Mar 31, 2018
1. GENERAL INFORMATION
Forbes & Company Limited (âthe Companyâ) is one of the oldest companies of the world that is still in existence. The Company traces its origin to the year 1767 when John Forbes of Aberdeenshire, Scotland started his business in India. Over the years, the Management of the Company moved from the Forbes Family to the Campbells to the Tata Group and now finally to the well known Shapoorji Pallonji Group. Its parent and ultimate holding company is Shapoorji Pallonji and Company Private Limited. The Company is mainly engaged in Engineering and Real estate business and is listed on the Bombay Stock Exchange. The address and registered office and principal place of business are disclosed in the Annual Report.
2. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the accounting policies, which are described in note 2, the directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
2.1 Critical judgements in applying accounting policies
The following are the critical judgements, apart from those involving estimations (see note 3.2 below), that the directors have made in the process of applying the accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
2.1.1. The Svadeshi Mills Company Limited (Svadeshi) is not an associate of the Company although the Company owns a 23% ownership interest (including indirect) in Svadeshi, as the Assets of Svadeshi continue to be in the hands of the Official Liquidator, High Court, Bombay. The Review Petition had been filed against the Order dated 23rd February, 2016 whereby the Special Leave Petition (SLP) was dismissed. The said Review Petition filed before the Honâble Supreme Court was dismissed vide Order dated 26th August, 2016. The records of Svadeshi are in the custody of the Official Liquidator. Hence, the Company does not have significant influence over Svadeshi as Svadeshi is under liquidation.
2.2 Key sources of estimation uncertainty
2.2.1 Real Estate Development
In case of Real estate development, the Companyâs revenue recognition and margin recognition policy, which are set out in Note 2(xvii), are critical to how the Company values the work it has carried out in each financial year and corresponding recognition of revenue and expenses. These policies require forecasts to be made of the outcomes of long-term real estate development services, which require assessments and judgements to be made mainly on sale considerations, changes in the plan/outlay of work and changes in costs.
2.2.2 Contingent Liabilities and Provisions
Contingent Liabilities and Provisions are liabilities of uncertain timing or amount and therefore in making a reliable estimate of the quantum and timing of liabilities judgement is applied and re-evaluated at each reporting date.
2.2.3 Useful life and residual value of Property, Plant and Equipment and Investment Properties
As described in Note 2(iv) and 2(vi), the Company reviews the estimated useful life and residual values of property, plant and equipment and investment properties at each reporting date.
2.2.4 Fair value measurement and valuation process
Some of the Companyâs assets and liabilities are measured at fair value for financial reporting purposes. The management of the Company determines the appropriate valuation techniques and inputs for fair value measurements. In estimating the fair value of an asset or a liability, the company uses market-observable data to the extent it is available. Where such inputs are not available, the Company engages third party qualified valuers to perform the valuation.
2.2.5 Impairment
Determining whether an asset is impaired requires an estimation of fair value/value in use. Such valuation requires the Company to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than expected, a material impairment loss may arise.
The carrying amount of investment in Forbes Technosys Limited, a subsidiary, as at 31st March, 2018 Rs.6,913.00 Lakhs (as at 31st March, 2017 Rs.5,729.50 Lakhs) and based on the valuation report there is no impairment.
3. STANDARDS ISSUED BUT NOT EFFECTIVE
The Ministry of Corporate Affairs (MCA) notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 (the âRulesâ) on 28th March, 2018. The rules shall be effective from reporting periods beginning on or after April 1, 2018. Amendments to Ind AS as per these rules are mentioned below:
Ind AS 115 - Revenue from Contracts with Customers
Ind AS 115, Revenue from contracts with customers deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entityâs contracts with customers. Revenue is recognised when a customer obtains control of a promised good or service and thus has the ability to direct the use and obtain the benefits from the good or service in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard replaces Ind AS 18 Revenue and Ind AS 11 Construction contracts and related appendices. A new five-step process must be applied before revenue can be recognised:
1 Identify contracts with customers
2 Identify the separate performance obligation
3 Determine the transaction price of the contract
4 Allocate the transaction price to each of the separate performance obligations, and
5 Recognise the revenue as each performance obligation is satisfied.
The management is in process of assessing the impact of above amendment. The new standard is mandatory for financial years commencing on or after 1 April, 2018 and early application is not permitted. The standard permits either a full retrospective or a modified retrospective approach for the adoption.
Appendix B to Ind AS 21 - Foreign currency transactions and advance consideration
The appendix clarifies how to determine the date of transaction for the exchange rate to be used on initial recognition of a related asset, expense or income where an entity pays or receives consideration in advance for foreign currency-denominated contracts.
The management is in process of assessing the impact of above amendment, though it is expected that impact from the amendment would not be significant. The Company intends to adopt the amendments prospectively from 1st April, 2018.
Ind AS 40 - Investment property - Transfers of investment property
The amendments clarify that transfers to, or from, investment property can only be made if there has been a change in use that is supported by evidence.
Ind AS 12 - Income taxes regarding recognition of deferred tax assets on unrealised losses
The amendments clarify the accounting for deferred taxes where an asset is measured at fair value and that fair value is below the assetâs tax base.
The management is in process of assessing the impact of above amendment, though it is expected that impact from the amendment would not be significant. The Company intends to adopt the amendments from 1st April, 2018.
1. Plant and equipment includes assets that are jointly owned of Rs.10.25 Lakhs.
2. Land and building with a carrying amount of Rs.251.96 Lakhs have been mortgaged by way of pari passu charge to secure borrowings of the Company (Refer Note 17).
3. Plant, equipments, furniture and fixtures and data processing equipments with a carrying amount of Rs.2,089.98 Lakhs have been mortgaged / hypothecated to secure borrowings of the Company (Refer Note 17).
Notes:
(i) Investment properties include premises on freehold land where the Company is yet to be registered as the owner of a proportionate share in the land Rs.28.66 Lakhs (Previous year Rs.28.66 Lakhs), Jointly owned Residential Premises Rs.28.39 Lakhs (Previousyear Rs.28.39 Lakhs) and Shares in Cooperative Housing Societies, Association of apartment owners and in a company Rs.0.17 Lakh (Previous year Rs.0.17 Lakh).
(ii) Building with a carrying amount of Rs.227.24 Lakhs (Previous year Rs.242.62 Lakhs) have been mortgaged to secure credit facilities of the Company.
(iii) Investment properties includes the lease rights in respect of the land and building at Fort, Mumbai with net carrying value of Rs.424.41 Lakhs of which Rs.66.23 Lakhs has been disclosed under property, plant and equipment (Refer Note 5) for which the Company has made an application for renewal of lease and approval from authorities awaited thereon.
4.1 The Company has entered into an agreement for sale of a flat and accordingly the carrying value aggregating Rs.1.98 Lakhs (Previous year â Nil) of the asset has been shown as âAsset classified as held for saleâ on the face of Balance Sheet . The fair value of the said asset is Rs.130 Lakhs.
4.2 Fair value measurement of the Companyâs investment properties
The fair value of the Companyâs investment properties as at 31st March, 2018 and 31st March, 2017 have been arrived at on the basis of a valuation carried out as on the respective dates by V.S.Modi and Yardi Prabhu, independent valuers not related to the Company. V.S. Modi and Yardi Prabhu are registered with the authority which governs the valuers in India, and they have appropriate qualifications and recent experience in the valuation of properties in the relevant locations. The fair value was determined based on the market comparable approach that reflects recent transaction prices for similar properties as well as other lettings of similar properties in the neighbourhood. In estimating the fair value of the properties, the highest and best use of the properties is their current use. Thus, the significant unobservable inputs are recent transaction price, taking into account the differences in location, and individual factors, such as frontage and size, between the comparables and the properties. Details of the Companyâs investment properties and information about the fair value hierarchy as at 31st March, 2018 and 31stMarch, 2017 are as follows:
1. During the previous year the Board of Directors of the Company had given their acceptance for a scheme of Capital reduction in Shapoorji Pallonji Forbes Shipping Limited (âSPFSLâ), a subsidiary of the Company where by 1,95,00,000 equity shares of Rs.10 each were to be cancelled out of aggregate investment of 4,00,00,000 equity shares held by the Company. A petition was filed by SPFSL in the High Court of Judicature at Bombay on 2nd September, 2016. The scheme was approved by the Honorable Bombay High Court vide order dated 2nd December, 2016. Accordingly, Company has recognized Rs.1,931.50 Lakhs as loss on capital reduction of investment in equity shares and correspondingly, reversed the existing provisions of Rs.2,380.00 Lakhs. The same has been disclosed as an exceptional item in the Statement of Profit and Loss for the year ended 31st March, 2017 (Refer Note 32B).
2. The Board of Directors of the Company at its meeting held on 12th October, 2016, had approved sale of its entire shareholding (50.001%) in Shapoorji Pallonji Bumi Armada Offshore Limited (fomerly known as Forbes Bumi Armada Offshore Limited), a joint venture with Bumi Armada Berhad to Shapoorji Pallonji Oil and Gas Private Limited (âSPOGPLâ) at a price of Rs.1,250.00 Lakhs. The Company had executed âShare Transfer Agreementâ and transferred the entire shareholding to SPOGPL and recognized profit of Rs.750.01 Lakhs during the previous year. The same has been disclosed as an exceptional item in the Statement of Profit and Loss for the year ended 31st March, 2017 (Refer Note 32B).
3. Forbes Container Lines Pte. Ltd., Singapore (âFCLPLâ), a foreign subsidiary of the Company has been ordered to be wound by the High Court of Republic of Singapore on 19th August, 2016. An official liquidator has been appointed by the court. As on 31st March, 2017, Company has made full provision for investments made and loans given to FCLPL. Accordingly, this entity is no longer a related party for the Company and not consolidated in these financial statements.
4. During the year, the terms of the preference shares held in Forbes Technosys Limited have been changed. The existing terms of the preference shares held in Forbes Technosys Limited have been changed to 10% Optionally Redeemable Compulsory Convertible Non Cumulative Preference Shares. The Board has approved the revised term sheet for preference shares issued by Forbes Technosys Limited in the Board Meeting held on 24th May, 2017.
5. Edumetry Inc., USA, a foreign joint venture of the Company has been dissolved vide Certificate of Dissolution dated 28th October, 2015 issued by the State of Delaware. Consequently, the Company does not have any significant influence or control over Edumetry Inc. as on date. Accordingly, this entity is no longer a related party for the Company and not consolidated in these financial statements.
6. The Company has 25% ownership in Shapoorji Pallonji Forbes Shipping Limited (âSPFSLâ) by virtue of joint venture agreement. However, SPFSL is consolidated as a subsidiary due to the Companyâs ability to appoint majority of directors on the Board of SPFSL.
For trade receivables from related parties refer Note 40.
The average credit period on sales is 75 days. No interest is charged on trade receivables overdue. There are no customers who represent more than 5% of the total balance of trade receivables.
In determining the recoverability of a trade receivable, the Company considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period. The concentration of credit risk is limited due to the fact that the customer base is large and unrelated.
Trade receivables of Rs.863.59 Lakhs (Previous year Rs.849.94 Lakhs) were impaired. The individually impaired receivables were mainly due to unexpected difficult economic situations. It was assessed that a portion of these receivables is expected to be recovered.
5. Employee Benefits : Brief description of the Plans:
The Company has various schemes for long term benefits such as Provident Fund, Gratuity, Superannuation, Employees State Insurance Fund (ESIC) and Employeesâ Pension Scheme, Leave Encashment, Post Retirement Medical and Non Compete fees. The Companyâs defined contribution plans are Superannuation, Employees State Insurance Fund and Employeesâ Pension Scheme (under the provisions of the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans. The Companyâs defined benefit plans include Provident Fund, Gratuity, Post Retirement Medical and Non Compete fees.
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service.
The gratuity plan is a funded plan and the Company had obtained insurance policies with Life Insurance Corporation of India(LIC) and makes a contribution to LIC for amounts notified by LIC. The Company accounts for gratuity benefits payable in future based on an independent external actuarial valuation carried out at the end of the year using the Projected Unit Credit method.
The Companyâs Gratuity Plan is administered by an insurer and the Investments are made in various schemes of the trust. The Company funds the plan on a periodical basis.
The eligible employees of the Company are entitled to receive post-employment benefits in respect of provident fund, in which both the employees and the Company make monthly contributions at a specified percentage of the employeesâ eligible salary. The contributions are made to the Government Family Pension Fund / provident fund managed by the trust set up by the Company which are charged to the Statement of Profit and Loss as incurred.
A large portion of assets consists of government and corporate bonds, although the Company also invests in equities, cash and mutual funds. The plan asset mix is in compliance with the requirements of the regulations in case of Provident fund.
The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations, with the objective that assets of the gratuity / provident fund obligations match the benefit payments as they fall due.
Under the post-retirement medical, and non-compete fees, eligible whole-time directors and on their demise, their spouses are entitled to medical benefits subject to certain limits and fixed monthly payment as non-compete fee. The Company accounts for these benefits payable in future based on an independent external actuarial valuation carried out at the end of the year using the Projected Unit Credit method.
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
Investment risk
The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Plan investment is a mix of investments in government securities, and other debt instruments.
Interest risk
A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the planâs investments.
Longevity risk
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.
Salary risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.
The above sensitivity analyses are based on change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
L. Provident Fund
The Company has established âForbes & Company Ltd. Employees Provident Fundâ in respect of all the employees to which both the employee and employer make contribution equal to 12% of the employeesâ basic salary respectively. The Companyâs contribution to the provident fund for all employees, are charged to the Statement of Profit and Loss. In case of any liability arising due to shortfall between the return from its investments and the administered interest rate, the same is required to be provided for by the Company. In accordance with the recent acturial valuation, there is no deficiency in the interest cost as the present value of expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest.
M. The liability for Compensated absenses (Non - Funded) as at year end is Rs.316.90 Lakhs (Previous year as at year end is Rs.303.66 Lakhs) (Refer Note 19B).
The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment / availment. The Company makes provision for compensated absences based on an actuarial valuation carried out at the end of the year using the Projected Unit Credit method.
6. Financial Instruments
6.1 Capital Management
The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in Notes 17, 18B and 22 offset by cash and bank balances) and total equity of the Company.
The Company determines the amount of capital required on the basis of annual as well as long term operating plans and other strategic investment plans. The funding requirements are met through non convertible debt securities or other long-term /short-term borrowing s. The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company.
6.2 Financial risk management objectives
The Management monitors and manages the financial risks to the operations of the Company. These risks include market risk, credit risk and liquidity risk.
6.3 Market Risk
The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates (Refer Note 36.6) and interest rates (Refer Note 36.6). The company enters into a variety of derivative financial instruments to manage its exposure to foreign currency risk.
6.4 Credit risk management Trade receivables
Trade receivables are generally unsecured and are derived from revenue earned from customers. 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 and forward-looking information and an assessment of the credit risk over the expected life of the financial asset to compute the expected credit loss allowance for trade receivables. Historical experience of collecting receivables of the Company is supported by low level of past default and hence the credit risk is perceived to be low.
Investments in subsidiaries, associates and joint ventures
The Company had invested in various subsidiaries and associates. The approved future business plans and cash flow projections of the subsidiaries and associates are evaluated by the management of the Company on an ongoing basis and based on this evaluation the recoverability of the investments is considered to be good.
Other Financial assets
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are mutual funds and banks with high credit-ratings assigned by credit-rating agencies.
In addition, the Company is exposed to credit risk in relation to the financial guarantees given to banks on behalf of subsidiaries by the Company. The Companyâs maximum exposure in this respect is the maximum amount the Company could have to pay if the guarantee is called on is Rs.18,270.40 Lakhs as at 31st March, 2018 (Previous year as at 31st March, 2017 is Rs.16,920.00 Lakhs). Based on expectations at the end of the reporting period, the Company considers that it is more likely that such an amount will not be payable under the arrangement. However, this estimate is subject to change depending on the probability of the counterparty claiming under the guarantee which is a function of the likelihood that the financial receivables held by the counterparty which are guaranteed suffer credit losses.
6.5 Liquidity Risk
Liquidity Risk refers to insufficiency of funds to meet the financial obligations. Liquidity Risk Management implies maintenance of sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit lines to meet obligations when due.
The Company manages liquidity risk by banking facilities and by continuously monitoring forecast and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities. The below table sets out details of additional undrawn facilities that the Company has at its disposal to further reduce liquidity risk.
