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Notes to Accounts of Forbes & Company Ltd.

Mar 31, 2018

1. GENERAL INFORMATION

Forbes & Company Limited (“the Company”) 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 Hon’ble 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 Company’s 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 Company’s 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 ‘Rules’) 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 entity’s 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 asset’s 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 ‘ Nil) of the asset has been shown as “Asset classified as held for sale” on the face of Balance Sheet . The fair value of the said asset is Rs.130 Lakhs.

4.2 Fair value measurement of the Company’s investment properties

The fair value of the Company’s 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 Company’s 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 (‘SPFSL’), 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 (‘SPOGPL’) at a price of Rs.1,250.00 Lakhs. The Company had executed “Share Transfer Agreement” 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 (‘FCLPL’), 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 (‘SPFSL’) by virtue of joint venture agreement. However, SPFSL is consolidated as a subsidiary due to the Company’s 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 Employees’ Pension Scheme, Leave Encashment, Post Retirement Medical and Non Compete fees. The Company’s defined contribution plans are Superannuation, Employees State Insurance Fund and Employees’ Pension Scheme (under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans. The Company’s 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 Company’s 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 employees’ 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 plan’s 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 plan’s 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 plan’s 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 ‘Forbes & Company Ltd. Employees Provident Fund’ in respect of all the employees to which both the employee and employer make contribution equal to 12% of the employees’ basic salary respectively. The Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 “Rent and amineties” 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 “Shipping & Logistics” segment in accordance with the Ind AS 105 on “Discontinuing Operations”.

9. Segment reporting

The Chief Operating Decision maker of the Company examines Company’s 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 “Shipping and logistics services” 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 “Project Vicinia” 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 Company’s 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 (“SPFSL”), 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 (“SPOGPL”) at a price of Rs. 1,250.00 Lakhs. The Company has executed “Share Transfer Agreement” 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 (“FCLPL”), 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 Company’s defined contribution plans are Provident Fund (in case of certain employees), Superannuation, Employees State Insurance Fund and Employees’ Pension Scheme (under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans. The Company’s 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 Company’s 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 employees’ 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 employees’ 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 Company’s 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 plan’s 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 plan’s 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 plan’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 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 of the 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 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 ‘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.

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.

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