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Notes to Accounts of Taneja Aerospace & Aviation Ltd.

Mar 31, 2015

Company Background

Taneja Aerospace and Aviation Limited (TAAL) is a public limited company incorporated in India under the Companies Act, 1956. TAAL is engaged in the business of manufacture and sale of various parts and components to aviation industry, providing services related to Aircraft Charter, Airfield & MRO and Allied Services.

1.1 As at 31st March, 2015, the Company has 15,000 Global Depository Receipts (GDR's) outstanding for conversion into Equity shares (equivalent to 30,000 Equity Shares).

2.1 Details of Securities and other terms :

The Term Loan from Bank outstanding as on 31st March, 2015 amounting to Rs. 0.15 Crore (including Current Maturities of Long Term Borrowings) is secured by a first charge on assets created out of TL – Building Rs. 4.60 Crores and Plant and Equipment Rs. 10.48 Crores of the Company and second charge on specific free hold lands to the extent of 26.87 acres and construction thereon of the Company at Belagondapalli Village, Thally Road, Denkanikottai Taluk, Krishnagiri District, Belagondapalli – 635114, Tamil Nadu.

The Term Loan from Bank outstanding as on 31st March, 2015 amounting to Rs. 18.44 Crores (including Current Maturities of Long Term Borrowings) is secured by a first charge on assignment of Hanger-1 rental/receivables from lessee and specific free hold lands to the extent of 36.93 acres of land and development thereon of the Company at Belagondapalli Village, Thally Road, Denkanikottai Taluk, Krishnagiri District, Belagondapalli – 635114, Tamil Nadu. Second Pari Passu Charge is created on other fixed assets (both movable and immovable) of the Company along with other consortium banks as collateral security.

The Term Loan from Bank outstanding as on 31st March, 2015 amounting to Rs. 15.34 Crores (including Current Maturities of Long Term Borrowings) is secured by a first charge on assignment of Hanger-2 rental/receivables from lessee and specific free hold lands to the extent of 37.11 acres of land and development thereon of the Company at Belagondapalli Village, Thally Road, Denkanikottai Taluk, Krishnagiri District, Belagondapalli – 635114, Tamil Nadu as collateral security.

3.1 Details of Securities and other terms

Working Capital Loan from Banks is secured against hypothecation of Stocks and Book Debts on pari-passu basis and second charge on Fixed Assets.

4 The Board of Directors of the Company have in their meeting held on October 9, 2014, approved the Scheme of Arrangement ("Scheme") under the Companies Act, 1956/ 2013 between Taneja Aerospace and Aviation Limited ('TAAL') and its wholly owned subsidiary TAAL Enterprises Limited ('TEL'), where the Charter Business including investment in First Airways Inc, USA (Wholly Owned Subsidiary) and Engineering Design Services Business conducted through TAAL Tech India Private Limited (Subsidiary) would be demerged into TEL with appointed date as October 1, 2014. The excess of book value of assets over the book value of liabilities to be transferred will be adjusted against Securities Premium Account (amounting to Reduction in Share Capital) as approved by the shareholders at the Extra Ordinary General Meeting held on April 15, 2015.

Pursuant to the Demerger, shareholders of the Company will get 1 fully paid up Equity Share of Rs. 10 each of TEL for every 8 fully paid up Equity Shares of Rs. 5 each held in the Company.

After clearance of the draft Scheme by the shareholders and various regulatory authorities, the Company's petition was admitted by the Hon'ble Madras High Court on April 29, 2015 and order sanctioning the Scheme has been received on July 23, 2015.

Effect of the Scheme will be given upon filing the aforesaid copy of the Scheme to the concerned Registrar of Companies and the Scheme becoming effective (Effective Date).

