSU / ESOP is estimated based on the vesting term and contractual term of the RSU / ESOP, as well as expected exercise behaviour of the employee who receives the RSU / ESOP. Expected volatility during the expected term of the RSU / ESOP is based on historical volatility of the observed market prices of the Company''s publicly traded equity shares during a period equivalent to the expected term of the RSU / ESOP.
59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, lease liabilities and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets include loans, cash and cash equivalents, trade and other receivables that derive directly from its operations.
The Company''s business activities expose it to a variety of financial risks, namely liquidity risk, market risks and credit risk. The management has the overall responsibility for the establishment and oversight of the Company''s risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The Company''s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities.
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Company uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period.
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company''s approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.
The following table shows the maturity analysis of the Company''s financial liabilities based on contractually agreed undiscounted cash flows as at the Balance Sheet date.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTOCI & FVTPL investments.
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments.
Customer credit risk is managed by each business unit subject to the Company established policy, procedures and control relating to customer credit risk management. To manage trade receivable, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts and aging of such receivables.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 15. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
Credit risk from balances with banks and financial institutions is managed by the management in accordance with the Company''s policy. Counterparty credit limits are reviewed by the management on an annual basis, and may be updated throughout the year. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
None of the Company''s financial assets are either impaired or past due, and there were no indications that defaults in payment obligations would occur.
Capital includes issued equity capital and share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximise the shareholder value. The following table provides detail of the debt and equity at the end of the reporting period:
a) The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations will arise.
The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Company''s strategy, which provides principles on the use of such forward contracts consistent with Company''s Risk Management Policy. The Company does not use forward contracts for speculative purposes.
b) The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
62. RECENT INDIAN ACCOUNTING STANDARDS (IND AS)
The MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2023 on March 31, 2023, whereby the amendments to various Indian Accounting Standards (Ind AS) has been made applicable with effect from April 1,2023 onwards. Amended requirements as per these rules in relation to various Standards are as follows:
Ind AS 1 - Presentation of Financial Statements: The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. The Company has evaluated the requirements of the amendment and its impact on Financial Statements is not likely to be material.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors: The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. The amendments will help entities to distinguish between accounting policies and accounting estimates. The Company has evaluated the requirements of the amendment and there is no impact on its Financial Statements.
I nd AS 12 - Income Taxes: The amendments narrowed the scope of the recognition exemption so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company has evaluated the requirements of the amendment and there is no impact on its Financial Statements.
Amendments to other Indian Accounting Standards viz. Ind AS 101- First-time Adoption of Indian Accounting Standards, Ind AS 102 - Share Based Payments, Ind AS 103- Business Combinations, Ind AS 107- Financial Instruments - Disclosures, Ind AS 109 - Financial Instruments, and Ind AS 34 Interim Financial Reporting are either consequential to above amendments or clerical in nature. The Company has evaluated the requirements of the amendments and there is no impact on its Financial Statements.
63. OTHER STATUTORY INFORMATION:
i) The Company does not have any benami property, where any proceeding has been initiated or pending against the Company for holding any benami property.
ii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
iii) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (intermediaries) with the understanding that the intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (ultimate beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries
iv) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (funding party) with the understanding (whether recorded in writing or otherwise) that the company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (ultimate beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
v) The Company does not have any such transactions which are not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
vi) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Companies Act 2013 read with the Companies (restriction on number of layers) Rules, 2017.
vii) The Company is not declared wilful defaulter by bank or financial institution or lender during the year.
viii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
ix) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was obtained.
64. Figures for the previous year has been regrouped/rearranged wherever necessary to confirm current year classification / presentation.
Mar 31, 2022
2. The Company had been approved capital subsidy for investment in its newly manufacturing plant setup at Plot No. S-9, E-City, Rangareddy, Telangana under Modified Special Incentive Package Scheme (MSIPS) by the Ministry of Electronics and Information Technology Department vide Approval letter No. 27(69)/2017-IPHW dated May 29, 2018. The Company is in the process of submitting its disbursement claims before the competent authority for sanctioning and in the absence of reasonable certainty that the claim will be received, the same has not been accounted for.
3. The Company has been sanctioned capital subsidy under the Incentive scheme of Industries and Commerce Department (IP&INF), Government of Telangana for its newly manufacturing plant setup at Plot No S-9, E-City, Rangareddy, Telangana. The subsidy includes capital subsidy of '' 30 crores, interest subsidy of '' 2.63 crores, power subsidy of '' 1 crore and stamp duty reimbursement of '' 0.36 crores.
The Company has adjusted capital subsidy (including stamp duty reimbursement) aggregating to '' 30.36 crores against the related Property, Plant and Equipment and power and interest subsidy (including interest up to March 31, 2022) aggregating to '' 15.20 crores has been recognized under the head ''Other Income'' in the Statement of Profit and Loss.
4. Refer Note 23 and 25 for details of assets pledged.
15.2 The credit period towards trade receivables related to turnkey projects generally ranges between down to achievement of specified milestones ( execution based ) and average project execution cycle is around 6 to 18 months. General payment terms include process time with the respective customers ranging between 60 to 90 days from the date of invoices / achievement of specified milestones.
15.3 In determining the allowance for trade receivables the Company has used practical expedients based on financial condition of the customers, ageing of the customer receivables & over-dues, availability of collaterals and historical experience of collections from customers. The concentration of risk with respect to trade receivables is reasonably low as most of the customers are Government and large Corporate organisations though there may be normal delays in collections.
15.4 Above balance of trade receivable include recoverable form related party (refer note 51).
* The Board of Directors of the Company has approved allotment of 4,934,300 equity shares of face value of '' 1/- each at applicable grant price to HFCL Employee''s Trust under HFCL Employee''s Long Term Incentive Plan 2017. Upon allotment of these equity shares, the paid up equity share capital of the Company had increased from '' 128.44 crore (Rupees One Hundred Twenty Eight Crore Forty Four Lakh Only) comprising of 1,284,377,494 equity shares of the face value of '' 1/- each to '' 128.93 crore (Rupees One Hundred Twenty Eight Crore Ninety Three Lakh Only) comprising of 1,289,311,494 equity shares of the face value of '' 1/- each.
** On December 10, 2021, the Company through Qualified Institutions Placement (QIP) allotted 87,272,727 equity shares to the eligible Qualified Institutional Buyers (QIB) at a price of '' 68.75 per equity share of '' 1 face value (inclusive of premium of '' 67.75 per share) aggregating to approximately '' 600.00 Crore. The issue was made in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. Funds received in the QIP of equity shares have been utilised for the purpose mentioned in the objects of the issue in the offer document.
The Company has issued equity share of '' 1/- each. On a show of hands, every holder of equity shares is entitled for one vote and upon a poll shall have voting rights in proportion to the shares of the paid up equity capital of the Company held by them. 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 amount in proportion to their shareholdings.
Information related to Employee Stock Option Plan, including details of options issued, exercised, expired and forfeited during the previous financial year and options outstanding at the end of the reporting period, is set out in note 56.
a. Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provision of the Companies Act, 2013.
b. The Company had issued redeemable non-convertible debentures and created Debenture Redemption Reserve (DRR) out of the profits of the Company in terms of the Companies (Share capital and Debenture) Rules, 2014 (as amended). The Company was required to maintain a DRR of 25% of the value of debentures issued, either by a public issue or on a private placement basis. The amounts credited to the DRR may not be utilised by the Company except to redeem debentures.
c. Capital Redemption reserve is created to the extent of Preference Share Capital redeemed i.e. 80,50,000 (previous year 80,50,000) CRPSs of '' 100/- each
d. Employee share based payment reserve is created as required by Ind AS 102 ''Share Based Payments'' on the Employee Stock Option Scheme operated by the Company for employees of the Group. (refer note no. 56)
a) Company had issued 3,372,750 10.30% secured unlisted Non-Convertible Redeemable Debenture (NCDs) of '' 100/- each aggregating '' 33.73 crore by way of conversion of outstanding right of recompense amount payable by the Company. NCDs are secured by way of first pari-passu charge on movable & immovable fixed assets of Company with existing term loans and redeemable at face value in instalment in the ratio of 33.33%, 33.33% and 33.33% at the end of 30th September, 2019 (FY 2019-20), 2020 (FY 2020-21), 2021(FY 2021-22) respectively. All the instalments of 3,372,750 NCDs have been redeemed on time.
b) Term Loan of '' Nil (Previous year '' 25.00 crore) from one of the bank are secured by pari-passu first charge on all the Fixed Assets, both present and future, by way of equitable mortgage. Further, loan is secured by way of pari passu second charge on the Current Assets of the Company.
c) Term Loan of '' 108.94 crore (Previous year '' 124.41 crore) from the Banks are secured by pari-passu first charge on entire Optical Fibre Project Assets at Hyderabad (Unit-1), both present and future, by way of equitable mortgage. The loan is further secured by personal guarantee of Managing Director of the Company and Corporate Guarantee of M/s MN Ventures Pvt. Ltd. Repayment of this term loan would be made in 28 structured quarterly instalments over a period of 7 years commencing after moratorium period i.e. 12 months after date of commencement of the project.
d) Term Loan of '' 13.34 crore (Previous year '' Nil) as disbursed against sanctioned of '' 48.00 crore from the Bank, are secured by exclusive first charge on entire Optical Fibre Cable Project Assets at Hyderabad (Unit-2), both present and future, by way of equitable mortgage except land which is pari-passu charge with the lenders of Unit 1. The loan is further secured by personal guarantee of Managing Director of the Company and Corporate Guarantee of M/s MN Ventures Pvt. Ltd. Repayment of this term loan would be made in 28 structured quarterly instalments over a period of 7 years commencing after moratorium period i.e. 12 months after date of commencement of the project.
e) Working Capital Facilities (COVID-19 Emergency Credit line) of '' 0.86 crore ( Previous year '' 19.24 crore) and FITL under COVID-19 scheme of '' Nil (Previous year '' 0.65 crore) are secured on pari passu basis by way of hypothecation of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. as well as by way of second charge on immovable properties except Hyderabad units of the Company and are also personally guaranteed by Managing Director of the Company and further secured by way of corporate guarantee of M/s MN Ventures Pvt. Ltd.
f) Other Vehicle Loans of '' 3.08 crore (Previous Year '' 2.35 crore) from banks and others are secured by way of hypothecation of respective vehicle.
* a) Working Capital Loans from banks aggregating to '' 218.81crore (Previous year: '' 222.52 crore ) are secured on pari passu basis by way of hypothecation
of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. as well as by way of first charge on immovable properties pertaining to Wireline, Wireless and Cable divisions of the Company and are also personally guaranteed by Managing Director of the Company and further secured by way of corporate guarantee of M/s MN Ventures Pvt. Ltd.
b) Working Capital Loans from Banks aggregating to '' Nil (Previous year: '' 49.14 crore) and Inland bills discounting limit of '' Nil (Previous year '' 49.81 crore) are secured by way of first pari passu charge on all current assets, movable & immovable fixed assets (both present & future) of GIS based Optical Fibre Network Management System (GOFNMS) Project. The loan is further secured by second pari passu charge on movable & immovable fixed assets, personal guarantee by Managing Director of the Company, corporate guarantee of M/s MN Ventures Pvt. Ltd. and Nextwave Communications Pvt. Ltd., first pari passu charge of cash flows of the project for working capital consortium.
c) Working Capital Loans from Banks aggregating to '' 73.37 crore (Previous year: '' 70.80 crore) are secured by way of first pari passu charge on all current assets, movable & immovable fixed assets (both present & future) of IPMPLS back bone Project for Network for Spectrum (NFS). The loan is further secured by second pari passu charge on movable & immovable fixed assets, personal guarantee by Managing Director of the Company, corporate guarantee of M/s MN Ventures Pvt. Ltd., first pari passu charge of cash flows of the project for working capital consortium.
d) Quarterly returns/statements of current assets filed by the Company with banks are in agreement with the books of accounts.
# Inter Corporate Deposits are having a maturity of less than one year and carry interest rate 9% to 15%.
i) While disclosing the aggregate amount of transaction price yet to be recognised as revenue towards unsatisfied (or partially satisfied) performance obligations, along with the broad time band for the expected time to recognize those revenues, the Company has applied the practical expedient in Ind AS 115.
ii) Unsatisfied (or partially satisfied) performance obligations are subject to variability due to several factors such as terminations, changes in scope of contracts, periodic revalidations of the estimates, economic factors (changes in currency rates, tax laws etc.). The aggregate value of transaction price allocated to unsatisfied (or partially satisfied) performance obligations is '' Nil (Previous year '' 30.11 crore) which is expected to be recognised as revenue in the next year.
Revenues in excess of invoicing are classified as contract assets (which can also be referred to as unbilled revenue) while invoicing in excess of revenues are classified as contract liabilities (which can also be referred to as unearned revenues). The contract assets are transferred to receivables when the rights become unconditional. This usually occurs when the Company issues an invoice to the Customer.
iv) The Company has evaluated the impact of COVID-19 resulting from (i) the possibility of constraints to render supply & services which may require revision of estimations of costs to complete the contracts because of additional efforts; (ii) onerous obligations; (iii) penalties relating to breaches of service level agreements, and (iv) termination or deferment of contracts by customers. The Company has concluded that the impact of COVID-19 is not material based on these estimates. Due to the nature of the pandemic, the Company will continue to monitor developments to identify significant uncertainties relating to revenue in future periods.
40. Critical accounting estimates and judgments
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life.
The useful lives and residual values of Company''s assets are determined by management at the time the asset is acquired. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.
Capitalization of cost in intangible assets under development is based on management''s judgement that technological and economic feasibility is confirmed and asset under development will generate economic
benefits in future. Based on evaluations carried out, the management has determined that there are no factors which indicates that these assets have suffered any impairment loss.
Defined benefit plans and other long-term benefits are evaluated with reference to uncertain events and based upon actuarial assumptions including among others discount rates, expected rates of return on plan assets, expected rates of salary increases, estimated retirement dates, mortality rates. The significant assumptions used to account for Employee benefits are described in Note 45.
The Company assesses the services promised in a contract and identifies distinct performance obligations in the contract. Judgement is also required to determine the transaction price for the contract. The Company allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations. The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the
applicable discount rate. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
The Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Company considered current and anticipated future economic conditions relating to industries the company deals with and the countries where it operates. In calculating expected credit loss, the Company has also considered credit reports and other related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID-19.
Deferred tax assets are recognized for unused tax credits to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies and obligations. Obligations relating to Project Executions is largely depends upon performance of services by respective contractors. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognised until the contingency has been resolved and amounts are received or receivable.
9. Fair Value of Unquoted equity investments
In order to arrive at the fair value of unquoted investments (other than subsidiaries and associates), the Company obtains independent valuations. The techniques used by the valuer is Asset approach - Net assets value method and Income approach - discounted cash flow method. The Company reviews its carrying value of investments carried at cost (net of impairment, if any) annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for in the statement of profit and loss.
41. Impact and future uncertainties relating to Global health pandemic from COVID-19
The Company has considered the possible effects that may result from the pandemic relating to COVID-19 in the preparation of the financial statements including there coverability of carrying amounts of financial and non financial assets. Further the impact assessment does not indicate any adverse impact on the ability of the company to continue as a going concern. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Company has, at the date of approval of the financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of the assets will be recovered. The impact of COVID-19 on the Company''s financial statements may differ from that estimated as at the date of approval of these financial statements.
42. Dividend Distribution made and proposed
The amount of dividend recognized as distributions to equity shareholders during the year ended March 31, 2022 is @ 15 %, i.e. '' 0.15/- per equity share of face value of '' 1/- each (Previous Year '' Nil). The Board of Directors at its meeting held on May
10, 2021 had recommended such dividend of 15% for the financial year ended March 31, 2021 which was approved by the shareholders at the Annual General Meeting held on September 30, 2021. The aforesaid dividend was paid during the year ended March 31,2022.
The Board of Directors have recommended a dividend of 18% (i.e. '' 0.18/- per equity share of face value of '' 1/- each) for the financial year ended March 31, 2022 which is subject to the approval of shareholders at the Annual General Meeting.
Interest on lease liabilities is '' 2.72 crore and '' 2.41 crore for the year ended March 31, 2022 and March 31, 2021 respectively.
Lease contracts entered by the Company majorly pertains for buildings taken on lease to conduct its business in the ordinary course. The
Company does not have any lease restrictions and commitment towards variable rent as per the contract. The leases that the Company
has entered with lessors towards properties used as warehouses/offices are long term in nature.
(i) During the year the Company has acquired voting right of 50% in Nimpaa Telecommunications Pvt. Ltd. (Nimpaa), having its registered office at No. 16/38, Maharaja Surya Road, Teynampet, Chennai - 600018, Tamilnadu, at a total consideration of '' 1.00 crore thereby making it a Jointly Controlled Entity of the Company w.e.f. June 14, 2021. Nimpaa is engaged in the business of manufacture of equipment, component, accessories and cables for telecommunication systems, networks.
(ii) During the year the Company has also acquired voting rights of 50% in BigCat Wireless Pvt. Ltd., having its registered office at New No. 21, Old No. 9, Flat C2, Dwarka Apartments, 1st Avenue, Shastri Nagar, Chennai - 600020, Tamilnadu, at a total consideration of '' 8.50 crore, thereby making it a Jointly Controlled Entity of the Company w.e.f. Nov 12, 2021. BigCat Wireless Pvt. Ltd. is engaged in the development of software and hardware products for wireless networking and other related technical, research and development activities.
45. During the year, Company has recognised the following amounts in the financial statements as per Ind AS - 19 "Employees Benefits" as specified in the Companies (Indian Accounting Standards) Rules, 2015:
The employees'' gratuity fund scheme is managed by HDFC Standard Life Insurance Company Limited which is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation and the obligation for leave encashment is recognised in the same manner as gratuity.
47. Commitments and Contingencies (a) Contingent Liabilities not provided for in respect of : |
'' in crore |
|
Particulars |
As at March 31, 2022 |
As at March 31, 2021 |
(i) Unexpired Letters of Credit (margin money paid '' 72.89 crore; Previous year '' 56.06 crore) |
466.20 |
364.87 |
(ii) Guarantees given by banks on behalf of the Company (margin money kept by way of fixed deposits of '' 132.14 crore; Previous year ''145.69 crore) |
868.37 |
777.21 |
(iii) Claims against the Company towards sales tax, income tax and others in dispute not acknowledged as debt (deposited under protest '' 3.87 crore, Previous Year '' 3.87 crore shown as recoverable advance) |
30.87 |
17.41 |
Notes:
(i) The Company''s pending litigations comprise of claims against the Company and proceedings pending with Tax Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material impact on its financial position.
(ii) The Company periodically reviews all its long term contracts to assess for any material foreseeable losses. Based on such review wherever applicable, the Company has made adequate provisions for these long term contracts in the books of account as required under any applicable law/accounting standard.
(iii) The Company has provided guarantees to third parties on behalf of subsidiary and associates. The Company does not expect any outflow of resources in respect of such guarantees.
(iv) There is uncertainty and ambiguity in interpreting and giving effect to the guidelines of Hon. Supreme Court vide its ruling in February 2019, in relation to the scope of compensation on which the organization and its employees are to contribute towards Provident Fund. The Company will evaluate its position and act, as clarity emerges.
(v) The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come in to effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period when the Code becomes effective.
(vi) As at March 31, 2022 the Company has outstanding term derivative contracts as referred in Note 59.
(vii) There has been no delay in transferring amounts, required to be transferred if any, to the Investor Education and Protection Fund by the Company.