The Company has the following undrawn credit lines available as at the end of the reporting period.
The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the earliest date on which the Company can be required to pay. The tables include both principal and interest cash flows.
6.6 Derivatives Instruments and unhedged Foreign Currency (FC) exposure
The Company is exposed to Currency Risk arising from its trade exposures and capital/Loan receipt/payments denominated, in other than the Functional Currency. The Company has a Foreign Exchange Risk Management policy within which the treasury has to perform and also lays down the checks and controls to ensure the continuing success of the treasury function. The Company has defined strategies for addressing the risks for each category of exposures (e.g. for exports , for imports, for loans, etc.). The centralised treasury function aggregates the foreign exchange exposure and takes prudent measures to hedge the exposure based on prevalent macro-economic conditions.
Of the above, the Company is mainly exposed to USD, GBP and EUR. Hence the following table analyses the Companyâs Sensitivity to a 5% increase and a 5% decrease in the exchange rates of these currencies against INR.
d) Valuation Process
The Company engages external valuation consultants to fair value financial instruments measured at FVTPL. The main level 3 inputs used for unlisted equity securities, preference shares and debentures are as follows:
1) The current market borrowing rates of the Company are compared with relevant market matrices as at the reporting dates to arrive at the discounting rates.
e) Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required)
The Company consider that the carrying amounts of financial assets and financial liabilities recognised in Note (a) above approximate their fair values.
7. Operating lease arrangements
7.1(i) The Company as lessor
The Company has entered into operating lease arrangements, consisting of surplus space in buildings to others. The normal tenure of the arrangement is upto five years. The rental income from the assets given on lease of Rs.1,667.76 Lakhs (previous year Rs.1,564.22 Lakhs) has been disclosed as âRent and aminetiesâ under Revenue from operations in Note 25 to the Statement of Profit and Loss.
The details of the premises leased are as follows:
7.1(iii) The Company as lessee
The Company leases various offices and equipments under cancellable operating lease expiring within two to three years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated. Rent expenses relating to operating leases amounting to Rs.278.92 Lakhs (Previous Year Rs.251.89Lakhs).
8. Discontinuing operations
In January 2016, the Board had granted its approval for sale of the Shipping business comprising Container Freight Station (CFS) at Veshvi and Mundra and Logistics Service business on a slump sale basis. The Company also executed an Agreement to transfer assets dated 18th April, 2016 pertaining to its Logistics business and simultaneously completed the transaction. The Company has completed the slump sale of Mundra CFS in April, 2016 and Veshvi CFS in August, 2016. Accordingly, profit for the year ended 31st March, 2017 includes profit on slump sale of Veshvi and Mundra CFS and profit on sale of Logistics business amounting to Rs.5,459.26 Lakhs and Rs.331.01 Lakhs respectively. The same has been considered in profit of discontinued operations in the Statement of Profit and Loss for the year ended 31 st March, 2017.
The following table summarises the financial information relating to discontinuing operation of âShipping & Logisticsâ segment in accordance with the Ind AS 105 on âDiscontinuing Operationsâ.
9. Segment reporting
The Chief Operating Decision maker of the Company examines Companyâs performance both from a product and from a geographic perspective. From a product perspective, the management has identified the reportable segments Engineering and Real Estate at standalone level. The âShipping and logistics servicesâ segment has been discontinued in the previous year.
Segment revenue, segment results, segment assets and segment liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.
Details of product categories included in each segment comprises:
Engineering Segment includes manufacture/ trading in Precision Cutting Tools, Spring Lock Washers and Marking Systems. The Company caters to the needs of domestic and export markets.
Real Estate includes income from renting out investment properties and revenue from real estate development project.
Unallocable Corporate Assets mainly comprises of investments, tax receivables and other unallocable assets.
Unallocable Liabilities comprise borrowings, provisions and other unallocable liabilities.
10. Svadeshi Mills is not considered as a related party of the Company as per Note 3.1.1. Secured Loans include interest free loans, relating to which full provision exists in books of accounts, aggregating Rs.4,391.78 Lakhs as at 31st March, 2018 (31stMarch, 2017 Rs.4,391.78 Lakhs) granted to The Svadeshi Mills Company Limited. The Company, being a secured creditor, with adjudicated dues by the Official Liquidator, expects to receive the dues when the matter is ultimately disposed off.
11. Details of costs and revenue in respect of Project in progress:
Methods used to determine the project revenue : Percentage Completion Method
Methods used to determine the stage of completion : The proportion that Project costs incurred for work performed upto the Balance Sheet date bear to the estimated total project costs.
12. Particulars of loan given / Investments made / guarantees given, as required by clause (4) of Section 186 of the Companies Act, 2013
13. The real estate development operations under âProject Viciniaâ being executed at a plot of land in the city of Mumbai at Chandivali have been agreed between Forbes and another Company as per the terms of settlement filed with the Honourable Bombay High Court in 2011 for the then existing dispute. Each Company is now independently entitled to 50% of the saleable area and 50% of the rights in the permissible Floor Space Index and also for their own individual development and consequent sale of their respective individual flats for the specified land being developed.
14. As per Indian Accounting Standard 18 on Revenue and Schedule III of the Companies Act, 2013, Revenue from Operations for the period July 1, 2017 to March 31, 2018 does not include Goods and Service Tax (GST), however Revenue from Operations till the period ended June 30, 2017 and for the year ended March 31, 2017 includes Excise Duty. In view of the aforesaid restructuring of indirect taxes, Revenue from Operations for the year ended March 31, 2018 are not comparable with previous year.
15. The Board of Directors of the Company has recommended a dividend of Rs.2.50 (25%) per equity share for the year ended 31st March, 2018. There is no other material subsequent event occurred after Balance Sheet date.
16. Previous year figures have been regrouped/ reclassified, wherever necessary to conform to current year classification.
17. The financial statements were approved by the Board of Directors of the Company at their respective meetings held on 28th May, 2018.
Mar 31, 2017
Footnotes:
1. Buildings (Cost) include: (i) Residential flats and office premises Rs. 69.54 Lakhs (as at 31st March, 2016 Rs. 69.54 Lakhs; as at 1st April, 2015 Rs. 69.54 Lakhs) in respect of which Co-operative societies are yet to be formed; (ii) Shares in Co-operative Housing Societies, Association of apartment owners and in a company Rs. 0.17 Lakh (as at 31st March, 2016 Rs. 0.17 Lakh; as at 1st April, 2015 Rs. 0.17 Lakh); (iii) Premises on freehold land where the Company is yet to be registered as the owner of a proportionate share in the land Rs. 28.66 Lakhs (as at 31st March, 2016 Rs. 28.66 Lakhs; as at 1st April, 2015 Rs. 28.66Lakhs); and (iv) Jointly owned Residential Premises Rs. 28.39 Lakhs (as at 31st March, 2016 Rs. 28.39 Lakhs; as at 1st April, 2015 Rs. 28.39Lakhs).
2. Plant and equipment includes assets that are jointly owned of Rs. 10.25 Lakhs (as at 31st March, 2016 Rs. 10.25 Lakhs; as at 1st April, 2015 Rs. 10.25 Lakhs).
3. Land and building with a carrying amount of Rs. 200.55 Lakhs (as at 31st March, 2016 Rs. 3,015.35 Lakhs; as at 1st April, 2015 '' 3,154.89 Lakhs) have been pledged to secure borrowings of the Company as security for bank loans under a mortgage (see Note 17).
4. Plant, equipments, furniture and fixtures with a carrying amount of '' Rs. 422.43 Lakhs (as at 31st March, 2016 Rs. 689.66 Lakhs; as at 1st April, 2015 Rs. 734.06Lakhs) have been pledged to secure borrowings of the Company as security for bank loans under a mortgage (see Note 17).
5. Fair value measurement of the Company''s investment properties
The fair value of the Companyâs investment properties as at 31st March, 2017, 31st March, 2016, and 1st April, 2015 have been arrived at on the basis of a valuation carried out as on the respective dates by V.S.Modi and Yardi Prabhu, independent valuers not related to the Company. V.S. Modi and Yardi Prabhu are registered with the authority which governs the valuers in India, and they have appropriate qualifications and recent experience in the valuation of properties in the relevant locations. The fair value was determined based on the market comparable approach that reflects recent transaction prices for similar properties as well as other lettings of similar properties in the neighborhood. In estimating the fair value of the properties, the highest and best use of the properties is their current use. Thus, the significant unobservable inputs are recent transaction price, taking into account the differences in location, and individual factors, such as frontage and size, between the comparables and the properties. Details of the Company''s investment properties and information about the fair value hierarchy as at 31st March, 2017, 31st March, 2016, and 1st April, 2015 are as follows:
6. During the year the Board of Directors of the Company had given their acceptance for a scheme of Capital reduction in Shapoorji Pallonji Forbes Shipping Limited (âSPFSLâ), a subsidiary of the Company where by 1,95,00,000 equity shares of Rs. 10 each were to be cancelled out of aggregate investment of 4,00,00,000 equity shares held by the Company. A Company scheme petition was filed by SPFSL in the High Court of Judicature at Bombay on 2nd September, 2016. The scheme was approved by the Honorable Bombay High Court vide order dated 2nd December, 2016. Accordingly, Company has recognized Rs. 1,931.50 Lakhs as loss on capital reduction of investment in equity shares and correspondingly, reversed the existing provisions of '' 2,380.00 Lakhs. The same has been disclosed as an exceptional item in the Statement of Profit & Loss for the year ended 31st March, 2017 (Refer Note 32B).
7. The Board of Directors of the Company at its meeting held on 12th October, 2016, had approved sale of its entire shareholding (50.001%) in Shapoorji Pallonji Bumi Armada Offshore Limited (formerly known as Forbes Bumi Armada Offshore Limited), a joint venture with Bumi Armada Berhad to Shapoorji Pallonji Oil and Gas Private Limited (âSPOGPLâ) at a price of Rs. 1,250.00 Lakhs. The Company has executed âShare Transfer Agreementâ and transferred the entire shareholding to SPOGPL and recognized profit of Rs. 750.01 Lakhs during the year. The same has been disclosed as an exceptional item in the Statement of Profit & Loss for the year ended 31st March, 2017 (Refer Note 32B).
8. Forbes Container Line Pte. Ltd., Singapore (âFCLPLâ), a foreign subsidiary of the Company has been ordered to be wound by the High Court of Republic of Singapore on 19th August, 2016. An official liquidator has been appointed by the court. As on 31st March, 2017, Company has made full provision for investments made and loans given to FCLPL.
The average credit period on sales is 75 days. No interest is charged on trade receivables overdue. The Company has generally recognized an allowance for doubtful debts at 50% against receivables between 180 -365 days and 100% against doubtful receivables and certain receivables over 365 days .
There are no customers who represent more than 5% of the total balance of trade receivables.
Trade receivables disclosed above include amounts (see below for aged analysis) that are past due at the end of the reporting period for which the Company has not recognized an allowance for doubtful debts because there has not been a significant change in credit quality and the amounts are still considered recoverable.
9. Trade receivables Rights, preferences and restrictions attached to equity shares
The Company has only one class of shares referred to as equity shares having a par value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend, if any, 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 of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
10. The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss. Note 2:
The Company has issued Redeemable Non-convertible Debentures. Accordingly, the Companies (Share Capital and Debenture) Rules, 2014 (as amended), requires the Company to create Debenture Redemption Reserve out of profits of the Company available for payment of dividend for an amount equal to 25% of the value of debentures issued.
In respect of the year ended 31st March, 2017, the directors in their meeting held on 24th May, 2017, proposed that a dividend of Rs. 2.50 per share be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs. 322.47 Lakhs. Dividend distribution tax on proposed dividend being Rs. 65.64 Lakhs.
11. Employee Benefits : Brief description of the Plans:
The Company has various schemes for long term benefits such as Provident Fund, Superannuation, Gratuity, Leave Encashment and Post Retirement Medical and Non Compete fees. In case of funded schemes, the funds are recognized by the Income tax authorities and administered through trustees. The Companyâs defined contribution plans are Provident Fund (in case of certain employees), Superannuation, Employees State Insurance Fund and Employeesâ Pension Scheme (under the provisions of the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans. The Companyâs defined benefit plans include Gratuity, Post Retirement Medical and Non Compete fees and Leave Encashment.
The gratuity plan is a funded plan and the Company had obtained insurance policies with Life Insurance Corporation of India(LIC) and makes an contribution to LIC for amounts notified by LIC. The Company accounts for gratuity benefits payable in future based on an independent external actuarial valuation carried out at the end of the year using the Projected Unit Credit method.
The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations, with the objective that assets of the gratuity / provident fund obligations match the benefit payments as they fall due.
A large portion of assets consists of government and corporate bonds, although the Company also invests in equities, cash and mutual funds. The plan asset mix is in compliance with the requirements of the regulations in case of Provident fund.
The Companyâs Gratuity Plan is administered by an insurer and the Investments are made in various schemes of the trust. The Company funds the plan on a periodical basis.
The eligible employees of the Company are entitled to receive postemployment benefits in respect of provident fund, in which both the employees and the Company make monthly contributions at a specified percentage of the employeesâ eligible salary. The contributions are made to the Government Family Pension Fund / provident fund managed by the trust set up by the Company which are charged to the statement of profit and loss as incurred.
The eligible employees of the Company are entitled to receive postemployment benefits in respect of superannuation fund in which the Company makes an annual contribution at a specified percentage of the employeesâ eligible salary. The contributions are made to the LIC. Superannuation is classified as defined contribution plan as the Company has no further obligations beyond making the contribution. The Companyâs contribution to defined contribution plan is charged to the statement of profit and loss as incurred.
Under the post-retirement scheme, eligible whole-time directors and on their demise, their spouses are entitled to medical benefits subject to certain limits and fixed monthly payment as non-compete fee. The Company accounts for these benefits payable in future based on an independent external actuarial valuation carried out at the end of the year using the Projected Unit Credit method.
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
Investment risk
The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Plan investment is a mix of investments in government securities, and other debt instruments.
Interest risk
A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the planâs debt investments.
Longevity risk
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.
Salary risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.
The above sensitivity analyses are based on change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
12. The liability for Compensated absences (Non - Funded) as at year end is Rs. 303.66 Lakhs (as at 31st March, 2016 Rs. 355.22 Lakhs and as at 1st April, 2015 Rs. 333.57Lakhs) (Refer Note 19B).
The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment / availment. The Company makes provision for compensated absences based on an actuarial valuation carried out at the end of the year using the Projected Unit Credit method.
13. Financial Instruments
14. Capital Management
The Company manages its capital to ensure that it will be able to continue as going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in Notes 17, 18B and 22 offset by cash and bank balances) and total equity of the Company.
The Company determines the amount of capital required on the basis of annual as well as long term operating plans and other strategic investment plans. The funding requirements are met through non convertible debt securities or other long-term /short-term borrowings. The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company.
15. Financial risk management objectives
The company monitors and manages the financial risks to the operations of the company. These risks include market risk, credit risk and liquidity risk.
16. Market Risk
The company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (see Note 37.7) and interest rates (see Note 37.7 of attached sheet). The company enters into a variety of derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk.
17. Credit risk management
Based on the Company''s monitoring of customer credit risk, the company believes that no impairment allowance is necessary in respect of trade receivables that are not past due or past due but not more than 180 days. Trade receivables consist of a large number of customers and the Company do not have significant credit risk exposure to any single counterparty. Ongoing credit evaluation is performed on the financial conditions of the trade receivables.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-rating assigned by credit-rating agencies.
In addition, the Company is exposed to credit risk in relation to the financial guarantees given to banks provided by the Company. The Companyâs maximum exposure in this respect is the maximum amount the Company could have to pay if the guarantee is called on is Rs. 16,920.00 Lakhs as at 31st March, 2017 (Previous year as at 31st March, 2016 is Rs. 16,920.00Lakhs and as at 1st April, 2015 is Rs. 16,920 Lakhs). Based on expectations at the end of the reporting period, the Company considers that it is more likely that such an amount will not be payable under the arrangement. However, this estimate is subject to change depending on the probability of the counterparty claiming under the guarantee which is a function of the likelihood that the financial receivables held by the counterparty which are guaranteed suffer credit looses.
18. Liquidity Risk
Liquidity Risk refers to insufficiency of funds to meet the financial obligations. Liquidity Risk Management implies maintenance of sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit lines to meet obligations when due.
