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Notes to Accounts of Sanghvi Movers Ltd.

Mar 31, 2017

1. Reporting entity

Sanghvi Movers Limited (“SML” or “the Company”) is a public company domiciled in India and was incorporated in 1989. SML is engaged in the business of providing hydraulic and crawler cranes to various industries in the infrastructure sector and has a fleet of medium-to large-size hydraulic truck mounted telescopic and lattice boom cranes and crawler cranes with lifting capacity ranging from 20 tons to 800 tons. The Company has its registered office in Pune. The equity shares of the Company are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

2. Basis of preparation

2.1 Statement of compliance

These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the ‘Act’) and other relevant provisions of the Act.

The financial statements up to and for the year ended 31 March 2016 were prepared in accordance with the Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act.

As these are the first financial statements prepared in accordance with Indian Accounting Standards (Ind AS), Ind AS 101, First-time Adoption of Indian Accounting Standards has been applied. An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in Note 28.

The financial statements were authorized for issue by the Company’s Board of Directors on 30 May 2017. Details of the Company’s significant accounting policies are included in Note 3.

2.2 Functional and presentation currency

These financial statements are presented in Indian Rupees (INR), which is also the Company’s functional currency. All amounts have been rounded-off to the nearest lakh to two decimal points, unless otherwise indicated.

2.3 Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following items:

2.4 Use of estimates

In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Assumptions and estimation uncertainties

- Note 19 - measurement of defined benefit obligations: key actuarial assumptions;

- Note 19 and 25 - the Company has received some orders and notices from tax authorities in respect of direct and indirect taxes. The outcome of these matters may have a material effect on the financial Management regularly analyzes current information about these matters and makes provisions for probable contingent losses expected to be incurred to resolve these matters. In making the decision regarding the need for loss provisions, management considers the degree of probability of an unfavourable outcome and the ability to make a sufficiently reliable estimate of the amount of loss. The filing of a suit or formal assertion of a claim against the Company or the disclosure or the disclosure of any such suit or assertions, does not automatically indicate that a provision of a loss maybe appropriate; and

- Note 10 - Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of company’s assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life.

2.5 Measurement of fair values

A number of the accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

The Company has an established control framework with respect to the measurement of fair values which is overseen by the Chief Financial Officer(CFO).

Significant valuation issues are reported to the Company’s Audit Committee.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset ora liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as a lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

2.6 Current versus non-current classification

The Company presents assets and liabilities in the balance sheet based on current/non-current classification.

Assets

An asset is classified as current when it satisfies any of the following criteria:

a) it is expected to be realised in, or is intended for sale or consumption in the Company’s normal operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is expected to be realised within 12 months after the reporting date; or

d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

Current assets include current portion of non-current financial assets. All other assets are classified as noncurrent.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

a) it is expected to be settled in the Company’s normal operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is expected to be settled within 12 months after the reporting date; or

d) the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counter party, result in its settlement by the issue of equity instruments do not affect its classification.

Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The operating cycle of the Company is less than 12 months.

3 (a) (i) Rights preferences and restrictions attached to equity shares

The Company has only one class of equity shares having par value of INR 2 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 proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation 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.

Nature and purpose of other reserves

Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve is to be utilised in accordance with the provisions of the Act.

Remeasurement of defined benefit liability (asset)

Remeasurement of defined benefit liability (asset) comprises actuarial gains and losses.

Cash flow hedging reserve

The Company uses hedging instruments as part of its management of foreign currency risk associated with foreign currency borrowings and interest rate risk associated with variable interest rate borrowings as described within note 22. For hedging foreign currency risk, the Company uses principal swap which is designated as cash flow hedges. For hedging interest rate risk, the Company uses interest rate swaps which is also designated as cash flow hedges. To the extent these hedges are effective; the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amounts recognised in the cash flow hedging reserve is reclassified to profit or loss when the hedged item affects profit or loss (e.g. interest payments).

4(a). Current borrowings

I) Term loans from banks in Indian rupees carry interest rate ranging from 9.95% to 10.90% p.a. repayable in 1 to 59 monthly and 16 to 22 quarterly installments.

ii) Loans from related parties are repayable on demand with a notice of 13 months and carry an interest ranging from 7.25%-10.30% p.a.

iii) USD term loan from bank equivalent to Rs. 2,138.96 (31 March 2016: Nil;01 April 2015: Nil) carries interest rate of one year 6 months LIBOR 0.50% which is repayable on 14 November 2018.

iv) Another USD term loan from bank equivalent to Rs. 2,596.58 (31 March 2016: Nil; 01 April 2015: Nil) carries interest rate of one year 6 months LIBOR 0.61% which is repayable on 17 September 2018.

v) EURO term loan from bank equivalent to Rs. 5,045.21 (31 March 2016:5,414.43,01 April 2015: Nil) carries interest rate of one year EURIBOR 0.68% which is repayable on 27 March 2018.

vi) Commercial paper loan carry interest rate of 7.50% p.a. and is repayable on 04 September 2017.

Secured borrowings and assets pledged as security

a) Term loans amounting to Rs. 29,517.64 (31 March 2016 : Rs.29,260.11, 01 April 2015 :Rs. 10,559.10) are secured against cranes/trailers.

b) Term loans amounting to Rs. 9,979.07 (31 March 2016 : Rs. 13,187.90, 01 April 2015 : Rs. 11,387.86) are secured against cranes/trailers and Registered mortgage on land and buildings at Tathawade.

c) Term loans amounting to Rs. 3,797.21 (31 March 2016 : Rs. 11,950.54, 01 April 2015 : Rs. Nil) are secured against cranes and Land at Vadagaon Pune.

d) Term loans amounting to Rs. 5,338.96 (31 March 2016: Rs. 3,380.01 (01 April 2015 : Rs. 4,198.30) are secured against cranes and office building at Sate, Pune.

e) Term loans amounting to Rs. Nil (31 March 2016: Nil (1 April 2015 : Rs. 4,935.75)) are secured against cranes and equitable mortgage of residential land at Sate & personal guarantees given by Chairman and Managing Director Mr. Chandrakant Sanghvi till the conversion of land into Non-agricultural land.

f) Working capital loans from banks representing cash credit facilities as at 31 March 2017 and 31 March 2016 are secured against receivables and stock of spares. As at 31 March 2015, the working capital loan was also secured against the personal guarantee given by Mr. Chandrakant Sanghvi, Chairman and the Managing Director amounting to Rs. 3,700 Lakhs and a pledge of 6 lakh equity shares of the Company held by him. The cash credit facilities are repayable on demand and carry an interest ranging between 11-13% p.a.

The carrying amounts of financial and non-financial assets pledged as security for current and non-current borrowings are disclosed in note 26.

Information about the Company’s exposure to interest rate foreign currency and liquidity risks is included in note 22.

5. Provisions

(i) Compensated absences

The compensated absences cover the Company’s liability for earned leave.

The amount of the provision of Rs. 31.50 (31 March 2016 - Rs. 24.63;1 April 2015 - Rs. 20.94) of its employees is presented as current since the same is expected to be funded within 12 months from the reporting date.

(ii) Defined contribution plans

The Company has certain defined contribution plans. Contributions are made to provident fund, superannuation fund and national pension scheme in India for employees at the prescribed rate of basic salary. These contributions are made to registered provident fund administered by the government. The Company also contributes to superannuation fund to Life Insurance Corporation of India for its employees. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan are as follows:

(iii) Defined benefit obligation

The Company has a defined benefit gratuity plan governed by the Payment of Gratuity Act, 1972. It entitles an employee who has rendered at least five years of continuous service to gratuity at the rate of fifteen days salary for every completed year of service or part thereof in excess of six months based on the rate of salary last drawn by the concerned employee.