(viii) Claim made by one of the corporate on misleading information given by it for registration of impugned Patent. Impact on the sales of optical Fibre cable covered under alleged Patent No. 335369 is insignificant to the Company''s total sales of optical Fibre cables. Currently, purchase orders for such cables are just less than 0.75% of the total order book.
48. The HTL Ltd. ("Subsidiary Company") had proposed for a right issue of equity shares for '' 120.00 crore in the ratio of equity shares holding i.e. 26% by GOI and 74% by the HFCL Limited (HFCL). It was proposed that the right issue be funded by way of conversion of outstanding loans and advances extended by the HFCL. However, the proposal for loan conversion has not been agreed upon by the Competent Authority of GOI as communicated vide file no 20-71/2015-FAC.II dated January 27, 2022.
The Subsidiary Company has now proposed for allotment of 8% redeemable and non-convertible preference capital of '' 100.00 crore by way of conversion of outstanding loan and advances extended by HFCL Limited. The Subsidiary Company has submitted the proposal before the Department of Telecommunications (DoT) vide letter dated March 22, 2022 for seeking their administrative approval for the proposal so that the required formalities under the Companies Act can be taken up accordingly. In view of this, entire advances & loans receivable from HTL Ltd. have been classified under Non-Current Assets in the financial statements. (Refer Note 9 and 10).
49. In the opinion of the Board, all assets other than fixed assets and non-current investments, have a realisable value in the ordinary course of business which is not significantly differ from the amount at which it is stated.
Balances of various trade payables, trade receivables, loans and advances, security deposits and other parties are subject to confirmation/reconciliation and consequential adjustments, if any. In the opinion of the management, such adjustments, if any, will not have a material impact on the Financial Statements.
50. In view of the limited scale of operations at the Company''s Solan (Himachal Pradesh) Facilities and as a step towards cost optimization, the Board in its meeting held on January 20, 2020, had decided to shift the Plant and Machinery of Solan Facilities and operations thereof to the Company''s Manufacturing Facility located in Hyderabad. Further, in order to ensure continuity of the job of the employees currently based at Solan, the Company also considered to offer the continued employment either at Hyderabad or at such other places where the project works are being got executed. The Company introduced a Voluntary Retirement Scheme (VRS) to those employees who are finding it difficult to relocate to Hyderabad/other locations. Consequently, VRS compensation paid during the previous year amounting to '' 4.13 crores has been disclosed as an exceptional item. Further, the management is also in the process of identifying prospective usages of its facilities at Solan post shifting of plant and machinery at its Hyderabad Plant.
The Company publishes the Standalone financial statements of the Company along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements.
56. On October 15, 2018, pursuant to the approval by the shareholders, the Board has been authorized to introduce, offer, issue and allot share-based incentives to eligible employees of the Company and its subsidiaries under the Himachal Futuristic Communications Limited Employees'' Long Term Incentive Plan ("HFCL Plan 2017"). The maximum number of shares under the HFCL Plan 2017 shall not exceed 1,40,98,000 equity shares. Out of this, 70,49,000 equity shares will be issued against RSUs at par value and 70,49,000 equity shares will be issued against stock options at fair market price immediately prior to date of the grant i.e. '' 20.65 per share. The Employee can exercise the vested options/units with in the maximum exercise period which shall be 5 years from the vesting date. The Stock options so granted will be vest over a period of 3 years and 70% RSUs granted will be vest at the end of 3 years from the date of grant and remaining 30% RSUs shall be vest in the 4th year from the date of grant.
The RSUs granted under the HFCL Plan 2017 are forfeited due to non-achievement of defined annual performance parameters as determined by the Nomination, Remuneration and Compensation Committee in its meeting held on April 23, 2022 and accordingly as on March 31,2022 the share based payment reserve is adjusted. This cancellation/forfeiture of unvested options has resulted into a reversal of share based payment expense in the Standalone Statement of Profit and Loss for the year ended March 31, 2022.
In respect of Options granted under the Employee Stock Option Plan the accounting is done as per requirements of Ind AS 102. Consequently, The Statement of Profit and Loss includes net income of '' 8.26 crore (Previous Year: net expenses of '' 3.69 crore) being expenses on account of share based payments, after adjusting for reversals on account of options forfeited. The amount excludes charged to its subsidiary for options issued to its employees.
The Nomination, Remuneration and Compensation Committee (''Committee'') of the Board of Directors which comprises a majority of Independent Directors is responsible for administration and supervision of the Stock Option Plans.
The expected life of the RSU/ESOP is estimated based on the vesting term and contractual term of the RSU/ESOP, as well as expected exercise behaviour of the employee who receives the RSU/ESOP. Expected volatility during the expected term of the RSU/ESOP is based on historical volatility of the observed market prices of the Company''s publicly traded equity shares during a period equivalent to the expected term of the RSU/ESOP.
58. Financial Instruments and risk management
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, lease liabilities and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets include loans, cash and cash equivalents, trade and other receivables that derive directly from its operations.
The Company''s business activities expose it to a variety of financial risks, namely liquidity risk, market risks and credit risk. The management has the overall responsibility for the establishment and oversight of the Company''s risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The Company''s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities.
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Company uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period.
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company''s approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTOCI & FVTPL investments.
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments.
Customer credit risk is managed by each business unit subject to the Company established policy, procedures and control relating to customer credit risk management. To manage trade receivable, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts and aging of such receivables.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 15. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
Credit risk from balances with banks and financial institutions is managed by the management in accordance with the Company''s policy. Counterparty credit limits are reviewed by the management on an annual basis, and may be updated throughout the year. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
None of the Company''s financial assets are either impaired or past due, and there were no indications that defaults in payment obligations would occur.
(a) The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations will arise.
The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Company''s strategy, which provides principles on the use of such forward contracts consistent with Company''s Risk Management Policy. The Company does not use forward contracts for speculative purposes.
(b) The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
61. Recent Indian Accounting Standards (Ind AS)
party) with the understanding (whether recorded in writing or otherwise) that the company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (ultimate beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
(v) The Company does not have any such transactions which are not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(vi) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Companies Act 2013 read with the Companies (restriction on number of layers) Rules, 2017.
(vii) The Company is not declared wilful defaulter by bank or financial institution or lender during the year.
(viii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(ix) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was obtained.
63. Figures for the previous year has been regrouped/
rearranged wherever necessary to confirm current year
classification/presentation.
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from April 1, 2022, are Ind AS 103 - Reference to Conceptual Framework, Ind AS 16 - Proceeds before intended use, Ind AS 37 - Onerous Contracts -Costs of Fulfilling a Contract, Ind AS 109 - Annual Improvements to Ind AS (2021) and Ind AS 106 - Annual Improvements to Ind AS (2021). The Company does not expect the amendment to have any significant impact in its financial statements.
62. Other statutory information:
(i) The Company does not have any benami property, where any proceeding has been initiated or pending against the Company for holding any benami property.
(ii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(iii) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (intermediaries) with the understanding that the intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (ultimate beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries
(iv) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (funding
Mar 31, 2021
15.1 The credit period towards trade receivables related to turnkey projects generally ranges between down to achievement of specified milestones (execution based ) and average project execution cycle is around 6 to 18 months. General payment terms include process time with the respective customers ranging between 30 to 60 days from the date of invoices / achievement of specified milestones .
15.2 In determining the allowance for trade receivables the Company has used practical expedients based on financial condition of the customers, ageing of the customer receivables & over-dues, availability of collaterals and historical experience of collections from customers. The concentration of risk with respect to trade receivables is reasonably low as most of the customers are Government and large Corporate organisations though there may be normal delays in collections.
* The Allotment Committee (Warrants) of the Board of Directors of the Company at its meetings held on 05th November, 2018, 29th March, 2019, 09th April, 2019 and 29th April, 2019 had made allotment of 75,00,000 & 2,75,00,000, 52,08,333 and 47,91,667 equity shares of the face value of Re.1/- each at a premium of ''15 per equity share respectively to the warrant holders consequent upon exercise of their rights for conversion of warrants into equity shares. Upon allotment of these equity shares, the paid up equity share capital of the Company had increased from ''123.94 Crore (Rupees One Hundred Twenty Three Crore Ninety Three Four Lakh Only) comprising of 1,23,93,77,194 equity shares of the face value of Re.1/- each to ''128.44 Crore (Rupees One Hundred Twenty Eight Crore Forty Four Lakh Only) comprising of 1,28,43,77,194 equity shares of the face value of Re.1/- each.
a. Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provision of the Companies Act, 2013.
b. The Company had issued redeemable non-convertible debentures and created Debenture Redemption Reserve (DRR) out of the profits of the Company in terms of the Companies (Share capital and Debenture) Rules, 2014 (as amended). The Company is required to maintain a DRR of 25% of the value of debentures issued, either by a public issue or on a private placement basis. The amounts credited to the DRR may not be utilised by the Company except to redeem debentures.
c. Capital Redemption reserve is created to the extent of Preference Share Capital redeemed i.e. 80,50,000 (previous year 80,50,000) CRPSs of '' 100/- each
d. The fair value of the equity settled share based payment transactions with employees is recognised in Statement of Profit and Loss with corresponding credit to share based payment reserve. Further, equity settled share based payment transaction with employees of subsidiary is recognised in investment of subsidiaries with corresponding credit to Share based payment reserve. (Refer note 56).
a) Company had issued 33,72,750 10.30% secured unlisted Non- Convertible Redeemable Debenture (NCDs) of ''100/- each aggregating '' 33.73 crore by way of conversion of outstanding right of recompense amount payable by the Company. NCDs are secured by way of first pari-passu charge on movable & immovable fixed assets of Company with existing term loans and redeemable at face value in installment in the ratio of 33.33%, 33.33% and 33.33% at the end of 30th September, 2019 (FY 2019-20), 2020 (FY 2020-21), 2021(FY 2021-22) respectively. First & Second installment of 33.33% of each year being 22,48,444 NCDs have been redeemed on time.
b) Term Loan of ''25.00 crore (Previous year ''50.00 crore) from one of the bank are secured by pari-passu first charge on all the Fixed Assets, both present and future, by way of equitable mortgage. Further, loan is secured by way of pari passu second charge on the Current Assets of the Company.
c) Term Loan of ''124.41 crore (Previous year ''111.77 crore) from the Banks are secured by pari-passu first charge on entire Project Assets, both present and future, by way of equitable mortgage. The loan is further secured by personal guarantee of Managing Director of the Company and Corporate Guarantee of M/s MN Ventures Private Limited. Repayment of this term loan would be made in 28 structured quarterly incitements over a period of 7 years commencing after moratorium period i.e. 12 months after date of commencement of the project.
d) Working Capital Term loan (Covid -19 Emergency Credit line) of ''19.23 crore and FITL under Covid-19 scheme of '' 0.65 crore are secured on pari passu basis by way of hypothecation of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. as well as by way of second charge on immovable properties pertaining to Wireline, Wireless and Cable divisions of the Company and further secured by way of pledge of equity shares up to 51% (24,15,48,750 equity shares) of promoters and are also personally guaranteed by Managing Director of the Company and further secured by way of corporate guarantee of M/s MN Ventures Private Limited.
e) Other Vehicle Loans of ''2.35 crore (Previous Year ''2.99 crore) from banks and others are secured by way of hypothecation of respective assets.
* a) Working Capital Loans from banks aggregating to ''222.52 crore (Previous year: ''200.23 crore ) are secured on pari passu basis by way of
hypothecation of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. as well as by way of second charge on immovable properties pertaining to Wireline, Wireless and Cable divisions of the Company and further secured by way of pledge of equity shares up to 51% (24,15,48,750 equity shares) of promoters and are also personally guaranteed by Managing Director of the Company and further secured by way of corporate guarantee of M/s MN Ventures Private Limited.
b) Working Capital Loans from banks aggregating to '' 49.14 crore (Previous year: '' 49.83 crore) and Inland bills discounting limit of '' 49.81 crore (Previous year ''50.00 crore) are secured by way of first pari passu charge on all current assets, moveable & immoveable fixed assets (Present & future) of GIS based Optical Fiber Network Management System (GOFNMS) Project. The loan is further secured by second pari passu charge on moveable & immoveable fixed assets, personal guarantee by Managing Director of the Company, corporate guarantee of M/s MN Ventures Private Limited, first pari passu charge of cash flows of the project and first pari passu charge on shares pledged/earmarked for working capital consortium.
c) Working Capital Loans from banks aggregating to '' 70.80 crore (Previous year: ''NIL ) are secured by way of first pari passu charge on all current assets, moveable & immoveable fixed assets (Present & future) of IPMLS back bone Project for Network for Spectrum (NFS). The loan is further secured by second pari passu charge on moveable & immoveable fixed assets, personal guarantee by Managing Director of the Company, corporate guarantee of M/s MN Ventures Private Limited, first pari passu charge of cash flows of the project and first pari passu charge on shares pledged/earmarked for working capital consortium.
# Inter Corporate Deposits are having a maturity of less than one year and carry interest rate 12% to 16%.
40 Critical accounting estimates and judgments
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
1. Useful lives of property, plant and equipment and Intangible Assets
Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life.
The useful lives and residual values of Company''s assets are determined by management at the time the asset is acquired. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.
2. Recoverability of intangible asset and intangible assets under development
Capitalization of cost in intangible assets under development is based on management''s judgement that technological and economic feasibility is confirmed and asset under development will generate economic benefits in future. Based on evaluations carried out, the management has determined that there are no factors which indicates that these assets have suffered any impairment loss.
Defined benefit plans and other long-term benefits are evaluated with reference to uncertain events and based upon actuarial assumptions including among others discount rates, expected rates of return on plan assets, expected rates of salary increases, estimated retirement dates, mortality rates. The significant assumptions used to account for Employee benefits are described in Note 45.
The Company assesses the services promised in a contract and identifies distinct performance obligations in the contract. Judgement is also required to determine the transaction price for the contract. The Company allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations. The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
6. Loss allowance for receivables and unbilled revenues
The Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Company considered current and anticipated future economic conditions relating to industries the company deals with and the countries where it operates. In calculating expected credit loss, the Company has also considered credit reports and other related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID -19.
Deferred tax assets are recognized for unused tax credits to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies and obligations. Obligations relating to Project Executions is largely depends upon performance of services by respective contractors. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided
for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognised until the contingency has been resolved and amounts are received or receivable.
9. Fair Value of Unquoted equity investments:
In order to arrive at the fair value of unquoted investments (other than subsidiaries and associates), the Company obtains independent valuations. The techniques used by the valuer is Asset approach - Net assets value method and Income approach- discounted cash flow method. The Company reviews its carrying value of investments carried at cost (net of impairment, if any) annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for in the statement of profit and loss.
41 Impact and future uncertainties relating to Global health pandemic from COVID-19
The Company has considered the possible effects that may result from the pandemic relating to COVID-19 in the preparation of the financial statements including there coverability of carrying amounts of financial and non financial assets. Further the impact assessment does not indicate any adverse impact on the ability of the company to continue as a going concern. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Company has, at the date of approval of the financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of the assets will be recovered. The impact of COVID-19 on the Company''s financial statements may differ from that estimated as at the date of approval of these financial statements.
42 Change in Accounting Policy
Except for the changes below, the Company has consistently applied the accounting policies to all periods presented in these financial statements.
Ministry of Corporate Affairs ("MCAâ) through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has notified Ind AS 116 Leases which replaces the existing lease standard, Ind AS 17 leases, and other interpretations. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for lessees. It introduces a single, on-balance sheet lease accounting model for lessees.
The Company has adopted Ind AS 116, effective annual reporting period beginning April 1, 2019 and applied the standard to its leases, retrospectively, with the cumulative effect of initially applying the Standard, recognised on the date of initial application (April 1,2019).
The total cash outflow for leases is '' 0.90 crore and '' 0.21 crore for the years ended March 31,2021 and March 31,2020, respectively, including cash outflow for short term and low value leases
Lease contracts entered by the Company majorly pertains for buildings taken on lease to conduct its business in the ordinary course. The Company does not have any lease restrictions and commitment towards variable rent as per the contract. The leases that the Company has entered with lessors towards properties used as ware houses/ offices are long term in nature and no changes in terms of those leases are expected due to the COVID-19.
(i) During the Previous Year, the Company acquired 90% (9,000 shares of face value of ''10/ each) of the equity share capital of M/s Raddef Pvt Ltd., a company dealing in components for the applications in defense, aerospace, meteorology and communication. This will help in exploring untapped growth in the Telecom and Defence Business verticals of the company. The business acquisition was undertaken by acquiring equity stake of 90% for cash consideration of ''90,000/-.
(ii) Company had entered into a Joint Venture Agreement dated October 18, 2010 with DragonWave Inc., Canada, and formed a joint venture entity under name DragonWave HFCL India Pvt Ltd. owned by DragonWave Pte. Ltd., Singapore (50.10%) (being controlled by DragonWave Inc., Canada) and HFCL Ltd. (49.90%). On December 17, 2019, the Company acquire balance 50.10% (comprising of 35,07,000 equity shares of face value '' 10/- each). The Company''s total holding along with the existing shares held has increased to 100%. The business acquisition was undertaken by entering into share purchase agreement for cash consideration of ''2.25 crore.
45 During the year, Company has recognised the following amounts in the financial statements as per Ind AS - 19 "Employees Benefitsâ as specified in the Companies (Indian Accounting Standards) Rules, 2015:
i) The Company''s pending litigations comprise of claims against the Company and proceedings pending with Tax Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material impact on its financial position.
ii) The Company periodically reviews all its long term contracts to assess for any material foreseeable losses. Based on such review wherever applicable, the Company has made adequate provisions for these long term contracts in the books of account as required under any applicable law/accounting standard.
iii) The Company has provided guarantees to third parties on behalf of subsidiary and associates. The Company does not expect any outflow of resources in respect of such guarantees.
iv) There is uncertainty and ambiguity in interpreting and giving effect to the guidelines of Honorable Supreme Court vide its ruling in February 2019, in relation to the scope of compensation on which the organization and its employees are to contribute towards Provident Fund. The Company will evaluate its position and act, as clarity emerges.
v) The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come in to effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period when the Code becomes effective.
vi) As at March 31,2021 the Company has outstanding term derivative contracts as referred in Note 58.
48 HTL Ltd., one of the Subsidiary of the Company, had proposed right issue of equity shares for '' 120.00 Crore to its existing shareholders i.e. GOI (26%) and the Company (74%). The Subsidiary Company is in the process of obtaining in principle concurrence from GOI for the proposed right issue of shares. Pending such formal concurrence, loan and advances given by the Company have been shown under Non-Current Financial Assets.
49 In the opinion of the Board, all assets other than fixed assets and non-current investments, have a realisable value in the ordinary course of business which is not significantly differ from the amount at which it is stated.
50 In view of the limited scale of operations at the Company''s Solan (Himachal Pradesh) Facilities and as a step towards cost optimization, the Board in its meeting held on January 20, 2020, had decided to shift the Plant and Machinery of Solan Facilities and operations thereof to the Company''s Manufacturing Facility located in Hyderabad. Further, in order to ensure continuity of the job of the employees currently based at Solan, the
Company also considered to offer the continued employment either at Hyderabad or at such other places where the project works are being got executed. The Company introduced a Voluntary Retirement Scheme (VRS) to those employees who are finding it difficult to relocate to Hyderabad/ other locations. Consequently, VRS compensation paid during the year amounting to ''4.13 crores has been disclosed as an exceptional item. Further, the management is also in the process of identifying prospective usages of its facilities at Solan post shifting of plant and machinery at its Hyderabad Plant.
