Notes to Accounts of Assam Company (India) Ltd.
Mar 31, 2018
1 Company Background
Assam Company India Limited (the ''Company'') is a Company limited by shares, incorporated and domiciled in India. The equity shares of the Company are listed on the National Stock Exchange of India Limited and BSE Limited in India. The Registered Office of the Company is located at Greenwood Tea Estate, P.O. Dibrugarh, Assam - 786 001 and Corporate/Head Office is located at Assam Tea House, 52, Chowringhee Road, Kolkata - 700 071.
The Company is mainly engaged in the business of tea plantation and is also engaged in oil and gas exploration business. The Company owns Fourteen Tea Estates in the State of Assam.
The Standalone Financial Statements were approved and authorised for issue by the Company''s Board of Directors on 30th May, 2018.
2. Property, plant and equipment pledged as security - Refer Note 44 for information on property, plant and equipment pledged as security by the Company.
3. Contractual obligations - Refer Note 37 for disclosure of contractual commitments for the acquisition of property, plant and equipment.
4. The aggregate depreciation/amortisation has been included under Depreciation and Amortisation Expense in the Statement of Profit and Loss.
(b) The Company has one class of Equity Shares having a par value of Re. 1/- 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 except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts in proportion to their shareholding.
5. Segment Information
A. Description of segments and principal activities
The Companyâs Executive Director examines the Companyâs performance both from a product and geographic perspective and has identified two reportable segments of its business:
a) Plantation products.
b) Oil and Gas Activities
Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the Standalone Financial Statements. Also, the Company''s borrowings (including finance costs and interest income), income taxes, investments and derivative instruments are managed at Head Office and are not allocated to operating segments.
The segment revenue is measured in the same way as in the Statement of Profit and Loss.
Segment Assets and Liabilities are measured in the same way as in the financial statements. These assets and liabilities are allocated based on the operations of the segment and the physical location of the assets.
(i) Fair Value Hierarchy
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 an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows below. Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing Net Asset Value.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the counter derivatives) 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 an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.
The Company''s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There are no transfers between levels 1 and 2 during the current year and previous year.
The management assessed that fair values of trade receivables, cash and cash equivalents, other bank balances, other Financial Assets (current), trade payables and other financial liabilities (current) approximate their carrying amounts largely due to the short-term maturities of these instruments.
For Financial Assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
(iii) Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include: the use of quoted market prices or dealer quotes for similar instruments
In respect of investments in mutual funds, the fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors. Accordingly, such net asset values are analogous to fair market value with respect to these investments, as transactions of these mutual funds are carried out at such prices between investors and the issuers of these units of mutual funds.
All of the resulting fair value estimates are included in level 2 except for unlisted equity securities, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.
The management consider that the carrying amounts of financial assets (other than those measured at fair value) and liabilities recognised in the financial statements approximate their fair value as on 31.03.2018,31.03.2017 and 01.04.2016.
(iv) Valuation processes
The finance department of the Company includes a team that performs the valuations of Financial Assets and liabilities required for financial reporting purposes, including level 3 fair values. This team reports directly to the chief financial officer (CFO) and the audit committee (AC).
The main level 3 inputs for unlisted equity securities used by the Company are derived and evaluated as follows:
- Discount rates are determined using a capital asset pricing model to calculate a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the asset.
- Risk adjustments specific to the counterparties (including assumptions about credit default rates) are derived from credit risk grading determined by the Company''s internal credit risk management Team.
- Earnings growth factor for unlisted equity securities are estimated based on market information for similar types of companies.
Changes in level 2 and 3 fair values are analysed at the end of each reporting period during the quarterly valuation discussion between the CFO, AC and the valuation team. As part of this discussion the team presents a report that explains the reason for the fair value movements.
6. Financial Risk Management
The Company''s activities expose it to market risk, liquidity risk and credit risk. In order to minimise any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts are entered to hedge certain foreign currency risk exposures and interest rate swaps to hedge variable interest rate exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
This Note explains the sources of risk which the entity is exposed to and how the entity manages the risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
The Company''s risk management is carried out by finance department under policies approved by the Board of Directors. Finance department identifies, evaluates and hedges financial risks in close co-operation with the Company''s operating units. The Board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.
(A) Credit Risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs.157,629,889, Rs. 7,080,323 and Rs. 15,574,412 as at 31st March 2018, 31st March, 2017 and 1st April, 2016 respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. Outstanding customer receivables are regularly monitored. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors such as credit ratings and the Company''s historical experience for customers.
Financial instruments and cash deposits
Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks with good credit ratings. Investments primarily include investment in liquid mutual fund units. The Company does not expect any losses from non-performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.
Financial assets that are neither past due nor impaired
None of the Company''s cash equivalents with banks and current investments were past due or impaired as at 31st March 2018. The Company''s credit period for customers generally ranges from 0 - 180 days. Of the total trade receivables, Rs. 24,088,011 as at 31st March, 2018, Rs. 7,001,346 as at 31st March, 2017 and Rs. 13,717,201 as at 1st April, 2016 consisted of customer balances that were neither past due nor impaired.
Receivables are deemed to be past due or impaired with reference to the Company''s normal terms and conditions of business. These terms and conditions are determined on a case to case basis with reference to the customer''s credit quality and prevailing market conditions. Receivables that are classified as ''past due'' in the above tables are those that have not been settled within the terms and conditions that have been agreed with that customer.
Other than trade and other receivables, the Company has no significant class of Financial Assets that is past due but not impaired.
During the period, the Company made no write-offs of trade receivables. It does not expect to receive future cash flows or recoveries from collection of cash flows previously written off.
The impairment provisions for Financial Assets disclosed above are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s past history, existing market condition as well as forward looking estimates at the end of each reporting period.
(B) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company''s treasury maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is generally carried out by the central treasury department (company treasury)in close co-ordination with operating units and in accordance with practice and limits set by the Company. These limits vary by location to take into account the liquidity of the market in which the unit operates. In addition, the Company''s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring Balance Sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
As at 31st March 2018, the Company had working capital of Rs.2,036,447,123 and cash and cash equivalents of Rs. 69,749,329 and current investments of Rs. Nil.
As at 31st March 2017, the Company had working capital of Rs. 2,503,263,266 and cash and cash equivalents of Rs. 9,469,110 and current investments of Rs. 500,000.
As at 1st April 2016, the Company had working capital of Rs. 2,362,135,146 and cash and cash equivalents of Rs. 26,811,922 and current investments of Rs. 1,343,938._
The bank overdraft and other facilities may be drawn at any time and may be terminated by the bank without notice.
(ii) Maturities of Financial Liabilities
The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
(C) Market risk
(i) Foreign currency risk
The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US$, EUR and GBP. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company''s functional currency (INR).
Exposures on foreign currency loans are managed through the Company''s hedging policy, which is reviewed periodically to ensure that the results from fluctuating currency exchange rates are appropriately managed. The Company strives to achieve asset liability offset of foreign currency exposures and only the net position is hedged.
The Company uses forward exchange contracts to hedge the effects of movements in exchange rates on foreign currency denominated assets and liabilities. The sources of foreign exchange risk are outstanding amounts payable as financing transactions and loans denominated in foreign currencies. The Company is also exposed to foreign exchange risk on its exports and foreign exchange risk on its net investment in foreign operations. Most of these transactions are denominated in US$, GBP and Euro. The policy of the Company is to determine on a regular basis what portion of the foreign exchange risk on financing transactions and loans are to be hedged through forward exchange contracts and other instruments.
(b) Sensitivity 10% appreciation/depreciation of the respective foreign currencies with respect to functional currency (holding all other variables constant) of the Company would result in increase/decrease in the Company''s profit by INR 20.82 crores for Financial Assets and decrease/increase in the Company''s profit before tax by approximately INR 14.70 crores.
(ii) Cash flow and fair value interest rate risk
The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During the years under review, the Company''s borrowings at variable rate were mainly denominated in INR and USD.
The Company manages its cash flow interest rate risk by using interest rate swap
An analysis by maturities is provided in Note 42(B)(ii) above. The percentage of total loans shows the proportion of loans that are currently at variable rates in relation to the total amount of borrowings.
(b) Sensitivity
Increase/decrease of 50 basis point (holding all other variables constant) in interest rates at the balance sheet date would result in an impact (decrease/increase) of INR 2.66 crs, INR 2.74 crs and INR 2.77 crs on profit before tax for the year ended 31st March, 2018, 31st March, 2017 and 1st April, 2016 respectively.
(iii) Securities Price risk
(a) Exposure
The Company''s exposure to equity securities price risk arises from investments held by the Company and classified in the Balance Sheet as fair value through profit or loss (Note 43).
To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.
The majority of the Company''s equity investments are publicly traded.
(b) Sensitivity
Increase/decrease of 1000 basis point of index would result in an impact (increase/decrease) by INR 0.50 lakhs and INR 1.34 lakhs on other comprehensive income for the year ended 31st March, 2017 and 1st April, 2016 respectively.
7. Capital Management (a) Risk Management
The Company''s objectives 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.
The Company monitors capital on the basis of the net debt to equity ratio. The Company is not subject to any externally imposed capital requirements.
Net debt are long term and short term debts as reduced by cash and cash equivalents and current investments. Equity comprises all components excluding other components of equity (representing other comprehensive income).
No changes were made to the objectives, policies or processes for managing capital during the years ended 31st March, 2018 and 31st March, 2017.
Loan covenants
Under the terms of a specific borrowing facility, the Company is required to comply with the following financial covenants:
- the ratio of net borrowing to tangible networth must be not more than 3.50:1, and
- the ratio of EBITDA less current tax to net interest expense and scheduled repayment of long term loan must be not be less than 1.20:1.
The Company has not complied with these covenants throughout the reporting period.
8 (a) The Company has two Oil and Gas Fields/Blocks in Assam Arakan Basin - Amguri (Discovered Field) and AA-ON/7 (Exploration Block) having Participating Interest (PI) of 100% and 35% respectively.
(b) Amguri Oil Field and AA-ON/7 Exploration Block were operated earlier under a consortium with Canoro Resources Limited (CRL), a Canadian based E&P Company where PI of ACIL were 40% and 35% respectively. PI of CRL was 60% in Amguri Oil Field and 65% in AA-ON/7 Exploration Block.
(c) Government of India (GOI) terminated 60% PI and operatorship of Canoro Resources Limited (CRL) with effect from 29th August, 2010 for breach of Production Sharing Contract (PSC). CRL closed the operation of Amguri in December, 2010 and GOI considering its vesting right on 60% PI handed over the Amguri Field to ONGC on 16th March, 2011, to continue the operations till the ownership of 60% PI and operatorship were finalized. The Company had staked its claim on 60% PI in accordance with the provisions of PSC being the sole non-defaulting contractor. After a prolonged delay, GOI had finally appointed the Company as the operator of Amguri Field vide its letter dated 2nd January, 2013._
(d) Pursuant to the appointment as an operator, the Company has entered into a Bilateral Agreement (BA) on 23rd December, 2014, with ONGC for their investment in the Amguri Field for & on behalf of GOI and to take over the field and to commence operation. The said BA was approved by GOI on 31st March, 2016.
(e) The Company''s rightful claim on 60% PI earlier held by CRL was contested by the Company before an Arbitral Tribunal Board, where GOI was a party. The Arbitral Tribunal Board has on 25.02.2017 pronounced the Award on the Arbitral proceedings of ACIL with GOI in respect of Amguri Field. ACIL is declared the owner of 60% of the PI currently held by GOI and thereby has now become the owner of 100% of PI of the Amguri Field. The contract period of the PSC of the Amguri Field shall stand extended by five years beyond its original term. A sum of US$ 3.54 Million was granted to ACIL as compensation alongwith interest at 6% per annum from March, 2011, till the date of payment. The cost of Arbitral proceedings amounting to INR 1.25 Crore shall also accrue to ACIL.
(f) Pursuant to the Arbitral Tribunal''s Award dated 25th February, 2017, ACIL has proposed GOI for an amicable settlement and submitted an unconditional undertaking to withdraw all its existing claim. GOI vide its letter dated 25th May, 2017, has approved ACIL''s ownership of 100% PI in the Amguri Field. Pursuant to such approval an amendment to PSC was executed on 7th June, 2017 where ACIL and the Ministry of Petroleun & Natural Gas, GOI are the parties.
(g) Based on the internal assessment of the valuation of Amguri Oil Field the management has decided to impair the Capital Investment amounting INR 221.96 Cr. included under the head "Propetry, Plant & Equipment" in line with IND-AS 36.
(h) As per the Award of the Arbitral Tribunal against CRL dated 21st November, 2011, the Company has got a damage claim of US$ 39.12 Million (Rs. 253.64 Crores) against CRL. The Tribunal had assigned a value of US$ 4.16 Million (Rs. 26.97 Crores) for 60% PI in Amguri and US$ 2.2071 Million (Rs. 14.31 Crores) for 52.9% shares of CRL, thereby awarding a net damage claim of US$ 32.75 Million (Rs. 212.34 Crores) against CRL.
(i) For enforcement of the Arbitral Tribunal Award before Canadian Court, the Company had initiated legal steps by filing execution petition on 9th November, 2012, before the Supreme Court of British Columbia. The Hon''ble Court has recognised the Arbitral Award vide its order dated 07.03.2014 as legally enforceable in British Columbia. The Company has taken legal steps for execution and realisation of the damaged claim as recognised by the Hon''ble Court.
(j) In view of the prolonged uncertainty in execution of new PSC and steps taken by the Nagaland Government towards formulating their own exploration policy, the management has decided to impair the entire capital investment of INR 36.47 Crore in AA-ON/7 Block included under the head "Property, Plant & Equipment" in line with IND-AS 36.
(k) Cost Record Order is applicable for Oil and Gas. There was no production of oil & gas during the year.
9. The Company had issued Zero Per Cent Foreign Currency Convertible Bonds (âFCCBâ) in 2006 aggregating to USD 48 Million (INR 2,109,120,000/-) to finance capital expenditure for modernisation, expansion and acquisitions. The Bond holders have an option of converting these Bonds into Equity Shares at a conversion price of Rs. 28.75 per share, at any time on or after 28th November, 2006, subject to compliance with certain conditions stated in the offer circular dated 23rd November, 2006. The Bonds were redeemable on 30th November, 2011 at 150.019 per cent of their principal amount, unless previously converted or redeemed.