5 Katra Auto Engineering Private Limted purchased land for the Company out of interest free advance of Rs. 646 Lakhs (Upto Previous Year Rs. 645.50 Lakhs) provided by the Company. As on 11th June, 2014, Katra Auto Engineering Private Limited has become 100% Subsidiary of the Company and therefore during the year, the said advance given to Katra Auto Engineering Private Limted has been transferred to Long Term Capital Advances from Capital Work-in-Progress.

6 In line with the objects of the Company and as approved by the Board, the Company has started during the current year trading in electrical goods.

7 The shareholders of the Company had by way of postal ballot passed a resolution dated 5th August, 2013 approving the transfer of Assets and Liabilities of the Company's Engineering Design Services Division to its Subsidiary 'TAAL Tech India Private Limted', with effect from 1st August, 2013. Accordingly, related Assets and Liabilities were transferred at their book values and the excess of Assets over Liabilities amounting to Rs. 766.44 Lakhs was treated as Inter Corporate Deposit to Subsidiary.

8 The Company considers its investment in and loans to subsidiaries as strategic and long term in nature and accordingly, in the view of the management, any decline in the value of such long term investments in subsidiaries is considered as temporary in nature and hence no provision for dimunition in value is considered necessary.

9 The balances in Debtors and Creditors accounts are subject to confirmations and reconciliations if any.

10 Current Assets, Loans and Advances are of the value stated if realised in the ordinary course of business.

11 In the Opinion of the Board, adequate steps are taken to make sufficient provision for all liabilities.

12 Consequent to Hive Off of Engineering Design Services Division (Refer Note No. 39), the Statement of Profit and Loss and the Cash Flow Statement of the previous year consists of the Results and Cash Flows of Engineering Design Services Division upto 31st July, 2013. Hence the current year figures are not comparable with the previous year figures.

13 Previous year figures have been regrouped and reclassified wherever necessary to conform to the current year classification.


Mar 31, 2014

1.1 Provisions, Contingent Liabilities and Contingent Assets

(a) Provisions are recognized when the Company has a legal and constructive obligation as a result of past event, for which it is probable that a cash outflow will be required and a reliable estimate can be made of the amount of obligation.

(b) Contingent Liabilities are not provided but are disclosed in Notes to Accounts. A disclosure for a Contingent Liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources.

(c) Contingent Assets are neither recognized nor disclosed in the financial statements.

1.2 Earnings Per Share

The Basic and Diluted Earnings Per Share ("EPS") is computed by dividing the net profit or loss after tax for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year.

A) Contingent Liabilities (Rs. in Lakhs)

Particulars 31st March, 2014 31st March, 2013

(a) Claim against the Company not acknowledged as debts :

(i) Custom Duty 622.67 622.67

(ii) Service Tax 441.37 317.00

(iii) Excise Duty 103.97 -

(iv) Sales Tax 78.00 -

(b) Future Cash Flows in respect of the above, if any, is determined only on receipt of judgement/decisions pending with relevant authorities. The Company does not expect the outcome of matters stated above to have a material adverse effect on the Company''s financial condition, result of operations or cash flows.

* Since the company is covered by the provisions of Sec. 115 JB of the Income Tax Act, 1961 and credit entitlement would be available in the subsequent years, no provision has been made for Tax Expenses.

3 During the year 2007-08, Company acquired an Aircraft on operating lease from an overseas lease finance company for the period of 120 months.

The payments under lease for the future period are :

* Including the part amount capitalised

The above figures do not include contribution to gratuity fund and provision for leave encashment as separate figures are not ascertainable for the Managing Director.

The Company has not paid any commission to the Managerial Personnel. Hence, the calculation under section 198/349 read with section 309 of the Companies Act, 1956 is not applicable.

The Board of Directors at its meeting dated November 30, 2013 had re-appointed Mr. C S Kameswaran as Whole Time Director designated as Managing Director of the Company with effect from December 1, 2013 up to November 30, 2014. The said appointment is subject to the approval of the shareholders of the Company at the forthcoming Annual General Meeting. The remuneration paid to him is within the limits specified under section 198 read together with Schedule XIII of the Companies Act, 1956.