54 Interest charges on loans is net of Interest income from loans and advances amounting to ''18.16 crore (Previous year ''21.37 crore ) .
55 Debt of the Company as restructured under Corporate Debt Restructuring (CDR) mechanism in financial year 2011-12 had been re-paid as per the approved Scheme, with improved performance, Company has also paid recompense amount of '' 148.47 crore as per exit term approved by CDR Empowered Group vide their order CDR(PMG) No.740/2015-16 dated March 22, 2016 on the recommendation of Monitoring Institution. CDR EG had given its approval for successful exit of the Company from CDR mechanism vide letter No. CDR(DAP) No.218/2017-18 dated 01.09.2017.
56 On October 15, 2018, pursuant to the approval by the shareholders, the Board has been authorized to introduce, offer, issue and allot share-based incentives to eligible employees of the Company and its subsidiaries under the Himachal Futuristic Communications Limited Employees'' Long Term Incentive Plan ("HFCL Plan 2017â). The maximum number of shares under the HFCL Plan 2017 shall not exceed 1,40,98,000 equity shares. Out of this, 70,49,000 equity shares will be issued against RSUs at par value and 70,49,000 equity shares will be issued against stock options at fair market price immediately prior to date of the grant i.e. ''20.65 per share. The Employee can exercise the vested options/units with in the maximum exercise period which shall be 5 years from the vesting date. The Stock options so granted will be vest over a period of 3 years and 70% RSUs granted will be vest at the end of 3 years from the date of grant and remaining 30% RSUs shall be vest in the 4th year from the date of grant.
The Nomination, Remuneration and Compensation Committee (''Committee'') of the Board of Directors which comprises a majority of Independent Directors is responsible for administration and supervision of the Stock Option Plans.
58 Financial Instruments and risk management
The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, lease liabilities and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets include loans, cash and cash equivalents, trade and other receivables that derive directly from its operations.
The Company''s business activities expose it to a variety of financial risks, namely liquidity risk, market risks and credit risk. The management has the overall responsibility for the establishment and oversight of the Company''s risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The Company''s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities.
Customer credit risk is managed by each business unit subject to the Company established policy, procedures and control relating to customer credit risk management. To manage trade receivable, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts and aging of such receivables.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 15. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the management in accordance with the Company''s policy. Counterparty credit limits are reviewed by the management on an annual basis, and may be updated throughout the year. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
None of the Company''s financial assets are either impaired or past due, and there were no indications that defaults in payment obligations would occur.
a) The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations will arise.
The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Company''s strategy, which provides principles on the use of such forward contracts consistent with Company''s Risk Management Policy. The Company does not use forward contracts for speculative purposes.
The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
61 Recent Indian Accounting Standards (Ind AS)
On March 24, 2021, the Ministry of Corporate Affairs ("MCAâ) through a notification, amended Schedule III of the Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from April 1,2021. The amendments are extensive and the Company will evaluate the same to give effect to them as required by law.
62 Figures for the previous year has been regrouped/rearranged wherever necessary to confirm current year classification / presentation.
63 The Board has recommended a dividend @15% i.e. Re. 0.15 per equity share for the financial year ended 31st March, 2021 subject to the approval of shareholders at the ensuing Annual General Meeting (AGM) of the Company or other authorities wherever required. The dividend for the financial year ended 31st March, 2021, if any, declared at the ensuing AGM, will be paid to the Shareholders within 30 days from the date of declaration.
Mar 31, 2018
1. Corporate information
Himachal Futuristic Communications Limited (âHFCLâ or âthe Companyâ) is a public limited company domiciled and incorporated in India having its registered office at 8, Electronics Complex , Chambaghat, Solan, Himachal Pradesh-173213. The Companyâs shares are listed and traded on Stock Exchanges in India. Established in 1987, HFCL is a diverse telecom infrastructure enabler with active interest spanning telecom infrastructure development, system integration, and manufacture and supply of high-end telecom equipment and Optic Fiber Cable (OFC).
The financial statements have been approved by the Board of Directors of the Company at its meeting held on May 03, 2018.
2 Deferred tax assets (net)
Deferred income tax reflect the net tax effects of temporary difference between the carrying amount of assets and liabilities for the financial reporting purposes and the amounts used for income tax purposes. Significant component of the Companyâs net deferred income tax are as follows:-
3.1 The credit period towards trade receivables generally ranges between down to achievement of specified milestones ( execution based) and average project execution cycle is around 6 to 24 months. General payment terms include process time with the respective customers ranging between 30 to 60 days from the date of invoices / achievement of specified milestones.
3.2 In determining the allowance for trade receivables the Company has used practical expedients based on financial condition of the customers, ageing of the customer receivables and over-dues, availability of collaterals and historical experience of collections from customers. The concentration of risk with respect to trade receivables is reasonably low as most of the customers are Government and large Corporate organisations though there may be normal delays in collections.
(iv) Terms/right attached to Equity/Preference Shares -
The Company has issued equity share of Re.1/- each and preference share of Rs.100/- each. On a show of hands, every holder of equity shares is entitled for one vote and upon a poll shall have voting rights in proportion to the shares of the paid up capital of the Company held by them. Preference shareholders shall have voting right in proportion to the shares of the paid up capital provided if the dividend due on such capital or any part of such dividend has remained unpaid. 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 amount in proportion to their shareholdings.
* Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provision of the Companies Act, 2013.
** The Company had issued redeemable non-convertible debentures and created Debenture Redemption Reserve (DRR) out of the profits of the Company in terms of the Companies (Share capital and Debenture) Rules, 2014 (as amended). The Company is required to maintain a DRR of 25% of the value of debentures issued, either by a public issue or on a private placement basis. The amounts credited to the DRR may not be utilised by the Company except to redeem debentures.
*** Capital Redemption reserve is created to the extent of Preference Share Capital redeemed (Rs.20.12 crore i.e. 25% of 80,50,000 CRPSs of Rs.100/- each)
**** During the year, Company has issued 4,50,00,000 Convertible Warrants on preferential basis with a right to Warrant Holders to apply for and get allotted one equity share of face value of Re. 1/- (Rupee One Only) each for each Warrant, within a period of 18 (Eighteen) months from the date of allotment of Warrants i.e. October 30, 2017, at a price of Rs.16/- each (Rupees Sixteen Only).
(a) 60,37,500 (Previous Year: 80,50,000) Cumulative Redeemable Preference Shares (CRPS) of Rs.100/- each aggregating to Rs.60.38 crore (Previous Year: Rs.80.50 crore) are redeemable at the rate of 25% and 75% of the face value in the financial years ending 31st March 2018 and 31st March, 2019, respectively. CRPS carry the coupon rate of 6.50% from new cut off date i.e. 1st January, 2011 as mentioned in the rework package approved by the CDR EG on 29.03.2011. However, dividend accrued on notional basis, as same has not been declared and fallen due for payment, and penal interest thereon, till the cut-off date, stands waived as per CDR rework package.
(b) During the year Company has allotted 423,000 (Previous Year: 29,49,750) 10.30% secured unlisted Non- Convertible Redeemable Debenture (NCDs) of Rs.100/- each aggregating Rs.4.23 crore (Previous Year : Rs.29.50 crore) by way of conversion of outstanding right of recompense amount payable by the Company. NCDs are secured by way of first pari-passu charge on movable & immovable fixed assets of Company with existing term loans and are redeemable at face value in installment in the ratio of 33.33%, 33.33% and 33.34% at the end of 30th September, 2019 (FY 2019-20), 2020 (FY 2020-21), 2021(FY 2021-22) respectively.
(c) Term Loan of Rs.103.32 crore (Previous year Rs.131.64 crore ) and Funded Interest Term Loan of Rs.6.31 crore (Previous year Rs.17.61 crore ) from one of the bank are secured by pari-passu first charge on all the Fixed Assets, both present and future, by way of equitable mortgage and first charge on the entire sales proceeds of the contracts covered under the aforesaid loan to be credited to the Escrow/designated account. Further, loan is secured by way of pari passu second charge on the Current Assets of the Company.
(d) Term Loan of Rs.4.67 crore (Previous year Rs.9.34 crore), Working Capital Term Loan of Rs.3.64 crore (Previous year Rs.7.28 crore) and Funded Interest Term Loan of Rs.10.34 crore (Previous year Rs.20.70 crore) from a bank are secured by way of pledge of shares and also secured on pari- passu basis by way of hypothecation of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. as well as by way of second charge on Fixed Assets pertaining to the Company.
(e) Working Capital Term Loans of Rs.5.01 crore (Previous year Rs.14.26 crore ) and Funded Interest Term Loans of Rs.6.93 crore (Previous year Rs.13.85 crore) from banks are secured on pari passu basis by way of hypothecation of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. as well as by way of second charge on Fixed Assets of the Company.
(f) Part of above Term Loans, Working Capital Term Loans and Funded Interest Term Loans from Banks amounting to Rs.52.71 crore (Previous year Rs.110.46 crore) are secured by pledge of equity shares up to 51% (241548750 equity shares) of new co-opted promoters and also personally guaranteed by Managing Director of the Company. Such loans are further secured by way of Corporate Guarantee of M/s MN Ventures Private Limited.
(g) Other Vehicle Loans of Rs.3.39 crore (Previous Year Rs.4 crore) from banks and others are secured by way of hypothecation of respective assets.
(h) Term and other Loans - Repayment schedule and rate of interest -
* Working Capital Loans from banks aggregating to Rs.115.27 crore (Previous year: Rs.114.64 crore) are secured on pari passu basis by way of hypothecation of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. as well as by way of second charge on immovable properties pertaining to Wireline, Wireless and Cable divisions of the Company and further secured by way of pledge of equity shares up to 51% (24,15,48,750 equity shares) of promoters and are also personally guaranteed by Managing Director of the Company and further secured by way of corporate guarantee of M/s MN Ventures Private Limited.
** Inter Corporate Deposits are having a maturity of less than one year and carry interest rate 12% to 16%.
4 Critical accounting estimates and judgments
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
1. useful lives of property, plant and equipment and Intangible Assets
Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of its life.
The useful lives and residual values of Companyâs assets are determined by management at the time the asset is acquired. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.
2. Recoverability of intangible asset and intangible assets under development
Capitalization of cost in intangible assets under development is based on managementâs judgement that technological and economic feasibility is confirmed and asset under development will generate economic benefits in future. Based on evaluations carried out, the management has determined that there are no factors which indicates that these assets have suffered any impairment loss.
3. Employee benefits
Defined benefit plans and other long-term benefits are evaluated with reference to uncertain events and based upon actuarial assumptions including among others discount rates, expected rates of return on plan assets, expected rates of salary increases, estimated retirement dates, mortality rates. The significant assumptions used to account for Employee benefits are described in Note 42.
4. Contingencies
On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies and obligations. Obligations relating to Project Executions is largely depends upon performance of services by respective contractors. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognized until the contingency has been resolved and amounts are received or receivable.
5. Fair Value of unquoted equity investments:
Fair value is derived on the basis of income approach, in this approach the discounted cash flow method is used to capture the present value of the expected future economic benefits to be derived from the ownership of these investments.
5 Business Combination
During the previous year Company had acquired 88.47% (1,60,000 shares) on 09-08-2016 and 6.00% (10,856 shares) on 31-03-2017, of the equity share capital of M/s Polixel Security Systems Pvt Ltd., a company engaged in safe & smart city business. The Companyâs total holding along with the existing shares held increased to 100%. The business acquisition was conducted by entering into share purchase agreements for Cash consideration of Rs.11 crore and 0.75 crore respectively.
6 During the year, Company has recognized the following amounts in the financial statements as per Ind AS - 19 âEmployees Benefitsâ as specified in the Companies (Indian Accounting Standards) Rules, 2015:
(a) Defined Contribution Plan
Contribution to Defined Contribution Plan, recognized are charged to Statement of Profit and Loss for the year as under :
(b) Defined Benefit Plan
The employeesâ gratuity fund scheme is managed by HDFC Standard Life Insurance Company Limited which is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation and the obligation for leave encashment is recognized in the same manner as gratuity.
Note: The estimates of rate of escalation in salary considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the Actuary Valuer.
7 HTL Ltd., one of the Subsidiary of the Company, has proposed right issue of equity shares for Rs.120.00 Crore to its existing shareholders i.e. GOI (26%) and the Company (74%).The Subsidiary company is in the process of obtaining in principle concurrence from GOI for the proposed right issue of shares. Pending such formal concurrence, loan and advances given by the Company have been shown under Non-Current Financial Assets.
8 The Company had made payment of Rs.1.79 crore to the lenders of associate company towards Guarantee Obligation and considering non-recoverability, the amount has been charged to Statement of Profit and Loss as exceptional items.
9 In the opinion of the Board, all assets other than fixed assets and non-current investments, have a realisable value in the ordinary course of business which is not significantly differ from the amount at which it is stated.
10 Lease payments under non-cancellable operating leases have been recognized as an expense in the Statement of Profit and Loss. Maximum obligation on lease amount payable as per rentals stated in respective agreements are as follows:-
11 During the year, the Company has paid interim dividends aggregating to Rs.6.50 per Cumulative Redeemable Preference Share (CRPS) of par value of Rs.100/ each for the year 2017-18.
12 Investment In Joint Venture entities:
(a) The disclosures relating to the Joint Venture Companies viz. DragonWave HFCL India Pvt. Ltd. (hereinafter referred to as JV) is as follows:
(b) The proportion of interest in the Company in the JV is by way of equity participation with DragonWave Inc, Canada formally known as DragonWave-X Canada Inc., a subsidiary of Transform -X Inc.
(c) The aggregate amount of interests in the JV as at 31st March, 2018 is as follows:
13 Segment Reporting
The Company publishes the Standalone financial statements of the Company along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements.
14 Interest charges on loans is net of Interest income from loans and advances amounting to Rs.11.87 crore (Previous year Rs.3.71 crore).
15 (a) Debt of the Company were earlier restructured under Corporate Debt Restructuring (CDR) mechanism in April 2004 which was subsequently modified in June 2005 with cut-off date as 1st April, 2005. CDR Empowered Group at its meeting held on 9th February, 2011 had approved the Rework Package of the Company with the cut off date as 1st January 2011 and communicated its sanction vide their letter No. BY CDR(JCP)/No 8643/2010-11 dated 29th March, 2011. The Rework Package includes inter-alia reduction in the existing rate of interest, re-schedulement for repayment of loans, conversion of overdue interest into funded interest term loan (FITL), conversion of Zero Coupon Premium Bonds (ZCPBâs), part of their premium and part of working capital loans into Equity, conversion of part of working capital loan into working capital term loan (WCTL), waiver of unpaid dividend on preference shares, waiver of penal interest etc. The conditions as stipulated by CDR EG while sanctioning Rework Package have been complied with by the Company. Accordingly, the impact of the rework package has been considered in the Financial Statements.
(b) Subsequent to the implementation of Rework Package, lenders have reset the rate of interest on certain loans in view of improved performance of the Company.
(c) Further, lenders have the right to claim recompense from the Company on account of various sacrifices & waivers made by them in the CDR Rework Package upon exit by the Company from CDR. The Companyâs proposal for CDR exit was considered by the Monitoring Institution (MI) of lenders i.e. IDBI Bank Ltd which recommended the recompense amount of Rs.148.47 crore on term loans and working capital loans. The said recompense amount was approved by CDR-EG vide its order CDR(PMG) No.740/2015-16 dated March 22, 2016. The Company has accordingly made provision of the said recompense amount in the financial year 2015-16. The Board of Directors in their meeting held on 10th May, 2016 has approved the recompense amount so that the Company can exit from CDR mechanism.
(d) Accordingly, Company has paid the recompense amount to the CDR lenders as per exit terms and CDR-EG has been given its approval for successful exit of the Company from CDR mechanism vide letter No. CDR(DAP) No.218/2017-18 dated 01.09.2017
16 Financial Instruments and risk management
The Companyâs principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Companyâs operations and to provide guarantees to support its operations. The Companyâs principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations.
The Companyâs business activities expose it to a variety of financial risks, namely liquidity risk, market risks and credit risk. The management has the overall responsibility for the establishment and oversight of the Companyâs risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Companyâs risk management policies. The Companyâs risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities.
1. Fair Value measurement
Fair Value Hierarchy and valuation technique used to determine fair value :
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and are categorized into Level 1 , Level 2 and Level 3 inputs.
Significant estimates
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Company uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. For details of the key assumptions used and the impact of the changes to these assumptions.
16.2 Management of Liquidity Risk
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Companyâs approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.
The following table shows the maturity analysis of the Companyâs financial liabilities based on contractually agreed undiscounted cash flows as at the Balance Sheet date.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTOCI investments.
The sensitivity analyses in the following sections relate to the position as at 31 March 2018 and 31 March 2017.
Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions and other financial instruments.
Trade Receivables
Customer credit risk is managed by each business unit subject to the Company established policy, procedures and control relating to customer credit risk management. To manage trade receivable, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts and aging of such receivables.
None of the Companyâs financial assets are either impaired or past due, and there were no indications that defaults in payment obligations would occur.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 14. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the management in accordance with the Companyâs policy. Counterparty credit limits are reviewed by the management on an annual basis, and may be updated throughout the year. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments.
None of the Companyâs financial assets are either impaired or past due, and there were no indications that defaults in payment obligations would occur.
Capital management
Capital includes issued equity capital and share premium and all other equity reserves attributable to the equity holders. The primary objective of the Companyâs capital management is to maximize the shareholder value.The following table provides detail of the debt and equity at the end of the reporting period :
17 Foreign Currency Exposure
a) The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations will arise.
The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Companyâs strategy, which provides principles on the use of such forward contracts consistent with Companyâs Risk Management Policy. The Company does not use forward contracts for speculative purposes.
The carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
Foreign currency sensitivity analysis
The following details are demonstrate the Companyâs sensitivity to a 5% increase and decrease in the INR against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as tabulated above and adjusts their translation at the period end for a 5% change in foreign currency rates. The sensitivity analysis includes external loans. A positive number below indicates an increase in profit or equity and vice-versa.
18 Recent Indian Accounting Standards (Ind AS)
Ministry of Corporate Affairs (âMCAâ) through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind ASs which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2018:
(i) Ind AS 115 Revenue from Contracts with Customers
(ii) Ind AS 21 The effect of changes in Foreign Exchange rates
The Company is evaluating the impact of these amendments on its financial statements.
19 The Board has recommended a dividend of 6 % per equity share for the financial year ended 31st March, 2018 subject to the approval of shareholders at the ensuing Annual General Meeting (AGM) of the Company or other authorities wherever required. The dividend for the financial year ended 31st March, 2018, if any, declared at the ensuing AGM, will be paid to the Shareholders within 30 days from the date of declaration.
20 Figures for the previous year has been regrouped/rearranged wherever necessary to confirm current year classification / presentation.
Mar 31, 2017
NOTE 1. CORPORATE INFORMATION
Himachal Futuristic Communication Limited (âHFCLâ or âthe Companyâ) is a public limited company domiciled and incorporated in India having its registered office at 8, Electronics Complex, Chambaghat, Solan, Himachal Pradesh-173213. . The Companyâs shares are listed and traded on Stock Exchanges in India. Established in 1987, Himachal Futuristic Communications Limited (HFCL) is a diverse telecom infrastructure enabler with active interest spanning telecom infrastructure development, system integration, and manufacture and supply of high-end telecom equipment and Optic Fiber Cable (OFC).