A. Funding

The gratuity liability is funded through a Group Gratuity Scheme with Life Insurance Corporation of India. The funding requirements is determined at each Balance sheet date based on an actuarial valuation carried out by an independent actuary using the projected unit credit method.

B. Reconciliation of net defined liability

The amounts recognised in the balance sheet and the movements in the net defined benefit obligation over the year are as follows:

iv) Plan assets are as follows:

The Company has invested Rs. 227.72 (2016: Rs. 195.16; 2015: Rs. 166.96) in assets which are insurer managed funds.

*Financial assets and liabilities such as trade receivables, loans, cash and cash equivalents, bank balance other than cash and cash equivalents, security deposits, interest accrued on fixed deposits, trade payables, interest accrued but not due on borrowings, accrued employee liabilities, capital creditors are largely short-term in nature. The fair value of these financial assets and liabilities approximate their carrying amount due to the short-term nature of such assets and liabilities.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Investment in mutual funds are valued using the closing net asset value (NAV).

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. Accordingly, unquoted equity shares have been considered as Level 3 financial instrument. The carrying amount of unquoted equity shares is not considered material and hence it has not been fair valued and carrying amount for the same has been considered as the fair value.

(ii) Valuation techniques used to determine fair value

Specific valuation techniques used to value the financial instruments include:

- the use of quoted market prices or dealer quotes for similar instruments.

- the fair value of the interest rate swaps is calculated as present value of the estimated future cash flows based on observable yield curves.

- the fair value of forward exchange contracts and principal swap is determined using forward exchange rates at the Balance Sheet date.

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

(iii) Valuation processes

The finance department of the Company performs the valuation of financial assets and liabilities required for financial reporting purposes. The finance department reports directly to the chief financial officer (CFO). Discussions of valuation processes and results are held between the CFO and the finance department at least once every three months, in line with the Company’s quarterly reporting periods.

6. Financial risk management

The Company’s board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The board of directors has established the risk management committee, which is responsible for developing and monitoring the Company’s risk management policies. The committee reports to the board of directors on its activities.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate credit limits and controls and to monitor risks and adherence to credit limits. The Company, through its training and established procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company’s activities expose it to market risk, liquidity risk and credit risk. In order to minimize any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts, principal swaps are entered to hedge certain foreign currency risk exposures and interest rate swaps to hedge variable interest rate exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

This note explains the sources of risk to which the Company is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements:

(A) Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs. 16,581.50 lakhs and Rs. 15,506.72 lakhs as of 31 March 2017 and 31 March 2016, respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers located in India. Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment. The Company computes the expected credit loss allowance for trade receivables based on available external and internal credit risk factors such as the ageing of its dues, market information about the customer, industry information and the Company’s historical experience for customers.

The following table gives details in respect of percentage of revenues generated from top two customers (top three for the year ended 31 March 2016) of the company wherein revenue for each of them exceeds 10% of company’s revenue from operations:

Credit risk exposure

The allowance for lifetime expected credit loss on customer balances for the year ended 31 March 2017 was Rs. 833.45 lakhs. The impairment loss recognised for lifetime expected credit loss on customer balances for the year ended 31 March 2017 was Rs.206.86 Lakhs.

Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings assigned by domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units and fixed deposit which are funds deposited at a bank for a specified time period.

(B) Liquidity risk

The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.

As of 31 March 2017, the Company had a working capital of Rs. 3,800.50 lakhs and that as at 31 March 2016 had a working capital of Rs. 1,687.06 lakhs. The working capital of the Company for this purpose has been derived as follows:

The working capital as at 31 March 2017 calculated above includes cash and cash equivalents of Rs. 238.92 lakhs and current investments of Rs. 1,500.43 lakhs. Also, the working capital as at 31 March 2016 calculated above includes cash and cash equivalents of Rs.342.57 lakhs and current investments of Rs. Nil.

The table below provides details regarding the contractual maturities of significant financial liabilities as of 31 March 2017:

(C) Market risk

Though the Company operates only in India, the Company is exposed to foreign exchange risk through purchases from overseas suppliers in various foreign currencies. The Company holds derivative financial instruments such as foreign exchange forward and cross currency interest rate swap (CCIRS) to mitigate the risk of changes in exchange rates on foreign currency exposures. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company’s operations are affected as the rupee appreciates/ depreciates against these currencies.

The following table analyzes foreign currency risk from financial instruments as 31 March 2017 and 31 March 2016:

Sensitivity Analysis:

A change in 1% in the rates of foreign currency payables will affect the outstanding as at 31 March 2017 by Rs. 97.81 lakhs. As the rate of exchange of the foreign currency increases, the outstanding dues would increase and vice versa. However the foreign currency payables are fully hedged by forward contracts.

Derivative financial instruments

The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.

The Company has designated foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions. The related hedge transactions for balance in cash flow hedging reserve are expected to occur and reclassified to the statement of profit or loss within a period of 12 months to 21 months from 31 March 2017.

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument, including whether the hedging instrument is expected to offset changes in cash flows of hedged items.

If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted for in profit or loss at the time of the hedge relationship rebalancing.

The following table provides a reconciliation by risk category of components of equity and analysis of OCI items, net of tax, resulting from cash flow hedge accounting:

7 Related party disclosures

a) Individuals exercising significant influence over the Company

1 Chandrakant Sanghvi

b) Key management personnel

1 Chandrakant Sanghvi - Chairman and Managing Director

2 Sham Kajale - Executive Director and Chief Financial Officer

3 Rajesh Likhite - Company Secretary & Chief Compliance Officer

c) Relatives of Individuals exercising significant influence over the Company

1 Mina Sanghvi - Spouse of Chandrakant Sanghvi

2 Rishi Sanghvi - Son of Chandrakant Sanghvi

3 Niyoshi Sanghvi - Daughter of Chandrakant Sanghvi

4 Ruchi Sanghvi - Daughter of Chandrakant Sanghvi

5 AnilkumarSanghvi - Brother of Chandrakant Sanghvi

d) Enterprises over which key management personnel exercise significant influence

1 Jethi Builders and Traders Private Limited

2 Maharashtra Erectors Private Limited

3 Sanghvi Erectors Private Limited

8 Contingent liabilities and commitments

a) Claims against the Company not acknowledged as debts comprises of claims raised on Company by it’s customers amounting to Rs. 127.92 (2016 : Rs. 117.92) for breach of contracts and by certain government authorities amounting to Rs. 174.06 (2016:125.92) on account of road taxes and charges for conversion fees for land. The Company has been advised by its legal counsel that it is possible, but not probable, that action will succeed in respect of claims against the Company. These claims are being contested in the courts by the Company. The Management does not expect these claims to succeed. Accordingly, no provision for the contingent liability has been recognized in the financial statements.

b) Sales tax matters includes demand notice received from various authorities regarding transfer of right to use the goods as mentioned below:

The Company has received Notice of Demand in respect of Order of Assessment for FY 2007-08, FY2008-09, FY 2009-10 and FY 2010-11 towards VAT and CST liability regarding transfer of right to use the goods.

