Mar 31, 2018
Note - 1
General Information
Reliance Naval and Engineering Limited (âRNELâ or âthe Companyâ) is a company limited by shares, incorporated and domiciled in India. The registered office of the company is located at Pipavav Port, Post Ucchaya, Via- Rajula, District Amreli (Gujarat) and the Company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The name of the Company got changed from Reliance Defence and Engineering Limited during the current year and fresh Certificate of Incorporation was issued by the Ministry of Corporate Affairs (MCA), Government of India on September 6, 2017. The Company is mainly engaged in the construction of vessels, repairs and refits of ships and rigs and heavy engineering. RNEL has a large shipbuilding/repair infrastructure in India including the largest Dry Dock in the world. The Company is the first private sector company in India to obtain the licence and contract to build Naval Offshore Patrol Vessels(NOPVs) for Indian Navy. The Shipyard has only modular shipbuilding facility in India with capacity to build fully fabricated and outfitted blocks. The fabrication facility spread over
2.1 million sq ft has annual capacity of 144,000 tons/year. The shipyard has pre-erection berth of 980 meter length and 40 meters width and two Goliath cranes with combined lifting capacity of 1200 tonnes, besides outfitting berth length of 780 meters.
2.2 During the year, the Company has capitalised borrowing cost aggregating to Rs.38,782.70 lacs (Previous year: Rs.33,618.79 lacs). The average rate used to determine the amount of borrowing cost is 10.95%. Additions during the year in the Computer Software include interest and financial charges of Rs.719.61 lacs (Previous Year: Rs. NIL).
2.3 In accordance with the Ind-AS 36 on âImpairment of Assetsâ, the Management has during the year carried out an exercise of identifying the assets that would have been impaired in respect of each cash generating unit. On the basis of this review carried out by the Management, there was no impairment loss on Fixed Assets during the year.
3.1 Equity Shares of E Complex Private Limited are pledged with Lenders for loan facilities availed by the Company
7.1 Reconciliation of tax expenses and the accounting profit multiplied by domestic tax rate:
Since the Company has incurred loss during the year ended March 31, 2018 and previous year, hence no tax is payable for these years as per provisions of Income Tax Act, 1961, the calculation of effective tax rate is not relevant and hence not given.
4.2 The Company has recognised deferred tax assets on carry forward business losses as sufficient future taxable income will be available against which deferred tax assets can be realised considering its present order book and anticipated orders and opportunities in the defence sector as convincing evidences.
5.1 The amount paid as MAT is allowed to be carried forward for being set off against the future tax liabilities computed in accordance with the provisions of the Income Tax Act, 1961 (âthe Actâ), other than section 115JB, in next fifteen years. Based on the future projection of the performances, the Company is expected to pay the Income Tax as per the applicable provisions, other than under section 115JB, of the Act. Accordingly, as advised in Guidance Note on âAccounting for credit available in respect of Minimum Alternate Tax under the Income Tax Act, 1961â issued by The Institute of Chartered Accountants of India (the ICAI),the excess of tax payable under section 115JB of the Act over tax payable as per the provisions other than section 115JB of the Act has been considered as MAT credit entitlement.
6.1 Refer Note No. 1(g)(VI) for basis of valuation.
4.2 All the Inventories of the Company are either mortagaged or hyphothecated against the secured borrowings of the Company as detailed in note no. 17 and 20 to the financial statements.
7.1 Trade receivables are non - interest bearing and receivable in normal operating cycle
All the above Loans are given for meeting working capital requirements of the Subsidiary Companies
b) Loans to employee and reimbursement of expenses are not considered for this clause.
c) None of the subsidiary Companies has invested in shares of the Company.
7.2 Terms and Rights attached to Equity Shares
The Company has only one class of Equity Share having par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation of the Company, the equity share holders will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amount. The distribution will be in proportionate to the number of equity shares held by the shareholders.
Capital Reserve: This Reserve was created at the time of forfeiture of amounts received against convertible share warrants in the financial year 2011 - 12. It shall be utilised in accordance with the provisions of the Companies Act, 2013 (the Act), however, not available for distribution of dividend.
Securities Premium Account: This Reserve was created when shares were issued at premium. It shall be utilised in accordance with the provisions of the Act.
Other Reserves: Other Reserve was created pursuant to first time adoption of Ind-AS as at April 01, 2015. It shall be utilised in accordance with the provisions of the Act, however, not available for distribution of dividend.
8.1 Compulsorily Redeemable Preference Shares
i) The Company has alloted 1,384,994 Equity Shares having face value of Rs.10 each per share at a premium of Rs.49.35 per share and 42,245,764 Compulsorily Redeemable Preference Shares (CRPS) having face value of Rs.10 each per share to one of its lenders against partial conversion of its outstanding debt. The CRPS are redeemable in 65 quarterly structured instalments commencing from March 2019 to March 2035. Annual dividend of 0.10% p.a. will be payable per CRPS on a cumulative basis.
ii) As at March 31, 2018 all the preference shares are held by HDFC Limited (March 31, 2017: NIL)
iii) Reconciliation of Preference Shares outstanding at the beginning and at the end of the year
8.2 Non Convertible Debentures (NCD)
In terms of MRA entered with certain lenders of the Company for Debt Restructuring, each of those lenders has a right of recompense as per extent guideline of CDR for reliefs and sacrifice extended by them. During the year the Company has paid one time cost towards right of recompense payable through issuance of Non Convertible Debentures. Accordingly Rs.16,239.65 lacs was charged to Statement of Profit or Loss and shown as âExceptional Itemsâ for the year and Rs.7,989.09 lacs has been capitalised as borrowing cost. Other terms and conditions are given below:
i These NCDs having coupon rate of 9.50% and Face value of Rs.100 each are repayable in 49 quarterly structured instalments commencing from March 2019 and ending on March 2031.
ii The NCDs are to be secured by way of first pari passu charge and mortgage on all the immovable properties; hypothecation of all movable properties of the Company and on all the intangible assets of the Company; both present and future, second pari-passu charge on all current assets and first pari passu charge by way of mortgage over leasehold rights on 124.1 199 hectares of land belonging to E Complex Private Limited.
iii The Company was required to provide Debenture Redemption Reserve (DRR) of Rs.363.85 lacs upto March 31, 2018 (Previous Year: NIL) in terms of the Trust Deed executed and the provisions of the Companies Act 2013. In the absence of profits available, no provision for DRR is made in the books of account as at March 31, 2018. The requisite provisions will be made out of the profits available in the future years.
8.3 The Company had availed various secured financial facilities from the banks and financial institutions (âThe Lendersâ). The Lenders led by IDBI Bank had, through Joint Lendersâ Forum (ILF), referred the Debt Restructuring Scheme (âRestructuring Schemeâ) of the Company to Corporate Debt Restructuring Cell (âCDR Cellâ). The Company and the Lenders who are members of the CDR forum (âCDR Lendersâ) have executed Master Restructuring Agreement (âMRAâ) dated March 30, 2015, by virtue of which the credit facilities extended by the CDR Lenders stand restructured and these restructured facilities are governed by the provisions stipulated in the MRA.
8.4 Secured Term loans as referred to above and Rs.522,518.30 lacs being part of current maturities of long term debt in note no. 22 are secured as under:
i) first pari passu charge and mortgage on all the immovable properties; hypothecation of all movable properties of the Company and on all the intangible assets of the Company; both present and future.
ii) Corporate Guarantee of SKIL Infrastructure Limited and personal guarantee of some of the erstwhile directors of the Company.
8.5 During the year 1 1,64,05,500 equity shares of the Company held by SKIL Infrastructure Limited (SKIL); 2,23,49,494 equity shares of the Company held by Grevek Investments and Finance Pvt Ltd (Grevek) and 1 equity share of the Company held by SKIL Shipyard Holdings Private Limited (SSHPL), which were pledged as security to the CDR lenders have been invoked by the lenders. Pending adjustment of value of above shares by the lenders aganist the amount borrowed by the Company, no accounting effect has been given in the Financial Statements as at March 31, 2018.
8.6 Secured Term loans of Rs.587,867.28 lacs are further secured as:
i) first pari passu charge by way of mortgage over leasehold rights on 124.1 199 hectares of land belonging to E Complex Private Limited and on sub-leasehold rights on 10.5 hectares of land belonging to Gujarat Maritime Board and second pari passu charge by way of hypothecation of all the current assets (including all receivables and inventories), both present and future.
ii) right to convert entire part of defaulted principal and interest into Equity Shares upon occurrence of events of default in the manner provided in the MRA.
iii) by way of Pledge of entire shareholding i.e. 2,17,09,327 Equity Shares of E Complex Private Limited held by the Company.
8.7 Repayment Terms
(i) Secured Rupee Term Loan of Rs.510,937.89 lacs are repayable in 28 quarterly structured instalments starting from September 30, 2017 to June 30, 2024, Rs.26,685.75 lacs are repayable in 24 quarterly structured instalments starting from June 30, 2019 to March 31, 2025, Rs.17,760.00 lacs in 28 quarterly structured instalments starting from September 30, 2017 to June 30, 2024, Rs.8,403 lacs in 40 quarterly structured instalments starting from August 31, 2005 to February 28, 2017, Rs.1 1,253.24 lacs in 61 quarterly structured instalments starting from March 31, 2019 to March 31, 2034 and Rs.530.19 lacs on May 25, 201 7 by way of bullet repayment.
(ii) Secured Foreign Currency Term Loan as referred above carry an interest rate of 2.78% and repayble in 41 quarterly structured instalments starting from March 31, 2019 to March 31, 2029.
8.8 Vehicle Loans referred to above including Rs.42.70 lacs being part of current maturities of long term debts in note no. 22 are secured by the Hypothecation of the specific vehicles financed. The loans are repayable in monthly equated instalments (including interest) as per repayment schedule starting from July 01, 2012 to March 15, 2021.
8.9 During the year the lenders have recalled all the loans and have invoked 14.51 Crores equity shares of the Company pledged with lenders and guarantees available with them. As at March 31, 2018, the Company has overdue of Rs.5,21,971.68 lacs included in current maturities of long term debts in note no 22 (Previous Year: Rs.8,403.00 lacs) and Rs.34,429.40 lacs included in interest accrued and due in note no 22(Previous Year: Rs.1 1,060.24 lacs) towards the principal and interest respectively as detailed below:
9.1 The above working capital loans from banks are secured by way of:
i) First pari passu charge by way of hypothecation of all the current assets (including all receivables and inventories); both present and future.
ii) Second pari passu charge by way of mortgage over leasehold rights on 1 24.1 1 99 hectares of land belonging to E Complex Private Limited and on sub-leasehold rights on 10.5 hectares of land belonging to Gujarat Maritime Board.
iii) Second pari passu charge and mortgage on all the immovable properties and hypothecation of all movable properties of the Company; both present and future.
9.2 The above working capital loans from banks are further secured by :
i) Corporate Guarantee of SKIL Infrastructure Limited and personal guarantee of some of the erstwhile directors of the Company.
ii) Pledge of entire shareholding i.e. 2,17,09,327 equity shares of E Complex Private Limited held by the Company.
10.1 Micro and Small Enterprises under the Micro and Small Enterprises Development Act, 2006 have been determined based on the information available with the Company and the required disclosures are given below:
10.2 All trade payables are non interest bearing and payable or settled with in normal operating cycle of the Company.
11.1 The Company has recognised liabilities based on substantial degree of estimation for provision for liquidated damages, warranty claims, estimated cost over contract revenue on shipbuilding contracts and costs estimated for revenue recognised as detailed below. Actual outflow is expected in the subsequent financial years.
Defined Benefit Plan
The Employees Gratuity Fund Scheme, which is a defined benefit plan, is managed by a trust maintained with Life Insurance Corporation of India (LIC). The Company has made contribution to the above mentioned trust upto the financial year ended March 31, 2009 and thereafter no contributions have been made. The Employees Leave Encashment Scheme which is a defined benefit plan is unfunded.
The present value of the obligation is determined based on actuarial valuation using Projected Units Credit Method, which recognizes each period of service as giving rise to additional units of employees benefit entitlement and measures each unit separately to buildup the final obligation.
The estimates of rate of increase in salary are considered in actuarial valuation, taking into account, inflation, seniority, promotion, attrition and other relevant factors including supply and demand in the employment market. The above information is certified by Actuary.
In the absence of detailed information regarding plan assets which is funded with Life Insurance Corporation of India, the composition of each major category of plan assets, the percentage and amount for each category of the fair value of plan assets has not been disclosed.