The financial statements are approved for issue by the Companyâs Board of Directors on May 10, 2017
NOTE 2. APPLICATION OF NEW AND REVISED IND -AS
All the Indian Accounting Standards issued and notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) read with Section 133 of the Companies Act, 2013 to the extent applicable have been considered in preparing these financial statements.
Recent accounting pronouncements:-
Standards issued but not yet effective
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, âStatement of cash flowsâ and Ind AS 102, âShare-based payment.â These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, âStatement of cash flowsâ and IFRS 2, âShare-based payment,â respectively. The amendments are applicable to the company from April 1, 2017.
Amendment to Ind AS 7:
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.
The company is evaluating the requirements of the amendment and its effect on the financial statements.
Amendment to Ind AS 102:
The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.
It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and nonvesting conditions are reflected in the âfair valuesâ, but nonmarket performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement.
The company is evaluating the requirements of the amendment and its impact on the financial statements is being evaluated.
Equity shares
1,45,50,000 (Previous year 1,45,50,000) shares of Re. 1/- each issued for consideration other than cash pursuant to the amalgamation of erstwhile Himachal Telematics Ltd. with the Company.
52,96,01,640 shares of Re. 1/- each have been allotted for a consideration other than cash pursuant to the Composite Scheme of Arrangement and Amalgamation between Sunvision Engineering Company Private Limited (SECPL), its Share holders & the Optionally Convertible Debenture (OCD) holders and the Company & its Shareholders, sanctioned by the Honâble High Court of Himachal Pradesh at Shimla vide its Order passed on 5th January, 2011.
The Company had received the notice for conversion of Optionally Fully Convertible Debentures (OFCDs) into Equity Shares on 27th February, 2006. Accordingly during the year 2006-2007, 2,000,000 OFCDs were converted into 11,802,739 equity shares of the face value of Rs. 10/- at a premium of Rs.11.90 per equity share and Rs.14.05 Crore has been transferred to securities premium account.
Terms/right attached to Equity/Preference Shares
The Company has issued equity share of Re.1/- each and 6.5% cumulative redeemable preference share of Rs.100/- each. On a show of hands, every holder of equity shares is entitled for one vote and upon a poll shall have voting rights in proportion to the shares of the paid up capital of the Company held by them. Preference shareholders shall have voting right in proportion to the shares of the paid up capital provided if the dividend due on such capital or any part of such dividend has remained unpaid. The Company declares dividend, if any, in Indian Rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of shareholders in the Annual General Meeting. 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 amount in proportion to their shareholdings.
a.) During the year Company has allotted 10.30% 29,49,750 Non-Convertible Debenture (NCDs) of Rs.100/- each aggregating Rs. 29.50 Crore by way of conversion of outstanding right of recompense amount payable by the Company. NCDs are secured by way of first pari-passu charge on movable & immovable fixed assets of Company with existing term loans and are redeemable at face value in installment in the ratio of 33.33%, 33.33% and 33.34% at the end of 30th September, 2019 (FY 2019-20), 2020 (FY 2020-21), 2021(FY 2021-22) respectively.
b.) The 6.5% Cumulative Redeemable Preference Shares (CRPS) aggregating to Rs. 80.50 Crore shall be redeemed at the rate of 25% and 75% of the face value in the financial years ending 31st March 2018 and 31st March, 2019, respectively and will carry the coupon rate of 6.50% from new cut off date i.e. 1st January, 2011 as mentioned in the rework package approved by the CDR EG on 29.03.2011. However, dividend accrued on notional basis, as same has not been declared and fallen due for payment, and penal interest thereon, till the cut-off date, stands waived as per CDR rework package.
c.) Term loan of Rs.131.64 Crore (Previous year Rs.143.51 Crore ) and Funded interest term loan of Rs.17.61 Crore (Previous year Rs. 28.92 Crore ) from one of the bank are secured on pari passu basis by way of first charge on all the immovable properties, both present and future, by way of equitable mortgage and first charge on the entire sales proceeds of the contracts covered under the aforesaid loan to be credited to the Escrow/designated account.
d.) Term loan of Rs.9.34 Crore (Previous year Rs.12.85 Crore) from a bank, Working capital term loan of Rs.7.28 Crore (Previous year Rs.10.01 Crore) and Funded interest term loan of Rs.20.70 Crore (Previous year Rs. 31.06 Crore) are secured by way of pledge of shares and also secured on pari passu basis by way of hypothecation of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. as well as by way of second charge on immovable properties pertaining to the Company.
e.) Working capital term loans of Rs.10.03 Crore (Previous year Rs.13.79 Crore ) from banks and Funded interest term loans of Rs.13.85 Crore (Previous year Rs.20.78 Crore) are secured on pari-passu basis by way of hypothecation of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. as well as by way of second charge on immovable properties of the Company.
f.) Part of term loan and FITL from Banks & Financial Institutions amounting to Rs.110.46 Crore (Previous year Rs.160.91 Crore) are secured by Pledge of equity shares up to 51% (241548750) of new co-opted promoters and also personally guaranteed by Managing Director of the Company and further by way of corporate Guarantee of M/s M N Ventures Pvt. Ltd. (erstwhile M/s ANM Enginnering and Works Pvt. Ltd.)
g.) Vehicle loan of Rs. 4.00 Crore (Previous Year Rs.3.95 Crore) from banks is secured by way of hypothecation of respective assets.
h.) Term loans and FITL are repayable in 7 years / 3 years commencing from Financial year 2012-13 / 2016-17 with rate of Interest @10% p.a. or at the rate as re-set by the lenders as detailed here in below:
i.) Term Loan amount to Rs.100 Crore with rate of Interest @ 10.75% p.a. re- payable as under:
Working capital loans from banks aggregating to Rs.117.64 crore (Previous year Rs. 66.35 crore) are secured on pari-passu basis by way of hypothecation of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. as well as by way of second charge on immovable properties pertaining to Wireline, Wireless and Cable divisions of the Company and further secured by way of pledge of equity shares up to 51% (241548750) of new co-opted promoters and are also personally guaranteed by Managing Director of the Company and further by way of corporate guarantee of M/s M N Ventures Pvt. Ltd. ( erstwhile M/s ANM Enginnering and Works Pvt. Ltd.).
Note 3. critical accounting estimates and judgments
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The areas involving critical estimates or judgments are:
1. Estimation of useful life of tangible asset Note 4.
2. Estimation of useful life of intangible asset Note 6.
3. Estimation of useful life of intangible asset under development Note 7.
4. Estimation of fair value of unlisted securities Note 62.
5. Estimation of defined benefit obligation Note 41.
6. Estimation of contingent liabilities refer Note 43.
Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.
NOTE 4. Business Combination
During the year the Company has acquired 88.47% (1,60,000 shares) on 09-08-2016 and 6.00% (10,856 shares) on 31-03-2017, of the equity share capital of M/s Polixel Security Systems Pvt. Ltd., a company engaged in safe & smart city business. The Companyâs total holding alongwith the shares held as on 1.4.2016 increased to 100% during the year. The business acquisition was conducted by entering into share purchase agreements for a Cash consideration of Rs.11 crore and Rs. 0.75 crore respectively.
Note 5. During the year, Company has recognised the following amounts in the financial statements as per Ind AS - 19 âEmployees Benefitsâ issued by the ICAI :
a) Defined Contribution Plan
Contribution to Defined Contribution Plan, recognised are charged off for the year as under :
b) Defined Benefit Plan
The employeesâ gratuity fund scheme is partially managed by HDFC Standard Life Insurance Company Limited which is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation and the obligation for leave encashment is recognised in the same manner as gratuity.
Investment details
HDFC Standard Life Insurance Company Limited (Cash accumulation ) Policy
Note-1: The estimates of rate of escalation in salary considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the Actuary.
NOTE 6. COMMITMENTs AND CONTINGENCY
(a) Contingent Liabilities not provided for in respect of :
(a) The Companyâs pending litigations comprise of claims against the Company and proceedings pending with Tax Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material impact on its financial position.
(b) The Company periodically reviews all its long term contracts to assess for any material foreseeable losses. Based on such review wherever applicable, the Company has made adequate provisions for these long term contracts in the books of account as required under any applicable law/accounting standard.
(c) As at 31st March, 2016, the Company did not have any outstanding term derivative contracts.
(b) Capital Commitments
NOTE 7. HTL Ltd., one of the Subsidiary of the company, has proposed right issue of equity shares for Rs. 120.00 Crore to its existing shareholders i.e GOI (26%) and the Company (74%).The Subsidiary company is in the process of obtaining in principal concurrence from GOI for the proposed right issue of shares. Pending such formal concurrence, loan and advances given by the Company have been shown under Non-Current Financial Assets as against Current Financial Assets shown in the previous year.
NOTE 8. Pursuant to the disinvestment by the Government of India, the Company had acquired 11,10,000 equity shares of Rs.100/- each of HTL Limited representing 74% of its equity capital at total consideration of Rs. 55.00 crore in terms of Shareholders Agreement dated 16.10.2001. The above consideration paid by the Company was subject to post closing adjustments on account of difference in net worth of HTL Limited as on 31.03.2001 and as on the date of purchase of shares in terms of Share Purchase Agreement dated 16.10.2001. The claim filed by the Company has been settled during the previous year and the amount of Rs.93.52 Crore received in the previous year has been adjusted against cost of investment amounting to Rs.55.00 Crore and balance being interest credited to Profit & Loss account during the previous year.
NOTE 9. During the previous year, the Exceptional items consist of : (i) Impact of recompense amount on account of waivers under rework package of CDR - Rs.148.47 Crore. Recompense amount payable has been worked out by Monitoring Institution (MI) of lenders i.e. IDBI Bank Ltd. and approved by CDR -EG and (ii) Claims in regard to one of investment made in earlier years amounting to Rs.38.52 Crore settled and recovered.
NOTE 10. The Company has reviewed the outstanding receivables and has written off a sum of Rs. 2.44 Crore( Previous year Rs.11.50 Crore) during the year as bad, which in the opinion of the Management is adequate and sundry balances also written back amounting to Rs. 0.73 Crore ( Previous year Rs.5.44 Crore)
NOTE 11. Lease payments under cancellable operating leases have been recognized as an expense in the Statement of profit & loss. Maximum obligation on lease amount payable as per rentals stated in respective agreements are as follows:-
NOTE 12. During the year, the Company has paid first interim dividend of Rs.3.25 per 6.5% Cumulative Redeemable Preference Share (CRPS) of par value of Rs.100/- each for the year 2016-17. Further Company has proposed second interim dividend of Rs.3.25 per CRPS of par value of Rs.100/- each for the year 2016-17. Thus, the total dividend for the financial year is Rs.6.50 per CRPS of Rs. 100/- each.
NOTE 13. INVESTMENT IN JOINT VENTURE ENTITIEs:
a) The disclosures relating to the Joint Venture Companies viz. DragonWave HFCL India Pvt. Ltd. (hereinafter referred to as JV) is as follows:
b) The proportion of interest in the Company in the JV is by way of equity participation with DragonWave Pte. Ltd., Singapore.
c) The aggregate amount of interests in the JV as at 31st March, 2017 is as follows:
NOTE 14. As REQUIRED BY Ind As - 24 âRelated PARTY Disclosuresâ
(i) Name and description of related parties.
NOTE 15. SEGMENT REPORTING
The chief operational decision maker monitors the operating results of its business segment separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.
The operating segments have been identified on the basis of nature of products.
i. Segment revenue includes sales and other income directly identifiable with the segment including inter-segment revenue.
ii. Expenses that are directly identifiable with the segment are considered for determining the segment result.
iii. Expenses / Incomes which are not directly allocable to the segments are included under un-allocable expenditure / incomes.
iv. Segment results include margins on inter-segment sales which are reduced in arriving at the profit before tax of the company.
v. Segment assets and liabilities include those directly identifiable with the respective segments. Un-allocable assets and liabilities represent the assets and liabilities that relate to the company as a whole and not allocable to any segment.
Inter - Segment revenue :- Segment revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are either determined to yield a desired margin or agreed on a negotiated basis.
(a) Primary segment information
The Companyâs operations primarily relates to manufacturing of telecom products, executing turnkey contracts and providing services relating thereto. Accordingly segments have been identified in line with Indian Accounting Standard on Segment Reporting âInd AS-108â. Telecom products and Turnkey contracts and services are the primary business segments. Details of business segments are as follows:
(b) secondary segment information
The Company caters mainly to the needs of Indian market and the export turnover being 4.03% (Previous year 2.91%) of the total turnover of the Company, there are no reportable geographical segments.
NOTE 14. DEFERRED TAX
In accordance with Ind AS 12 on âIncome Taxesâ, issued by the Institute of Chartered Accountants of India, on conservative basis, deferred tax assets have not been accounted for in the books, as the estimation of future taxable profits cannot be made with virtual certainty supported by convincing evidences, against which such deferred tax assets would be realized.
NOTE 15. Interest charges on loans is net of Interest income from loans and advances amounting to Rs.3.71 crore (Previous year Rs.0.45 crore).
NOTE 16. (a) Debt of the Company were earlier restructured under Corporate Debt Restructuring (CDR) mechanism in April 2004 which was subsequently modified in June 2005 with cut-off date as 1st April, 2005. CDR Empowered Group at its meeting held on 9th February, 2011 has approved the Rework Package of the Company with the cut off date as 1st January 2011 and communicated its sanction vide their letter No. BY CDR(JCP)/No 8643/2010-11 dated 29th March, 2011. The Rework Package includes inter-alia reduction in the existing rate of interest, re-schedulement for repayment of loans, conversion of overdue interest into funded interest term loan (FITL), conversion of Zero Coupon Premium Bonds (ZCPBâs), part of their premium and part of working capital loans into Equity, conversion of part of working capital loan into working capital term loan (WCTL), waiver of unpaid dividend on preference shares, waiver of penal interest etc. The conditions as stipulated by CDR EG while sanctioning Rework Package have been complied with by the Company. Accordingly, the impact of the rework package has been considered in the Financial Statements.
(b) Subsequent to the implementation of Rework Package, lenders have reset the rate of interest on certain loans in view of improved performance of the Company.
(c ) Further, lenders have the right to claim recompense from the Company on account of various sacrifices & waivers made by them in the CDR Rework Package upon exit by the Company from CDR. The Companyâs proposal for CDR exit was considered by the Monitoring Institution (MI) of lenders i.e. IDBI Bank Ltd which recommended the recompense amount of Rs.148.47 Crore on term loans and working capital loans. The said recompense amount was approved by CDR-EG vide its order CDR(PMG) No.740/2015-16 dated March 22, 2016 subject to confirmations by the respective lenders. The Company has accordingly made provision of the said recompense amount in the previous year. The Board of Directors in their meeting held on 10th May, 2016 has approved the recompense amount so that the Company can exit from CDR mechanism. Company has paid the recompense amount to the CDR lenders as per exit terms and has requested to MI to put up the status before CDR-EG for formal approval for exit of the Company from CDR mechanism.
NOTE 17. DISCLOSURE OF SPECIFIED BANK NOTEs (SBNS)
During the year the Company had specified bank notes or other denomination note as defined in MCA notification G.S.R. 308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBNs) held and transacted during the period from November 8, 2016 to December 30, 2016, the denomination wise SBNs and other notes as per the notification is given below:
* For the purpose of this clause, the term âSpecified Bank Notesâ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.
NOTE 18. FINANCIAL RISK MANAGEMENT, OBJECTIVEs AND POLICIEs
The Companyâs principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Companyâs operations and to provide guarantees to support its operations. The Companyâs principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations.
The Companyâs business activities expose it to a variety of financial risks, namely liquidity risk, market risks and credit risk. The Companyâs senior management has the overall responsibility for the establishment and oversight of the Companyâs risk management framework. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the Companyâs risk management policies. The Companyâs risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities.
MANAGEMENT OF LIQUIDITY RISK
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Companyâs approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTOCI investments.
Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions and other financial instruments.
Trade Receivables
Customer credit risk is managed by each business unit subject to the Company established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored. At 31 March 2017, the Company had top10 customers (31 March 2016: top 10 customers, 1 April 2015: top 10 customers) that owed the Company more than Rs. 1112.37 Crore(31 March 2016: 1091.36 Crore, 1 April 2015: 320.34 Crore) and accounted for approximately 96.97% (31 March 2016: 97.56 %, 1 April 2015: 87.19 %) of all the receivables outstanding.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 14. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the management in accordance with the Companyâs policy. Counterparty credit limits are reviewed by the management on an annual basis, and may be updated throughout the year. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments.
The Companyâs maximum exposure to credit risk for the components of the balance sheet at 31 March 2017 and 31 March 2016 is the carrying amounts as illustrated in Note 15 except for financial guarantees. The Companyâs maximum exposure relating to financial guarantees and financial derivative instruments is noted in note 43 (c) and the liquidity table below.
Capital management
Capital includes issued equity capital and share premium and all other equity reserves attributable to the equity holders. The primary objective of the Companyâs capital management is to maximize the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Companyâs policy is to keep the gearing ratio between 40% and 50%.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March, 2017, 31 March, 2016 and 31 March, 2015.
1. Fair Value measurement
Fair Value Hierarchy and valuation technique used to determine fair value :
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and are categorized into Level 1 , Level 2 and Level 3 inputs.
Significant estimates
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Company uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. For details of the key assumptions used and the impact of the changes to these assumptions.
NOTE 19. DERIVATIVE INSTRUMENTS
a) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Companyâs strategy, which provides principles on the use of such forward contracts consistent with Companyâs Risk Management Policy. The Company does not use forward contracts for speculative purposes.
NOTE 20. OVERALL PRINCIPLED
The Company has prepared the opening balance sheet as per Ind AS as of April 1, 2015 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying certain items from Previous GAAP to Ind AS as required under the Ind AS, and applying Ind AS in the measurement of recognized assets and liabilities. However, this principle is subject to certain mandatory exceptions and certain optional exemptions availed by the Company as detailed below.
NOTE 21. FIRST TIME ADOPTION OF IND As
The accounting policies set out in Note 3 have been applied in preparing the Financial statements for the year ended March 31, 2017 and 2016.
Exemptions and exceptions availed
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS as at the transition date, i.e. April 1, 2015.
A.1 Ind- As optional exemptions A. 1.1 Deemed cost
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the Previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and Investment Property covered by Ind AS 40 Investment Properties.
Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets and investment property at their Previous GAAP carrying value.
A.1.2 Business combinations
Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.
The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated instead have been accounted as per previous GAAP. The Company has applied same exemption for investment in associates and joint ventures.
A.1.3 Designation of previously recognized financial instruments
Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS.
The Company has elected to apply this exemption for its investment in equity instruments.
A.1.4 Leases
Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material.
The Company has elected to apply this exemption for such contracts / arrangements.
a.1.3 Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.
A.2 Ind As mandatory exceptions A.2.1 Estimates
An entityâs estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made in for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. A.2.2 Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS. Accordingly, classification and measurement of financial asset has been based on the facts and circumstances that exist at the date of transition to Ind AS.
Note to Reconciliation statement
1. Under the Previous GAAP, investments in equity instruments and mutual funds were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments (other than equity instruments designated as at FVOCI) have been recognised in other equity as at the date of transition i.e. April 1, 2015.
Fair value changes with respect to investments in equity instruments designated as at FVOCI have been recognised in FVOCI equity instruments reserve as at the date of transition and subsequently in the other comprehensive income.
2. Under the previous GAAP the debtors assigned to third party were carried at cost, however under IND AS the debtors assigned for more than 12 months needs to be fair valued. Company has fair valued such debtors and the difference has been charged to profit and loss account as finance charge.