The Company manages liquidity risk by banking facilities and by continuously monitoring forecast and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities. The below table sets out details of additional undrawn facilities that the Company has at its disposal to further reduce liquidity risk.
19. Interest Rate Risk & Sensitivity Analysis
The company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates.
The sensitivity analyses below have been determined based on the exposure to interest rates for borrowings at the end of the reporting period. For floating rate borrowings the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year and the rates are reset as per the applicable reset dates. The basis risk between various benchmarks used to reset the floating rate borrowings has been considered to be insignificant.
If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Company''s
- Profit for the year ended 31st March, 2017 would decrease/increase by Rs. NIL. This is mainly attributable to the Companyâs exposure to borrowings at floating interest rates.
If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Company''s
- Profit for the year ended 31st March, 2016 would decrease/increase by Rs. 39.97 Lakhs. This is mainly attributable to the Companyâs exposure to borrowings at floating interest rates.
20. Derivatives Instruments and unhedged Foreign Currency (FC) exposure
The Company is exposed to Currency Risk arising from its trade exposures and capital/Loan receipt/payments denominated, in other than the Functional Currency. The Company has a Foreign Exchange Risk Management policy within which the treasury has to perform and also lays down the checks and controls to ensure the continuing success of the treasury function. The Company has defined strategies for addressing the risks for each category of exposures (e.g. for exports , for imports, for loans, etc.). The centralized treasury function aggregates the foreign exchange exposure and takes prudent measures to hedge the exposure based on prevalent macroeconomic conditions.
21. Discontinuing operations
In January 2016, the Board had granted its approval for sale of the Shipping business comprising Container Freight Station (CFS) at Veshvi and Mundra and Logistics Service business on a slump sale basis. The Company also executed an Agreement to transfer assets dated 18th April, 2016 pertaining to its Logistics business and simultaneously completed the transaction. The Company has completed the slump sale of Mundra CFS in April, 2016 and Veshvi CFS in August, 2016. Accordingly, profit for the year ended 31st March, 2017 includes profit on slump sale of Veshvi and Mundra CFS and profit on sale of Logistics business amounting to Rs. 5,459.26 Lakhs and Rs. 331.01 Lakhs respectively. The same has been considered in profit of discontinued operations in the Statement of Profit and Loss for the year ended 31st March, 2017.
22. Under Previous GAAP borrowings were carried at cost and transaction cost were charged to profit and loss as and when incurred. Under Ind AS, transaction cost incurred towards origination of borrowings is required to be deducted from the carrying amount of borrowings on initial recognition. These cost are recognized in the statement of profit and loss over the tenure of the borrowing as part of interest expense by applying effective interest rate method. Accordingly, borrowings for the year ended 31st March, 2016 have been increased by Rs. 17.85 lakhs and reduced by Rs. 55.12 lakhs as at 1st April, 2015.
23. Under previous GAAP, long term investments in preference shares and debentures of subsidiaries (investments) made at below market rate/interest free were measured at cost less diminution in value which is other than temporary. In previous GAAP, there was no specific guidance on accounting for investments in instruments that are below market rate/interest free. Under Ind AS, the cost of below market rate/interest free investments is measured as the difference between their initial carrying amount determined in accordance with Ind AS 109 and the amount of loan given. After initial recognition, the investment has been subsequently carried at fair value through Profit or Loss i.e. interest based on market rate has been recognized as fair value. Thus considering the criteria of Ind AS, the investments have increased by '' 98.62 Lakhs for the year ended 31st March, 2016 and by Rs. 474.40 Lakhs as at 1st April, 2015. The total equity increased by an equivalent amount.
24. Under previous GAAP, there was no specific guidance on accounting for interest free rental deposits. Hence, these were recognized and carried at the amount given. Whereas in Ind AS, the prepaid rent is measured as the difference between the initial carrying amount of the deposit determined in accordance with Ind AS 109 and the amount of deposit given. The Company has given interest free security deposit of Rs. 417.42 Lakhs as on 1st April, 2015 and the fair value on initial recognition is estimated to be Rs. 284.84 Lakhs. The difference of Rs. 132.58 Lakhs has been treated as prepaid rent under Ind AS and is recognized in the statement of profit and loss over the period of lease. After initial recognition, the rental deposit has been subsequently carried at amortized cost i.e. interest based on market rate has been recognized under the effective interest rate method as part of finance cost. The net effect of these changes is an increase in total equity of Rs. 10.86 Lakhs as at 31st March, 2016 and of Rs. 20.05 Lakhs as at 1st April, 2015.
25. Under previous GAAP, premium paid for derivative contracts was amortized over the term of the derivative contracts whereas under Ind AS the derivative contracts are measured at FVTPL. Thus, the unamortized premium as of March 15 has been charged off to retained earnings and Derivative contracts have been recognized at Fair value resulting into net increase in Profit & Loss of Rs. 4.98 Lakhs for the year ended 31st March, 2016. The loss on MTM measurement of forward exchange contracts amount to Rs. 4.60 Lakhs for the year ended 31st March, 2016.
26. Under Ind AS, financial guarantee contracts are accounted as financial liabilities and measured initially at fair value and subsequently at the higher of i) amount of loss allowance determined in accordance with impairment requirements of Ind AS 109 and the amount initially recognized less when appropriate, the cumulative amount of income recognized in accordance with principles of Ind AS 18. Under previous GAAP, these were not recognized in the balance sheet. As these financial guarantee have been given towards loans taken by its group entities, notional financial guarantee commission income has been recognized with the corresponding increase in the investment in the respective group entities resulting into increase in investment by Rs. 59.23 Lakhs as at 31st March, 2016 and Rs. 106.64 Lakhs as at 1st April, 2015 with corresponding increase in Equity.
27. Under previous GAAP, actuarial gain or losses were recognized in profit or loss. Under Ind AS, actuarial gain and losses form part of re-measurement of the net defined benefits liability/asset which is recognized in other comprehensive income. Consequently, the tax effect of the same has also been recognized in other comprehensive income under Ind AS instead of the statement of profit & loss. The actuarial gains for the year ended 31st March, 2016 were Rs. 37.48 lakhs and the tax effect thereon '' Nil. This does not affect total equity, but there is a decrease in profit before tax and in total profit of Rs. 37.48 lakhs for year ended 31st March, 2016.
28. Segment reporting
The Chief Operating Decision maker of the Company examines Companyâs performance both from a product and from a geographic perspective. From a product perspective, the management has identified the reportable segments Engineering and Real Estate at standalone level as follows:
The "Shipping and logistics services" segment has been discontinued. The Company caters to the needs of the domestic and export markets.
Segment revenue, segment results, segment assets and segment liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.
29. In respect of loans given to Coromondal Garments Limited, The Company had made full provision amounting to Rs. 364.99 Lakhs in an earlier year and had also stopped accruing interest thereon due to uncertainty as to recoverability of loans and interest, in view of ongoing liquidation process of Coromondal Garments Limited.
Subsequent to the previous year end, on the basis of order passed by the Honâble High Court, Mumbai, the Company has received Rs. 1,017.04 Lakhs from Honâble Debt Recovery Tribunal, Mumbai as part satisfaction of amount due. The amount received by the Company is after setting aside amount for securing the claim of the workmen of the company in liquidation. The companyâs status as a secured creditor is not disputed by the official liquidator.
Considering the above, management is of the view that possibility of amount becoming refundable upon final outcome of this matter is remote. The Company has therefore during the previous year reversed the provision amounting to Rs. 364.99 Lakhs towards the loans and advances and accounted the balance amount of Rs. 652.05 Lakhs as interest income. This has been disclosed as an exceptional item at Note no. 32 B to the statement of profit and loss account of the Company.
30. Secured Loans and advances include interest free loans, relating to which full provision exists in books of accounts, aggregating Rs. 4,391.78 Lakhs as at 31st March, 2017 (31stMarch, 2016 Rs. 4,391.78Lakhs) granted to The Svadeshi Mills Company Limited. The Company, being a secured creditor, with adjudicated dues by the Official Liquidator, expects to receive the dues when the matter is ultimately disposed off.
31. Details of costs and revenue in respect of Project in progress:
Methods used to determine the project revenue : Percentage Completion Method
Methods used to determine the stage of completion : The proportion that Project costs incurred for work performed up to the balance sheet date bear to the estimated total project costs.
32.. The Board of Directors of the Company has recommended a dividend of Rs. 2.50 (25%) per equity share for the year ended 31st March, 2017. There is no other material subsequent event occurred after balance sheet date.
33. The financial statements were approved by the Board of Directors of the Company at their respective meetings held on 24th May, 2017 which concluded on 25 the May, 2017.
Mar 31, 2016
1. Corporate Information
Forbes & Company Limited is one of the oldest companies of the world
that is still in existence. The Company traces its origin to the year
1767 when John Forbes of Aberdeenshire, Scotland started his business
in India. Over the years, the Management of the Company moved from the
Forbes Family to the Campbells to the Tata Group and now finally to the
well known Shapoorji Pallonji Group. The Company is mainly engaged in
the Engineering, Real estate and Shipping & Logistics business; and is
listed on the Bombay Stock Exchange.
2. Capital and other commitments
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs.423.04 Lakhs; (Previousyear:Rs.188.61
Lakhs) [against which advance paid aggregating Rs.148.85 Lakhs;
(Previousyear:Rs.125.38Lakhs)]
(b) For commitments relating to lease arrangements, see Note 34(a).
The estimates of future salary increases, considered in the actuarial
valuation, take into account inflation, seniority, promotion and other
relevant factors such as supply and demand in the employment market.
The contribution expected to be made by the Company during the
financial year 2016-17 is Rs.105.18 Lakhs
(Previousyear:Rs.101.57Lakhs).
Other Post Retirement Benefits
The information in respect of medical cost trend rates and the effect
of an increase / decrease of 1% point in the assumed medical cost trend
rates on current service cost, interest cost, accumulated post
employment benefit cost and experience adjustment is not available;
during the year, medical cost of Rs.1.59 Lakhs
(Previousyear:Rs.13.98Lakhs) is recognised to the statement of profit
and loss based on actuarial valuation.
The Company has charged amounts aggregating '' (6.46) Lakhs;
(Previousyear: Rs.86.33 Lakhs) to the statement of profit and loss
based on actuarial valuation [Present value of future obligation as at
31st March, 2016 Rs.350.13 Lakhs; (Previousyear: Rs.411.57Lakhs)] and
paid Rs.54.98 Lakhs (Previous year: Rs.58.92Lakhs), towards the post
retirement arrangements to former Managing Directors and other
Directors.
3. Segment reporting
The Company has identified business segments as its primary segment and
geographical segment as its secondary segment. Business segments are
primarily "Engineering", "Real estate" and "Energy Solution" segment.
The "Shipping and logistics services" segment has been discontinued.
The Company caters to the needs ofthe domestic and export markets.
Segment revenue, segment results, segment assets and segment
liabilities include the respective amounts identifiable to each of the
segments as also amounts allocated on a reasonable basis.
4. (a) Related party disclosures
(A) Holding Company
Shapoorji Pallonji and Company Private Limited
(B) Subsidiary Companies
1 Eureka Forbes Limited and its subsidiaries:
a) Aquamall Water Solutions Limited and its subsidiary:
i) Aquadiagnostics Water Research & Technology Centre Limited
ii) Forbes Lux International AG and its subsidiaries:
- Lux International AG and its subsidiary:
- Lux Aqua Gmbh, Switzerland
- Lux Aqua Hungary KFT
- Lux Italia srl
- Forbes Lux Group AG Baar and its subsidiary:
- Lux / Sk / s.r.o
- Lux Schweiz AG
- Lux (Deutschland) GmbH and its subsidiaries:
- Lux Service GmbH
- Lux Norge A/s
- Lux Oesterreich GmbH
- Lux CZ s.r.o
- Lux Hungaria Kereskedelmi Kft
- LIAG Trading & Investment Limited
b) EFL Mauritius Limited
c) Euro Forbes Limited Dubai and its subsidiary:
i) Forbes Lux FZCO
d) Forbes Facility Services Pvt. Limited
e) Forbes Enviro Solutions Limited
f) Euro Forbes Financial Services Limited
2 Forbes Campbell Finance Limited and its subsidiaries
a) Forbes Bumi Armada Limited
b) Forbes Campbell Services Limited
c) Forbes Edumetry Limited ( Under voluntary winding up)
3 Forbes Technosys Limited
4 Forbes Bumi Armada Offshore Limited
5 Forbes Container Lines Pte. Limited and its subsidiary: a) Forbesline
Shipping Services LLC
6 Shapoorji Pallonji Forbes Shipping Limited
7 Campbell Properties & Hospitality Services Limited
8 Volkart Fleming Shipping and Services Limited
9 Technext E-Payments & Services Limited (incorporated on 14th July,
2015 and sold on 28th March, 2016)
(C) Fellow Subsidiaries (where there are transactions):
1 Afcons Infrastructure Limited
2 Forvol International Services Limited
3 Gokak Textiles Limited
4 Shapoorji Pallonji Investment Advisors Pvt.Limited
5 Shapoorji Pallonji Oil and Gas Pvt. Limited (earlier known as Cosima
Properties Pvt. Limited)
6 Sterling and Wilson Pvt. Limited
7 SP Fabricators Pvt. Limited
8 SP Architectural Coatings Pvt. Limited
(D) Associate Companies (where there are transactions):
1 The Svadeshi Mills Company Limited (refer Note 55)
2 Coromandel Garments Limited (Subsidiary of The Svadeshi Mills Company
Limited)
3 Neuvo Consultancy Service Limited
(E) Joint Ventures (where there are transactions):
1 Edumetry Inc (Upto 28th October, 2015)
2 Forbes Aquatech Limited (Joint venture of Eureka Forbes Limited)
3 Nypro Forbes Products Limited (Joint venture of Forbes Campbell
Finance Limited) (Upto 23 rd February, 2015)
(F) Key Management Personnel:
Managing Director, Mr. Ashok Barat
5. Leases
(a) Finance lease: Company as lessee
The Company has acquired Computer Hardware under finance lease for
three years.
(i) The gross carrying amount and the accumulated depreciation at the
balance sheet date are Rs.64.68 Lakhs; (Previousyear: Rs.120.38 Lakhs)
and Rs.64.68 Lakhs; (Previousyear:Rs.119.36Lakhs) respectively.
(ii) Depreciation recognised in the statement of profit and loss is
Rs.1.02 Lakhs; (Previousyear:Rs.44.71 Lakhs).
Future minimum aggregate lease payments (MLP) under finance leases
together with the present value of future lease payments (PV of MLP),
discounted at the interest rates implicit in the lease are as follows:
(b) Operating lease: Company as lessor
The Company has entered into operating lease arrangements, consisting
of surplus space in buildings to others. The normal tenure of the
arrangement is upto three years. The details ofthe premises leased are
as follows:
6. Discontinuing operations
In January 2016, the Board had granted its approval for sale of the
Shipping & Logistics Services business comprising Container Freight
Station (CFS) and Logistics on a slump sale basis.
The CFS division at Veshvi is yet to be transferred for which a
definitive agreement is in place.
The Company has completed the slump sale of Mundra CFS in April, 2016.
The Company has executed an Agreement to transfer assets dated April
18, 2016 pertaining to its Logistics business and simultaneously
completed the transaction.
7. Details of dues to micro and small enterprises as defined under the
Micro, Small and Medium Enterprises Development Act, 2006
The information as required under Micro, Small and Medium Enterprises
Development Act, 2006, has been determined to the extent such parties
have been identified on the basis of information available with the
Company and relied upon by Auditors, is as follows:-
8. Secured Loans and advances include interest free loans, relating
to which full provision exists in books of accounts, aggregating
Rs.4,391.78 Lakhs as at 31st March, 2016 (Previous year: Rs.4,716.78
Lakhs) granted to The Svadeshi Mills Company Limited (Previous year
include its subsidiary Coromandel Garments Limited). The Company, being
a secured creditor, with adjudicated dues by the Official Liquidator,
expects to receive the dues when the matter is ultimately disposed off.
9. In respect of loans given to Coromandel Garments Limited, The
Company had made full provision amounting to Rs.364.99 lakhs in an
earlier year and had also stopped accruing interest thereon due to
uncertainty as to recoverability of loans and interest, in view of
ongoing liquidation process of Coromandel Garments Limited.
