Shares reserved for issue under options and contracts/commitments
1. 9,55,303 equity shares (435,000 options newly added during the year ) of Rs.2 each are reserved under employee stock option scheme as on 31st March 2017 (Previous year 12,34,990 as on 31st Mar, 2016). Of this 4,38,553 Options, 2,12,250 Options, 174,000 options and 130,500 Options will vest in the year 2017-18, 2018-19, 2019-20, 2020-21 respectively.
2. On December 12, 2011, the Company issued 22,182 Zero Coupon Unsecured Foreign Currency Convertible Bonds of US$ 1,000 each for an amount of US$ 22.18 Mn. The Bonds are convertible at any time on and after December 31, 2012 up to the close of business on November 13, 2016 by holders of the Bonds into fully paid equity shares with full voting rights with a par value of Rs.2/- each at an initial conversion price of Rs.38.51 per share with a fixed rate of exchange on conversion of Rs.52.2285 to US$. Unless previously converted, redeemed or purchased and cancelled, the Bonds are due for redemption in US dollars at 132.8341 percent of principal amount on or before December 13, 2016 giving a Yield to Maturity of 5.76 percent per annum calculated on semi-annual basis.
3. On allotment of 4,59,117(Previous Year 2,45,400) shares under Employee Stock Option Scheme and transferred from Stock Option Outstanding account.
4. Provision for Pro-rata Premium on redemption of Foreign Currency Convertible Bonds.
5. In respect of options granted under the Companies Employees Stock Options Scheme and in accordance with the guidelines issued by Securities and Exchange Board of India the accounting value of options(based on market value of share on the date of grant of options minus the option price) is accounted as deferred employees compensation which is amortized on a straight line basis over the vesting period. Consequently employee benefit expenses includes Rs.0.19 Mn (previous year Rs.7.24 Mn) being amortization of deferred employee compensation after adjusting for reversal on account of options refunds/lapsed and re-imbursement of discount on option issued to Employees of the subsidiary.
The Hon''''ble Andhra Pradesh High Court, approved the Scheme of Arrangement for amalgamation. (the Scheme) vide its order dated 19th March, 2013 which interalia, permits creation of a capital reserve to be called Special Reserve to which shall be credited excess of value of assets over value of liabilities on amalgamation of the subsidiaries amounting to Rs.5,555.4 mn to be utilized by the Company to adjust there from any capital losses arising from transfer of assets and certain other losses, any balance remaining in the Special Reserve shall be available for adjustment against any future permanent diminution in the value of assets and exceptional items etc. as specified in the scheme and as the Board of directors may deem fit. In accordance with the Scheme an aggregate sum of Rs.3,034.1 mn has been adjusted with the Special Reserve till the year 2015-16.
In accordance with the scheme and on professional advice, the Board of Directors carried out the following further adjustments against Special Reserve during the year 2016-17
6. Provision for diminution in the value of Investments in a subsidiary of Rs.3.6 mn.
7. Provision for irrecoverable loans & advances to a subsidiary and an Associate aggregating to Rs.64.4 mn.
8. Irrecoverable loans and advances to a subsidiary of Rs.12.3 mn and to third parties made in earlier years aggregating to Rs.207.4 mn.
9. The above adjustments aggregating Rs.287.7 mn otherwise, required to be debited to the Statement of Profit and loss and adjusted against Special Reserve are not in accordance with Accounting Standard(AS) 5 ''''Net Profit or Loss for the period, prior period items and changes in accounting policies'''' and Accounting Standard(AS) 13 ''''Accounting for Investments''''. Had the Scheme not prescribed the above accounting treatment the accounts would have reflected as follows:
10. On transfer of Express Distribution and Supply Chain and Shipping businesses to separate subsidiaries in the year 2011-2012 , the primary operating business of the Company sit in the Balance Sheet as investments in subsidiaries and became major source of income by way of dividend. Accordingly, the Company has been advised that the dividend income of Rs.138.6 mn during the year from subsidiary (Previous year Rs.84.0 mn) and Management Fees of Rs.18.8 Mn during the year (Previous year Rs.24.9 mn) be considered as other operating income. This has no impact on the profit of the year.