Note to Reconciliation statement
1. Proposed dividend
Under the Previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend including dividend distribution tax was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend including dividend distribution tax included under provisions has been reversed with corresponding adjustment to in other equity.
Under Previous GAAP, the entire dividend distribution tax paid by the Group was charged as an appropriation in equity along with the dividend proposed by the Parent company. As per Ind AS dividend distribution tax paid on the dividends is recognised consistently with the presentation of the transaction that creates the income tax consequence. Dividend distribution tax is charged to profit or loss if the dividend itself is charged to profit or loss. If the dividend is recognised in equity, the presentation of dividend distribution tax is also recognised in equity.
2. Under the Previous GAAP, investments in equity instruments and mutual funds were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments (other than equity instruments designated as at FVOCI) have been recognised in other equity as at the date of transition i.e. April 1, 2015
Fair value changes with respect to investments in equity instruments designated as at FVOCI have been recognised in FVOCI equity instruments reserve as at the date of transition and subsequently in the other comprehensive income.
3. Under the previous GAAP the debtors assigned to third party were carried at cost, however under IND AS the debtors assigned for more than 12 months needs to be fair valued. Company has fair valued such debtors and the difference has been charged to profit and loss account as finance charge.
4. Under Ind AS, re-measurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the Previous GAAP, these re-measurements were forming part of the profit or loss for the year
Mar 31, 2016
1. Merger of Manufacturing Division of Jindal Photo Limited
The Hon''ble High Court of Judicature at Allahabad and Bombay vide their Order dated 12th October, 2015 and 26th February, 2016 respectively sanctioned the scheme of arrangement (''the scheme'') between Jindal Photo Limited (âDemerged Companyâ) and Jindal Poly Films Limited (âResulting Companyâ) and their respective shareholders and creditors, pursuant to the provisions of section 391 to 394 and other provisions of the Companies Act, 1956 and/or Companies Act, 2013. The scheme became effective upon filing of certified copies of the Orders of the Hon''ble High Court of Judicature at Bombay on 31st March, 2016.
The scheme is effective from Appointed Date i.e. 1st April, 2014 inter alia provides for the demerger of the demerged undertaking as defined in part (III) of the scheme - Business of Manufacture, production, sale and distribution of photographic products of demerged company into the Resulting Company. Accordingly financial statements of the demerged entity has been incorporated for the year ended 31st March 2016 along with corresponding previous year ended 31st March 2015.
(a) Pursuant to the scheme of Arrangement between Jindal Photo Limited (Demerged Company) and Jindal Poly Films Limited (Resulting Company) and their respective shareholders and creditors, as a Consideration, Jindal Poly Films Limited have allotted 17,38,700 (seventeen lac thirty eight thousand seven hundred) Equity shares of Rs. 10 each fully paid up in the capital of the company on 30th May,2016 in the ratio of 10 fully Paid-up equity shares of Rs. 10 each of the Company for every 59 Equity shares of Jindal Photo Limited held by shareholders of Jindal Photo Limited on record date i.e. 13th May, 2016. Accordingly these shares are treated as outstanding as on reporting date and are included for the calculation of basic earnings per share for the year ended 31st March 2016 along with corresponding previous year ended 31st March 2015.
(b) The accounting of this Arrangement was done as per the scheme and the same has been given effect to in the financial statements as under:
i. The Resulting Company has recorded all assets and liabilities of the Demerged Undertaking vested in it pursuance to this scheme, at the respective book values thereof, as appearing in the books of account of the Demerged Company immediately before the appointed date.
ii. The Resulting Company has credited the aggregate face value of the New Equity shares of the Company issued by it to the members of the Demerged Company pursuant to this scheme to the share capital in books of accounts.
iii. The difference of the aggregate of face value equity shares allotted by the Company to the shareholders of the Demerged Undertaking, and the amount representing surplus of book value of assets over liabilities of the Demerged Undertaking has been recorded by the Resulting Company as Capital Reserve.
iv. Figures of demerged undertakings have been regrouped and/or rearranged wherever required to align with disclosure parameters of the Resulting Company.
Note : Pursuant to the scheme of Arrangement between Jindal Photo Limited (Demerged Company) and Jindal Poly Films Limited (Resulting Company), as approved by Hon''ble High Court of Judicature Mumbai vide order dated 26th February 2016, the Company has given impact in its books of accounts. Accordingly general inter unit balances arose earlier to approval of the scheme between Demerged Undertaking - M/s Jindal Photo Limited (Manufacturing Division) and Residual Undertaking - M/s Jindal Photo Limited (Investing Division) aggregating Rs 9,08,29,456 (Previous Year Rs 7,26,51,606) has been disclosed in short Term Loans and Advances (Refer Note 17.1). Being merely an accounting treatment for giving effect of the scheme, the above transaction and balance thereon is not disclosed in above related party disclosures.
2. Disclosure under Regulation 34(3) of âSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015â
Loans and advances outstanding at the year end and maximum amount outstanding during the year, as required to be disclosed under schedule V and Regulation 34(3) of âsecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015â are as follows: *Comprehensive disclosure of investments as at 31st March 2016 has been made in Note 10 to the Financial statements, hence closing balance of other investments (Equity shares/Preference shares) having no movement during the year were not again disclosed in above statement.
**balance including interest
Note: Pursuant to the scheme of Arrangement between Jindal Photo Limited (Demerged Company) and Jindal Poly Films Limited (Resulting Company), as approved by Hon''ble High Court of Judicature Mumbai vide order dated 26th February 2016, the Company has given impact in its books of accounts. Accordingly general inter unit balances arose earlier to approval of the scheme between Demerged Undertaking - M/s Jindal Photo Limited (Manufacturing Division) and Residual Undertaking - M/s Jindal Photo Limited (Investing Division) aggregating Rs 9,08,29,456 (Previous Year Rs 7,26,51,606) has been disclosed in short Term Loans and Advances (Refer Note 17.1). Being merely an accounting treatment for giving effect of the scheme, the above transaction and balance thereon is not disclosed in above related party disclosures.
3. Segment Reporting
Pursuant to the scheme of arrangement for merger of manufacturing business of Jindal Photo Limited having different photographic products, the management has classified the business in two reportable segment, as defined in Accounting standard - 17 (segment Reporting) as follows :
- Plastic Films Business
- Photographic Division
4. Provision for Post-sales Client support and Warranties:
Provisions for post-sales client support and warranties on certain products and services relating to photographic business of the Company are made towards expected cost of meeting such obligations of rectification/replacement, based on the expected future cash outflows and computed on total sales made during the year, based on past experience. Provision for post-sales client support are expected to be utilized over a period of one year.
5. (a) The Administration of Union Territory of Dadra & Nager Haveli vide its Notification dated 31st December, 1999 granted exemption for sales tax to the Demerged Entity M/s Jindal Photo Limited (now being merged with the Company M/s Jindal Poly Films Limited) and in view of legal opinion received from experts and as per Ads-12 such benefit being in nature of capital receipt has been reduced from Gross sales and credited to Capital Reserve.
(b) Further financial statements for the financial years 2005-06 to 2010-11 of Demerged Entity M/s Jindal Photo Limited (now being merged with the Company M/s Jindal Poly Films Limited) were prepared considering such benefit as revenue receipt and income tax was provided and paid at normal rate for respective year. The assessment of financial year 2005-06 to 2010-11 for which assessment proceedings u/s 153A is in progress, entity has filed revised income tax computations for such financial years claiming benefit of Rs. 1,12,88,56,658 as exempted income and tax liability was revised as per provisions of section 115JB of Income Tax Act, 1961 (MAT) at Rs. 22,78,69,632. As the claim is for the years for which normal revised return could not be filed, the effect of such claim of benefit is not considered and necessary effective entries will be passed on finality of the assessment. Year wise detail is as under:
6. (a) A sum of Rs.13,92,18,077 (previous year Rs.13,11,88,659) being the difference between domestic and imported raw material prices prevailing at the year ended on 31st March 2016 on account of advance liceNSE s excess utilized for which exports are yet to be made, has been adjusted in the cost of raw material.
(b) Under the Package scheme of Incentive 2001/2007 approved by the Government of Maharashtra, the Company is entitled to industrial promotion subsidy to the extent of 100% of the fixed capital investment or to the extent of taxes paid to the state Government within a period of 7 years, whichever is lower. During the year, subsidy receivable under the above said scheme amounting to Rs 52,14,31,163 (previous year Rs. 51,57,72,707) has been added to Capital Reserve .
(c) The Export obligation undertaken by the company for import of capital equipments under EPCG scheme of the Central Government at the concessional rate of custom duty are in the opinion of the management expected to be fulfilled within their respective due dates/extended due date.
7. During the year, the Company had invested Rs. 39,29,00,000 in the Zero Percent redeemable preference share capital and Rs 249,00,00,000 in Zero Percent Optionally Convertible Preference shares M/s of Jindal India Powertech Limited (JIPL), a group company. JIPL is the holding Company of Jindal India Thermal Power Limited (the borrower).
8. (a) Certain old balances of sundry debtors and sundry creditors are subject to reconciliation and confirmation.
(b) sundry Debtors include Rs.53,23,605 (previous year Rs. 46,06,143) under litigation, against which legal cases are pending in various Courts for recovery. The same are considered good and realizable in the opinion of the management.
(c) In the opinion of the Board and to the best of their knowledge and belief, the realizable value of current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance sheet.
9. (a) Advance receivable in cash or in kind includes Rs. 28,254,171 (Previous Year Rs. 28,254,171 ) being the amount of custom duty deposited against import of capital goods assessed under provisional assessments in earlier year.
(b) Non - Current Investment includes 6 shares of Jindal Films India Ltd (Previously known as Jindal Metal & Mining Ltd) of which the Company is beneficial owner are held by certain individuals in fiduciary capacity.
(c) Pursuant to the scheme of Arrangement (Refer Note 30), investment held by Demerged Undertaking (M/s Jindal Photo Limited) in equity shares of M/s Jindal Imaging Limited and M/s Jindal Photo Imaging Limited has been transferred to Resulting Company (M/s Jindal Poly Films Limited), accordingly these equity shares has been considered as Non-Current Investments of the Resulting Company, however issuance of these shares in the name of M/s Jindal Poly Films Limited is under process.
(d) stores & spares consumed and salaries & wages incurred during the year for repair and maintenance of plant & machinery and sheds & building, have been charged to the former accounts wherever separation is not ascertainable.
10. (a) Discontinued Operation
Company has discontinued the operation of Partially Oriented Yarn (POY) facility at Gulaothi, Uttar Pradesh and Pet film facility at Khanvel unit as it has been terminated through abandonment in earlier years as per Accounting standard - 24 (Discontinuing Operations) referred to in section 133 of the Companies Act 2013.
Following is extracts of financial information included in loss from discontinued operations for the Gulaothi and Khanvel unit:-
(b) since FY 2006-07, the company was in the process of disposal of its unused plant & machineries and store items at Gulaothi Unit (Discontinued Operation). During the year, a part of such unused plant and machineries was reported to have been removed inappropriately. The management is taking due actions for recovery and do not consider any impairment/ provision for loss, if any, on this account as the credit balance of parties and realizable value of remaining assets is likely to exceed the book value of assets.
(c) As per Accounting standard -28 âImpairment of Assetsâ referred to in section 133 of the Companies Act 2013, no further impairment loss has been considered by the management in assets of Gulaothi & Khanvel unit.
11. Exceptional items represents Loss of Rs. 1,58,31,145 (previous year Rs 2,98,35,055) being exchange differences on translation/settlement of long term foreign currency loans for acquiring fixed assets.
12. Information related to Micro Enterprises and small Enterprises, as defined in the Micro, small and Medium Enterprises Development Act, 2006 (MsME Development Act), are given below. The information given below have been determined to the extent such enterprises have been identified on the basis of information available with the Company:
13. During the year, the erstwhile associate M/s Rexor Holding sAs has been merged with its wholly owned subsidiary M/s Rexor sAs, with effect from 1st April 2015, sanctioned as per order dated 21st October 2015 by an Foreign Authority (Greffe du Tribunal de Commerce de Vienne) and accordingly post-merger the surviving entity M/s Rexor sAs has become the associate of M/s Jindal Poly Films Limited. Pursuant to the scheme of merger, shares of M/s Rexor Holding sAs have been cancelled and in consideration proportionate shares as per the determined ratio, has been allotted in the surviving entity M/s Rexor sAs comprising 11163 Equity shares at Face Value of Euro 3506 allotted to M/s Jindal Poly Films Limited.
14. The Company has pledged 4,88,76,000 equity shares of Rs 10/- each of M/s Global Nonwoven Limited a subsidiary company and mortgaged 26.54 acres land of the Company situated at Nasik Maharashtra (Land being Leased out to Global
Mar 31, 2014
A Equity Shares
(i) Nil (Previous year 278,180) shares of Rs. 1/- each represent Global
Depository Receipts.
(ii) 1,45,50,000 (Previous year 1,45,50,000) shares of Rs. 1/- each
issued for consideration other than cash pursuant to the amalgamation
of erstwhile Himachal Telematics Ltd. with the Company.
(iii) 52,96,01,640 shares of Rs. 1/- each have been allotted for a
consideration other than cash pursuant to the Composite Scheme of
Arrangement and Amalgamation between Sunvision Engineering Company
Private Limited (SECPL), its Share holders &the Optionally Convertible
Debenture (OCD) holders and the Company & its Shareholders, sanctioned
by the Hon''ble High Court of Himachal Pradesh at Shimla vide its Order
passed on 5th January, 2011.
B Preference Shares
The Cumulative Redeemable Preference Shares (CRPS) aggregating to Rs.
80.50 crore shall be redeemed at the rate of 25% and 75% of the face
value in the financial years ending 31st March 2018 and 31st March,
2019, respectively and will carry the coupon rate of 6.50% from new cut
off date i.e. 1st January, 2011 as mentioned in the rework package
approved by the CDR EG on 29.03.2011. However, dividend accrued on
notional basis, as same has not been declared and fallen due for
payment, and penal interest thereon, till the cut-off date, stands
waived as per CDR rework package.
E Terms/right attached to Equity/Preference Shares
The Company has issued equity share of Rs. 1/-each and preference share
of Rs.100/-each. On a show of hands, every holder of equity shares is
entitled for one vote and upon a poll shall have voting rights in
proportion to the shares of the paid up capital of the Company held by
them. Preference shareholders shall have voting right in proportion to
the shares of the paid up capital provided if the dividend due on such
capital or any part of such dividend has remained unpaid. The Company
declares dividend, if any, in Indian Rupees. The dividend, if any,
proposed by the Board of Directors is subject to the approval of
shareholders in the Annual General Meeting. 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 amount in proportion to their shareholdings.
Secured Long Term Borrowings
a) Term loan of Rs.63.28 crore (Previous year Rs.71.19 crore) and Funded
interest term loan of Rs.28.92 crore (Previous yearRs. 33.92 crore) from
one of the bank are secured on pari passu basis by way of first charge
on all the immovable properties, both present and future, by way of
equitable mortgage and first charge on the entire sales proceeds of the
contracts covered under the aforesaid loan to be credited to the
Escrow/designated account.
b) Term loan of Rs.18.69 crore (Previous yearRs.21.02 crore) from a bank,
Working capital term loan ofRs.14.56 crore (Previous year Rs.16.38 crore)
and Funded interest term loan of Rs.31.06 crore (Previous year Rs. 31.06
crore) are secured by way of pledge of shares and also secured on pari
passu basis by way of hypothecation of stocks of raw materials,
finished and semi- finished goods, stores and spares, book debts etc.
as well as by way of second charge on immovable properties pertaining
to the Company.
c) Working capital term loans of Rs.20.09 crore (Previous year Rs.22.57
crore) from banks and Funded interest term loans of Rs.20.77 crore
(Previous year Rs.20.77 crore) are secured on pari passu basis by way of
hypothecation of stocks of raw materials, finished and semi- finished
goods, stores and spares, book debts etc. as well as by way of second
charge on immovable properties pertaining to Wireline, Wireless and
Cable divisions of the Company.
d) All the secured loans from banks are secured by Pledge of equity
shares up to 51 % (239700000) of new co-opted promoters.
e) All the secured loans as stated above are also personally guaranteed
by Managing Director of the Company.
f) Term loans and FITLare repayable in 7 years/3 years commencing from
Financial year2012-13/2016-17 with rate of Interest @10% p.a. or at the
rate as re-set by the lenders as detailed herein below:
Secured Short Term Borrowings
Working capital loans from banks aggregating to Rs.33.86 crore (Previous
year Rs. 30.67 crore) are secured on pari passu basis by way of
hypothecation of stocks of raw materials, finished and semi-finished
goods, stores and spares, book debts etc. as well as by way of second
charge on immovable properties pertaining to Wireline, Wireless and
Cable Divisions of the Company and further secured by way of pledge of
equity shares up to 51% (239700000) of new co-opted promoters and are
also personally guaranteed by Managing Director of the Company.
(Rs. in crore)
As at As at
NOTE 2 Contingent Liabilities not provided
for in respect of 31.03.2014 31.03.2013
(a) Unexpired Letters of Credit (margin money
paid Rs.7.61 crore ; Previous year
Rs.1.82 crore) 26.54 1.82
(b) Guarantees given by banks on behalf of the
Company (margin money kept by way of fixed 56.03 32.93
deposits Rs.15.79 crore; Previous year
Rs.10.64 crore)
(c) Counter Guarantees given by the Company to
the financial institutions/banks for providing 20.16 20.16
guarantees on behalf of companies promoted
by the Company, (margin money kept by the
banks by way of fixed deposits Rs. Nil ;
Previous year Rs. Nil)
(d) Arrears of Dividend on Cumulative redeemable
preference shares - 18.90
NOTE 3 Interest charges on loans is net of Interest income from loans
and advances amounting to Rs.0.43 crore (Previous year Rs.0.45 crore).
NOTE 4 The disclosures as per the Accounting Standard 7 on
''Construction Contracts'' issued by the Institute of Chartered
Accountants of India are as under:
NOTE 5 (a) Debt of the Company were earlier restructured under
Corporate Debt Restructuring (CDR) mechanism in April 2004 which was
subsequently modified in June 2005 with cut-off date as 1st April,
2005. CDR Empowered Group at its meeting held on 9th February, 2011 has
approved the Rework Package of the Company with the cut off date as 1st
January 2011 and communicated its sanction vide their letter No. BY
CDR(JCP)/No 8643/2010-11 dated 29th March, 2011. The Rework Package
includes inter-alia reduction in the existing rate of interest,
re-schedulement for repayment of loans, conversion of overdue interest
into funded interest term loan (FITL), conversion of Zero Coupon
Premium Bonds (ZCPB''s), part of their premium and part of working
capital loans into Equity, conversion of part of working capital loan
into working capital term loan (WCTL), waiver of unpaid dividend on
preference shares, waiver of penal interest etc. The conditions as
stipulated by CDR EG while sanctioning Rework Package have been
complied with by the Company. Accordingly, the impact of the rework
package has been considered in the Financial Statements.
(b) Subsequent to the implementation of Rework Package, lenders have
reset the rate of interest on certain loans in view of improved
performance of the Company.
(c) Further, lenders have the right to claim recompense from the
Company on account of various sacrifices & waivers made by them in the
CDR Rework Package. The amount of recompense and the manner of
repayment shall be ascertained upon exit from CDR mechanism by the
Company.
NOTE 6 Pursuant to the disinvestment by the Government of India, the
Company had acquired 11,10,000 equity shares of Rs.100/- each of HTL
Limited representing 74% of its equity capital at total consideration
of Rs. 55.00 crore in terms of Shareholders Agreement dated 16.10.2001.
