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Mar 31, 2025
2.7 Provisions and contingent liabilities
Provisions are recognized when there is a present
obligation as a result of a past event, it is probable
that an outflow of resources embodying economic
benefits will be required to settle the obligation and
there is a reliable estimate of the amount of the
obligation. Provisions are measured at the best
estimate of the expenditure required to settle the
present obligation at the Balance sheet date.
If the effect of the time value of money is material,
provisions are discounted using a current pre¬
tax rate that reflects, when appropriate, the risks
specific to the liability. When discounting is used,
the increase in the provision due to the passage of
time is recognized as a finance cost.
Contingent liabilities are disclosed when there
is a possible obligation arising from past events,
the existence of which will be confirmed only by
the occurrence or non occurrence of one or more
uncertain future events not wholly within the control
of the Company or a present obligation that arises
from past events where it is either not probable that
an outflow of resources will be required to settle or
a reliable estimate of the amount cannot be made.
Provisions, contingent liabilities and contingent
assets are reviewed at each Balance Sheet date.
Where the unavoidable costs of meeting the
obligations under the contract exceed the economic
benefits expected to be received under such
contract, the present obligation under the contract
is recognised and measured as a provision.
2.8 Commitments
Commitments are future liabilities for contractual
expenditure, classified and disclosed as follows:
a) estimated amount of contracts remaining to be
executed on capital account and not provided
for;
b) uncalled liability on shares and other
investments partly paid;
c) funding related commitment to subsidiary,
associate and joint venture companies; and
d) other non-cancellable commitments, if any, to
the extent they are considered material and
relevant in the opinion of management.
2.9 Financial instruments
A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
(a) Financial assets
(i) Initial recognition and measurement
At initial recognition, financial asset is
measured at its fair value plus, in the case of
a financial asset not at fair value through profit
or loss, transaction costs that are directly
attributable to the acquisition of the financial
asset. Transaction costs of financial assets
carried at fair value through profit or loss are
expensed in the Statement of Profit and Loss.
(ii) Subsequent measurement
For purposes of subsequent measurement,
financial assets are classified in following
categories:
a) at amortized cost; or
b) at fair value through other comprehensive
income; or
c) at fair value through profit or loss.
The classification depends on the entity''s
business model for managing the financial
assets and the contractual terms of the cash
flows.
Amortized cost: Assets that are held for
collection of contractual cash flows where
those cash flows represent solely payments
of principal and interest are measured at
amortized cost. Interest income from these
financial assets is included in finance income
using the effective interest rate method (EIR).
Fair value through other comprehensive
income (FVOCI): Assets that are held for
collection of contractual cash flows and for
selling the financial assets, where the assets''
cash flows represent solely payments of
principal and interest, are measured at fair
value through other comprehensive income
(FVOCI). Movements in the carrying amount are
taken through OCI, except for the recognition
of impairment gains or losses, interest revenue
and foreign exchange gains and losses which
are recognized in Statement of Profit and Loss.
When the financial asset is derecognized, the
cumulative gain or loss previously recognized
in OCI is reclassified from equity to Statement
of Profit and Loss and recognized in other
gains/ (losses). Interest income from these
financial assets is included in other income
using the effective interest rate method.
Fair value through profit or loss: Assets that
do not meet the criteria for amortized cost or
FVOCI are measured at fair value through profit
or loss. Interest income from these financial
assets is included in other income.
The company has currently excercised
the irrevocable option to present in Other
comprehensive Income, subsequent changes
in the Fair value of Equity Instruments. Such
an election has been made on instrument-by¬
instrument basis. The classification is made on
initial recognition and is irrevocable.
(iii) Impairment of financial assets
In accordance with Ind AS 109, Financial
Instruments, the Company applies expected
credit loss (ECL) model for measurement and
recognition of impairment loss on financial
assets that are measured at amortized cost
and FVOCI.
For recognition of impairment loss on financial
assets and risk exposure, the Company
determines that whether there has been a
significant increase in the credit risk since initial
recognition. If credit risk has not increased
significantly, 12-month ECL is used to provide
for impairment loss. However, if credit risk
has increased significantly, lifetime ECL is
used. If in subsequent years, credit quality of
the instrument improves such that there is no
longer a significant increase in credit risk since
initial recognition, then the entity reverts to
recognizing impairment loss allowance based
on 12 month ECL.