11. Pursuant to the notification issued by the Ministry of Corporate Affairs dated 29th December 2011 on Accounting Standard 11, the company has opted to adjust the carrying cost of depreciable fixed assets to amortize the exchange differences on the Long term Foreign Currency Monetary Items over their tenure and the year ended balance in the account was carried forward from year to year in the “Foreign Exchange Monetary Items Translation Difference Account" (FCMITDA). FCMITDA has been fully amortized during the year.
12. There are other amounts due from subsidiaries of Rs.196.7 mn (Previous year Rs.219.9 mn). The above includes Rs.190 mn utilized by the subsidiary for acquiring land. The management is confident of recovery of the amount in due course and no provision is considered necessary for any possible losses that may arise in this behalf.
13. The company has investment of Rs.399.25 mn in equity share capital of the subsidiary Gati Kausar India Limited. On account of continuous losses incurred by the said subsidiary the value of investment is eroded to a considerable extent. The performance of the subsidiary is expected to improve in the near future. Under the circumstances no provision is considered necessary by the management at present for diminution in the value of investments.
14. Loans and Advances includes Rs.41 mn due from Air India Limited. The matter was referred to arbitration of the Arbitral Tribunal and the Arbitral tribunal passed an Award dated 17th September 2013, directing Air India Limited to pay an amount of Rs.268.20 mn to the Company and to pay interest @18% per annum on the awarded amount. Air India preferred an application before the Hon''''ble Delhi High Court seeking setting aside of the Award who directed Air India to deposit Rs.220 mn which has been paid to the company. In the circumstances, the dues from Air India Limited of Rs.41 mn included in Loans and Advances, are considered good for recovery by the management.
15. Details of Loans Given, Investments made and Guarantee given covered u/s 186 (4) of the Companies Act, 2013 Investments made are given under the respective heads (Refer Note 12)
Corporate Guarantee given by the company in respect of loans as at 31st March, 2017
16. The Board of Directors of the company has allotted 3,63,117 equity shares on exercise of options by the employees under the employee stock option scheme and 96,000 equity shares to Non-Executive Directors. Consequently the Equity Share Capital of the company increased from 8,77,22,937 equity shares of Rs.2/- each to equity shares 8,81,82,054 of Rs.2/- each during the year.
17. In the assessment for the accounting year ended 31st March 2012, the surplus on transfer of Express Distribution & Supply Chain business of Rs.1,241 mn to a subsidiary has been treated as income and raised demand of Rs.511.3 mn. On appeal, the Commissioner (Appeals) has deleted the addition. The Company has paid Rs.126 mn and also refunds due was adjusted to the tune of Rs.141 mn under protest which is treated as recoverable in books. Since the addition has deleted by the Commissioner Appeals, the said amount to be receivable from Income tax department. Against the order of Commissioner (Appeals), the income tax department has preferred an appeal with Income Tax Appellate Tribunal.
18. Income tax assessment for the accounting year ended 31st March 2014 was completed during the current quarter resulting in disallowance of significant amount of advances written off during the accounting year against which an appeal has been filed. Such disallowances have been adjusted against business losses during the year..
19. The Trustee of the bondholders (FCCBs) had filed a Civil Suit in the Secunderabad Court for specific performance for conversion of bonds into equity and the matter is still pending adjudication. The FCCB redemption has fallen due on 13th December 2016.