Unutilised FCCB proceeds amounting to Rs.692,467/- (31.03.2017 - Rs. 692,467/-) have been invested in securities and the balance Rs. Nil (31.03.2017 - Rs. 233,850/-) is lying with banks at the year end.
As at the year end the total outstanding of FCCBs. Including redemption premium is USD 5.70 Million.
10. The Company is under Corporate Insolvency Resolution Process (CIRP) where the entire management is vested with the Resolution Professional (RP). A Resolution Plan is needed to be approved by the Committee of Creditors (COC) and the Insolvency Bankruptcy Board (IBB) to keep the Company as a going Concern. As the Resolution Plan of the Company is under process and the normal operations are continuing, its Financial Statements are prepared on a Going Concern basis.
11. National Company Law Tribunal (NCLT), Guwahati Branch, has by its Order dated 26.10.2017, initiated Corporate Insolvencty Resolution Proceedings (CIRP) against the Company and has appointed Mr. Vinod Kothari Interim Resolution Professional (IRP). Subsequently, vide its Order dated 12.01.2018, the NCLT has appointed Mr. Kannan Tiruvengadam as the Resolution Professional (RP) of the Company.
These are the Company''s first Standalone Financial Statements prepared in accordance with Ind AS.
The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended 31st March 2018, the comparative information presented in these financial statements for the year ended 31st March, 2017 and in the preparation of an opening Ind AS balance sheet at 1st April, 2016 (the Company''s date of transition). 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 (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP 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
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
A.1 Ind AS optional exemptions A.1.1 Business combinations
Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.
The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.
A.1.2 Prospective application of Ind AS 21 to business combinations
Ind AS 101 allows a first-time adopter not to apply Ind AS 21 Effects of changes in Foreign Exchange Rates retrospectively for business combinations that occurred before the date of transition to Ind AS. In such cases, where the entity does not apply Ind AS 21 retrospectively to fair value adjustments and goodwill, the entity treats them as assets and liabilities of the acquirer entity and not as the acquiree.
The Company has elected to apply this exemption.
A.1.3 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 recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities, if applicable. 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 previous GAAP carrying value.
A.1.4 Investments in subsidiaries
Ind AS 101 permits a first-time adopter to elect to measure its investments in subsidiaries at fair value of such investments at the Company''s date of transition to Ind AS or previous GAAP carrying amount at that date and use that as its deemed cost as at the date of transition.
Accordingly, the Company has elected to measure all of its investments in subsidiaries at their previous GAAP carrying value.
A.1.5|Exchange differences on long-term foreign currency monetary items
Under previous GAAP, an alternative accounting treatment was provided to companies with respect to exchange differences arising on restatement of long-term foreign currency monetary items. Exchange differences on account of depreciable assets could be added/deducted from the cost of the depreciable asset, which would then be depreciated over the balance life of the asset. In other cases, the exchange difference could be accumulated in a foreign currency monetary item translation difference account, and amortised over the balance period of such long term asset/ liability. Ind AS 101 includes an optional exemption that allows a first-time adopter to continue the above accounting treatment in respect of the long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period.
The Company has elected to apply this exemption for such items recognised in the financial statements up to 31st March, 2017.
A.1.6 Designation of previously recognised financial instruments
Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS.
The Company has elected to apply this exemption for its investment in equity investments.
A.2 Ind AS mandatory exceptions A.2.1 Estimates
An entity''s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates as at 1st April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:
- Investment in equity instruments carried at FVPL;
- Impairment of Financial Assets based on expected credit loss model.
A.2.2 De-recognition of Financial Assets and liabilities
Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entity''s choosing, provided that the information needed to apply Ind AS 109 to Financial Assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.
The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.
A.2.3 Classification and measurement of Financial Assets
Ind AS 101 requires an entity to assess classification and measurement of Financial Assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
B. Notes to First-time Adoption
1 Fair valuation of investments
Under the previous GAAP, investments in equity instruments and mutual funds were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments (other than investments in subsidiaries) are required to be measured at fair value. The resulting fair value changes of these investments (other than equity instruments designated as at FVOCI) have been recognised in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended 31st March 2017.
2 Inventories
a) Under previous GAAP, no valuation was done for period end harvested tea leaf. Under Ind AS, harvested leaf is measured at its fair value less cost to sell and is classified as Agricultural produce under work in progress. The impact of the same is reflected in Statement of Profit and Loss.
b) Under previous GAAP, biological assets (unharvested leaf on tea bushes) neither valued nor recognised in the accounts Under Ind AS, Unharvested leaf is measured at its fair value less cost to sell and is classified as Biological assets under work in progress. The impact of the same is reflected in Statement of Profit and Loss.
c) Under previous GAAP, stock of tea is valued at cost comprising of the cost of production (including costs for plucked green leaf) for the full year. Under Ind AS, cost is comprises of fair value of green leaf plucked from the company''s estates less cost to sell at the point of harvest and cost of production for the full year. The impact of the same is reflected in Statement of Profit and Loss.
3 Depreciation on Bearer Plants
Under Ind AS tea bushes representing bearer plants have been recognised as depreciable item of PPE, fair valued on the date of transition in accordance with exemption available in Ind AS 101and recognised as deemed cost. The cosequent impact on depreciation is reflected in Statement of Profit and Loss.
4 Borrowings
Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method.
Under previous GAAP, these transaction costs were charged to profit or loss as and when incurred. Accordingly, borrowings as at 31st March, 2017 have been reduced by Rs.9,954,042/- (1st April, 2016 - Rs.12,444,587/-) with a corresponding adjustment to retained earnings. The total equity increased by an equivalent amount. The loss for the year ended 31st March, 2017 increased by Rs. 2,490,545/-. as a result of the additional interest expense.
5 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 recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, 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 31st March, 2017 decreased by Rs. 33,520,949/-. There is no impact on the total equity as at 31st March, 2017.
6 Retained earnings
Retained earnings as at 1st April, 2016, has been adjusted consequent to the above Ind AS transition adjustments.
7 Other comprehensive income
Under Ind AS, all items of income and expense recognised 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 recognised in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP.
12. Figure for the previous years have been regrouped /rearranged wherever necessary.
Mar 31, 2016
(b) Terms/ rights attached to equity shares
The Company has only one class of Ordinary Shares (''Equity Shares'') having a par value of Re1/- each. Each holder of Ordinary Shares (''Equity Shareholder'') is entitled to one vote per Share. The Company declares and pays dividend in Indian Rupees.
The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting of the Company. In the event of the Liquidation, the Equity Shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Nature of Security
(a) Loan repayable on demand from Banks
Outstanding loans of Rs1,144,006,996 /- ( 31.12.14 - 1,799,964,659/-) Secured by hypothecation created on stock, book debts, all moveable assets and other current assets of the Tea Estates both present and future and equitable mortgage created of all immovable properties both present and future relating to all Tea Estates of the Company situated in Assam ranking pari-passu with all other term loans from Consortium Banks.
NOTES: 1 Land and Development (including leasehold land) include certain freehold lands the amount of which is not ascertainable.
2 Vehicles include assets acquired on hire purchase - Rs.Nil (31.12.2014 - Rs. 37,465,467/-)
3 Deletion to Land and Development (including leasehold land) is inclusive of subsidy received from Tea Board for replanting activities amounting to Rs. 43,68,414 (31.12.2014 - Rs. Nil)
4 The cost of Oil and Gas producing properties represents Company''s share (40%) in jointly held properties.
5 *lnclude Rs 87,349,860/- and Rs 25,533,451/- which are adjusted against Revaluation Reserve and Surplus in Statement of Profit And Loss (Retained earnings) respectively.
Notes:-
***As the face value of shares of Bank of Baroda changed from Rs 10/- Rs 2/- per share and accordingly number of shares have been increased proportionately.
***As the face value of shares of Tata Coffee Ltd changed from Rs 10/- Rs 1/- per share and accordingly number of shares have been increased proportionately.
Aggregate market value of quoted investments Rs. 3,392,591/- (31.12.2014 - Rs. 3,437,358/-)
Aggregate book value of quoted investments Rs. 6,301,068/- (31.12.2014 - Rs. 6,301,068/-)
Aggregate book value of unquoted investments Rs. 160,386,207/- (31.12.2014 - Rs.160,386,207/-)
# Pledged in favour of Srei Infrastructure Finance Limited against loan taken by Gujarat Hydrocarbons and Power SEZ Limited.
6. [a] All assets except Furniture as at 31st December, 1994 were revalued by an approved valuer at the then net replacement cost resulting in increase in value of these assets by Rs.427,664,732/-. All assets except Furniture as at 31st December, 1996 were revalued again by an approved valuer at the then net replacement cost resulting in a further increase in value of these assets by Rs.113,567,000/-.
[b] Taking into account the total intrinsic value of the Company''s land in Assam, no adjustment in the opinion of the management is required for the loss of land lost due to flood and consequent erosion before 2009. Claim for compensation in this regard has been made to the Government of Assam. Subsequent loss of land due to flood and erosion from 2009 is yet to be ascertained.
7. Estimated amount of contracts remaining to be executed on capital account and other commitment not provided for are as follows:-
[a] Other Commitment - For Hire Purchase and Lease payments, Refer Note No 35 [a] and 35 [b].
8. Contingent Liabilities not provided for in respect of :
[a] Income Tax including Agriculture Tax demands disputed and under Appeals amounting to Rs. 413,902,876/- (31.12.2014 - Rs 156,199,620/-) .
[b] Sales Tax assessments disputed in appeals Rs.134,026,941/- and Professional Tax of Rs Nil /- (31.12.2014 - Sales Tax -Rs.142,225,852/- and Professional Tax - Rs. 235,000 )
[c] Liability towards Interest on unpaid FCCB Bonds and Redemption premium amounting to Rs.36,944,028/- (31.12.2014 - Rs.25,128,053/-). (Refer Note No 40 )
[d] Liability towards Fringe Benefit Tax under adjudication - Rs. 70,929,211/- (31.12.2014 - Rs. 70,929,211/-).
[e] Liability towards Service tax Rs 38,804,780/-
[f] Guarantees given in favour of third parties Rs 3,249,530,000/- (31.12.2014 - Rs.3.000,000,000/-).
[g] Pledged 5,000,000 shares ( having cost of Rs 50,000,000/-) representing investment in 51% Equity shares in Gujarat Hydrocarbons and Power SEZ Ltd in favour of third parties.
[h] Uncalled liability on partly paid shares - Rs.6,999,510/- (31.12.2014 - Rs.6,999,510/-).
[i] There is a contingent liability in connection with operationalisation of Amguri field, the amount of which can not be reliably ascertained at present.
The future cash flows on account of above cannot be determined unless the judgment / decisions / demand are received from the appropriate authorities/parties.
9. Provision for taxation for the Company''s financial period of fifteen months ended 31st March, 2016 has been determined based on the results for three months ended 31st March, 2015 (Assessment Year 2015-2016) and for twelve months ended 31st March, 2016 (Assessment Year 2016-2017).The ultimate liability for the Assessment Year 2016-2017,however,will be determined on the total income of the Company for the period from 1st April, 2015 to 31st March, 2016.
10. As the production of green leaf (raw materials consumed by the company for the manufacture of Tea) from Company''s own Tea Estates involves integrated process having various stages such as nursery, planting, cultivation etc., their values at intermediate stage could not be ascertained.
11.[a] Assets acquired under Hire Purchase (HP) comprise of vehicles. These agreements are of a period of 36 months and more and in certain cases provide for revision of hire charges for variation in prime lending rates of the bank. There are no restrictive covenants in the HP agreements.
[b] The Company has taken various premises under operating lease having tenures up to 36 months which are not non-cancellable. These are usually renewed periodically by mutual consent. The rental payable against these lease amounting to Rs.1,715,500/- (31.12.2014- Rs.2,012,400/-) has been debited to the Statement of Profit and Loss.
Provision for site restoration represents the liability that is expected to materialize once production of oil and gas from the wells cease and/or they are capped. Future cash outflow in respect of the above is determinable only on occurrence of uncertain future events.
12. [a] The Company has three Oil and Gas Fields/Blocks in Assam Arakan Basin - Amguri (Discovered Field), AA-ON/7 (Exploration Block) and AA-ONN-2005/1 (Exploration Block) having Participating Interest (PI) of 40%, 35% and 10% respectively. Amguri Oil Field and AA-ON/7 Exploration Block were operated under a consortium with Canoro Resources Limited (CRL), a Canadian based E&P Company while AA-ONN-2005/1 Exploration Block is under consortium with Oil & Natural Gas Corporation Limited (ONGC) and Oil India Limited (OIL).
[b] Government of India (GOI) terminated 60% PI and operatorship of Canoro Resources Limited (CRL) with effect from 29th August, 2010 for breach of Production Sharing Contract (PSC). CRL closed the operation of Amguri in December, 2010 and GOI considering its vesting right on 60% PI handed over the Amguri Field to ONGC on 16th March, 2011 to continue the operations till the ownership of 60% PI and operatorship were finalized. The company had already staked its claim on 60% PI in accordance with the provisions of PSC being the sole non defaulting contractor. After a prolonged delay, GOI had finally appointed the company as the operator of Amguri Field vide its letter dated 2nd January, 2013.
[c] Pursuant to the appointment as an operator, the Company has entered into a Bilateral Agreement (BA) on 23rd December, 2014, with ONGC for their investment in the Amguri Field for & on behalf of GOI and to take over the field and to commence operation. The said BA was approved by GOI on 31st March, 2016. GOI has vide its letter dated 6th May, 2016 advised the Company regarding timelines for completion of initial activities regarding operationalisation of Amguri field.
[d] The Company''s rightful claim on 60% PI earlier held by CRL is being contested by the Company before an Arbitral Tribunal Board, where GOI is a party. The Company expects that the Award of the Tribunal will be available during the next financial year as the Arbitral proceeding are under progress.
[e] As per the Award of the Arbitral Tribunal against CRL dated 21st November, 2011, the Company has got a damage claim of US$ 39.12 million (Rs 259.49 Crores) against CRL. The Tribunal had assigned a value of US$ 4.16 million (Rs 27.59 Crores) for 60% PI in Amguri and US$ 2.2071 million (Rs 14.63 Crores) for 52.9% shares of CRL, thereby awarding a net damage claim of US$ 32.75 million (Rs.217.24 Crores) against CRL.
