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Notes to Accounts of PNB Gilts Ltd.

Mar 31, 2015

1. SHARE CAPITAL

* Rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of capital:

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. Dividend distribution is for all equity shareholders who are eligible for dividend as on record date. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

* Shares reserved for issue under options and contracts/commitments for the sale of shares/disinvestment, including the terms and amounts: Nil (Prev. Year: Nil)

* For the period of five years immediately preceding the date as at which the Balance Sheet is prepared:

(a) Aggregate number and class of shares allotted as fully paid-up pursuant to contract(s) without payment being received in cash: Nil (Prev. Year: Nil)

(b) Aggregate number and class of shares allotted as fully paid-up by way of bonus shares: Nil

(Prev. Year: 45002534 equity shares of Rs. 10 each)

(c) Aggregate number and class of shares bought back : Nil (Prev. Year: Nil)

* Terms of any securities convertible into equity/preference shares issued along with the earliest date of conversion in descending order starting from the farthest such date : Nil (Prev. Year: Nil)

* Calls unpaid (showing aggregate value of calls unpaid by Directors and Officers): Nil (Prev. Year: Nil)

* Forfeited shares: Nil (Prev. Year: Nil)

Reportable Segments in respect of business operations of the company have been identified on the basis of varied risk and return profile attached to each business segment which is the primary reporting format, and which are in terms of Accounting Standard - 17 on Segment Reporting. The company does not have any geographical segments, as such there is no secondary reporting format.

2. RELATED PARTY INFORMATION

As per Para 9 of the Accounting Standard 18 on Related Party Disclosures, the Company, being a state controlled enterprise, is not required to make disclosures of related party relationships with other state controlled enterprises and transactions with such enterprises. Other information as per the Standard is as under:

* The overall supervision and control of the company vests with the Board of Directors.The Managing Director and Executive Director and CFO of the company, appointed by the Board of Directors, are working full time with the company.

* Out of the total Eight Directors on the Board of the company as at March 31, 2015, four are independent Directors. Only the Non-Executive Directors are being paid sitting fees for the Board / Committee Meetings. The sitting fees for attending the Board Meeting is Rs. 10000/- per meeting and for Committee Meeting sitting fee payable is Rs. 5000/- per meeting. During the year the Company has paid a sum of Rs. 11.52 lacs towards sitting fee, including service tax (Prev. Year Rs. 8.96 lacs).

* Other information in this regard is available in Corporate Governance Report and Board's report.

3. REAL ESTATE EXPOSURES

Exposure to Real Estate Sector (direct and indirect) is NIL both in current and Prev. Year (as it is not applicable to the company)

4. OTHERS

* Tax deducted at source on the interest, miscellaneous income and commission and fees during the financial year 2014-15, amounted to Rs. 322.42 lacs (Prev. Year Rs. 287.23 lacs).

* The Company does not have any foreign currency transactions whether by way of imports, exports or any expenditure. Therefore, no expenditure has been incurred in foreign currency in the current year as well as in the Prev. Year.

* Being a Level-1 enterprise, all the accounting standards are applicable to the company. However on the basis of operations carried out by the Company, AS-7, AS-11, AS-12, AS-14, AS-16, AS-19, AS-23, AS-24, AS-25 and AS-27 do not apply.

* There are no impairment losses. Therefore, the company has not accounted for any impairment losses.

* No expenditure on research and development has been incurred by the company.

* Provisions to the extent known and reasonable have been provided in the books of accounts.

* There are no contingent liabilities.

* There are no trade receivables as on March 31, 2015and also as on March 31,2014.

* Figures for the Prev. Year have been regrouped and rearranged wherever considered necessary, in order to make them comparable with those of the current period.


Mar 31, 2014

1. A sum of Rs. 1227.64 lacs (20% of Profit After Tax) has been transferred to Statutory Reserve Fund as per RBI Guidelines.