Subsequent to the year end, on the basis of order passed by Hon''ble
High Court, Mumbai, the Company has received Rs.1,017.04 lakhs from
Hon''ble Debt Recovery Tribunal, Mumbai as part satisfaction of amount
due. The amount received by the Company is after setting aside amount
for securing the claim of the workmen ofthe company in liquidation. The
company''s status as a secured creditor is not disputed by the official
liquidator.
Considering the above, management is of the view that possibility of
amount becoming refundable upon final outcome of this matter is remote.
The Company has therefore reversed the provision amounting to Rs.364.99
lakhs towards the loans and advances and accounted the balance amount
of Rs.652.05 lakhs as interest income. This has been disclosed as an
exceptional item at Note no. 28 to the statement of profit and loss
account of the Company.
10. Details of costs and revenue in respect ofProject in progress:
Methods used to determine the project revenue : Percentage Completion
Method
Methods used to determine the stage of completion : The proportion that
Project costs incurred for work performed upto the balance sheet date
bear to the estimated total project costs.
11. The Management is in the process of identifying and appointing a
Chief Financial Officer as required under Section 203 of the Companies
Act, 2013.
12. Assets of The Svadeshi Mills Company Limited (Svadeshi) continued
to be in the hands of the Official Liquidator, High Court, Bombay. An
application to get Svadeshi out of liquidation was filed with the
Hon''ble High Court, Bombay, which was dismissed and the Official
Liquidator was directed to proceed expeditiously for winding up of
Svadeshi. The Company filed an appeal before the Division Bench which
was dismissed. The Company filed a Special Leave Petition (SLP) before
Hon''ble Supreme Court (SC) which too was dismissed. Thereafter, a
Review Petition has been filed before the Hon''ble Supreme Court and the
same is pending hearing. The records of the Svadeshi are in the custody
of the Official Liquidator. In view of the current status of the court
matter, management has not considered Svadeshi as an associate from the
current year.
13. Previous year figures have been regrouped / reclassified wherever
necessary to correspond with the current year''s classificaton /
disclosure.
Mar 31, 2015
1. Corporate Information
Forbes & Company Limited is one of the oldest companies of the world
that is still in existence. The Company traces its origin to the year
1767 when John Forbes of Aberdeenshire, Scotland started his business
in India. Over the years, the Management of the Company moved from the
Forbes Family to the Campbells to the Tata Group and now finally to the
well known Shapoorji Pallonji Group. The Company is mainly engaged in
the Engineering, Real estate and Shipping & Logistics business; and is
listed on the Bombay Stock Exchange.
2. Contingent liabilities:
(a) Claims against the Company not acknowledged as debts
As at As at
31st March, 31st March,
2015 2014
Rs. in Lakhs Rs. in Lakhs
1) Tax matters:-
(i) Excise demand (Advance paid
against the demand Rs. 29.36 Lakhs;
Previous year Rs. 29.13 Lakhs) 4,774.54 4,723.51
ii) Sales tax (Advance paid against
the demand Rs. 225.16 Lakhs;
Previous year Rs. 94.91 Lakhs) 2,297.83 809.49
iii) Income-tax (Advance paid against
the demand Rs. 1,347.30 Lakhs;
Previous year Rs. 981.18 Lakhs) 4,136.46 1,243.88
iv) Service-tax 732.68 691.01
v) Entry-tax (Advance paid Rs. 38.45
Lakhs; Previous year Rs. 38.45
Lakhs) 76.90 38.45
vi) Customs duty (Advance paid
Rs. 0.18 Lakhs; Previous year Rs. Nil) 2.00 -
vii) Wealth tax (Advance paid Rs. 14.95
Lakhs; Previous year Rs. 36.12 Lakhs) 14.95 36.12
viii) Property tax 451.61 551.61
2) Labour matters in dispute 9.00 6.00
3) Claim of Madhya Gujarat Vij Co.
Ltd. for alleged diversion of fraction
of the power consumed and contested
by the Company in the Court 188.29 188.29
4) Customer claims (Advance paid
against the demand Rs. 50.18 Lakhs;
Previous year Rs. Nil) 3,042.26 2,582.93
5) Supplier claims - 15.00
6) Other legal matters 6.20 6.20
(b) Guarantees:-
i) Guarantees given on behalf
of Shipping Principals
including subsidiary and
Surety Bonds jointly
executed with third parties
in favour of customs and
other parties 12,404.50 14,193.93
ii) Guarantee on behalf of a
subsidiary company 2,801.55 2,676.52
iii) Corporate Guarantee on
behalf of a subsidiary company 16,920.00 11,920.00
Note:
In respect of items mentioned above, till the matters are finally
decided, the timing of outflow of economic benefits cannot be
ascertained.
3. Capital and other commitments
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs. 188.61 Lakhs; (Previous year: Rs.
311.72 Lakhs) [against which advance paid aggregating Rs. 125.38 Lakhs;
(Previous year: Rs. 114.50 Lakhs)]
(b) For commitments relating to lease arrangements.
(c) The Company has agreed to provide continuing financial support to
Forbes Container Lines Pte. Ltd. a wholly owned subsidiary, to meet all
its obligation, to the extent the subsidiary is unable to meet its
obligations.
Defined-benefits plans:
In terms of the guidance note issued by the Institute of Actuaries of
India, the actuary has provided a valuation of provident fund liability
based on the assumptions listed below and determined a shortfall of Rs.
Nil (Previous year Rs. 10.54 Lakhs) as at 31st March, 2015 and the same
is recognised to the statement of profit and loss based on actuarial
valuation.
The information in respect of medical cost trend rates and the effect
of an increase / decrease of 1% point in the assumed medical cost trend
rates on current service cost, interest cost, accumulated post
employment benefit cost and experience adjustment is not available;
during the year, medical cost of Rs. 4.34 Lakhs (Previous year: Rs.
(12.05) Lakhs) is recognised to the statement of profit and loss based
on actuarial valuation.
The Company has charged amounts aggregating Rs. 86.33 Lakhs; (Previous
year: Rs. 78.29 Lakhs) to the statement of profit and loss based on
actuarial valuation [Present value of future obligation as at 31st
March, 2015 Rs. 411.57 Lakhs; (Previous year: Rs. 384.17 Lakhs)] and
paidRs. 58.92 Lakhs (Previous year: Rs. 53.96 Lakhs), towards the post
retirement arrangements to former Managing Directors and other
Directors.
4. Segment reporting
The Company has identified business segments as its primary segment and
geographical segment as its secondary segment. Business segments are
primarily "Engineering", "Shipping and logistics services", "Real
estate" and "Energy Solution" segment. The Company caters to the needs
of the domestic and export markets.
Segment revenue, segment results, segment assets and segment
liabilities include the respective amounts identifiable to each of the
segments as also amounts allocated on a reasonable basis.
5. (a) Related party disclosures
(A) Holding Company
Shapoorji Pallonji and Company Private Limited (Formerly known as
Shapoorji Pallonji and Company Limited)
(B) Subsidiary Companies
1 Eureka Forbes Limited and its subsidiaries:
a) Aquamall Water Solutions Limited and its subsidiary:
i) Aquadiagnostics Water Research & Technology Centre Limited
ii) Forbes Lux International AG and its subsidiary:
- Lux International AG and its subsidiaries:
- Lux del Paraguay S.A (Formerly known as Hogar Paraguay
Electrodomesticos S.A)
- Lux Italia srl
- Forbes Lux Group AG Baar and its subsidiary:
* Lux / Sk / s.r.o
- Lux Schweiz AG
- Lux (Deutschland) GmbH and its subsidiaries:
* Lux Service GmbH
* Lux Norge A/s
* Lux Oesterreich GmbH
* Lux CZ s.r.o
* Lux Hungaria Kereskedelmi Kft
- LIAG Trading & Investment Limited (w.e.f. 4th February, 2015)
b) EFL Mauritius Limited
c) Euro Forbes Limited Dubai and its subsidiary: i) Forbes Lux FZCO
d) Forbes Facility Services Pvt. Limited
e) Forbes Enviro Solutions Limited
f) Waterwings Equipments Pvt.Ltd.
g) Radiant Energy Systems Pvt.Ltd.
h) Euro Forbes Financial Services Limited
2. Forbes Campbell Finance Limited and its subsidiaries
a) Forbes Bumi Armada Limited
b) Forbes Campbell Services Limited
c) Forbes Edumetry Limited (Under voluntary winding up)
d) Forbes Technosys Limited
3. Forbes Bumi Armada Offshore Limited
4. Forbes Container Lines Pte. Limited and its subsidiary: *
a) Forbesline Shipping Services LLC *
5. Shapoorji Pallonji Forbes Shipping Limited (Formerly known as SCI
Forbes Ltd. w.e.f. 1st December, 2014)
6. Campbell Properties & Hospitality Services Limited (w.e.f. 30th
December, 2014)
7. Volkart Fleming Shipping and Services Limited
(C) Fellow Subsidiaries (where there are transactions):
1. Afcons Infrastructure Limited
2. Forvol International Services Limited
3. Gokak Textiles Limited
4. Shapoorji Pallonji Investment Advisors Pvt.Limited
5. Shapoorji Pallonji Energy (Gujarat) Pvt. Limited
6. Sterling and Wilson Pvt. Limited
7. SP Fabricators Pvt. Limited
8. SP Architectural Coatings Pvt. Limited
(D) Associate Companies (where there are transactions):
1. The Svadeshi Mills Company Limited
2. Coromondal Garments Limited (Subsidiary of The Svadeshi Mills Company
Limited)
3. Neuvo Consultancy Service Limited
(E) Joint Ventures (where there are transactions):
1 Edumetry Inc
2 Nypro Forbes Products Limited (Joint venture of Forbes Campbell
Finance Limited) (Upto 23rd February, 2015)
3 SCI Forbes Limited (Now known as Shapoorji Pallonji Forbes Shipping
Limited) (Upto 30th November, 2014)
(F) Key Management Personnel:
Managing Director, Mr. Ashok Barat
* For the purpose of Companies Act, 2013, this will be treated as an
Associate Company.
6. Leases
(a) Finance lease: Company as lessee
The Company has acquired Office Equipments under finance lease for four
years.
(i) The gross carrying amount and the accumulated depreciation at the
balance sheet date are Rs. 120.38 Lakhs; (Previous year: Rs. 122.14
Lakhs) and Rs. 119.36 Lakhs; (Previous year: Rs. 76.17 Lakhs)
respectively.
(ii) Depreciation recognised in the statement of profit and loss is Rs.
44.71 Lakhs; (Previous year: Rs. 38.01 Lakhs).
7. Derivative instruments and unhedged foreign currency exposures
The Company enters into Foreign Exchange Contracts being derivative
instruments, which are not intended for trading or speculative
purposes, but for hedge purposes, to establish the amount of reporting
currency required or available at the settlement date.
8. Loans and advances to related parties includes interest free loans,
relating to which full provision exists in books of accounts,
aggregating Rs. 4,756.77 Lakhs (Secured Rs. 4,716.78 Lakhs) as at 31st
March, 2015 [Previous year: Rs. 4,756.77 Lakhs (Secured Rs. 4,716.78
Lakhs)]granted to The Svadeshi Mills Company Limited and its subsidiary
Coromandal Garments Limited. The Company, being a secured creditor,
with adjudicated dues by the official Liquidator, expects to receive
the dues when the matter is ultimately disposed off.
9. Previous year figures have been regrouped / reclassified wherever
necessary to correspond with the current year's classification /
disclosure.
Mar 31, 2014
As at As at
31st March, 31st March,
2014 2013
Rs. in Lakhs Rs. in Lakhs
1. Contingent liabilities:
(a) Claims against the Company
not acknowledged as debts
1) Taxes in dispute:-
(i) Excise demand 4,723.51 4,723.51
(ii) Sales tax 809.49 790.54
(iii) Income-tax 1,243.88 1,352.05
(iv) Service-tax 691.01 254.21
(v) Entry-tax 38.45 76.90
(vi) Wealth tax 36.12 36.12
(vii) Property tax 551.61 551.60
2) Labour matters in dispute 6.00 16.50
3) Claim of Madhya Gujarat Vij Co.
Ltd. for alleged diversion of
fraction of the power consumed and
contested by the Company in the
Court 188.29 188.29
4) Customer claims 2,582.93 2,404.32
5) Supplier claims 15.00 15.00
6) Other legal matters 6.20 6.20
(b) Guarantees:-
(i) Guarantees given on behalf of
Shipping Principals including
subsidiary and Surety Bonds jointly
executed with third parties in
favour of customs and other parties 14,193.93 6,620.00
(ii) Guarantee on behalf of a
subsidiary company 2,676.52 3,533.37
(iii) Corporate Guarantee on
behalf of a subsidiary company 11,920.00 3,420.00
Note:
In respect of item mentioned above, till the matters are finally
decided, the timing of outflow of economic benefits cannot be
ascertained.
2. Capital and other commitments
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs. 311.72 Lakhs; (Previous year:
Rs. 424.45 Lakhs) [against which advance paid aggregating Rs. 114.50
Lakhs; (Previous year: Rs. 54.38 Lakhs)]
(b) For commitments relating to lease arrangements, see Note 35(a) and
for derivative contracts, see Note 39(a).
(c) The Company along-with other joint venturers, has entered into a
"Sponsor Support Deed" with Natixis, Security Trustee, on 15th July,
2011 by which the Company irrevocably and unconditionally undertaken to
the Security Trustee and each of other creditors, to the extent of its
shareholding (i.e. 25%) in the Borrower, namely SCI Forbes Limited, a
joint venture company, to pay dues if the Borrower does not pay or
discharge any of its obligations.
(d) The Company has agreed to provide continuing financial support to
Forbes Container Lines Pte. Ltd. wholly owned subsidiary to meet all
its obligation, to the extent the subsidiary is unable to meet its
obligations.
Defined-benefits plans:
In terms of the guidance note issued by the Institute of Actuaries of
India, the actuary has provided a valuation of provident fund liability
based on the assumptions listed below and determined a shortfall of Rs.
10.54 Lakhs (Previous year Rs. 10.77 Lakhs) as at 31st March, 2014 and
the same is recognised to the statement of profit and loss based on
actuarial valuation.
The estimates of future salary increases, considered in the actuarial
valuation, take into account inflation, seniority, promotion and other
relevant factors such as supply and demand in the employment market.
The contribution expected to be made by the Company during the
financial year 2014-15 is Rs. 58.70 Lakhs (Previous year: amount not
ascertainable).
Other Post Retirement Benefits
The information in respect of medical cost trend rates and the effect
of an increase / decrease of 1% point in the assumed medical cost trend
rates on current service cost, interest cost, accumulated post
employment benefit cost and experience adjustment is not available;
during the year, medical cost of Rs. (12.05) Lakhs (Previous year:
Rs. 2.21 Lakhs) is recognised to the statement of profit and loss based
on actuarial valuation.
The Company has charged amounts aggregating Rs. 78.29 Lakhs; (Previous
year: Rs. 76.62 Lakhs) to the statement of profit and loss based on
actuarial valuation [Present value of future obligation as at 31st
March, 2014 Rs. 384.17 Lakhs; (Previous year: Rs. 359.84 Lakhs)]
and paid Rs. 53.96 Lakhs (Previous year: Rs. 55.64 Lakhs), towards
the post retirement arrangements to former Managing Directors and
other Directors.
3. Segment reporting
The Company has identified business segments as its primary segment and
geographical segment as its secondary segment. Business segments are
primarily "Engineering", "Shipping and logistics services", "Real
estate" and "Energy Solution" segment. The Company caters to the needs
of the domestic and export markets.
Segment revenue, segment results, segment assets and segment
liabilities include the respective amounts identifiable to each of the
segments as also amounts allocated on a reasonable basis.
4. (a) Related party disclosures
(A) Holding Company
Shapoorji Pallonji & Company Limited
(B) Subsidiary Companies
1 Eureka Forbes Limited and its subsidiaries:
a Aquamall Water Solutions Limited and its subsidiary:
- Aquadiagnostics Water Research & Technology Centre Limited
b Forbes Lux International AG and its subsidiaries: (w.e.f.
23rd May, 2013)
(i) Lux International AG and its subsidiary: (w.e.f. 5th June, 2013)
- Hogar Paraguay Electrodomesticos S.A. (w.e.f. 5th June, 2013)
(ii) Forbes Lux Group AG Baar and its subsidiary: (w.e.f. 5th June,
2013)
- Lux / Sk / s.r.o (w.e.f. 5th June, 2013) (iii) Lux Italia srl (w.e.f.