For enforcement of the Arbitral Tribunal award before Canadian Court, the company had initiated legal steps by filing execution petition on 9th November, 2012 before the Supreme Court of British Columbia. The Hon''ble Court has recognized the Arbitral award vide its order dated 07.03.14 as legally enforceable in British Columbia. The Company has taken necessary legal steps for execution and realization of the damage claim as recognized by the Hon''ble Court.
[f] In respect of AA-ON/7 Exploration Block, the area falls into two States - Assam and Nagaland. The exploration activities in Assam were completed and the area has been relinquished in March, 2008, as there was no discovery of oil and gas. In order to pursue exploration activities in the State of Nagaland, a new PSC in continuation of the earlier PSC on the basis of the terms and conditions not inferior to the existing PSC will be executed as approved by the Cabinet Committee of Economic Affairs (CCEA) on 5th December, 2009.
Though execution of a new PSC was approved by CCEA, GOI was unable to enter into a new contract due to Nagaland (Ownership of land and execution) Act, 1990, which entitles the Government of Nagaland to formulate their own exploration policy and continue E&P activities by them.
Similar to Amguri Field, the company as per PSC is also entitled to 65% PI and operatorship of AA-ON/7 Block, earlier held by Canoro, as the company remained as the sole non-defaulting contractor. The company has already claimed the PI and operatorship from GOI. GOI earlier vide letter Ref.No.O- 19024/29/2000-ONG-DV (Pt.1) dated 24.05.2013 had conveyed that they would take up the matter of execution of the new PSC along with the Company''s claim of 65% PI with operatorship after resolution of Nagaland issue. GOI has reconfirmed the said status vide its letter Ref. No. DGH/(AA-ON/7) New PSC/03 dated 9th February,2015.
[g] Though a new PSC will be executed, the name of the Block will remain as AA-ON/7 as the Nagaland portion for which a new PSC will be executed was part of the original acreage of AA-ON/7. Accordingly, all past investment costs in Assam area would be eligible for cost recovery. Since, the Block in totality was not relinquished and execution of a new PSC was mere an administrative action having already approved by CCEA, legally the Block still exists and it does not attract any capitalization/impairment provision/adjustment as per AS- 10 and 28 and Guidance Note on Accounting for Oil & Gas producing activities.
[h] With regard to AA-ONN-2005/1 Exploration Block where ONGC is the operator, the exploration activity to complete the minimum work programme could not start for want of permission from Govt. of Nagaland. As per the GOI communication the block stands relinquished w.e.f. 27th May,2015 without any liability of the Consortium for the cost of unfinished work programme.
[i] The Company''s aggregate capital investments grouped under Capital Work in Progress and Fixed Assets will be eligible for full cost recovery as per PSC against future activities and revenue from production of oil and gas.
[j] Fixed Assets Register has not been maintained in Oil & Gas Division as details of the assets were maintained by the Operator (CRL) which has since been maintained by ONGC as the custodian operator and 40% share of cost was booked by ACIL for each of the assets in Amguri Field.
[k] Cost Record Order is applicable for Oil and Gas. There was no production of oil & gas during the year.
13. The Company had issued Zero Per Cent Foreign Currency Convertible Bonds (âFCCBâ) in 2006 aggregating to USD 48 Million (INR 2,109,120,000/-) to finance capital expenditure for modernization, expansion and acquisitions. The Bond holders have an option of converting these Bonds into Equity Shares at a conversion price of Rs. 28.75 per share, at any time on or after 28th November, 2006, subject to compliance with certain conditions stated in the offer circular dated 23rd November, 2006. The Bonds were redeemable on 30th November, 2011 at 150.019 per cent of their principal amount, unless previously converted or redeemed.
Unutilized FCCB proceeds amounting to Rs.692,467/- (31.12.2014 - Rs. 692,467/-) have been invested in securities and the balance Rs.235,663/- ( 31.12.2014 - Rs. 235,893/-) is lying with banks at the year end.
As at the year end, the total outstanding of FCCBs including Redemption Premium is USD 5.70 million.
14. General Charges include Rs 2,000,000/- given to Assam Pradesh Congress Committee as donation.
15. Advances and loans to subsidiaries include an amount of Rs.2,504,625,810/- (including interest Rs. 1,111,049,664/- Net of TDS) (31.12.14 Rs.2,527,479,375/- including interest Rs.1,111,049,664/- Net of TDS) due from Gujarat Hydrocarbons and Power SEZ Limited (GHPSL), a subsidiary of the company.
GHPSL was incorporated for developing a Hydrocarbon and Power Special Economic Zone (SEZ) in the State of Gujarat. GHPSL has got possession of 296 hectares of land for its project from Gujarat Industrial Development Corporation (GIDC). The loan was given towards acquisition and development of the acquired area by GHPSL.
Note: a)The information has been given in respect of such vendors to the extent they could be identified as "Micro, Small and Medium" enterprises on the basis of information available with the Company.
b) Unpaid interest in respect of 15 months period from ist January, 2015 to 31st March, 2016 amounting to Rs. 502,687/- has not been provided in the accounts.
Notes :
[i] The Company has considered business segment as the primary segment for disclosure. The components of these business segments are plantation products and oil and gas activities.
[ii] The segment wise revenue, results, assets and liabilities relate to the respective amounts directly identifiable to each of the segments. Unallocable income/expenditure refers to income/expenses incurred on common services at corporate level.
[iii] Geographical segment:
Segregation of revenue is on the basis of geographical location of customer i.e.
Sales within India
Sales outside India
Segregation of asset and capital expenditure is on the basis of geographical location of assets i.e.
Asset within India
Asset outside India
[iv] Figures in bold represent previous year''s figures .
16. In line with the notification dated 31st March, 2009 and notification dated 29th December, 2011 issued by the Ministry of Corporate Affairs, amending Accounting Standard (AS) 11 - "Effects of Changes in Foreign Exchange Rate", the Company in the current year has:
[i] charged to the Statement of Profit and Loss Rs. 74,973,167/- (31.12.14 - Rs.183,043,098/-) being the amortization charge of ''Foreign Currency Monetary item Translation Difference Account'' (FCMITDA) for the year.
[ii] carried forward Rs.73,247,861/- (31.12.14- Rs.134,045,860/-) in the FCMITDA, amortisable by 30th November, 2019.
17. Derivative instruments :
The Company uses Foreign Exchange Contracts to hedge its certain exposures in foreign currency related to firm commitments and highly probable transactions.
[a] There was no Derivative instruments ( Forward Exchange Contracts) outstanding as at Balance Sheet date.
18. Employee Benefit Obligation Provident Fund
Provident Fund is a defined contribution scheme whereby the Company contributes an amount determined as a fixed percentage of basic salary to the trust/government authorities every month.
Gratuity
The Company operates three gratuity schemes wherein every employee is entitled to the benefit equivalent to 15 days salary last drawn for each completed year of service subject to minimum service of five years. The same is payable on retirement or termination of service, whichever is earlier. Annual contributions based on actuarial valuation carried out at the year end are made to an independent trust fund who in turn is investing in a private insurance company under group gratuity scheme.
Pension
The Company operates two pension schemes for eligible employees, one of them being a defined benefit scheme and the other a defined contribution scheme. Annual contributions to the defined benefit scheme are made by the Company based on actuarial valuation carried out by the Company at year end. Contributions for the defined contribution scheme are deposited with a Trust and such funds are funded to a private insurance company.
Leave Benefit
Leave benefit comprises of leave balances accumulated by the employees. These balances can be accumulated up to a maximum of 120 days and can be encashed only at any time of retirement/separation. The scheme is unfunded.
Post Retirement Medical Benefit
The Company has a scheme of re-imbursement of post retirement medical expenses to certain categories of employees and their surviving spouses, upon retirement, subject to a monetary limit. The scheme is unfunded
A. Defined Contribution Plans
Contributions for Defined Contribution Plans amounting to Rs.15,92,60,669/- (31.12.2014 Rs.103,427,024/-) has been recognized in the Profit & Loss Account.
19. Effective from January, 01, 2015, the Company has charged depreciation based on the revised remaining useful life of the assets as per requirement of Schedule II of the Companies Act, 2013. Due to above change the depreciation of Rs.112,883,311/- on account of assets whose useful life is already exhausted as on 01.01.15 has been adjusted against Revaluation Reserve amounting Rs. 87,349,860/- and against Surplus in Statement of Profit and Loss (Retained earnings) amounting Rs. 25,533,451/-.Upon such change the Depreciation charge for the period ended 31st March, 2016, is higher by Rs.36,434,558/-.
20. In order to align with the financial year as per the provisions of the Companies Act,2013 the Company has extended its financial year by three months i.e. ending on 31st March,2016. Accordingly figures for the current financial year comprise of fifteen months as against the previous financial year'' of twelve months and as such, are not comparable.
21. Previous year''s figures have been regrouped/rearranged wherever necessary.
Dec 31, 2014
(A) Terms/ rights attached to equity shares
The Company has only one class of Ordinary Shares(''Equity Shares'')
having a par value of Re1/- each. Each holder of Ordinary Shares
(''Equity Shareholders'') is entitled to one vote per Share. The
Company declares and pays dividend in Indian Rupees.
The dividend proposed by the Board of Directors is subject to the
approval of the Shareholders in the ensuing Annual General Meeting of
the Company. In the event of the Liquidation, the Equity Shareholders
are eligible to receive the remaining assets of the Company after
distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.
The Board of Directors has not recommended any dividend for the year
ended 31st December, 2014, (31.12.2013- Re Nil perShare)
Nature of Security
(a) Loan repayable on demand from Banks
Outstanding loans of Rs. 1,799,964,659/- (31.12.13 - Rs. 1,607,902,809/-)
Secured by hypothecation created on stock, book debts, all moveable
assets and other current assets of the tea estates both present and
future and equitable mortgage created of all immovable properties both
present and future relating to all tea estates of the Company situated
in Assam ranking pari passu with all other term loans from Consortium
Banks.
1. [a] All assets except Furniture as at 31st December, 1994 were
revalued by an approved valuer at the then net replacement cost
resulting in increase in value of these assets by Rs.427,664,732/-.
All assets except Furniture as at 31st December, 1996 were revalued
again by an approved valuer at the then net replacement cost resulting
in a further increase in value of these assets by Rs.113,567,000/-.
[b] Taking into account the total intrinsic value of the Company''s
land in Assam, no adjustment in the opinion of the management is
required for the loss of land lost due to flood and consequent erosion
before 2009. Claim for compensation in this regard has been made to the
Government of Assam. Subsequent loss of land due to flood and erosion
from 2009 is yet to be ascertained.
29. Estimated amount of contracts remaining to be executed on capital
account and other commitment not provided for are as follows:-
[a] On capital account - Rs. Nil (net of advance - Rs. Nil), [31.12.2013 -
Rs. 97,000/- (net of advance - Rs. Nil)]
[b] Other Commitment - For Hire Purchase and Lease payments, Refer Note
No 35 [a] and 35 [b].
30. Contingent Liabilities not provided for in respect of:
[a] Income tax demand amounting to Rs. 28,631,700/- ( 31.12.2013 - Rs.
28,631,700/-) is under assessment.
[b] Sales Tax assessments disputed in appeals Rs. 142,225,852/- and
Professional Tax of Rs. 235,000/- (31.12.2013-^174,185,080/- and
Professional Tax-Rs. Nil)
[c] Liability towards Interest on unpaid FCCB Bonds and Redemption
premium amounting to Rs. 25,128,053/- (31.12.2013-Rs. 16,952,210/-).
[d] Liability towards fringe benefit tax under adjudication -
Rs.70,929,211/- (31.12.2013 - Rs.70,929,211/-).
[e] Guarantees given in favour of third parties Rs. 3,000,000,000/-
(31.12.2013 - Rs. 1,050,000,000/-).
[f] Pledged 5,000,000 shares ( having cost of Rs. 50,000,000/-)
representing investment in 51% Equity shares in Gujarat Hydrocarbon &
Power SEZ Ltd in favour of third parties.
[g] Uncalled liability on partly paid shares - Rs. 6,999,510/-
(31.12.2013 - Rs. 6,999,510/-).
The future cash flows on account of above cannot be determined unless
the judgement / decisions / demand are received from the appropriate
authorities/parties.
2 Provision for taxation has been made as per the Income Tax Act, 1961
and the rules framed thereunder with reference to the profit for the
year ended 31st December, 2014 which extends over two assessment years,
Assessment Year 2014-2015 and Assessment Year 2015 - 2016. The ultimate
tax liability for the Assessment Year 2015-2016 will be determined on
the total income for the period from 1st April, 2014 to 31st March,
2015.
3. As the production of green leaf (raw materials consumed by the
company for the manufacture of Tea) from Company''s own tea estates
involves integrated process having various stages such as nursery,
planting, cultivation etc., their values at intermediate stage could
not be ascertained.
4. [a] Assets acquired under Hire Purchase (HP) comprise of vehicles.
These agreements are of a period of 36 months and more and in certain
cases provide for revision of hire charges for variation in prime
lending rates of the bank. There are no restrictive covenants in the
HP agreements.
[b] The Company has taken various premises under operating lease having
tenures upto 36 months which are not non-cancellable. These are usually
renewed periodically by mutual consent. The rental payable against
these lease amounting to Rs. 2,012,400/- (31.12.2013- Rs. 2,012,400/-) has
been debited to the Statement of Profit and Loss.
5 [a] The Company has three Oil and Gas Fields/Blocks in Assam Arakan
Basin - Amguri (Discovered Field), AA-ON/7 (Exploration Block) and
AA-ONN-2005/1 (Exploration Block) having Participating Interest (PI) of
40%, 35% and 10% respectively. Amguri Oil Field and AA-ON/7 Exploration
Block were operated under a consortium with Canoro Resources Limited
(CRL), a Canadian based E&P company while AA-ONN-2005/1 Exploration
Block is under consortium with Oil & Natural Gas Corporation Limited
(ONGC) and Oil India Limited (OIL).