Life time ECLs are the expected credit losses
resulting from all possible default events over
the expected life of a financial instrument.
The 12 month ECL is a portion of the lifetime
ECL which results from default events that are
possible within 12 months after the year end.
ECL is the difference between all contractual
cash flows that are due to the Company in
accordance with the contract and all the cash
flows that the entity expects to receive (i.e. all
shortfalls), discounted at the original EIR. When
estimating the cash flows, an entity is required
to consider all contractual terms of the financial
instrument (including prepayment, extension
etc.) over the expected life of the financial
instrument. However, in rare cases when the
expected life of the financial instrument cannot
be estimated reliably, then the entity is required
to use the remaining contractual term of the
financial instrument.
ECL impairment loss allowance (or reversal)
recognized during the year is recognized as
income/expense in the statement of profit and
loss. In balance sheet, ECL for financial assets
measured at amortized cost is presented as
an allowance, i.e. as an integral part of the
measurement of those assets in the balance
sheet. The allowance reduces the net carrying
amount. Until the asset meets write off criteria,
the Company does not reduce impairment
allowance from the gross carrying amount.
(iv) Derecognition of financial assets
A financial asset is derecognized only when
a) the rights to receive cash flows from the
financial asset is transferred or
b) retains the contractual rights to receive
the cash flows of the financial asset, but
assumes a contractual obligation to pay
the cash flows to one or more recipients.
Where the financial asset is transferred then in
that case financial asset is derecognized only if
substantially all risks and rewards of ownership
of the financial asset is transferred. Where
the entity has not transferred substantially all
risks and rewards of ownership of the financial
asset, the financial asset is not derecognized."
(b) Financial liabilities
(i) Initial recognition and measurement
Financial liabilities are classified, at
initial recognition, as financial liabilities
at fair value through profit or loss and at
amortized cost, as appropriate.
All financial liabilities are recognized
initially at fair value and, in the case of
borrowings and payables, net of directly
attributable transaction costs.
(ii) Subsequent measurement
The measurement of financial liabilities
depends on their classification, as
described below:
Financial liabilities at fair value through
profit or loss
Financial liabilities at fair value through
profit or loss include financial liabilities
held for trading and financial liabilities
designated upon initial recognition
as at fair value through profit or loss.
Separated embedded derivatives are
also classified as held for trading unless
they are designated as effective hedging
instruments. Gains or losses on liabilities
held for trading are recognized in the
Statement of Profit and Loss.
Loans and borrowings
After initial recognition, interest-bearing
loans and borrowings are subsequently
measured at amortized cost using the EIR
method. Gains and losses are recognized
in Statement of Profit and Loss when the
liabilities are derecognized as well as
through the EIR amortization process.
Amortized cost is calculated by taking
into account any discount or premium
on acquisition and fees or costs that
are an integral part of the EIR. The EIR
amortization is included as finance costs
in the Statement of Profit and Loss.
(iii) Derecognition
A financial liability is derecognized
when the obligation under the liability
is discharged or cancelled or expires.
When an existing financial liability is
replaced by another from the same
lender on substantially different terms,
or the terms of an existing liability
are substantially modified, such an
exchange or modification is treated as
the derecognition of the original liability
and the recognition of a new liability.
The difference in the respective carrying
amounts is recognized in the Statement
of Profit and Loss as finance costs.
(c) Offsetting financial instruments
Financial assets and liabilities are offset and
the net amount is reported in the balance sheet
where there is a legally enforceable right to
offset the recognized amounts and there is an
intention to settle on a net basis or realize the
asset and settle the liability simultaneously. The
legally enforceable right must not be contingent
on future events and must be enforceable in
the normal course of business and in the event
of default, insolvency or bankruptcy of the
Company or the counterparty.
3 Significant accounting judgments, estimates and
assumptions
The preparation of financial statements requires
management to make judgments, estimates and
assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and the
accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes
that require a material adjustment to the carrying amount
of assets or liabilities affected in future years.
4 Estimates and assumptions
The key assumptions concerning the future and other
key sources of estimation uncertainty at the year end
date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described
below. The Company based its assumptions and
estimates on parameters available when the financial
statements were prepared. Existing circumstances
and assumptions about future developments, however,
may change due to market changes or circumstances
arising that are beyond the control of the Company. Such
changes are reflected in the assumptions when they
occur.
