Note: 1. Borrowings
Details of terms of repayment and securities provided in respect of secured term loans are as under:
1) Non-Current borrowings
a) Term Loan from Banks
- The securities provided for the Term loan from Banks amounting to Rs. 1,757.36/- lakhs (31 March 2016 -Rs. 2,283.70/- lakhs and 01 April 2015 - Rs. 2,527.53/lakhs) is as follows:
i. Personal guarantee of Mr. Dilip Suryavanshi, the managing director of the company, Mrs. Seema Suryavanshi, the whole time director, Mr. Devendra Jain, the CEO and Ms. Preeti Jain, the relative of the CEO
ii. Guarantee of the firm M/s B. S. Associates
- The securities provided for the Term loan from Banks amounting to Rs. 2,916.67/- lakhs (31 March 2016 -Rs. 4,583.33/- lakhs and 01 April 2015 - Rs. 5,000.00/- lakhs) is as follows:
i. Personal guarantee of Mr. Dilip Suryavanshi, the managing director of the company, Mrs. Seema Suryavanshi, the whole time director, Mr. Devendra Jain, the CEO and Ms. Preeti Jain, the relative of the CEO
ii. Guarantee of the firm M/s B. S. Associates
iii. Exclusive charge on properties (non agricultural land) and machinery
iv. Additional tangible security to the satisfaction of the bank
- The securities provided for the Term loan from Banks amounting to Rs. 8,690.00/- lakhs (31 March 2016 -Rs. 9,950.00/- lakhs and 01 April 2015 - Rs. Nil) is as follows:
i. Personal guarantee of Mr. Dilip Suryavanshi, the managing director of the company and Mr. Devendra Jain, the CEO
ii. Exclusive charge on non agricultural land held by M/s Shreenathji Builders and Promoters and machinery owned by the Company
iii. Exclusive pledge of equity shares of DBL held by the Promoter of the Company to provide the security coverage of 1 times the amount of loan
- The securities provided for the balance Term loan from Banks amounting to Rs. 28,711.72/- lakhs (31 March 2016 - Rs. 24,272.86/- lakhs and 01 April 2015 - Rs. 18,626.80/- lakhs) is secured by way of hypothecation of the respective vehicles purchased and personal guarantee of the directors.
- The above loans carry interest rates ranging from 9.00% to 13.50%. The loans are repayable in monthly installments along with interest.
b) Loan from financial institutions
- The securities provided for the Term loan from financial institutions amounting to Rs. 3,325.00/- lakhs (31 March 2016 - Rs. Nil and 01 April 2015 - Rs. Nil) is as follows:
i. Unconditional and irreovcable bank guarantee
- The balance portion of loans from financial institutions amounting to Rs. 53,626.35/- lakhs (31 March 2016 -Rs. 60,947.67/- lakhs and 01 April 2015 - Rs. 50,894.40/- lakhs) are taken for the purpose of purchase of vehicles.
- The above loans carry interest rates ranging from 8.50% to 13.50%. The loans are repayable in monthly installments along with interest.
- The loans are secured by way of hypothecation of the respective vehicles.
2) Current borrowings
a) Loans payable on demand from Banks
i. Hypothecation of unencumbered plant and machinery and equipments (present and future).
ii. Pledge of Fixed Deposit Receipts standing in the name of the company
iii. Pari Passu charge of all lender banks by way of hypothecation of stock of Material, Stock-in-process i.e. Cement, Steel, Steel Pipes, Gitty, Murram, Bolders, Diesel, Bituminous, oil grease etc. used in construction works at various sites of the company, work in progress, completed projects along with book-debts and the Government receivables there against.
iv. Margin provided: 25% for Stocks / Receivables 25% for receivables upto 6 months 40% for retention receivable up to 12 months (only with Government Departments)
v. Personal guarantee of Mr. Dilip Suryavanshi, the managing director of the company, Mrs. Seema Suryavanshi, the whole time director, Mr. Devendra Jain, the CEO and Ms. Preeti Jain, the relative of the CEO
vi. Guarantee of the firm M/s B. S. Associates
vii. The collateral securities provided for the above loans are as follows:
Pari Passi charge of all lender banks by way of Extension of Equitable Mortgage of the following Immovable properties:
1) House No.38 at Railway Housing Society Shahpura standing in the name of, the whole time director of the company.