The above consideration paid by the Company is subject to post closing
adjustments on account of difference in net worth of HTL Limited as on
31.03.2001 and as on the date of purchase of shares in terms of Share
Purchase Agreement dated 16.10.2001. The Company has submitted its
claim on account of Closing Date Adjustment to the Government in
respect of such reduction in net assets of HTL Limited which has not
been settled by the Government. Due to this, the Company has invoked
the provisions of the Share Purchase Agreement for settlement of
dispute by Arbitration. The Hon''ble Arbitral Tribunal has since given
the award in favour of the Company on 12th October, 2007 upholding the
claim of the Company on account of the above to the extent of Rs.55.00
crore and interest from the date of award till actual date of payment.
The said award has been upheld by the single Judge of Hon''ble High
Court of Delhi on 5th December, 2012 and again by the Division Bench on
25th February, 2013. SLP filed by DoT against Order of Division Bench
of Hon''ble High Court of Delhi was also dismissed on 1 st November,
2013, by the Hon''ble Supreme Court of India. The Review Petition filed
by DoT was also dismissed on 16th January, 2014 by the Hon''ble Supreme
Court of India. However, the consequential effect has not been given in
the books of accounts as DoT is entitled to file Curative Petition
before Hon''ble Supreme Court of India.
NOTE 7 The Company had made payment of Rs.9.70 crore (Previous year
Rs.0.24 crore) to certain Cumulative Redeemable Preference Shareholders
as per contractual obligations. The said amount has been shown as
"advances recoverable in cash or kind or for value to be received".
NOTE 8 Payment made to lenders towards guarantee contract/obligation
amounting to Rs.Nil on behalf of associates companies (Previous year 9.82
crore) has been accounted for under the head Exceptional items.
NOTE 9 In accordance with the Company''s Policy, the Company has
reviewed the outstanding receivables and has written off a sum of
Rs.87.14 crore during the year as bad, which in the opinion of the
Management is adequate.
NOTE 10 During the year, Company has recognised the following amounts
in the financial statements as per Accounting Standard 15 (Revised)
"Employees Benefits" issued by the ICAI:
b) Defined Benefit Plan
The employees'' gratuity fund scheme is partially managed by HDFC
Standard Life Insurance Company Limited which is a defined benefit
plan. The present value of obligation is determined based on actuarial
valuation using the Projected Unit Credit Method, which recognises each
period of service as giving rise to additional unit of employee benefit
entitlement and measures each unit separately to build up the final
obligation and the obligation for leave encashment is recognised in the
same manner as gratuity.
NOTE 11 The Company has carried out Impairment Test on its Fixed Assets
as on 31.3.2014 and the Management is of the opinion that there is no
asset for which impairment is required to be
madeasperAccountingStandard-28on Impairment of Assets issued by the
ICAI. (Previous year Rs. Nil)
NOTE 12 The Board of Directors has recommended a dividend of Rs. 6.50
p.a. on each 80,50,000 Cummulative Redeemable Preference Shares of Rs.
100/- each for the period from 1 st January, 2011 to 31 st March, 2014.
The dividend for the financial year 2010-11 would be proportionate
which is Rs. 1.60 per Preference Share.
NOTE 13 As required by Accounting Standard 18 "Related Party
Disclosures"
(i) Name and description of related parties.
Relationship Name of Related Party
(a) Subsidiaries: HTLLtd.
Moneta Finance Pvt. Ltd.
(b) Associates: Microwave Communications Ltd.
Exicom Tele-systems Ltd.
HFCL Satellite Communications Ltd.
HFCL Dacom Infochek Ltd.
HFCL Bezeq Telecom Ltd.
Westel Wireless Ltd.
Polixel Security Systems Pvt. Ltd.
DragonWave HFCL India Pvt. Ltd.
ANM Enginnering and Works Pvt. Ltd.
NextWave Communications Pvt. Ltd.
(c) Key management personnel : Mr. Mahendra Nahata
Mr. Arvind Kharabanda
Note : Related party relationship is as
identified by the Company and relied upon by the auditors.
(a) Primary segment information
The Company''s operations primarily relates to manufacturing of telecom
products, executing turnkey contracts and providing services relating
thereto. Accordingly segments have been identified in line with
Accounting Standard on Segment Reporting ''AS-17''. Telecom products and
Turnkey contracts and services are the primary business segments
whereas Others constituting less than 10% of the segment
revenue/results/assets and accordingly have been considered as other
business segments and are disclosed in the financial statements.
Details of business segments are as follows:
(b) Secondary segment information
The Company caters mainly to the needs of Indian market and the export
turnover being 0.72% (Previous year 0.02%) of the total turnover of the
Company, there are no reportable geographical segments.
NOTE 14 Details of business advances outstanding from Subsidiary for
the year ended 31st March, 2014 - Disclosure required under Clause 32
of the
NOTE 15 Derivative Instruments
a) The Company uses foreign currency forward contracts to hedge its
risks associated with foreign currency fluctuations relating to certain
firm commitments and forecasted transactions. The use of foreign
currency forward contracts is governed by the Company''s strategy, which
provides principles on the use of such forward contracts consistent
with Company''s Risk Management Policy. The Company does not use forward
contracts for speculative purposes.
NOTE 16 Previous year figures have been regrouped/reclassified wherever
necessary and the figures have been rounded off to the nearest rupees
in lakh. NOTE 52 Value of imported and indigenous raw material and
stores & spares consumed
Mar 31, 2013
As at As at
31.03.2013 31.03.2012
01 Contingent Liabilities not
provided for in respect of :
(a) Unexpired Letters of Credit
(margin money paid Rs.18,155 ;
Previous year 18,155 125,214
Rs.70,000)
(b) Guarantees given by banks on
behalf of the Company (margin money
kept by 329,274 338,176
way of fxed deposits Rs.106,424;
Previous year Rs.147,919)
(c) Counter Guarantees given by the
Company to the fnancial
institutions/banks for 201,591 1,374,331
providing guarantees on behalf
of companies promoted by the
Company. (margin
money kept by the banks by way
of fxed deposits Rs.Nil ;
Previous year Rs Nil)
(d) Arrears of Dividend on Cumulative
redeemable preference shares 189,013 136,688
The Company has received necessary approval from the Central Government
(CG) for the re-appointment and payment of remuneration to Wholetime
Directors for the Financial Year 2007-08, 2008-09 and part Financial
Year 2009-10 for Rs.27,464.The Company also fled the necessary
Applications with the CG seeking their approval for re-appointment and
payment of remuneration to Wholetime Directors for remaining part of
the Financial Year 2009-10 and onwards which have not been approved by
the CG in absence of "no objection letter" from the lenders.
Accordingly a sum of Rs.41,144 being the excess amount paid for the
aforesaid period continuous to be shown as recoverable. The working
capital lenders have authorised IDBI Bank Ltd. (IDBI) to issue Âno
objection letter'' (NOC) for payment of managerial remuneration to whole
time directors for the aforesaid period which has since been received
from IDBI. The Company will now fle its representation with the CG for
seeking their approval for the balance amount of remuneration. However,
pending approval from the Central Government, the said amount,
subsequent to Balance Sheet date, has been recovered from the
respective Directors.
02 Interest charges on loans is net of Interest income from loans and
advances amounting to Rs.4,515 (Previous year Rs.4,282).
03 Debt of the Company were earlier restructured under Corporate Debt
Restructuring (CDR) mechanism in April 2004 which was subsequently
modifed in June 2005 with cut-off date as 1st April, 2005. CDR
Empowered Group at its meeting held on 9th February, 2011 has approved
the reworked package of the Company with the cut off date as 1st
January 2011 and communicated its sanction vide their letter No. BY
CDR(JCP)/No 8643/2010-11 dated 29.03.2011. The reworked package
includes interalia reduction in the existing rate of interest,
re-schedulement for repayment of loans, conversion of overdue interest
into funded interest term loan (FITL), conversion of Zero Coupon
Premium Bonds (ZCPB''s), part of their premium and part of working
capital loans into Equity, conversion of part of working capital loan
into working capital Term Loan (WCTL), waiver of unpaid dividend on
preference shares, waiver of penal interest etc. The conditions as
stipulated by CDR EG while sanctioning Rework Package have been
complied with by the Company. Accordingly, the impact of the reworked
package has been considered in the Financial Statement.
04 Pursuant to the disinvestment by the Government of India, the
Company had acquired 11,10,000 equity shares of Rs.100/- each of HTL
Limited representing 74% of its equity capital at total consideration
of Rs. 550,000 in terms of Shareholders Agreement dated 16.10.2001. The
above consideration paid by the Company is subject to post closing
adjustments on account of difference in net worth of HTL Limited as on
31.03.2001 and as on the date of purchase of shares in terms of Share
Purchase Agreement dated 16.10.2001.The Company has submitted its claim
on account of Closing Date Adjustment to the Government in respect of
such reduction in net assets of HTL Limited which has not been settled
by the Government. Due to this, the Company has invoked the provisions
of the Share Purchase Agreement for settlement of dispute by
Arbitration. The Hon''ble Arbitral Tribunal has since given the award in
favour of the company on 10th October, 2007 upholding the claim of the
company on account of the above to the extent of Rs.550,000 and
interest from the date of award. The said award has been upheld by the
Divisional Bench of Hon''ble High Court of Delhi on 25th February, 2013,
however, the consequential effect has not been given as DoT is entitled
to appeal against said order before Hon''ble Supreme Court of India.
05 The Company had made payment of Rs.2,400 (Previous year Rs.2,400) to
certain cumulative redeemable preference shareholders as per
contractual obligations in the earlier years. The said amount paid have
been shown as "advances" to be adjusted against future expected
liability of dividend on cumulative preference shares.
06 Payment made to lenders towards guarantee contract/obligation
amounting to Rs.98,187 including associate company (Previous year
Rs.59,500) has been accounted for under the head Exceptional items.
07 In accordance with the Company Policy, the company has reviewed the
outstanding receivables and is in continuous process of working out
different modalities of recovery. The Company has also written off a
sum of Rs. 303,007 during the year, which in the opinion of the
Management, is adequate.
08 During the year, Company has recognised the following amounts in the
fnancial statements as per Accounting Standard 15 (Revised) "Employees
Benefts" issued by the ICAI:
09 The Company has carried out Impairment Test on its Fixed Assets as
on 31.3.2013 and the Management is of the opinion that there is no
asset for which impairment is required to be made as per Accounting
Standard-28 on Impairment of Assets issued by ICAI . (Previous year Rs.
Nil)
10 Lease payments under cancellable operating leases have been
recognised as an expense in the proft & loss account. Maximum
obligation on lease amount payable as per rentals stated in respective
agreements are as follows:-
11 Segment Reporting
(a) Primary segment information
The Company''s operations primarily relates to manufacturing of telecom
products, executing turnkey contracts and providing services relating
thereto. Accordingly segments have been identifed in line with
Accounting Standard on Segment Reporting ''AS-17'' .Telecom products and
Turnkey contracts and services are the primary business segments
whereas Others constituting less than 10% of the segment
revenue/results/assets and accordingly have been considered as other
business segments and are disclosed in the fnancial statements. Details
of business segments are as follows:
12 Previous period''s fgures have been regrouped/reclassifed wherever
necessary and the fgures have been rounded off to the nearest rupee.
Mar 31, 2012
A Equity Shares
(i) 278,180 (Previous year 278,180) shares of Re. 1/- each represent
Global Depository Receipts.
(ii) 14,550,000 (Previous year 14,550,000) shares of Re. 1/- each
issued for consideration other than cash pursuant to the amalgamation
of erstwhile Himachal Telematics Ltd. with the Company.
(iii) The Company on 10th April 2006, further allotted 100B to F Series
Foreign Currency Convertible Bonds (FCCBs) of USD 100,000 each fully
paid up aggregating to USD 10 million. Each FCCB has been converted
into 168,620 fully paid up equity shares of face value of Rs.10 each at
a premium of Rs.16.45 per equity share ( At a total price of Rs.26.45
per share).
(iv) 529,601,640 shares of Re. 1/- each have been allotted for a
consideration other than cash pursuant to the Composite Scheme of
Arrangement and Amalgamation between Sunvision Engineering Company
Private Limited (SECPL) its share holders and the Optionally
Convertible Debenture (OCD) holders and the Company and its
shareholders sanctioned by the Hon'ble High Court of Himachal Pradesh
at Shimla vide its order passed on 5 th January, 2011.
B Preference Shares
The Cumulative Redeemable Preference Shares (CRPS) aggregating to Rs.
805,000 shall be redeemed at the rate of 25% and 75% of the face value
in the financial years ending 31st March 2018 and 31st March, 2019,
respectively and will carry the coupon rate of 6.50% from new cut off
date i.e. 1st January 2011. However, dividend accrued on notional
basis, as same has not been declared and fallen due for payment, and
penal interest thereon, till the cut-off date, stands waived as per CDR
rework package.
C Terms/right attached to Equity/Preference Shares
The Company has issued equity share of Re.1/- each and preference share
of Rs.100/- each. On a show of hands, every holder of equity shares is
entitled for one vote and upon a poll shall have voting rights in
proportion to the shares of the paid up capital of the Company held by
them. Preference shareholders shall have voting right in proportion to
the shares of the paid up capital provided if the dividend due on such
capital or any part of such dividend has remained unpaid. The Company
declares dividend, if any, in Indian Rupees. The dividend, if any,
proposed by the Board of Directors is subject to the approval of
shareholders in the Annual General Meeting. 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 amount in proportion to their shareholdings.
Secured Long Term Borrowings
a) Term loan of Rs.791,043 (Previous year Rs.791,043) from financial
institution and Funded interest term loan of Rs.339,154 (Pre- vious
year Rs. 450,022) are secured on pari passu basis by way of first
charge on all the immovable properties, both present and future, by way
of equitable mortgage and first charge on the entire sales proceeds of
the contracts covered under the aforesaid loan to be credited to the
Escrow/designated account.
b) Term loan of Rs.233,541 (Previous year Rs.233,541) from a bank,
Working capital term loan of Rs.182,010(Previous year Rs.182,010) and
Funded interest term loan of Rs.310,600 (Previous year Rs. 361,614) are
secured by way of pledge of shares/ Bonds/Units and also secured on
pari passu basis by way of hypothecation of stocks of raw materials,
finished and semi- finished goods, stores and spares, book debts etc.
as well as by way of second charge on immovable properties pertaining
to the Com- pany.
c) Working capital term loans of Rs.250,800 (Previous year Rs.134,941)
from banks and Funded interest term loans of Rs.207,800 (Previous year
Rs.143,900) are secured on pari passu basis by way of hypothecation of
stocks of raw materials, finished and semi- finished goods, stores and
spares, book debts etc. as well as by way of second charge on immovable
properties pertaining to Wireline, Wireless and Cable divisions of the
Company.
d) Pursuant to the rework CDR package, some of the loans amounting to
Rs.24,30,301 have been converted into Equity shares of the Company at a
price of Rs.9.84 per equity share as per SEBI guidelines, after
complying with necessary formalities in this regard. In the previous
year pending completion of such formalities the said amount of
Rs.24,30,301 was shown as " Loans pending conversion into Equity" under
the head "Loan Funds".
e) All the secured loans as stated above are also personally guaranteed
by Managing Director of the Company.
f) Term loans are repayable in 7 years commencing from Financial year
2012-13 with rate of Interest @10% p.a. and Interest free Funded
interest term loans are repayable in three equal annual installments
commencing from December 31, 2016, as detailed here in below:
a) Working capital loans from banks aggregating to Rs.363,504 (Previous
year Rs. 534,300) are secured on pari passu basis by way of
hypothecation of stocks of raw materials, finished and semi- finished
goods, stores and spares, book debts etc. as well as by way of second
charge on immovable properties pertaining to Wireline, Wireless and
Cable divisions of the Company.
b) Other loans amounting to Rs. Nil (Previous year Rs.123) are secured
by way of hypothecation of assets under hire purchase agreements.
As at As at
31.03.2012 31.03.2011
1 Contingent Liabilities not provided
for in respect of :
(a) Unexpired Letters of Credit (margin
money paid Rs.70,000 ; Previous
year Rs.20,511) 125,214 15,702
(b) Guarantees given by banks on behalf
of the Company (margin money kept by way 338,176 478,992
of fixed deposits Rs.147,919; Previous
year Rs.168,812)
(c) Counter Guarantees given by the
Company to the financial institutions/
banks for providing 1,374,331 1,374,331*
guarantees on behalf of companies
promoted by the Company. (margin money
kept by the banks by way of fixed
deposits Rs. Nil ; Previous year Rs Nil)
(d) Arrears of Dividend on Cumulative
redeemable preference shares 137,937 400,513
* This excludes Company's counter guarantees of Rs.56.70 crore in
respect of guarantees provided by the banks and institutions on behalf
of HFCL Bezeq Telecom Ltd. for bid bonds to Department of
Telecommunications (DoT) towards tender for operation of basic
telephone services as the guarantees have already expired and the
Hon'ble Delhi High Court vide its order dated 19.09.97 granted
permanent injunction restraining the DoT from invoking the said
guarantees. The appeal filed by DoT against this also stands dismissed
as per order dated 02/01/2012. The Hon'ble High Court has further
directed the banks to treat the said bank guarantee(s) as discharged.
2 Estimated amount of contracts remaining to be executed on capital
account and not 78,138 51,625 provided for (net of advances)
3 Claims against the Company towards sales tax, income tax and others
in dispute not acknowledged 100,903 100,903 as debt (deposited under
protest Rs.5,000 shown as advance)
4 The Company has received necessary approval from the Central
Government for the re-appointment and payment of remuneration to
Wholetime Directors for the Financial Year 2007-2008, 2008-09 and part
Financial Year 2009-10 for Rs.27,464.The Company has also filed the
necessary application with the Central Government seeking their
approval for re-appointment and payment of remuneration to Wholetime
Director for remaining part of the Financial Year 2009-10 and onwards
which has not been approved by the Central Government. However, since
the Financial Year 2007-08, the company has so far paid Rs.64,396 as
remuneration to Whole time Directors. As the approval of Central
Government received is of lesser amount than the actual amount paid for
the aforesaid period, the excess amount of Rs.36,932 paid continues to
be shown as recoverable. The Company is in the process of making
representation to the Central Government for seeking their approval for
the entire amount of remuneration paid to them.
5 Interest charges on loans is net of Interest income from loans and
advances amounting to Rs.4,282 (Previous year Rs.122,333) .
6 (a) Debt of the Company were earlier restructured under Corporate
Debt Restructuring (CDR) mechanism in April 2004 which was subsequently
modified in June 2005 with cut-off date as 1st April, 2005. CDR
Empowered Group at its meeting held on 9th February, 2011 has approved
the Rework package of the Company with the cut off date as 1st January
2011 and communicated its sanction vide their letter No. BY CDR(JCP)/No
8643/2010-11 dated 29.03.2011. The Rework package interalia includes
reduction in the existing rate of interest, re-schedulement for
repayment of loans, conversion of overdue interest into funded interest
term loan (FITL), conversion of Zero Coupon Premium Bonds (ZCPB's),
part of their premium and part of working capital loans into Equity,
conversion of part of working capital loan into working capital Term
Loan (WCTL), waiver of unpaid dividend on preference shares, waiver of
penal interest etc. The said CDR package also stipulates arrangement of
additional infusion of funds by the promoters.