4 Disclosure required by Clause 32 of the Listing Agreement

a) Amount of Investment in / Loans and Advances in the nature of loans to subsidiaries and associates for the year ended 31st March

* These loans and advances fall under the category of loans and advances in the nature of loans where there is no repayment schedule and are repayable on demand.

b) Investment by the loanee in the shares of the parent company and subsidiary company, when the Company has made a loan or advance in the nature of loan : Investment made by Indian Seamless Enterprises Ltd in Taneja Aerospace and Aviation Ltd - 1,04,79,620 equity shares.

5 Disclosure in respect of Related Parties pursuant to Accounting Standard 18

Related Parties Name of the Party

a. Subsidiary Companie First Airways Inc TAAL Tech India Private Limited TAAL Technologies, Inc (Subsidiary of TAAL Tech India Private Limited)

b. Associate Companies ISMT Limited Indian Seamless Enterprises Limited TAAL Aerosystems Private Limited

c. Key Management Personnel Mr. Salil Taneja (Chairman) Mr. C S Kameswaran (Managing Director)

(Figures in brackets relate to previous year)

* Includes Rs. 766.44 Lakhs which was debited as Difference between Assets and Liabilities transferred by way of Hive Off of Engineering Services Division of the Company to its Wholly Owned Subsidiary ''TAAL Tech India Private Limited'' (Refer Note No. 40).

6 The Accounting Standard 15 (Revised 2005) on "Employee Benefits" has been adopted by the Company effective from April 1, 2007.

a. Defined Contribution Plan :

The Company has recognized the following amounts as an expense and included under the head " Personnel Cost".

b. Defined Benefit Plan as per Actuarial Valuation :

I. Changes in present value of Defined Benefit Obligations :

Note : In case of Gratuity and Leave Enchashment, the present value of obligation as at 31st March, 2013 and 1st April, 2013 is not same, as during the year ''Engineering Services Division'' of the Company has been Hived Off to it''s wholly owned subsidiary (Refer Note No. 40).

II. Changes in fair value of plan Assets: The Company has not made any investment in plan assets and therefore, there are no changes in fair value and returns thereon

# Refer Note No. 40

As per Accounting Standard 17, the Company has two segments viz "Aviation and Engg Design Service"

(i) Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and Expenses which relate to Enterprise as a whole and are not allocable to a segement on reasonable basis have been disclosed as unallocable

(ii) Segment Asset and Segment liability represents Assets and Liabilities in respective Segments. Investment, Tax related Assets, Other Assets and Liabilities which cannot be allocated to a segment on a reasonable basis have been included under Unallocable Assets and Liabilities

7 Statement of Additional Information :

a. Value of Raw Materials and Components consumed during the Year

40 The shareholders of the Company by way of postal ballot passed a resolution dated 5th August, 2013 approving the transfer of Assets and Liabilities of the Company''s Engineering Services Division to its 100% subsidiary ''TAAL Tech India Pvt Ltd'', with effect from 1st August, 2013. Accordingly, related Assets and Liabilities transferred at their book values are as follows :

8 Katra Auto Engineering Pvt Ltd (Katra) purchased land for the Company out of interest free advance of Rs. 645.50 Lakhs provided by the Company. The Board of Directors of the Company at its meeting held on 28th May, 2014 approved in principle, to make Katra a 100% Subsidiary of the Company. The above advance given continues to be shown as capital work in progress.

9 The balances in Debtors and Creditors accounts are subject to confirmations.

10 As informed to us by the Management, the Company owes no dues, which are outstanding as at 31st March, 2014 to any "Micro, Small And Medium Enterprises " as required under "Micro, Small And Medium Enterprises Development Act 2006".

11 In the Opinion of the Board, adequate steps are taken to make sufficient provision for all liabilities.

12 Current Assets, Loans and Advances are of the value stated if realised in the ordinary course of business.

13 Consequent to Hive Off of Engineering Design Services Division (Refer Note No. 40), the current year figures are not comparable with the previous year figures.