The above sensitivity analysis is based on an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. In presenting the above sensitivity analysis, the present value of defined obligation has been calculated using the projected unit credit method at the end of reporting period, which is the same as that applied in calculating the defined obligation liability recognized in the Balance Sheet.
vii) Risk Exposure :
1 Investment Risk: The Present value of the defined benefit plan laibility is calculated using a discount rate which is determined by refrence to market yeilds at the end of reporting period on government bonds
2 Interest Risk: A decrease in the bond interest rate will increase the plan liability: however, this will be partially offset by an increase in th return on the plan debt investment.
3 Liquidity Risk: The present value of the defined plan liability is calculated by refrence to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability
4 Salary Risk: The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an incraese in the salary of the plan participants will increase the planâs liability.
viii) Details of Asset-Liability Matching Strategy :- Gratuity benefits liabilities of the company are funded. There are no minimum funding requirements for a Gratuity benefits plan in India and there is no compulsion on the part of the Company to fully or partially pre-fund the liabilities under the Plan. The trustees of the plan have outsourced the investment management of the fund to an insurance company. The insurance company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it may not be possible to explicitly follow an asset-liability matching strategy to manage risk actively in a conventional fund.
The estimates of rate of increase in salary are considered in actuarial valuation, taking into account, inflation, seniority, promotion, attrition and other relevant factors including supply and demand in the employment market. The above information is certified by Actuary.
12.1 The Company had issued a corporate guarantee for loan availed by Reliance Marine and Offshore Limited (âRMOLâ), a wholly owned subsidiary from IFCI Limited (âIFCIâ). During the year, IFCI has issued a loan recall notice and subsequently applied for the insolvency petition under the Insolvency and Bankruptcy Code 2016 due to continued default in repayment of principal and interest against RMOL and the Company. In responce to the recall notice, the company and RMOL has requested to the lender to liquidate the securities available with them and has offered to settle the balance amount through promotersâ support. The petition filed by the lender is not yet admitted by the NCLT. Accordingly, no provision against the above corporate guarantee is considered necessary at this stage.
Note - 13
The Company has issued a Bond cum legal undertaking for Rs. 64,400 lacs (Previous Year: Rs. 64,400 lacs) in favour of President of India acting through Development Commissioner of Kandla Special Economic Zone for setting up a SEZ unit for availing exemption from payment of duties, taxes or cess or drawback and concession etc, a General Bond in favour of the President of India for a sum of Rs. 15,300 lacs (Previous Year : Rs. 15,300 lacs) as Security for compliance of applicable provisions of the Customs Act, 1962 and the Excise Act, 1944 for EOU unit, a bond cum legal undertaking for Rs. 1,350.00 lacs (Previous Year: 1,350.00 lacs) in favour of President of India acting through D.R.I. Ahmedabad, Zonal Unit as security of compliance under Central Excise Act, 1944.
Note - 14
The Company has received Twenty Three show cause notices in its 100% EOU unit from the Office of the Commissioner of Central Excise, Bhavnagar and Directorate of Revenue Intelligence which mainly relates alleged wrong availment of Cenvat/Customs Duty/Service Tax Credit on inputs/services used for Construction of Dry Dock and Goliath Cranes and non-submission of original evidences/documents and some procedural non-compliances. The Company does not foresee any losses on this account.
Note - 15 Going Concern
The Company primarily is in the business of Ship Building and Ship Construction having state of the art infrastructure facilities including Dry Dock complex, Goliath Cranes, Fabrication facilities, Blasting and Painting Cell, etc, and is capable of undertaking complex and large size/volume of fabrication for varied industries.
The overall infrastructure facility required currently available with the company are nearly new and have long useful life. For last few years there is a downtrend in the shipbuilding industry globally. In defence sector also the process of awarding contract has been deferred in respect of many large orders for variety of reasons.
All these have resulted in temporary financial constraints on the Company, losses in the operations, erosion of net worth and calling back of loans by the secured lenders. Therefore Company has approached its lenders for an appropriate Resolution Plan with the objective to make the operations of the Company viable and sustainable. The Company is engaged with the Lenders for Resolution Plan.
Considering the strength of the Companyâs world class infrastructure, business plans and future outlook as assessed, the management is quite confident to reach at some workable solution to resolve financial position of the Company and to continue as a going concern. The company is participating in several business opportunities both in & outside India, and hopeful to get business in the coming years. Further, the promoters of the Company have supported the Company since management take over by them in January 2016 and will continue to do so in future in their capacity as promoters.
Pending such resolution and on considering the facts given in above paras:
a. Accounts have been prepared on going concern basis;
b. The company continued to account for deferred tax assets on losses, which will be available for set off against future profits in view of the anticipated orders and opportunities in the defence and non-defence sector and expected resolution with the secured Lenders and improved availability of working capital; and
c. No provision for impairment of Non-current assets have been considered necessary.
Note - 16
Fair Value Measurements
The fair value of the financial assets and liabilities are included at the amount that would be received on sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide and indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescrible under the accounting standard. An explanation of each level follows underneath the table.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments that have quoted price and financial instruments like Mutual Funds for which NAV is published by the Mutual Fund Operator. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period and Mutual Fund are valued using the Closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value and instruments are observable, the instrument is included in level 2. Instruments in the level 2 category for the company include forward exchange contract derivatives
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in this level. Instruments in level 3 category for the Company include unquoted equity shares and FCCDs, unquoted units of mutual funds and unquoted units of venture capital funds.
The carrying amount of all other Financial Assets is reasonably approximate to its fair value.
Financial Liabilities
The Preference shares are classified as a financial Libility. The Liability in case of Preference Shares and Non Convertible Debentures are initially recognised on fair value and the difference between fair value and transaction price is considered as Other Income. Subsequently the liability is measured at amortised cost using the effective interest rate. The impact on this account has been recognsied as other income on the transaction date and subsequent impact are recognised as finance cost in the Statement of Profit and Loss.
The carrying amount of all other Financial Liabilities is reasonably approximate to its fair value. The fair values disclosed above are based on discounted cash flows using current borrowing rate. These are classified at level 2 fair values in the fair value hierarchy due to the use of observable inputs.
During the years mentioned above, there have been no transfers amongst the levels of the hierarchy.
Valuation process
The Company evaluates the fair value of the financial assets and financial liabilties on periodic basis using the best and most relevant data available. Also the Company internally evaluates the valuation process periodically.
Note - 17 Segment Reporting
Segment information as per Ind AS - 108 on Operating Segment :
Information provided in respect of revenue items for the year ended March 31, 2018 and in respect of assets/liabilities as at March 31, 2018.
I The risk - return profile of the Companyâs business is determined predominantly by the nature of its products. The Company is engaged in the business of Shipbuilding, Repair and Fabrication. Further based on the organisational structure, internal management reporting system, nature of production process and infrastructure facilities used, there are no separate reportable segments.
III Revenue from Major Customers :
Revenue from operations include Rs.27,441.79 lacs (Previous Year: Rs.49,545.55 lacs) from one customer (Previous Year: three customers) having more than 10% of the total revenue
Note - 18
Related Party Disclosures
a) List of Related parties
1 Subsidiary Companies
E Complex Private Limited
Reliance Marine and Offshore Limited
Reliance Lighter Than Air Systems Private Limited
Reliance Technologies and Systems Private Limited
Reliance Engineering and Defence Services Limited
PDOC Pte. Ltd.
2 Associates
Reliance Defence Systems Private Limited
Reliance Defence Limited
Reliance Infrastructure Limited
SKIL Infrastructure Limited (up to March 16, 2018)
Conceptia Software Technologies Private Limited
3 Key Managerial Personnel
Cmde. K. Subramaniam, NM (Retd.) (upto 31.03.2018)
Mr. Madan Pendse (upto 01.08.2017)
Mr. Nikhil Jain (w.e.f.: 02.08.201 7)
Mr. Ajit Dabholakar (upto 31.03.2018)
b) Terms and Conditions of transactions with related parties
The Transactions with related parties are at armâs length price and in the ordinary course of business. Outstanding balances at the year-end are unsecured and interest have been accounted on market rate except the advances, which is merely reimbursement of expenses. This assessment is undertaken at each financial year through examining the financial position of the related party and the market in which the related party operates.
3 During the year SKIL Infrastructure Limited ceased to be a related party of the Company. The Loan outstanding on April 1, 2017 was Rs.254.02 Lacs. Interest expenses of Rs.29.22 lacs (Previous Year: Rs.30.48 lacs) has been provided on Loan taken for the period of relationship exist.
Figures in brackets represents previous yearâs amounts.
d) Details of Loans given, investment made and Guarantee given, covered u/s 186(4) of the Companies Act, 2013
i Loan given and investment made are given under the respective head
ii Corporate Guarantee have been issued on behalf of subsidiary Companies, details of which are given in related party transactions above
Note - 19 Operating Lease
The Company has entered in to a non cancellable leasing agreements for Land and Infrastructure Facilities for a period between 30 to 60 years which are renewable by mutual consent on mutually agreeable terms. There is an escalation clause in the lease agreement during the lease period in line with expected general inflation. There are no restrictions imposed by lease arrangements and there are no sub leases. There are no contingent rents. Disclosures as required under Ind-AS 17 on âLeaseâ are given below: Future minimum Lease payments under non-cancellable operating lease:
Note - 20
Financial Risk Management Objective and Policies
The Companyâs principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables and advances from Customers. The main purpose of these financial liabilities is to finance the Companyâs operations, projects under implementation and to provide guarantees to support its operations. The Companyâs principal financial assets include Investment, loans and advances, trade and other receivables and cash and bank balances that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Companyâs policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors, reviews and agrees policies for managing each of these risks, which are summarised below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial assets 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 and commodity risk. Financial Assets affected by market risk include loans and borrowings, deposits and derivative financial instruments.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs debt obligations with floating interest rates.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities (when revenue or expense is denominated in a foreign currency).
Commodity price risk
The Company is affected by the price volatility of certain commodities. Its operating activities require the on-going purchase or continuous supply of steel plates. Therefore the Company monitors its purchases closely to optimise the price.
Credit risk
Credit risk is the risk that a counter party 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 advances to suppliers) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
Trade receivables
Customer credit risk is managed by each business unit subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. An impairment analysis is performed at each reporting date on an individual basis for major clients.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance with the Companyâs policy. Investments of surplus funds are made only with approved authorities. Credit limits of all authorities are reviewed by the Management on regular basis.
Liquidity risk
Liquidity risk is the risk that the Company will face in meeting its obligation asscoiated with its financial liabilities. The Company monitors its risk of a shortage of funds using a liquidity planning tool.
The Companyâs objective is to maintain a balance between continuity of funding and flexibility through the use of Bank Overdrafts, Letter of Credit and Working Capital Limits.
Note - 21
Capital Management
For the purpose of the Companyâs capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The funding requirement is met through a mixture of equity, internal accruals, long term borrowings and short term borrowings.
In order to achieve this overall objective, the Companyâs capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
Note - 22
Post Reporting Events
No adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation
Note - 23
Authorisation of Financial Statements
The financial statements for the year ended March 31, 2018 were approved by the Board of Directors on April 23, 2018. The Management and authorities have the power to amend the Financial Statements in accordance with section 130 and 131 of The Companies Act, 2013.
Note - 24
Previous year figures have been regrouped and rearranged, wherever necessary to make them comparable with those of the current year.
Mar 31, 2017
Note - 1
General Information
Reliance Defence and Engineering Limited (âRDELâ or âthe Companyâ) is a company limited by shares, incorporated and domiciled in India. The registered office of the company is located at Pipavav Port, Post Ucchaya, Via- Rajula, District Amreli (Gujarat) and listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The name of the Company got changed from Pipavav Defence and Offshore Engineering Company Limited during the financial year 2015-16 and fresh certificate of incorporation was issued by the Ministry of Corporate Affairs (MCA), Government of India on March 3, 2016. The Company is mainly engaged in the construction of vessels, repairs and refits of ships and rigs and heavy engineering. RDEL has a large shipbuilding/repair infrastructure in India including the largest Dry Dock in the world. The Company is the first private sector Company in India to obtain the licence and contract to build Naval Offshore Patrol Vessels(NOPVs) for Indian Navy. The Shipyard has only moduler shipbuilding facility in India with capacity to build fully fabricated and outfitted blocks. The fabrication facility spread over 2.1 million sq ft has annual capacity of 144,000 tons/year. The shipyard has pre-erection berth of 980 meter length and 40 meters width and two Goliath cranes with combined lifting capacity of 1200 tonnes, besides outfitting berth length of 780 meters.