(a) Taxes
The extent to which deferred tax assets can be
recognized is based on an assessment of the
probability that future taxable income will be
available against which the deductible temporary
differences and tax loss carryforwards can be
utilized. In addition, significant management
judgment is required to determine the amount of
deferred tax assets that can be recognized, based
upon the likely timing and the level of future taxable
profits together with future tax planning strategies.
(b) Construction Contracts
Recognizing construction contract revenue requires
significant judgement in determining actual work
performed and the estimated costs to complete
the work, provision for rectification costs, variation
claims etc"
(c) In assessing the recoverability of the trade
receivables and contracts assets, management''s
judgement involves consideration of ageing status,
evaluation of litigations and the likelihood of
collection based on the terms of the contract
5 Standards (including amendments) issued but not yet
effective
Recent Indian Accounting Standards (Ind AS)
Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules
as issued from time to time. For the year ended March
31, 2025, MCA has not notified any new standards or
amendments to the existing standards applicable to the
Company.
Nature and Purpose of Reserves
Securities premium reserve
Securities premium reserve is used to record the premium on issue of shares. The reserve will be utilised in accordance with
provisions of the Act.
General Reserve
The Company created a General Reserve in earlier years pursuant to the provisions of the Companies Act wherein certain
percentage of profits were required to be transferred to General Reserve before declaring dividends. As per the Companies Act
2013, the requirement to transfer profits to General Reserve is not mandatory. General Reserve is a free reserve available to the
Company.
Capital reserve
Capital reserve was created under the previous GAAP out of the profit earned from a specific transaction of capital nature. Capital
reserve is not available for the distribution to the shareholders.
Security
(**) a) Primary - First Pari-Passu charge over the pooled Assets i.e., Movable & Immovable (both Fixed and Current)
Assets of the Company with other Working Capital Lenders.
b) Collateral (EM) - Equitable Mortgage of Land & Building admeasuring 0.96 Acres at Ambattur Industrial Estate, Korattur,
Chennai on Pari-Passu basis
c) Collateral (Pledge)- Pledge of 14,24,89,592 equity shares of SEPC Limited held by Mark AB WelfareTrust on Pari-Passu basis
d) Collateral (CG) - Corporate Guarantee of Mark AB Capital Investment LLC, Dubai & Mark AB Investment India Pvt
Ltd, New Delhi
23.2 During the year ended March 31,2025, the Company has obtained unsecured loan from a related party amounting to Rs.325
Lakhs (March 31,2024 Rs 4,000 lakhs). The terms of repayment is bullet repayment of principal on 31-December-2035. The
loan carries interest rate at 0.10% per annum payable half yearly from March 2024 till December 2035. The said loan has
been recognised at amortised cost and the resultant gain on initial recognition amounting to Rs 213.17 lakhs is credited to
other income in the statement of profit and loss under INDAS 109-Financial Instruments. (Also refer note 34)
23.3 The Company has not been declared a wilful defaulter by any bank or financial institution or any other lender during the
current year.
27.1 a) Primary - First Pari-Passu charge over the pooled Assets i.e., Movable & Immovable (both Fixed and Current) Assets of
the Company with other Working Capital Lenders.
b) Collateral (EM) - Equitable Mortgage of Land & Building admeasuring 0.96 Acres at Ambattur Industrial Estate, Korattur,
Chennai on Pari-Passu basis
c) Collateral (Pledge)- Pledge of 14,24,89,592 equity shares of SEPC Limited held by Mark AB Welfare Trust on Pari-Passu
basis
d) Collateral (CG) - Corporate Guarantee of Mark AB Capital Investment LLC, Dubai & Mark AB Investment India Pvt Ltd,
New Delhi
27.2 The quarterly statements filed by the Company with the banks and financial institutions are in agreement with the books of
accounts.
27.3 The Company has utilised the funds as per the terms of the Borrowings. Also, the Company has not used funds raised on
short term basis for long term purpose.
