Notes to Accounts of Snowman Logistics Ltd.

Mar 31, 2018

1. Corporate Information

Snowman Logistics limited (the "Company") is a public company domiciled in India and is incorporated in India in 1993, under the provisions of Companies Act applicable in India, is engaged in the business of in providing integrated cold chain solution to users in India. Its shares are listed on two recognised stock exchanges in India. The registered office of the Company is located at Plot No. M8, Taloja Industrial Area, MIDC, Raigad, Navi Mumbai, Maharashtra - 410206.

The Company''s infrastructure comprises of compartmentalized temperature - controlled warehouses in all major cities of the country and a fleet of temperature controlled trucks. The company is focused on its core business of temperature controlled warehousing for frozen and chilled products with transportation division acting as an enabler.

Information on related party relationship of the Company is provided in note 28.

The financial statements were authorised for issue in accordance with a resolution of the directors on 15 May 2018.

Notes:

i. Title deed of Freehold Land situated at Kolkata with carrying value of INR 2.22 lakhs (31 March 2017: INR 2.22 lakhs) is yet to be transferred in the name of the Company.

ii. Represents payments made for acquiring land on lease at various locations for perpetual lease as per the lease deeds.

iii. Includes self constructed building with net book value of INR 18,795.08 lakhs (31 March 2017: INR 19,915.88 lakhs) on leasehold land.

iv. Contractual obligations: Refer to note 27 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

v. Capital work-in-progress (CWIP) includes civil works mainly related to warehouse under constuction.

vi. Assets pledged as Security for borrowings: Refer note 41 for information on property, plant and equipment, pledged as security by the Company.

vii. Capitalised costs Borrowing cost:

Buildings include INR 88.92 lakhs (31 March 2017: INR 359.30 lakhs) towards borrowing costs capitalised during the year. The rate used to determine the amount of borrowing costs eligible for capitalisation was 8.40% (31 March 2017: 8.40%), which is the effective interest rate of the specific borrowing.

Others:

The company incurred expenditure of salary, travelling costs and other miscellaneous expenses during the course of construction of warehouse which have been capitalised. Below is the breakup :

1. Fixed deposits of INR 80.27 lakhs (31 March 2017: INR 31.72 lakhs) held as lien by bank against bank guarantee.

2. Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates.

3. At 31 March 2018, the Company has available INR 150 lakhs (31 March 2017: INR 3,300 lakhs) of undrawn borrowing facilities.

4. For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:

1. Fixed deposits of INR 1.10 lakhs (31 March 2017: INR 16.80 lakhs) held as lien by bank against bank guarantee.

2. Security deposits are non interest bearing and are expected to be settled as per terms of respective agreements. The carrying value may be affected by changes in the credit risk of the counterparties.

Significant estimate

Company has recognized deferred tax asset on brought forward losses and deduction available under section 35AD of the Income Tax Act, 1961.

The tax impact for the above purpose has been arrived at by applying a tax rate of 34.61% (31 March 2017: 34.61%) being the prevailing tax rate for Indian Companies under the Income Tax Act, 1961.

At 31 March 2018, the Company has recognised deferred tax liability of INR 11,216.42 lakhs (31 March 2017: INR 12,012.91 lakhs) and deferred tax assets of INR 16,627.29 lakhs (31 March 2017: INR 17,423.78 lakhs) on other temporary differences which will be adjusted for computation of future years taxable income.

The Company has unused section 35AD losses of INR 46,874.58 lakhs (March 31, 2017: INR 48,487.48 lakhs) that are available for offsetting against future taxable profits of the company.

The Company has recognised deferred tax asset of INR 15,882.22 lakhs on unused section 35AD losses of INR 45,715.75 lakhs based on analysis of taxable income in near future.

On remaining unused section 35AD losses of INR 1,158.83 lakhs deferred tax assets have not been recognised as there are no tax planning opportunities or other evidence of recoverability in the near future.

During 31, March 2018 the Company had decided to rescind operations at its warehouses at Hyderabad and was under discussion with prospective buyers for sale of its assets and the sale was expected to be completed by 31 March 2019.

Accordingly the asset belongs to hyderabad location were classified from property, plant and equipment to Assets Held for Sale under current assets.

Assets classified as held for sale during the reporting period are measured at lower of its carrying amount and fair value less cost to sell at the time of reclassification. Fair value of the assets were determined using the market approach. This is a level 2 measurement and key inputs under this approach are price per asset comparable for the assets in similar business and technology.