Note - 2
a) Long Term Borrowings (Note No. 15 to the Financial Statements)
As at March 31, 2017, the Company has overdue of Rs.8,403 Lacs (Previous Year: Rs.8,225.07 Lacs) and Rs.1 1,060.24 Lacs (Previous Year: Rs.4,402.83 Lacs) towards the principal and interest respectively
b) Short Term Borrowings (Note No. 19 to the Financial Statements)
As on March 31, 2017, the Company has overdue of Rs.Nil (Previous Year: Rs.703.93 Lacs) towards the principal.
3.1 Reconciliation of tax expenses and the accounting profit multiplied by domestic tax rate:
Since the Company has incurred loss during the year 2016-17 and previous year 2015-16 and no tax is payable for these years as per provisions of Income Tax Act, 1961, the calculation of effective tax rate is not relevant and hence, not given.
3.2 The Company has recognised deferred tax assets on carry forward business losses as sufficient future taxable income will be available against which deferred tax assets can be realised considering its present order book and anticipated orders and opportunities in the defence sector as convincing evidences.
Note - 4
Trade Payables (MSME) (Note No. 20 to the Financial Statements)
Micro and Small Enterprises under the Micro and Small Enterprises Development Act, 2006 have been determined based on the information available with the Company and the required disclosures are given below:
5.1 Salary, wages and allowances includes remuneration paid to Executive Director of Rs.107.03 Lacs which is in excess of limits prescribed under section 198 and Schedule V of the Companies Act 2013. The Company has filed necessary application for approval of Central Government, which is awaited.
5.2 Employee Benefits
As per Ind AS-19 âEmployee Benefitsâ, the disclosure of employee benefits as defined in the accounting standards are given below:
Defined Benefit Plan
The Employees Gratuity Fund Scheme, which is a defined benefit plan, is managed by a trust maintained with Life Insurance Corporation of India (LIC). The Company has made contribution to the above mentioned trust upto the financial year ended March 31, 2009 and thereafter no contributions have been made. The Employees Leave Encashment Scheme which is a defined benefit plan is unfunded.
The present value of the obligation is determined based on actuarial valuation using Projected Units Credit Method, which recognizes each period of service as giving rise to additional units of employees benefit entitlement and measures each unit separately to buildup the final obligation.
6.1 Pursuant to proposed refinance scheme and exit from CDR, as approved by members of the Company, existing loans upto Rs.655 Crores will be refinanced through issuance of Equity Shares of Rs.10 each at a premium of Rs.49.35 per equity shares. The effect of these potential shares on Earning Per Share are anti-dilutive and hence, they are not considered for the purpose of calculation of diluted earning per share.
Note - 7
Contingent Liabilities (Note no. 32 to the Financial Statements)
(No Cash Outflow is expected except as stated otherwise and not likely to have any material impact on financial position of the Company)
Note - 8
(Note no. 34 to the Financial Statements)
The Company has issued a Bond cum legal undertaking for Rs.64,400 Lacs (Previous Year: Rs.64,400 Lacs) in favour of President of India acting through Development Commissioner of Kandla Special Economic Zone for setting up a SEZ unit for availing exemption from payment of duties, taxes or cess or drawback and concession etc, a General Bond in favour of the President of India for a sum of Rs.15,300 Lacs (Previous Year : Rs.15,300 Lacs) as Security for compliance of applicable provisions of the Customs Act, 1 962 and the Excise Act, 1 944 for EOU unit, a bond cum legal undertaking for Rs.1 350 Lacs (Previous Year: Rs.1,350 Lacs) in favour of President of India acting through D.R.I. Ahmedabad, Zonal Unit as security of compliance under Central Excise Act, 1 944.
Note - 9
(Note no. 35 to the Financial Statements)
The Company has received Twenty Four show cause notices in its 100% EOU unit from the Office of the Commissioner of Central Excise, Bhavnagar and Directorate of Revenue Intelligence which mainly relates alleged wrong availment of Cenvat/Customs Duty/ Service Tax Credit on inputs/services used for Construction of Dry Dock and Goliath Cranes and non-submission of original evidences/ documents and some procedural non-compliances. The Company does not forsee any losses on this account.
Note - 10
(Note no. 36 to the Financial Statements)
The carrying amount of Assets and Liabilities is resonably approximate to its fair value. In the opinion of the Management, Current Assets, Loans and Advances are of the value stated, if realized in the ordinary course of business.
Note - 11
Segment Reporting (Note no. 37 to the Financial Statements)
A. Segment information as per Ind AS - 108 on Operating Segment :
Information provided in respect of revenue items for the year ended March 31, 2017 and in respect of assets/liabilities as at March 31, 2017.
I The risk - return profile of the Companyâs business is determined predominantly by the nature of its products. The Company is engaged in the business of Shipbuilding, Repair and Fabrication. Further based on the organisational structure, internal management reporting system, nature of production process and infrastructure facilities used, there are no separate reportable segments.
II Information about Secondary Segment :
Geographical Segment :
III Revenue from Major Customers :
Revenue from operations include Rs.49,545.55 Lacs (Previous Year: Rs.28,463.43 Lacs from three customers (Previous Year: three customers) having more than 10% revenue of total revenue
Note - 12
Related Party Disclosures (Note no. 38 to the Financial Statements)
a) List of Related parties
1 Subsidiary Companies
E Complex Private Limited
Reliance Marine and Offshore Limited
Reliance Lighter Than Air Systems Private Limited
Reliance Technologies and Systems Private Limited
Reliance Engineering and Defence Services Limited
PDOC Pte. Ltd.
2 Associates
Reliance Defence Systems Private Limited
Reliance Infrastructure Limited
SKIL Infrastructure Limited
Conceptia Software Technologies Private Limited
3 Key Managerial Personnel
Mr. Harisimran Singh Malhi (up to 31.03.2017)
Mr. Sridahr Krishnamurthy (upto 15.10.2016)
Mr. Madan Pendse (w.e.f. 17.10.2016)
Mr. Ajit Dabholakar
b) Terms and Conditions of transactions with related parties
The Transactions with related parties are at armâs length price and in the ordinary course of business. Outstanding balances at the year-end are unsecured and interest have been accounted on market rate except the advances, which is merely reimbursment of expenses. This assessment is undertaken at each financial year through examining the financial position of the related party and the market in which the related party operates.
Note - 13
(Note no. 39 to the Financial Statements)
Details of loans given, investment made and Guarantees given, covered u/s 186(4) of the Companies Act, 2013
I Loans given and investment made are given under the respective heads
II Corporate Guarantees have been issued on behalf of subsidiary companies, details of which are given in related party transactions above.
Note - 14
Financial and Other Derivative Instruments (Note no. 40 to the Financial Statements)
a Derivative contracts entered into by the Company and outstanding are as under:
b All derivative and financial instruments acquired by the company are for hedging purpose only, c Foreign currency exposures that are not hedged by derivative instruments or forward contracts are:
Note - 15
Operating Lease (Note no. 41 to the Financial Statements)
The Company has entered in to a non cancellable leasing agreements for Land and Infrastructure Facilities for a period between 30 to 60 years which are renewable by mutual consent on mutually agreeable terms. There is an escalation clause in the lease agreement during the lease period in line with expected general inflation. There are no restrictions imposed by lease arrangements and there are no sub leases. There are no contingent rents. Disclosures as required under Ind-AS 17 on âLeaseâ are given below:
Note - 16
Financial Risk Management Obejective and Policies (Note no. 42 to the Financial Statements)
The Companyâs principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables and advances from Customers. The main purpose of these financial liabilities is to finance the Companyâs operations, projects under implementation and to provide guarantees to support its operations. The Companyâs principal financial assets include Investment, loans and advances, trade and other receivables and cash and bank balances that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Companyâs policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial assets 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 and commodity risk. Financial Assets affected by market risk include loans and borrowings, deposits and derivative financial instruments.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs long-term debt obligations with floating interest rates.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities (when revenue or expense is denominated in a foreign currency).
The Company manages its foreign currency risk by hedging transactions that are expected to realise in future.
Foreign Risk Sentivity
The following table demonstrates the sensitivity in USD to Indian Rupees with all other Variable held constant. The effect on loss before tax due to foreign exchange rate fluctuation:
Commodity price risk
The Company is affected by the price volatility of certain commodities. Its operating activities require the on-going purchase or continuous supply of steel plates. Therefore the Company monitors its purchases closely to optimise the price.
Credit risk
Credit risk is the risk that a counter party 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 advances to suppliers) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
Trade receivables
Customer credit risk is managed by each business unit subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. An impairment analysis is performed at each reporting date on an individual basis for major clients.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance with the Companyâs policy. Investments of surplus funds are made only with approved authorities. Credit limits of all authorities are reviewed by the Management on regular basis.
Liquidity risk
The Company monitors its risk of a shortage of funds using a liquidity planning tool.
The Companyâs objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, Letter of Credit and working capital limits.
Note - 17
Capital Management (Note no. 43 to the Financial Statements)
For the purpose of the Companyâs capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The funding requirement is met through a mixture of equity, internal accruals, long term borrowings and short term borrowings. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.
In order to achieve this overall objective, the Companyâs capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
Note - 18
Post Reporting Events (Note no. 45 to the Financial Statements)
No adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation
Note - 19
Authorisation of Financial Statements (Note no. 46 to the Financial Statements)
The financial statements for the year ended March 31, 2017 were approved by the Board of Directors on April 11, 2017
Note - 20
(Note no. 47 to the Financial Statements)
The Management and authorities have the power to amend the Financial Statements in accordance with section 130 and 131 of The Companies Act, 2013.
Note - 21
(Note no. 48 to the Financial Statements)
Previous year figures have been reworked, regrouped, rearranged and reclassified, wherever necessary to make them comparable with those of the current year.
Mar 31, 2016
1 The Company has issued a Bond cum legal undertaking for Rs.64,400 lacs (Previous Year: Rs.44,400 lacs) in favour of President
of India acting through Development Commissioner of Kandla Special Economic Zone for setting up a SEZ unit for availing
exemption from payment of duties, taxes or cess or drawback and concession etc, a General Bond in favour of the President
of India for a sum of Rs.1 5,300 lacs (Previous year : Rs.15,300 lacs) as Security for compliance of applicable provisions of the
Customs Act, 1962 and the Excise Act, 1944 for EOU unit, a bond cum legal undertaking for Rs.1350.00 lacs (Previous Year:
Rs.1,350.00 lacs) in favour of President of India acting through D.R.I. Ahmedabad, Zonal Unit as security of compliance under
Central Excise Act, 1944.
2. The Company has received twenty one show cause notices in its 100% EOU unit from the Office of the Commissioner of Central
Excise, Bhavnagar and Directorate of Revenue Intelligence which mainly relates to alleged wrong availment of Cenvat/Customs
Duty/Service Tax Credit on inputs/services used for Construction of Dry Dock and Goliath Cranes and non-submission of original evidences/documents and some procedural non-compliances. The Company does not forsee any losses on this account.
3. In the opinion of the Management, Current Assets, Loans and Advances are of the value stated, if realized in the ordinary course
of business.
4 Related Party Disclosures:
a) List of Related parties
1 Subsidiary Companies
E Complex Private Limited
Reliance Marine and Offshore Limited (formerly Pipavav Marine and Offshore Limited)
Reliance Lighter Than Air Systems Private Limited (formerly Pipavav Lighter Than Air Systems Private Limited)
Reliance Technologies and Systems Private Limited (formerly Pipavav Technologies and Systems Private Limited)
Reliance Engineering and Defence Services Limited (formerly Pipavav Engineering and Defence Services Limited)
PDOC Pte. Ltd.