14 Previous year figures have been regrouped and reclassified wherever necessary to conform to the current year classification.

Notes :

1. The accounts of subsidiaries have been re-stated in line with Indian GAAP and as required by Accounting Standard 21 issued by the Institute of Chartered Accountants of India, wherever applicable

2. The Financial Statement of the subsidiaries whose reporting currency are other than INR are converted into Indian Rupees on the basis of following exchange rates


Mar 31, 2013

1. Provisions and Contingencies

a. Bank Guarantees Rs. 1664.03 lakhs (Previous Year Rs. 1567.81 lakhs)

b. Indemnity issued to customers Rs. 1045.46 lakhs (Previous Year Rs. 1477.78 lakhs)

c. EPCG Export sales obligation to be fulfilled Rs. 991.10 lakhs (Previous Year Rs. 1189.52 lakhs)

d. Capital commitment towards the new project is Rs. 531.57 lakhs (Previous Year Rs. 1573.29 lakhs)

2. During the year 2007-08, Company acquired an Aircraft on operating lease from an overseas lease finance company for the period of 120 months. Based on the legal opinion obtained by the Company, the lease rental has been grouped under the head Charter Expenses. The payments under lease for the future period are :

3. The balances in debtors and creditors accounts are subject to confirmations.

4. As informed to us by the Management, the Company owes no dues, which are outstanding for more than 45 days as at March 31, 2013 to any "Micro, Small And Medium Enterprises " as required under "Micro, Small And Medium Enterprises Development Act 2006".

5. In the Opinion of the Board, adequate steps are taken to make sufficient provision for all liabilities.

6. Current Assets, Loans and Advances are of the value stated if realised in the ordinary course of business.

7. Previous year figure have been regrouped and reclassified wherever necessary to confirm to the current year classification.


Mar 31, 2012

1.1 Terms/rights attached to Equity Shares

The Company has only one class of issued share having par value of Rs. 5/- each. Holder of Equity Shares is entitled to one vote per share.

1.2 Details of Securities and other terms:

Term Loan from Bank is secured by a first charge on specific free hold lands to the extent of 26.87 acres along with all movable properties of the Company situated on the said lands both present and future at Belagondapalli village, Thalli Road Denkanikottai Taluk, Krishnagiri District, Belagondapalli - 635114, Tamilnadu and second charge by way of hypothecation on current assets of the Company and further counter guarantee of ISMT Ltd. and Indian Seamless Enterprises Ltd.

The Loan is repayable in 60 monthly installment of Rs. 10 lakhs commencing from April 01, 2010 & ending on March 31, 2015.

Inter Corporate Deposit from related parties does not have any security or repayment term.

There are no stipulations for repayment of other borrowings.

2.1 Working Capital Loan from the banks is secured against hypothecation of stocks and Book Debts on pari-passu and second charge on Immovable properties/Fixed Assets and further guaranteed by counter guarantee of Promoter Company.

3. Provisions and Contingencies

a. Bank Guarantees Rs.1,567.81 Lakhs (Previous Year Rs. 1,637.20 lakhs).

b. Indemnity issued to customers Rs.1,477.78 Lakhs (Previous Year Rs.1,026.50 Lakhs).

c. EPCG Export sales obligation to be fulfilled Rs.1,189.52 Lakhs (Previous Year Rs. 1,189.52 Lakhs).

d. Capital commitment towards the new project is Rs.1,573.29 Lakhs (Previous Year Rs.1,266.06 Lakhs).

e. Employees Provident Fund Rs.11.78 Lakhs (Previous Year NIL).

4. During the year 2007-08, Company acquired an Aircraft on operating lease from an overseas lease finance Company for the period of 120 months. Based on the legal opinion obtained by the Company, the lease rental has been grouped under the head Charter Expenses.