Terms/rights attached to equity shares

The company has only one class of equity shares having par value of INR 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees.

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.

(ii) Shares reserved for issue under options

Information relating to Snowman logistics limited employee option plan, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in Note 26.

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 utilised in accordance with the provisions of the Companies Act, 2013.

Share options outstanding account

The share options outstanding account is used to recognise the grant date fair value of options issued to employees under Snowman Logistics Limited Employee Stock Option Plan (Refer Note 26).

* Security deposits from customers are as per the terms of agreement.

** Retention money relates to vendors for construction of warehouse as per terms of agreement.

*** There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

During the year under review, the CSR Committee had outlined a road map on the CSR expenditure. However due to the corrective actions taken in terms of change in the business model and strategy, the company has reported a loss during the year. Hence the board in the best interest of the stakeholders opted to defer any expenditure on CSR activities. Moving forward the Company will endeavor to spend on CSR activities in accordance with the prescribed limits.

2. Exceptional Items

During the year 2016-17, the company terminated the contract with a major customer in the Food Services Division. The contract was signed for a three year period in 2015-16. The contract required the company to procure, store and distribute food products used by the customer in its catering business. Since the volumes envisaged by the company were not being met, the division was incurring losses. The management found it prudent to cut losses by rescinding the contract rather than go with it for 2 more years. The company had to incur a loss of INR 265.91 lakhs on account of exit costs, which has been shown as an exceptional item in the financials for the year ended March 31, 2017.

3. Income tax

The major components of income tax expense for the year ended 31 March 2018 and 31 March 2017 are :

Significant estimate

Company has recognized deferred tax asset on brought forward losses and deduction available under section 35AD of the Income Tax Act, 1961.

Deduction under Section 35AD of the Income Tax Act, 1961 has been claimed on eligible amount capitalised during the year, based on future business projections made by the management.

The tax impact for the above purpose has been arrived at by applying a tax rate of 34.60% (31 March 2017: 34.60%) being the prevailing tax rate for Indian Companies under the Income Tax Act, 1961.

4. Earnings per Share

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

a) Post retirement benefit- defined contribution plans

The company has recognised an amount of INR 102.02 lakhs (31 March 2017: INR 83.36 lakhs) as expenses under the defined contribution plans in the Statement of Profit and Loss in respect of contribution to Provident Fund.

b) Post retirement benefit- defined benefit plan

The company makes provision for gratuity based on actuarial valuation done on projected unit credit method at each Balance Sheet date.

The Company makes annual contribution to the Gratuity Fund Trust which is maintained by LIC of India, a 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 as per provisions of Payment of Gratuity Act, 1972. The benefit vests after 5 years of continuous service.

The present value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at the Balance Sheet date.

1) The discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligation.

2) The expected return on plan assets is based on market expectations,at the beginning of the period,for returns over the entire life of the related obligation.The expected return on plan assets reflects changes in the fairvalue of plan assets held during the period as a result of actual contributions paid in to the fund and actual benefits paid out of the fund.

3) The salary escalation rate is the estimate of future salary increase considered taking into account the inflation, seniority, promotion and other relevant factors.

The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

The average duration of the defined benefit plan obligation at the end of the reporting period is 25.94 years (31 March 2017: 25.42 years) Expected contributions to post employment benefits for the year ended March 31, 2019 are INR 107.00 lakhs for the funded plan.

5. Employee Stock Option Plan

Snowman Logistics Limited Stock Option Plan 2012 (ESOP 2012)

Pursuant to the resolution passed by the Shareholders at the Extraordinary General Meeting held on April 24, 2012, the Company had introduced new ESOP scheme for eligible directors and employees of the Company. Under the scheme, options for 51,45,350 (fifty one lakh forty five thousand three hundred and fifty) shares would be available for being granted to eligible employees of the Company and each option (after it is vested) will be exercisable for one equity share of INR 10.60, INR 15.40 and INR 18.30. Compensation Committee finalises the specific number of options to be granted to the employees. Vesting of the options shall take place over a maximum period of 3 years with a minimum vesting period of 1 year from the date of grant.

ii) Income Tax Matters:

1. The AO vide order u/s 147 read with 143(3) dated 19/12/06 has disallowed amount of Rs.4,62,500/- by reducing the subsidy received from NHB, from cost of asset stating that the subsidy is directly related to asset. However the company draws reference to Expl.10 to Sec 43(1) which applies only if cost of asset is met directly or indirectly by government or agency stated therein and not in respect of subsidy given to help company setup business. The company has filed an appeal for AY 2003-04 on same grounds placing its reliance on Apex court decision in case of "CIT vs. PJ.Chemicals" and the appeal is still pending as on the end of reporting date. The Company has assessed that the outflow on account of this assessment is only possible in nature and it may liable contingently.

