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Notes to Accounts of Snowman Logistics Ltd.

Mar 31, 2017

1. Capital Management (a) Risk Management

The Company''s objective when managing capital are to :

Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio:

Net debt (total borrowings net of cash and cash equivalents) divided by total equity (as shown in the balance sheet)

(i) Loan Covenants

Loan covenants related to HDFC Bank Ltd

No further borrowings without No Objection Certificate (NOC) from HDFC

Prior approval to be sought for any change in share holding pattern/ Management of the Company

No Guarantee to be issued by the company without Bank''s NOC

No loans to be extended by the company without prior approval from HDFC bank

All Cash flows/ Cash Management Services (CMS)/ Foreign currency transactions and any other business of the company should be routed through HDFC Bank

Maximum Total Outstanding Liability (TOL)/Total Net Worth (TNW) to be maintained at 1 times during the tenor of the loan.

Minimum Debt Service Coverage Ratio (DSCR) of 1.35 times to be maintained during the tenure of the loan.

Fixed asset cover to be maintained at >=2

Financial projections to be met with 10% variation

Majority holding by Gateway Distriparks Limited (GDL) to be maintained.

Loan covenants related to International Finance Corporation (IFC)

Financial debt should not exceed INR 80 Million Following financial ratios to be maintained:

a) Current ratio of at least 1.33

b) Liabilities to tangible net worth ratio of not more than 1.50

c) Historic debt service coverage ratio of not less than 1.50

d) Fixed asset coverage ratio of not less than 2

As represented by the Company there has been no breach of above covenants during the year.

2. Disclosures under Indian accounting standard 19

a) Post Retirement Benefit- Defined Contribution Plans

The Company has recognized an amount of INR 83.36 (2016: INR 99.18) as expenses under the defined contribution plans in the Statement of Profit and Loss in respect of contribution to Provident Fund for the year ended March 31, 2017.

b) Post Retirement Benefit- Defined Benefit Plan

The Company makes provision for gratuity based on actuarial valuation done on projected unit credit method at each Balance Sheet date.

The Company makes annual contribution to the Gratuity Fund Trust which is maintained by LIC of India, a defined benefit plan for qualifying employees. The Scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment as per provisions of Payment of Gratuity Act, 1972. The benefit vests after 5 years of continuous service.

The present value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at the Balance Sheet date.

3. Related party transactions

In compliance with Ind AS 24 - "Related Party Disclosures", as notified under Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 the required disclosures are given in the table below:

(a) Name of related parties and related parties relationship

Associates:

1. Gateway Distriparks Limited

2. Gateway East India Private Limited

3. Gateway Distriparks (South) Private Limited

4. Gateway Distriparks (Kerala) Limited

5. Gateway Rail Freight Limited.

6. Chandra CFS and Terminal Operators Private Limited Key Management Personnel/ Executive Directors:

Mr. Sunil Nair, CEO and Whole time Director (appointed w.e.f. December 1, 2016)

Mr. A M Sundar, CFO, Company Secretary and Compliance Officer Mr. Ravi Kannan, CEO and Director (resigned w.e.f. February 2, 2016)

Mr. Pradeep Kumar Dubey, COO and Director (resigned w.e.f. November 9, 2016)

b) Directors of the Company Independent and Non-Executive Directors

Mr. Prem Kishan Dass Gupta (Non-Executive)

Mrs. Mamta Gupta (appointed w.e.f. November 5, 2015) (Non-Executive)

Mr. Tomoyuki Masuda (appointed w.e.f. April 28, 2015) (Non-Executive Independent)

Mr. Michael Philip Pinto (resigned w.e.f. August 14, 2016) (Non-Executive Independent)

Mr. Saroosh Cowasjee Dinshaw (resigned w.e.f. August 14, 2016) (Non-Executive Independent) Mr. Shabbir Hakimuddin Hassanbhai (Non-Executive Independent)