* Including the part amount capitalised

The above figures do not include contribution to gratuity fund and provision for leave enchasment as separate figures are not ascertainable for the Whole-time Director

5 The balances in Debtors and creditors accounts are subject to confirmations.

6 As informed to us by management, the Company owes no dues, which are outstanding for more than 45 days as at March 31, 2012 to any "Micro, Small And Medium Enterprises " as required under "Micro, Small And Medium Enterprises Development Act 2006"

7 In the Opinion of the board , adequate steps are taken to make sufficient provision for all liabilities.

8 Current Assets , Loans and Advances are of the value stated if realised in the ordinary course of business.

9 The Accounting Standard 15 (Revised 2005) on "Employee Benefits" has been adopted by the Company effective from April 1, 2007.

i) Defined Contribution Plan :

The Company has recognized the following amounts as an expense and included under the head " Personnel Cost" .

10. As per the clause of accounting policy mentioned in the scheme of arrangement sanctioned by The Hon'ble High Court, Madras on January 08, 2010 (Effective Date February 24, 2010), The Company has transferred Rs. 27.86 Lakhs to the General Reserve from the Profit and Loss Account on account of write back of excess provision for Rent, Rates and Taxes made in the years prior to the sanction of the Scheme.

11. The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre- revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures


Jun 30, 2009

1. Provisions and Contingencies

Provisions are recognized when the company has a legal and constrictive obligation as a result of past event, for which it is probable that a cash outflow will be required and a reliable estimate can be made of the amount of obligation.

a) Bank Guarantees Rs.7,42,07,703/- (Previous year Rs.5,09,32,964/-),

b) Indemnity issued to customers Rs. 13,00,16,800/- (Previous Year Rs.80,00,000/-)

c) EPCG obligation to be fulfilled Rs.3,98,00,209/- (Previous Year Rs.74,00,833)

d) Capital commitment towards the new project is Rs.2,60,82,116/-(Previous Year Rs.25,07,000)

e) Forfeiture of advance from a customer Rs.1,00,00,000/- (Previous year Rs.1,00,00,000)

2. (a) Term Loans from Banks are secured by a first mortgage and charge on all the immovable properties, present and future, of the Company and first charge by way of hypothecation of all present and future movables excluding book debts subject to prior charges created / to be created in favour of bankers on stock of raw materials, semi finished and finished goods, consumables stores and such other movables as may be agreed for securing the borrowings for Working Capital Requirements and further guaranteed by counter guarantee of promoter Company. (b) Working Capital Loan from the Banks is secured against hypothecation of Stocks & Book Debts on pari-passu and second charge on Immovable properties and further guaranteed by counter guarantee of Promoter Company.

(c) Hire Purchase Finance is secured against assets bought on hire purchase basis.

(d) During the period Company has taken over on an assignment basis amounting to Rs. 12,00,00,000/- sanctioned by a bank to one of its subsidiary companies for implementations of projects of the Company. The loan is secured by deposit kept with the bank by a third party. Approval from the bank for assignment of loan is awaited. Further interest paid on such loan is considered as interest paid to bank and accounted accordingly.

3. Revenue on long term fixed price contracts for supply of certain sets of components and assemblies is recognized on the basis of proportionate completion method and billed in terms of agreement with and certification by the customer. Cost of processing incurred on sets of components which are not billable is included in work in process.

4. During the year 2006-07, the Company made preferential allotment of 23,50,000 equity shares of Rs.5/- each at a premium of Rs. 150/- per share. Out of the proceeds the Company has expended Rs.27,03,77,885/- till 31 st March, 2008 and balance amount of Rs. 9,38,72,115/- is expended during the current period towards the objects of the issue.

5. During the year 2007-08, Company acquired an Aircraft on lease from an overseas lease finance company for the period of 120 months. Based on the legal opinion obtained by the company, the lease has been accounted in books as Operating Lease that is grouped under the head of charter expenses.