2 Associates
Reliance Defence Systems Private Limited (w.e.f. 18.01.2016)
Reliance Infrastructure Limited (w.e.f. 18.01.2016)
SKIL Infrastructure Limited
Conceptia Software Technologies Private Limited
3 Person having control over investing party Mr. Anil D. Ambani (w.e.f. 18.01.2016)
4 Key Managerial Personnel
Mr. Harisimran Singh Malhi (w.e.f. 18.01.2016)
Mr. Sridhar Krishnamurthy (w.e.f. 18.01.2016)
Mr. Ajit Dabholkar
Mr. Nikhil P. Gandhi (up to 18.01.2016)
Mr. Bhavesh P. Gandhi (up to 18.01.2016)
5 Enterprises in which persons mentioned in point 3 and 4 above or their relatives are able to exercise significant
influence (Other Related Parties)
Reliance General Insurance Company Limited (w.e.f 18.01.2016)
Reliance Communication Infra Limited (w.e.f 18.01.2016)
Sasan Power Limited (w.e.f 18.01.2016)
SKIL Shipyard Holdings Private Limited
Awaita Properties Private Limited (up to 18.01.2016)
b) Terms and Conditions of transactions with related parties
The transactions with related parties are at arm''s length price and in the ordinary course of business. Outstanding balances
at the year end are unsecured and interest have been accounted on market rate except the advances, which is merely
reimbursement of expenses. This assessment is undertaken at each financial year through examining the financial position
of the related party and the market in which the related party operates.
5. Operating Lease:
The Company has entered in to a non cancellable leasing agreements for Land and Infrastructure Facilities for a period of 30
years which are renewable by mutual consent on mutually agreeable terms. There is an escalation clause in the lease agreement
during the lease period in line with expected general inflation. There are no restrictions imposed by lease arrangements and there
are no sub leases. There are no contingent rents. Disclosures as required under Ind-AS 17 on "Lease" are given below:
6 Financial Risk Management Objective and Policies: The
Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables and
advances from Customers. The main purpose of these financial liabilities is to finance the Company''s operations, projects under
implementation and to provide guarantees to support its operations. The Company''s principal financial assets include Investment,
loans and advances, trade and other receivables and cash and bank balances that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management
of these risks. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate
skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be
undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial assets 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
and commodity risk. Financial Assets affected by market risk include loans and borrowings, deposits and derivative financial
instruments.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s
long-term debt obligations with floating interest rates.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign
exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s
operating activities (when revenue or expense is denominated in a foreign currency).
The Company manages its foreign currency risk by hedging transactions that are expected to realise in future.
Commodity Price Risk
The Company is affected by the price volatility of certain commodities. Its operating activities require the on-going purchase or
continuous supply of steel plates. Therefore the Company monitors its purchases closely to optimise the price.
Credit Risk
Credit risk is the risk that a counter party 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 advances to
suppliers) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions
and other financial instruments.
Trade Receivables
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control
relating to customer credit risk management. Outstanding customer receivables are regularly monitored. An impairment analysis
is performed at each reporting date on an individual basis for major clients.
Financial Instruments and Cash Deposits
Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance
with the Company''s policy. Investments of surplus funds are made only with approved authorities. Credit limits of all authorities
are reviewed by the Management on regular basis.
Liquidity Risk
The Company monitors its risk of a shortage of funds using a liquidity planning tool.
The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of bank
overdrafts, Letter of Credit and working capital limits.
7 Capital Management:
For the purpose of the Company''s capital management, capital includes issued equity capital, securities premium and all other
equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management
is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide
adequate return to shareholders through continuing growth.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the
requirements of the financial covenants. The funding requirement is met through a mixture of equity, internal accruals, long term
borrowings and short term borrowings. The Company monitors capital using a gearing ratio, which is net debt divided by total
capital plus net debt.
In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets
financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
8 Post Reporting Events:
No adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation
9 Authorisation of Financial Statements:
The financial statements for the year ended March 31, 2016 were approved by the Board of Directors on May 14, 2016
10 The management and authorities have the power to amend the Financial Statements in accordance with Section 130 and 131
of The Companies Act, 2013.
11 First Time Adoption of Ind-AS:
Pursuant to the Companies (Indian Accounting Standard) Rules, 2015, the Company has voluntarily adopted March 31, 2016
as reporting date for first time adoption of Indian Accounting Standard (Ind-AS) and consequently April 1, 2014 as the
transition date for preparation of financial statements. The financial statements for the year ended March 31, 2016, are the
first financials, prepared in accordance with Ind-AS. Upto the Financial year ended March 31, 2015, the Company prepared its
financial statements in accordance with previous GAAP, including accounting standards notified under the Companies (Accounting
Standard) Rule, 2006. For preparing these financial statements, opening balance sheet was prepared as at April 1, 2014 i.e. the
date of transition to Ind-AS. The figures for the previous periods and for the year ended March 31, 2015 have been restated,
regrouped and reclassified, wherever required to comply with Ind-AS and Schedule III to the Companies Act, 2013 and to make
them comparable.
III Notes to the reconciliation
i. Property, Plant and Equipment
The Company has as at the date of transition elected to measure Plant and Equipments under property, plant and
equipment at fair value as deemed cost. Consequently, depreciation for the financial year 2014 - 15 has been
recomputed on the deemed cost as at transition date.
ii Consequent to the early adoption of Ind-AS, the Company undertook a detailed evaluation of its Non-current assets,
trade receivables, other current assets and current liabilities and provisions under Indian GAAP as at the date of
transition being April 1, 2014. These assets and liabilities were assessed for future economic benefits expected to flow
to the Company or collection or payment expected over the period of time in accordance with Ind-AS principals. Ind-
AS requires measurement of provision for bad and doubtful debts to be determined with reference to the expected
credit loss model. Such assets and liabilities, based on evaluation, have been measured at the present value discounted
at effective interest rate and adjusted to other reserve as at transition date. Accordingly, the Company has made
appropriate adjustment on the transition date.
iii Under previous GAAP, the Company has not presented Other Comprehensive Income (OCI) separately. Hence, the
Statement of Profit and Loss under previous GAAP has been reconciled with profit and loss statement and total other
comprehensive income as per Ind - AS.
iv Previous GAAP required recognition of deferred tax using the income statement approach; however, Ind-AS requires
the Company to recognise deferred tax using the balance sheet approach. The effect on account of application of
Ind-AS has been duly accounted.
v In the preparation of these Ind-AS Financial Statements, the Company has made several presentation differences
between previous GAAP and Ind-AS. These differences have no impact on reported profit or total equity. Accordingly,
some assets and liabilities have been reclassified into another line item under Ind-AS at the date of transition. Further,
in these Financial Statements, some line items are described differently under Ind-AS compared to previous GAAP,
although the assets and liabilities included in these line items are unaffected.
Mar 31, 2015
1.Terms and Rights attached to Equity Shares
The Company has only one class of Equity Share having par value of ' 10
per share. Each shareholder is eligible for one vote per share held. In
the event of liquidation of the company, the equity share holders will
be entitled to receive any of the remaining assets of the company,
after distribution of all preferential amount. The distribution will be
in proportionate to the number of equity shares held by the
shareholders.
2. Rs. The Company had availed various secured financial facilities from
the banks and financial institutions ("the Lenders").
3. The lenders led by IDBI Bank had through Joint Lenders' Forum (JLF)
referred the Debt Restructuring Scheme ('Restructuring Scheme') of the
Company to Corporate Debt Restructuring Cell ("CDR Cell"). The
Restructuring Scheme was subsequently approved by CDR Cell on 18th March
2015 and communicated vide Letter of Approval (LOA) dated 27th March
2015. The Cut Off Date as per Restructuring Scheme is 1st July 2014
('COD'). The Company and the Lenders who are members of the CDR forum
('CDR Lenders') have executed Master Restructuring Agreement ('MRA')
dated March 30, 2015, by virtue of which the credit facilities extended
by the CDR Lenders stand restructured and these restructured facilities
are gov- erned by the provisions stipulated in the MRA. For all the
loans restructured under the terms of MRA, creation/extension of
security is under process. The Restructuring scheme has been implemented
as at 31st March 2015 with effect from the COD.
4. The key features of the Restructuring Scheme are as follows:
i) Restructuring of Working Capital facilities:
* Overdue portion of the working capital facilities converted into
working capital term loan (WCTL).
* Interest moratorium ofi yearfrom the COD on the fund based working
capital facilities. During the interest moratorium period, the interest
will accrue and will be converted into funded interest term loan (FITL).
* Reduced margin requirements for non-fund based working capital
facilities as well as reduction of commission applicable on the same.
* Fresh working capital facilities sanctioned as per projected
requirement for 1 year, to be renewed/reassessed on a yearly basis
thereafter. The terms for these fresh working capital facilities shall
be in line with the other restructured working capital facilities.
ii) Restructuring of Rupee Term Loans (RTL) and Short Term Loans (STL):
* Principal repayment moratorium for 3 years from the COD and
thereafter repayment to be made in 28 structured quarterly installments.
* For term loans and short term loans relating to ongoing capex program,
interest during construction period to be fi- nanced by the respective
lenders up to July, 2016 and 5 months of interest moratorium thereafter,
which will also be converted into FITL.
* Forothertermloans,interestmoratoriumfor2yearsfrom theCOD.
* Fresh term loans sanctioned as required for completion of the ongoing
capex program. The terms for these fresh term loans shall be in line
with the terms applicable for existing term loans for the ongoing capex
program.
iii) Working Capital Term Loans (WCTL) - created out of
irregular/overdue portion of working capital facilities
* Principal repayment moratorium for 3 years from the COD and thereafter
repayment to be made in 28 structured quarterly installments.
* Interest moratorium up to 31st March, 2017.
iv) Funded Interest Term Loan (FITL) - accrued interest during interest
moratorium period on the above facilities
* Principal repayment to be made in 28 structured quarterly
installments commencing from quarter ending on 30th September, 2017.
* Out of Total FITL facility amounting to an estimated amount of '
86,212 lacs, an amount aggregating to Rs. 25,000 lacs is proposed to be
converted into equity shares before 30th June 2017. The pricing shall be
calculated as per SEBI formula and issue will be subject to approval of
members of the Company.
v) Interest Rate:
For fund based working capital facilities, RTL, FITL and WCTL: Floating
interest rate of IDBI base rate plus 75 bps i.e. currently 11.00% shall
be applicable for the initial period of 3 years from the COD and
thereafter the interest rate shall be revised to IDBI base rate plus
325 bps i.e. currently 13.50%.
vi) Promoter's contribution of Rs. 16,600 lacs to be infused in the
Company as per the CDR norms for restructuring of the credit facilities
as stipulated in the MRA and further Rs. 17,648.47 lacs to be brought by
promoters towards equity margin towards financing of the ongoing Capex
program to maintain stipulated debt-equity ratio for the project.
5. In terms of the Master Restructuring Agreement entered with certain
lenders of the Company for Debt Restructuring, each of those Lenders has
a right of recompense as per extant guidelines of CDR for the reliefs
and sacrifices extended by them. The amount of recompense being
depending on various matters cannot be ascertained as on March 31, 2015.
6. Secured Term loans as referred to above and Rs. 7,956.95 lacs
included in current maturities of long term debt in note no. 10
are secured/to be secured as under:
i) Rs. 457,004.42 lacs havingfirst pari passu charge by way of mortgage
over leasehold rights on 124.1199 hectares of land belong- ing to
E-Complex Private Limited and on sub-leasehold rights on 10.5 hectares
of land belonging to Gujarat Maritime Board.
ii) Rs. 487,956.61 lacs having first pari passu charge and mortgage on
all the immovable properties; hypothecation of all movable properties of
the Company and on all the intangible assets of the Company; both
present and future.
iii) Rs. 457,004.42 lacs having second pari passu charge by way of
hypothecation of all the current assets (including all receivables and
inventories); both present and future.
7. Secured Term loans as referred to above and Rs. 7,956.95 lacs
included in current maturities of long term debt in note no. 10 are
further secured/to be secured as:
i) Corporate Guarantee of SKIL Infrastructure Limited and personal
guarantee of some ofthe Directors ofthe Company.
ii) Pledge of 12,27,55,500 equity shares of the Company held by SKIL
Infrastructure Limited (SKIL); 2,23,49,494 equity shares of the Company
held by Grevek Investments and Finance Pvt Ltd (Grevek) and 1 equity
share of the Company held by SKIL Shipyard Holdings Private Limited
(SSHPL). Further, SKIL, Grevek and SSHPL are required to pledge their
remaining shareholdings in the Company, which are currently pledged in
favour of lenders of promoters group, to the CDR Lenders upon release of
such charge.
iii) Rs. 457,004.42 lacs by way of Pledge of entire shareholding i.e.
2,17,09,327 equity shares of E-Complex Private Limited held by
the Company.
8. Lenders in respect of secured loans aggregating to Rs. 457,004.42
lacs have right to convert entire part of defaulted principal and
interest into Equity shares upon occurrence of events of default in the
manner provided in the MRA.