2. The A.O vide order u/s 143(3) dated 10/12/2009 disallowed expenditure of Rs.11,00,000/- relating to Fruits and Vegetable project due to "insufficient and inadequate explanation and deficiencies in details" against which the company has stated that the loss was incurred under a pilot project which has been started as a joint venture with two other companies. The project suffered a loss and the parties have written off loss in their respective profit/loss ratio in their books. The company has preferred an appeal for AY 2007-08 against the A.O.order with CIT(A) and the company assesses the liability to be contingent.

3. The A.O. vide order u/s 143(3) dated 10/12/2009 has disallowed expenditure under head computers@ 60% stating the reason of insufficient details and explanations against which the company has drawn reference to asset wise listing of additions reported under Clause 14 of 3CD supported by Annexure B which was not considered before disallowing.The company has filed an appeal for AY 2007-08 with CIT (A) and the liability if any which may arise is assessed contingent.

4. The A.O. vide order u/s 143(3) dated 10/12/2009 has disallowed income which had arisen from sale of Land located at Derabassi for Rs.39,00,000/-,the sale deed of its purchase transaction indicates the land is agricultural in nature. The A.O. contended that the land is not "agricultural land" and has disallowed the income against which the company preferred an appeal for AY 2007-08 to CIT(A) which is pending as at end of reporting period and liability if any which may arise is assessed contingent.

5. The Company has an appeal pending before CIT(A) in respect of Disallowance of Depreciation which arose due to Difference in Rate of Depreciaton adopted by A.O. and the company in respect of years A.Y.2003-04,2007-08 and the amount in dispute is Rs.4,19,430/- and 3,62,151/- for the two years respsectively.The outflow if any is assessed contingent.

6. The Company has an appeal pending before CIT(A) for the AY 2007-08 in respect of disallowance of expenditure being treated as penal nature by the A.O. to the tune of Rs.2,27,465/- .The company assesses the aforesaid expenditure to be contingent.

iii) Wealth Tax Matters:

The order dated 16(3) r.w.s 17 of the Wealth Tax Act 30.12.2008 demanding INR 3.02 Lakhs was issued by the A.O alleging that the vacant land owned by the Company falls under the purview of the W.T Act and therfore would be chargeable to the same. The A.O also contended that the motor vehicle which disclosed by the Company after adjusting the vehicle loan would be considered chargeable to the W.T Act. Subsequently the Company has an appeal pending before Asst. Commissioner of Wealth Taxes for the AY 2002-03 for granting relief against the order. The company assesses the liability contingent."

iv) Indirect Tax Matters:

1. The order dated 30U/S 51 (7)(c) of the Punjab Value Added Tax Act, 2005 demanding INR 8.42 lakhs was issued by the Asst. Commissioner of taxes alleging that goods were not reported at the check post of Information Collection Centre at the time of entering the goods at Punjab, however company has able to substantiate that the goods were duly reported at the check post by the driver of vehicle while entering at Punjab. On the same ground company has gone to appeal for AY 2016-17 against the order and assessed the liability contingent.

2. The Assistant Commissioner, VAT Special Circle, Department of Commercial taxes, Kerala issued Assessment order for the year 2011-12 demanding INR 26.92 lakhs (Including Interest of INR 10.07 lakhs) mentioning the irregularities regarding suppression of total turnover INR 63.93 lakhs, difference of INR 1.76 lakhs in audited statement and online return and for concealment of INR 3.67 lakhs in online return. The company has preferred an appeal with the Deputy Commissioner Appeals against the assessment order received.

On the basis of current status of individual case for respective years and as per legal advice obtained by the Company, wherever applicable, the Company is confident of winning the above cases and is of view that no provision is required in respect of these cases.

6. Segment Informations

As per Ind AS 108 "Operating segments" the company has three reportable segments as below :

Warehousing services:

Warehousing services comprises of temperature controlled warehousing service operating across locations servicing customers on pan-India basis.