2. Net Profit (after tax) through sale of securities from HTM category amounting Rs. 1183.62 lacs has been transferred to Capital Reserve Account as per RBI guidelines. The same will be utilized as per the provisions of the Companies Act, 1956

3. The Board of Directors, in its meeting held on January 9, 2003, had decided to build up Market Fluctuation Reserve over a period of time with the cap equal to paid up capital of the company. At the time of approval of annual accounts each year, the Board may decide the quantum of amount to be transferred to this Reserve, if necessary. For the financial year 2013-14, Board of Directors had decided not to appropriate any amount to this reserve and the balance outstanding as on March 31, 2014 in this reserve is Rs. 6300 lacs

4. The Company has proposed a final dividend of Rs. 0.90 per share, subject to approval of shareholders in Annual General Meeting amounting to Rs. 1620.09 lacs. Accordingly, a provision of Dividend Distribution Tax of Rs. 275.33 lacs has been made @ 15 per cent plus surcharge @ 10 per cent plus Education Cess @ 2 per cent and Secondary and Higher Education Cess @ 1 per cent.

5. Net Owned Funds (after deducting Deferred Tax and Intangible Assets) of the company stands at Rs. 66253.18 lacs as against the minimum stipulated capital of Rs. 25000.00 lacs. Return on Net Worth for the year 2013-14 stands at 9.57 per cent.

6. Capital Adequacy Ratios as on June 30, 2013, September 30, 2013, December 31, 2013 and March 31, 2014 were 46.47 per cent, 53.84 per cent, 39.89 per cent and 49.14 per cent respectively as against RBI stipulation of 15 percent.

7. During the year, Net Average and Peak borrowings in Call Money amounted to Rs. 84573.97 lacs and Rs. 179914.00 lacs respectively. (Prev. Year Net Average and Peak borrowings – Rs. 72192.00 lacs and Rs.161505.00 lacs respectively)

8. For the year, average and peak leverage ratio stands at 2.60 and 6.54 times respectively (Prev. Year average and peak stands at 3.87 and 5.56 times respectively)

9. Govt. Securities pledged for availing LAF/Term Repo : Face Value Rs. 90480.00 lacs, Book Value Rs. 89661.82 lacs (Prev. Year : Face Value Rs. 68300.00 and Book value Rs. 67051.51 lacs).

10. Govt. Securities pledged for availing CBLO borrowing : Face Value Rs. 54900.00 lacs, Book Value Rs. 54369.66 lacs (Prev. Year : Face Value Rs. 43200.00 lacs and Book Value Rs. 42204.39 lacs).

11. Govt. Securities pledged for availing RBI Refinance : Face Value Rs. 33007.00 lacs, Book Value Rs. 32604.43 lacs (Prev. Year : Face Value Rs. 35440.00 and Book Value Rs. 34394.06 lacs).

The securities mentioned in (i) ,(ii) and (iii) above were not available for trading as on March 31, 2014.

12 - RELATED PARTY INFORMATION

As per Para 9 of the accounting Standard 18 on Related Party Disclosures, the company, being a state controlled enterprise, is not required to make disclosures of related party relationships with other state controlled enterprises and transactions with such enterprises. Other information as per the Standard is as under:

The overall supervision and control of the company vests with the Board of Directors. The Managing Director of the company, appointed by the Board of Directors, is working full time with the company.

Out of the total Seven Directors on the Board of the company as at March 31, 2014, four are independent Directors. Only the Non-Executive Directors are being paid sitting fees for the Board / Committee Meetings. The sitting fees for attending the Board Meeting is Rs. 10000/- per meeting and for Committee Meeting sitting fee payable is Rs. 5000/- per meeting. During the year the company has paid a sum of Rs. 8.96 lacs towards sitting fee, including service tax (Prev. Year Rs. 9.93 lacs)


Mar 31, 2013

- A sum of Rs. 1224.92 lacs (20% of Profit After Tax) has been transferred to Statutory Reserve Fund as per RBI Guidelines.