27.4 Rate of Interest- The interest rate is charged @ 9.00% p.a. w.e.f 1st October 2020
28.1 The average credit period ranges from 30 days to 90 days, depending on the nature of the item or work. The work orders
include element of retention, which would be payable on completion of a milestone, completion of the contract or after a
specified period from completion of the work. The terms also would include back to back arrangement wherein, certain
amounts are payable on realisation of corresponding amounts by the company from the customer. No interest is payable
for delay in payments, unless otherwise specifically agreed in the order or as required by a legislation, like Micro, Small
and Medium Enterprises Development Act ("MSMED Act"). The company has a well defined process for ensuring regular
payments to the vendors.
28.2 Based on the information available with the Company, there are no outstanding dues and payments made to any supplier
of goods and services beyond the specified period under Micro, Small and Medium Enterprises Development Act, 2006
[MSMED Act]. There is no interest payable or paid to any suppliers under the said Act.
40.1 Exceptional items for the year ended March 31, 2025 of Rs 1,389.25 lakhs, represents loss on extinguishment of financial
liability upon conversion of Compulsorily convertible debentures (CCDs) into equity.On 28.06.2022 consequent to the approval
of Resolution Plan under RBI Circular dt.07-06-2019 on Prudential Framework for Resolution of Stressed Assets, CCDs were
issued upon conversion of partial debt. The CCDs were converted into equity shares based on the option excercised by the
CCD holders and approved by the Board of Directors on 28.11.2024. These equity shares are issued at price of Rs 26.73 per
share which is determined based on the minimum price of equity shares being higher of:
a) the volume weighted average price of the related equity shares quoted on the recognised stock exchange during the
ninety trading days preceding the relevant date; and
b) the volume weighted average prices of the related equity shares quoted on a recognised stock exchange during the ten
trading days preceding the relevant date.
Approval from stock exchanges are awaited for listing and trading of the said equity shares.
(D) The Company has business losses which are allowed to be carried forward and set off against available future taxable profits
under the Income Tax Act, 1961, in respect of which the Company has created Deferred Tax Assets ("DTA"). The Company
has recognised DTA on the carry forward unabsorbed business losses only to the extent of Rs.88,343.94 lakhs (March 31,
2023: Rs.1,11,216.10 lakhs) out of the total carry forward unabsorbed business losses of Rs.1,04,486.51 lakhs that was
available as at March 31, 2024 (March 31, 2023- Rs.1,37,510.14 lakhs). The DTA amount recognised by the Company on
these carry forward unabsorbed business losses amounts to Rs. 30,870.91 lakhs as at March 31, 2024 (March 31, 2023 -
Rs. 33,289.92 lakhs). Considering the potential order book as on date, the expected reduction in finance cost in the light of
implementation of resolution plan with its lenders, the current projects in the pipeline and a positive future outlook for the
Company, the management of the Company is confident of generating sufficient taxable profits in the future and adjust them
against these unabsorbed business losses, and accordingly, the entire DTA can be utilised before the expiry of the period for
which this benefit is available.
The Company is exposed to various financial risks. These risks are categorized into market risk, credit risk and liquidity risk.
The Company''s risk management is coordinated by the Board of Directors and focuses on securing long term and short term
cash flows. The Company does not engage in trading of financial assets for speculative purposes.
(A) 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 and financial instruments.
(i) 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 outstanding debt in local currency is on fixed rate basis and hence not
subject to interest rate risk.
(ii) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates
primarily to the Company''s operating activities (when revenue or expense is denominated in a different currency from
the Company''s functional currency).
(B) Credit risk
The credit risk to the company arises from two sources:
a) Customers, who default on their contractual obligations, thus resulting in financial loss to the Company
Company evaluates the credentials of a customer at a very early stage of the bid. Company has adopted a policy of
3 tier verification before participating for any bid. The first step of such verification includes verification of customer
credentials. The company, as part of verification of the customer credentials, ensures the compliance with the following
criterion
(i) Customer''s financial health by examining the audited financial statements
(ii) Whether the Customer has achieved the financial closure for the work for which the company is bidding
(iii) Where the customer is Public Sector Undertaking, sanction and availability of adequate financial resources for the
proposed work.
Company makes provision on it''s financial assets, on every reporting period, as per Expected Credit Loss Method. The
provision is made separately for each financial assets of each business line. The percentage at which the provision is
made, is determined on the basis of historical experience of such provisions, modified to the current and prospective
business and customer profile.