Mr. AKT Chari (Non-Executive Independent)

Mr. Bhaskar Avula Reddy (appointed w.e.f. April 26, 2016) (Non-Executive Independent)

Mr. Arun Gupta Kumar (appointed w.e.f. April 26, 2016) (Non-Executive Independent)

Mr. Gopinath Pillai (resigned w.e.f. October 27, 2015) (Non-Executive)

Mrs. Chitra Gowri Lal (resigned w.e.f. August 19, 2015) (Non-Executive Independent)

Note: Provision for leave encashment and group gratuity, which is based on actuarial valuation done on overall company basis, is excluded.

4. Segment Information

(i) Snowman Logistics limited is engaged in providing integrated cold chain solution to users in India. The company''s infrastructure comprises of compartmentalized temperature - controlled warehouses in all major cities of the country and a fleet of temperature controlled trucks. The company is focused on its core business of temperature controlled warehousing for frozen and chilled products with transportation division acting as an enabler. The Company''s Management examines the business from two perspectives as followed:

Temperature controlled service

This part of the business comprises of the temperature controlled warehousing service and temperature controlled transportation service operating across locations servicing customers on pan-India basis. Company''s warehousing/ transportation solutions offer services across a spectrum of temperature from ambient to chilled and frozen (i.e. 25°C to -20°C).

Ambient Services

This part of the business provides dry warehousing facility also to the customers using the temperature controlled facilities so that the customer gets a one stop solution for all the warehousing requirement. These warehouses provide dock stuffing/destuffing, palletized storage facilities and are equipped with latest machinery and skilled manpower.

5. Exceptional Item

During the year 2016-17, the Company terminated the contract with a major customer in the Food Services Division. The contract was signed for a three year period in 2015-16. The contract required the Company to procure, store and distribute food products used by the customer in its catering business. Since the volumes envisaged by the Company were not being met, the division was incurring losses. The management found it prudent to cut losses by rescinding the contract rather than go with it for 2 more years. The Company had to incur a loss of Rs.265.91 on account of exit costs, which has been shown as an exceptional item in the financials for the year ended March 31, 2017.

6. First time adoption of Ind AS

1. Transition to Ind AS

These are the company''s first financial statements prepared in accordance with Ind AS.

The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from April 1, 2016, with a transition date of April 1, 2015. These financial statements for the year ended March 31, 2017 are the first the Company has prepared under Ind AS. For all periods upto and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with the previously applicable Indian GAAP (hereinafter referred to as "IGAAP")

The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. Ind AS 101 requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements be applied retrospectively and consistently for all financial years presented. Accordingly, the Company has prepared financial statements which comply with Ind AS for year ended March 31, 2017, together with the comparative information as at and for the year ended March 31, 2016. The Company''s opening Ind AS Balance Sheet has been prepared as at April 1, 2015, the date of transition to Ind AS.

In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (IGAAP). An explanation of how the transition from IGAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions and exceptions availed

In preparing these Ind AS financial statements, the Company has availed certain exemptions and exceptions in accordance with Ind AS 101, as explained below. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at the transition date under Ind AS and IGAAP have been recognized directly in equity (retained earnings or another appropriate category of equity). This note explains the adjustments made by the Company in restating its IGAAP financial statements, including the Balance Sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.

A.1 Ind AS optional exemptions

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous IGAAP to Ind AS.

A. 1. 1. Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the IGAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the company has elected to measure all of its property, plant and equipment and intangible assets at their IGAAP carrying value.

A. 1.2 Share based payment transactions

Ind AS 101 permits a first-time adopter not to apply Ind AS 102 Share-based payment to equity instruments that vested before date of transition to Ind AS. Accordingly, the company has elected not to apply the Ind AS 102 Share-based payments to employee stock options which were vested before transition date of April 1, 2015.