Transportation services:

The transportation generally facilitates inter-city transport of products and includes door to door service i.e. last mile distribution.

This part of the business provides dry Transportation facility also to the customers using the temperature controlled facilities so that the customer gets a one stop solution for all the warehousing requirement.

Consignment agency services:

The company provides retail distribution through a consignment agency model for customers.

No operating segments have been agreegated to form the above reportable reporting segments.

The management of the company monitors the operating results of its segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on the profit / loss and is measured consistently with profit / loss in the financial statements and also the company''s financing (including finance costs and finance income) and income taxes are managed on company basis and are not allocated to operating segments.

Adjustments and elimination

Finance income and costs, and fair value gains and losses on financial assets are not allocated to individual segments as the underlying instruments are managed on a company basis.

Current taxes, deferred taxes and certain financial assets and liabilities are not alocated to those segments as they are also managed on a group basis.

7. Fair values

Setout below is a comparison by class of the carrying amounts and fair value of the company''s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

The management assessed that trade receivables, cash and cash equivalents, other bank balances, loan, other financial assets, trade payables, other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair value of the company''s interest bearing-borrowings are determined by using DCF method using discount rate that reflects the issuer''s borrowing rate as at the end of the reporting period. The own non-performance risk was assessed to be insignificant.

Fair value hierarchy

Level 1: This hierarchy includes financial assets/ liabilities measured using quoted prices.

Level 2: The fair value of financial assets/ liabilities 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 assets/ liabilities are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the assets/ liabilities is included in level 3.

The following table provides the fair value measurement hierarchy of the company''s assets and liabilities.

8. Financial risk management

The Company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s risk management is carried out by a corporate finance team under the policies approved by the Board of Directors. The Board provides written principles for overall risk management as well as policies covering specific areas, such as credit risk, interest rate risk and investment of excess liquidity.

i) Market Risk- Interest Rate Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument may fluctuate due to change in market price. The value of a financial instruments may change as result of change in interest rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including payable, deposits, loans & borrowings.

The Company management evaluates and exercise control over process of market risk management. The Board recommends risk management objective and policies which includes management of cash resources, borrowing strategies and ensuring compliance with market risk limits and policies.

The sensitivity analysis in the following sections relate to the position as at 31 March 2018 and 31 March 2017.

The analyses exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations and provisions. The analysis for the contingent consideration liability is provided in note 27.

The Company assumes that the sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2018 and 31 March 2017.

ii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with interest rates.

The Company manages its interest rate risk by having a portfolio of loans and borrowings. In order to optimize the Company''s position with regards to interest income and interest expense, the Company performs a comprehensive corporate interest rate risk by using different type of economic product of floating rate of borrowings in its total portfolio.

iii) 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 INR 4,435.99 lakhs, INR 3,528.22 lakhs as of 31 March 2018, 31 March 2017 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 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 loss or gain.

Credit Risk Management Financial instruments and cash deposits

The Company maintains exposure in cash and cash equivalents and term deposits with banks. The Company has diversified portfolio of investment with various number of counter-parties which have good credit ratings, good reputation and hence the risk is reduced. Individual risk limits are set for each counter-party based on financial position, credit rating and past experience. Credit limits and concentration of exposures are actively monitored by the Company. For banks and financial institutions, only high rated banks/institutions are accepted. The Company''s maximum exposure to credit risk as at 31 March 2018 and, 31 March 2017 is the carrying value of each class of financial assets as disclosed in note 30.

Trade receivables and other financial assets

Trade receivables are typically unsecured and are derived from revenue earned from customers. Other financial assets are unsecured receivables. It comprises of Interest accrued on fixed deposits, security deposits, other deposits, and deposits with bank with maturity period more than 12 months.

Credit risk has 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 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. There are no significant credit risk pertaining to other finacial assets.

Total maximum credit exposure on trade receivable and other financial assets as at 31 March 2018 is INR 6,285.51 lakhs (31 March 2017 is INR 5,414.58 lakhs)

iv) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the dynamic nature of the underlying businesses, company''s finance team maintains flexibility in funding by maintaining availability under committed credit lines.

Maturities of financial liabilities

The table below analyses the company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all nonderivative financial liabilities:

9. Capital Management

Risk Management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maintain optimum capital structure to reduce cost of capital and to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants which otherwise would permit the banks to immediately call loans and borrowings. To maintain or adjust the capital structure, the Compamy may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents.

Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio:

Net debt (total borrowings net of cash and cash equivalents) divided by total equity (as shown in the balance sheet)

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.

The company has satisfied all financial debt covenants prescribed in the terms of bank loan except as mentioned below:

HDFC

a) Minimum Debt Service Coverage Ratio (DSCR) of 1.35 times to be maintained during the tenure of the loan whereas as on 31 March 2018 it is 1.08 times.

IFC

a) Financial debt should not exceed INR 80 Million whereas as on 31 March 2018 it is INR 1,312.42 million.

b) Current ratio of atleast 1.33 times should be maintained whereas as on 31 March 2018 it is 0.89 times.

c) Historic debt service coverage ratio of not less than 1.50 times whereas as on 31 March 2018 it is 1.08 times.

There is no impact of the breach of covenants and the same has been duly communicated to the bank.

10. Offsetting financial assets and financial liabilities

Collateral against borrowings

Trade receivables and non-current assets of the Group are pledged as security against debt facilities from the lender. For carrying amount of assets pledged as security refer note 30.

11. Other Matter

During a routine stock audit in Visakhapatnam, management became aware of the shortage of stocks amounting to INR 183.00 lakhs for the year 2017. A FIR was filed in this regard and upon investigation by the police it was found that most of the suspects in this case were former employees of the Company. All the suspects were booked under the provisions of CrPC and the matter is in progress at the Court. The internal auditors were assigned the work to conduct a stock verification to authenticate the value of the goods lost. This event is not considered as a material event since the value involved or the impact does not exceed 5% of the turnover or revenue or total income; or does not exceed 10% of the networth (lower threshold shall be taken as a trigger) as per the materiality policy of the Company. The above thresholds are determined on the basis of audited financial statements of the Company''s last audited financial year. Necessary corrective action has been taken for improving the systems and processes in place to ensure that a similar situation does not occur. The customers who lost the material have been compensated appropriately and continue to do business with the Company.

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Mar 31, 2017

1. Capital Management (a) Risk Management

The Company''s objective when managing capital are to :

Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio:

Net debt (total borrowings net of cash and cash equivalents) divided by total equity (as shown in the balance sheet)

(i) Loan Covenants

Loan covenants related to HDFC Bank Ltd

No further borrowings without No Objection Certificate (NOC) from HDFC

Prior approval to be sought for any change in share holding pattern/ Management of the Company

No Guarantee to be issued by the company without Bank''s NOC

No loans to be extended by the company without prior approval from HDFC bank

All Cash flows/ Cash Management Services (CMS)/ Foreign currency transactions and any other business of the company should be routed through HDFC Bank

Maximum Total Outstanding Liability (TOL)/Total Net Worth (TNW) to be maintained at 1 times during the tenor of the loan.

Minimum Debt Service Coverage Ratio (DSCR) of 1.35 times to be maintained during the tenure of the loan.

Fixed asset cover to be maintained at >=2

Financial projections to be met with 10% variation

Majority holding by Gateway Distriparks Limited (GDL) to be maintained.

Loan covenants related to International Finance Corporation (IFC)

Financial debt should not exceed INR 80 Million Following financial ratios to be maintained:

a) Current ratio of at least 1.33

b) Liabilities to tangible net worth ratio of not more than 1.50

c) Historic debt service coverage ratio of not less than 1.50

d) Fixed asset coverage ratio of not less than 2

As represented by the Company there has been no breach of above covenants during the year.

2. Disclosures under Indian accounting standard 19

a) Post Retirement Benefit- Defined Contribution Plans

The Company has recognized an amount of INR 83.36 (2016: INR 99.18) as expenses under the defined contribution plans in the Statement of Profit and Loss in respect of contribution to Provident Fund for the year ended March 31, 2017.

b) Post Retirement Benefit- Defined Benefit Plan

The Company makes provision for gratuity based on actuarial valuation done on projected unit credit method at each Balance Sheet date.

The Company makes annual contribution to the Gratuity Fund Trust which is maintained by LIC of India, a 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 as per provisions of Payment of Gratuity Act, 1972. The benefit vests after 5 years of continuous service.

The present value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at the Balance Sheet date.