2) VacantPlot khasra No. 9/1/2/1/4 situated at vill. Banjari, Kolar Road, Bhopal standing in the name of, the managing director of the company.
3) Vacant plot at K.No. 83/2/1, P.H.No.35; R.N.M. - 4, vill. ChapriRatibar, Bhopl, standing in the name of, the whole time director of the company.
4) Plot at Khasra No. 235 (Old 85,86/1, 87/23) ;
PatwariHalka No. 35, Vill. Chapri, Ratibar Tehsil- Huzur;
Distt. Bhopal, standing in the name of the whole time director of the company.
5) Diverted land at Khasra No 56 at Village Sevania Tehsil Huzur Dist. Bhopal, standing in the name of, the whole time director of the company.
6) 3 flats viz G-1, G-II & 302 at plot No B-235,Janki Apartment Shahpura, Bhopal, standing in the name of, the whole time director of the company.
7) Diverted Land at Survey No. 9/1/2/1/5, Gram Banjari, Near Ganpati Enclave, Ph no. 39, Kolar Road, Tehsil Huzur, Bhopal standing in the name of relative of the whole time director of the company.
8) Diverted Land at Survey No. 7/3/1, Gram Baradari, Falodi Colony, Ward No. 14, Ph No. 18 (Behind Vivekanand School) Pargana, Raigarh, Tehsil & District Rajgarh (M.P) H. No. 7/522) standing in the name of the whole time director of the company.
9) Diverted Land at Survey No. 7/3/1, Gram Baradari, Falodi Colony, Ward No. 14, Ph No. 18 (Behind Vivekanand School) Pargana, Raigarh, DistrictRajgarh (M.P) H. No. 7 standing in the name of the whole time director of the company and its relative.
10) Land at part Khasra No. 315/2, PatwariHalka No. 35 R N M - 4, Gram Chapri (Ratlam) Vikas KhandFanda, Tehsil Huzur, Bhopal. Standing in the name of, the whole time director of the company
11) Immovable property at khasra no. 51/1/2/1, 51/1/2/2, 51/1/2/3, 51/1/2/4, Behind Halalpura Bus Stand, Bhopal standing in the name of B.S. Associates (partnership firm).
12) House on Plot No C/2, C/3A, C/14, C/15, Falaudi Colony, New Ward No 15, Near Swami Vivekanand Public School, Rajgarh standing in the name of relative of the whole time director of the Company.
2.1 The claims against the company not acknowledged as debts include claims made by others under various laws.
2.2 Assessment of Sales Tax Liability in respect of earlier years is under progress and the additional liability if any, would be determinable only on completion of said assessments.
2.3 The Company as part of its various commitments to be fulfilled under Construction Contracts has provided Bank Guarantees to various parties.
2.4 Subsequent to the survey proceedings u/s 133 of the Income Tax Act initiated by the Department in the earlier years, the Company has filed an application before the Income Tax Settlement Commission for Assessment Year 2007-08 to 2013-14. The Company is yet to receive the final orders towards outcome of the same.
2.5 The Company had filed its Income Tax Return for the Assessment year 2013-14(Covered under the application made to the Settlement Commission) wherein it has claimed deduction u/s 80IA. The said deduction has been disallowed by the Income Tax Authorities against which the Company has appealed to the High Court. The Company is yet to receive the final order from the High Court.
2.6 The company has received the order from the Income Tax department for the Assessment Year 2014-15 claiming the tax payable of Rs. 1,227.76 lakhs against which the company has filed the reply; the final outcome of which is still pending.
Note: 3. Fair value of financial assets and liabilities
Set out below, is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments that are recognised in the financial statements.
The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available. In addition, the Company internally reviews valuations, including independent price validation for certain instruments. Further, in other instances, Company retains independent pricing vendors to assist in corroborating the valuations of certain instruments.
The fair value of the financial assets and liabilities are included at the amount at which the instrument that would be received to sell an asset or paid to transfer liability in an orderly transaction between market participants at the measurement date.
“ The following methods and assumptions were used to estimate the fair values:”
* The company has not disclosed the fair values of trade payables, trade receivables and cash and cash equivalents because their carrying amounts are reasonable approximation of fair value.
Fair value of security deposits have been estimated using a discounted cash flow model. The valuation requires management to make certain assumptions about interest rates, maturity period, credit risk, forecated cash flows.