Based on various favourable judgements and considering the nature of its business, the management believes that rendering Crane Services on rental basis does not involve “transfer of right to use goods” so as to fall under the purview of VAT or Sales tax. As the Company never passes effective control and possession of its cranes to its customers, the question of levying VAT or CST does not arise.

c) Income tax matters comprise demand from the tax authorities for the payment of additional tax of Rs. 6.24 (2016: Rs. 34.64) upon completion of their tax reviews for the various financial years. The tax demands are mainly on account of TDS liability under the Income Tax Act. The matter is pending before the Assessing Officer of Income Tax.

d) Service tax matters comprise of demand raised by tax authorities for the payment of service tax of Rs. 237.48 (2016: Rs. 237.48) on account of services provided to SEZ developer/unit where exemption have been claimed by the Company. The matter is pending before the Customs, Excise and Service Tax Appellate Tribunal.

The Company is contesting the above demands of Sales tax, Income tax and Service tax and the management, including its tax advisors, believe that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company’s financial position and results of operations.

9 Events occurring after the reporting period

Refer to note 16(b) for the final dividend proposed by the directors which is subject to the approval of shareholders in the ensuing annual general meeting.

10 Operating leases Leases as lessor

The Company leases out its investment property on operating lease basis (see Note 11).

Amounts recognised in profit or loss

During the year ended 31 March 2017, property rentals of Rs. 27.53 lakhs (31 March 2016: Nil) pertaining to investment property have been included in other income (see note 5). Expenses recognised in profit or loss, is as follows:

11 Disclosure on Specified Bank Notes

During the year, the Company had Specified Bank Notes (SBNs) or other denomination notes as defined in the MCA notification, G.S.R. 308(E), dated March 31, 2017. The details of SBNs held and transacted during the period from November 08,2016 to December 30, 2016, the denomination-wise SBNs and other notes as per the notification are as follows:

* For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economics Affairs number S.0.3407(E), dated November 8,2016.

A Permitted receipts includeRs.20.48 lakhs representing withdrawal from banks.

12 Explanation of transition to Ind AS

As stated in Note 2, these are the Company’s first financial statements prepared in accordance with Ind AS. For the year ended 31 March 2016, the Company prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2006, notified under 133 of the Act and other relevant provisions of the Act (‘previous GAAP’).

The accounting policies set out in Note 2 have been applied in preparing these financial statements for the year ended 31 March 2017 including the comparative information for the year ended 31 March 2016 and the opening Ind AS balance sheet on the date of transition i.e. 1 April 2015.

In preparing its Ind AS balance sheet as at 1 April 2015 and in presenting the comparative information for the year ended 31 March 2016, the Company has adjusted amounts reported previously in the financial statements prepared in accordance with previous GAAP. This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows.

A. Optional exemptions availed and mandatory exceptions

In preparing these financial statements, the Company has applied below mentioned optional exemptions and mandatory exceptions.

1. Property plant and equipments

As per Ind AS 101 an entity may elect to:

(i) measure an item of property, plant and equipment at the date of transition at its fair value and use that fair value as its deemed cost at that date

(ii) use a previous GAAP revaluation of an item of property, plant and equipment at or before the date of transition as deemed cost at the date of the revaluation, provided the revaluation was, at the date of the revolution, broadly comparable to:

- fair value

- or cost or depreciated cost under Ind AS adjusted to reflect, for example, changes in a general or specific price index.

(iii) use carrying values of property, plant and equipment as on the date of transition to Ind AS (which are measured in accordance with previous GAAP and after making adjustments relating to decommissioning liabilities prescribed under Ind AS 101) if there has been no change in its functional currency on the date of transition.

As permitted by Ind AS 101, the Company has elected to continue with the carrying values under previous GAAP for all the items of property, plant and equipment.

2. Designation of previously recognised financial instruments

Ind AS permits an entity to designate particular equity instruments as at fair value through other comprehensive income (FVOCI) based on facts and circumstances at the date of transition to Ind AS (rather than initial recognition). Other equity investments are classified at fair value through profit or loss (FVTPL).

The Company has opted to avail this exemption to designate certain equity investments as FVTPL on the date of transition.

B. Mandatory exceptions

1. Estimates

As per Ind AS 101, an entity’s estimates in accordance with Ind AS at the date of transition to Ind AS at the end of the comparative period presented in the entity’s first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the previous GAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any differences in accounting policies.

As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP, those estimates should be made to reflect conditions that existed at the date of transition (for preparing opening Ind AS balance sheet) or at the end of the comparative period (for presenting comparative information as per Ind AS).

The Company’s estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statements that were not required under the previous GAAP are listed below:

- Fair valuation of financial instruments carried at FVTPL and/or FVOCI.

- Impairment of financial assets based on expected credit loss model.

- Determination of the discounted value for financial instruments carried at amortised cost.

2. Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on the facts and circumstances existing at the date of transition if retrospective application is impracticable.

Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

Notes to the reconciliation

(a) Revenue from operations

As per Ind AS 18, the revenue recognition criteria are applied to two or more transactions together when they are linked in such a way that the commercial effect cannot be understood without reference to the series of transactions as a whole.

The Company is responsible for mobilization and operation of the cranes during the service period. Therefore, these components of the contract are treated as a single transaction and mobilization charges are deferred over the service period of the contract. Accordingly, the Company has deferred revenue accounting to Rs. 664.34 lakhs as at 31 March 2016 (Rs. 592.94 lakhs).

Hence the revenue from operations recognised under Ind AS has increased by Rs. 71.40 lakhs as compared to that under the previous GAAP for the year ended 31 March 2016.

(b) Fair valuation of investments

In accordance with Ind AS, financial assets representing investment in equity shares of entities have been fair valued. The Company has designated certain investments as fair value through profit or loss (FVPL) as permitted by Ind AS 109. Under previous GAAP, the application of the relevant accounting standard resulted in all these investments being carried at cost.

(c) Actuarial gain and loss

Under Ind AS, all actuarial gains and losses are recognised in other comprehensive income. Under previous GAAP the Company recognised actuarial gains and losses in profit or loss. Accordingly, actuarial loss of Rs. 108.29 lakhs (net of tax accounting to Rs. 70.81 lakhs) recognised in the Statement of profit and loss has been recognised under other comprehensive income under Ind AS. However, this has no impact on total comprehensive income and total equity as on 1 April 2015 and as on 31 March 2016.

(d) Borrowing at amortised cost

Based on Ind AS 109, financial liabilities in the form of borrowings have been accounted at amortised cost using the effective interest rate method.

(e) Proposed dividend

Under previous GAAP, dividends proposed by the board of directors after the reporting date but before the approval of financial statements were considered to be adjusting event and accordingly recognised (along with related dividend distribution tax) as liabilities at the reporting date. Under Ind AS, dividends so proposed by the board are considered to be non-adjusting event. Accordingly, provision for proposed dividend distribution tax recognised under previous GAAP has been reversed.

(f) Income tax

The above changes (decreased)/increased the deferred tax liability as follows based on a tax rate of 34.608 percent:

(g) Retained earnings

The above changes (decreased)/increased total equity as follows:


Mar 31, 2016

1 Rights, preferences and restrictions attached to equity shares

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company''s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity share holder on a poll (not on show of hands) are in proportion to its share of the paid up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.

Failure to pay any amount called up on shares may lead to forfeiture of the shares.

On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

i) Term loans from banks in Indian rupees carry interest rate ranging from 10.50% to 11.40% p.a. Repayable in 16 to 60 monthly and 9 to 22 quarterly installments.

ii) Loans from related parties are repayable on demand with a notice of 13 months and carry an interest ranging from 7.25 % - 12.30 % p.a.

iii) Term loans from bank in foreign currency carry interest rate of one year EURIBOR 0.68% which is repayable on 27 March 2018.