3. Related party transactions

In compliance with Ind AS 24 - "Related Party Disclosures", as notified under Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 the required disclosures are given in the table below:

(a) Name of related parties and related parties relationship

Associates:

1. Gateway Distriparks Limited

2. Gateway East India Private Limited

3. Gateway Distriparks (South) Private Limited

4. Gateway Distriparks (Kerala) Limited

5. Gateway Rail Freight Limited.

6. Chandra CFS and Terminal Operators Private Limited Key Management Personnel/ Executive Directors:

Mr. Sunil Nair, CEO and Whole time Director (appointed w.e.f. December 1, 2016)

Mr. A M Sundar, CFO, Company Secretary and Compliance Officer Mr. Ravi Kannan, CEO and Director (resigned w.e.f. February 2, 2016)

Mr. Pradeep Kumar Dubey, COO and Director (resigned w.e.f. November 9, 2016)

b) Directors of the Company Independent and Non-Executive Directors

Mr. Prem Kishan Dass Gupta (Non-Executive)

Mrs. Mamta Gupta (appointed w.e.f. November 5, 2015) (Non-Executive)

Mr. Tomoyuki Masuda (appointed w.e.f. April 28, 2015) (Non-Executive Independent)

Mr. Michael Philip Pinto (resigned w.e.f. August 14, 2016) (Non-Executive Independent)

Mr. Saroosh Cowasjee Dinshaw (resigned w.e.f. August 14, 2016) (Non-Executive Independent) Mr. Shabbir Hakimuddin Hassanbhai (Non-Executive Independent)

Mr. AKT Chari (Non-Executive Independent)

Mr. Bhaskar Avula Reddy (appointed w.e.f. April 26, 2016) (Non-Executive Independent)

Mr. Arun Gupta Kumar (appointed w.e.f. April 26, 2016) (Non-Executive Independent)

Mr. Gopinath Pillai (resigned w.e.f. October 27, 2015) (Non-Executive)

Mrs. Chitra Gowri Lal (resigned w.e.f. August 19, 2015) (Non-Executive Independent)

Note: Provision for leave encashment and group gratuity, which is based on actuarial valuation done on overall company basis, is excluded.

4. Segment Information

(i) Snowman Logistics limited is engaged in providing integrated cold chain solution to users in India. The company''s infrastructure comprises of compartmentalized temperature - controlled warehouses in all major cities of the country and a fleet of temperature controlled trucks. The company is focused on its core business of temperature controlled warehousing for frozen and chilled products with transportation division acting as an enabler. The Company''s Management examines the business from two perspectives as followed:

Temperature controlled service

This part of the business comprises of the temperature controlled warehousing service and temperature controlled transportation service operating across locations servicing customers on pan-India basis. Company''s warehousing/ transportation solutions offer services across a spectrum of temperature from ambient to chilled and frozen (i.e. 25°C to -20°C).

Ambient Services

This part of the business provides dry warehousing facility also to the customers using the temperature controlled facilities so that the customer gets a one stop solution for all the warehousing requirement. These warehouses provide dock stuffing/destuffing, palletized storage facilities and are equipped with latest machinery and skilled manpower.

5. Exceptional Item

During the year 2016-17, the Company terminated the contract with a major customer in the Food Services Division. The contract was signed for a three year period in 2015-16. The contract required the Company to procure, store and distribute food products used by the customer in its catering business. Since the volumes envisaged by the Company were not being met, the division was incurring losses. The management found it prudent to cut losses by rescinding the contract rather than go with it for 2 more years. The Company had to incur a loss of Rs.265.91 on account of exit costs, which has been shown as an exceptional item in the financials for the year ended March 31, 2017.

6. First time adoption of Ind AS

1. Transition to Ind AS

These are the company''s first financial statements prepared in accordance with Ind AS.

The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from April 1, 2016, with a transition date of April 1, 2015. These financial statements for the year ended March 31, 2017 are the first the Company has prepared under Ind AS. For all periods upto and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with the previously applicable Indian GAAP (hereinafter referred to as "IGAAP")

The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. Ind AS 101 requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements be applied retrospectively and consistently for all financial years presented. Accordingly, the Company has prepared financial statements which comply with Ind AS for year ended March 31, 2017, together with the comparative information as at and for the year ended March 31, 2016. The Company''s opening Ind AS Balance Sheet has been prepared as at April 1, 2015, the date of transition to Ind AS.