- Net Profit (after tax) through sale of securities from HTM category amounting Rs. 1106.09 lacs has been transferred to Capital Reserve Account as per RBI guidelines. The same will be utilized as per the provisions of the Companies Act, 1956.

- The Board of Directors, in its meeting held on January 9, 2003, had decided to build up Market Fluctuation Reserve over a period of time with the cap equal to paid up capital of the Company. At the time of adoption of annual accounts each year, the Board may decide the quantum of amount to be transferred to this Reserve, if necessary. For the FY 2012-13, Board of Directors had decided not to appropriate any amount to this reserve and the balance outstanding as on March 31, 2013 in this reserve is Rs. 6300 lacs.

- The Company has proposed a final dividend of Re 1.00 per share, subject to approval of shareholders in Annual General Meeting amounting to Rs. 1350.08 lacs. Accordingly, a provision of Dividend Distribution Tax of Rs. 229.44 lacs has been made @ 15 per cent plus surcharge @ 10 per cent plus Education Cess @ 2 per cent and Secondary and Higher Education Cess @ 1 per cent.

- Net Owned Funds (after deducting Deferred Tax and Intangible Assets) of the Company stands at Rs. 62008.28 lacs as against the minimum stipulated capital of Rs. 25000.00 lacs. Return on networth for the year 2012-13 stands at 10.25 per cent.

- Capital Adequacy Ratios as on June 30, 2012, September 30, 2012, December 31, 2012 and March 31, 2013 were 52.32 per cent, 41.61 per cent, 35.88 per cent and 42.34 per cent respectively as against RBI stipulation of 15 percent.

- Market Value of the above stock as on March 31, 2013 was Rs.18259.36 lacs (Prev. Year: Rs. 16769.22 Lacs). For basis of valuation, refer to note 1.5b.

- As per the RBI Circular, the Company had Govt. securities of Rs. 17367.10 lacs Face Value (Book Value - Rs. 17453.68 lacs) in Held to Maturity (HTM) category as on March 31, 2012. During the current year, amount of Rs.121755.62 (Face Value) was classified to HTM category, by subscribing from the primary market (Prev. Year: Rs. 12119.10 lacs) and an amount of Rs. 10452.90 lacs (Face Value) has been transferred to HTM category (Prev. Year: Rs. 8905.30 lacs). Securities amounting to Rs. 118977.80 lacs (Face Value) were sold directly from the HTM category (Prev. Year: Rs. 16486.60 lacs) and the Company earned a gross profit of Rs. 1637.33 lacs (Prev. Year: Rs. 59.89 lacs). Balance after tax amounting to Rs. 1106.09 lacs has been transferred to Capital Reserve Account in accordance with RBI guidelines (Prev. Year: Rs. 40.46 lacs). An amount of Rs. 12842.20 lacs (Face Value) has been transferred from HTM category to trading category (Prev. Year: Rs. NIL). Further, an amount of Rs. 41.85 lacs is amortised by Straight line basis on the securities (Prev. Year: Rs. 12.20 lacs). The outstanding under HTM category as on March 31, 2013 is Rs. 17755.62 lacs Face Value (Book Value Rs. 18229.58 lacs).

- An amount of Rs. 1000 lacs was lent in Call Money to Mahavpura Mercantile Co-operative Bank Ltd. (MMCBL) in March 2001, which became over due as on March 31, 2001. We have been informed by MMCBL that the Government of India (Ministry of Agriculture, Department of Agriculture and Co-operation, New Delhi), in consultation with RBI, has formed Reconstruction Scheme and the amount would be paid accordingly. However, the repayment was not done by them as per the scheme and vide Government''s notifications instructed that all payments by bank including installment of repayment due in August 2007, August 2008 and August 2009 (totaling to Rs. 761.88 lacs against which Rs. 761.88 lacs provision was outstanding) and payments of interest and the deposit amount are deferred till August 2011. Now, RBI has cancelled the license of MMCBL to carry on banking business in India and Liquidator has been appointed. We have lodged the Claim with the Liquidator as per the format advertised by them in the news papers, and awaiting response from them.