Security

a) Term loans amounting to Rs. 29,488.10 Lakhs (2015 : Rs. 10,690.90 Lakhs) are secured against cranes/trailers.

b) Term loans amounting to Rs. 13,290.47 Lakhs (2015 : Rs. 11,513.69 Lakhs) are secured against cranes/trailers and Registered mortgage on land and buildings at Tathawade.

c) Term loans amounting to Rs. 12,076.03 Lakhs (2015 : Rs. NIL) are secured against cranes and Land at Vadagaon, Pune.

d) Term loans amounting to Rs. 3,422.28 Lakhs (2015 : Rs. 4,248.59 Lakhs) are secured against cranes and office building at Sate, Pune.

e) Term loans amounting to Rs. NIL (2015 : Rs. 4,997.87 Lakhs) are secured against cranes and equitable Mortgage of residential land at Sate & personal guarantees given by Chairman and Managing Director Mr. Chandrakant Sanghvi till the conversion of land into Non-agricultural land.

f) Also refer note 19.

a) Claims against the Company not acknowledged as debts comprises of claims raised on Company by its customers amounting to Rs. 117.92 Lakhs (2015 : Rs. 167.16 Lakhs) for breach of contracts and by certain government authorities amounting to Rs. 125.92 Lakhs (2015 : Rs. 75.68 Lakhs) on account of road taxes and charges for conversion fees for land. The Company has been advised by its legal counsel that it is possible, but not probable, that action will succeed in respect of claims against the Company. These claims are being contested in the courts by the Company. The Management does not expect these claims to succeed. Accordingly, no provision for the contingent liability has been recognized in the financial statements.

b) Sales tax matters includes demand notice received from various authorities regarding transfer of right to use the goods as mentioned below:

The Company has received Notice of Demand on 25th May 2015 from Assistant Commissioner of Sales Tax (PUN-INV-D-007) Pune in respect of Order of Assessment for Financial Year 2008-09 towards VAT and CST liability regarding transfer of right to use the goods .

Based on various favorable judgments and considering the nature of its business, the management believes that rendering Crane Services on rental basis does not involve "transfer of right to use goods" so as to fall under the purview of VAT or Sales tax. As the Company never passes effective control and possession of its cranes to its customers, the question of levying VAT or CST does not arise.

c) Income tax matters comprise demand from the tax authorities for the payment of additional tax of Rs. 34.64 Lakhs (2015 : Rs. 102.47 Lakhs) upon completion of their tax reviews for the various financial years. The tax demands are mainly on account of TDS liability under the Income Tax Act. The matter is pending before the Commissioner of Income Tax (Appeals).

d) Service tax matters comprise of demand raised by tax authorities for the payment of service tax of Rs. 237.48 Lakhs (2015: Rs. 261.20 Lakhs) on account of services provided to SEZ developer/unit where exemption have been claimed by the Company. The matter is pending before the Customs, Excise and Service Tax Appellate Tribunal.

The Company is contesting the above demands of Sales tax, Income tax and Service tax and the management, including its tax advisors, believe that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position and results of operations.

2. Related party disclosures

a) Individuals exercising significant influence over the company

1 Mr. Chandrakant Sanghvi

b) Key management personnel

1 Mr. Chandrakant Sanghvi - Chairman and Managing Director

2 Mr. Sham Kajale - Executive Director and Chief Financial Officer

3 Mr. Rajesh Likhite - Company Secretary

c) Relatives of Individuals exercising significant influence over the company

1 Mrs. Mina Sanghvi - Spouse of Chandrakant Sanghvi

2 Mr. Rishi Sanghvi - Son of Chandrakant Sanghvi

3 Ms. Niyoshi Sanghvi - Daughter of Chandrakant Sanghvi

4 Ms. Ruchi Sanghvi - Daughter of Chandrakant Sanghvi

5 Mr. Anilkumar Sanghvi - Brother of Chandrakant Sanghvi

d) Enterprises over which key management personnel exercise significant influence

1 Jethi Builders and Traders Private Limited

2 Sanghvi Erectors Private Limited

3 Maharashtra Erectors Private Limited

3. Deferral/capitalization of exchange differences

On 29th December 2011, the Ministry of Corporate Affairs (’MCA’) has issued an amendment to Accounting Standard 11- The Effects of changes in Foreign Exchange Rates and clarification provided vide circular 25/2012 dated 09 August 2012. The amendment permits Companies to defer/capitalize the exchange differences arising on Long Term Foreign Currency Monetary Items.

In accordance with the amendment, the Company has capitalized exchange gain arising on unhedged long term foreign currency loans, amounting to Rs. NIL (2015 : Rs. 544.18 Lakhs) to the cost of plant and equipments. There is no exchange loss deferred in ’Foreign Currency Monetary Translation Difference Account’, as there are no other long term foreign currency monetary items.

4. Foreign currency exposures outstanding at the year end

(a) The Company has hedged its foreign currency risk exposure and the forward cover outstanding as at the Balance Sheet date

5. Segment reporting

The Company is primarily engaged in the business of providing cranes on rental basis. Further all the commercial operations of the Company are based in India. Accordingly, there is no separate reportable segment in accordance with AS 17- Segment Reporting prescribed under the Companies (Accounting Standards) Rules, 2006 which continue to apply under Section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules 2014.

6. Corporate Social Responsibility

As per provisions of Section 135 of the Companies Act 2013, the Company was required to spend Rs. 39.14 Lakhs (2015 : Rs. 123.76 Lakhs) being 2% of average net profits made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy on the activities specified in Schedule VII of the Act.

7. Derivative instruments

During the current financial year, the Company has availed 3 years Buyers’ Credit Facility (‘hedged item’) of Euro 72.00 Lakhs (2015: NIL). Being a Foreign Currency Loan, it is exposed to the risk of foreign currency fluctuations & interest rate fluctuation. In order to mitigate the effect of these fluctuations, the Company has simultaneously entered into fully hedged structure (an Interest Rate Swap (IRS) and Principal Swap Structure (POS)- ‘hedging instrument’) whereby the Company fixed the principal repayment and its interest outflows in Indian Rupee terms as they fall due.

As at the year end, the Company has recorded a mark-to-market loss of Rs. 294.23 Lakhs (2015: NIL) in Hedging Reserve, being the effective portion of the change in fair value of the Hedging Instrument. Further, to match the gains and losses of the hedged item and the hedging instrument in the Statement of Profit and Loss, Rs. 287.28 Lakhs (2015: Nil) has been recycled from the Hedging Reserve to the Statement of Profit and Loss.


Mar 31, 2014

Particulars For the year ended 31st March 2014 31st March 2013 1. Contingent liabilities and commitments Contingent liabilities

(a) Claims against the Company not acknowledged as debts 82.17 104.30

(b) Bills receivable discounted — 279.22

(c) Sales tax matters (refer note ''i'' below) 707.06 125.00

(d) Income tax matters* 258.94 535.90

(e) Service tax matters* 261.20 — excluding consequent penalties, if any

Commitments

Estimated amount of contracts 29.40 86.11 remaining to be executed on capital and not provided for (net of advances)

1,338.77 1,130.53

i) Includes demand notice of Rs. 363.94 lakh (2013: Rs. Nil) towards VAT and Rs. 218.37 lakh (2013: Rs. Nil) for interest aggregating to Rs. 582.31 lakh (2013: Rs. Nil) received from Deputy Commissioner of Sales Tax under Maharashtra Value Added Tax Act, 2002 for the year 2009-10 and Rs. 124.75 (2013: Rs. 124.75) from Joint Commissioner of Sales Tax under Gujarat Value Added Tax Act, 2003 for the year 2008-09 regarding transfer of right to use the goods. The Company is in process of contesting the demand in appeal under Maharashtra Value Added Tax Act, 2002 and has contested the demand in appeal under the Gujarat Value Added Tax Act, 2003.