[b] Government of India (GOI) terminated 60% PI and operatorship of
Canoro Resources Limited (CRL) with effect from 29th August, 2010 for
breach of Production Sharing Contract (PSC). CRL closed the operation
of Amguri in December, 2010 and GOI considering its vesting right on
60% PI handed over the Amguri Field to ONGC on 16th March, 2011 to
continue the operations till the ownership of 60% PI and operatorship
were finalized. The company had already staked its claim on 60% PI in
accordance with the provisions of PSC being the sole non-defaulting
contractor. After a prolong delay, GOI had finally appointed the
company as the operator of Amguri Field vide its letter dated 2nd
January, 2013.
[c] Pursuant to the appointment as an operator, the Company has entered
into a Bilateral Agreement on 23rd December, 2014, with ONGC to
takeover the field from them and to commence operations by the Company.
The handover of the field to the Company by ONGC is awaiting for the
approval of Bilateral Agreement by the GOI.The approval is expected to
be received shortly.
[d] The Company''s rightful claim on 60% PI earlier held by CRL is
being contested by the Company before an Arbitral Tribunal Board, where
GOI is a party. The Company expects that the Award of the Tribunal will
be available during the next financial year as the Arbitral proceeding
are under progress.
[e] As per the Award of the Arbitral Tribunal against CRL dated 21st
November, 2011, the Company has got a damage claim of US$ 39.12 million
Rs. 247.95 Crores) against CRL.
The Tribunal had assigned a value of US$ 4.16 million (Rs. 26.35 Crores)
for 60% PI in Amguri and US$ 2.2071 million (Rs. 13.97 Crores) for 52.9%
shares of CRL, thereby awarding a net damage claim of US$ 32.75 million
(Rs. 207.41 Crores) against CRL.
For enforcement of the Arbitral Tribunal award before Canadian Court,
the company had initiated legal steps by filing execution petition on
9th November, 2012 before the Supreme Court of British Columbia. The
Hon''ble Court has recognised the Arbitral award vide its order dated
07.03.14 as legally enforceable in British Columbia.The Company has
taken necessary legal steps for execution and realisation of the
damaged claim as recognised by the Hon''ble Court
[f] Having finally appointed as the operator of the Field, the company
is quite upbeat in commencing the production of oil and gas, which has
remained suspended after the Field was closed by CRL in December, 2010.
[g] In respect of AA-ON/7 Exploration Block, the area falls into two
States - Assam and Nagaland. The exploration activities in Assam were
completed and the area has been relinquished in March,2008, as there
was no discovery of oil and gas. In order to pursue exploration
activities in the State of Nagaland, a new PSC in continuation of the
earlier PSC on the basis of the terms and conditions not inferior to
the existing PSC will be executed as approved by the Cabinet Committee
of Economic Affairs (CCEA) on 5th December, 2009.
Though execution of a new PSC was approved by CCEA,GOI was unable to
enter into a new contract due to Nagaland (Ownership of land and
execution) Act,1990, which entitles the Government of Nagaland to
formulate their own exploration policy and continue E&P activities by
them. Similar to Amguri Field, the company as per PSC is also entitled
to 65% PI and operatorship of AA- ON/7 Block, earlier held by Canoro,
as the company remained as the sole non-defaulting contractor. The
company has already claimed the PI and operatorship from GOI. The
company feels that once the ownership of 60% PI in Amguri is resolved,
GOI will take similar decision on AA-ON/7. GOI earlier vide letter Ref.
No. O- 19024/29/2000-ONG-DV (Pt.1) dated 24.05.2013 had coveyed that
they would take up the matter of execution of the new PSC along with
the Comany''s claim of 65% PI with operatorship after resolution of
Nagaland issue.
The Company is hopeful that the Nagaland issue between the State of
Nagaland and GOI would be resolved soon as E & P activities by all
operators have been stopped in the State of Nagaland. Considering high
potential basin, GOI will ensure to resolve the issue for operators to
commence exploration activities to step up domestic production,which is
the need of the Country to save foreign exchange. GOI has reconfirmed
the said status vide its commuinication DGH/(AA-ON/7)/New PSC/03 dated
9th February,2015.
[h] Though a new PSC will be executed, the name of the Block will
remain as AA-ON/7 as the Nagaland portion for which a new PSC will be
executed was part of the original acereage of AA-ON/7. Accordingly, all
past investment costs in Assam area would be eligible for cost
recovery. Since, the Block in totality was not relinquished and
execution of a new PSC was mere an administrative action having already
approved by CCEA, legally the Block still exists and it does not
attract any capitalisation/impairment provision/adjustment as per AS-10
and 28 and Guidance Note on Accounting for Oil & Gas producing
activities.
[i] With regard to AA-ONN-2005/1 Exploration Block where ONGC is the
operator, the Geological and Geophysical (G&G) activities are under
progress, which are the activities in phase -1 of Exploration phase.The
drilling activities in AA-ONN-2005/1 Exploraton Block will only
commence after G&G activities are concluded and drilling potential is
identified.
[j] The Company''s aggregate capital investments grouped under Capital
Work in Progress and Fixed Assets will be eligible for full cost
recovery as per PSC against future activities and revenue from
production of oil and gas.
[k] Fixed Assets Register has not been maintained in Oil & Gas Division
as details of the assets were maintained by the Operator (CRL) which
has since been maintained by ONGC as the custodian operator and 40%
share of cost was booked by ACIL for each of the assets in Amguri
Field.
[l] In respect of oil and gas producing assets for which depreciation
rates has not been prescribed in Schedule XIV of the Companies Act,
1956, the Company has applied to the Central Government for its
approval to adopt the unit of production method of computing
depreciation for the purpose of provision of Section 205 of the
Companies Act, 1956, which is awaited.
[m] Cost Record Order is applicable for Oil and Gas. There was no
production of oil & gas during the year.
[n] Disclosure of Company''s participating interest (PI)in the Oil and
Gas project:
6. The Company had issued Zero Per Cent Foreign Currency Convertible
Bonds ("FCCB") in 2006 aggregating to USD 48 Million (INR
2,109,120,000/-) to finance capital expenditure for modernisation,
expansion and acquisitions. The Bond holders have an option of
converting these Bonds into Equity Shares at a conversion price of Rs.
28.75 per share, at any time on or after 28th November, 2006, subject
to compliance with certain conditions stated in the offer circular
dated 23rd November, 2006. The Bonds were redeemable on 30th November,
2011 at 150.019 per cent of their principal amount, unless previously
converted or redeemed.
Unutilised FCCB proceeds amounting to Rs.692,467/- (31.12.2013 - Rs.
692,467/-) have been invested in securities and the balance Rs. 235893/-
( 31.12.2013 - Rs. 236,119/-) is lying with banks at the year end.
As at the year end, the total Principal FCCBs outstanding is USD 3.10
million. The Company had obtained permission from Reserve Bank of India
(RBI) for extending the time for redemption of Outstanding FCCBs beyond
the maturity date.
7. Advances and loans to subsidiaries include an amount of Rs.
2,527,479,375/- (including interest Rs. 1,111,049,664/- Net of TDS)
(31.12.13Rs. 2,526,631,406/- including interestRs. 1,111,049,664/- Net of
TDS) due from Gujarat Hydrocarbons and Power SEZ Limited (GHPSL), a
subsidiary of the company.
GHPSL was incorporated for developing a Hydrocarbon and Power Special
Economic Zone (SEZ) in the state of Gujarat. GHPSL had acquired 315
hectares of land for its project from Gujarat Industrial Development
Corporation (GIDC) out of which 296 hectares possession was received
and the balance 19 Hectares is in the process of acquisition. The loan
was given towards acquisition and development of the acquired area by
GHPSL. In view of the assurance of repayment received from GHPSL and
also in order to protect the long term interest of the Company the
Board considered prudent not to charge interest for the year on the
loan provided to GHPSL.
8. Advances and loans to subsidiaries include interest free loan of Rs.
Nil (31.12.13Rs. 813,732,224/-) due from Duncan Macneill Natural
Resources Limited (DMNRL) a wholly owned subsidiary of the company
located in UK, The loan was given to acquire E & P assets. The Company
,in order to expand its oil and gas activities in upstream sector
desire to make a strong presence at overseas countries by acquiring E &
P assets.Since no overseas E&P assets could be acquired over the last
few years, DMNRL has refunded the entire amount in January ,2014.
9. Advances and loans to subsidiaries include interest free loan of
Rs.13,558,077/-) (31.12.13 Rs.12,991,165/-) due from Assam Oil and Natural
Gas Limited a wholly owned subsidiary of the company located in Cayman
Islands, as loan. The loan was given to acquire E&P (Oil and gas)
assets in Colombia.
10. In line with the notification dated 31st March, 2009 and
notification dated 29th December,2011 issued by the Ministry of
Corporate Affairs, amending Accounting Standard (AS) 11 - "Effects of
Changes in Foreign Exchange Rate", the Company in the current year
has:
[i] charged to the Statement of Profit and Loss Rs. 183,043,098
/-(31.12.13 - Rs.131,842,159/- being the amortisation charge of
''Foreign Currency Monetary item Translation Difference Account''
(FCMITDA) for the year.
[ii] carried forward Rs.134,045,860/- (31.12.13- Rs.345,001,365/-) in
the FCMITDA, amortisable by31st January, 2020.
11. Derivative instruments:
The Company uses Foreign Exchange Contracts to hedge its certain
exposures in foreign currency related to firm commitments and highly
probable transactions.
[a] There was no Derivative instruments (Forward Exchange Contracts)
outstanding as at Balance Sheet date.
12. Employee Benefit Obligation Provident Fund
Provident Fund is a defined contribution scheme whereby the Company
contributes an amount determined as a fixed percentage of basic salary
to the trust/government authorities every month.
Gratuity
The Company operates three gratuity schemes wherein every employee is
entitled to the benefit equivalent to 15 days salary last drawn for
each completed year of service subject to minimum service of five
years. The same is payable on retirement or termination of service,
whichever is earlier. Annual contributions based on actuarial valuation
carried out at the year end are made to an independent trust fund who
in turn is investing in a private insurance company under group
gratuity scheme.
Pension
The Company operates two pension schemes for eligible employees, one of
them being a defined benefit scheme and the other a defined
contribution scheme. Annual contributions to the defined benefit scheme
are made by the Company based on actuarial valuation carried out by the
Company at year end. Contributions for the defined contribution scheme
are deposited with a Trust and such funds are funded to a private
insurance company.
Leave Benefit
Leave benefit comprises of leave balances accumulated by the employees.
These balances can be accumulated upto a maximum of 120 days and can be
encashed only at any time of retirement/separation.
Post Retirement Medical Benefit
The Company has a scheme of re-imbursement of post retirement medical
expenses to certain categories of employees and their surviving
spouses, upon retirement, subject to a monetary limit.
A. Defined Contribution Plans
Contributions for Defined Contribution Plans amounting to
Rs.103,787,952/- (31.12.2013Rs. 95,063,234/-) has been recognised in the
Statement of Profit & Loss.
13. Related Party Disclosure :
I Names of related parties and description of relationship
[a] Subsidiaries of the Company
Camellia Cha Bar Limited North East Hydrocarbon Limited Assam Oil & Gas
Limited Duncan Macneill Natural Resources Limited Dahej Offshore
Infrastructure SEZ Limited Gujarat Hydrocarbons & Power SEZ Limited
Duncan Macneill Power India Ltd Assam Oil & Natural Gas Limited.
[b] Stepdown subsidiaries
Lord Inchcape Financial Services Limited (control exercised through two
subsidiaries) Assam Oil & Natural Gas Columbia Limited
[c] Key Managerial Personnel
Mr. A.K.Jajodia, Managing Director
[d] Relatives of Key Managerial Personnel Ms. Ruchika Jajodia
[e] Joint Venture through jointly controlled operations
Oil and Natural Gas Corporation Limited Oil India Limited
14. Pursuant to a Resolution passed by the shareholders on 26.06.2012
and the subsequent approval of the Board on 02.08.2012, the Company had
entered into an "Agreement for sale" on 03.08.2012 with Salonah Tea
Private Limited for sale of Salonah Tea Estate. The requisite approvals
and NOCs from the concerned authorities have been received and
accordingly necessary entries have been booked in the year 2013. The
amount due is shown underTrade Receivables. The Conveyance in respect
of the immovable property is pending.
15 The Company has obtained a stay from the Hon''ble Guwahati High
Court restraining the taxation authorities from imposing and collecting
Fringe Benefit Tax (FBT) under section 115WA of the Income Tax Act,
1961. In view of this, the Company has not provided the liability for
FBT till the year-end December 2009.
16 Previous year figures have been regrouped/rearranged wherever
necessary.
Dec 31, 2012
(a) Terms/ rights attached to Equity Shares
The Company has only one class of Ordinary Shares (''Equity Shares'')
having a par value of Rs. 1/- each. Each holder of Ordinary Shares
(''Equity Shareholders'') is entitled to one vote per Share. The Company
declares and pays Dividend in Indian Rupees.
The Dividend proposed by the Board of Directors is subject to the
approval of the Shareholders in the ensuing Annual General Meeting of
the Company. In the event of the Liquidation, the Equity Shareholders
are eligible to receive the remaining assets of the Company after
distribution of all preferential amounts. The distribution will be in
proportion to the number of Equity Shares held by the Shareholders.
During the year ended 31st December, 2012, the amount of per Share
Dividend recognised as distribution to Equity Shareholders was Rs. 0.05/-
per share.
(31.12.2011- Rs. 0.05) The Total Dividend appropriation for the year
ended 31st December, 2012, amounted to Rs. 18,000,597 including Corporate
Dividend Tax of Rs. 2,512,549.
Nature of Security
(a) Loan repayable on demand from Banks
Outstanding loans of 1 1,665,813,679 (31.12.11 -1 1,645,251,770)
Secured by hypothecation created on stock, book debts, all moveable
assets and other current assets of the tea estates both present and
future and equitable mortgage created of all immovable properties both
present and future relating to all Tea Estates of the Company situated
in Assam ranking pari passu with all other term loans from Consortium
Banks.
1. [a] All assets except Furniture as at 31st December, 1994, were
revalued by an approved valuer at the then net replacement cost
resulting in increase in value of these assets by Rs. 427,664,732. All
assets except Furniture as at 31st December, 1996, were revalued again
by an approved valuer at the then net replacement cost resulting in a
further increase in value of these assets by Rs. 113,567,000.
[b] Taking into account the total intrinsic value of the Company''s land
in Assam, no adjustment in the opinion of the Management is required
for the loss of land lost due to flood and consequent erosion in past
years. Claim for compensation in this regard has been made to the
Government ofAssam.