Trade receivables consist of large number of customers, spread across diverse industries and geographical areas.
Majority of the customers of the company comprise of Public Sector Undertakings, with whom the company does not
perceive any credit risk. As regards the customers from private sector, company carries out financial evaluation on
regular basis and provides for any amount perceived as non realisable, in the books of accounts.
b) Non certification by the customers, either in part or in full, the works billed as per the contract, being non claimable cost
as per the terms of the contract with the customer
Non certification of works billed The Company has contract claims from customers including costs on account of
account of delays / changes in scope / design by them etc. which are at various stages of discussions / negotiations
or under arbitrations. The realisability of these claims are estimated based on contractual terms, historical experience
with similar claims as well as legal opinion obtained from internal and external experts, wherever necessary. Changes
in facts of the case or the legal framework may impact realisability of these claims
The Company provides for doubtful receivables/advances and expected credit loss based on 12 months and lifetime
expected credit loss basis for following financial assets:
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. The primary objective of the Company''s capital management is to maximize
the shareholder value and to ensure the Company''s ability to continue as a going concern.
The Company has not distributed any dividend to its shareholders. The Company monitors Net Debt to Capital ratio i.e. total
debt in proportion to its overall financing structure, i.e. equity and debt. Total debt comprises of term loans and cash credits.
The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and
the risk characteristics of the underlying assets.
# Represents total revenue from operations
58 There are no transactions with vendors under the Micro, Small and Medium Enterprises Development Act, 2006, this has
been determined on the basis of information available with the Company.
59 "The Company (SEPC) and Twarit Consultancy Services Private Limited (TCPL) were the Respondents in respect of an
International Arbitration before The Singapore International Arbitration Centre (SIAC) filed by GPE (INDIA) Ltd, GPE JVILtd,
Gaja Trustee Company Private Ltd (the Claimants) in connection with the investments made by the claimants in an associate
company of the Company. SIAC vide its award dated January 07, 2021 awarded damages jointly and severally on the
Respondents to the tune of Rs.19,854.10 lakhs and a sum of SGD 372,754.79 towards Arbitration expenses. These are to be
paid along with simple interest @ 7.25% pa from July 21,2017 until the date of payment.
The Respondents preferred an appeal before the High Court of Republic of Singapore against the award of SIAC and the
same is held in favour of the claimants. Recognition and Enforcement petition was filed by the claimants before Madras High
Court which recognised the foreign award subject to obtaining of prior approval from the RBI. Aggrieved by this the claimants
have moved the Supreme Court for certain directions. Supreme Court directed the respondents to pay Rs 12,500 lakhs with
interest @7.25 % pa from 07.01.2021 till the date of payment. The respondent has preferred an interim application on this
order which was disposed off on 29.04.2025 by ordering payment of Rs 12,000 lakhs within two working days and interest
@ 7.25 % pa from 07.01.2021 within three weeks to remit to the Registrar Supreme Court. Accordingly M/s TCPL remitted Rs
12,000 lakhs on 01.05.2025 and sought time for remittance of interest. Supreme Court vide Order dated 21.05.2025 directed
TCPL to remit Rs 1,000 lakhs within two working days and the balance Rs 2,950 lakhs with accrued interest on or before
31.07.2025. M/s Twarit has remitted Rs 1,000 lakhs on 23.05.2025.
The Company has entered into an Inter-se arrangement dated September 29, 2015 with TCPL and Shri Housing Pvt Ltd by
which, Company will be fully indemnified, in case of any liability arising out of any Suits, Proceedings, Disputes, Damages
payable by the Company on any defaults arising out of the above. The management is confident that there will be no liability
which would devolve on the Company from the proceedings as the Company is fully indemnified by virtue of the said Inter-se
arrangement.
60 Mokul Shriram EPC JV (JV Company) where SEPC Limited is a JV partner, have won the complaint against Export Credit
Guarantee Corporation of India Limited (ECGC) before the National Consumer Disputes Redressal Commission,(NCDRC)
New Delhi, in connection with the project executed in Basra, Iraq. NCDRC, vide their order dated January 27, 2021, allowed
the claims and directed ECGC to pay a sum of Rs. 26,501 lakhs along with simple interest @ 10% pa. with effect from
September 19, 2016 till the date of realisation to the JV Company within a period of three months from the date of order,
failing which ECGC will be liable to pay compensation in the form of simple interest @ 12% pa. ECGC had filed an appeal
against the order of NCDRC New Delhi, before Supreme Court, and the case is pending for disposal.