A.2 Ind AS mandatory exceptions

The company has applied the following exceptions from full retrospective application of Ind AS mandatorily required under Ind AS 101: A.2.1 Estimates

An entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with IGAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with IGAAP.

7. Reconciliations between IGAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from IGAAP to Ind AS.

b: Notes to first-time adoption:

Note 8: Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under the IGAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31, 2016 decreased by INR 1.72. There is no impact on the total equity as at March 31, 2016.

Note 9 : Security deposits

Under the previous GAAP, interest free security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognized as prepaid rent.

Note 10: Proposed dividend

Under the previous GAAP, dividends proposed by the Board of Directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of INR NIL as at March 31, 2016 (April 1, 2015 INR 1,002.32) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

Note 6: Retained earnings

Retained earnings as at April 1, 2015 has been adjusted consequent to the Ind AS transition adjustments

Note 11: Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as "other comprehensive income" includes remeasurements of defined benefit plans, foreign exchange differences arising on translation of foreign operations, effective portion of gains and losses on cash flow hedging instruments and fair value gains or (losses) on FVOCI equity instruments. The concept of other comprehensive income did not exist under IGAAP.

Note 12: Rent equalization

Ind AS 17 Leases covers lease related to land and accordingly rental payments towards the lease are equalised for rent free period and corresponding rent equalization liability is accounted for such rent free period.

Note 9: Capitalization of Borrowing Cost

Under Ind AS 23 Borrowing Costs, borrowing costs that are directly attributable to obtaining qualifying assets are those borrowing costs that would have been avoided if the expenditure on the qualifying asset had not been made. If cash was not spent on other qualifying assets, it could be directed to repay this specific loan, accordingly borrowing cost in relation to avoidable cost is capitalized during 2015-16.

Note 10: Revenue from Operations

The Company has evaluated its contract with one of the customer''s, wherein in substance company is acting as an agent. Accordingly, the Company has recognized revenue only to the extent of the net amount received/ receivable under the arrangement in return for its performance under the contract. Under IGAAP, the transaction was accounted on gross basis. This has resulted in reduction in sales and cost of sales by INR 1,526.28. This has no impact on the loss for the year.

Note 11: Deferred Tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements. Also, deferred tax has been recognized on the adjustments made on transition to Ind AS.

Note 12: Leases

Land Leases for a term of less than 30 years are considered as operating leases and classified under prepayments under other non-current assets.

Note 13: Other Income

Liabilities no longer required written back has been adjusted against the respective expense head in statement of profit and loss.

14. Previous year figures

The previous year’s figures have been reclassified to conform to this year''s classification.


Mar 31, 2016

(d) Rights, preferences and restrictions attached to shares:

Equity shares :The company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion to their share holding.

1. Shifting of Registered Office

The Company vide resolution passed in the Board of Directors meeting dated February 2, 2016 and the members of the Company vide postal ballot and e-voting have resolved to shift the registered office of the Company from the state of Karnataka to the state of Maharashtra, Mumbai. The Company is in the process of filling the application with the Registrar of Companies and Regional Director.

2. Previous year figures

The previous year’s figures have been reclassified to conform to this years'' classification.


Mar 31, 2015

General Information

Snowman Logistics Limited (the 'Company') is engaged in cold chain business in India. Snowman offers a range of complete and unique facilities for transportation, storage,handling and retail distribution of frozen and chilled products.

The Company had changed its name from Snowman Frozen Foods Limited to Snowman Logistics Limited and obtained a fresh certificate of incorporation dated March 17, 2011. The equity shares of the Company were listed on The National Stock Exchange of India Limited and Bombay Stock Exchange of India Limited on September 12, 2014.

1. Share capital

Rights, preferences and restrictions attached to shares:

Equity shares :The company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion to their share holding.

(g) Shares reserved for issues under options

Refer Note 35 for details of shares to be issued under the Employees Stock Option Plan.