2. Related party disclosures

a) Individuals exercising significant influence over the company

1 Mr. Chandrakant Sanghvi

b) Key management personnel

1 Mr. Chandrakant Sanghvi

2 Mr. Ramchandra Desai (upto 1 November 2012)

3 Mr. Sham D. Kajale

c) Relatives of Individuals exercising significant influence over the company

1 Mrs. Mina C. Sanghvi - Spouse of Mr. Chandrakant Sanghvi

2 Mr. Rishi Sanghvi - Son of Mr. Chandrakant Sanghvi

3 Ms. Niyoshi Sanghvi - Daughter of Mr. Chandrakant Sanghvi

4 Ms. Ruchi Sanghvi - Daughter of Mr. Chandrakant Sanghvi

5 Mr. Anilkumar Sanghvi - Brother of Mr. Chandrakant Sanghvi

d) Relatives of key management personnel

1 Mrs. Tanuja Desai - Spouse of Ramchandra Desai (upto 1 November 2012)

e) Enterprises over which key management personnel exercise significant influence

1 Jethi Builders and Traders Private Limited

2 Sanghvi Erectors Private Limited

3 Maharashtra Erectors Private Limited

* As gratuity and compensated absences are computed for all the employees in aggregate, the amounts relating to the Key Managerial Personnel cannot be individually identified. However, contribution toward superannuation fund is included as part of managerial remuneration.

** Mr. Chandrakant P. Sanghvi has given personal guarantee up to Rs. 3,500 Lakhs (2013 : Rs. 3,500 Lakhs) and has pledged his 6 lakh (2013 : 6 Lakhs) equity shares towards the loan for which no guarantee commission is paid by the Company.

$ Includes Rs. 79.83 Lakhs (Previous Year Rs. Nil) of managerial remuneration which is subject to the approval of shareholders and Central Government.

# Includes Rs. 15.72 Lakhs (Previous Year Rs. Nil) managerial remuneration subject to the approval of shareholders.

31. Disclosure as per Accounting Standard 15 ( Revised) : Employee Benefits

The following table sets out the status of the Gratuity plan as required under Accounting Standard 15 (Revised)

Note:The estimates of future salary increases take into account inflation, seniority, promotion and other relevant factors on long term basis.

3. Deferral/capitalisation of exchange differences

On 29 December 2011, the Ministry of Corporate Affairs (''MCA'') has issued an amendment to Accounting Standard 11- The Effects of changes in Foreign Exchange Rates and clarification provided vide circular 25/2012 dated 09 August 2012. The amendment permits Companies to defer/capitalise the exchange differences arising on Long Term Foreign Currency Monetary Items.

In accordance with the amendment, the Company has capitalised exchange differences arising on long term foreign currency loans, amounting to Rs. 3,229.02 (2013: Rs. 684.32) to the cost of plant and equipments. There is no exchange loss deferred in ''Foreign Currency Monetary Translation Difference Account'', as there are no other long term foreign currency monetary items.

4. Foreign currency exposures outstanding at the year end

(a) The Company has hedged its foreign currency risk exposure and the forward cover outstanding as at the Balance Sheet date:

5. Segment reporting

The Company is primarily engaged in the business of providing cranes on rental basis. Further all the commercial operations of the Company are based in India. Accordingly, there is no separate reportable segment in accordance with AS 17- Segment Reporting prescribed under the Companies (Accounting Standards) Rules, 2006.


Mar 31, 2013

1. Background

Sanghvi Movers Limited ("SML" or "the Company") was incorporated in 1989. SML is engaged in the business of providing hydraulic and crawler cranes to various industries in the infrastructure sector and has a fleet of 387 medium-to large-size hydraulic trucks mounted telescopic and lattice boom cranes and crawler cranes with lifting capacity ranging from 20 tons to 800 tons. The Company has its corporate office at Pune. The equity shares of the Company are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

2. Related party disclosures

a) Enterprises exercising significant influence over the company

1 Maharashtra Erectors Private Limited (upto 09 September 2011)

b) Individuals exercising significant influence over the company

1 Mr. Chandrakant Sanghvi

c) Key management personnel

1 Mr. Chandrakant Sanghvi

2 Mr. Ramchandra Desai (upto 1 November 2012)

3 Mr. Sham Kajale

d) Relatives of individuals exercising significant influence over the company

1 Mrs. Mina Sanghvi - Spouse of Mr. Chandrakant Sanghvi

2 Mr. Rishi Sanghvi - Son of Mr. Chandrakant Sanghvi

3 Ms. Niyoshi Sanghvi - Daughter of Mr. Chandrakant Sanghvi

4 Ms. Ruchi Sanghvi - Daughter of Mr. Chandrakant Sanghvi

5 Mr. Anilkumar Sanghvi - Brother of Mr. Chandrakant Sanghvi

e) Relatives of key management personnel exercising significant influence over the Company

1 Mrs. Tanuja Desai - Spouse of Ramchandra Desai (upto 1 November 2012)

f) Enterprises over which key management personnel exercise significant influence

1 Jethi Builders and Traders Private Limited

2 Sanghvi Erectors Private Limited

3 Maharashtra Erectors Private Limited

3. Deferral/capitalisation of exchange differences

On 29 December 2011, the Ministry of Corporate Affairs (''MCA'') has issued an amendment to Accounting Standard 11- The Effects of changes in Foreign Exchange Rates and clarification provided vide circular 25/2012 dated 09 August 2012. The amendment permits Companies to defer/capitalise the exchange differences arising on Long Term Foreign Currency Monetary Items.

In accordance with the amendment, the Company has capitalised exchange differences arising on long term foreign currency loans, amounting to Rs.684.32 (2012: Rs.1,230.01) to the cost of plant and equipments. There is no exchange loss deferred in ''Foreign Currency Monetary Translation Difference Account'', as there are no other long term foreign currency monetary items.

4. Foreign currency exposures outstanding at the year end

(a) The Company has hedged its foreign currency risk exposure and the forward cover outstanding as at the Balance Sheet date:

(b) The following foreign currency receivables/payables balances are not covered by derivative instruments at the Balance Sheet date:

5. Segment reporting

The company is primarily engaged in the business of providing cranes on rental basis. Further all the commercial operations of the company are based in India. Accordingly, there is no separate reportable segment in accordance with AS 17- Segment Reporting prescribed under the Companies (Accounting Standards) Rules, 2006.

6. During the previous year, the company had corrected its accounting practice of recognising certain borrowing costs as cost of fixed assets resulting in the interest expense being higher by Rs. Nil (2012 : Rs.678.66) and consequently depreciation charge being lower by Rs. Nil (2012 : Rs.199.29) for the year with consequent profit before tax being lower by Rs. Nil (2012 : Rs.479.37) on account of the prior period item.

7. Prior period comparatives

Previous years'' comparative figures have been regrouped/reclassified wherever necessary to conform to current year''s presentation.