61 The Company has made net profit during the year ended March 31,2025 amounting to Rs 2,514.57 lakhs and as of that date
has accumulated losses aggregating Rs. 2,10,867.57 Lakhs. Considering the positive developments of implementation of
resolution plan approved in the previous year, completion of Rights issue, additional funding by Investor for working capital
together with plans to meet financial obligations in future out of the cash flows from execution of the pipeline of orders in
hand, business plans, sanctioned non-fund based facilities etc, these financial statements are prepared on a going concern
basis.
62 ine code on social security zuzu (me code) relating to employee benefits, auring tne employment ana post-employment,
has received Presidential assent on September 28, 2020. The Code has been published in the Gazette of India. Further, the
Ministry of Labour and Employment has released draft rules for the Code on November 13, 2020. However, the effective date
from which the changes are applicable is yet to De notified and rules for quantifying the financial impact are also not yet
issued.
The Company will assess the impact of the Code and will give appropriate impact in the financial statements in the period in
which, the Code becomes effective and the related rules to determine the financial impact are published.
63 Relationship with Struck off Companies under section 248 of the Companies Act, 2013 or section 560 of Companies Act,
1956,
The Company does not have transactions with companies struck off under section 248 of the Companies Act, 2013 or
section 560 of Companies Act, 1956, during the year.
64 Utilisation of Borrowed funds and Securities Premium:
(i) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign
entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever Dy or on behalf
of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
ii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with
the understanding (whether recorded in writing or otherwise) that the Company shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf
of the Funding Party (Ultimate Beneficiaries) or
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
66 Compliance with number of layers of companies
The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the
Companies (Restriction on number of Layers) Rules, 2017.
67 Undisclosed income
The Company does not have any undisclosed income which is not recorded in the books of account that has been surrendered
or disclosed as income during the year (previous year) in the tax assessments under the Income Tax Act, 1961 (such as,
search or survey or any other relevant provisions of the Income Tax Act, 1961.)
68 Details of Crypto Currency or Virtual Currency
The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
69 Registration of charges or satisfaction with Registrar of Companies (ROC)
The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
70 The Board, duly taking into account all the relevant disclosures made has approved these financial statements in its meeting
held on May 29, 2025.
71 The figures for the previous year have been reclassified/ regrouped wherever necessary for better understanding and
comparability.
As per our report of even date For and on behalf of the Board of Directors of
For MSKA & Associates SEPC Limited
Chartered Accountants CIN - L74210TN2000PLC045167
Firm Registration No. 105047W
T.V.Ganesh N K Suryanarayanan R Ravichandran
Partner Managing Director & CEO Director
Membership No: 203370 DIN: 01714066 DIN: 01920603
T.Sriraman R S Chandrasekharan
Company Secretary Chief Financial Officer
Membership No:A68102
Place: Chennai Place: Chennai
Date: May 29, 2025 Date: May 29, 2025
Mar 31, 2024
2.7 Provisions and contingent liabilities
Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date.
If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date. Where the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under such contract, the present obligation under the contract is recognised and measured as a provision.
2.8 Commitments
Commitments are future liabilities for contractual expenditure, classified and disclosed as follows:
a) estimated amount of contracts remaining to be executed on capital account and not provided for;
b) uncalled liability on shares and other investments partly paid;
c) funding related commitment to subsidiary, associate and joint venture companies; and
d) other non-cancellable commitments, if any, to the extent they are considered material and relevant in the opinion of management.
2.9 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(a) Financial assets
(i) Initial recognition and measurement
At initial recognition, financial asset is measured at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the Statement of Profit and Loss.
(ii) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
a) at amortized cost; or
b) at fair value through other comprehensive income; or
c) at fair value through profit or loss.
The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method (EIR).
Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in Statement of Profit and Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. Interest income from these financial assets is included in other income.
The company has currently excercised the irrevocable option to present in Other comprehensive Income , subsequent changes in the Fair value of Equity Instruments. Such an election has been made on instrument-byinstrument basis. The classification is made on initial recognition and is irrevocable.