(b) The Company has created securities as stipulated by the CDR
Empowered Group and complied with all other terms and conditions except
execution of pledge of shares in favour of the lenders. The execution
of pledge of shares as stipulated in CDR rework package which is in
process. Accordingly, during the year:
i) In terms of CDR rework package, Secured working capital loans from
banks amounting to Rs.165,201 Zero Coupon Premium Bonds (ZCPBs)
amounting to Rs.19,50,700 and the premium of Rs.3,14,400 accrued on
these ZCPB's till cut off date have been converted into equity shares
of face value of Re.1/-each at a price of Rs.9.84 per equity share as
per SEBI guidelines.
ii) Subsequent to the individual sanctions & reconciliation with
working capital lenders, a sum of Rs.120,800 (Previous period
Rs.235,604) out of working capital loan have been converted into
working capital term loans (WCTL) and the same is to be repaid in 84
monthly installments commencing from 30th April 2012.
iii) Subsequent to the individual sanctions & reconciliation with
working capital lenders, a sum of Rs.63,900 (Previous period
Rs.793,654) being interest accrued and due up to the cut off date on
working capital loans have been converted into Funded Interest Term
Loan (FITL) and which is repayable in three equal annual installments
commencing from 31st December 2016 onwards and shall not carry any
interest.
(c) The Company is in process of reconciliation of balances with one of
the bank. Adjustments, if any, on account of interest/ principal will
be made when the same stands reconciled and confirmed.
7 Pursuant to the disinvestment by the Government of India, the
Company had acquired 1,110,000 equity shares of Rs.100/- each of HTL
Limited representing 74% of its equity capital at total consideration
of Rs. 550,000 in terms of Shareholders Agreement dated 16.10.2001.
The above consideration paid by the Company is subject to post closing
adjustments on account of difference in net worth of HTL Limited as on
31.03.2001 and as on the date of purchase of shares in terms of Share
Purchase Agreement dated 16.10.2001.The Company has submitted its claim
on account of Closing Date Adjustment to the Government in respect of
such reduction in net assets of HTL Limited which has not been settled
by the Government. Due to this, the Company has invoked the provisions
of the Share Purchase Agreement for settlement of dispute by
Arbitration. The Hon'ble Arbitral Tribunal has since given the award
in favour of the company on 10th October, 2007 upholding the claim of
the company on account of the above to the extent of Rs.550,000 and
interest from the date of award.
Since the Government of India has gone in appeal against the above
arbitral award which is yet to be decided by the Hon'ble High Court,
no adjustment has been made in the accounts in respect of above award
pending the final outcome.
8 The Company had made payment of Rs.113,375 to certain cumulative
preference shareholders as per contractual obligations in the earlier
years. Pursuant to the CDR rework package some of the preferential
share holders has adjusted a sum of Rs.110,975 against the contractual
liability and waived the balance dues. Accordingly, a sum of Rs.110,975
has been written off and the balance amount of Rs.2,400 (previous year
113,375) has been shown as "advances" to be adjusted against future
expected liability of dividend on cumulative preference shares.
9 Exceptional items consists of (i) Payment made to lenders towards
guarantee contract/obligation amounting to Rs.59,500 including promoted
companies (Previous period 64,500) (ii) Written back of liabilities /
waiver under rework package of CDR and on account of One Time
Settlement of some of the of the lenders Rs. NIL (Previous period
Rs.2,677,977).
10 Sundry debtors include debts outstanding for more than two years
amounting to Rs.2,417,161. The Company is in continuous process of
working out different modalities of recovery for its remaining long
outstanding debts. Pending outcome of such exercise, an amount of
Rs.83,507 has been written off during the year, which is in opinion of
the management is adequate.
11 During the year, Company has recognised the following amounts in the
financial statements as per Accounting Standard 15 (Revised)
"Employees Benefits" issued by the ICAI :
a) Defined Contribution Plan
Contribution to Defined Contribution Plan, recognised are charged off
for the year/period as under :
b) Defined Benefit Plan
The employees' gratuity fund scheme managed by HDFC Standard Life
Insurance Company Limited is a defined benefit plan. The present value
of obligation is determined based on actuarial valuation using the
Projected Unit Credit Method, which recognises each period of service
as giving rise to additional unit of employee benefit entitlement and
measures each unit separately to build up the final obligation and the
obligation for leave encashment is recognised in the same manner as
gratuity.
12 The Company has carried out Impairment Test on its Fixed Assets as
on 31.03.2012 and the Management is of the opinion that there is no
asset for which impairment is required to be made as per Accounting
Standard-28 on Impairment of Assets issued by ICAI . (Previous period
Rs.795,275 has been impaired )
13 Lease payments under cancellable operating leases have been
recognised as an expense in the profit & loss account. Maximum
obligation on lease amount payable as per rentals stated in respective
agreements are as follows:-
14 Balances of some of the sundry debtors, creditors, lenders ,loans
and advances are subject to confirmations from the respective parties
and consequential adjustments arising from reconciliation, if any. The
Management, however is of the view that there will be no material
adjustments in this regard.
15 Segment Reporting
(a) Primary segment information
The Company's operations primarily relates to manufacturing of
telecom products, executing turnkey contracts and providing services
relating thereto. Accordingly segments have been identified in line
with Accounting Standard on Segment Reporting 'AS- 17' .Telecom
products and Turnkey contracts and services are the primary business
segments whereas others constituting less than 10% of the segment
revenue/results/assets and accordingly have been considered as other
business segments and are disclosed in the financial statements.
Details of business segments are as follows:
Note: 1. The above information and that given in Note No. 7 ' Trade
payable' regarding Micro, Small and Medium Enterprises has been
determined on the basis of information available with the Company and
has been relied upon by the auditors.
Note: 2. The Company is in process of compiling relevant information
for the period from its suppliers, since the information is not ready,
no disclosure have been made in accounts. However, in view of the
management, the impact of interest, if any, that may be payable is not
expected to be material.
16 Earning per Share (EPS)- In accordance with the Accounting Standard
(AS-20)
17 The figures of the current year are not comparable with those of
previous period as current year is for Twelve months as against six
months for previous period. Previous period's figures have been
regrouped/reclassified wherever necessary and the figures have been
rounded off to the nearest rupee.
Mar 31, 2011
(Rs. in thousands)
1. The Company has opted for the period of current financial year as
six months from 1st October, 2010 to 31st March 2011. During the
previous year, Registrar of Companies, Punjab, Himachal Pradesh and
Chandigarh (ROC) vide its order dated 4th May, 2010 had granted the
permission to the Company to prepare the annual accounts for a period
of eighteen months ending 30th September, 2010.
As at As at
31.03.2011 30.09.2010
2. Contingent Liabilities not
provided for in respect of :
(a) Unexpired Letters of Credit
(margin money paid Rs. 20,511;
Previous year 15,702 24,348
Rs. 44,745)
(b) Guarantees given by banks
on behalf of the Company
(margin money kept 4,78,992 4,15,295
by way of fixed deposits Rs. 168,812;
Previous year Rs. 104,422)
(c) Counter Guarantees given by the
Company to the financial
institutions/banks 13,74,331* 19,15,672*
for providing guarantees on behalf of
companies promoted by the Company.
(margin money kept by the banks by
way of fixed deposits Rs. Nil ;
Previous year Rs. Nil)
* This excludes CompanyÃs counter guarantees of Rs. 567,000 in respect of
guarantees provided by the banks and institutions on behalf of HFCL
Bezeq Telecom Ltd. for bid bonds to Department of Telecommunications
(DoT) towards tender for operation of basic telephone services as the
guarantees have already expired and the HonÃble Delhi High Court vide
its order dated 19.09.97 granted permanent injunction restraining the
DoT from invoking the said guarantees. The appeal fled by DoT against
this also stands dismissed. The DoT has fled application for
restoration of appeal before the Double Bench of the HonÃble High Court
of Delhi which has been allowed and matter is now pending for decision.
* The Company has received necessary approval from the Central
Government for the re-appointment and payment of remuneration to
Wholetime Directors for the Financial year 2007-08, 2008-09 and part
financial year of 2009-10 for Rs. 27,464. The Central Government has not
given its approval for remuneration paid to Managing Director for the
period from 1st October, 2010 to 31st March, 2011. However, since the
financial year 2007-08, the Company has so far paid Rs. 52,772 as
remuneration to Wholetime Directors. As the approval of Central
Government received is of lesser amount than the actual remuneration
paid for the aforesaid period, the excess amount of Rs. 25,308 paid
continues to be shown as recoverable. The Company is in the process of
making representation to the Central Government for seeking their
approval for the entire amount of remuneration paid to them. The
Company also fled necessary application with the Central Government
seeking their approval for re-appointment and payment of remuneration
to Wholetime Director for financial year 2009-10 and onwards which is
under their consideration.
3. Interest charges on loans is net of Interest income from loans and
advances amounting to Rs. 122,333 (Previous year Rs. 145,483).
4. a Debt of the Company were earlier restructured under Corporate Debt
Restructuring (CDR) mechanism in April 2004 which was subsequently
modified in June 2005 with cut-off date as 1st April, 2005. Because of
liquidity problems and due to inadequate working capital funds, the
Company had again approached its lenders viz. Banks and Financial
Institutions for Rework of earlier sanctioned restructuring package.
CDR Empowered Group at its meeting held on 9th February, 2011 has
approved the Rework package of the company with the cut off date as 1st
January 2011 and communicated its sanction vide their letter No. BY
CDR(JCP)/No 8643/2010-11 dated 29.03.2011. The Rework package includes
interalia reduction in the existing payable rate of interest,
reschedulement and longer period for repayment of loans, conversion of
overdue interest into funded interest term loan (FITL), conversion of
Zero Coupon Premium Bonds (ZCPBÃs), part of their premium and part of
working capital loans into Equity, conversion of part of working
capital loan into working capital Term Loan (WCTL), waiver of unpaid
dividend on preference shares, waiver of penal interest etc. The said
CDR package also stipulates conditions to be complied with by the
Company and arrangement of additional infusion of funds from promoters.
b The Company has complied with most of the conditions as stipulated in
CDR Rework package. Accordingly, the impact of CDR Scheme as above has
been incorporated in these financial statements as below:
i) Interest to banks and financial institutions w.e.f. cut off date has
been accounted for at the rates specified in the said package.
ii) The Cumulative Redeemable Preference Shares (CRPS) aggregating to Rs.
805,000 shall be redeemed at the rate of 25% and 75% of the face value
in the financial years ending 31st March 2018 and 31st March, 2019,
respectively and will carry the coupon rate of 6.50% from new cut off
date i.e. 1st January 2011. However, dividend accrued on notional
basis, as same has not been declared and fallen due for payment, and
penal interest thereon, till the cut-off date, shall be waived. (Also
refer Note no. 9 (c ) below)
iii) Zero Coupon Premium Bonds (ZCPBs) amounting to Rs. 1,950,700 shall
be converted into equity shares of face value of Rs. 1/-each at a price
to be arrived at as per SEBI guidelines. Accordingly Equity shares
equal to Rs. 1,950,700 divided by such arrived at price shall be allotted
to the holders of ZCPBs after necessary compliance & formalities. Out
of the total premium of Rs. 1,189,781 accrued on these ZCPBs till cut off
date, a sum of Rs. 314,400 shall also converted into equity share of face
value of Rs. 1/- each at a price to be arrived at as per SEBI guidelines.
According Equity shares equal to Rs. 314,400 divided by such arrived at
price shall be allotted to the holders of ZCPBs after necessary
compliance & formalities and balance amount of premium of Rs. 875,381 has
been waived. The amount of premium waived which was earlier adjusted
from security premium account in earlier years has now been reversed.
iv) Secured and unsecured working capital loans from banks amounting to
Rs. 240,545 have been converted into working capital term loans (WCTL)
which together with existing WCTL of Rs. 76,406 have been reschedule so
as to be repaid in 84 monthly installments, commencing from 30th April
2012 and ending 31st March 2019.
v) Secured working capital loans from banks amounting to Rs. 170,142
shall be converted in to equity shares of face value of Rs. 1/- each at a
price to be arrived at as per SEBI guidelines. Accordingly equity
shares equal to Rs. 170,142 divided by such arrived at price shall be
allotted to the respective lenders after necessary compliance &
formalities.
vi) The outstanding principal amount of secured loan amounting to Rs.
1,024,584 from financial institutions and banks have been rescheduled so
as to be repaid in 84 monthly installments commencing from 30th April,
2012 and ending 31st March 2019 on flat interest rate of 10% p.a. from
cut off date.
vii) Funded Interest Term Loans (FITL) amounting to Rs. 647,346 have been
settled at 25% on one time settlement basis. One time settled amount of
Rs. 161,836 is payable by 30th September 2011. The balance 75% of FITL
i.e. Rs. 485,509 has been waived off and shown under the head other
income as waiver of loans & writes back of liability.
viii) Interest accrued and due on simple interest basis amounting to Rs.
506,500 up to the cut off date on the term loans have been converted
into Funded Interest Term Loan (FITL) and is to be repaid in three
equal installments on 31st December 2016, 31st December 2017 and 31st
December 2018 and shall not carry any interest. Balance amount of
outstanding interest as on cut off date, comprising of liquidated
damages etc. amounting to Rs. 83,294 has been waived and shown under the
head other income as waiver of loans & writes back of liability.
ix) Interest accrued and due on simple interest basis amounting to Rs.
287,200 up to the cut off date on working capital loans have been
converted into Funded Interest Term Loan (FITL) and is to be repaid in
three equal installments on 31st December 2016, 31st December 2017 and
31st December 2018 and shall not carry any interest. Balance amount of
outstanding interest as on cut off date, comprising of liquidated
damages etc. amounting to Rs. 63,928 has been waived and shown under the
head other income as waiver of loans & writes back of liability.
x) The Company has to create securities as stipulated by the CDR
Empowered Group.
xi) One of the working capital lender having total outstanding of Rs.
157,226 as at 31.03.2011 has not agreed to the restructuring granted by
CDR empowered group. However, the Company is in discussion with the
lender for fresh proposal which is under consideration.
c Some of the Cumulative Redeemable Preference Share (CRPS)
shareholders have disputed the modified terms of redemption and rate of
dividend as per CDR package on the ground that they have not agreed to
any of the restructuring granted by CDR empowered group and hence
original terms and conditions of 12% CRPS continues to be in force and
accordingly are insisting for redemption and dividend as per the
original terms of the issue of CRPS. One of the preference shareholder
has earlier fled case against the company for recovery. The Company is
in the advance stage of negotiation with these CRPS holders to accord
their approval to reworked package approved under CDR system in view of
the present financial position of the Company.
d The company is in process of reconciliation of balances with the
lenders i.e. financial institutions and banks. Adjustments, if any, on
account of interest/ principal will be made when the same are confirmed
by them.
e The Company had settled the dues of certain lender/suppliers on One
Time Settlement (OTS) basis and made the final payment of settled amount
during the current period. The gain arising out of such OTS has been
accounted for during the current period under the head other income as
waiver of loan, interest thereon and write backs. The provision for
premium on Zero Coupon Premium Bond issued to lender amounting to Rs.
641,349 which was adjusted from security premium account in earlier
years has been now reversed.
f Pursuant to the rework of CDR package, some of the loans amounting to
Rs. 2,435,242, are to be converted into Equity shares of the Company at a
price to be arrived at as per SEBI guidelines, after complying with
necessary formalities in this regard. Pending completion of such
formalities the amount of Rs. 2,435,242 has been kept as " Loans pending
conversion into Equity" and shown under the head "Loan Funds".
5. 529,601,640 equity share of Rs. 1/- each have been issued & allotted
as on 10th February, 2011 pursuant to the Arrangement & Amalgamation to
the shareholders and Optionally Convertible Debenture (OCD) holders of
erstwhile Sunvision Engineering Company Private Limited (SECPL) this
amount was shown as ÃEquity Share Suspense Accountà as on 30.09.2010.
6. Pursuant to the disinvestment by the Government of India, the
Company had acquired 1,110,000 equity shares of Rs.100/- each of HTL
Limited representing 74% of its equity capital at total consideration
of Rs. 550,000 in terms of Shareholders Agreement dated 16.10.2001. The
above consideration paid by the Company is subject to post closing
adjustments on account of difference in net worth of HTL Limited as on
31.03.2001 and as on the date of purchase of shares in terms of Share
Purchase Agreement dated 16.10.2001.The Company has submitted its claim
on account of Closing Date Adjustment to the Government in respect of
such reduction in net assets of HTL Limited which has not been settled
by the Government. Due to this, the Company has invoked the provisions
of the Share Purchase Agreement for settlement of dispute by
Arbitration. The HonÃble Arbitral Tribunal has since given the award in
favour of the company on 10th October, 2007 upholding the claim of the
company on account of the above to the extent of Rs. 550,000 and interest
from the date of award.
Since the Government of India has gone in appeal against the above
arbitral award which is yet to be decided by the HonÃble High Court, no
adjustment has been made in the accounts in respect of above award
pending the final outcome.
7. The Company had made a payment of Rs. 113,375 to certain cumulative
preference shareholders as per contractual obligations in the earlier
years. The said amounts paid have been treated as "advances" to be
adjusted against future expected liability of dividend on cumulative
preference shares.
8. Dividend on 6,500,000 equity shares of AB Corp Ltd. which are
pledge with OBC (e- GTBL), amounting to Rs. 39,000 has not been received
by the Company. The same is under reconciliation and shall be accounted
for after completion of reconciliation.
9. During the year, the Company has transferred a sum of Rs. 1,432,715
to Loans & Advances from the carrying amount of its investment in
Optionally Fully Convertible Debentures (OFCDs), as per the agreed
terms with respective investee companies, since the Company has not
exercised its conversion option and said OFCDs had become overdue for
redemption. An amount of Rs.1,132,715 had already been provided in the
accounts in earlier years towards diminution in value of these OFCDs.
10. Profit on sales of Investment (net) includes Rs. 60 being Profit on
sales of OFCDÃs, [Sale proceeds of OFCDs Rs. 60 Less (cost in books Rs.
2,700,757) less (Provision already made in earlier years for diminution
in value Rs. 2,700,757) ].
11. During the period the Company has paid Guarantee
contract/obligation amounting to Rs. 64,500 towards obligation payments (
as Corporate guarantor ) to the lenders of promoted companies against
their over dues.
12. Sundry debtors include debts outstanding for more than two years
amounting to Rs.v2,564,056. The Company is in continuous process of
working out different modalities of recovery for its remaining long
outstanding debts. Pending outcome of such exercise, an amount of Rs.
614,203 has been written off during the period, which is in opinion of
the management is adequate.
13. Pursuant to the Accounting Standard (AS-28) - Impairment of Assets
issued by ICAI, the Company had appointed an outside agency for
conducting an exercise of identifying the assets, if any, that may have
been impaired. Based on the report Impairment loss of Rs. 795,275 has
been determined on curtained fixed assets as at 31.03.2011 and the same
has been provided in the accounts. The Impairment loss has been
assessed on the basis of projected cash flows of Cash Generating Units
(CGUs) for the next 3 years discounted at IRR of 8.5%.
14. Balances of some of the sundry debtors, creditors, lenders ,loans
and advances are subject to confirmations from the respective parties
and consequential adjustments arising from reconciliation, if any. The
Management, however is of the view that there will be no material
adjustments in this regard.
15. The fgures of the current period are not comparable with those of
previous year as current period is for six months as against period of
eighteen months for previous year. Previous yearÃs fgures have been
regrouped/reclassified wherever necessary and the fgures have been
rounded off to the nearest rupee.