Mar 31, 2012

1. Background

Sanghvi Movers Limited ("SML" or "the Company") was incorporated in 1989. SML is engaged in the business of providing hydraulic and crawler cranes to various industries in the infrastructure sector and has a fleet of 400 medium to large size hydraulic trucks mounted telescopic and lattice boom cranes and crawler cranes with lifting capacity ranging from 20 tons to 800 tons. The Company has its corporate office at Pune. The equity shares of the Company are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

2.1 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. 2. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board of Directors, in their meeting held on 30th May 2012 proposed a final dividend of Rs. 3 per equity share. The proposal is subject to the approval of shareholders at the ensuing Annual General Meeting . In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their share holding.

a) Term loans from banks in Indian Rupees carry interest rate ranging from 10% to 13.5% p.a. The number of monthly installments payable for these loans are 54 to 96.

b) Foreign Currency term loans from banks carry usance interest or interest rate ranging from 6 months to 1 year LIBOR or EURIBOR plus additional basis points ranging from 120 to 350. These loans are repayable in 360 to 720 days from the date when these loans were availed.

Security

a) Term loans amounting to Rs. 59,527.93 (2011 : Rs. 52,444.73) are secured against cranes/trailers.

b) Term loans amounting to Rs. 3,508.22 (2011 : Rs. 2,229.26) are secured against cranes/trailers and equitable mortgage on land and buildings at Tathawade and Bharuch.

c) Term loans amounting to Rs. 424.77 (2011 : Rs. 731.82) are secured against mortgage on land and buildings at Tathawade and Bharuch.

d) Term loans amounting to Rs. 2,219.51 (2011 : Rs. 4,120.01) are secured against cranes/trailers and personal guarantees given by Chairman and Managing Director, Mr. Chandrakant Sanghvi.

e) Term loans amounting to Rs. 72.24 (2011 : Rs. 56.03) are secured against vehicles purchased out of the term loan.

f) Also refer note 16.

a) Working Capital loans from banks representing cash credit facilities are secured against receivables, personal guarantee of Mr. Chandrakant Sanghvi, Chairman and the Managing Director up to Rs. 3,700, pledge of 5 lacs equity shares of the Company held by Mr. Chandrakant Sanghvi, Chairman and the Managing Director and 1 lac equity shares held by Mrs. Mina Sanghvi. The cash credit facilities are repayable on demand and carry an interest ranging between 12-14% p.a.

b) Loans and Advances from a related party are repayable on demand and carry an interest rate ranging from 12-14 % p.a.

The Company was levied additional custom duty amounting to Rs. 140.59 in the year 1998 on import of certain cranes. The Company had capitalised this amount in the year of procurement of these cranes and had also filed an appeal against the levy of this additional customs duty. Those cranes were subsequently sold in earlier years. In the current year the appeal was decided in favour of the Company and it received a refund.

3. Related Party Disclosures

a) Enterprises Exercising Significant Influence over the Company

1 Maharashtra Erectors Private Limited (upto 09 September 2011)

b) Individuals Exercising Significant Influence over the Company

1 Chandrakant Sanghvi

c) Key Management Personnel

1 Chandrakant Sanghvi

2 Ramchandra Desai

3 Sham Kajale

d) Relatives of Individuals Exercising Significant Influence over the Company

1 Mina Sanghvi - Spouse of Chandrakant Sanghvi

2 Rishi Sanghvi - Son of Chandrakant Sanghvi

3 Niyoshi Sanghvi - Daughter of Chandrakant Sanghvi

4 Ruchi Sanghvi - Daughter of Chandrakant Sanghvi

5 Anilkumar Sanghvi - Brother of Chandrakant Sanghvi

e) Relatives of Key Management Personnel Exercising Significant Influence over the Company

1 Tanuja Desai - Spouse of Ramchandra Desai

f) Enterprises over which Key Management Personnel Exercise Significant Influence

1 Jethi Builders and Traders Private Limited

2 Sanghvi Erectors Private Limited

3 Maharashtra Erectors Private Limited

* As gratuity and compensated absences are computed for all the employees in aggregate, the amounts relating to the Key Managerial Personnel cannot be individually identified.

** Chandrakant Sanghvi has given personal guarantee up to Rs. 59.45 crores and has pledged his 5 lacs equity shares towards the loan for which no guarantee commission is paid by the Company.

** Mina Sanghvi has pledged her 1 lac equity shares towards a loan for which no guarantee commission is paid by the Company.

4. Deferral/Capitalisation of Exchange Differences

On 29 December 2011, the Ministry of Corporate Affairs ('MCA') has issued an amendment to Accounting Standard 11- The Effects of changes in Foreign Exchange Rates. The amendment permits Companies to defer/capitalise the exchange differences arising on Long Term Foreign Currency Monetary Items.

In accordance with the amendment, the Company has capitalised exchange differences arising on long term foreign currency loans, amounting to Rs. 1,230.01 (2011: 83.44) to the cost of plant and equipments. There is no exchange loss deferred in 'Foreign Currency Monetary Translation Difference Account', as there are no other long term foreign currency monetary items.

5. Segment Reporting

The Company is primaraly engaged in the business of providing cranes on rental basis. Further all the commercial operations of the Company are based in India. Accordingly, there is no separate reportable segment in accordance with AS 17- Segment Reporting prescribed under the Companies (Accounting Standards) Rules, 2006.

6. During the year, the Company corrected its accounting practice of recognising certain borrowing costs as cost of fixed assets resulting in the interest expense being higher by Rs. 678.66 (2011 : Nil) and consequently depreciation charge being lower by Rs. 199.29 (2011 : Nil) for the year with consequent profit before tax being lower by Rs. 479.37 (2011 : Nil) on account of the prior period item.

7. Prior Period Comparatives

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

8. The prior year financial statements have been audited by a firm of Chartered Accountants other than B S R & Co.


Mar 31, 2011

1 Contingent Liabilities

a) Claims against the Company not acknowledged as debts – Rs.79.60 Lakhs (previous year Rs.75.60 Lakhs).

b) Guarantees issued by Company's bankers on behalf of the Company for performance of contractual obligations, or as security deposits, or as a condition of tender bids made by the Company, aggregate to Rs.324 Lakhs (previous year Rs.197 Lakhs). Some of them are covered by margins in the form of fixed deposits Rs.22 Lakhs (previous year Rs.2.52 Lakhs) and others by way of counter-guarantee and extension of charge on cranes which are hypothecated to the bank on existing term loans.

c) Bills Receivable which are discounted with bankers - Rs.2,801.33 Lakhs (previous year Rs.572.23 Lakhs).

d) Letters of Credit issued by Banks in foreign currencies for which goods were yet to be received on date of Balance Sheet US $ 24,41,750; Euro 43,04,996; Yen 90,08,569.

e) Income Tax Assessment demands contested in appeal – Rs.296.85 lakhs (previous year Rs.296.85 lakhs). The contested demand arises due to issues which do not warrant a provision to be made.

f) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.Nil (previous year Rs.Nil Lakhs).