Long-term fixed-rate and variable-rate receivables / borrowings are evaluated by the company based on parameters such as interest rates, individual creditworthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables. As of reporting date the carrying amounts of such receivables, net of allowances are not materially different from their calculated fair values.
Carrying value of loans from banks, other non current borrowings and other financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. The own non- performance risk as at reporting date was assessed to be insignificant.
Fair value hierarchy
The following table provides the fair value measurement hierarchy of Company’s assets and liabilities grouped into Level 1 to Level 3 as described in significant accounting policies - Note 1. Further table describes the valuation techniques used, key inputs to valuations and quantitative information about significant unobservable inputs for fair value measurements.
Note: 4. Employee Benefits
i Defined Contribution Plans:
a) Amount of Rs. 2,272.22/- lakhs (P.Y. Rs.1,792.02/-lakhs) is recognised as an expense and included in “Employees benefits expense” (Note 21) in the Profit and Loss Statement.
b) The expenses for leave entitlement recognised in the profit and loss statement is Rs. 306.71/- lakhs (P.Y. Rs. 469.00/- lakhs)
ii Defined Benefit Plans:
a) The amounts recognised in Balance Sheet are as follows:
Basis used to determine the overall expected return:
The net interest approach effectively aasumes an expected rate of return on plan assets equal to the beginning of the year Discount Rate. Expected return of 7.90% has been used for the valuation purpose.
c) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)
1 Discount rate as at 31-03-2017 - 6.95%
2 Expected return on plan assets as at 31-03-2017: 6.95%
3 Salary growth rate : For Gratuity Scheme - 8.00%
4 The estimates of future salary increase considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
d) General descriptions of defined plans:
1 Gratuity Plan:
The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.
e) The Company expects to fund Rs.1,00,00,000/- towards its gratuity plan in the year 2017-18.
f) Sensitivity analysis
Sensitivity analysis indicates the influence of a reasonable change in certain significant assumptions on the outcome of the Present value of obligaion(PVO). Sensitivity analysis is done by varying (increasing/ decresing) one parameter by 50 basis points (0.5%)
Note: 5. Financial risk management policy and objectives
“The key objective of the Company’s capital management is to ensure that it maintains a stable capital structure with the focus on total equity to uphold investor, creditor, and customer confidence and to ensure future development of its business. The Company is focused on maintaining a strong equity base to ensure independence, security, as well as financial flexibility for potential future borrowings, if required without impacting the risk profile of the Company.
Company’s principal financial liabilities, comprise borrowings from banks, trade payables and security deposits. The main purpose of these financial liabilities is to finance Company’s operations (short term). Company’s principal financial assets include investments, security deposit, trade and other receivables, deposits with banks and cash and cash equivalents, that derive directly from its operations.
Company is exposed to market risk, credit risk and liquidity risk.
i) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk interest rate risk, currency risk and other price risk such as equity price risk and commodity risk. Financial instruments affected by market risk include borrowings, trade and other payables, security deposit, trade and other receivables, deposits with banks.
The sensitivity analysis in the following sections relate to the position as at 31 March 2017 and 31 March 2016. The sensitivity of the relevant income statement item is the effect of the assumed changes in respective market risks. The sensitivity analysis have been prepared on the basis that the amount of net debt and the ratio of fixed to floating interest rates of the debt are constant at 31 March 2017.
The analysis exclude the impact of movements in market variables on: the carrying values of gratuity, other post retirement obligations and provisions.
Company’s activities exposed to interest rate risk.
a) 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. At the reporting date the interest rate profile of the Company’s interest bearing financial instruments are follows:
The Company is exposed to debt obligations with variable interest rates. Accordingly, interest rate sensitivity disclosure is applicable and disclosed below:
ii) Credit risk
Credit risk on trade receivables and unbilled work-in-progress is limited as the customers of the Company mainly consists of the government promoted entities having a strong credit worthiness. For other customers, the Company uses a provision matrix to compute the expected credit loss allowance for trade receivables and unbilled work-in-progress. The provision matrix takes into account available external and internal credit risk factors such as credit ratings from credit rating agencies, financial condition, ageing of accounts receivable and the Company’s historical experience for customers.