9. Secured Rupee Term Loan of Rs. 30,000.00 lacs are repayable in 24
quarterly structured installment starting from June 30, 2019 to March
31, 2025, Rs. 12,500.00 lacs in 28 quarterly structured installment
starting from September 30, 2017 to June 30, 2024, Rs. 9,271.32 lacs in
40 quarterly structured installments starting from August 31, 2005 to
February 28, 2017 and Rs. 400.00 lacs in 40 quarterly structured
installments starting from September 30, 2005 to March 30, 2015.
10. All the Secured Rupee Term Loan carry an interest rate of 11%
except loan of Rs. 9,271.32 lacs which carry an interest rate of
13.50%.
11. Secured Foreign Currency Term Loan a referred above including Rs.
425.62 lacs included in Current Maturities of Long Term Debts in note 10
carry an interest rate of 2.57% and repayble in 11 yearly structured
installment starting from February 01, 2016 to February 01, 2026.
12. Unsecured Foreign Currency Term Loan :
i) Unsecured Foreign Currency Term Loan as referred above including Rs.
2,098.33 lacs included in Current Maturities of Long Term Debts in note
no. 10 is secured by way of Mortgage of Property at Mahal Mira, Pen
Taluka, Raigad admeasuring 10,89,3000 sq.feet owned by other Corporates.
The above loan is further secured by Corporate Guarantee of SKIL
Infrastructure Limited and some of the directors of the Company.
ii) The above unsecured loan cary an interest rate of 6.57% and
repayable in 30 monthly structured installments starting from May 31,
2015 to October 31, 2017
13. The maturity profile, period and amount of installments of Term
Loans as referred above including current maturities of long term debt
of Rs. 10,055.28 Lacs referred to in note no. 10 are as under:
Rs.in Lacs
14. Vehicle Loans referred to above including Rs. 24.56 lacs included
in current maturities of long term debts in note no. 10 are secured by
the Hypothecation of the specific vehicles financed. The loans are
repayable in monthly equated installments (including interest) as per
repayment schedule starting from July 01, 2012 to March 15, 2021.
15. Terms and Conditions for Loans from Related Parties:
The above unsecured loans from related parties carry an interest rate
of 12.00% and include Rs. 15,750 lacs & Rs. 292.17 lacs repayable after
15 months by way of bullet payments from the date of first disbursement
i.e. March 23, 2015 and March 24, 2015 respectively.
16. AS at March 31st, 2015, the Company has overdue of Rs. 5,531-33
lacs (Previous Year: Rs. 4,873.28 lacs) and Rs. 1,982.49 lacs (Previous
Year: Rs. 5,679.44 lacs) towards the principal and interest
respectively, out of which Rs. 1,097.07 lacs has since been paid.
17. The above working capital loans from banks are secured / to be
secured by way of:
i) First pari passu charge by way of hypothecation of all the current
assets (including all receivables and inventories); both
present and future.
ii) Second pari passu charge by way of mortgage over leasehold rights
on 124.1199 hectares of land belonging to E-complex
Private Limited and on sub-leasehold rights on 10.5 hectares of land
belonging to Gujarat Maritime Board.
iii) Second pari passu charge and mortgage on all the immovable
properties and hypothecation of all movable properties of the
Company; both present and future.
18. The above working capital loans from banks are further secured / to
be secured by :
i) Corporate Guarantee of SKIL Infrastructure Limited and personal
guarantee of some of the Directors of the Company.
ii) Pledge of 12,27,55,500 equity shares of the Company held by SKIL
Infrastructure Limited (SKIL); 2,23,49,494 equity shares
of the Company held by Grevek Investments and Finance Pvt Ltd (Grevek)
and 1 equity share of the Company held by SKIL Shipyard Holdings
Private Limited (SSHPL). Further, SKIL, Grevek and SSHPL are required
to pledge their remaining share- holdings in the Company, which are
currently pledged in favour of lenders of promoters group, to the CDR
Lenders upon release of such charge.
iii) Pledge of entire shareholding i.e. 2,17,09,327 equity shares of
E-Complex Private Limited held by the Company.
19. As on March 31st, 2015, the Company has overdue of Rs. NIL
(Previous Year: Rs. 26,618.91 lacs) and Rs. NIL (Previous Year: Rs.
879.12 lacs) towards the principal and interest respectively
20. The Leasehold Land and Development represents the lease premium
and the cost incurred for reclaiming, development and strengthening of
the Land.
21. Buildings and Plant & equipments are constructed / installed on
leasehold land.
22. In accordance with the Accounting Standard (AS - 28) on
"Impairment of Assets", the Management during the year carried out an
exercise of identifying the assets that may have been impaired in
respect of each cash generating unit. On the basis of this review
carried out by the Management, there was no impairment loss on Fixed
Assets during the year.
23. Additions in the Plant and Equipments include interest and
financial charges of Rs. 5,274.70 lacs (Previous Year Rs. NIL).
24. The amount paid as MAT is allowed to be carried forward for being
set off against the future tax liabilities computed in accordance with
the provisions of the Act, other than section 115JB, in next ten years.
Based on the future projection of the performances, the Company is
expected to pay the Income Tax as per provisions, other than under
section 115JB, of the Act. Accordingly, as advised in Guidance Note on
"Accounting for credit available in respect of Minimum Alternate Tax
under the Income Tax Act, 1961" issued by The Institute of Chartered
Accountants of India, Rs. Nil (Previous Year: Rs. 587.31 lacs) being
the excess of tax payable under section 115JB of the Act over tax
payable as per the provisions other than section 115JB of the Act has
been considered as MAT credit entitlement and credited to statement of
Profit and Loss. The aggregate MAT credit entitlement available to the
Company as on March 31st, 2015 is Rs. 3,338.18 lacs (Previous Year:Rs.
3,343.69 lacs) net of reversal of excess provision of Rs. 5.51 lacs
(Previous Year: Rs. 0.79 lacs) made in previous years.
25. In accordance with Clause 32 of the Listing Agreement the details
of loans and advances in the nature of loan are as under:
i) To E Complex Private Limited, Subsidiary Company, maximum balance
during the year was Rs. 6,906.02 lacs
(PreviousYear: 6,887.24 lacs)
ii) E Complex Private Limited has not invested in shares of the
company.
iii) Loans to employee and reimbursement of expenses are not considered
for this clause.
26. As per the communication letter no. SY-12018/1/2007-SBR (VOL-VI)
dt.18.11.2013 of Ministry of Shipping relating to the shipbuilding
subsidy, the subsidy would be available in respect of Ships that are
technically certified as built (as per the contract specifications) and
other requisite documents are submitted before 31st January,2014,. The
technical survey for this certification is undertaken on or around
delivery of the ship.The Shipyard Association of
lndia('SAI')hasalreadyrepresentedtothe Ministry of Shipping, Govt, of
India ('MoS') for extension of the said date. The Company is of the
view that the MoS may extend the said date consideringSAI's
representation. The Company believes that the subsidy would befully
receivable on ships for which orders were received prior to expiry of
the shipbuilding subsidy scheme. As such the Company has not reversed
the subsidy receivable aggregating to ' 7,830.04 lacs recognised on the
ships which are delivered post March 2014 or yet to be delivered but
for which orders were received prior to expiry of the shipbuilding
subsidy scheme.
27. Salary, wages and allowances includes remuneration to Executive
Vice Chairman of Rs. 385.92 lacs (Previous Year: Rs. 257.28 lacs) which
is subject to requisite approvals and procedure.
28. Defined Benefit Plan
The Employees Gratuity Fund Scheme, which is a defined benefit plan, is
managed by a trust maintained with Life Insurance Corporation of India
(LIC). The Company has made contribution to the above mentioned trust
upto the financial year ended 31st March, 2009 and thereafter no
contributions have been made. The Employees Leave Encashment Scheme
which is a defined benefit plan is unfunded.
The present value of the obligation is determined based on actuarial
valuation using Projected Units Credit Method, which recognizes each
period of service as giving rise to additional units of employees
benefit entitlement and measures each unit separately to buildup the
final obligation.
29.
CONTINGENT LIABILITIES AND COMMITMENTS
CONTINGENT LIABILITIES
(No Cash Outflow is expected except as stated otherwise)
Rs.in Lacs
Sr. Particulars 2014-2015 2013-2014
No
a) Guarantees given by Company's Bankers
i) RefundBankGuaranteesgiventocustomers
(Netofliabilities 118,058.60 98,396.32
accounted for)
ii) Other Bank Guarantees 42,026.74 27,358.84
(Bank Guarantees are provided
under Contractual/ Legal
obligations.)
b) Corporate Guarantee 52,885.20 52,677.69
(Given to Banks, Financial
Institutions and Body Corporates
for credit facilities taken by
subsidiary companies)
c) Demands not acknowledged as Debts
i) IncomeTax 187.71 4,190.54
(The Company has Advance Tax/TDS
Credit of Rs. 58.81 Lacs (P.Y.
1,557-10 lacs) against the
total demand)
ii) ServiceTax,ExciseDutyandSalesTax 5,871.19 2,438.36
(Relates to disallowance of CENVAT
Credit and Vat Credit taken
by the Company)
iii) Third Party Claims 10,680.66 4,883.98
(Relates to demands raised by
vendors, refund receivable from
banks and penalties to customers)
d) Letters of Credit opened infavour
of suppliers 5,019.79 4,272.03
(Cash Flow is expected on receipt of
materials from suppliers)
30. COMMITMENTS
a) Estimated amount of contracts
remaining to be executed on Capital 68,342.68 116,062.80
Accounts and not provided for
(Net ofAdvances).
(Cash flow is expected on
execution of such Capital
Contracts on progressive basis)
b) Other Commitments 2,463.74 802.24
(for investment in the Associates
and Joint Venture)
31. The Company has issued a Bond cum legal undertaking for Rs. 44,400
lacs (Previous Year: Rs. 44,400 lacs) in favour of President of India
acting through Development Commissioner of Kandla Special Economic Zone
for setting up an SEZ unitfor availing exemption from payment of duties,
taxes or cess or drawback and concession etc, a General Bond in favour
of the President of India for a sum of Rs.15,300 lacs (Previous Year:
Rs. 15,300 lacs) as Security for compliance of applicable provisions
of the Customs Act, 1962 and the Excise Act, 1944 for EOU unit, a bond
cum legal undertaking for Rs. 1350.00 lacs (Previous Year: 1,350.00
lacs) in favour of President of India acting through D.R.I. Ahmedabad,
Zonal Unit as security of compliance under Central Excise Act 1944.
32. The Company has received Sixteen show cause notices in its 100% EOU
unit from the Office of the Commissioner of Central Excise, Bhavnagar
and Directorate of Revenue Intelligence which mainly relates to wrong
availment of Cenvat/Customs Duty/Service Tax Credit on inputs/services
used for Construction of Dry Dock and Goliath Cranes and non-submission
of original evidences/documents and some procedural non-compliances.
The Company does not forsee any losses on this account.
33. In the opinion of the management, Current Assets, Loans and
Advances are of the value stated, if realized in the ordinary course
of business.
34 Cenvat/Vat recoverable represents the Cenvat/Vat/Central Sales Tax
paid on the purchase of goods and services for the project and
operations. Management is of the opinion that such amounts are
recoverable. Any unrealised amounts will be added back to the cost of
the project or charged off to the statement of profit and loss, as the
case may be in the year of settlement.
B Segment Identification, Reportable Segments and definition of
each segment:
35. Primary / Secondary Segment Reporting Format:
The risk - return profile of the Company's business is determined
predominantly by the nature of its products. Accordingly, the business
segment constitute the Primary Segments for disclosure of segment
information.
36. Reportable Segments:
Segments have been identified based on the organisational structure,
internal management reporting system, nature of production process and
infrastructure facilities used.
37. Segment Composition:
Ship building and Fabrication includes shipbuilding, block
manufacturing, ship and rig repairs, fabrication etc. at its SEZ and
EOU units situated at Pipavav, Gujarat.
Trading includes steel trading activities.
38 RELATED PARTY DISCLOSURES
a) List of Related parties
1 Subsidiary Companies
PDOC Pte. Ltd.
E Complex Private Limited Pipavav Marine and Offshore Limited Pipavav
LighterThanAirSystems Private Limited PipavavTechnologies and Systems
Private Limited (w.e.f. Februaryio, 2015)
Pipavav Engineering and Defence Services Limited (w.e.f. October 01,
2014)
2 Associates
SKIL Infrastructure Limited
Conceptia Software Technologies Private Limited
3 Key Managerial Personnel
Mr. Nikhil P. Gandhi
Mr. Bhavesh P. Gandhi
4 Enterprises in which key managerial personnel or their relatives are
able to exercise significant influence (Other Related Party)
SKILShipyard Holdings Private Limited
Awaita Properties Private Limited
Grevek investments and Finance private Limited
39. Previous year figures have been reworked, regrouped, rearranged and
reclassified, wherever necessary to make them comparable with those of
the current year.