In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (IGAAP). An explanation of how the transition from IGAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions and exceptions availed

In preparing these Ind AS financial statements, the Company has availed certain exemptions and exceptions in accordance with Ind AS 101, as explained below. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at the transition date under Ind AS and IGAAP have been recognized directly in equity (retained earnings or another appropriate category of equity). This note explains the adjustments made by the Company in restating its IGAAP financial statements, including the Balance Sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.

A.1 Ind AS optional exemptions

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous IGAAP to Ind AS.

A. 1. 1. Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the IGAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the company has elected to measure all of its property, plant and equipment and intangible assets at their IGAAP carrying value.

A. 1.2 Share based payment transactions

Ind AS 101 permits a first-time adopter not to apply Ind AS 102 Share-based payment to equity instruments that vested before date of transition to Ind AS. Accordingly, the company has elected not to apply the Ind AS 102 Share-based payments to employee stock options which were vested before transition date of April 1, 2015.

A.2 Ind AS mandatory exceptions

The company has applied the following exceptions from full retrospective application of Ind AS mandatorily required under Ind AS 101: A.2.1 Estimates

An entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with IGAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with IGAAP.

7. Reconciliations between IGAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from IGAAP to Ind AS.

b: Notes to first-time adoption:

Note 8: Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under the IGAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31, 2016 decreased by INR 1.72. There is no impact on the total equity as at March 31, 2016.

Note 9 : Security deposits

Under the previous GAAP, interest free security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognized as prepaid rent.

Note 10: Proposed dividend

Under the previous GAAP, dividends proposed by the Board of Directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of INR NIL as at March 31, 2016 (April 1, 2015 INR 1,002.32) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

Note 6: Retained earnings

Retained earnings as at April 1, 2015 has been adjusted consequent to the Ind AS transition adjustments

Note 11: Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as "other comprehensive income" includes remeasurements of defined benefit plans, foreign exchange differences arising on translation of foreign operations, effective portion of gains and losses on cash flow hedging instruments and fair value gains or (losses) on FVOCI equity instruments. The concept of other comprehensive income did not exist under IGAAP.

Note 12: Rent equalization

Ind AS 17 Leases covers lease related to land and accordingly rental payments towards the lease are equalised for rent free period and corresponding rent equalization liability is accounted for such rent free period.

Note 9: Capitalization of Borrowing Cost

Under Ind AS 23 Borrowing Costs, borrowing costs that are directly attributable to obtaining qualifying assets are those borrowing costs that would have been avoided if the expenditure on the qualifying asset had not been made. If cash was not spent on other qualifying assets, it could be directed to repay this specific loan, accordingly borrowing cost in relation to avoidable cost is capitalized during 2015-16.

Note 10: Revenue from Operations

The Company has evaluated its contract with one of the customer''s, wherein in substance company is acting as an agent. Accordingly, the Company has recognized revenue only to the extent of the net amount received/ receivable under the arrangement in return for its performance under the contract. Under IGAAP, the transaction was accounted on gross basis. This has resulted in reduction in sales and cost of sales by INR 1,526.28. This has no impact on the loss for the year.

Note 11: Deferred Tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements. Also, deferred tax has been recognized on the adjustments made on transition to Ind AS.

Note 12: Leases

Land Leases for a term of less than 30 years are considered as operating leases and classified under prepayments under other non-current assets.

Note 13: Other Income

Liabilities no longer required written back has been adjusted against the respective expense head in statement of profit and loss.

14. Previous year figures

The previous year’s figures have been reclassified to conform to this year''s classification.

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Mar 31, 2016

(d) Rights, preferences and restrictions attached to shares:

Equity shares :The company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion to their share holding.

1. Shifting of Registered Office

The Company vide resolution passed in the Board of Directors meeting dated February 2, 2016 and the members of the Company vide postal ballot and e-voting have resolved to shift the registered office of the Company from the state of Karnataka to the state of Maharashtra, Mumbai. The Company is in the process of filling the application with the Registrar of Companies and Regional Director.

2. Previous year figures

The previous year’s figures have been reclassified to conform to this years'' classification.

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Mar 31, 2015

General Information

Snowman Logistics Limited (the 'Company') is engaged in cold chain business in India. Snowman offers a range of complete and unique facilities for transportation, storage,handling and retail distribution of frozen and chilled products.