The ageing of trade receivables at the reporting date that were not impaired are as follows :
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on exchange losses historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 7. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
b) Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the company in accordance with company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Company monitors rating, credit spreads and financial strength of its counter parties. Company monitors ratings, credit spread and financial strength of its counter parties. Based on ongoing assessment company adjust it’s exposure to various counterparties. Company’s maximum exposure to credit risk for the components of balance sheet is the carrying amount as disclosed in Note 8.
iii) Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash flow and collateral obligations without incurring unacceptable losses. Company’s objective is to, at all time maintain optimum levels of liquidity to meet its cash and collateral requirements. Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing at optimised cost.
The table summarises the maturity profile of company’s financial liabilities based on contractual undiscounted payments
“For the purpose of the Company’s capital management, capital includes issued equity capital , share premium and all other equity reserves. The primary objective of the Company’s capital management is to maximise 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. To maintain or adjust the capital structure, Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. 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, excluding discontinued operations.”
Note: 6. Explanation of transition to Ind AS
These are Company’s first financial statements prepared in accordance with Indian Accounting Standards (Ind AS) as notified under Companies’ (Indian Accounting Standards) Rules, 2015. In preparing the financial statements for the year ended 31 March 2016 and balance sheet as at 1 April 2015 (Date of transition), the Company has adjusted amounts reported previously in financial statements prepared in accordance with Indian Generally Accepted Accounting Principles (Indian GAAP). This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2015 and the financial statements for the year ended 31 March 2016.
“Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has elected to apply the following exemptions:”
1. Investment in subsidiaries to be carried at cost.
The Company has elected to carry the investment in subsidiaries at cost as at the transition date.
Upon an assessment of the estimates made under Indian GAAP the Company has concluded that there was no necessity to revise such estimates under Ind AS, except where estimates were required by Ind AS and not required by Indian GAAP
Explanation of transition to Ind AS
An explanation of how the transition from Indian GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flow is set out in the following tables and notes that accompany the tables. The reconciliations include
- equity reconciliation as at 1 April 2015;
- equity reconciliation as at 31 March 2016;
- profit reconciliation for the year ended 31 March 2016;
There are no material adjustments to the cash flow statements In the reconciliations mentioned above, certain reclassifications have been made from Indian GAAP financial information to align with the Ind AS presentation.
Notes to the reconciliations:
(a) Proposed dividend
Under Indian GAAP, dividend proposed after the date of the financial statements but prior to the approval of financial statements is considered as an adjusting event, and a provision for dividend is recognised in the financial statements of the period to which the dividend relates.
Under Ind AS, dividend declaration is considered as a nonadjusting event and provision for dividend is recognised only in the period when the dividend is approved by the shareholders in annual general meeting.
(b) Transaction cost incurred on borrowing
Under Indian GAAP, loans and borrowings are stated at historical cost. Under Ind AS, loans and borrowings are recognised at amortised cost using effective interest rate method.
(c) Defect liability provision
Under Indian GAAP, defect liability provision is recorded at transaction price. Under Ind AS, defect liability provision is discounted to its present value where the effect of time value of money is material. The imputed interest on the provision is subsequently recognised in statement of profit and loss.
(d) Interest free security deposit paid
Under Indian GAAP, interest-free lease security deposits paid are reported at their transaction values. Under Ind AS, interest-free security deposits are measured at fair value on initial recognition and at amortised cost on subsequent recognition. The difference between the transaction value and fair value of the lease deposit at initial recognition is treated as prepaid rentals. This amount is recognised in statement of profit and loss on a straight line basis over the lease term.
(e) Expected credit loss
On transition to Ind AS, the Company has recognised provision of loss allowance on trade receivables measured at amoutn equal to lifetime expected credit loss. Consequently, trade receivables measured at amortised cost reduced with a corresponding decrease in retained earnings on the date of transition.
(f) Employee benefit expenses - actuarial gains and losses and return on plan assets
Under Indian GAAP, actuarial gains and losses and return on plan assets on post-employment defined benefit plans are recognised immediately in statement of profit and loss. Under Ind AS, remeasurements which comprise of actuarial gains and losses, return on plan assets and changes in the effect of asset ceiling, if any, with respect to postemployment defined benefit plans are recognised immediately in other comprehensive income (OCI). Further, remeasurements recognised in OCI are never reclassified to statement of profit and loss.
Actuarial gains and losses are recognised in other comprehensive income and transferred to retained earnings. Accordingly, this adjustment does not have any impact on equity.