5th June, 2013)
(iv) Lux Schweiz AG (w.e.f. 5th June, 2013)
(v) Lux (Deutschland) GmbH and its subsidiaries: (w.e.f. 5th June,
2013)
- Lux Service GmbH (w.e.f. 5th June, 2013)
- Lux Norge A/s (w.e.f. 5th June, 2013)
- Lux Oesterreich GmbH (w.e.f. 5th June, 2013)
- Lux CZ s.r.o (w.e.f. 5th June, 2013)
- Lux Hungaria Kereskedelmi Kft (w.e.f. 5th June, 2013)
c Euro Forbes International Pte. Limited
d Forbes Facility Services Pvt. Limited
e E4 Development & Coaching Limited
f Forbes Enviro Solutions Limited
g Waterwings Equipments Pvt.Ltd.
h Radiant Energy Systems Pvt.Ltd.
i EFL Mauritius Limited and its subsidiary:
- Euro Forbes Mauritius Limited (Upto 19th December, 2013)
j Euro Forbes Financial Services Limited
k Euro Forbes Limited Dubai and its subsidiary:
- Forbes Lux FZCO
2 Forbes Campbell Finance Limited and its subsidiaries a Forbes Bumi
Armada Limited
b Forbes Campbell Services Limited
c Forbes Edumetry Limited
d Forbes Technosys Limited
3 Forbes Bumi Armada Offshore Limited
4 Forbes Container Lines Pte. Limited and its subsidiary:
- Forbesline Shipping Services LLC (w.e.f. 10th January, 2013)
5 Volkart Fleming Shipping and Services Limited
(C) Fellow Subsidiaries (where there are transactions):
1 Forvol International Services Limited
2 Gokak Textiles Limited
3 Shapoorji Pallonji Investment Advisors Pvt. Limited
4 Shapoorji Pallonji Energy (Gujarat) Pvt. Limited
5 SP Fabricators Pvt. Limited
(D) Associate Companies (where there are transactions):
1 The Svadeshi Mills Company Limited
2 Coromondal Garments Limited (Subsidiary of The Svadeshi Mills Company
Limited)
3 Neuvo Consultancy ServiceLimited
(E) Joint Ventures (where there are transactions):
1 Edumetry Inc
2 Nypro Forbes Products Limited (Joint venture of Forbes Campbell
Finance Limited)
3 SCI Forbes Limited
(F) Key Management Personnel:
Managing Director, Mr. Ashok Barat
5. Leases
(a) Finance lease: Company as lessee
The Company has acquired Office Equipments under finance lease for four
years.
(i) The gross carrying amount and the accumulated depreciation at the
balance sheet date are Rs. 122.14 Lakhs; (Previous year: Rs. 212.31
Lakhs) and Rs. 76.17 Lakhs; (Previous year: Rs.128.32 Lakhs)
respectively.
(ii) Depreciation recognised in the statement of profit and loss is Rs.
38.01 Lakhs; (Previous year: Rs. 53.09 Lakhs).
6. Derivative instruments and unhedged foreign currency exposures
The Company enters into Foreign Exchange Contracts being derivative
instruments, which are not intended for trading or speculative
purposes, but for hedge purposes, to establish the amount of reporting
currency required or available at the settlement date.
7. Loans and advances to related parties includes interest free
loans, relating to which full provision exists in books of accounts,
aggregating Rs. 4,756.77 Lakhs (Secured Rs. 4,716.78 Lakhs) as at
31st March, 2014 [Previous year: Rs. 4,756.77 Lakhs (Secured Rs.
4,716.78 Lakhs)] granted to The Svadeshi Mills Company Limited and its
subsidiary Coromandal Garments Limited. The Company, being a secured
creditor, with adjudicated dues by the official Liquidator, expects to
receive the dues when the matter is ultimately disposed off.
8. Previous year figures have been regrouped / reclassified wherever
necessary to correspond with the current year''s classification /
disclosure.
Mar 31, 2013
1. Corporate Information
Forbes & Company Limited is one of the oldest companies of the world
that is still in existence. The Company traces its origin to the year
1767 when John Forbes of Aberdeenshire, Scotland started his business
in India. Over the years, the Management of the Company moved from the
Forbes Family to the Campbells to the Tata Group and now finally to the
well known Shapoorji Pallonji Group. The Company is mainly engaged in
the Engineering, Real estate and Shipping & Logistics business; and is
listed on the Bombay Stock Exchange.
2. Capital and other commitments
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs. 424.45 Lakhs; (Previous year: Rs.
468.71 Lakhs) [against which advance paid aggregating Rs. 54.38 Lakhs;
(Previousyear: Rs. 103.35Lakhs)]
(b) For commitments relating to lease arrangements, see Note 35(a) and
for derivative contracts, see Note 39(a).
(c) The Company along-with other joint venturers, has entered into a
"Sponsor Support Deed" with Natixis, Security Trustee, on 15 th
July, 2011 by which the Company irrevocably and unconditionally
undertaken to the Security Trustee and each of other creditors, to the
extent of its shareholding (i.e. 25%) in the Borrower, namely SCI
Forbes Limited, a joint venture company, to pay dues if the Borrower
does not pay or discharge any of its obligations.
(d) The Company has agreed to provide continuing financial support to
Forbes Container Lines Pte. Ltd. wholly owned subsidiary to meet all
its obligation, to the extent they are unable to meet their
obligations.
3. Segment reporting
The Company has identified business segments as its primary segment and
geographical segment as its secondary segment. Business segments are
primarily "Engineering", "Shipping and logistics services" and
"Real estate" segment. The Company caters to the needs of the
domestic and export markets.
Segment revenue, segment results, segment assets and segment
liabilities include the respective amounts identifiable to each of the
segments as also amounts allocated on a reasonable basis.
4. Related party disclosures
(A) Holding Company
Shapoorji Pallonji & Company Limited
(B) Subsidiary Companies
1 Eureka Forbes Limited and its subsidiaries a Aquamall Water Solutions
Limited
b Aquadiagnostics Water Research & Technology Centre Limited
(Subsidiary of Aquamall Water Solutions Limited)
c Euro Forbes Financial Services Limited (w.e.f. 2nd April, 2011)
d Euro Forbes International Pte. Limited
e Euro Forbes Limited Dubai (w.e.f. 10th June, 2011)
f Euro Forbes Mauritius Limited
g E4 Development & Coaching Limited
h EFL Mauritius Limited
i Forbes Aquamall Limited (w. e.f. 9th August, 2011 amalgamated with
Aquamall Water Solutions Limited)
j Forbes Lux FZCO (w.e.f. 26th June, 2011 subsidiary of Euro Forbes
Limited)
k Forbes Facility Services Pvt. Limited
l Forbes Enviro Solutions Limited
m Radiant Energy Systems Pvt. Ltd.
n Waterwings Equipments Pvt. Ltd.
2 Forbes Campbell Finance Limited and its subsidiaries
a Forbes Bumi Armada Limited
b Forbes Campbell Services Limited
c Forbes Edumetry Limited
d Forbes Technosys Limited
3 Forbes Bumi Armada Offshore Limited
4 Forbes Container Lines Pte. Limited and its subsidiary, namely
Forbesline Shipping Services LLC
5 Volkart Fleming Shipping and Services Limited
(C) Fellow Subsidiaries (where there are transactions):
1 Afcons Infrastructure Limited
2 Forvol International Services Limited
3 Gokak Textiles Limited
4 Neuvo Consultancy Services Limited (w.e.f. 29th April, 2011)
5 Shapoorji Pallonji Investment Advisors Pvt. Limited
6 Shapoorji Pallonji Energy (Gujarat) Pvt. Limited
7 SP Fabricators Pvt. Limited
(D) Associate Companies (where there are transactions):
1 Euro P2P Direct (Thailand) Co. Limited (Associate of Eureka Forbes
Limited)
2 Forbes Lux Group AG, BAAR (Associate of Eureka Forbes Limited)
3 Lux International AG (Associates of Eureka Forbes Limited)
4 The Svadeshi Mills Company Limited
5 Coromondal Garments Limited (Subsidiary of The Svadeshi Mills Company
Limited)
6 Nuevo Consultancy Services Limited (w.e.f. 29th April, 2011)[up to
28th April, 2011 joint venture, w.e.f. 29th April, 2011 also fellow
subsidiary]
(E) Joint Ventures (where there are transactions):
1 Edumetry Inc
2 Forbes Aquatech Limited (Joint venture of Eureka Forbes Limited)
3 Forbes Concept Hospitality Services Pvt. Limited (Joint venture of
Eureka Forbes Limited)
4 Forbes G4S Solutions Pvt. Ltd (Joint venture of Eureka ForbesLimited)
5 Infinite Water Solutions Pvt. Limited (Joint venture of Eureka Forbes
Limited)
6 Nypro Forbes Moulds Limited (w.e.f. 1st April, 2011 amalgamated with
Nypro Forbes Products Limited) [Joint venture of Forbes Campbell
Finance Limited]
7 Nypro Forbes Products Limited (Joint venture of Forbes Campbell
Finance Limited)
8 SCI Forbes Limited
(F) Key Management Personnel:
Managing Director, Mr. Ashok Barat
5. Leases
(a) Finance lease: Company as lessee
The Company has acquired Office Equipments under finance lease for four
years.
(i) The gross carrying amount and the accumulated depreciation at the
balance sheet date are Rs. 212.31 Lakhs; (Previous year: Rs. 212.78
Lakhs) and Rs. 128.32 Lakhs; (Previousyear: Rs. 75.30 Lakhs)
respectively.
(ii) Depreciation recognised in the statement of profit and loss is Rs.
53.09 Lakhs; (Previousyear: Rs. 37.69Lakhs).
6. Derivative instruments and unhedged foreign currency exposures
The Company enters into Foreign Exchange Contracts being derivative
instruments, which are not intended for trading or speculative
purposes, but for hedge purposes, to establish the amount of reporting
currency required or available at the settlement date.
A) The following are the outstanding Forward Exchange Contracts entered
into by the Company as at 31st March, 2013
7. Details of dues to micro and small enterprises as defined under
the Micro, Small and Medium Enterprises Development Act, 2006
The information as required under Micro, Small and Medium Enterprises
Development Act, 2006, has been determined to the extent such parties
have been identified on the basis of information available with the
Company and relied upon by Auditors, is as follows:-
8. Loans and advances to related parties includes interest free
loans, relating to which full provision exists in books of accounts,
aggregating Rs. 4,756.77 Lakhs (Secured Rs. 4,716.78 Lakhs) as at 31st
March, 2013 [Previous year: Rs. 4,756.77 Lakhs (Secured Rs. 4,716.78
Lakhs)] granted to The Svadeshi Mills Company Limited and its
subsidiary Coromandel Garments Limited. Such loans having been granted,
free of interest, as financial support to the companies in which the
Company has substantial interest, the terms and condition of such loans
are, in the opinion of the management, not prejudicial to the interests
of the Company.
9. To secure the lenders of SCI Forbes Limited (SFL), a jointly
controlled entity, amongst other undertakings, two of the joint venture
partners, including the Company, had to, sign a standby charter
agreement, under which, in the event the vessels were not on charter
with a lender approved third party at anytime during the pendency of
the loan, two vessels each would come on automatic charter to the joint
venture partners at rates specified in the standby charter agreement.
Immediately thereafter the global financial crisis occurred with
shipping being badly hit with charter rates crashing. The lenders
sought a change in some commercial terms for agreeing to approve
charterers and other forms of vessel deployment. Whilst this
negotiation was going on, the loan covenant had got activated and the
Company (as also its other JV partner) had to take the vessels on
charter at standby charter rates and deploy them on market rates
resulting in the loss of Rs. 513 Lakhs during previous year ended 31st
March, 2012. With effect from 1st July, 2011, the aforesaid standby
charter agreement has been suspended and consequently the ships have
been re-delivered by the Company as also by the joint venture partner
to SFL. Non-provision of estimated loss arising from the aforesaid
onerous standby charter agreements not being in accordance with the
requirements of Accounting Standard 29, ''Provisions, Contingent
Liabilities and Contingent Assets'' (AS-29) was a subject matter of a
qualification in the audit report for the year ended 31st March, 2011.
10. Previous year figures have been regrouped / reclassified wherever
necessary to correspond with the current year''s classificaton /
disclosure.
Mar 31, 2012
1. Corporate Information
Forbes & Company Limited is one of the oldest companies of the world
that is still in business. The Company traces its origin to the year
1767 when John Forbes of Aberdeenshire, Scotland started his business
in India. Over the years, the Management of the Company moved from the
Forbes Family to the Campbells to the Tata Group and now finally to the
well known Shapoorji Pallonji Group. The Company is mainly engage in
the Engineering, Real estate and Shipping & Logistics business and
listed on the Bombay Stock Exchange.
(a) Rights, preferences and restrictions attached to equity shares
The Company has only one class of shares referred to as equity shares
having a par value of Rs. 10 per share. Each holder of equity shares is
entitled to one vote per share. The Company declares and pays dividends
in Indian rupees. The dividend, if any, 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 of the Company, the holders of equity shares will
be entitled to receive remaining assets of the Company, after
distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.
(b) Equity shares held by holding company and subsidiary company
92,95,293 (Previous year: 92,95,293) equity shares are held by the
holding company, Shapoorji Pallonji & Company Limited; and 1,66,398
(Previous year: 1,66,398) equity shares are held by a subsidiary of the
Company, Forbes Campbell Finance Limited.
2. Contingent liabilities:
(a) In the year 1994-95, the Company had entered in to a Memorandum of
Understanding giving sole and exclusive right for developing a part of
its land at Chandivali, Mumbai. The Developer had filed a suit against
the Company for recession of the said Memorandum of Understanding and
has claimed a sum of Rs. 3,271.48 Lakhs and has asked interest at 21% per
annum with effect from April, 1998. The Company had been contesting the
aforesaid claim. This has been settled out of court on 22nd December,
2011 and the aforesaid claim is withdrawn by the developer.
As at As at
31st March, 31st March,
2012 2011
Rs.in Lakhs Rs.in Lakhs
(b) Taxes in dispute:-
(i) Excise demand 4,730.86 4,745.04
(ii) Sales tax 770.32 809.61
(iii)Income-tax 1,505.36 1,525.83
(iv) Customs duty 17.10 17.10
(v) Wealth tax 36.12 36.12
(vi) Property tax 1,075.85 934.07
(c) Labour matters in dispute 10.00 68.50
(d) Claim of Gujarat Electricity
Board for alleged diversion of
fraction of the power consumed and
contested by the Company in the
Court 188.29 188.29
(e) Customer claims 76.01 212.53
(f) Supplier claims 15.00 15.00
(g) Other legal matters 6.20 6.20
(h) Guarantees:-
(i) Guarantees given on behalf of
Shipping Principals including
subsidiary and Surety Bonds jointly
executed with third parties in favour
of customs and other parties 4,857.50 4,857.50
(ii) Guarantee on behalf of a
subsidiary company 2,325.49 200.00
(iii) Guarantees issued by bank 317.83 308.34
(i) Other money for which the
Company is contingently liable
Bills discounted 80.01 101.21
3. Capital and other commitments
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs. 468.71 Lakhs; (Previous year: Rs.
582.48Lakhs) [net of advance paid aggregating Rs. 103.35 Lakhs;
(Previousyear: Rs. 209.28Lakhs)]
(b) For commitments relating to lease arrangements, see Note 34(a) and
for derivative contracts, see Note 40(a).
(c) The Company along-with other joint venturers, has entered into a
"Sponsor Support Deed" with Natixis, Security Trustee, on 15th July,
2011 by which the Company irrevocably and unconditionally undertaken to
the Security Trustee and each of other creditors, to the extent of its
shareholding (i.e. 25%) in the Borrower, namely SCI Forbes Limited, a
joint venture company, if the Borrower do not pay or discharge any of
its obligations.
(d) The Company has agreed to provide continuing financial support to
Forbes Container Lines Pte. Ltd. wholly owned subsidiary to meet all
its obligation, to the extent they are unable to meet their
obligations.
(e) Also see Note 49.