2 Secured Loans - Nature of Security

a) Term Loans from State Bank of India are secured by Hypothecation of Cranes and additions thereto which are funded there from and also collaterally secured by Hypothecation of certain Cranes funded by the Bank in respect of its previous Term Loans.

b) Term Loans from ING Vysya Bank are secured by Hypothecation of Cranes, Prime Movers & Trailers which are funded there from besides being collaterally secured by Hypothecation of certain Cranes funded by the Bank in respect of its previous Term Loans.

c) Term Loans from ICICI Bank Ltd and Letters of Credit accepted by the bank are secured by Hypothecation of Cranes which are funded there from besides being collaterally secured by Hypothecation of certain Cranes funded by the Bank in respect of its previous Term Loans.

d) Term Loans from The Saraswat Co-operative Bank Ltd are secured by Hypothecation of the respective Cranes and Vehicles, in aggregate, as well by Equitable Mortgage of certain Lands and Immovable properties and by Hypothecation of certain Cranes funded by the Bank in respect of its previous Term Loans.

e) Term Loans from Axis Bank and Letters of Credit accepted by the bank are secured by Hypothecation of the Cranes funded there from besides being collaterally secured by Hypothecation of certain Cranes funded by the Bank in respect of its previous Term Loans. One of the Term loan is personally guaranteed by the Managing Director.

f) Term Loans from HDFC Bank are secured by Hypothecation of the Cranes funded there from.

g) Term Loans from Corporation Bank are secured by Hypothecation of the Cranes funded there from besides being collaterally secured by Hypothecation of certain Cranes funded by the Bank in respect of its previous Term Loans with some loans being personally guaranteed by the Managing Director.

h) Term Loans from State Bank of Hyderabad are secured by Hypothecation of the Cranes funded there from with besides being collaterally secured by Hypothecation of certain Cranes funded by the Bank in respect of its previous Term Loans. Some loans being personally guaranteed by the Managing Director.

i) Term Loans from Bank of Baroda and Letters of Credit accepted by the bank are secured by Hypothecation of the Cranes and additions thereto funded there from besides being collaterally secured by Hypothecation of certain Cranes funded by the Bank in respect of its previous Term Loans. One of the Term Loan is personally guaranteed by the Managing Director.

j) Term Loans from Bank of India are secured by Hypothecation of the Cranes or additions thereto funded there from.

k) Cash Credit facilities availed from Dena Bank are secured against the Company's receivables. These are personally guaranteed by the Managing Director up to Rs.37 Crores.

l) Principal amount of secured Term Loans due for repayment within next 12 months - Rs.162.44 Crores (previous year Rs.148.52 Crores).

3 The Company has opted to follow the amended accounting standard rules with respect to change in foreign exchange rates by capitalising the gain or loss on foreign currency loans used for acquiring fixed assets to their cost. Accordingly, the cost of fixed assets has been adjusted accordingly.

4 Confirmations from Debtors of balances due to the Company are generally not received. In the management's view in the ordinary course of its business, the Company shall be able to realise the Debtors at the amounts they are stated.

5 Loans and Advances include Rs.13.88 Lakhs (previous year Rs.14.13 Lakhs) due from Officers of the Company. Aggregate of Maximum amounts due during the year was Rs.22.45 Lakhs (previous year Rs.19.42 Lakhs).

6 Managerial Remuneration :

a) To Mr. C. P. Sanghvi, Chairman and Managing Director comprises of Salary & Allowances Rs.144 Lakhs, Commission Rs.119 Lakhs, Payments towards (i) residential Electricity and Club fees & charges Rs.3.05 Lakhs, (ii) Medical Expenses Rs.0.14 lakh (iii) Contribution to Superannuation Fund Rs.37.26 Lakhs. Perquisite value of Car provided as per Income Tax Rules Rs.0.40 lakh.

b) To Mr. R. S. Desai, Executive Director, comprises of Salary & Allowances Rs.25.56 Lakhs, Payments towards (i) Medical Expenses Rs.0.15 lakh (ii) Contribution to Superannuation Fund 2.74 Lakhs. Perquisite value of Car provided as per Income Tax Rules Rs.0.26 lakhs.

c) To Mr. S. D. Kajale, Executive Director & CFO, comprises of Salary & Allowances Rs.23.04 Lakhs, Payments towards (i) Medical Expenses Rs.0.17 lakh and Contribution to Superannuation Fund Rs.2.47 Lakhs. Perquisite value of Car provided as per Income Tax Rules is Rs.0.26 lakhs.

7 Related Party Disclosures as per Accounting Standard 18 -

a) Key Management Personnel of the Company:

(i) Mr. C. P. Sanghvi, Managing Director,

(ii) Mr. R. S. Desai, Executive Director, and

(iii) Mr. S. D. Kajale Executive Director & CFO

b) Enterprises under control of Key Management Personnel :

(i) Maharashtra Erectors Private Limited (MEPL)

(ii) Sanghvi Hi-Lift Private Limited (SHPL)

(iii) Jethi Builders & Traders Private Limited (JBTPL)

c) Transactions with related parties :

(i) Remuneration to Key Management Personnel is stated at (7) above.

(ii) For services and facilities availed from MEPL Crane Hire Charges Rs.72.75 Lakhs and Trailer Hire Charges Rs.27 Lakhs

(iii) Advance from MEPL – at the beginning of the year – Nil, received Rs.740 lakhs and refunded Rs.100 lakhs.

(iv) Interest Paid to MEPL – Rs.43.40 lakhs.

(v) Sitting Fees Paid to Mrs Mina C. Sanghvi – Rs.1.00 lakhs

d) Mr C. P. Sanghvi has guaranteed some of the secured loans borrowed by the Company for which no guarantee commission is paid to him.

8 Employee Benefit Plans :

Defined Contribution Plans -

The Company makes Provident Fund, Pension Fund and Superannuation Fund contributions to defined contribution retirement benefit plans for qualifying employees. The Company charged Rs.18.41 Lakhs (previous year Rs.14.72 Lakhs) to the Profit & Loss Account towards Provident Fund and Pension Fund contributions and Rs.50.77 Lakhs (previous year Rs.49.32 Lakhs) towards Superannuation Fund contributions.

Defined Benefit Plans –

The Company makes annual contributions to the Employees' Group Gratuity cum Life Assurance Scheme of Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary for each completed year of service. Vesting occurs upon completion of five years of service, except in case of death of permanent disability.

9 Foreign Currency Transactions :

a) Imports on CIF basis during the year in respect of :

Components and Spare Parts - Rs.685.67 Lakhs (previous year Rs.483.60 Lakhs) Capital Goods – Rs.26,381.24 Lakhs (previous year Rs.12,775.53 Lakhs)

b) Expenditure incurred in foreign currency during the year – Rs.27.32 Lakhs (previous year Rs.15.34 Lakhs)

c) Remittance of Dividends – Rs.132 Lakhs (previous year – Rs.88 lakhs)

10 As per Accounting Standard 17, the Company's Windmills are not a reportable segment and Operations from Cranes is the only reportable segment.

11 Installed Capacity – Wind Power Generation – 5.05 MW and Generation of Electricity – 55.29 Lakhs Kwh (previous year 78.32 Lakhs Kwh)

12 Previous year's figures have been regrouped wherever necessary.


Mar 31, 2010

1 Contingent Liabilities

a) Claims against the Company not acknowledged as debts - Rs. 75.60 Lakhs (previous year Rs. 42.14 Lakhs).

b) Guarantees issued by Companys bankers on behalf of the Company for performance of contractual obligations, or as security deposits, or as a condition of tender bids made by the Company, aggregate to Rs. 197 Lakhs (previous year Rs. 483 Lakhs). Some of them are covered by margins in the form of fixed deposits Rs. 2.52 Lakhs (previous year Rs. 26.46 Lakhs) and others by of counter-guarantee and extension of charge on cranes which are hypothecated to the bank on existing term loans.

c) Bills Receivable which are discounted with bankers are Rs. 572.23 Lakhs (previous year Rs. 994.40 Lakhs).

d) Income Tax Assessment Order for financial year 2006-07 was received in December, 2009 raising a rectified demand of Rs. 303.68 Lakhs. Of the same Rs. 6.83 Lakhs has been accepted and paid. Balance demand of Rs. 296.85 Lakhs though contested in an appeal is being partly adjusted against various refunds receivable and was partly paid. The contested demand arises due to issues which do not warrant a provision to be made.

e) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. Nil (previous year Rs. 3,483 Lakhs).