(g) Deferred tax
Under Indian GAAP, deferred taxes are recognised using income statement approach i.e. reflecting the tax effects of timing differences between accounting income and taxable income for the period. Under Ind AS, deferred taxes are recognised using balance sheet approach i.e. reflecting the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes using the income tax rates enacted or substantively enacted at reporting date. Also, deferred taxes are recognised on account of the above mentioned changes explained in notes (b) to (e), wherever applicable.
* One of the Sundry Creditor of the company registered under the MSME Act, 2006 has filed a case against the company claiming an amount of Rs. 32,28,769/- (including interest). The said creditor and the company have entered into an out of court settlement and the company has agreed to pay Rs. 28,74,641/- (excluding interest). The final outcome of the same will be known on disposal of the complaint by the designated court. The agreed amount has been already paid by the company
Note: 7. Disclosure of Creditors outstanding under MSMED Act, 2006
Disclosure of sundry creditors under current liabilities is based on the information available with the Company regarding the status of the suppliers as defined under the “Micro, Small and Medium Enterprises Development Act, 2006” (the Act). There are no delays in payment made to such suppliers and there is no overdue amount outstanding as at the Balance sheet date. Relevant disclosures as required under the Act are as follows:
The Company has taken certain Premises/Fixed assets under lease, leave and license agreements for the year which generally range between 11 months to 3 years. These arrangements are renewable by mutual consent on mutually agreed terms. The total lease rent and office rent payments amounting to Rs. 3,250.11/Lakhs (P.Y. Rs. 1,528.96 Lakhs) has been charged to Statement of Profit and Loss as Lease Rent Expense under Note No. 19 and Office Rent under Note No. 23. Also the company has entered into operating lease arrangement for equipments during the current year. Expenses for equipment leasing payments in respect of these equipments as on 31 March 2017 is as below:
Balances of Debtors, Creditors, Advances, Deposits, and Unsecured Loans etc are subject to confirmation and reconciliation.
In opinion of the Board of Directors of the company, the Current Assets, Loans and Advances are expected to be realized approximately at the value at which they are stated in the accounts in the ordinary course of business.
There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at 31st March 2017.
Segments have been identified in accordance with Indian Accounting Standards (Ind AS) 108 on Operating Segments considering the risk or return profiles of the business. As required under Ind AS 108, the Chief Operating Decision Maker (CODM) evaluates the performance and allocates resources based on analysis of various performance indicators. Accordingly, information has been presented for the Group’s operating segments and the company has identified business segment as primary segment. The reportable segment is Construction and Engineering Contracts and the business of Construction and Development of Real Estate is at a nascent stage and no actual operations have commenced.
Royalty on use of construction material is determined by the concerned authorities and the amount of Royalty payable as at year end has not been ascertained in absence of necessary confirmation from the said authorities and the management does not consider the same to be substantial and material.
Subsequent to the survey proceedings u/s 133 of the Income Tax Act initiated by the Department in the earlier years, the Company has filed an application before the Income Tax Settlement Commission for Assessment Year 2007-08 to 2013-14. The Income Tax liability including interest arising thereon based on the application made Rs. 710 Lakhs has been provided for the in accounts for the year ended 31st March 2015. Any additional liability for tax / interest / penalty arising on account of the adjustments made / to be made in the application will be provided / made as and when these are finally ascertained.
As per provisions of the Companies Act, 2013 the Company was required to spend Rs. 454.80/- lakhs (P.Y. Rs.492.42/- lakhs) on CSR activities during the preceding year. The Company had incurred expenditure relating to CSR activities amounting to Rs. 7.02/- lakhs (P.Y. Rs. 5.86/- lakhs) and the same is reflected in Other Expenses in Note 23.
The Board of Directors of the Company at its meeting held on 17 May 2017 has recommended a final dividend of Rs. 1.00 per share (10%) (Face value Rs.10/-) for the financial year 2016-17 subject to approval from shareholders.
The Company completed its Initial Public Offering (IPO) of Rs.43,000 lakhs pursuant to which 1,96,34,703 Number of Equity Shares of Rs.10 each were allotted at a price of Rs.219/- per equity share. The Equity shares of the Company were listed on National Stock Exchange and Bombay Stock Exchange on 11th August 2016. The details of Utilisation of IPO proceeds are as under:
Specified Bank Notes has been defined as Bank notes in notification of the Government of India, Ministry of Financial Department of Economic Affairs No. S.O.3407€, dated 08th November 2016.
Note: 18. Figures relating to previous years have been regrouped / rearranged, wherever necessary.