Defined-benefits plans:
In terms of the guidance note issued by the Institute of Actuaries of
India, the actuary has provided a valuation of provident fund liability
based on the assumptions listed below and determined that there is no
shortfall as at 31st March, 2012. During the previous year, the Company
had made a provision of Rs. 21.35 lakhs towards interest shortfall on an
estimated basis in the absense of actuarial valuation.
The assumptions used in determining the present value of obligation of
the interest rate guarantee under deterministic approach are:-
Remaining terms of maturity 17 years.
Expected guarantee interest rate 8.25%.
Discount rate for the remaining term to maturity of interest portfolio
8.15%.
The actuarial calculations used to estimate defined benefit commitments
and expenses are based on the following assumptions which if changed,
would affect the defined benefit commitment's size, funding
requirements and expense.
* Figures in respect of Financial Year 2007-08 are not available.
The estimates of future salary increases, considered in the actuarial
valuation, take into account inflation, seniority, promotion and other
relevant factors such as supply and demand in the employment market.
The contribution expected to be made by the Company during the
financial year 2012-13 has not been ascertained.
The information in respect of medical cost trend rates and the effect
of an increase / decrease of 1% point in the assumed medical cost trend
rates on current service cost, interest cost, accumulated post
employment benefit cost and experience adjustment is not available;
during the year, medical cost of Rs. 46.93 Lakhs (Previous year: Rs.
47.15Lakhs) recognised to the statement of profit and loss based on
actuarial valuation.
The Company has charged amounts aggregating Rs. 74.30 Lakhs; (Previous
year: Rs. 46.72 Lakhs) to the statement of profit and loss based on
actuarial valuation [Present value of future obligation as at 31st
March, 2012 Rs. 338.86 Lakhs; (Previous year: Rs. 315.90 Lakhs)] and paid
Rs. 51.34 Lakhs (Previous year: Rs. 61.06Lakhs), towards the post
retirement arrangements to former Managing Directors and other Directors.
4. Related party disclosures
(A) Holding Company / Ultimate Holding Company
1 Shapoorji Pallonji & Company Limited [Holding Company (Ultimate
Holding Company upto 14th October, 2010)]
2 Sterling Investment Corporation Private Limited (Holding Company upto
14th October, 2010, merged with Shapoorji Pallonji & Company Limited
w.e.f. 15th October, 2010)
(B) Subsidiary Companies
1 Eureka Forbes Limited and its subsidiaries a Aquamall Water Solutions
Limited
b Aquadiagnostics Water Research & Technology Centre Limited
(Subsidiary of Aquamall Water Solutions Limited)
c Euro Forbes Financial Services Limited (w.e.f. 2nd April, 2011)
d Euro Forbes International Pte. Limited
e Euro Forbes Limited Dubai (w.e.f. 10th June, 2011)
f E4 Development & Coaching Limited
g EFL Mauritius Limited (w.e.f. 2nd December, 2010)
h Forbes Aquamall Limited (w.e.f. 9th August, 2011 amalgamated with
Aquamall Water Solutions Limited) i Forbes Lux FZCO ( w.e.f. 26th June,
2011 subsidiary of Euro Forbes Limited) j Forbes Facility Services Pvt.
Limited k Forbes Enviro Solutions Limited l Radiant Energy Systems Pvt.
Limited m Waterwings Equipments Pvt. Limited
2 Forbes Campbell Finance Limited and its subsidiaries a Forbes Bumi
Armada Limited
b Forbes Campbell Services Limited c Forbes Edumetry Limited
d Forbes Smart Data Limited (Wound up on 30th March, 2011) e Forbes
Technosys Limited
3 Forbes Bumi Armada Offshore Limited (w.e.f. 29th October, 2010)
4 Forbes Container Lines Pte. Limited
5 Volkart Fleming Shipping and Services Limited
(C) Fellow Subsidiaries (where there are transactions):
1 Afcons Infrastructure Limited
2 Forvol International Services Limited
3 Gokak Textiles Limited
4 Shapoorji Pallonji Investment Advisors Pvt. Limited (formerly
Euphoria Properties Pvt. Limited)
5 Shapoorji Pallonji Energy (Gujarat) Pvt. Limited
6 Sterling and Wilson Limited
7 SP Fabricators Pvt. Limited
(D) Associate Companies (where there are transactions):
1 The Svadeshi Mills Company Limited
2 Coromondal Garments Limited (Subsidiary of The Svadeshi Mills Company
Limited)
3 Nuevo Consultancy Services Limited (formerly Forbes Infotainment
Limited) (w.e.f. 29th April, 2011)[up to 28th April, 2011 joint
venture, w.e.f. 29th April, 2011 also fellow subsidiary]
(E) Joint Ventures (where there are transactions):
1 Edumetry Inc
2 Nuevo Consultancy Services Limited (formerly Forbes Infotainment
Limited) (upto 28th April, 2011)[w.e.f. 29th April, 2011 associate and
also fellow subsidiary]
3 Nypro Forbes Moulds Limited (formerly known as Nypro Forbes Moulds
Pvt. Limited) [Joint venture of Forbes Campbell Finance Limited]
4 Nypro Forbes Products Limited (formerly known as Nypro Forbes
Products Private Limited) [Joint venture of Forbes Campbell Finance
Limited]
5 SCI Forbes Limited
(F) Key Management Personnel:
Managing Director, Mr. Ashok Barat
5. Leases
(a) Finance lease: Company as lessee
The Company has acquired Office Equipments under finance lease of four
years.
(i) The gross carrying amount and the accumulated depreciation at the
balance sheet date are Rs. 212.78 Lakhs; (Previous year: Rs. 90.16Lakhs)
and Rs. 75.30 Lakhs; (Previous year: Rs. 37.61 Lakhs) respectively.
(ii) Depreciation recognised in the statement of profit and loss is Rs.
37.69 Lakhs; (Previous year: Rs. 22.54Lakhs).
Deferred tax asset has been recognised in respect of unabsorbed
depreciation and other items to the extent that future taxable income
will be available from future reversal of deferred tax liability
recognised at the balance sheet date and is restricted to the extent of
such liabilities. As a prudent measure, the excess deferred tax asset
(net) has not been recognised in the accounts as there is no virtual
certainty supported by convincing evidence that sufficient future
taxable income will be available against which such deferred tax assets
can be realised.
6. Standby charter agreement
To secure the lenders of SCI Forbes Limited (SFL), a jointly controlled
entity, amongst other undertakings, two of the joint venture partners,
including the Company, had to, sign a standby charter agreement, under
which, in the event the vessels were not on charter with a lender
approved third party at anytime during the pendency of the loan, two
vessels each would come on automatic charter to the joint venture
partners at rates specified in the standby charter agreement.
Immediately thereafter the global financial crisis occurred with
shipping being badly hit with charter rates crashing. The lenders
sought a change in some commercial terms for agreeing to approve
charterers and other forms of vessel deployment. Whilst this
negotiation was going on, the loan covenant had got activated and the
Company (as also its other JV partner) had to take the vessels on
charter at standby charter rates and deploy them on market rates
resulting in the loss of Rs. 513.33 Lakhs (Previous year: Rs. 2,164.09
Lakhs). With effect from 1st July, 2011, the aforesaid standby charter
agreement has been suspended and consequently the ships have been
re-delivered by the Company as also by the joint venture partner to
SFL. Non-provision of estimated loss arising from the aforesaid onerous
standby charter agreements not being in accordance with the
requirements of Accounting Standard 29, 'Provisions, Contingent
Liabilities and Contingent Assets' (AS-29) was a subject matter of a
qualification in the audit report for the year ended 31st March, 2011.
7. Derivative instruments and unhedged foreign currency exposures
The Company enters into Foreign Exchange Contracts being derivative
instruments, which are not intended for trading or speculative
purposes, but for hedge purposes, to establish the amount of reporting
currency required or available at the settlement date.
A) The following are the outstanding Forward Exchange Contracts entered
into by the Company as at 31st March, 2012
8. The Company had signed an undertaking for non-disposal of shares
held by it in Nypro Forbes Moulds Pvt. Ltd. under the promoter's /
borrowing agreement. However, in an earlier year, the Company had
transferred its shareholding in Nypro Forbes Moulds Pvt. Ltd. to Forbes
Finance Limited, an erstwhile wholly owned subsidiary Company which has
merged with Forbes Campbell Finance Limited, a wholly owned subsidiary
company, pursuant to the scheme of amalgamation. The novation and
assignment of joint venture agreement is still under process.
9. Loans and advances to related parties includes interest free loans
aggregating Rs. 4,756.77 Lakhs (Secured Rs. 4,716.78 Lakhs) as at 31st
March, 2012 [Previous year: Rs. 4,742.44 Lakhs (Secured Rs. 4,716.78
Lakhs)] granted to The Svadeshi Mills Company Limited and its
subsidiary Coromandel Garments Limited. Such loans having been granted,
free of interest, as financial support to the companies in which the
Company has substantial interest, the terms and condition of such loans
are, in the opinion of the management, not prejudicial to the interests
of the Company.
10. The Company has investments in equity shares and preference shares
aggregating Rs. 7,090 Lakhs in its Joint Venture Company, viz. SCI Forbes
Limited, which has four chemical tankers (vessels) currently deployed
on time charter. In the opinion of the management, the downturn in the
shipping industry in the recent past is exceptional in nature and is
considered to be a temporary event. The chemical business is expected
to grow in near future and having regard to very low level of order
position for new vessels, there would be better deployment of existing
vessels which would improve the charter hire rates. Based on the
present value of estimated future cash flow expected to arise from the
continuing use of vessels and from its disposal at the end of its
useful life, no provision for diminution in value of these investments,
held as non-current, is required to be made.
11. Account balances of trade payables and other current liabilities
aggregating to Rs. 2,386.15 Lakhs and trade receivables, long term /
short term loans and advances and other current assets aggregating to Rs.
1,321.48 Lakhs relating to the Shipping and Logistics division are in
the process of detailed review and reconciliation. This was a subject
matter of qualification in the audit report for the year ended 31st
March, 2011 and continues to be a subject matter of qualification in
the audit report for the year ended 31st March, 2012. The Management
expects that the net effect on the financial results would not be
material on completion of this exercise.
12. The Revised Schedule VI has become effective from 1st April, 2011
for the preparation of financial statement. This has significantly
impacted the disclosure and presentation made in the financial
statements. Previous year figures have been regrouped / reclassified
wherever necessary to correspond with the current year's classification
/ disclosure.
Mar 31, 2011
1. Contingent Liability and Provision for Contingencies:
a) In the year 1994-95, the Company had entered in to a Memorandum of
Understanding giving sole and exclusive right for developing a part of
its land at Chandivali, Mumbai. The Developer had filed a suit against
the Company for recession of the said Memorandum of Understanding and
has claimed a sum of Rs.3,271.48 Lakhs and has asked interest at 21%
per annum with effect from April, 1998. The Company has been legally
advised that the aforesaid claim for Rs.3,271.48 Lakhs and interest at
21% per annum is unjustified and is legally untenable. The Company is
contesting the aforesaid claim. The matter is sub-judice. Both parties
are also in active discussion to reach an out of court settlement in
the matter which will enable joint development of the property.
b) Other Contingent Liabilities not provided for:
(Rs. in Lakhs)
Current Previous
Year Year
(A) Bills discounted 101.21 42.83
(B) Guarantees issued by bank 506.88 448.62
(C) Taxes in dispute :-
(i)Excise demand 4,745.04 4,745.04
(ii) Sales Tax 809.61 873.54
(iii) Income-tax 1,525.83 1,440.32
(iv) Customs duty 17.10 17.10
(v) Wealth tax 36.12 36.12
(vi) Property Tax 934.07 671.60
(D) Labour matters in dispute 68.50 63.25
(E) Claim of Gujarat Electricity Board for
alleged diversion of fraction of the power
consumed and contested by the Company in
the Court 188.29 188.29
(F) Guarantees given on behalf of Shipping
Principals and Surety Bonds jointly executed
with third parties in favour of customs and
other parties 3,577.50 3,593.58
(G) Guarantee on behalf of a subsidiary
company 200.00 -
(H) Other demands contested by the Company :-
(i) Customer claims against the Company not
acknowledged as debts 136.52 137.71
(ii) Supplier claims against the Company not
acknowledged as debts 15.00 15.00
2. Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs.582.48 Lakhs; (Previous year Rs.59.69
Lakhs) (against which advances paid aggregate Rs.209.28 Lakhs; Previous
year Rs.11.31 Lakhs).
3. The Company has charged amounts aggregating Rs.46.72 Lakhs;
(Previous year Rs.18.70 Lakhs) to the profit and loss account based on
actuarial valuation [Present value of future obligation as at 31st
March, 2011 Rs.315.90 Lakhs; (Previous year Rs.330.23 Lakhs)] and paid
Rs.61.06 Lakhs (Previous year Rs.48.81 Lakhs), towards the post
retirement arrangements to former Managing Directors and other
Directors.
4. The information as required under Micro, Small and Medium
Enterprises Development Act, 2006, has been determined to the extent
such parties have been identified on the basis of information available
with the Company and relied upon by Auditors, is as follows:- (a) The
total amount of delayed payments during the year aggregated to
Rs.137.94 Lakhs; (Previous year Rs.3.83 Lakhs) in respect of 40
parties;
(Previous year 4 parties) with amounts ranging from Rs.0.03 Lakh to
Rs.61.80 Lakhs; (Previous year Rs.0.01 Lakh to Rs.0.20 Lakh).
(b) The amount of principal outstanding in respect of the above as at
Balance Sheet date is Rs.137.11 Lakhs; (Previous year Rs.3.12 Lakhs) in
respect of 40 parties; (Previous year 4 parties) with amount ranging
from Rs.0.03 Lakh to Rs.61.42 Lakhs; (Previous year Rs.0.01 Lakh to
Rs.0.20 Lakh).
(c) The total interest payable on account of delayed payment aggregates
to Rs.0.83 Lakh; (Previous year Rs.0.71 Lakh) and this entire amount
was outstanding as at the year end.
5 . Based on a legal opinion received, the Company has not deposited
the dividend amount of Rs.Nil (Previous year Rs.1.29 Lakhs) to Investor
Education and Protection Fund even though amounts are outstanding for
more than seven years.
6. In accordance with the Accounting Standard on Leases (AS) 19,
disclosures in respect of leases are made below :
A. The Company has acquired Plant and Machinery under finance lease of
four years. The particulars in respect of such leases are as follows:
(a) (i) The gross carrying amount and the accumulated depreciation at
the balance sheet date are Rs.90.16 Lakhs; (Previous year Rs.90.16
Lakhs) and Rs.37.61 Lakhs; (Previous year Rs.15.07 Lakhs) respectively.
7. The Company had signed an undertaking for non-disposal of shares
held by it in Nypro Forbes Moulds Pvt. Ltd. under the promoter's /
borrowing agreement. However, in an earlier year, the Company had
transferred its share holding in Nypro Forbes Moulds Pvt. Ltd. to
Forbes Finance Limited, an erstwhile wholly owned subsidiary Company
which has merged with Forbes Campbell Finance Limited, pursuant to the
scheme of amalgamation. The novation and assignment of joint venture
agreement is still under process.
8. The Company has granted interest free loans aggregating Rs.4742.44
Lakhs (Secured Rs. 4,716.78 Lakhs) as at 31st March, 2011 [Previous
year Rs.4,725.61 Lakhs (Secured Rs. 4,716.78)] to The Svadeshi Mills
Company Limited and its subsidiary Coromandel Garments Limited. Such
loans having been granted, free of interest, as financial support to
the companies in which the Company has substantial interest, the terms
and condition of such loans are, in the opinion of the management, not
prejudicial to the interests of the Company.
9. (a) The Company, as part of a condition imposed by the lenders to
SCI Forbes Limited (SFL), a joint venture entity, had entered into a
standby charter agreement under which the Company (as also its joint
venture partner Shipping Corporation of India (SCI)) committed to
charter vessels from SFL at a defined charter rate specified in the
agreement in the event the vessels are not on a 'approved' charter
with a third party, until SFL repays its borrowings. Given the global
financial crisis which impacted freight rates and volumes adversely,
the lenders did not 'approve' the proposals by SFL to put the vessels
into a pooling arrangement (which was more profitable than putting on
long term charter) and hence the standby charter agreement got
triggered.