The above figures do not include contribution to gratuity fund and provision for leave encashment as separate figures are not asertainable for the Whole-time Director.

Computation of Net Profit in accordance with Section 198 read with Section 349 and 350 of the Companies Act, 1956 and calculation of commission payable to Whole-time Director.

In view of inadequacy of profits for the period, managerial remuneration is provided / paid is in accordance with the requirements of Schedule XIII of the Companies Act, 1956.

6. Disclosure in respect of related parties pursuant to Accounting Standard 18 A. Related Parties

Name of the Party I) Subsidiary Companies First Airways Inc

M M Infoproc Services Pvt. Ltd. TAAL Infrastructure Pvt. Ltd.

ii) Associate Companies ISMTLtd

Indian Seamless Enterprises Ltd Vishkul Leather Garments Pvt. Ltd Indseam Services Ltd Taal Technolgies Pvt. Ltd Integrated Syndication Services Pvt. Ltd.

iii) Key Management Personnel Mr. C S Kameswaran (Managing Director)

Mr Salil Taneja (Chairman)

7. The balances in debtors and creditors accounts are subject to confirmations.

8. As informed to us by management, company owes no dues, which are outstanding for more than 45 days as at 30.06.2009 to any "Micro, Small and Medium Enterprises" as required under "Micro, Small and Medium Enterprise Development Act 2006"

9. The provision for all known liabilities is adequate in the opinion of the Board.

10. Current Assets, Loans and Advances are of the value stated if realised in the ordinary course of business.

11. The Accounting Standard 15 (Revised 2005) on " Employee Benefits" has been adopted by the Company effective from April 1,2007.

i) Defined Contribution Plan:

The Company has recognised the following amounts as an expense and included under the head " Personnel Cosfcontribution to Provident and other Fund:

12. The Company subsequent to the date of Balance Sheet, filed with the Hoble High Cout of Madras a scheme of Arrangement between the company and TAAL Technologies Pvt. Ltd., Upon approval of the Scheme TAAL Technology would be merged with the Company effective April 01,2008. The proposed scheme of arrangement inter alia envisages right sizing of balance sheet of the Company. The Company has accordingly made following adjustments.

a) The Company has revalued its land located at Belagondapalli village, Thally Road, Denkanikotta Taluk, Krishnagiri Dist. Belagondapalli, Tamilnadu at the fair market value based on the report of reconigsed valuer (as on April 01,2009). The difference between the cost of acquisition and fair market value works out to Rs 44,89,00,000/- which has been credited to Revaluation Reserve.

b) Out of the amount of revaluation reserve as stated above the Company has transferred Rs. 20,00,00,000/- to Profit and Loss account for the period. This amount is mainly used utilised for writing off Inventory net of salvage / realizable value Rs. 12,28,03,000/- (being 75% of total some old non moving inventories), Rs. 1,92,91,875/-for Sundry Debtors and estimated provision for impairment of Fixed Assets Rs. 1,00,00,000/-, The further adjustments, if any in all the above will be done on implementation of the Scheme. Similarly, Loss on sale of Investments of Rs. 2,27,40,133/-, Consultancy charges Rs. 1,55,82,480/- and legal expenses Rs. 42,80,397/- incurred during the period are also adjusted against the above amount withdrawn from revaluation reserve. The excess withdrawal from the reserve over above adjustment amounting to Rs. 53,02,115/- is remained credited to the Profit and Loss Account.

13. The Company has in the previous year accounted interest free sales tax deferral liability to reflect the discounted present value of future payments. Actual liability as at June 30,2009 is Rs. 1,78,59,310/- (Previous year Rs. 1,78,59,310/-). During the current period, thr Company has not accounted the difference between the actual liability and the discounted value as revenue expenditure of Rs. 36,92,497/- (Previous year Rs. 9,39,987/-) as the same would be provided through the proposed of scheme of arrangement as stated above.

14. Previous year figures have bee recognised / recast, wherever necessary.

 
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