Mar 31, 2014
1 CONTINGENT LIABILITIES
(No Cash Outflow is expected except as stated otherwise)
Rs. in Lacs
Sr. Particulars 2013 - 2014 2012 - 2013
No.
(a) Guarantees given by Company''s Bankers
(i) Refund Bank Guarantees given to
customers (Net of liabilities
accounted for) 98,396.32 114,943.76
(ii) Other Bank Guarantees 27,358.84 28,917.31
(Bank Guarantees are provided under
Contractual/Legal obligations.)
(b) Corporate Guarantee 52,677.69 Â
(Given to Banks, Financial
Institutions and Body Corporates for
credit facilities taken by
subsidiary companies)
(c) Demands not acknowledged as Debts
(i) Income Tax 4,190.54 1,165.21
(The Company has Advance Tax/TDS
Credit of Rs. 1,557.10 Lacs
(P.Y. Rs. 321.51 Lacs) against
the total demand)
(ii) Service Tax, Excise Duty and Vat 2,438.36 2,327.88
(Relates to disallowance of CENVAT
Credit and Vat Credit taken by
the Company)
(iii) Third Party Claims 4,883.98 5,148.62
(Relates to demands raised by
vendors)
(d) Letters of Credit opened in favour
of suppliers 4,272.03 7,189.04
(Cash Flow is expected on receipt of
materials from suppliers)
2 COMMITMENTS
(a) Estimated amount of contracts
remaining to be executed on Capital
Accounts and not provided for
(Net of Advances). 116,062.80 27,548.11
(Cash flow is expected on execution
of such Capital Contracts on
progressive basis)
(b) Other Commitments 802.24 802.24
(for investment in an Associate and
Joint Venture)
Note - 3
The Company has issued a Bond cum legal undertaking for Rs. 44,400 Lacs
(Previous Year: Rs. 44,400 Lacs) in favour of President of India acting
through Development Commissioner of Kandla Special Economic Zone for
setting up an SEZ unit for availing exemption from payment of duties,
taxes or cess or drawback and concession etc, a General Bond in favour
of the President of India for a sum of Rs. 15,300 Lacs (Previous Year :
Rs. 15,300 Lacs) as Security for compliance of applicable provisions of
the Customs Act, 1962 and the Excise Act, 1944 for EOU unit.
Note - 4
The Company has received Twenty-two show cause notices in its 100% EOU
unit from the Office of the Commissioner of Central Excise, Bhavnagar
and Directorate of Revenue Intelligence which mainly relates to wrong
availment of Cenvat/Customs Duty/Service Tax Credit availed on
inputs/services used for Construction of Dry Dock and Goliath Cranes
and non-submission of original evidences/documents and some procedural
non-compliances. The Company does not forsee any losses on this
account.
Note - 5
Cenvat/Vat recoverable represents the Cenvat/Vat/Central Sales Tax paid
on the purchase of goods and services for the project and operations.
The Company has been legally advised that such amounts are recoverable.
Any unrealised amounts will be added back to the cost of the project or
charged off to the statement of profit and loss, as the case may be in
the year of settlement. The Company has been further advised that the
construction of dry dock and revenue from fabrication at its sites are
exempted from Service Tax and Excise Duty.
Note - 6
In the opinion of the management, Current Assets, Loans and Advances
are of the value stated, if realized in the ordinary course of
business.
Note - 7
Previous year figures have been reworked, regrouped, rearranged and
reclassified, wherever necessary to make them comparable with those of
the current year.
Mar 31, 2013
1.1 As per the Guidelines for the Shipbuilding Subsidy issued by the
Government of India on March 25, 2009, the Company is eligible for
subsidy at the rate of 30% of the contract price, in respect of the
export order received for vessels for which the contracts with the
customers were signed on or before August 14, 2007. Accordingly
Government Subsidy ofRs. 5,360.02 Lacs for the year ended March 31, 2013
(Previous YearRs. 12,753.54 Lacs) has been recognised as revenue
including in respect of Ships under construction on proportionate
completion basis.
1.2 The Company has order for building several panamax sister vessels.
The Company has initiated arbitration proceedings as per terms of
contract for four panamax vessels & subsequently, the Company has
received alleged cancellation notices for these vessels. The Company is
of the view that it has a strong case. However, since most of the
panamax vessels are sister vessels, the Company can deliver these
vessels against orders for balance panamax vessels. Therefore the
Company continues to recognise the revenue on these vessels and during
the year the Company has recognised revenue ofRs. 17,761.95 Lacs
(Previous Year: Rs. 29,047.63 Lacs) on these vessels and subsidy of Rs.
5,328.58 Lacs (Previous Year: Rs. 8,714.29 Lacs).
1.3 In pursuance of the re-negotiation of certain contracts the
customer agreed to forgo advances given by them and, accordingly the
company has accounted Rs. 6,336.59 Lacs (Previous Year: NIL) as other
operating revenue.
Note - 2
CONTINGENT LIABILITIES AND COMMITMENTS
2.1 CONTINGENT LIABILITIES
(No Cash Outflow is expected except stated otherwise)
in lacs
a) Guarantees given by Company''s Bankers
i) Refund Bank Guarantees given to customers 114,943.76 106,819.04
(Net of liabilities accounted for)
ii) Other Bank Guarantees 28,917.31 22,842.57
Bank Guarantees are provided under
Contractual/ Legal obligations.)
b) Demands not acknowledged as Debts
i) Income Tax 1,165.21 1,116.81
(The Company has deposited under protest
Rs. 321.51 Lacs (Previous
YearRs. 321.51 Lacs) out of total
demand)
ii) Service Tax, Excise Duty and VAT 2,327.88 71.83
(Relates to disallowance of CENVAT
Credit and VAT Credit taken by
the Company)
iii) Third Party Claims 5,148.62 220.35
(Relates to demands raised by endors
c) Letters of Credit opened in favour of
suppliers 7,189.04 1,308.97
(Cash Flow is expected on receipt of
materials from suppliers)
2.2 COMMITMENTS
a) Estimated amount of contracts remaining to be executed on Capital
27,548.11 91,862.47 Accounts and not provided for (Net of Advances).
(Cash flow is expected on execution of such Capital Contracts on
progressive basis)
b) Other Commitments (for investment in an Associate and Joint Venture)
802.24 159.24
Note - 3
The Company has issued, a Bond cum legal undertaking for Rs. 44,400 Lacs
(Previous Year: Rs. 44,400 Lacs) in favour of President of India acting
through Development Commissioner of Kandla Special Economic Zone for
setting up a SEZ unit for availing exemption from payment of duties,
taxes or cess or drawback and concession etc, a General Bond in favour
of the President of India for a sum ofRs. 15,300 Lacs (Previous Year: Rs.
15,300 Lacs) as Security for compliance of applicable provisions of the
Customs Act, 1962 and the Excise Act, 1944 for EOU unit.
Note - 4
The Company has received Nineteen show cause notices in its 100% EOU
unit from the Office of the Commissioner of Central Excise, Bhavnagar
and Directorate of Revenue Intelligence which mainly relates to wrong
availment of Cenvat/ Customs Duty/Service Tax Credit availed on
inputs/services used for Construction of Dry Dock and Goliath Cranes
and non-submission of original evidences/documents and some procedural
non-compliances. The company does not forsee any losses on this
account.
Note - 5
In the opinion of the management, Current Assets, Loans and Advances
are of the value stated, if realized in the ordinary course of
business.
Note - 6
SEGMENT REPORTING
A. Segment information as per Accounting Standard - 17 on Segment
Reporting :
Information provided in respect of revenue items for the year ended
March 31, 2013 and in respect of assets / liabilities as at March 31,
2013.
Note - 7
RELATED PARTY DISCLOSURES
a) List of Related parties
1. Subsidiary Company
PDOC Pte. Ltd. (from September 05, 2012)
E Complex Private Limited
Pipavav Marine & Offshore Limited (from February 18, 2013)
2. Associates
SKIL Infrastructure Limited
Conceptia Software Technologies P. Ltd.
3. Key Managerial Personnel Mr. Nikhil P. Gandhi
Mr. Bhavesh P. Gandhi
Mr. Praveen Mohnot (w.e.f. June 01, 2012)
Mr. Jigar Shah (upto May 30, 2012)
4. Enterprises in which key managerial personnel or their relatives
are able to exercise significant influence (Other Related Parties)
Grevek Investments and Finance Private Limited Awaita Properties
Private Limited
Note - 8
On October 12, 2011 the Income Tax authorities carried out search and
seizure operations at the Company premises. The Company has filed
revised return u/s 153A of the Income Tax Act, 1961. Given the
information provided so far and the investigation carried out at the
time of this operation, the Company believes that there will be no
material tax liability. The amount of tax liability, if any shall be
determined upon completion of the assessment by the Tax Authorities.
Note - 9
Previous year figures have been reworked, regrouped, rearranged and
reclassified, wherever necessary to make them comparable with those of
the current year
Mar 31, 2012
1.1 Reserved Shares
The Convertible Share Warrant Holders have the option to convert their
share warrants into 2,05,00,000 Equity Shares (Previous Year
2,52,21,612) of Rs. 10/- each at the terms and conditions as referred in
note no. 4.2
1.2 Terms and Rights attached to Equity Shares
The Company has only one class of Equity Share having a par value of Rs.
10 per share. Each shareholder is eligible for one vote per share held.
In the event of liquidation of the Company, the equity shareholders
will be entitled to receive any of the remaining assets of the Company,
after distribution of all preferential amount. The distribution will be
in proportionate to the number of equity shares held by the
shareholders.
Note - 2
MONIES RECEIVED AGAINST CONVERTIBLE SHARE WARRANTS
2.1 2,52,21,612 Convertible Share Warrants were issued by the Company
in the Financial Year 2010-11 on preferential basis to one of the
promoter Company. Subsequently on the due date warrant holder didn't
exercise the option against said warrants, accordingly Rs. 6,254.96 Lacs
being the amount received against these Convertible Share Warrants has
been forfeited by the Company and credited to the Capital Reserve.
2.2 As approved by the Shareholders in the Annual General Meeting held
on October 5, 2011, the Company has alloted 1,05,00,000 Convertible
Warrants to individual investors and 1,00,00,000 Convertible Warrants
to a promoter Group Company @ Rs. 78 each. Each Warrant is convertible
into one fully paid-up equity share of the Company of Rs. 10 each at a
premium of Rs. 68 per equity share at any time prior to 18 months from
the date of allotment of warrants. Against the above warrants the
Company has received Rs. 3,997.50 Lacs being 25% of the total
consideration as at March 31, 2012, which has been fully utilised for
the purpose for which they have been issued.
3.1 Rupee Term loan from Banks and Financial Institutions referred to
above and Rs. 28,479.48 Lacs included in current maturities of long term
debt in note no. 10 are secured as under:
i) Rs. 101,456.38 Lacs by way of First charge & mortgage on all the
immovable properties, both present & future & hypothecation of all
movable properties, both present and future.
ii) Rs. 5,500 Lacs by way of subservient charge on Fixed Assets, both
present & future.
iii) Rs. 11,672.00 Lacs by way of subservient charge on Fixed Assets and
Current Assets.
iv) Rs. 10,000 Lacs by way of first pari-passu charge on entire moveable
and immoveable properties, both present & future, second pari-passu
charge on Current Assets of the Company.
3.2 Repayment Terms:
i) The above Rupee Term Loans including Rs. 28,479.48 Lacs included in
current maturities of Long Term Debts carry an interest rate ranging
from 11.00% to 14.25%. Out of the above Rupee Term Loan Rs. 44,018.63
Lacs are repayable in 40 equal quarterly instalments commencing from
1st April 2010 to 1st January 2020, Rs. 20,535 Lacs in 40 quarterly
structured instalments commencing from 31 August 2005 to 28th February
2017, Rs. 4,500 Lacs in 40 equal quarterly instalments commencing from
1st October 2009 to 1st July 2019, Rs. 30,777.75 Lacs in 36 equal
quarterly instalments commencing from 1st April 2011 to 1st January
2020, Rs. 1,625 Lacs in 32 quarterly equal instalments commencing from
1st October 2010 to 1st July 2018 , Rs. 5,500 Lacs in 4 quarterly equal
instalments commencing from 29th September 2012 to 29th June 2013, Rs.