* The aggregate carrying value and market value as at March 31, 2013 is Rs. 325175.92 lacs and Rs. 325175.92 lacs (Prev. Year: Rs. 248694.67 lacs and Rs. 248694.67 lacs) respectively.

(i) Govt. Securities pledged for availing LAF : Face Value - Rs. 68300.00 lacs, Book Value - Rs.67051.51 lacs (Prev. Year: Face Value - Rs. 45852.90 and Book Value - Rs. 46024.21 lacs).

(ii) Govt. Securities pledged for availing CBLO borrowing : Face Value - Rs. 43200.00 lacs, Book Value - Rs. 42204.39 lacs (Prev. Year: Face Value - Rs. 29600.00 lacs and Book value - Rs. 28644.04 lacs) .

(iii) Govt. Securities pledged for availing RBI Refinance : Face Value Rs - 35440.00 lacs, Book Value - Rs.34394.06 lacs (Prev. Year: Face Value - Rs. 36269.60 and Book Value - Rs. 36567.19 lacs).

The securities mentioned in (i) ,(ii) and (iii) above were not available for trading as on March 31, 2013.

NOTE - 1.1 - SEGMENT INFORMATION

Reportable Segments in respect of business operations of the Company have been identified on the basis of varied risk and return profile attached to each business segment which is the primary reporting format, and which are in terms of Accounting Standard - 17 on Segment Reporting. The Company does not have any geographical segments, as such there is no secondary reporting format.

NOTE - 1.2 RELATED PARTY INFORMATION

As per Para 9 of the accounting Standard 18 on Related Party Disclosures, the Company, being a state controlled enterprise, is not required to make disclosures of related party relationships with other state controlled enterprises and transactions with such enterprises. Other information as per the Standard is as under:

- The overall supervision and control of the Company vests with the Board of Directors. The Managing Director of the Company, appointed by the Board of Directors, is working full time with the Company.

- Out of the total Seven Directors on the Board of the Company as at March 31, 2013, four are independent Directors. Only the Non-Executive Directors are being paid sitting fees for the Board / Committee Meetings. The sitting fees for attending the Board Meeting is Rs. 10000/- per meeting and for Committee Meeting sitting fee payable is Rs. 5000/- per meeting. During the year, the Company has paid a sum of Rs. 9.93 lacs towards sitting fee, including applicable service tax (Prev. Year : Rs. 8.35 lacs)

NOTE - 1.3 ISSUER COMPOSITION OF INVESTEMENTS IN NON-GOVERNMENT SECURITIES

As on March 31, 2013, the total stock of Rs. 325175.92 lacs comprises of Government Securities (including Treasury Bills) of Rs. 239819.40 lacs (Prev. Year : Rs. 248694.67 lacs ), Equity Instruments Rs. 19.97 lacs (Prev. Year : Rs. 623.98 lacs), Money Market instruments Rs. 59055.97 lacs (Prev. Year : Rs. 4547.23 lacs) and Corporate Bonds and Debentures Rs. 26280.58 lacs (Prev. Year : Rs. 15249.72 lacs). The portfolio of Non-Government Securities comprises of Rs. 25901.38 lacs (Book value) of AAA rated), Rs. 379.20 lacs (Book Value) of AA rated bonds and Rs. 59055.97 lacs (Book Value) of A1 rated Bank CDs. (Prev. Year : Rs. 14466.90 lacs of AAA rated, Rs. 829.20 lacs of AA rated and Rs. 4547.23 lacs of A1 rated Bank CDs).

NOTE - 1.4 REAL ESTATE EXPOSURES

Exposure to Real Estate Sector (direct and indirect) is NIL both in current and previous year (as it is not applicable to the Company).

NOTE - 1.5 CESS PROVISION

In the absence of any government notification, the Company has not provided for cess envisaged in terms with the Section 441A (1) of the Companies Act 1956.