2. Estimated amount of contracts remaining to be executed on capital
account and other commitment not provided for are as follows:-
[a] On capital account - Rs. 235,527 (net of advance - Rs. 867,345),
[31.12.2011- Rs. 10,264,615 (net of advance -Rs. 4,717,872)]
[b] Other Commitment - For Hire Purchase and Lease payments, Refer Note
No 36 [a] and 36 [b].
3. Contingent Liabilities not provided for in respect of :
[a] Sales Tax assessments disputed in appeals Rs. 174,272,207 (31.12.2011
- Rs. 108,907,869)
[b] LiabilitytowardsFringeBenefitTaxunderadjudication-Rs. 70,929,211
(31.12.2011 - Rs. 70,929,211).
[c] Guarantees given in favour of third parties Rs. 1,048,200,000
(31.12.2011 - Rs. 1,048,200,000).
[d] Pledged 5,000,000 shares (having cost of Rs 50,000,000)
representing investment in 51% Equity shares in Gujarat Hydrocarbons
and Power SEZ Ltd. in favour of third parties.
[e] Uncalled liability on partly paid shares - Rs. 6,999,510 (31.12.2011
- Rs. 6,999,510).
[f] Interest and penalty for non-deduction and non-deposit of tax
deducted at source from green leaf suppliers in respect of an earlier
year, not ascertainable at this stage.
[g] Financial undertaking issued to a subsidiary - amount not
ascertainable.
The future cash flows on account of above cannot be determined unless
the judgement / decisions / demand are received from the appropriate
authorities/parties.
4. Provision for taxation has been made as per the Income Tax Act,
1961 and the rules framed thereunder with reference to the profit for
the year ended 31st December, 2012 which extends over two assessment
years, Assessment Year 2012-2013 and Assessment Year 2013 - 2014. The
ultimate tax liability for the Assessment Year 2013-2014 will be
determined on the total income for the period from 1st April, 2012 to
31st March, 2013.
5. As the production of green leaf (raw materials consumed by the
Company for the manufacture of Tea) from Company''s own Tea Estates
involves integrated process having various stages such as
nursery,planting,cultivation etc., theirvalues at intermediate stage
could not be ascertained.
6. [a] Assets acquired under Hire Purchase (HP) comprise of vehicles.
These agreements are of a period of 36 months and more and in certain
cases provide for revision of hire charges for variation in prime
lending rates of the bank. There are no restrictive covenants in the HP
agreements.
[b] The Company has taken various premises under operating lease having
tenures upto 36 months which are not non-cancellable. These are usually
renewed periodically by mutual consent. The rental payable against
these lease amounting to Rs. 2,006,400 (31.12.2011 - Rs. 2,006,400) has
been debited to the Statement of Profit and Loss.
7. [a] The Companys'' Oil and Gas activities comprise of three Oil
Fields - Amguri (Discovered Field), AA-ON/7 (Exploration Block) and
AA-ONN-2005/1 (Exploration Block) having Participating Interest of 40%,
35% and 10% respectively. Amguri Oil Field and AA-ON/7 Exploration
Block were operated under a consortium with Canoro Resources Limited
(Canoro), a Canadian based E&P company. AA-ONN-2005/1 Exploration Block
is however under consortium with ONGC and OIL.
[b] Following termination of Production Sharing Contract (PSC) and 60%
Participation Interest (PI) of Amguri Field of Canoro by Government of
India (GOI) with effect from 29th August, 2010, Canoro finally closed
its operation in India in December,2012 having their appeal being
dismissed by Hon''ble High Court. GOI as interim arrangement had
appointed ONGC as the custodian of GOI to operate the field from 16th
March, 2011 pending appointment of a regular operator for which the
Company had already staked its claim alongwith the ownership of 60% PI
in accordance of the provisions of PSC. After a prolong delay, GOI has
finally appointed the Company as the operator of Amguri Field vide its
letter dated 2nd January, 2013. The Company on priority basis has now
taken steps to resume the operations and production of oil and gas in
Amguri Field.
[c] The Company also, under the Joint Operating Agreement (JOA),
exercised its right of first refusal on its claim on 60% PI from
Canoro. Accordingly, the Company initiated Arbitral proceedings against
Canoro as per PSC for redressal of dispute on ownership of majority
Equity Shareholding of Canoro and 60% PI of Amguri Field.
The Arbitral Tribunal passed the Award on21st November,2011 under which
the Company had become the rightful owner of 60% PI of Amguri and also
52.9% shares of Canoro which was earlier issued to Mass Financial
Corporation in breach of JOA. As per the said Award, the Company had
also got a damage claim of US$ 39.12 Million (Rs. 214.29 Crores) against
Canoro. The consideration of US$ 4.16 Million (Rs. 22.78 Crores) and US$
2.2071 Million (Rs. 12.08 Crores) assigned towards 60% PI ofAmguri and
52.9% shares of Canoro respectively was set off from the total damage
claim and the net damage claim of US$ 32.75 Million (Rs. 179.40 Crores)
was awarded against Canoro. Consequent upon the receipt of the Award,
the Company sought the formal consent from GOI on transfer of 60% PI
pursuant to the provisions of PSC which is still awaited.
[d] For execution of the Arbitral Tribunal award before Canadian Court,
the Company has initiated legal steps by filing execution petition on
9th November,2012 before the Supreme Court of British Columbia. The
hearing ofthe execution petition is due in April, 2013. Meanwhile, the
Company had received execution orders on Arbitral award against Canoro
from District Courts in Assam for taking possession of inventory and
field equipments.
[e] In view of delay in response from GOI for according consent on
assignment of 60% PI and operatorship of Amguri Field, the Company had
initiated Arbitral proceedings against GOI by filing Section 9
Application before Hon''ble High Court of Delhi seeking interim relief,
pending disposal ofthe case by Arbitral Tribunal. The Company had
received interim Judgment of Hon''ble High Court on 20th July,2012,
under which the Court had prima facie observed that the Company was
entitled to 60% PI of Canoro as per PSC and GOI should accord the
consent without holding it up further. However, GOI is still to take a
decision on this matter.
[f] In respect of AA-ON/7 Exploration Block, the area falls into two
States - Assam and Nagaland. The exploration activities in Assam were
completed and the area has been relinquished as there was no discovery
of oil and gas. In order to pursue exploration activities in the State
of Nagaland, a new PSC in continuation of the earlier PSC on the basis
of same terms and conditions of the earlier PSC will be executed very
shortly. The execution of new PSC has been delayed due to ongoing legal
dispute on Amguri with Canoro. Since the matter has now been finally
resolved and also Canoro''s PSC and PI on this Block has been terminated
by GOI vide letter dated 10th January,2013, the new PSC, which has
already been approved by GOI, will now be executed with the Company.
Similar to Amguri Field, the Company as per PSC is also entitled to 65%
PI and operatorship of this Block, earlier held by Canoro, as the
Company remained as the sole non-defaulting contractor. The Company has
already claimed the PI and Operatorship from GOI.
[g] The new PSC of AA-ON/7 Exploration Block will be in continuation of
the previous PSC and its terms and conditions will not be inferior to
the terms and conditions of previous PSC as confirmed by GOI. AA-ON/7
even though falls in two states - Assam and Nagaland and require
independent PSC, is a single E&P asset. Accordingly, all past
expenditure in this Block will qualify for 100% cost recovery and at
present it does not attract any capitalisation/impairment
provision/adjustment as per AS- 10 and 28 and Guidance Note on
Accounting for Oil & Gas producing activities.
[h] With regard to AA-ONN-2005/1 Exploration Block where ONGC is the
operator, the Geological and Geophysical (G&G) activities are under
progress.
[i] With regard to AA-ONN-2005/1 Exploration Block, this Block was
awarded under NELP-VII round under consortium with ONGC and OIL. The
PEL was obtained on 1st December, 2010. This Block falls in the
Assam-Nagaland border and is sensitive with respect to environment,
reserve forest and border disputes. Permission to conduct seismic
surveys was granted by Assam State Government recently hence
exploration activities are in early stages.
[j] The Company''s aggregate capital investments grouped under Capital
Work in Progress and Fixed Assets will be eligible for full cost
recovery as per PSC against future activities. The operations in Amguri
Field and AA-ON/7 Exploration Block will resume on receipt of consent
from GOI and execution of new PSC respectively.
[k] Fixed Assets Register has not been maintained in Oil & Gas Division
as details ofthe assets were maintained by the Operator (Canoro) which
has since been maintaind by ONGC as the custodian operator and 40%
share of cost was booked by ACIL for each of the assets. A list of
assets is maintained.
[l] In respect of oil and gas producing assets for which depreciation
rates has not been prescribed in Schedule XIV of the Companies Act,
1956, the Company has applied to the Central Government for its
approval to adopt the unit of production method of computing
depreciation for the purpose of provision of Section 205 of the
Companies Act, 1956, which is awaited.
[m] Cost Record Order is applicable for Oil and Gas. There was no
production during the year and the Company was not the Operator. All
relevant papers and records were maintained by the Operator.
8. The Company had issued Zero Per Cent Foreign Currency Convertible
Bonds ("FCCB") in 2006 aggregating to USD 48 Million (INR
2,109,120,000) to finance capital expenditure for modernisation,
expansion and acquisitions. The Bond holders have an option of
converting these Bonds into Equity Shares at a conversion price of Rs.
28.75 per share, at any time on or after 28th November, 2006, subject
to compliance with certain conditions stated in the Offer Circular
dated 23rd November, 2006. The Bonds were redeemable on 30th November,
2011, at 150.019 per cent of their principal amount, unless previously
converted or redeemed.
Unutilised FCCB proceeds amounting to t7,884,472 (31.12.2011 -t
7,884,472) have been invested in securities and the balance t 241,015 (
31.12.2011 -t 241,015) is lying with banks at the year end.
The Principal amount of FCCBs outstanding at the beginning of the year
was USD 31.80 Million. The Company had during the year redeemed
Principal FCCBs of USD 22.70 Million together with agreed redemption
premium. As at the year end, the total Principal FCCBs outstanding is
USD 9.10 Million out of which the Company has since redeemed Principal
FCCBs of USD 6 Million with agreed redemption premium. The Company is
negotiating with the Bondholders for settlement of the remaining
FCCB''s. The Company had obtained permission from Reserve Bank of India
(RBI) for extending the time for redemption of Outstanding FCCBs beyond
the maturity date.
9. Advances and loans to subsidiaries include an amount oft
2,520,121,211 (including interest 1 1,111,049,664 Net of TDS) (31.12.11
t 2,118,199,469 including interest t 783,371,113 Net of TDS) due from
Gujarat Hydrocarbons and Power SEZ Limited (GHPSL), a Subsidiary of the
Company.
GHPSL was incorporated for developing a Hydrocarbon and Power Special
Economic Zone (SEZ) in the State of Gujarat. GHPSL had acquired 315
Hectares of land for its project from Gujarat Industrial Development
Corporation (GIDC) out ofwhich 296 Hectares possession was received and
the balance 19 Hectares is in the process of acquisition.The loan was
given towards acquisition and development of the acquired area by
GHPSL.
10. Advances and loans to subsidiaries include interest free loan of Rs.
813,732,224) (31.12.11 t813,732,224) due from Duncan Macneill Natural
Resources Limited (DMNRL) a Wholly Owned Subsidiary of the Company
located in UK. The loan was given to acquire E&P assets.The Company, in
order to expand its oil and gas activities in upstream sector desire to
make a strong presence at overseas countries by acquiring E&P
assets.The Company is confident in acquiring economically feasible E& P
assets through DMNRL by using the loan given to them. DMNRL has agreed
to repay rupee equivalent of the total amount outstanding to the
Company.
11. Advances and loans to subsidiaries include interest free loan of Rs.
10,708,140 (31.12.11 t 10,174,605) due from Assam Oil and Natural Gas
Limited a Wholly Owned Subsidiary of the Company located in Cayman
Islands, as loan. The loan was given to acquire E&P (Oil and Gas)
assets in Colombia.
12. The Single Bench of the Hon''ble Calcutta High Court has allowed
the eviction proceedings filed by the owners in respect of the
Company''s Corporate Office at Kolkata.The Company has preferred an
appeal before the Division Bench of the Hon''ble Calcutta High Court,who
have stayed the order passed by the Single Bench. TheAppeal is pending
adjudication.
Notes :
[i] The Company has considered business segment as the primary segment
for disclosure. The components of these business segments are
plantation products,oil and gas activities and Merchant trading.
[ii] The segment wise revenue, results, assets and liabilities relate
to the respective amounts directly identifiable to each ofthe segments.
Unallocable income/expenditure refers to income/expenses incurred on
common services at corporate level.
[iii] Geographical segment:
Segregation of revenue is on the basis of geographical location of
customer i.e.
Sales within India Sales outside India
Segregation of asset and capital expenditure is on the basis of
geographical location of assets i.e. Asset within India Asset outside
India
[iv] Figures in bold represent previous year''s figures .
50. In line with the notification dated 31st March, 2009 and
notification dated 29.12.11 issued by the Ministry of Corporate
Affairs, amending Accounting Standard (AS) 11 - "Effects of Changes in
Foreign Exchange Rate", the Company in the current year has:
[i] charged to the Statement of Profit and Loss Rs. 84,949,234 (31.12.11
- Rs. 136,945,139) being the amortisation charge of ''Foreign Currency
Monetary item Translation Difference Account'' (FCMITDA) for the year.
[ii] carried forward Rs. 165,916,130 (31.12.11- Rs. 174,684,288) in the
FCMITDA, amortisable by 31st January, 2020.
13. Employee Benefit Obligation Provident Fund
Provident Fund is a defined contribution scheme whereby the Company
contributes an amount determined as a fixed percentage of basic salary
to the Trust/Government authorities every month.
Gratuity
The Company operates three gratuity schemes wherein every employee is
entitled to the benefit equivalent to 15 days salary last drawn for
each completed year of service. The same is payable on retirement or
termination of service, whichever is earlier. Annual contributions
based on actuarial valuation carried out at the year end are made to an
independent trust fund who in turn is investing in a private insurance
company under group gratuity scheme.