11,672 Lacs in 6 quarterly equal instalments commencing from 1st July
2012 to 1st December 2013 and Rs. 10,000 Lacs in 20 equal half yearly
instalments commencing from 20th February 2015 to 31 August 2024.
3.3 All Rupee Term Loans are guaranteed by a promoter group Company and
rupee Term Loan of Rs. 1,11,456.38 Lacs are further secured by pledge of
133,999,994 shares of the Company held by the promoters.
3.4 Rupee Term Loans of Rs. 97,850.63 Lacs (Previous Year: Rs. 79,773.49
Lacs ) are also guaranteed by some of the directors in their personal
capacities.
3.5 Lenders in respect of secured loans aggregating to Rs. 1,01,456.38
Lacs (Previous Year: Rs. 1,08,237.83 Lacs) have right to convert the
loans at their option into fully paid-up equity shares of the Company
if the Company is in default for a period more than what is specified
in the respective loan agreements.
3.6 Vehicle Loans referred to above are secured by the hypothecation of
the specific vehicles financed. The loans are repayable in monthly
equal instalments (including interest) as per repayment schedule
starting from 1st May, 2010 to 1st April, 2015.
3.7 As on March 31, 2012, the Company has overdue ofRs. 1,437.59 Lacs and
Rs. 948.77 Lacs being the loan amount and interest thereon respectively.
4.1 Secured Loans from Banks referred to above includes:
i) Rs. 5,000 Lacs secured by way of first charge on the current assets of
the Company and second charge on Fixed Assets of the Company.
ii) Rs. 20,000 Lacs secured by way of subservient charge on fixed assets
and current assets of the Company both present and future.
iii) Rs. 20,000 Lacs secured by way of first pari-passu charge on fixed
assets both present and future of the Company with existing lenders.
iv) Rs. 32,355.30 Lacs secured by way of first pari-passu charge on
entire current assets of the Company, second pari-passu charge on the
entire fixed assets of the Company.
v) Rs. 5,482.76 Lacs secured by way of hypothecation of stock and
receivables.
vi) Rs. 2,529.88 Lacs secured by way of hypothecation of entire stock of
raw materials, stock in process, finished goods, consumables, stores
and spares, inward RR's/GR's receivables and all other current assets
of the borrower on pari-passu basis with other consortium banks.
4.2 Secured loans of Rs. 42,500.21 Lacs are further guaranteed by a
promoter group Company and some of the directors in their personal
capacity.
4.3 As on March 31, 2012, the Company has overdue of Rs. 4,561.05 Lacs
and Rs. 417.90 Lacs being the loan amount and interest thereon
respectively.
4.4 In accordance with the Accounting Standard (AS - 28) on
"Impairment of Assets" the Management during the year carried out an
exercise of identifying the assets that may have been impaired in
respect of each cash generating unit. On the basis of this review
carried out by the Management, there was no impairment loss on Fixed
Assets during the year.
5.1 Cenvat / VAT recoverable represents the Cenvat/VAT/Central Sales
Tax paid on the purchase of goods and services for the project and
operations. The Company has been legally advised that such amounts are
recoverable. Any unrealized amounts will be added back to the cost of
the project or charged off to the statement of Profit and Loss, as the
case may be in the year of settlement.
5.2 Presently the Company is liable to pay Minimum Alternate Tax (MAT)
under section 115JB of the Income Tax Act, 1961 ("the Act") and the
amount paid as MAT is allowed to be carried forward for being set off
against the future tax liabilities computed in accordance with the
provisions of the Act, other than section 115JB, in next ten years.
Based on the future projection of the performances, the Company will be
liable to pay the Income Tax as per provisions, other than under
section 115JB, of the Act. Accordingly as advised in Guidance Note on
"Accounting for credit available in respect of Minimum Alternate Tax
under the Income Tax Act, 1961" issued by The Institute of Chartered
Accountants of India, Rs. 1,471.30 Lacs (Previous Year: Rs. 1,127.65 Lacs)
being the excess of tax payable under section 115JB of the Act over tax
payable as per the provisions other than section 115JB of the Act has
been considered as MAT credit entitlement and credited to statement of
Profit and Loss. The aggregate MAT credit entitlement available to the
Company as on March 31, 2012 isRs. 2,091.44 Lacs. (Previous Year: Rs.
1,127.65 Lacs) net of reversal of excess provision of Rs. 507.51 Lacs
made in previous year.
6.1 As per the Revised Guidelines for the Shipbuilding Subsidy issued
by the Government of India on 25th March 2009, the Company is eligible
for subsidy at the rate of 30% of the contract price, in respect of the
export order received for vessels for which the contracts with the
customers were signed on or before 14th August 2007. Accordingly
Government Subsidy of Rs. 12,753.54 Lacs for the year ended March 31,
2012 (Previous Year Rs. 7,494.13 Lacs) has been recognised as revenue
including in respect of Ships under construction on proportionate
completion basis.
6.2 The Company has order for building several panamax sister vessels.
The Company has initiated arbitration proceedings as per terms of
contract for four panamax vessels & subsequently, the Company has
received alleged cancellation notices for these vessels. The Company is
of the view that it has a strong case. However, since most of the
panamax vessels are sister vessels, the Company can deliver these
vessels against orders for balance panamax vessels. Therefore the
Company continues to recognise the revenue on these vessels and during
the year the Company has recognised revenue of Rs. 29,047.63 Lacs
(Previous Year: Rs. 9,792.32 Lacs) on these vessels and subsidy of Rs.
8,714.29 Lacs (Previous Year: Rs. 2,937.70 Lacs).
6.3 Employee Benefits
As per Accounting Standard 15 "Employee Benefits", the disclosure of
employee benefits as defined in the accounting standards are given
below:
7.1 CONTINGENT LIABILITIES
(No Cash Outflow is expected except stated otherwise)
Rs. in lacs
2011-2012 2010-2011
a) Guarantees given by Company's Bankers
i) Refund Bank Guarantees given to
customers 14,815.31 17,539.84
(Net of liabilities accounted for)
ii) Other Bank Guarantees 22,842.57 9,065.85
(Bank Guarantees are provided under
Contractual/ Legal obligations.)
b) Demands not acknowledged as Debts
i) Income Tax 1,116.81 397.32
(The Company has deposited under
protest Rs. 321.51 Lacs
(Previous Year Rs. 288.67 Lacs)
out of total demand)
ii) Service Tax and Excise Duty 71.83 58.45
(Relates to disallowance of CENVAT
Credit taken by the Company)
iii) Other Claims 220.35 192.10
(Relates to claims of suppliers and
demand raised by vendor for
Service Tax etc.)
c) Letters of Credit opened in
favour of suppliers 1,308.97 23,388.51
(Cash Flow is expected on receipt
of materials from Suppliers)
7.2 COMMITMENTS
a) Estimated amount of contracts
remaining to be executed on Capital 91,862.47 3,377.20
Accounts and not provided for
(Net of Advances).
(Cash flow is expected on execution of
such Capital Contracts on
progressive basis)
b) Other Commitments 159.24 -
(for investment in an Associate)
Note - 8
In the opinion of the management, Current Assets, Loans and Advances
are of the value stated, if realized in the ordinary course of
business.
Note - 9
The Company has issued, a Bond cum legal undertaking for Rs. 44,400 Lacs
(Previous Year: Rs. 24,400 Lacs) in favour of President of India acting
through Development Commissioner of Kandla Special Economic Zone for
setting up a SEZ unit for availing exemption from payment of duties,
taxes or cess or drawback and concession etc, a General Bond in favour
of the President of India for a sum of Rs. 15,300 Lacs (Previous Year : Rs.
15,300 Lacs) as Security for compliance of applicable provisions of the
Customs Act, 1962 and the Excise Act, 1944 for EOU unit.
Note - 10
The Company has received thirteen show cause notices in its 100% EOU
unit from the Office of the Commissioner of Central Excise, Bhavnagar
and Directorate of Revenue Intelligence which mainly relates to wrong
availment of Cenvat/ Customs Duty/Service Tax Credit availed on
inputs/services used for Construction of Dry Dock and Goliath Cranes
and non-submission of original evidences/documents and some procedural
non-compliances. The Company does not for see any losses on this
account.
Note - 11
On October 12, 2011 the Income Tax Authorities carried out search and
seizure operations at the Company premises. Given the information
provided so far and the investigation carried out at the time of this
operation, the Company believes that there will be no material tax
liability for the year. The amount of tax liability, if any shall be
determined upon completion of the process by the Tax Authorities.
Note - 12 Segment Reporting
A. Segment information as per Accounting Standard - 17 on Segment
Reporting :
Information provided in respect of revenue items for the year ended
March 31, 2012 and in respect of assets / liabilities as at March 31,
2012.
B Segment Identification, Reportable Segments and definition of each
segment
I Primary / Secendary Segment Reporting Format:
The risk - return profile of the Company's business is determined
predominantly by the nature of its products. Accordingly, the business
segment constitute the Primary Segments for disclosure of segment
information.
II Reportable Segments:
Segments have been identified and reported taking into account the
differing risks and returns, nature of products, the organisational
structure and the internal reporting system of the Company.
III Segment Composition:
Shipbuilding and Repairs comprises of Ship-Building and Repair
activities carried out by the Company at or from its Shipyard located
at Pipavav, Gujarat.
Trading includes steel trading activities carried out by the Company.
Note - 13
Related Party Disclosures
a) List of Related parties
1. Subsidiary Company
E Complex Private Limited
2. Associates
SKIL Infrastructure Limited
Conceptia Software Technologies Pvt. Ltd.
3. Key Managerial Personnel
Mr. Nikhil P. Gandhi
Mr. Bhavesh P. Gandhi
Mr. M. Jitendran (upto September 2011)
Mr. Jigar Shah
4. Enterprises in which key managerial personnel or their relatives
are able to exercise significant influence (Other Related Parties)
Awaita Properties Private Limited
Grevek Investments and Finance Private Limited
Note - 14
Disclosure pursuant to Accounting Standard - 7 (AS-7 "Accounting for
Construction Contracts") as notified by Companies Accounting Standards
Rules, 2006:
Note - 15
Previous year figures have been reworked, regrouped, rearranged and
reclassified, wherever necessary to make them comparable with those of
the current year.
Mar 31, 2011
(Rs. in Lacs)
1. Contingent Liabilities: 31.03.2011 31.03.2010
a) Guarantees given by Company's Bankers
i) Refund Bank Guarantees given to
customers (Net of liabilities 17,539.84 48,400.26
accounted for)
ii) Other Bank Guarantees 9,065.85 7,597.99
(Bank Guarantees are provided under
Contractual/ Legal obligations.
No cash outflow is expected)
b) Demands not acknowledged as Debts
i) Income Tax 397.32 40.49
(Out of total demand the Company has
already deposited Rs.288.67 Lacs (P.Y.
Rs. 21.17 Lacs) and no further cash
outflow is expected in
the near future)
ii) Service Tax and excise duty 58.45 -
(Relates to disallowance of Cenvat
Credit taken by the Company.)
iii) Other Claims 192.10 94.01
(Relates to claims of suppliers and
demand raised by vendor for service
tax etc. No Cash Outflow is expected.)
c) Letters of Credit opened in favour
of suppliers 23,388.51 1,891.67
(Cash Flow is expected on receipt of
materials from Suppliers)
2. Estimated amount of contracts remaining to be executed on Capital
Accounts 3,377.20 11,630.89 and not provided for (Net of Advances).
(Cash flow is expected on execution of such Capital Contracts on
Progressive basis)
3. As approved by the Shareholders in Extra-Ordinary General Meeting
held on September 07, 2010, the Company has issued 2,52,21,612
Convertible Share Warrants to SKIL Infrastructure Limited, the
Promoters of the Company, having a currency period of eighteen months
from the date of issue of Share Warrant i.e. September 22, 2010. Each
Share Warrant provides the holder an option to convert it into one
fully paid up Equity Share of Rs. 10/- each at an exercise price of Rs.
99.10 per equity share. The company has received Rs. 6,254.96 Lacs upto
March 31, 2011 against the above Convertible Share Warrants. No Share
Warrants have been converted during the year.
4. During the year the company has decided to value the inventories of
its major raw materials viz. steel plates, profiles & equipments on
Specific Identification Method as against Weighted Average Method. This
change in method of valuation has resulted into inventory of raw
materials higher by Rs.179.11 Lacs and consumption of raw materials
lower by the equal amount & the profit for the year lower by Rs 75.40
Lacs.