NOTE - 1.6 OTHERS

Tax deducted at source on the interest, miscellaneous income and commission and fees during the financial year 2012-13, amounted to Rs. 142.23 lacs (Prev. Year : Rs. 88.36 lacs).

Figures for the previous year have been regrouped and rearranged wherever considered necessary, in order to make them comparable with those of the current period.


Mar 31, 2012

- A sum of Rs. 421.05 lacs (20% of Profit After Tax) has been transferred to Statutory Reserve Fund as per RBI Guidelines.

- Net Profit (after tax) through sale of securities from HTM amounting to Rs. 40.46 lacs has been transferred to Capital Reserve Account as per RBI guidelines. The same will be utilised as per the provisions of the Companies Act, 1956.

- The Board of Directors, in its meeting held on January 9, 2003, had decided to build up Market Fluctuation Reserve over a period of time with the cap equal to paid up capital of the company. At the time of adoption of annual accounts each year, the Board may decide the quantum of amount to be transferred to this Reserve, if necessary. For the FY 2011-12, Board of Directors had decided not to appropriate any amount to this reserve and the balance outstanding as on March 31, 2012 in this reserve is Rs. 6300 lacs.

- The company has proposed a final dividend of Re. 1.00 per share, subject to approval of shareholders in Annual General Meeting, amounting to Rs. 1350.08 lacs. Accordingly, a provision of Dividend Distribution Tax of Rs. 219.01 lacs has been made @ 15 per cent plus surcharge @ 5.00 per cent plus Education Cess @ 2 per cent and Secondary Higher Education Cess @ 1 per cent.

- Net Owned Funds (after deducting Deferred Tax Assets and Intangible Assets) of the company stands at Rs. 57469.10 lacs as against the minimum stipulated capital of Rs. 25000.00 lacs. Return on net worth for the year 2011-12 stands at 3.68 per cent.

- Capital Adequacy Ratios as on June 30, 2011, September 30, 2011, December 31, 2011 and March 31, 2012 were 95.84 per cent, 79.76 per cent, 73.96 per cent and 74.72 per cent respectively as against RBI stipulation of 15 per cent.

- Market Value of the above stock as on March 31, 2012 is Rs.16769.22 lacs. As such, the above asset is overstated by Rs. 684.46 lacs. For basis of valuation, refer note 1.5 b.

- The company had categorized an amount of Rs. 12829.30 lacs (Book Value - Rs. 12898.88 lacs) of Government Securities in Held To Maturity (HTM) category as on March 31, 2011. During the current year, an amount of Rs. 21024.40 lacs (Book value - Rs. 20369.69 lacs) was transferred to HTM category, by subscribing from the primary market. Securities amounting to Rs. 16486.60 lacs (Book Value - Rs. 15802.69 lacs) were sold directly from the HTM category and the company earned a gross profit of Rs. 59.89 lacs. Balance after tax amounting to Rs. 40.46 lacs was transferred to Capital Reserve Account in accordance with the RBI guidelines. Further, an amount of Rs.12.20 lacs was amortized by Straight- line basis on the securities. The outstanding under HTM category as on March 31, 2012 is Rs. 17453.68 lacs (Face value - Rs. 17367.10 lacs).

- An amount of Rs. 1000 lacs was lent in Call Money to Madhavpura Mercantile Co-operative Bank Ltd. (MMCBL) in March 2001, which became overdue as on March 31, 2001. We have been informed by MMCBL that the Govt. of India (Ministry of Agriculture, Department of Agriculture & Co-operation, New Delhi) in consultation with RBI, has formed Reconstruction Scheme and the amount would be repaid accordingly. However, the repayment was not made by them as per the scheme and vide Government's notifications instructed that all payments by bank including installment of repayment due in August 2007, August 2008, and August 2009 (totalling to Rs. 761.88 lacs against which Rs. 761.88 lacs provision was outstanding) and payments of interest to banks on their deposits are deferred till August 2011.