Pension
The Company operates two pension schemes for eligible employees, one of
them being a defined benefit scheme and the other a defined
contribution scheme. Annual contributions to the defined benefit scheme
are made by the Company based on actuarial valuation carried out by the
Company at year end. Contributions for the defined contribution scheme
are deposited with a Trust and such funds are funded to a private
insurance company.
Leave Benefit
Leave benefit comprises of leave balances accumulated by the employees.
These balances can be accumulated upto a maximum of 120 days and can be
encashed only at any time of retirement/separation.
Post Retirement Medical Benefit
The Company has a scheme of re-imbursement of post retirement medical
expenses to certain categories of employees and their surviving
spouses, upon retirement, subject to a monetary limit.
A. Defined Contribution Plans
Contributions for Defined Contribution Plans amounting to t 9,17,04,830
(31.12.2011 t 8,47,96,893) has been recognised in the Profit & Loss
Account.
Notes:
(i) The estimates of future salary increases considered in the
actuarial valuation takes into account factors like inflation, future
salary increases, seniority, promotion, supply and demand in the
employment market etc. The expected return on plan assets is based on
the actuarial expectation of the average long term rate of return on
investments of the fund during the estimated time of the obligations.
(ii) Since the Company has adopted Accounting Standard 15 (Revised
2005) on Employee Benefits during the year 2007, figures for five
financial years are available and have been disclosed except for post
retirement medical benefits which have been actuarially valued from the
year 2011.
(iii) As per the actuarial valuation carried out ,there is gain in
contribution to be made during the year of Rs.3,618,543 and Rs. 2,465,546
in Management Staff Gratuity Fund and Clerical, Medical & Technical
Staff Pension Fund respectively.As a matter of prudence the effect of
the same has not been taken.
(iv) The contribution expected to be made by the Company for the year
ending 31st December, 2013, cannot be ascertained at this stage.
14. Related Party Disclosure :
I. Names of related parties and description of relationship
[a] Subsidiaries of the Company
Namburnadi Tea Company Limited Camellia Cha Bar Limited North East
Hydrocarbon Limited Assam Oil and Gas Limited Duncan Macneill Natural
Resources Limited
Dahej Offshore Infrastructure SEZ Limited (Formerly known as Assam
Estates Limited)
Gujarat Hydrocarbons and Power SEZ Limited
Duncan Macneill Power India Ltd. (Formerly known as Duncan Macneill
Power and Utilities Ltd.) Assam Oil & Natural Gas Limited.
[b] Stepdown subsidiaries
Lord Inchcape Financial Services Limited (control exercised through two
subsidiaries)
Assam Oil & Natural Gas Columbia Limited
[c] Key Managerial Personnel
Mr. A.K.Jajodia, Managing Director
[d] Relatives of Key Managerial Personnel
Ms. Ruchika Jajodia
[e] Joint Venture through jointly controlled operations
Canoro Resources Limited
Oil and Natural Gas Corporation Limited
Oil India Limited
15. Pursuant to a Resolution passed by the Shareholders on 26th June,
2012 and the subsequent approval of the Board on 2nd August, 2012, the
Company had entered into an "Agreement for Sale" (Agreement) on 3rd
August, 2012 with Salonah Tea Private Limited (Purchaser) for sale of
Salonah Tea Estate (the Estate) subject to receipt of requisite
approvals and NOCs from the concerned authorities which are awaited.
Pursuant to the said Agreement, the profit and loss and liabilities
will accrue and arise to the account of Purchaser from the appointed
date i.e. 20th August, 2012. Accordingly, the Company has discontinued
to account for all the income and expenditure of the Estate effective
from the same date. As the "sale" of the Estate is yet to be completed
pending receipt of requisite approvals and NOCs and execution of
conveyance deed, the assets and ownership of the Estate continues to
remain with the Company.
Net block of Fixed Assets as referred in Note No.11 includes Assets
pertaining to Salonah Tea Estate which are not being used by the
Company from the appointment date ie. 20th August, 2012 and held for
disposal.
16. The Company has obtained a stay from the Hon''ble Guwahati High
Court restraining the taxation authorities from imposing and collecting
Fringe Benefit Tax (FBT) under Section 115WA of the Income Tax Act,
1961. In view of this, the Company has not provided the liability for
FBT till the year-end December, 2009.
17. The Financial Statements for the year ended 31st December, 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 31st December, 2012 are prepared as per Revised Schedule
VI. Accordingly, the previous year figures have also been reclassified
to conform with this year''s classification.
Dec 31, 2011
1. [a] All assets except Furniture as at 31st December, 1994 were
revalued by an approved valuer at the then net replacement cost
resulting in increase in value of these assets by Rs 427,664,732. All
assets except Furniture as at 31st December, 1996 were revalued again
by an approved valuer at the then net replacement cost resulting in a
further increase in value of these assets by Rs 113,567,000. [b] Taking
into account the total intrinsic value of the Company's land in Assam,
no adjustment in the opinion of the management is required for the loss
of land lost due to flood and consequent erosion in past years. Claim
for compensation in this regard has been made to the Government of
Assam.
2. Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs 10,264,615 (net of advance - Rs
4,717,872), [31.12.2010 - Rs 10,162,148 (net of advance - Rs 1,823,897)]
3. Contingent Liabilities not provided for in respect of :
[a] Income Tax assessments disputed in appeals Rs NIL (31.12.2010 - Rs
20,824,240)
[b] Sales Tax assessments disputed in appeals Rs 108,907,869 (31.12.2010
- Rs 118,019,201)
[c] Liability towards fringe benefit tax under adjudication - Rs
70,929,211 (31.12.2010 - Rs 70,929,211). (Refer Note 30 of Schedule 13).
[d] Guarantees given on behalf of third parties Rs 48,214,400
(31.12.2010 - Rs 48,214,400) of which Rs 29,824,134 (31.12.2010 - Rs
26,178697) was outstanding as at 31st December, 2011.
[e] Uncalled liability on partly paid shares - Rs 6,999,510 (31.12.2009
- Rs 6,999,510).
[f] Interest and penalty for non-deduction and non-deposit of tax
deducted at source from green leaf suppliers in respect of an earlier
year, not ascertainable at this stage.
[g] Financial undertaking issued to a subsidiary - amount not
ascertainable. The future cash flows on account of above cannot be
determined unless the judgement / decisions / demand are received from
the appropriate authorities/parties.
4. Provision for taxation has been made as per the Income Tax Act,
1961 and the rules framed thereunder with reference to the profit for
the year ended 31st December, 2011 which extends over two assessment
years, Assessment Year 2011-2012 and Assessment Year 2012 - 2013. The
ultimate tax liability for the Assessment Year 2012-2013 will be
determined on the total income for the period from 1st April, 2011 to
31st March, 2012.
5. Employee Benefit Obligation
Provident Fund
Provident Fund is a defined contribution scheme whereby the Company
contributes an amount determined as a fixed percentage of basic salary
to the trust/government authorities every month.
Gratuity
The Company operates three gratuity schemes wherein every employee is
entitled to the benefit equivalent to 15 days salary last drawn for
each completed year of service. The same is payable on retirement or
termination of service, whichever is earlier. Annual contributions
based on actuarial valuation carried out at the year end are made to an
independent trust fund who in turn is investing in a private insurance
company under group gratuity scheme.
Pension
The Company operates two pension schemes for eligible employees, one of
them being a defined benefit scheme and the other a defined
contribution scheme. The defined benefit scheme is funded with Life
Insurance Corporation of India (LICI). Annual contributions to the
defined benefit scheme are made by the Company based on actuarial
valuation carried out by LICI at year end. Contributions for the
defined contribution scheme are deposited with a Trust and such funds
are utilised to buy pension annuity from the insurance company.
Leave Benefit
Leave benefit comprises of leave balances accumulated by the employees.
These balances can be accumulated upto a maximum of 120 days and can be
encashed only at any time of retirement/separation.
Post Retirement Medical Benefit
The Company has a scheme of re-imbursement of post retirement medical
expenses to certain categories of employees and their surviving
spouses, upon retirement, subject to a monetary limit.
A. Defined Contribution Plans
Contributions for Defined Contribution Plans amounting to Rs 84,796,893
(31.12.2010 - Rs 78,296,118) has been recognised in the Profit and Loss
Account.
[b] The Company has taken various premises under operating lease having
tenures upto 36 months which are not non- cancellable. These are
usually renewed periodically by mutual consent. The rental payable
against these lease amounting to Rs Nil (31.12.2010 - Rs 335,400) have
been debited to the Profit and Loss Account.
6. Related Party Disclosure:
I. Names of related parties and description of relationship
[a] Subsidiaries of the Company
Namburnadi Tea Company Limited
Camellia Cha Bar Limited
North East Hydrocarbon Limited
Assam Oil and Gas Limited
Duncan Macneill Natural Resources Limited
Dahej Offshore Infrastructure SEZ Limited (Formerly known as Assam
Estates Limited)
Gujarat Hydrocarbons and Power SEZ Limited
Duncan Macneill Power India Limited (Formerly known as Duncan Macneill
Power and Utilities Ltd.)
Lord Inchcape Financial Services Limited (control exercised through two
subsidiaries)
Assam Oil & Natural Gas Ltd. with effect from 18.05.2011
[b] Key Managerial Personnel
Mr. A.K.Jajodia, Managing Director
[c] Relatives of Key Managerial Personnel
Ms. Ruchika Jajodia
[d] Joint Venture through jointly controlled operations
Canoro Resources Limited - (Refer Note No. 17 (a) below)
7. [a] The CompanyÃs Oil and Gas activities comprise of three Oil
Fields à Amguri (Discovered Field), AA-ON/7 (Exploration Block) and
AA-ONN-2005/1 (Exploration Block) having Participating Interest of 40%,
35% and 10% respectively. While Amguri Oil Field and AA-ON/7
Exploration Block were operated under a consortium with Canoro
Resources Limited (Canoro), a Canadian based E&P Company, AA-ONN-2005/1
Exploration Block is under consortium with ONGC and OIL.
[b] During the year 2010, Government of India (GOI) terminated CanoroÃs
60% Participating Interest (PI) in Amguri Field on account of change in
ownership of the Company without prior consent of GOI as per provisions
of Production Sharing Contract (PSC). As a result of the dispute on
account of termination of PI between Canoro and GOI, the operation of
Amguri Field was shut down by Canoro, being the operator of the Field,
on 4th December, 2010. GOI, after dismissal of CanoroÃs appeal before
High Court against termination of PI, appointed ONGC as the custodian
and interim operator of the Field pending settlement of ownership of
60% PI. But there were no effective operations in Amguri Field during
the year 2011 as ONGC did not have mining license.
[c] The Company, under the Joint Operating Agreement (JOA) exercised
its right of first refusal against material change of ownership of
Canoro. Accordingly, it initiated Arbitral proceedings against Canoro,
not only to seek the majority control of Canoro but also the ownership
of 60% PI, being the principal asset of Canoro. The Arbitral Tribunal
passed the Award on 21st November,2011 under which the Company has now
become the assignee of 60% PI of Amguri and also the owner of 52.9%
shares of Canoro which was earlier issued to Mass Financial
Corporation. As per the said Award, the Company had acquired the right
of 60% PI at a consideration of US$ 4.16 million (Rs 22.16 crores) and
the control of 52.9% shares of Canoro at a consideration of US$ 2.2071
million (Rs 11.76 crores) besides awarding a total damage claim of US$
39.12 million (Rs 208.38 crores) in favour of the Company. Consequent
upon the receipt of the Award, the Company sought the formal consent
from GOI pursuant to the provisions of PSC which is still awaited.
[d] The Arbitral Award is yet to be executed before Canadian Court
prior to the same becomes enforceable against Canoro. Hence, the
Company pending receipt of enforceable Execution Order against Canoro
from Canadian Court has not considered the impact of Award during the
year, 2011.
[e] In view of delay in response from GOI for according consent on
assignment of 60% PI of Amguri Field, the Company had initiated
Arbitral proceedings against GOI by filing Section 9 Application before
HonÃble High Court seeking interim relief, pending disposal of the case
by Arbitral Tribunal. The Company had since received the Judgement of
HonÃble High Court on 20th July, 2012, under which the Court had
observed that the Company was entitled to 60% PI of Canoro as per PSC
and GOI should accord the consent without holding it up further, as the
stoppage of operations in Amguri Field was against the public interest.
The Company believes that pursuant to the Judgement of HonÃble High
Court, GOI will accord the consent on ownership of 60% PI of Amguri
Field. With this consent from GOI, the Company will become the owner of
60% PI of Amguri Field.
[f] The Company during the year has made suitable adjustments between
payables and receivables to and from Canoro on account of capital
expenditure and receivables against sale of gas and balance residual
amount has been adjusted with Capital Work in Progress. With this
adjustment, CanoroÃs Account as per books is fully settled. Because of
the sub-judice nature of the case, accounts have been continued to be
maintained as in last year as a going concern
[g] In respect of AA-ON/7 Exploration Block, the area fell in two
States à Assam and Nagaland. The exploration activities in Assam were
completed and having no success, the area has been relinquished. In
order to pursue exploration activities in the State of Nagaland, there
is a need to execute a new PSC in continuation of the earlier PSC on
the basis of same terms and conditions, which is awaiting execution
from GOI. The execution of new PSC has been delayed due to ongoing
legal dispute on Amguri with Canoro as Canoro is also the Operator in
AA-ON/7 Exploration Block having 65% Participating Interest. Since
Canoro has not shown any further interest on this Exploration Block,
the Company expects that the new PSC will be solely executed with them
soon after the dispute on Amguri Field is resolved.
[h] Since the new PSC for exploratory activities in the State of
Nagaland will be in continuation of the old PSC and it relates the same
Exploratory Block, all expenses incurred on exploratory activities will
be eligible for cost recovery.
[i] With regard to AA-ONN-2005/1 Exploration Block, this Block was
awarded under NELP-VII round under consortium with ONGC and OIL. The
PEL was obtained on 1st December, 2010. This block falls in the
Assam-Nagaland border and is sensitive with respect to environment,
reserve forest and border disputes. Permission to conduct seismic
surveys was granted by Assam State Government recently, hence
exploration activities are in early stages.
[j] The CompanyÃs aggregate capital investments grouped under
Capital Work in Progress and Fixed Assets will be eligible for full
cost recovery as per PSC against future activities. The operations in
Amguri Field and AA-ON/7 Exploration Block will resume on receipt of
consent from GOI and execution of new PSC respectively.