5. The Company has issued, a Bond-cum-Legal Undertaking for Rs. 24,400
Lacs (Previous Year Rs. 24,400 Lacs) in favour of President of India
acting through Development Commissioner of Kandla Special Economic Zone
for setting up a SEZ unit for availing exemption from payment of
duties, taxes or cess or drawback and concession etc, and a General
Bond in favour of the President of India for a sum of Rs. 15,300 Lacs
(Previous Year. Rs. 15,300 Lacs) a security for compliance of
applicable provisions of the Customs Act, 1962 and the Excise Act, 1944
for EOU unit.
6. In the opinion of the management, Current Assets, Loans and
Advances are of the value stated, if realized in the ordinary course of
business.
7. As per the Revised Guidelines for the Shipbuilding Subsidy issued
by the Government of India on March 25, 2009, the Company is eligible
for subsidy at the rate of 30% of the contract price, in respect of the
export order received for vessels for which the contracts with the
customers were signed on or before August 14, 2007. Accordingly
Government Subsidy of Rs. 7,494.13 Lacs for the year (Previous Year Rs.
8,814.91 Lacs) has been recognised as revenue in respect of Ships under
construction on proportionate completion basis.
8. Advances recoverable in cash or in kind or for the value to be
received in Schedule 11 includes Rs. 5,906.85 Lacs (Previous Year Rs.
4,309.18 Lacs), being the Cenvat/VAT/Central Sales Tax paid on the
purchase of goods and services for the project. The company has been
legally advised that such amounts are recoverable. Any unrealized
amounts will be added back to the cost of the project or charged off to
the profit & loss account, as the case may be in the year of
settlement.
9. The company has received two show cause notices in its 100% EOU
unit from the Office of the Commissioner of Central Excise, Bhavnagar
and Directorate of Revenue Intelligence which mainly relates to
availment of Cenvat/Customs Duty/ Service Tax Credit availed on
inputs/services used for Construction of Dry Dock and Goliath Cranes
and Non-submission of original evidences/documents. The company has
also received five show cause notices in its SEZ Unit from the Office
of the Assistant Commissioner of Service Tax, Bhavnagar, mainly relates
to non submission of original evidence / documents. The company does
not forsee any losses on this account.
Liability for Gratuity and Leave Encashment is provided on actuarial
basis for the Company as a whole, the amounts pertaining to the
Director is not ascertainable and therefore not included above.
b) The computation of net profit for the purpose of directors
remuneration under section 349 of the Companies Act 1956 have not been
enumerated since no commission has been paid to any of the directors.
Fixed Managerial Remuneration has been paid to the whole time director.
Defined Benefit Plan
The Employees Gratuity Fund Scheme, which is a defined benefit plan, is
managed by the trust maintained with Life Insurance Corporation of
India (LIC). The company has made contribution to the above mentioned
trust upto the financial year ended March 31, 2009 and thereafter no
contribution have been made.
The present value of the obligation is determined based on actuarial
valuation using Projected Units Credit Method, which recognizes each
period of service as giving rise to additional units of employees
benefit entitlement and measures each unit separately to buildup the
final obligation.
10. Segment Reporting
The Company's activities predominantly revolve around the shipbuilding,
ship repair and other related activities. Considering the nature of
Company's business and operations, there is only one reportable segment
(business and / or geographical).
11. Related Party Disclosures
a) List of Related parties
1. Subsidiary Company
E Complex Private Limited
2. Associates
SKIL Infrastructure Limited
3. Key Managerial Personnel
Mr. Nikhil P. Gandhi
Mr. Bhavesh P. Gandhi
Mr. J P Rai (upto 30-06-2010)
Mr. M. Jitendran (w.e.f 01-07-2010)
4. Enterprises in which key managerial personnel or their relatives
are able to exercise significant influence (Other Related Parties)
Awaita Properties Private Limited
12. In respect of Offshore Vessels (OSVs), the Company has accounted
for contract revenue and expenses based on the proportion of completion
of contracts as certified by technical experts. With an aim to allocate
the profit on the said contracts to whole of the contract during the
year a provision of Rs. 8,372.32 Lacs (Previous Year Rs. 11,400.78
Lacs) being the proportionate cost to be incurred has been made. The
total provision on this account as on March 31, 2011 is Rs. 8,372.32
Lacs (Previous Year Rs. 11,400.78 Lacs).
13. Lenders in respect of secured / unsecured loans aggregating to Rs.
1,08,237.83 Lacs (Previous Year Rs. 97,179.75 Lacs) have right to
convert them at their option into fully paid up equity shares of the
company if the company is in default for a period more than what is
specified in respective loan agreements.
14. Presently the company is liable to pay Minimum Alternate Tax (MAT)
under section 115JB of the Income Tax Act, 1961 ("the Act") and the
amount paid as MAT is allowed to be carried forward for being set off
against the future tax liabilities computed in accordance with the
provisions of the Act, other than section 115JB, in next ten years.
Based on the future projection of the performances the company will be
liable to pay the Income Tax as per provisions, other than under
section 115JB, of the Act. Accordingly as advised in Guidance Note on
"Accounting for credit available in respect of Minimum Alternate Tax
under the Income Tax Act, 1961" issued by The Institute of Chartered
Accountants of India, Rs. 1,127.65 Lacs being the excess of tax payable
under section 115JB of the Act over tax payable as per the provisions
other than section 115JB of the Act has been considered as MAT credit
entitlement and credited to Profit and Loss Account. The aggregate MAT
credit entitlement available to the company as on March 31, 2011 is Rs.
1,127.65 Lacs.
15. In accordance with the Accounting Standard (AS Ã 28) on
"Impairment of Assets" the Management during the year carried out an
exercise of identifying the asset that may have been impaired in
respect of each cash generating unit. On the basis of this review
carried out by the Management, there was no impairment loss on Fixed
Assets during the year ended March 31, 2011.
16. Previous year figures have been reworked, regrouped, rearranged
and reclassified, wherever necessary to make them comparable with those
of the current year.
Mar 31, 2010
(Rs. In Lacs)
1. Contingent Liabilities: 31.03.2010 31.03.2009
a) Guarantees given by Companys Bankers
i) Refund Bank Guarantees given to
customers (Net of liabilities accounted 48,400.26 50,642.13
for)
ii) Other Bank Guarantees(Bank Guarantees
are provided under Contractual/ 7,597.99 1,035.62
Legal obligations. No cash outflow is
expected)
b) Demands not acknowledged as Debts
i) Income Tax 40.49 1.84
(The Company has deposited Rs.21.17 Lacs
out of total demand and no
further cash outflow is expected in the
near future)
ii) Other Claims (Mainly related to Geology
and Mining Charges, No Cash 94.01 85.36
Outflow is expected in the near future)
c) Letters of Credit opened in favour of
suppliers (Cash Flow is expected on 1,891.67 9,321.04
receipt of materials from Suppliers)
2. Estimated amount of contracts remaining to
be executed on Capital Accounts and 11,630.89 15,624.76
not provided for (Net of Advances).
(Cash flow is expected on execution
of such
Capital Contracts on Progressive basis)
3. During the year, the Company had raised Rs. 49,866.58 Lacs through
its Initial Public Offer (IPO) and allotted 85,450,225 Equity Shares of
Rs.10 each on 1st October, 2009. The above proceeds have been fully
utilized as à Rs.17,926.68 Lacs for Construction of Facilities for
Shipbuilding, Ship Repairs and the Offshore Business; Rs.24,403.81 Lacs
for Working Capital; Rs.2,416.51 Lacs for General Corporate Purpose and
Rs.5,119.58 Lacs for Share Issue Expenses.
4. The Company has issued, a Bond-cum-Legal Undertaking for Rs.24,400
Lacs in favour of President of India acting through Development
Commissioner of Kandla Special Economic Zone for setting up a SEZ unit
for availing exemption from payment of duties, taxes or cess or
drawback and concession etc, and a General Bond in favour of the
President of India for a sum of Rs.15,300 Lacs as a security for
compliance of applicable provisions of the Customs Act, 1962 and the
Excise Act, 1944 for EOU unit.
5. In the opinion of the management, Current Assets, Loans and
Advances are of the value stated, if realized in the ordinary course of
business.
6. As per the Revised Guidelines for the Shipbuilding Subsidy issued
by the Government of India on 25th March 2009, the Company is eligible
for subsidy at the rate of 30% of the contract price, suitably adjusted
for any unintended benefits by the SEZ unit in respect of the export
order received for vessels for which the contracts with the customers
were signed on or before 14th August 2007. Accordingly Government
Subsidy of Rs.8,814.91 Lacs for the year has been recognised as revenue
in respect of Ships under construction on proportionate completion
basis. This includes Rs.4,422.85 Lacs (including rs.3,724.02 Lacs of
customs duty), being the indirect tax benefits availed by the SEZ unit.
The company is of the view that the above tax benefits would in any
case be available for export of ships irrespective of whether the ships
are built in SEZ or otherwise and do not include any unintended
benefits and hence need not be netted against the subsidy so
recognised.
7. Advances recoverable in cash or in kind or for the value to be
received in Schedule 11 includes Rs. 4,309.18 Lacs (Previous Year
rs.3,848.57 Lacs), being the Cenvat/VAT/Central Sales Tax paid on the
purchase of goods and services for the project. The company has been
legally advised that such amounts are recoverable. Any unrealized
amounts will be added back to the cost of the project.
8. The company has received two show cause notices in its 100% EOU
from the Office of the Commissioner of Central Excise, Bhavnagar and
Directorate of
9. Managerial Remuneration:
Revenue Intelligence which mainly relates to availment of
Cenvat/Customs Duty/Service Tax Credit availed on inputs/services used
for Construction of Dry Dock and Goliath Cranes and Non-submission of
original evidences/documents. The company does not forsee any losses
on this account and duty reversal, if any, will be added back to the
cost of project.
i) The above managerial remuneration is subject to approval of Central
Government in terms of Sec. 269 of the Companies Act 1956, for which
the Company has fled the application.
ii) Liability for Gratuity and Leave Encashment is provided on
actuarial basis for the Company as a whole, the amounts pertaining to
the Director is not ascertainable and therefore not included above.
b) The computation of net profit for the purpose of directors
remuneration under section 349 of the Companies Act 1956 have not been
enumerated since no commission has been paid to any of the directors.
Fixed Managerial Remuneration has been paid to the whole time director.
Defined Beneft Plan
The Employees Gratuity Fund Scheme, which is a defined benefit plan is
managed by the trust maintained with Life Insurance Corporation of
India (LIC).
The present value of the obligation is determined based on actuarial
valuation using Projected Units Credit Method, which recognizes each
period of service as giving rise to additional units of employees
benefit entitlement and measures each unit separately to buildup the
final obligation.
10. Segment Reporting
The CompanyÃs activities predominantly revolve around the shipbuilding
activity. Considering the nature of CompanyÃs business and operations,
there is only one reportable segment (business and / or geographical)
in accordance with the requirements of the Accounting Standard 17 -
"Segment Reporting" notified in the Companies (Accounting Standards)
Rules 2006.
11. Related Party Disclosures
a) List of Related parties
1. Subsidiary Company
E Complex Private Limited
2. Associates
SKIL Infrastructure Limited Punj Lloyd Limited
3. Key Managerial Personnel
Mr. Nikhil P. Gandhi
Mr. Bhavesh P. Gandhi
Mr. Ray Stewart (upto 31-01-2009)
Mr. J P Rai (w.e.f 02-02-2009)
4. Enterprises in which key managerial personnel or their relatives
are able to exercise significant influence (Other Related Parties)
Awaita Properties Private Limited
12. In respect of Offshore Vessels (OSVs), the Company has accounted
for contract revenue and expenses based on the proportion of completion
of contracts as certifed by technical experts. With an aim to allocate
the proft on the said contracts to whole of the contract a provision of
Rs 11,400.78 Lacs being the proportionate cost to be incurred has been
made in the books of accounts.
13. Lenders in respect of secured / unsecured loans aggregating to Rs
97,179.75 Lacs have right to convert them at their option into fully
paid up equity shares of the company if the company is in default for a
period more than what is specifed in respective loan agreements.
14. In accordance with the Accounting Standard (AS Ã 28) on
"Impairment of Assets" the Management during the year carried out an
exercise of identifying the asset that may have been impaired in
respect of each cash generating unit. On the basis of this review
carried out by the Management, there was no impairment loss on Fixed
Assets during the year ended 31.03.2010.