2 Secured Loans :- Nature of Security

a) Term Loans from State Bank of India are secured by Hypothecation of Cranes and additions thereto which are funded there from and also collaterally secured by way of Mortgage of certain Windmills and by Hypothecation of certain Cranes. Some of the loans are also personally guaranteed by the Managing Director.

b) Term Loans from ING Vysya Bank are secured by Hypothecation of Cranes which are funded there from besides being collaterally secured by Hypothecation of certain Cranes. Some of the loans are also personally guaranteed by the Managing Director.

c) Term Loans from ICICI Bank Ltd are secured by Hypothecation of Cranes and Tractor Trailers which are funded there from besides being collaterally secured by Hypothecation of certain Cranes. Some of the loans are also personally guaranteed by the Managing Director.

d) Term Loans from The Saraswat Co-operative Bank Ltd are secured by Hypothecation of the respective Cranes and vehicle, in aggregate, as well by Equitable Mortgage of certain Lands and Immovable properties and by Hypothecation of certain Cranes. Some of the loans are also personally guaranteed by the Managing Director.

e) Term Loans from Axis Bank are secured by Hypothecation of the Cranes funded there from with some loans being personally guaranteed by the Managing Director.

f) Term Loans from HDFC Bank are secured by Hypothecation of the Cranes funded there from.

g) Term Loans from Corporation Bank are secured by Hypothecation of the Cranes funded there from with some loans being personally guaranteed by the Managing Director.

h) Term Loans from State Bank of Hyderabad are secured by Hypothecation of the Cranes funded there from with some loans being personally guaranteed by the Managing Director.

i) Term Loans from Bank of Baroda are secured by Hypothecation of the Cranes or additions thereto funded there from with some loans being personally guaranteed by the Managing Director.

j) Term Loans from Bank of India are secured by Hypothecation of the Cranes or additions thereto funded there from.

k) Cash Credit facilities availed from Dena Bank are secured against the Companys receivables. These are personally guaranteed by the Managing Director upto Rs. 35 Crores.

l) Principal amount of secured Term Loans due for repayment within next 12 months - Rs. 14,852 Lakhs.

3 Stores and spare parts for repairs and maintenance of cranes and trailers were being expensed out on purchase as consumables. Management considered it expedient to take an inventory of spare parts at the year end and has valued it at cost resulting in an increase in Profit before Tax by Rs. 2,88,80,340.

4 The Company has opted to follow the amended accounting standard rules with respect to change in foreign exchange rates by capitalising the gain or loss on foreign currency loans used for acquiring fixed assets to their cost. Accordingly, cost of fixed assets has been reduced by gain of Rs. 149.10 Lakhs.

5 Confirmations from Debtors of balances due to the Company are generally not received. In the managements view in the ordinary course of its business, the Company shall be able to realise the Debtors at the amounts they are stated.

6 Loans and Advances include Rs. 14.13 Lakhs (previous year Rs. 8.33 Lakhs) due from Officers of the Company. Aggregate of Maximum amounts due during the year was Rs. 19.42 Lakhs (previous year Rs. 15.08 Lakhs).

7 Managerial Remuneration :

a) To Shri C. P. Sanghvi, Chairman and Managing Director comprises of Salary and Allowances Rs. 144 Lakhs, Commission Rs. 133 Lakhs, Payment of residential Electricity and Club fees & charges Rs. 1.94 Lakhs, Reimbursement of Medical Expenses 0.67 Lakhs, Contribution to Superannuation Fund Rs. 37.26 Lakhs. The perquisite value of one Car provided as per Income Tax Rules is Rs. 0.40 Lakhs.

b) To Shri R. S. Desai, Executive Director, comprises of Salary & Allowances Rs. 21.92 Lakhs, Performance Linked Incentive Rs. 6 Lakhs, Reimbursement of Medical Expenses Rs. 0.15 Lakhs and Contribution to Superannuation Fund Rs. 2.28 Lakhs. The perquisite value of one Car provided as per Income Tax Rules is Rs. 0.22 Lakhs.

c) To Shri S. D. Kajale, Executive Director & CFO, comprises of Salary & Allowances Rs. 19.73 Lakhs, Performance Linked Incentive Rs. 5.60 Lakhs, Reimbursement of Medical Expenses Rs. 0.15 Lakhs and Contribution to Superannuation Fund Rs. 2.05 Lakhs. The perquisite value of one Car provided as per Income Tax Rules is Rs. 0.22 Lakhs.

8 Related Party Disclosures as per Accounting Standard 18 :

a) Key Management Personnel of the Company : (i) Mr. C. P. Sanghvi, Managing Director,

(ii) Mr. R. S. Desai, Executive Director, and (iii) Mr. S. D. Kajale Executive Director & C.F.O.

b) Enterprises under control of Key Management Personnel : (i) Maharashtra Erectors Private Limited (MEPL)

(ii) Sanghvi Hi-Lift Private Limited (SHPL)

(iii) Jethi Builders & Traders Private Limited (JBTPL)

c) Transactions with related parties :

i) Remuneration to Key Management Personnel is stated at (8) above.

ii) For services and facilities availed from MEPL, Crane Hire Charges Rs. 111.05 Lakhs and Trailer Hire Charges Rs. 21 Lakhs.

iii) Advance to MEPL - at the beginning of the year Rs. 70 Lakhs, received back Rs. 70 Lakhs, at the end of the year Rs. Nil.

iv) Interest Received from MEPL – Rs. 2.82 Lakhs.

v) Advance from MEPL - at the beginning of the year - Nil, received Rs. 435 Lakhs and refunded Rs. 435 Lakhs.

vi) Interest Paid to MEPL – Rs. 12.44 Lakhs.

vii) S a l ary to Niyoshi C. Sanghvi – Rs. 3.17 Lakhs.

viii) Sitting Fees Paid to Mrs. Mina C. Sanghvi – Rs. 0.70 Lakhs.

d) Mr. C. P. Sanghvi has guaranteed secured loans borrowed by the Company for which no guarantee commission is paid to him.

9 Employee Benefit Plans :

Defined Contribution Plans -

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution retirement benefit plans for qualifying employees. The Company charged Rs. 14.72 Lakhs (previous year Rs. 14.75 Lakhs) to the Profit & Loss Account towards Provident Fund contribution and Rs. 49.32 Lakhs (previous year.40.48Lakhs) towards Superannuation Fund contributions.

Defined Benefit Plans -

The Company makes annual contributions to the Employees Group Gratuity cum Life Assurance Scheme of Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary for each completed year of service. Vesting occurs upon completion of five years of service, except in case of death or permanent disability.

10 Foreign Currency Transactions :

a) Imports on CIF basis during the year in respect of :

Components and Spare Parts - Rs. 483.60 Lakhs (previous year Rs. 489.75 Lakhs)

Capital Goods - Rs. 12,775.53 Lakhs (previous year Rs. 19,622.45 Lakhs)

b) Expenditure incurred in foreign currency during the year - Rs. 15.34 Lakhs (previous year Rs. 20.65 Lakhs)

c) Remittance of Dividends - Rs. 88 Lakhs (previous year Rs. 132 Lakhs)

11 As per Accounting Standard 17, the Companys Windmills are not a reportable segment and Operations from Cranes is the only reportable segment.

12 Installed Capacity - Wind Power Generation - 5.05 MW and Generation of Electricity - 78.32 Lakhs Kwh (previous year 78.01 Lakhs Kwh)

13 Previous years figures have been regrouped wherever necessary.

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