[k] Fixed Assets Register has not been maintained in Oil and Gas
Division as details of the assets were maintained by the Operator
(Canoro) and 40% share of cost was booked by ACIL for each of the
assets. A list of assets is maintained.
[l] In respect of oil and gas producing assets for which depreciation
rates has not been prescribed in Schedule XIV of the Companies Act,
1956, the Company has applied to the Central Government for its
approval to adopt the unit of production method of computing
depreciation for the purpose of provision of Section 205 of the
Companies Act, 1956, which is awaited.
[m] Cost Record Order is applicable for Oil and Gas. As there was
almost no production and the Company was not the Operator, all relevant
papers and records were maintained by the Operator.
8. The Company had issued Zero Per Cent Foreign Currency Convertible
Bonds (ÃFCCBÃ) in 2006 aggregating to USD 48 Million (INR
2,109,120,000) to finance capital expenditure for modernisation,
expansion and acquisitions. The Bond holders have an option of
converting these Bonds into Equity Shares at a conversion price of Rs
28.75 per share, at any time on or after 28th November, 2006, subject
to compliance with certain conditions stated in the Offer Circular
dated 23rd November, 2006. The Bonds are redeemable on 30th November,
2011 at 150.019 per cent of their principal amount, unless previously
converted or redeemed.
During the year 2008, Bond holders have exercised their option of
converting their Bond amounting Rs 5,145,703 into Equity Shares.
Accordingly, 5,145,703 shares were issued in 2008 with resultant
increase in issued share capital and securities premium account.
During the year 2009, the Company re-purchased and cancelled FCCB of Rs
605,152,000 at a discount which has resulted in a saving of Rs
118,107,100. Consequent upon such re-purchase and cancellation, the
Company's obligation to convert said FCCBs into shares or to redeem the
same in foreign currency has come to an end.
9. During the year 2007, the Company received the balance amount
outstanding against 81,000,000 share warrants of Rs1 each issued in 2006
at a premium of Rs 22.25 per warrant. Equivalent number of Equity Shares
of Rs 1 each has been issued on conversion of these warrants resulting
in increase of issued and paid up share capital of the Company by Rs
81,000,000 and the securities premium by Rs 1,802,250,000.
10. Loans and Advances to subsidiaries include an amount of Rs
2,118,199,469 (including interest Rs 783,371,113 Net of TDS) (31.12.2010
Rs 1,883,979,211 including interest Rs 524,377,105 Net of TDS) due from
Gujarat Hydrocarbons and Power SEZ Limited (GHPSL), a subsidiary of the
company.
Consequent upon further issue of equity shares by GHPSL during the year
the holding of the Company comes down to 51%.
GHPSL was incorporated for developing a Hydrocarbon and Power Special
Economic Zone (SEZ) in the state of Gujarat. GHPSL has acquired 315
hectares of land for its SEZ project from Gujarat Industrial
Development Corporation (GIDC) out of which 296 hectares (inclusive of
146 hectares Non-SEZ land) of land has been taken possession of and the
balance 19 Hectares is in the process of acquisition.
11. Loans and Advances to subsidiaries include interest free loan of Rs
813,732,224) (31.12.2010 Rs 813,732,224) due from Duncan Macneill
Natural Resources Limited (DMNRL) a Wholly Owned Subsidiary of the
Company located in UK, as loan. DMNRL has agreed to repay rupee
equivalent of the total amount outstanding to the Company in the
Company's books.The above loan was given for acquisition of E & P (Oil
and Gas) assets which are yet to be materialised.
12. The Single Bench of the Hon'ble Calcutta High Court has allowed
the eviction proceedings filed by the owners in respect of the
Company's Corporate Office at Kolkata.The Company has preferred an
appeal before the Division Bench of the Hon'ble Calcutta High Court,
which is pending adjudication.
13. In line with the Notification dated 31st March, 2009 and
Notification dated 29th December, 2011, issued by the Ministry of
Corporate Affairs, amending Accounting Standard (AS) 11 - "Effects of
Changes in Foreign Exchange Rate", the Company in the current year has:
(i) charged to the Profit and Loss Account Rs 136,945,139 (31.12.2010 -
Rs 29,637,828), being the amortisation charge of 'Foreign Currency
Monetary Item Translation Difference Account' (FCMITDA) for the year.
(ii) carried forward Rs 174,684,288 (31.12.2010 - Rs 7,227,867) in the
FCMITDA, amortisable by 31st March, 2015.
14. Derivative Instruments :
The Company uses Foreign Exchange Contracts to hedge its certain
exposures in foreign currency related to firm commitments and highly
probable transactions.
15. The Company has obtained a stay from the Hon'ble Guwahati High
Court restraining the taxation authorities from imposing and collecting
Fringe Benefit Tax (FBT) under Section 115WA of the Income Tax Act,
1961. In view of this, the Company has not provided the liability for
FBT till the year-end December, 2009.
16. Sundry Debtors include an overdue above two year of Rs 1,526.51
Lacs, which in the opinion of the Management is good and recoverable.
17. Previous year's figures have been regrouped / rearranged wherever
necessary.
Dec 31, 2010
1. [a] All assets except Furniture as at 31 st December, 1994 were
revalued by an approved valuer at the then net replacement cost
resulting in increase in value of these assets by Rs.427,664,732. All
assets except Furniture as at 31st December, 1996 were revalued again
by an approved valuer at the then net replacement cost resulting in a
further increase in value of these assets by Rs.113,567,000. [b]
Taking into account the total intrinsic value of the Company's land in
Assam, no adjustment in the opinion of the management is required for
the loss on land lost due to flood and consequent erosion in past
years. Claim for compensation in this regard has been made to the
Government of Assam.
2. Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs.10,162,148 (net of advance - Rs.
1,823,897), [31.12.2009 - Rs.6,228,955 (net of advance - Rs.1,978,734)]
3. Contingent Liabilities not provided for in respect of:
[a] Income Tax assessments disputed in appeals Rs. 20,824,240
(31.12.2009 - Rs.1,084,258)
[b] Sales Tax assessments disputed in appeals Rs.118,019,201
(31.12.2009 - Rs.195,551,033)
[c] Liability towards fringe benefit tax under adjudication - Rs.
70,929,211 (31.12.2009 - Rs. 70,929,211) (Refer Note 29 of Schedule
13).
[d] Premium on redemption of Foreign Currency Convertible Bonds
Rs.559,923,846 (31.12.2009 - Rs.422,707,146). (Refer Note 18 of
Schedule 13.)
[e] Guarantees given on behalf of third parties Rs. 48,214,400
(31.12.2009 - Rs.76,814,400) of which Rs.26,178,697 (31.12.2009 -
Rs.30,863,255) was outstanding as at 31st December, 2010.
[f] Uncalled liability on partly paid shares - Rs.6,999,510 (31.12.2009
- Rs.6,999,510).
[g] Interest and penalty for non-deduction and non-deposit of tax
deducted at source from green leaf suppliers in respect of an earlier
year, not ascertainable at this stage.
[h] Commercial claims not acknowledged as debts Rs. Nil (31.12.2009 -
242,899,702) [i] Financial undertaking issued to a subsidiary - amount
not ascertainable.
The future cash flows on account of above cannot be determined unless
the judgement / decisions / demand are received from the appropriate
authorities/parties.
4. Provision for taxation has been made as per the Income Tax Act,
1961 and the rules framed thereunder with reference to the profit for
the year ended 31st December, 2010 which extends over two assessment
years, Assessment Year 2010-2011 and Assessment Year 2011 - 2012. The
ultimate tax liability for the Assessment Year 2011-2012 will be
determined on the total income for the period from 1st April, 2010 to
31st March, 2011.
5. Employee Benefit Obligation Provident Fund
Provident Fund is a defined contribution scheme whereby the Company
contributes an amount determined as a fixed percentage of basic salary
to the Trust/government authorities every month. Gratuity
The Company operates three gratuity schemes wherein every employee is
entitled to the benefit equivalent to 15 days salary last drawn for
each completed year of service. The same is payable on retirement or
termination of service, whichever is earlier. Annual contributions
based on actuarial valuation carried out at the year end are made to an
independent trust fund who in turn is investing in a private insurance
company under group gratuity scheme. Pension
The Company operates two pension schemes for eligible employees, one of
them being a defined benefit scheme and the other a defined
contribution scheme. The defined benefit scheme is funded with Life
Insurance Corporation of India (LICI). Annual contributions to the
defined benefit scheme are made by the Company based on actuarial
valuation carried out by LICI at year end. Contributions for the
defined contribution scheme are deposited with a Trust and such funds
are utilised to buy pension annuity from the insurance company. Leave
Benefit
Leave benefit comprises of leave balances accumulated by the employees.
These balances can be accumulated upto a maximum of 120 days and can be
encashed only at any time of retirement/seperation. Post Retirement
Medical Benefit
The Company has a Scheme of re-imbursement of Post-retirement medical
expenses to certain categories of employees and their surviving
spouses, upon retirement, subject to a monetary limit. A. Defined
Contribution Plans
Contributions for Defined Contribution Plans amounting to Rs.78,296,118
(31.12.2009 - Rs.58,906,944) has been recognised in the Profit & Loss
Account.
6. [a] Assets acquired under Hire Purchase (HP) comprise of vehicles.
These agreements are of a period of 36 months and more and in certain
cases provide for revision of hire charges for variation in prime
lending rates of the bank. There are no restrictive covenants in the HP
agreements.
[b] The Company has taken various premises under operating lease having
tenures upto 36 months which are not non- cancellable. These are
usually renewed periodically by mutual consent. The rental payable
against these lease amounting to Rs 335,400 (31.12.2009 - Rs. 676,200)
have been debited to the Profit and Loss Account.
7. Related Party Disclosure:
I. Names of related parties and description of relationship
a. Subsidiaries of the Company
Namburnadi Tea Company Limited
Camellia Cha Bar Limited
North East Hydrocarbon Limited
Assam Oil & Gas Limited
Duncan Macneill Natural Resources Limited
Dahej Offshore Infrastructure SEZ Limited (Formerly known as Assam
Estates Limited)
Gujarat Hydrocarbons & Power SEZ Limited
Duncan Macneill Power and Utilities Limited (with effect from
17.12.2010)
Lord Inschcape Financial Services Limited (Control Exercised through
two Subsidiaries)
b. Key Managerial Personnel
Mr. A.KJajodia, Managing Director
c. Relatives of Key Managerial Personnel
Ms. Ruchika Jajodia
d. Joint Venture through jointly controlled operations
Canoro Resources Limited - (Refer Note No. 17(a))
8. [a] In 2009, the Company was pursuing E&P activities in Amguri
Development Block and AA-ON/7 Exploration Block located in North East
under a Joint Operating Agreement (JOA) with Canoro Resources Ltd
(Canoro), a Canadian E&P Company based in Calgary, Canada, having
participation interest of 40% and 35% respectively.
The company continued its E&P operations in upstream oil and gas sector
in Amguri Development Block during the year under Production Sharing
Contract (PSC) with Government of India (GOI). Consequent to Canoro
Resources Limited (CRL) committing breach to the PSC, GOI had
terminated their Participation Interest (PI) and operatorship with
effect from 29th August, 2010. Hon'ble Delhi High Court has decided
against Canoro in the case filed by them against such termination by
the GOI. Subsequently, case filed by the Company against Canoro was
dismissed by the Hon'ble Delhi High Court. However, the Arbitration
proceedings against Canoro is in progress.
As per interim arrangement, GOI had advised Oil and Natural Gas
Corporation (ONGC) to take over the physical possession of the Amguri
field from CRL along with all assets as a custodian of GOI, pending
formalization of transfer of PI to ACIL and appointment of ACIL as an
operator.
In addition, the Company has one more E&P asset - AA-ONN-2005/1 in
Assam and Assam-Arakan Basin under consortium with ONGC and OIL, having
participation interest of 10% through bidding process under NELP-VII.
[b] New PSC of AA-ON/7 Exploration Block covering Nagaland area is
awaiting execution after completion of exploratory activities in Assam
area. The new PSC will be an extension of the existing PSC under same
terms and conditions allowing another 7 years Exploratory Phase in
Nagaland.
[c] Initial exploratory activities such as seismic studies in
AA-ONN-2005/1, awarded under NELP-VII,The Company has 10% PI along with
ONGC and Oil India Ltd holding 60% and 30% respectively, has already
commenced.
9. The Company had issued Zero Per Cent Foreign Currency Convertible
Bonds ("FCCB") in 2006 aggregating to USD 48 Million (INR
2,109,120,000) to finance capital expenditure for modernisation,
expansion and acquisitions. The Bond holders have an option of
converting these Bonds into Equity Shares at a conversion price of Rs.
28.75 per share, at any time on or after 28th November, 2006, subject
to compliance with certain conditions stated in the offer circular
dated 23rd November, 2006. The Bonds are redeemable on 30th November,
2011 at 150.019 per cent of their principal amount, unless previously
converted or redeemed.
During the year 2008, bond holders have exercised their option of
converting their Bond amounting Rs.5,145,703 into Equity Shares.
Accordingly, 5,145,703 shares were issued in 2008 with resultant
increase in issued share capital and securities premium account.
During the year 2009, the Company re-purchased and cancelled FCCB of
Rs.605,152,000 at a discount which has resulted in a saving of
Rs.118,107,100/. Consequent upon such re-purchase and cancellation the
Company's obligation to convert said FCCBs into shares or to redeem the
same in foreign currency has come to an end. As of date FCCBs
outstanding aggregate to Rs. 1,424,958,000.
10. During the year 2007, the Company received the balance amount
outstanding against 81,000,000 share warrants of Re. 1 each issued in
2006 at a premium of Rs.22.25 per warrant. Equivalent number of Equity
Shares of Re. 1 each has been issued on conversion of these warrants
resulting in increase of issued and paid up share capital of the
Company by Rs.81,000,000 and the securities premium by Rs.
1,802,250,000 .