The Company had changed its name from Snowman Frozen Foods Limited to Snowman Logistics Limited and obtained a fresh certificate of incorporation dated March 17, 2011. The equity shares of the Company were listed on The National Stock Exchange of India Limited and Bombay Stock Exchange of India Limited on September 12, 2014.

1. Share capital

Rights, preferences and restrictions attached to shares:

Equity shares :The company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion to their share holding.

(g) Shares reserved for issues under options

Refer Note 35 for details of shares to be issued under the Employees Stock Option Plan.

2. Reserves and surplus

Nature of security and terms of repayment for secured borrowings:

Nature of security Terms of Repayment

i) Term loan from Bank (HDFC Principal is repayable (for each Bank) amounting to Rs.479,000,000 disbursement) in 20 equal quarterly (2014:Rs.609,000,000)is secured instalments starting from by paripassu charge on all assets August 2013. namely fixed and current assets present and future of the company.

ii) Term loans from International Principal is repayable in 12 half Finance Corporation (IFC)amounting yearly instalments starting from to Rs. 425,001,668 (2014:Rs. January 2015. 450,000,000) are secured by paripassu charge on all assets namely fixed and current assets present and future of the company.

3. Contingent liabilities

Bank guarantees:

Financial Guarantee 2,160,212 7,458,070

Performance Guarantee 12,900,000 259,472

Income Tax Matters (Amount paid under protest Rs. NIL) 770,643 770,643 (2014: Rs. 574,603)

Wealth Tax Matters (Amount paid under protest Rs. NIL) 301,833 301,833 (2014: Rs. 301,833)

Sales Tax Matters (Amount paid under protest Rs. NIL) 1,255,044 1,255,044 (2014: Rs. 480,051) 17,387,732 10,045,062

Note:

It is not practicable for the Company to estimate the timings of cash outflows, if any in respect of the above pending resolution of the respective proceedings.

4. Disclosures under Accounting Standard 15

a) Post Retirement Benefit- Defined Contribution Plans

The Company has recognised an amount of Rs. 8,058,827 (2014: Rs. 7,521,055) as expenses under the defined contribution plans in the Statement of Profit and Loss in respect of contribution to Provident Fund for the year ended March 31, 2015.

b) Post Retirement Benefit- Defined Benefit Plan

The Company makes provision for gratuity based on actuarial valuation done on projected unit credit method at each Balance Sheet date.

The Company makes annual contribution to the Gratuity Fund Trust which is maintained by LIC of India, a 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 as per provisions of Payment of Gratuity Act, 1972. The benefit vests after 5 years of continuous service.

The present value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at the BalanceSheet date.

(c) Other employee benefit plan:

The liability for leave encashment and compensated balances as at year end is Rs. 2,066,683 (2014: Rs. 2,453,240).

5. Employee stock option plan

Snowman Logistics Limited Stock Option Plan 2012 (ESOP 2012):

Pursuant to the resolution passed by the Shareholders at the Extraordinary General Meeting held on April 24, 2012, the Company had introduced new ESOP scheme for eligible Directors and employees of the Company. Under the scheme, options for 5,145,350 (fifty one lakh forty five thousand three hundred and fifty) shares would be available for being granted to eligible employees of the Company and each option (after it is vested) will be exercisable for one equity share of Rs. 10.60, Rs. 15.40 and Rs.18.30. Compensation Committee finalises the specific number of options to be granted to the employees. Vesting of the options shall take place over a maximum period of 3 years with a minimum vesting period of 1 year from the date of grant.

6. Related party disclosures

(a) Names of related parties and nature of relationship:

Holding company:

Gateway Distriparks Limited (till September 9, 2014 and associate company thereafter).

Associates:

1. Gateway East India Private Limited

2. Gateway Distriparks (South) Private Limited (amalagamated with Gateway Distriparks Limited w.e.f. March 12, 2015)

3. Gateway Distriparks (Kerala) Limited

4. Gateway Rail Freight Limited.

5. Chandra CFS and Terminal Operators Private Limited

Key management personnel (KMP):

Mr. Ravi Kannan, CEO and Director

Mr. A M Sundar, CFO, Company Secretary and Compliance Officer

7. (a) Amount utilised for share issue expenses

Amount utilised for share issue expenses Rs. 138,440,409 includes payments made to merchant bankers, attorneys, consultants and registrars towards Initial Public Offering of shares.

8. Previous year figures

The previous years figures have been reclassified to conform to this years' classification.