The Govt. of India made a reference to RBI for extending the validity of the Reconstruction Scheme. RBI has not extended

- For basis of valuation, please refer accounting policy (note 1.5.a). Details of securities are given in Annexure 2.

- Stock in trade include hedged securities (Book Value - Rs. 33640.80 lacs and the market value of the same is Rs. 33556.20 lacs).

- Provision for Diminution of securities includes Rs. 84.60 lacs for Hedged stock securities and Rs. 50.30 lacs MTM gain on the designated Swap contracts.

- The aggregate carrying value and market value as at March 31, 2012 is Rs. 248694.67 lacs and Rs. 248694.67 lacs respectively (Prev Year- Rs. 118131.15 lacs and Rs.118131.15 lacs).

*(i) Govt. Securities pledged for availing LAF - Face Value Rs. 45852.90 lacs - Book Value Rs.46024.21 lacs.

(ii) Govt. Securities pledged for availing CBLO borrowing - Face Value Rs. 29600 lacs - Book Value Rs. 28644.04 lacs.

(iii) Govt. Securities pledged for availing RBI Refinance - Face Value Rs. 36269.60 lacs - Book Value Rs. 36567.19 lacs.

The securities mentioned in (i), (ii) and (iii) above were not available for trading as on March 31, 2012.

- Provision for Diminution of Rs 1584.35 lacs on Government Securities (including the hedging securities), Rs.52.28 lacs on Treasury Bills, Rs.14.81 lacs on Equity investments and Rs. 46.37 lacs on Corporate Bonds as on 31.03.2012 has been provided for and shown in segment liabilities (Prev Year Rs. 1014.02 lacs on Government Securities, Rs. 9.42 lacs on Treasury Bills, Rs. 7.19 lacs on Equity Investments and Rs. NIL on Corporate Bonds and Debentures).

- Fixed deposits placed by the company are funded out of the net owned funds and thus have not been apportioned any costs. Consequently, the total allocable expenses have been allocated to all other segments. Figures for the previous year have been regrouped and rearranged accordingly.

NOTE -1 RELATED PARTY INFORMATION

As per Para 9 of the Accounting Standard 18 on Related Party Disclosures, the company, being a state controlled enterprise, is not required to make disclosures of related party relationships with other state controlled enterprises and transactions with such enterprises. Other information as per the Standard is as under:

- The overall supervision and control of the company vests with the Board of Directors. The Managing Director of the company, appointed by the Board of Directors, is working full time with the company.

- Out of a total of eight Directors on the Board of the company as at March 31, 2012, four are Independent Directors. Only the Non-Executive Directors are being paid sitting fees for the Board / Committee Meetings. The Sitting fees for attending the Board Meeting was raised from Rs. 5000/- to Rs. 10000/- per meeting w.e.f. June 25, 2011 and for Committee Meeting sitting fee payable is Rs. 5000/- per meeting. During the year the company has paid a sum of Rs. 8.35 lacs towards sitting fee.

NOTE - 2.ISSUER COMPOSITION OF INVESTMENTS IN NON-GOVERNMENT SECURITIES

As on March 31, 2012, the total stock of Rs. 248694.67 lacs comprise of Government securities (including Treasury Bills) of Rs. 228273.74 lacs, Rs. 623.98 lacs of Equity instruments, Rs. 4547.23 lacs of money market instruments and Rs. 15249.72 lacs of Corporate Bonds & Debentures. The portfolio of Corporate Bonds & Debentures comprises Rs.14466.90 lacs (Book value) of AAA rated, Rs. 829.20 lacs (Book value) of AA rated bonds and Rs. 4547.23 lacs (Book value) of A1 rated Bank CDs.

NOTE - 3. OTHERS

Tax deducted at source on interest, miscellaneous income and commission and fees during the FY 2011-12 amounted to Rs. 88.36 lacs (Prev. Year : Rs 98.07 lacs)

Figures for the previous year have been regrouped and rearranged wherever considered necessary, in order to make them comparable with those of the current period.

 
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