Sep 30, 2010
A. OTHER NOTES
1 The Company has filed an application under section 210 (4) of the
Companies Act, 1956 with the Registrar of Companies , Punjab, Himachal
Pradesh and Chandigarh (ROC) seeking permission to extend the fi
-nancial year of the Company for a period of eighteen months commencing
from 1st April, 2009 to 30th September, 2010. The ROC vide its order
dated 4th May, 2010 has granted the permission to the Company to
prepare the annual accounts for eighteen months up to 30th September,
2010.
2 The Board of Directors of the Company in compliances with the terms
of (i) letter dated 13th August, 2009 issued by CDR Cell of IDBI, (ii)
Settlement Co-operation Agreement dated 12th September, 2009, (iii)
SEBI order dated 3rd March, 2010 and IDBIs letter dated 30th March,
2010 at its meeting held on 30th March, 2010 has approved the sale of
32,67,05,000 equity shares and 65,00,000 Cumulative Redeemable
Preference shares of HFCL Infotel Limited held by the Company to fulfi
ll its obligation as stipulated in settlement co-operation agreement
dated 12.09.2009. Accordingly the said shares have been sold on 31st
March, 2010 and HFCL Infotel Limited has ceased to be a subsidiary of
the Company w.e.f. 31st March, 2010. The loss on sale of the said
investment in subsidiary of Rs.3916.05 million has been shown as extra
ordinary item in the profit & Loss Account.
3 (a) The Honble High Court of Himachal Pradesh at Shimla has
sanctioned the Composite Scheme of Arrangement and Amalgamation (" the
Scheme") between Sunvision Engineering Company Private Limited
("SECPL", Transferrer Company), its Shareholders and Optionally
Convertible Debenture holder ("OCD holder") and Himachal Futuristic
Communications Limited ("HFCL", Company, Transferee Company) and its
Shareholders vide its order passed on 5th January, 2011 u/s 391 to 394
of the Companies Act, 1956.The aforesaid Order has been filed with the
Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh (ROC)
in the prescribed form no. 21 both by HFCL and SECPL, and ROC has
issued a certifi cate confi rming the registration of the aforesaid
Court Order on 14th January, 2011 i.e. "effective date". With the
registration of the aforesaid Court Order on 14th January, 2011
(effective date), SECPL stands amalgamated with HFCL w.e.f. 1st
January, 2010 (Appointed date).
(b) The objects for which SECPL had been established were to carry on
the business of manufacturing, assembling, trading, repairing,
installation and commissioning of various types of engineering
equipments, engineering goods, infrastructural works, civil,
mechanical, electrical projects, etc. The Company forayed in the
business of electronic surveillance, electronic security and monitoring
systems, etc. and made a strategic investment of 47.95% in Polixel
Security Systems Private Limited (Polixel).
(c) Consequent upon the said scheme becoming effective, the Companys
issued, subscribed and paid up equity share capital stands reduced from
Rs. 4627.94 million divided into 46,27,93,697 equity shares of Rs. 10/-
each to Rs. 462.79 million divided into 46,27,93,697 equity shares of
Re 1/- each by reduction in face value and paid up value from Rs. 10/-
per share to Re 1/- per share. Accordingly, an amount of Rs.4165.15
million being the equity capital so reduced has been credited to the
Business Reconstruction Account. The ROC has also issued a necessary
certifi cate under Section 103(4) of the Companies Act, 1956 on 14th
January, 2011 confi rming the reduction in equity share capital of the
Company.
(d) With effect from the Appointed date SECPL (Transferor Company) has
been amalgamated with the Company, as a going concern, with all its
assets, liabilities, properties, rights, benefits and interest therein
subject to existing charges thereon in favour of banks and financial
institutions. All the employees of the Transferor Company, who are in
service on the effective date, shall become the employees of the
Company on that date, without any break or interruption in service.
(e) In consideration for the amalgamation, 470,000,000 equity shares of
face value of Re1/- each, credited as fully paid-up, in the ratio of
47(forty seven) equity shares of the face value of Re1/- each in the
Company for every 1 (one) equity share of face value of Rs.10/- each
held in SECPL have been allotted on 10th February, 2011 to the share
holders of SECPL whose names appeared in the Register of Members, as on
9th February, 2011, being the record date. Further, upon the scheme
becoming effective, 59,601,640 equity shares of Re 1/- each credited as
fully paid-up have been allotted to the Optionally Convertible
Debenture Holders of erstwhile SECPL.
(f) The amalgamation has been accounted for under the Purchase
method prescribed by Accounting standard AS-14 " Accounting for
Amalgamations " issued by the Institute of Chartered Accountants of
India. Accordingly, the assets and liability of SECPL have been
recorded at fair value on the appointed date.
(g) In terms of the Scheme, the Company has recorded all the assets and
liabilities appearing in the books of account of SECPL and transferred
to and vested in the Company at their fair values as on 1st January,
2010. For this purpose the fair value of Assets including Investments
is as per the report of the independent valuers, fairness opinion on
the said valuation report and based on the managements assessment of
its recoverability. The difference of Rs.33.68 million between the fair
value of net assets of SECPL transferred to the Company, and the fair
value of equity shares allotted by the Company (the consideration) has
been debited to Goodwill. The same has been written off in profit
and Loss Statement.
(h) Excess of Consideration over the paid-up value of equity shares
issued and allotted (as referred to under 3(e) above) amounting to
Rs.4770.50 million has been credited to Securities Premium Account as
prescribed in the Scheme. Further, difference between fair value and
paid up value of equity shares issued and allotted to OCD holders of
erstwhile SECPL (as referred to under 3(e) above) amounting to
Rs.640.40 million has been credited to Securities Premium Account as
prescribed in the Scheme.
i) The Company is in the process of getting the investment and other
assets of SECPL transferred in its own name by the operation of law.
(j) Authorised Share Capital of the Transferee Company is total of the
authorised share capital of both the Companies
4 529,601,640 equity share of Re 1/- each referred to note no. B-3(e)
above have been allotted after the balance sheet date i.e. on 10th
February, 2011 for a consideration other than cash pursuant to the
scheme to the shareholders and the OCD holders of erstwhile SECPL and
have been booked in " Equity Share Suspense" account as on 30.09.2010.
5 Pursuant to the scheme approved by the Honble high court of Himachal
Pradesh vide its order dated 05 January, 2011 under section 391 to 394
of the Companies Act, 1956, (the Act), SECPL has amalgamated with
Company w.e.f. 1st January, 2010. Before amalgamation SECPL was having
certain investment and loans. However being a private limited company
it was exempt from the provisions of section 372A of the Act. On
amalgamation, the financial statements of SECPL and Company have been
combined as a result of which the Company has exceeded the prescribed
limit u/s 372A(1) of the Act and it has to carry on certain investment
in the form of debentures at a rate of interest lower than the rate
prescribed u/s 372A(3) of the Act. The above situation has arisen only
on account of amalgamation as per the scheme approved by the Honble
High Court.
The Company has been legally advised that in above situation it would
not be deemed to have violated the provisions of section 372A(1) and
(3) of the Act.
As at As at
30.09.2010 31.03.2009
(Rs. in millions) (Rs. in millions)
6 Contingent Liabilities not provided
for in respect of :
(a) Unexpired Letters of Credit
(margin money paid Rs.44.74 million ;
Previous year Rs.2.62 million) 24.35 26.17
(b) Guarantees given by banks on behalf
of the Company (margin money kept by
way of fixed deposits Rs.104.42 million;
Previous year Rs.123.70 million) 415.29 440.06
(c) Counter Guarantees given by the Company to the financial
institutions/banks for providing guarantees on behalf of companies
promoted by the Company. (margin money kept by the banks by way of fi
-xed deposits Rs. Nil ;
Previous year Rs Nil) 1,915.67* 7225.67*
* This excludes Companys counter guarantees of Rs.567.00 million in
respect of guarantees provided by the banks and institutions on behalf
of HFCL Bezeq Telecom Ltd. for bid bonds to Department of
Telecommunications (DoT) towards tender for operation of basic
telephone services as the guarantees have already expired and the
Honble Delhi High Court vide its order dated 19.09.97 granted
permanent injunction restraining the DoT from invoking the said
guarantees. The appeal filed by DoT against this also stands
dismissed. The DoT has filed application for restoration of appeal
before the Double Bench of the Honble High Court of Delhi which has
been allowed and matter is now pending for decision.
7 Interest charges on loans is net of Interest income from loans and
advances and others amounting to Rs.145.48 million (Previous year
Rs.1.01 million) .
8 (a) The Company had approached its lenders viz. Banks and Financial
Institutions for financial restructuring and a financial
restructuring package, has been approved under the Corporate Debt
Restructuring (CDR) mechanism by the CDR Empowered Group of lenders
vide letter dated 6th April ,2004. Subsequently the CDR Empowered Group
in its meeting held on 8th June, 2005 has approved modifi cations to
the aforesaid CDR package with the cut off date as 1st April 2005 and
communicated to the company vide their letter No. BY CDR(ALB)/No 404
dated 24.06.2005.The modifi cation in the CDR package include,
interalia, reduction of interest rate on loans with effect from new cut
off date, re-schedulement of repayment of loans and Cumulative
Redeemable Preference Shares (CRPS) and conversion of certain loan
amounts into Zero Coupon Premium Bonds (ZCPBs) . The said CDR package
also stipulates conditions to be complied with by the Company and
arrangement of additional infusion of working capital from existing or
new lenders.
(b) The Company has complied with most of the conditions as stipulated
in CDR package and Master Restructuring Agreement (MRA) has been signed
with the lenders. Pursuant to the modifi ed CDR package:
i) Interest to banks and financial institutions has been accounted for
at the rates specifi ed in the said package.
ii) The Cumulative Redeemable Preference Shares (CRPS) aggregating to
Rs. 805.00 million shall be redeemed at the rate of 25% and 75% of the
face value in the financial years ending 31st March 2018 and 31st
March, 2019, respectively and will carry the coupon rate of 9% from old
cut off date till new cut off date and 6.50% from new cut off date.
(Also refer Note no.13(d) below)
iii) The Company has issued 23,600,000 and 8,318,000 Zero Coupon
Premium Bonds (ZCPBs) of Rs.100/- each on 30th October,2004 and 8th
October, 2005 respectively in lieu of the part of term loans and
debentures from financial institutions and banks. ZCPBs are to be
redeemed in 48 monthly installments, from 30th April 2011 and ending
31st March 2015 on ballooning basis to ensure yield of 8.5% p.a. on
simple interest basis by way of premium payable in 36 monthly interest
free installments commencing from 30th April,2015 till 31st March,
2018.
iv) Secured and unsecured working capital loans from banks amounting to
Rs. 315.00 million and Rs. 76.41 million respectively have been
converted into working capital term loans to be repaid in 48 monthly
installments, on ballooning basis, from 30th April, 2011 and ending
31st March, 2015 to ensure yield of 8.5% p.a. on simple interest
basis..
v) The outstanding principal amount of secured and unsecured term loans
(after conversion into OFCDs and ZCPBs) amounting to Rs.1316.82 million
(Previous year Rs.1756.82 million) and Rs.33.50 million (Previous year
Rs.131.59 million) respectively from financial institutions and banks
have been rescheduled so as to be repaid on ballooning basis in monthly
installments commencing from 30th April, 2007 till 31st March, 2013.
The installments fallen due/repayable during the period eighteen month
amounted to Rs.107.78 million (Previous year Rs.89.20 million) and
Rs.3.35 million (Previous year Rs.6.71 million). Accordingly overdue
installments amounting to Rs.349.95 million and Rs.11.73 million have
not been paid for Secured and unsecured loans, respectively.
vi) Funded Interest Term Loan (FITL) amounting to Rs.889.68 million
(Previous year Rs.889.68 million) is repayable in twenty four monthly
installments commencing from 30th April, 2017 till 31st March, 2019 and
shall not carry any interest.
vii) The Company is required to open and operate Trust and Retention
Account and the rights, title and interest in all bank accounts have to
be assigned to the lenders by way of fi rst ranking security interest.
viii) The Company has to create securities as stipulated by the CDR
Empowered Group.
(c) Due to continued cash losses and very tight liquidity conditions,
the company could not meet its interest and repayment obligations
towards its lenders under CDR package its over due amount towards such
lenders as on 30th September, 2010 is Rs.841.10 million (Previous year
556.91 million) including interest Rs.479.42 million (Previous year
394.88 million). However the company is in continuous discussions with
lenders in respect of such default / possibility of further
restructuring / modifi cation in the CDR package in view of this, the
company does not expect withdrawal of any relief. Further, the company
has submitted fresh restructuring proposal to the lenders which is
under consideration
(d) Some of the Cumulative Redeemable Preference Share (CRPS)
shareholders have disputed the modifi ed terms of redemption and rate
of dividend as per CDR package on the ground that they have not agreed
to any of the restructuring granted by CDR empowered group and hence
original terms and conditions of 12% CRPS continues to be in force and
accordingly are insisting for redemption and dividend as per the
original terms of the issue of CRPS.
The management has requested the said CRPS shareholders to accord their
approval to revised package in view of the present financial position
of the company. One of the shareholders, has, however filed case
against the company for recovery which is being contested.
(e) The company is in process of reconciliation of balances with the
lenders i.e. financial institutions and banks. Adjustments, if any, on
account of interest/ principal will be made when the same are confi
rmed by them. The Company has submitted fresh restructuring proposal
which has already been recommended by the lenders to the empowered
group of CDR Cell.
(f) The Company has settled the dues of The Jammu & Kashmir Bank Ltd.
and HDFC Bank Ltd. ( Formerly Centurion Bank of Punjab Ltd. ) on One
Time Settlement (OTS) basis and the gain arising out of OTS amounting
to Rs.210.67 million and Rs.391.18 million respectively has been
accounted for under the head other income as remission of liability &
interest thereon. Further, Rs.86.85 million being the provision for
premium on Zero Coupon Premium Bond issued to the The Jammu & Kashmir
Bank Ltd. which was earlier adjusted from security premium account in
earlier year has been now reversed.
(g) The Company has its dues with Assets Reconstruction Company (India)
Ltd (ARCIL) on One time settlement (OTS) basis and most of the
commitments as per the OTS have been fulfi lled. In view of this,
provision of interest on loan from ARCIL has not been made for the
period from 1st July, 2010 to 30th September, 2010. The effect of the
settlement will be given in the accounts after completion of all
obligations.
9 The Board of Directors of the Company at their meeting held on 26th
March, 2010 has allotted 20,000,000 equity shares of Rs. 10/- each at
par to Asset Reconstruction Company (India) Limited on account of
conversion of part of their loan into equity shares in terms of Loan
Agreement dated 5th March, 2001 and letter dated 8th February, 2010
from ARCIL.
10 In terms of the modifi ed CDR package, Company has to pay interest
on term loans on ballooning basis over the period 2006 to 2013 at the
ballooning rates of interest from 2% to 15.5% p.a. The Company accounts
for interest at the rate it is required to pay during the respective
year in terms of the aforesaid package on monthly rests for this year,
in place of @ 8.50% p.a. i.e. on YTM basis. Had the interest been
provided for on YTM basis, the loss for the year would have been lower
by Rs.172.60 million and the accumulated debit balance in the profit
and Loss Account would have been higher by Rs.46.35 million.
11 Pursuant to the disinvestment by the Government of India, the
Company had acquired 1,110,000 equity shares of Rs.100/- each of HTL
Limited representing 74% of its equity capital at total consideration
of Rs. 550.00 million in terms of Shareholders Agreement dated
16.10.2001. The above consideration paid by the Company is subject to
post closing adjustments on account of difference in net worth of HTL
Limited as on 31.03.2001 and as on the date of purchase of shares in
terms of Share Purchase Agreement dated 16.10.2001.The Company has
submitted its claim on account of Closing Date Adjustment to the
Government in respect of such reduction in net assets of HTL Limited
which has not been settled by the Government. Due to this, the Company
has invoked the provisions of the Share Purchase Agreement for
settlement of dispute by Arbitration. The Honble Arbitral Tribunal has
since given the award in favour of the company on 10th October, 2007
upholding the claim of the company on account of the above to the
extent of Rs.550.00 million and interest from the date of award.
Since the Government of India has gone in appeal against the above
arbitral award which is yet to be decided by the Honble High Court, no
adjustment has been made in the accounts in respect of above award. It
shall be made as and when the appeal is decided finally.
12 The Company had made a payment of Rs.113.38 million to certain
cumulative preference shareholders as per contractual obligations in
the earlier years. The said amounts paid have been treated as
"advances" to be adjusted against future expected liability of dividend
on cumulative preference shares.
13 During the period the Company has paid Guarantee contract/obligation
amounting to Rs. 69.92 million. It includes Rs. 23.12 million on
account of compensation to its customers/ invocation of performance
bank guarantees due to non fulfillment of contractual obligations in
terms of work orders and Rs.46.80 million towards obligation payments (
as Corporate guarantor ) to the lenders of promoted companies against
their over dues.
14 Sundry debtors include debts outstanding for more than two years
amounting to Rs 1922.92 million. The Company is in continuous process
of working out different modalities of recovery for its remaining long
outstanding debts. Pending outcome of such exercise, an amount of
Rs.677.19 million (net of provision) has been written off during the
period, which is in opinion of the management is adequate.
15 During the year, Company has recognised the following amounts in the
financial statements as per Accounting Standard 15 (Revised)
"Employees benefits" issued by the ICAI :
a) Defi ned Contribution Plan
Contribution to Defi ned Contribution Plan, recognised are charged off
for the year/period are as under:
b) Defi ned Benefit Plan
The employees gratuity fund scheme managed by HDFC Standard Life
Insurance Company Limited a defi ned Benefit plan. The present value
of obligation is determined based on actuarial valuation using the
Projected Unit Credit Method, which recognises each period of service
as giving rise to additional unit of employee Benefit entitlement and
measures each unit separately to build up the fi nal obligation and the
obligation for leave encashment is recognised in the same manner as
gratuity.
15 To comply with the requirement of the Accounting Standard (AS-28) on
"Impairment of Assets" the management has appointed an outside agency
for conducting an exercise of identifying the assets that may have been
impaired, if any. Since the exercise is still in process, the effect of
diminution in value of assets due to impairment, if any shall be given
in the accounts upon such determination.
16 Balances of some of the sundry debtors, creditors, lenders ,loans
and advances are subject to confirmations from the respective parties
and consequential adjustments arising from reconciliation, if any. The
Management, however is of the view that there will be no material
adjustments in this regard.
17 As required by Accounting Standard 18 "Related Party Disclosures"
(i) Name of related parties and description of relationship:
Relationship Name of Related Party
(a) Subsidiaries: HTL Ltd.
Moneta Finance Pvt. Ltd.
HFCL Infotel Ltd. (Ceased w.e.f. 31st March, 2010)
Infotel Tower Infrastructure Private Ltd (Ceased w.e.f. 31st March,
2010)
(b) Associates: HFCL Bezeq Telecom Ltd
HFCL Dacom Infochek Ltd (HDIL)
HFCL Kongsung Telecom Ltd
HFCL Satellite Communications Ltd
Exicom Tele-systems Ltd.
Microwave Communications Ltd.
Westel Wireless Ltd
WPPL Ltd
Polixel Security Systems Pvt. Ltd.
(c) Key management personnel: Mr. Mahendra Nahata
Mr. Arvind Kharabanda
Note : Related party relationship is as identified by the Company and
relied upon by the auditors.
18 The figures of the current period are not comparable with those of
previous year as current period is for eighteen months as against
twelve months in previous year and in view of the amalgamation of SECPL
w.e.f 01.01.2010. Previous years figures have been
regrouped/reclassified wherever necessary and the figures have been
rounded off to the nearest rupee.