11. Loans and Advances to subsidiaries include an amount of
Rs.1,883,979,211 (including interest Rs.524,377,105 Net of TDS)
(31.12.09 Rs.1,388,834,110 including interest Rs.314,327,976 Net of
TDS) due from Gujarat Hydrocarbons and Power SEZ Limited (GHPSL), a
wholly owned subsidiary of the company. GHPSL was incorporated for
developing a Hydrocarbon and Power Special Economic Zone (SEZ) in the
state of Gujarat. GHPSL has acquired 315 hectares of land for its SEZ
project from Gujarat Industrial Development Corporation (GIDC) out of
which 296 hectares of land has been taken possession of and the balance
19 Hectares is in the process of acquisition.
12. The Single bench of the Hon'ble Calcutta High Court has allowed
the eviction proceedings filed by the owners in respect of the
Company's Corporate Office at Kolkata.The Company has preferred an
apeal before the Division Bench of the Hon'ble Calcutta High Court.
13. In line with the notification dated 31st March, 2009 issued by the
Ministry of Corporate Affairs, amending Accounting Standard (AS) 11 -
"Effects of Changes in Foreign Exchange Rate", the Company in the
current year has:
(i) charged to the Profit and Loss Account Rs.29,637,828, being the
amortisation charge of 'Foreign Currency Monetary Item Translation
Difference Account' (FCMITDA) for the year.
(ii) carried forward Rs.7,227,867 (31.12.09- Rs.36,865,695) in the
FCMITDA, amortisable by 31st March, 2011.
14. Derivative instruments
The Company uses Foreign Exchange Contracts to hedge its certain
exposures in foreign currency related to firm commitments and highly
probable transactions.
15. The Company has obtained a stay from the Hon'ble Guwahati High
Court restraining the taxation authorities from imposing and collecting
Fringe Benefit Tax (FBT) under section 115WA of the Income Tax Act,
1961. In view of this, the Company has not provided the liability for
FBT till the year-end.
16. Sundry Debtors include an overdue above one year of Rs. 2,777.64
lacs, which in the opinion of the management is good and recoverable.
17[a] Until previous year depreciation for Oil and Gas producing
properties used as fixed assets, was provided based on Unit of
Production method as recommended in the Guidance Note on "Accounting
for Oil and Gas Producing Activities" issued by Institute of Chartered
Accountants of India in February, 2003. In the current year the Company
has changed the method of providing depreciation in respect of certain
assets for which depreciation rates have, been prescribed in Schedule
XIV of the Companies Act, 1956. For those assets depreciation has been
provided for on Written Down Value method at the rates prescribed in
Schedule XIV of the Companies Act, 1956. In respect of other oil and
gas producing assets, depreciation has been provided on unit of
production method as per past practice. In view of the above change in
method of providing depreciation, an additional depreciation charge of
Rs. 52,536,252 has been provided in these accounts.
18 [b] In respect of oil and gas producing assets for which
depreciation rates has not been prescribed in Schedule XIV of the
Companies Act, 1956, the Company has applied to the Central Government
for its approval to adopt the unit of production method of computing
depreciation for the purpose of provision of Section 205 of the
Companies Act, 1956, which is awaited.
19. Previous year's figures have been regrouped / rearranged wherever
necessary.
Dec 31, 2009
1. [a] All assets except Furniture as at 31st December, 1994 were
revalued by an approved valuer at the then net replacement
cost resulting in increase in value of these assets by
Rs.427,664,732/-. All assets except Furniture as at 31st December, 1996
have been revalued again by an approved valuer at net replacement cost
resulting in a further increase in value of these assets by
Rs.113,567,000/-.
[b] Taking into account the total intrinsic value of the Companys land
in Assam, no adjustment in the opinion of the management is required
for the loss on land lost due to flood and consequent erosion in past
years. Claim for compensation in this regard has been made to
Government of Assam.
2. Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs.6,228,955/- (net of advance
- Rs. 1,978,734/-), [31.12.2008 - Rs.7,638,834/- (net of advance -
Rs.15,368,371/-)]
3. Contingent Liabilities not provided for in respect of:
[a] [i] Income Tax assessments disputed in appeals Rs.1,084,258/-
(31.12.2008 - Rs.11,208,122/-).
[a] [ii] Agricultural Income Tax matter Rs. Nil ( 31.12.2008 -
Rs.64,209,208/-)
[b] Sales Tax assessments disputed in appeals Rs.195,551,033/-
(31.12.2008-Rs.143,482,782/-)
[c] Liability towards fringe benefit tax under adjudication - Rs.
70,929,211/- (31.12.2008 - Rs. 48,527,839/-) Refer Note 29 of Schedule
13.
[d] Premium on redemption of Foreign Currency Convertible Bonds Rs.
422,707,146/- (31.12.2008 - Rs. 400,623,012/-). Refer Note 18 of
Schedule 13.
[e] Guarantees gr.-on on behalf of third parties Rs. 76,814,400/-
(31.12.2008 - Rs. 151,100,000/-) of which Rs. 30,863,255/- (31.12.2008
- Rs. 45,844,416/-) was outstanding as at 31st December, 2009.
[f] Uncalled liability on partly paid shares - Rs.6,999,510/-
(31.12.2008 - Rs. 6,999,510/-).
[g] Interest and penalty for non-deduction and non-deposit of tax
deducted at source from green leaf suppliers not ascertainable at
this stage.
[h] Commercial claims not acknowledged as debts Rs. 242,899,702/-
(31.12.2008 - not ascertainable).
The future cash (lows on account of above cannot be determined unless
the judgement / decisions / demand are received from the appropriate
authorities / parties.
4. Provision for taxation has been made as per the Income Tax Act,
1961 and the rules framed thereunder with reference to the profit for
the year ended 31st December, 2009 which extends over two assessment
years, Assessment Year 2009-2010 and Assessment Year 2010-11. The
ultimate tax liability for the Assessment Year 2010-11 will be
determined on the total income for the year period from 1st April, 2009
to 31st March 2010.
5. Employee Benefit Obligation Gratuity
The Company operates three gratuity schemes wherein every employee is
entitled to the benefit equivalent to 15 days salary last drawn for
each completed year of service. The same is payable on" retirement or
termination of service, whichever is earlier. Annual contributions
based on actuarial valuation carried out at the year end are made to an
independent trust fund who in turn is investing in a private insurance
company under group gratuity scheme. Pension
The Company operates two pension schemes for eligible employees, one of
them being a defined benefit scheme and the other a defined
contribution. The defined benefit scheme is funded with Life Insurance
Corporation of India (LICI). Annual contributions to the defined
benefit scheme are made by the Company based on actuarial valuation
carried out by them at year end. Contributions for the defined
contribution plan are deposited with a Trust and such contributions
along with interest accumulate during the service period of such
employee. Such funds are utilised to buy pension annuity from the
insurance company.
Provident Fund
Provident Fund is a defined contribution scheme whereby the Company
deposits an amount determined as a fixed percentage of basic salary to
the Trust/government authorities every month. Leave Benefit
Leave benefit comprises of leave balances accumulated by the employees
which can be encashed only at the time of retirement. A. Defined
Contribution Plans
Contributions for Defined Contribution Plans amounting to
Rs.58,906,944/- (31.12.2008 - Rs.56,928,082/-) has been recognised in
the Profit and Loss Account.
Notes:
(i) The estimates of future salary increases considered in the
actuarial valuation takes into account factors like inflation, future
salary increases, seniority, promotion, supply and demand in the
employment market etc. The expected return on plan assets is based on
the actuarial expectation of the average long term rate of return on
investments of the fund during the estimated time of the obligations.
(ii) Since the company has adopted Accounting Standard 15 (Revised
2005) on Employee Benefits during the year 2007, figures for three
financial years are available and have been disclosed.
(iii) The contribution expected to be made by the company for the year
ending 31st December, 2010 cannot be ascertained at this stage.
6. [a] Assets acquired under Hire Purchase (HP) comprise of vehicles.
These agreements are of a period of 36 months and more and in certain
cases provide for revision of hire charges for variation in prime
lending rates of the bank. There are no restrictive covenants in the HP
agreements.
[b] The Company has taken various premises under operating lease having
tenures upto 36 months which are not non- cancellable. These are
usually renewed periodically by mutual consent. The rental payable
against these lease amounting to Rs.676,200/- (31.12.2008 -
Rs.424,495/-) have been debited to the Profit and Loss Account.
7. Related Party Disclosure:
I. Names of related parties and description of relationship
a. Subsidiaries of the Company
Namburnadi Tea Company Ltd.
Camellia Cha Bar Ltd.
North East Hydrocarbon Ltd.
Assam Oil and Gas Ltd.
Duncan Macneill Natural Resources Ltd.
Assam Estates Ltd.
Gujarat Hydrocarbons and Power SEZ Ltd.
b. Key Managerial Personnel
Mr. A. K. Jajodia, Managing Director
Mr. Abhay Chawdhry, Director Finance & CFO (upto 18.08.2008)
c. Relatives of Key Managerial Personnel
Ms. Ruchika Jajodia
Ms. Rashmi Chawdhry (upto 18.08.2008)
d. Enterprises over which the key managerial personnel are able to
exercise a significant influence
Abhay Chawdhry HUF (upto 18.08.2008)
e. Joint Venture through jointly controlled operations
Canoro Resources Limited - (Refer Note No. 17 below)
8. [a] The Company is pursuing E&P activities in Amguri Development
Block and AA-ON/7 Exploration Block located in North East under a Joint
Operating Agreement (JOA) with Canoro Resources Ltd, a Canadian E&P
Company based in Calgary, Canada, having participation interest of 40%
and 35% respectively. In addition, the Company has one more E&P asset -
AA-ONN-2005/1 in Assam and Assam-Arakan Basin under consortium with
ONGC and OIL, having participation interest of 10% through bidding
process under NELP-VII.
With regard to operations in Marginal Discovered Fields, having made
investments in work over operations in Laxmijan and Barsilla and having
established oil and gas reserve, the Company made strong representation
before ONGC seeking amendment of commercial terms to make the operation
economically viable due to increased cost of operation. Since the
operation was not economically viable, the management has decided to
treat these Marginal Fields as abandoned and subsequently surrendered
these Fields back to ONGC. Accordingly the investment cost capitalised
earlier has been fully charged off under the head "exceptional items".
9. The Company had issued Zero Per Cent Foreign Currency Convertible
Bonds ("FCCB") in 2006 aggregating to USD 48 Million (INR
2,109,120,000/-) to finance capital expenditure for modernisation,
expansion and acquisitions. The Bond holders have an option of
converting these Bonds into Equity Shares at a conversion price of Rs.
28.75 per share, at any time on or after 28th November, 2006, subject
to compliance with certain conditions stated in the offer circular
dated 23rd November, 2006. The Bonds are redeemable on 30th November,
2011 at 150.019 per cent of their principal amount, unless previously
converted or redeemed.
Bond holders have exercised their option of converting their Bond
amounting Rs. 5,145,703/- into Equity Shares on 18th January, 2008.
Accordingly, 5,145,703 shares have been issued last year with resultant
increase in issued share capital and securities premium account.
During the current year the Company re-purchased and cancelled FCCB of
Rs. 605,152,000/- at a discount which has resulted in a saving of Rs.
118,107,100/. This has been treated as "Exceptional Items". Consequent
upon such re-purchase and cancellation the Companys obligation to
convert said FCCBs into shares or to redeem the same in foreign
currency has come to an end. As of date FCCBs outstanding aggregate to
Rs. 148,442,400/-.
Unutilised FCCB proceeds amounting to Rs.8,706,025/- have been invested
in securities and the balance Rs.37,275,008/- is lying with banks at
the year end.
10. During the year 2007, the Company received the balance amount
outstanding against 81,000,000 share warrants of Re. 1 each issued in
2006 at a premium of Rs.22.25/- per warrant. Equivalent number of
Equity Shares of Re. 1 each has been issued on conversion of these
warrants resulting in increase of issued and paid up share capital of
the Company by Rs.81,000,000/- and the securities premium by
Rs.1,802,250,000/-.
11. Loans and Advances to subsidiaries include an amount of Rs.
1,388,834,110/- (including interest Rs. 183,081,878/-) (31.12.08 -
Rs.1,107,849,116/- including interest Rs. 133,991,914/-) due from
Gujarat Hydrocarbons and Power SEZ Limited (GHPSL), a wholly owned
subsidiary of the Company.
GHPSL was incorporated for developing a Special Economic Zone (SEZ) for
Hydrocarbon Park for Energy in the State of Gujarat. GHPSL has acquired
315 hectares of land for its SEZ project from Gujarat Industrial
Development Corporation (GIDC) out of which 276 hectares of land has
been taken possession of and the balance 39 Hectares is in the process
of acquisition.
12. An eviction suit has been filed before the Single bench at
Calcutta High Court by the Landlord of the Corporate Office.The Honble
Judge has directed the Parties to settle the matter amicably and has
sought for submitting terms from both the parties. The Court has given
the terms of settlement but the Landlord have asked for some time to
furnish their terms of settlement. It is expected that the matter will
be resolved amicably and the new long term lease deed will be entered
into on mutually accepted terms. However, as a matter of abundant
precaution, the amount lying in the Fixed Assets has been fully
depreciated.
Notes :-
[i] The Company has considered business segment as the primary segment
for disclosure. The components of these business segments are
plantation products and oil & gas.
[ii] The segment wise revenue, results, assets and liabilities relate
to the respective amounts directly identifiable to each of the
segments. Unallocable income/expenditure refers to income/expenses
incurred on common services at corporate level.
[iii] Geographical segments is on the basis of the geographical
location of the customer namely :
Sales within India
Sales outside India [iv] Figures in bold represent previous years
figures.
13. In line with the notification dated 31st March, 2009 issued by the
Ministry of Corporate Affairs, amending Accounting Standard (AS) 11 -
"Effects of Changes in Foreign Exchange Rate", the Company in the
current year has:
(i) charged to the Profit and Loss Account Rs.29,492,555/-, being the
amortisation charge of Foreign Currency Monetary Item Translation
Difference Account (FCMITDA) for the year.
(ii) carried forward Rs.36,865,695/- (31.12.08 - Rs. 66,358,250/-) in
the FCMITDA amortisable by 31st March, 2011.
14. Derivative instruments
The Company uses Foreign Exchange Contracts to hedge its certain
exposures in foreign currency related to firm commitments and highly
probable transactions.
15. The Company has obtained a stay from the Honble Guwahati High
Court restraining the taxation authorities from imposing and collecting
Fringe Benefit Tax (FBT) under Section 115WA of the Income Tax Act,
1961. In view of this, the Company has not provided the liability for
FBT till the year-end.
16. Previous years figures have been regrouped / rearranged wherever
necessary.
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