Subsequent to the year end, with effect from 1st July, 2011, the
aforesaid standby charter agreement has been suspended and consequently
the ships have been re-delivered by the Company to SFL. The loss
materialised from 1st April, 2011 to 30th June, 2011 is Rs.515.97 Lakhs
which will be accounted in the period in which it materialises as the
said stand by agreements are not to be treated as onerous contract as
per AS-29 since the triggering of the agreement is dependant on the
freight rate prevailing in the market and the discretion of the
lenders.
(b) Account balances of sundry creditors / customers' credit balances /
advances aggregating Rs.1,781.67 Lakhs; sundry debtors aggregating
Rs.838.62 Lakhs and loans and advances aggregating Rs.953.88 Lakhs
relating to the Shipping and Logistics segment are in the process of
detailed review and reconciliation. The Management expect that the net
effect on the profit and loss account would not be material on
completion of exercise.
(c) In shipping and logistics due to teething problems in the new ERP
system implemented with effect from 1st April, 2010 some of Tax
Deducted at Source values were not generated & has resulted in delay in
payment of said values.
10. During the previous year, the High Court of Mumbai had approved
the demerger of the Shipping Agency Division of Volkart Fleming
Shipping and Services Limited, a subsidiary company, into the Company
w.e.f. 1st April, 2008. Accordingly, the scheme had been given effect
to in the accounts of the previous year and the assets and liabilities
of the Shipping Agency Division of Volkart Fleming Shipping and
Services Limited, at their respective book values as appearing in the
audited divisional balance sheet as at 31st March, 2009 had been
transferred to and vested in the Company alongwith the profit for the
year ended 31st March, 2009 (the appointed date of the scheme being 1st
April, 2008).
Notes:
1 The above figures exclude contribution to Gratuity Fund and Provision
for compensated absences provided on actuarial basis as separate
figures are not available.
2 The managerial remuneration of Rs.50.33 Lakhs paid during the year is
in excess of the limits specified in Schedule XIII of the Companies
Act, 1956 and is subject to the approval of the Central Government.
During the year, the Company has received approval of the Central
Government in respect of managerial remuneration of Rs.37.35 Lakhs paid
in excess of limits specified in the aforesaid Schedule XIII during the
previous year.
11. Employee Benefit Obligations:- Defined-Contribution Plans:
The Company offers its employees defined contribution plan in the form
of family pension fund and superannuation fund. Family pension fund
cover substantially all regular employees while the superannuation fund
covers certain executives. Contributions are paid during the year into
separate funds under certain fiduciary-type arrangements. The
contribution into the superannuation fund and Family Pension Fund are
made only by the Company. The contributions are based on a certain
proportion of the employee's salary.
Defined-Benefits Plans:
According to the Management, actuarial valuation can not be applied to
reliably measure provident fund liabilities in respect of fund managed
by the trust, set up by the Company. Accordingly, the Company is
currently not in a position to provide other related disclosures as
required by Accounting Standard (AS) 15 (Revised) on Employee Benefits
notified by the Companies (Accounting Standards) Rules, 2006 read with
the Guidance issued by the Accounting Standards Board of the Institute
of Chartered Accountants of India. During the year, the Company has
provided Rs.21.35 Lakhs (Previous year Rs.Nil) towards interest short
fall.
The Company offers its employees defined-benefits plans in the form of
a gratuity scheme (a lump sum amount), post retirement medical benefits
and non compete fees. Benefits under the defined benefit plans are
typically based either on years of service and the employee's
compensation (generally immediately before retirement). The gratuity
scheme covers substantially all regular employees, while post
retirement medical benefit covers certain executives. In the case of
the gratuity scheme, the Company contributes funds to a Gratuity Trust,
which is irrevocable, while post retirement medical benefit and non
compete fees are not funded. Commitments are actuarially determined at
year end. Actuarial valuation is done based on "Projected Unit Credit"
method. Gains and losses of changed actuarial assumptions are charged
to the profit and loss account.
A sum of Rs.269.89 Lakhs (Previous Year Rs.235.78 Lakhs) has been
charged to the profit and loss account in respect of the contribution
to provident fund, family pension fund, superannuation fund and other
funds.
12. (a) Related Party Disclosures
(i) Names of related parties and nature of related party relationship.
(A) Holding Company / Ultimate Holding Company:
1 Shapoorji Pallonji & Company Limited [Holding Company (Ultimate
Holding Company upto 14th October, 2010)]
2 Sterling Investment Corporation Private Limited (Holding Company upto
14th October, 2010, merged with Shapoorji Palonji & Company Limited
w.e.f. 15th October, 2010)
(B) Subsidiary Companies:
1 Aquamall Water Solutions Limited (Subsidiary of Eureka Forbes
Limited)
2 Aquadiagnostics Water Research & Technology Centre Limited
(Subsidiary of Aquamall Water Solutions Limited)
3 Eureka Forbes Limited
4 Euro Forbes International Pte. Limited (Subsidiary of Eureka Forbes
Limited)
5 E4 Development & Coaching Limited (Subsidiary of Eureka Forbes
Limited)
6 EFL Mauritius Limited (Subsidiary of Eureka Forbes Limited w.e.f. 2nd
December, 2010)
7 Forbes Aquamall Limited (Subsidiary of Aquamall Water Solutions
Limited)
8 Forbes Bumi Armada Limited (Subsidiary of Forbes Campbell Finance
Limited)
9 Forbes Bumi Armada Offshore Limited (w.e.f. 29th October, 2010)
10 Forbes Campbell Services Limited (Subsidiary of Forbes Campbell
Finance Limited)
11 Forbes Container Lines Pte. Limited
12 Forbes Edumetry Limited (Subsidiary of Forbes Campbell Finance
Limited)
13 Forbes Facility Services Pvt. Limited (Subsidiary of Eureka Forbes
Limited)
14 Forbes Smart Data Limited [Subsidiary of Forbes Campbell Finance
Limited (upto 30th March, 2011)]
15 Forbes Technosys Limited (Subsidiary of Forbes Campbell Finance
Limited)
16 Forbes Enviro Solutions Limited (Subsidiary of Eureka Forbes
Limited)
17 Forbes Campbell Finance Limited
18 Radiant Energy Systems Pvt. Limited (Subsidiary of Eureka Forbes
Limited)
19 Waterwings Equipments Pvt. Limited (Subsidiary of Eureka Forbes
Limited)
20 Volkart Fleming Shipping and Services Limited
(C) Fellow Subsidiaries (where there are transactions):
1 Forvol International Services Limited
2 Gokak Textiles Limited
3 Afcons Infrastructure Ltd.
4 Sterling and Wilson Limited
5 SP Fabricators Pvt. Limited
(D) Associate Companies (where there are transactions):
The Svadeshi Mills Company Limited
(E) Joint Ventures (where there are transactions):
1 Edumetry Inc
2 Forbes Infotainment Limited
3 Nypro Forbes Moulds Pvt. Limited (Joint venture of Forbes Campbell
Finance Limited)
4 Nypro Forbes Products Pvt. Limited (Joint venture of Forbes Campbell
Finance Limited)
5 SCI Forbes Limited
(F) Key Management Personnel:
Managing Director, Mr. Ashok Barat
27. (b) Related Party Disclosures
(i) Names of related parties and nature of related party relationship
for the year ended 31st March, 2010.
(A) Holding Company / Ultimate Holding Company:
1 Shapoorji Pallonji & Company Limited (Ultimate Holding Company)
2 Sterling Investment Corporation Private Limited (Holding Company)
(B) Subsidiary Companies:
1 Aquamall Water Solutions Limited (Subsidiary of Eureka Forbes
Limited)
2 Aquadiagnostics Water Research & Technology Centre Limited
(Subsidiary of Aquamall Water Solutions Limited)
3 Eureka Forbes Limited
4 Euro Forbes International Pte. Limited (Subsidiary of Eureka Forbes
Limited)
5 E4 Development & Coaching Limited (Subsidiary of Eureka Forbes
Limited)
6 Forbes Aquamall Limited (Subsidiary of Aquamall Water Solutions
Limited)
7 Forbes Bumi Armada Limited (Subsidiary of Forbes Campbell Finance
Limited)
8 Forbes Campbell Services Limited (Subsidiary of Forbes Campbell
Finance Limited)
9 Forbes Container Lines Pte. Limited
10 Forbes Doris and Naess Maritime Limited (wound up on 29th April,
2009)
11 Forbes Edumetry Limited (Subsidiary of Forbes Campbell Finance
Limited)
12 Forbes Facility Services Pvt. Limited (Subsidiary of Eureka Forbes
Limited)
13 Forbes Smart Data Limited (Subsidiary of Forbes Campbell Finance
Limited)
14 Forbes Technosys Limited (Subsidiary of Forbes Campbell Finance
Limited)
15 Forbes Tinsley Company Limited (wound up on 23rd June, 2009)
16 Forbes Enviro Solutions Limited (Subsidiary of Eureka Forbes
Limited)
17 Forbes Campbell Finance Limited
18 Next Gen Publishing Limited (from 26th May, 2009 to 14th February,
2010)
19 Radiant Energy Systems Pvt. Limited (Subsidiary of Eureka Forbes
Limited)
20 Waterwings Equipments Pvt. Limited (Subsidiary of Eureka Forbes
Limited)
21 Volkart Fleming Shipping and Services Limited
(C) Fellow Subsidiaries (where there are transactions):
1 Afcons Infrastructure Limited
2 Forvol International Services Limited
3 Gokak Textiles Limited
4 SP Fabricators Pvt. Limited
(D) Associate Companies (where there are transactions):
The Svadeshi Mills Company Limited
(E) Joint Ventures (where there are transactions):
1 Edumetry Inc.
2 Forbes Infotainment Limited
3 Nypro Forbes Moulds Pvt. Limited (Joint venture of Forbes Campbell
Finance Limited)
4 Nypro Forbes Products Pvt. Limited (Joint venture of Forbes Campbell
Finance Limited)
5 SCI Forbes Limited
(F) Key Management Personnel:
Managing Director, Mr. Ashok Barat
Footnotes:
1 Installed capacity has been certified by the Management and accepted
by Auditors without verification, this being a technical matter.
2 Production is derived after reducing the aggregate of opening stock
and purchases from the aggregate of closing stock and sales.
3 Quantity whereof is not ascertainable. (comprise diverse products in
respect of which quantities cannot be practicably aggregates.)
4 In arriving at the quantities disclosed in metric tonnes, standard
conversion factors have been used.
29. (a) Segment Reporting
The Company has disclosed Business Segment as the primary segment.
Segment have been identified taking into account the nature of the
products, risks and returns, organisation structure and internal
reporting system.
The Company's operations predominantly relate to "Engineering",
"Motors", "Shipping and Logistics Services", "Personal Wear" and "Real
Estate" The Company caters to the needs of the Domestic and Export
Markets.
Segment Revenue, Segment Results, Segment Assets and Segment
Liabilities include the respective amounts identifiable to each of the
segments as also amounts allocated on a reasonable basis.
30. Figures of previous years have been regrouped wherever necessary.
Mar 31, 2010
1. Contingent Liability and Provision for Contingencies:
a) In the year 1994-95, the Company had entered in to a Memorandum of
Understanding giving sole and exclusive right for developing a part of
its land at Chandivali, Mumbai. The Developer had filed a suit against
the Company for recession of the said Memorandum of Understanding and
has claimed a sum of Rs.3,271.48 Lakhs and has asked interest at 21%
per annum with effect from April, 1998. The Company has been advised
that the aforesaid claim for Rs.3,271.48 Lakhs and interest at 21% per
annum is unjustified and is legally untenable. The Company is
contesting the aforesaid claim. The matter is sub-judice.
b) Other Contingent Liabilities not provided for: (Rs. In Lakhs)
Current Previous
Year Year
(A) Bills discounted 42.83 181.00
(B) Guarantees issued by bank 418.62 664.73
(C) Taxes in dispute :-
(i) Excise demand [Advance paid
against the demand Rs.15.29
Lakhs; (Previous year
Rs.15.29 Lakhs)] 4,745.04 4,745.04
(ii) Sales Tax [Advance paid
Rs.68.58 Lakhs; (Previous
year Rs.66.97 Lakhs)] 873.54 1,144.51
(iii) Income-tax 1,440.32 1,119.22
(iv) Customs duty 17.10 -
(v) Wealth tax 36.12 36.12
(vi) Property Tax 409.81 409.81
(D) Labour matters in dispute 69.25 49.31
(E) Claim of Gujarat Electricity
Board for alleged diversion of
fraction of the power consumed
and contested by the Company
in the Court 188.69 188.69
(F) Guarantees given on behalf of
Shipping Principals and Surety
Bonds jointly executed with third
parties in favour of customs and
other parties 1,683.08 2,973.00
(G) Guarantees given in favour of
customs authorities 6.00 6.00
(H) Guarantee Bonds on behalf
of others 30.00 43.68
(I) Other demands contested by
the Company :-
(i) Customer claims against the
Company not acknowledged as debts 137.71 136.52
(ii) Supplier claims against the
Company not acknowledged as debts 15.00 15.00
(iii) Rent - 3.00
The Company does not expect any liability to devolve on it on account
of the above referred contingent liabilities and therefore no provision
is held.
2. Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs.59.69 Lakhs; (Previous year Rs.963.05
Lakhs) (against which advances paid aggregate Rs.11.31 Lakhs; Previous
year Rs.6.23 Lakhs).
3. The Company has charged monthly amounts aggregating Rs.18.70 Lakhs;
(Previous year Rs.120.33 Lakhs) to the profit and loss account based on
actuarial valuation [Present value of future obligation as at 31st
March, 2010 Rs.330.23 Lakhs; (Previous year Rs.354.85 Lakhs)], towards
the post retirement arrangements to former Managing Director and other
Directors.
4. The Company has incurred Rs.Nil; (Previous year Rs.13.97 Lakhs) on
Research and Development. These amounts have been expensed out during
the year.
5. The information as required under Micro, Small and Medium
Enterprises Development Act, 2006 as received by the Company and relied
upon by Auditors is as follows:- (a) The total amount of delayed
payments during the year aggregated to Rs.3.84 Lakhs; (Previous year
Rs.26.53 Lakhs) in respect of 4 parties;
(Previous year 3 parties) with amounts ranging from Rs.0.01 Lakh to
Rs.0.20 Lakh; (Previous year Rs.0.01 Lakh to Rs.6.92 Lakhs).
(b) The amount of principal outstanding in respect of the above as at
Balance Sheet date is Rs.3.12 Lakhs; (Previous year Rs.6.76 Lakhs) in
respect of 4 parties; (Previous year 3 parties) with amount ranging
from Rs.0.01 Lakh to Rs.0.20 Lakhs; (Previous year Rs.0.02 Lakh to
Rs.4.28 Lakhs).
(c) The total interest payable on account of delayed payment aggregates
to Rs.0.71 Lakh; (Previous year Rs.0.47 Lakh) and this entire amount
was outstanding as at the year end.
During the previous year, the company had offset deferred tax assets
aggregating Rs.398.15 Lakhs against General Reserve. These deferred tax
assets were recognised in earlier years in respect of voluntary
retirement compensation liabilities which were offset against General
Reserve as at 31st March, 2007, in terms of scheme of demerger of the
Textile Division into a seperate company viz. Gokak Textiles Limited
approved by the Honourable High Court of Judicature at Bombay and the
Honourable High Court of Karnataka.
Deferred tax assets in respect of unabsorbed depreciation is recognised
having regard to the deferred tax liability arising from timing
differences in respect of depreciation charge on the fixed assets, the
reversal of which is virtually certain.
6. Based on a legal opinion received, the Company has not deposited
the dividend amount of Rs.1.29 Lakhs (Previous year Rs.0.51 Lakh) to
Investor Education and Protection Fund even though amounts are
outstanding for more than seven years.
7. In accordance with the Accounting Standard on Leases (AS) 19,
disclosures in respect of leases are made below :
A. The Company has acquired Plant & Machinery under finance lease of
four years. The particulars in respect of such leases are as follows:
(a) (i) The gross carrying amount and the accumulated depreciation at
the balance sheet date are Rs.90.16 Lakhs; (Previous year Rs.77.95
Lakhs) and Rs.15.07 Lakhs; (Previous year Rs.47.65 Lakhs) respectively.
(ii) Depreciation recognised in the profit and loss account is Rs.15.07
Lakhs; (Previous year Rs.8.06 Lakhs)
B. (i) The Company has taken certain office premises on operating
lease basis. Lease payments in respect of such leases recognised in
Profit and Loss Account Rs.109.73 Lakhs; (Previous Year Rs.231.63
Lakhs).