2. Reserves and surplus

Nature of security and terms of repayment for secured borrowings:

Nature of security Terms of Repayment

i) Term loan from Bank (HDFC Principal is repayable (for each Bank) amounting to Rs.479,000,000 disbursement) in 20 equal quarterly (2014:Rs.609,000,000)is secured instalments starting from by paripassu charge on all assets August 2013. namely fixed and current assets present and future of the company.

ii) Term loans from International Principal is repayable in 12 half Finance Corporation (IFC)amounting yearly instalments starting from to Rs. 425,001,668 (2014:Rs. January 2015. 450,000,000) are secured by paripassu charge on all assets namely fixed and current assets present and future of the company.

3. Contingent liabilities

Bank guarantees:

Financial Guarantee 2,160,212 7,458,070

Performance Guarantee 12,900,000 259,472

Income Tax Matters (Amount paid under protest Rs. NIL) 770,643 770,643 (2014: Rs. 574,603)

Wealth Tax Matters (Amount paid under protest Rs. NIL) 301,833 301,833 (2014: Rs. 301,833)

Sales Tax Matters (Amount paid under protest Rs. NIL) 1,255,044 1,255,044 (2014: Rs. 480,051) 17,387,732 10,045,062

Note:

It is not practicable for the Company to estimate the timings of cash outflows, if any in respect of the above pending resolution of the respective proceedings.

4. Disclosures under Accounting Standard 15

a) Post Retirement Benefit- Defined Contribution Plans

The Company has recognised an amount of Rs. 8,058,827 (2014: Rs. 7,521,055) as expenses under the defined contribution plans in the Statement of Profit and Loss in respect of contribution to Provident Fund for the year ended March 31, 2015.

b) Post Retirement Benefit- Defined Benefit Plan

The Company makes provision for gratuity based on actuarial valuation done on projected unit credit method at each Balance Sheet date.

The Company makes annual contribution to the Gratuity Fund Trust which is maintained by LIC of India, a defined benefit plan for qualifying employees. The Scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment as per provisions of Payment of Gratuity Act, 1972. The benefit vests after 5 years of continuous service.

The present value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at the BalanceSheet date.

(c) Other employee benefit plan:

The liability for leave encashment and compensated balances as at year end is Rs. 2,066,683 (2014: Rs. 2,453,240).

5. Employee stock option plan

Snowman Logistics Limited Stock Option Plan 2012 (ESOP 2012):

Pursuant to the resolution passed by the Shareholders at the Extraordinary General Meeting held on April 24, 2012, the Company had introduced new ESOP scheme for eligible Directors and employees of the Company. Under the scheme, options for 5,145,350 (fifty one lakh forty five thousand three hundred and fifty) shares would be available for being granted to eligible employees of the Company and each option (after it is vested) will be exercisable for one equity share of Rs. 10.60, Rs. 15.40 and Rs.18.30. Compensation Committee finalises the specific number of options to be granted to the employees. Vesting of the options shall take place over a maximum period of 3 years with a minimum vesting period of 1 year from the date of grant.

6. Related party disclosures

(a) Names of related parties and nature of relationship:

Holding company:

Gateway Distriparks Limited (till September 9, 2014 and associate company thereafter).

Associates:

1. Gateway East India Private Limited

2. Gateway Distriparks (South) Private Limited (amalagamated with Gateway Distriparks Limited w.e.f. March 12, 2015)

3. Gateway Distriparks (Kerala) Limited

4. Gateway Rail Freight Limited.

5. Chandra CFS and Terminal Operators Private Limited

Key management personnel (KMP):

Mr. Ravi Kannan, CEO and Director

Mr. A M Sundar, CFO, Company Secretary and Compliance Officer

7. (a) Amount utilised for share issue expenses

Amount utilised for share issue expenses Rs. 138,440,409 includes payments made to merchant bankers, attorneys, consultants and registrars towards Initial Public Offering of shares.

8. Previous year figures

The previous years figures have been reclassified to conform to this years' classification.

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