20. In accordance with terms of issue of Foreign Currency Convertible Bonds (FCCB) an amount of Rs.1,438.2 mn together with premium on redemption thereof of Rs.472.2 mn are due for redemption to the bondholders on or before December, 2016. The classification of the same as Long Term Liabilities / Provisions has been continued as in earlier years because of the pending litigation as explained in note 37(a) above
21. Disclosure on Specified Bank Notes(SBNs)
During the year, the company had specified notes or other denomination note as defined in the MCA notification G.S.R.308(E) dated 31 March,2017 on the details of specified Bank Notes(SBN) held and transacted during the period from 8 November 2016 to 30 December 2016, the denomination wise SBNs and other notes as per the notification is given below:
22. Related Party Disclosures
23. Related parties with whom transactions have taken place during the period
24. Key Managerial Personnel( KMP):
25. Mr. Mahendra Agarwal (Founder & CEO)
26. Mr Sanjeev Kumar Jain ( Director - Finance) ( Resigned w.e.f 31.10.2016)
27. Mr V S N Raju ( Company Secretary - Resigned w.e.f 28.04.2016)
28. Mr Amit Pathak (Company Secretary- Appointed w.e.f 04.08.2016)
29.The Board of Directors has recommended a dividend of Rs.0.80/- (40%) per equity share for the financial year ended 31st March 2017, which upon approval by the shareholders at the ensuing annual general meeting will be met out of reserves of the company.
30. Significant Accounting Policies
These financial statements have been prepared to comply with the Generally Accepted Accounting Principles in India (Indian GAAP), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013.
Recognition of Income & Expenditure
31. Income and expenditure are generally recognized on accrual basis in accordance with the applicable accounting standards and provision is made for all known losses and liabilities.
32. Freight Income is accounted when goods are delivered by the Company to customers.
33. Freight expenses are accounted when hired vehicles deliver goods to the Company at destination.
34. Having regard to the size of operations and the nature and complexities of the company''''s business, freight received/paid in advance is accounted as income/expenses on payment and interdivisional transfers are eliminated.
35. Year-end liability in respect of claims for loss and damages is provided as calculated by claims recovery agents.
Provident fund contribution is remitted to appropriate authority. Superannuation Fund
Superannuation fund contribution is remitted to approved trust fund.
36. Fixed Assets are stated at cost and / or at revaluation. Cost includes borrowing cost and indirect expenditure capitalized to the extent it relates to the construction activity or incidental thereto.
37. Depreciation is provided on straight line method at rates specified in Schedule II to the companies Act, 2013. Depreciation on addition /deduction is cancelled prorata from /to date of addition / deduction. Individual assets cost up to Rs.5,000/- depreciated fully in the year of acquisition.
Investments are stated at cost or at the fair value.
Petroleum products are valued at lower of cost and net realizable value.
Foreign Exchange Transaction
38. Foreign currency transactions are recorded at average rate for the month.
39. Monetary items in foreign currency at the yearend are converted in Indian currency at the yearend rates. In terms of the amendments to Accounting Standard II on The Effects of Changes in Foreign Exchange Rates, exchange differences relating to long-term monetary items are dealt with in the following manner:
40. Exchange difference relating to the long term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable capital asset are added to/deducted from the cost of the assets and depreciated over the balance life of the asset.
41. In other cases such differences are accumulated in a “Foreign Currency Monetary Item Transaction Difference Account" and amortized over the balance life of the long-term monetary item, not beyond 31st March 2020.
42. Any Income or expenses on account of exchange difference either on settlement or transaction recognized in the Statement of Profit & Loss.
43. In respect of forward exchange contracts, the difference between the forward rate and exchange rate at the inception of the contract is recognized as income or expenses over the contract.
Provision for tax is made for both current and deferred taxes. Provision for current income made on the current tax rates based on the working results of the year. The company provides for deferred tax based on the tax effect of timing difference resulting from the recognition of items in the accounts and in estimating its current tax provision. The effect on deferred taxes of a change in tax rate is recognized in the year in which the change is affected.
Impairment of Assets
Impairment of Assets are assessed at each balance sheet date and loss is recognized whenever recoverable amount of an asset is less than its carrying amount.