(iii) Except for the escalation clauses contained in certain lease
arrangements providing for increase in the lease payment by a specified
percentages / amounts after completion of specified period, the lease
agreements do not contain any renewal clause. Further, the lease terms
do not contain any exceptional / restrictive covenants other than prior
approval of the lessee before renewal of lease.
(iv) There are no restrictions such as those concerning dividend and
additional debt other than in some cases where prior approval of lessor
is necessitated for further leasing.
(v) Other lease arrangements, in respect of which payments are made by
the Company, are cancellable.
8. The Company had signed an undertaking for non-disposal of shares
held by it in Nypro Forbes Moulds Pvt. Ltd. under the promoters /
borrowing agreement. However, in the previous year, the Company had
transferred its share holding in Nypro Forbes Moulds Pvt. Ltd. to
Forbes Finance Limited, an erstwhile wholly owned subsidiary Company
which has merged with Forbes Campbell Finance Limited (formerly known
as Latham India Limited), pursuant to the scheme of amalgamation. The
novation and assignment of joint venture agreement is still under
process.
9. The Company has granted interest free loans aggregating
Rs.4,725.61 Lakhs (Secured Rs. 4,716.78 Lakhs) as at 31st March, 2010
[Previous year Rs.4,716.78 Lakhs (Secured Rs. 4,716.78)] to The
Svadeshi Mills Company Limited and Coromandel Garments Limited. Such
loans having been granted, free of interest, as financial support to
the companies in which the Company has substantial interest, the terms
and condition of such loans are, in the opinion of the management, not
prejudicial to the interests of the Company.
10. The Company, as part of a condition imposed by the lenders to SCI
Forbes Limited (SFL), a joint venture entity, had entered into a
standby charter agreement under which the Company (as also its joint
venture partner Shipping Corporation of India (SCI)) committed to
charter vessels from SFL at a defined charter rate specified in the
agreement in the event the vessels are not on a Ãapproved charter with
a third party, until SFL repays its borrowings. Given the global
financial crisis which impacted freight rates and volumes adversely,
the lenders did not Ãapprove the proposals by SFL to put the vessels
into a pooling arrangement (which was more profitable than putting on
long term charter) and hence the standby charter agreement got
triggered.
The Company and SCI have already signed a term sheet with the lenders
of SFL under which the aforesaid standby charter agreement will be
suspended; this term sheet is awaiting approval of the Korean Export
Import Corporation, the loan guarantor, which approval is expected
shortly. The loss materialised till date subsequent to 31st March, 2010
is Rs.735.80 Lakhs. This loss will be accounted in the period in which
it materialises and the said stand by agreements are not to be treated
as onerous contract as per AS-29 as the triggering of the agreement is
dependant on the freight rate prevailing in the market and the
discretion of the lenders.
11. On 6th November, 2009, the High Court, Mumbai has approved the
demerger of the Shipping Agency Division of Volkart Fleming Shipping
and Services Limited, a subsidiary company, into the company w.e.f. 1st
April, 2008. The order has since been received and filed with the
Registrar of Companies. Accordingly, the scheme has been given effect
to in the accounts and the assets and liabilities of the Shipping
Agency Division of Volkart Fleming Shipping and Services Limited, at
their respective book values as appearing in the audited divisional
balance sheet as at 31st March, 2009 have been transferred to and
vested in the company alongwith the profit for the year ended 31st
March, 2009 (the appointed date of the scheme being 1st April, 2008).
12. Employee Benefit Obligations:- Defined-Contribution Plans:
The Company offers its employees defined contribution plan in the form
of provident fund, family pension fund and superannuation fund.
Provident fund and family pension fund cover substantially all regular
employees while the superannuation fund covers certain executives.
Contributions are paid during the year into separate funds under
certain flduciary-type arrangements. While both the employees and the
Company pay predetermined contributions into the provident fund and
family pension fund, the contribution into the superannuation fund are
made only by the Company. The contributions are normally based on a
certain proportion of the employees salary.
A sum of Rs.235.78 Lakhs (Previous Year Rs.257.13 Lakhs) has been
charged to the revenue account in this respect.
Defined-Benefits Plans:
The Company offers its employees defined-benefits plans in the form of
a gratuity scheme (a lump sum amount), compensated absences, post
retirement medical benefits and non compete fees. Benefits under the
defined benefit plans are typically based either on years of service
and the employees compensation (generally immediately before
retirement). The gratuity scheme covers substantially all regular
employees, while post retirement medical benefit covers certain
executives. In the case of the gratuity scheme, the Company contributes
funds to a Gratuity Trust, which is irrevocable, while the gratuity for
one of the division, post retirement medical benefit and non compete
fees are not funded. Commitments are actuarially determined at year
end. On adoption of the revised Accounting Standard (AS-15) on
"Employee Benefits", actuarial valuation is done based on "Projected
Unit Credit" method. Gains and losses of changed actuarial assumptions
are charged to the profit and loss account.
The net value of the defined benefit commitment is detailed below:
The amounts of the present value of the obligation, fair value of the
plan assets, surplus or deficit in the plan, experience adjustments
arising on plan liabilities and plan assets for the previous one annual
period have not been furnished as the revised AS-15 was adopted by the
Company in the financial year 2006-07.
The estimates of future salary increases, considered in the acturial
valuation, take into account inflation, seniority, promotion and other
relevant factors such as supply and demand in the employment market.
The contribution expected to be made by the Company during the
financial year 2010-11 has not been ascertained.
13. (a) Related Party Disclosures
(i) Names of related parties and nature of related party relationship.
(A) Holding Company / Ultimate Holding Company:
1 Shapoorji Pallonji & Company Limited (Ultimate Holding Company)
2 Sterling Investment Corporation Private Limited (Holding Company)
(B) Subsidiary Companies:
1 Aquamall Water Solutions Limited (Subsidiary of Eureka Forbes
Limited)
2 Aquadiagnostics Water Research & Technology Centre Limited
(Subsidiary of Aquamall Water Solutions Limited)
3 Eureka Forbes Limited
4 Euro Forbes International Pte. Limited (Subsidiary of Eureka Forbes
Limited)
5 E4 Development & Coaching Limited (Subsidiary of Eureka Forbes
Limited)
6 Forbes Aquamall Limited (Subsidiary of Aquamall Water Solutions
Limited)
7 Forbes Bumi Armada Limited [Subsidiary of Forbes Campbell Finance
Limited (formerly known as Latham India Limited)] *
8 Forbes Campbell Services Limited [Subsidiary of Forbes Campbell
Finance Limited (formerly known as Latham India Limited)] *
9 Forbes Container Lines Pte. Limited
10 Forbes Doris and Naess Maritime Limited (wound up on 29th April,
2009)
11 Forbes Edumetry Limited [Subsidiary of Forbes Campbell Finance
Limited (formerly known as Latham India Limited)] *
12 Forbes Facility Services Pvt. Limited (Subsidiary of Eureka Forbes
Limited)
13 Forbes Smart Data Limited [Subsidiary of Forbes Campbell Finance
Limited (formerly known as Latham India Limited)] *
14 Forbes Technosys Limited [Subsidiary of Forbes Campbell Finance
Limited (formerly known as Latham India Limited)] *
15 Forbes Tinsley Company Limited (wound up on 23rd June, 2009)
16 Forbes Enviro Solutions Limited (Subsidiary of Eureka Forbes
Limited)
17 Forbes Campbell Finance Limited (formerly known as Latham India
Limited)
18 Next Gen Publishing Limited (from 26th May, 2009 to 14th February,
2010)
19 Radiant Energy Systems Pvt. Limited (Subsidiary of Eureka Forbes
Limited)
20 Waterwings Equipments Pvt. Limited (Subsidiary of Eureka Forbes
Limited)
21 Volkart Fleming Shipping and Services Limited
(C) Fellow Subsidiaries:
1 Afcons Infrastructure Limited
2 Cyrus Investments Limited
3 Forvol International Services Limited
4 Gokak Textiles Limited
5 Shapoorji Pallonji Ports Pvt. Limited
6 SP Fabricators Pvt. Limited
7 United Motors (India) Limited
(D) Associate Companies:
1 Euro P2P Direct (Thailand) Co. Limited (Associate of Eureka Forbes
Limited)
2 Forbes Lux Group AG, BAAR (Associate of Eureka Forbes Limited)
(w.e.f. 1st January, 2009)
3 Forbes Lux FZE (Subsidiary of Forbes Lux Group AG, BAAR) (w.e.f. 1st
January, 2009)
4 Next Gen Publishing Limited (upto 25th May, 2009)
5 P T Gokak Indonesia (Associate of Forbes Campbell Finance Limited)
(upto 27th May, 2009) *
6 The Svadeshi Mills Company Limited
(E) Joint Ventures:
1 Edumetry Inc
2 Forbes Aquatech Limited (Joint venture of Eureka Forbes Limited)
3 Forbes Concept Hospitality Services Pvt. Limited (Joint venture of
Eureka Forbes Limited)
4 Forbes Infotainment Limited
5 Forbes Lux Group AG, BAAR (Joint venture of Eureka Forbes Limited)
(upto 31st December, 2008)
6 Forbes Lux FZE (Subsidiary of Forbes Lux Group AG, BAAR) (upto 31st
December, 2008)
7 Infinite Water Solutions Pvt. Limited (Joint venture of Eureka Forbes
Limited)
8 Nypro Forbes Moulds Pvt. Limited [Joint venture of Forbes Campbell
Finance Limited (formerly known as Latham India Limited)] *
9 Nypro Forbes Products Pvt. Limited [Joint venture of Forbes Campbell
Finance Limited (formerly known as Latham India Limited)] *
10 SCI Forbes Limited
11 Meadows Shipping Pvt. Limited (wound up during the year) [Joint
Venture of Forbes Campbell Finance Limited (formerly known as Latham
India Limited)] *
(F) Key Management Personnel:
1 Managing Director, Mr. Ashok Barat
Pursuant to the scheme of amalgamation, approved by the High Court
Judicature at Mumbai on 11th September, 2009, Forbes Finance Limited
has amalgamated with Forbes Campbell Finance Limited (formerly known as
Latham India Limited) (appointed date of scheme being 1st Aptil, 2008).
30. (b) Related Party Disclosures
(i) Names of related parties and nature of related party relationship
for the year ended 31st March, 2009.
(A) Holding Company / Ultimate Holding Company:
1 Shapoorji Pallonji & Company Limited (Ultimate Holding Company)
2 Sterling Investment Corporation Private Limited (Holding Company)
(B) Subsidiary Companies:
1 Aquamall Water Solutions Limited (Subsidiary of Eureka Forbes
Limited)
2 Aquadiagnostics Water Research & Technology Centre Limited
(Subsidiary of Aquamall Water Solutions Limited)
3 Eureka Forbes Limited
4 Euro Forbes International Pte. Limited (Subsidiary of Eureka Forbes
Limited)
5 E4 Development & Coaching Limited (Subsidiary of Eureka Forbes
Limited)
6 Forbes Aquamall Limited (Subsidiary of Aquamall Water Solutions
Limited)
7 Forbes Bumi Armada Limited (Subsidiary of Forbes Finance Limited) *
8 Forbes Campbell Services Limited (Subsidiary of Forbes Finance
Limited) *
9 Forbes Container Lines Pte. Limited
10 Forbes Doris & Naess Maritime Limited
11 Forbes Edumetry Limited (Subsidiary of Forbes Finance Limited) *
12 Forbes Facility Services Pvt. Limited (Subsidiary of Eureka Forbes
Limited)
13 Forbes Finance Limited *
14 Forbes Smart Data Limited (Subsidiary of Forbes Finance Limited) *
15 Forbes Sterling Star Limited (upto 8th January, 2009)
16 Forbes Technosys Limited (Subsidiary of Forbes Finance Limited) *
17 Forbes Tinsley Co. Limited
18 Latham India Limited
19 Volkart Fleming Shipping & Services Limited
14 High Point Properties Limited (upto 3rd March, 2009) 21 Sea-Falcon
Shipping Services Limited (Subsidiary of Latham India Limited) 22
Sea-Speed Shipping Agencies Limited (Subsidiary of Latham India
Limited) 23 Trident Shipping Agencies Limited (Subsidiary of Latham
India Limited)
(C) Fellow Subsidiaries:
1 Cyrus Investments Limited
2 Forvol International Services Limited
3 Gokak Textiles Limited
4 Shapoorji Pallonji Ports Pvt. Limited
5 SP Fabricators Pvt. Limited
6 United Motors (India) Limited
(D) Associate Companies:
1 Euro P2P Direct (Thailand) Co. Limited (Associate of Eureka Forbes
Limited)
2 Next Gen Publishing Limited
3 P T Gokak Indonesia (Associate of Forbes Finance Limited)
4 The Svadeshi Mills Company Limited
(E) Joint Ventures:
1 Edumetry Inc
2 Forbes Aquatech Limited (Joint venture of Eureka Forbes Limited)
3 Forbes Concept Hospitality Services Pvt. Limited (Joint venture of
Eureka Forbes Limited)
4 Forbes Infotainment Limited
5 Forbes Lux Group AG, BAAR (Joint venture of Eureka Forbes Limited)
6 Forbes Lux FZE (Subsidiary of Forbes Lux Group AG, BAAR)
7 Infinite Water Solutions Pvt. Limited (Joint venture of Eureka Forbes
Limited)
8 Nypro Forbes Moulds Pvt. Limited (Joint venture of Forbes Finance
Limited) *
9 Nypro Forbes Products Pvt. Limited (Joint venture of Forbes Finance
Limited) *
10 SCI Forbes Limited
11 Meadows Shipping Pvt. Limited (Joint Venture of Sea-Speed Shipping
Agencies Limited) *
(F) Key Management Personnel :
1 Managing Director, Mr. Ashok Barat.
2 Executive Director (Finance), Mr. C G Shah. (upto 30th September,
2008)
- Considering the effect of cross holding among these companies, these
companies are covered under the meaning of Subsidiary Company, under
Accounting Standard (AS) 18 Related Party Disclosures. These companies
are not covered under the definition of Subsidiary Company as contained
in Section 3 of the Companies Act, 1956.
* Pursuant to the scheme of amalgamation, approved by the High Court
Judicature at Mumbai on 11th September, 2009, Forbes Finance Limited
has amalgamated with Forbes Campbell Finance Limited (formerly known as
Latham India Limited) (appointed date of scheme being 1st Aptil, 2008).
32. (a) Segment Reporting year ended 31st March, 2010
The Company has disclosed Business Segment as the primary segment.
Segment have been identified taking into account the nature of the
products, risks and returns, organisation structure and internal
reporting system.
The Companys operations predominantly relate to manufacture of
"Engineering", "Motors", "Logistics Services", "Personal Wear" and
"Real Estate"
The company caters mainly to the needs of the Domestic and Export
Markets.
Segment Revenue, Segment Results, Segment Assets and Segment
Liabilities include the respective amounts identifiable to each of the
segments as also amounts allocated on a reasonable basis.
Segment Reporting year ended 31st March, 2009
The Company has disclosed Business Segment as the primary segment.
Segment have been identified taking into account the nature of the
products, risks and returns, organisation structure and internal
reporting system.
The Companys operations predominantly relate to manufacture of
"Engineering", "Motors", "Logistics Services", "Personal Wear" and
"Real Estate"
The company caters mainly to the needs of the Domestic and Export
Markets.
Segment Revenue, Segment Results, Segment Assets and Segment
Liabilities include the respective amounts identifiable to each of the
segments as also amounts allocated on a reasonable basis.
15. Pursuant to the amendment to Section 115JB of the Income-tax Act,
1961, by the Finance Act, 2009 with retrospective effect from
Assessment Years beginning 1st April, 2001, the Company has made an
additonal provision for taxation in respect of earlier years
aggregating Rs.191.00 Lakhs.
16. In view of mergers of Forbes Finance Limited, Trident Shipping
Agencies Limited, Sea Falcon Ship Limited and Sea Speed Shipping Agency
Limited with Forbes Campbell Finance Limited (formerly known as Latham
India Limited), the net worth of Forbes Campbell Finance Limited
(formerly known as Latham India Limited) is now positive. This has
resulted in the write back of provision for loans and advances and
diminution in value of Investment worth Rs.450.34 Lakhs.
17. Figures of previous years have been regrouped wherever necessary.