(iii) Impairment of financial assets
In accordance with Ind AS 109, Financial Instruments, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on financial assets that are measured at amortized cost and FVOCI.
For recognition of impairment loss on financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in subsequent years, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12 month ECL.
Life time ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12 month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the year end.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider all contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.
ECL impairment loss allowance (or reversal) recognized during the year is recognized as income/expense in the statement of profit and loss. In balance sheet, ECL for financial assets measured at amortized cost is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
(iv) Derecognition of financial assets
A financial asset is derecognized only when
a) the rights to receive cash flows from the financial asset is transferred or
b) retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the financial asset is transferred then in that case financial asset is derecognized only if substantially all risks and rewards of ownership of the financial asset is transferred. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.
(b) Financial liabilities
(i) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss and at amortized cost, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs.
(ii) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in Statement of Profit and Loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.
(iii) Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss as finance costs.
(c) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
3 Significant accounting judgments, estimates and assumptions
The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future years.
4 Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the year end date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
(a) Taxes
The extent to which deferred tax assets can be recognized is based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences and tax loss carryforwards can be utilized. In addition, significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
(b) Construction Contracts
Recognizing construction contract revenue requires significant judgement in determining actual work performed and the estimated costs to complete the work, provision for rectification costs, variation claims etc
5 Standards (including amendments) issued but not yet effective
Recent Indian Accounting Standards (Ind AS)
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
Corporate Guarantees of SVL ltd and SVL Trust gets released on March 31, 2024 upon completion of 18 months from the date of Resolution Plan , as there was no default for a consecutive period of 12 months as defined in RBI Circular dated 7th June 2019.
Rate of Interest- The interest rate is charged @ 9.00% p.a. w.e.f 1st October 2020
23.2 Implementation of Resolution Plan
The Resolution Plan (RP) for restructuring of the debt, submitted to the lenders, under the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 issued by Reserve Bank of India vide its circular dated June 7, 2019 (the "RBI Circular"), was approved by the consortium lenders and implemented on 30th September 2022.
The key features of the Resolution Plan are as follows:
1. Equity Infusion by Prospective Investor - Minimum of '' 35,000 Lakhs. Preferential Issue of Equity Shares subject to the pricing as per the SEBI (ICDR) Regulations 2015 to the Investor for 26.4% stake in the Company.
2. Conversion of a part of the existing bank debts into '' 17,500 Lakhs of Non-Convertible Debentures (NCD) and '' 17,500 Lakhs of Compulsory Convertible Debenture (CCD).
3. Charging rate of interest @ 9.00% p.a. w.e.f 1st October 2020.
4. Banks to allow utilization of vacancy in Non-Fund Based Facilities and Fund based limits already sanctioned and available to the Company, post implementation of the plan.
5. Prospective Investor to provide Corporate Guarantee to lenders for entire facilities in lieu of Corporate Guarantees of SVL Ltd and SVL Trust. However, the Corporate Guarantees of SVL ltd and SVL Trust shall be released on March 31, 2024 on complaince of the stipulation that after 18 months from the date of RP, if there are no default for a consecutive period of 12 months as defined in RBI Circular dated 7th June 2019.
6. Continuation of Margin of 15% on stock and book debts and cover period of 270 days for receivable.
The Company has accounted for the CCD and NCD as per IND AS 109- Financial Instruments
The CCD and NCD have been classified as financial liability as there is contractual obligation to deliver cash over a period of 14 years in terms of repayment of principal and interest. CCD and NCD are initially recognised at amortised cost using the effective interest method at 9.00%. The resultant gain or loss at initial recognition is recognised as exceptional gain in the statement of profit and loss. (Also refer Note no 40)
23.3 During the year ended March 31,2024, the Company has obtained unsecured loan from a related party amounting to ''4,000 Lakhs( March 31,2023 ''900 lakhs). The terms of repayment is bullet repayment of principal on 31-December-2035. The loan carries interest rate at 0.10% per annum payable half yearly from March 2024 till December 2035. The said loan has been recognised at amortised cost and the resultant gain on initial recognition is credited to other income in the statement of profit and loss under INDAS 109-Financial Instruments. (Also refer note 34)
23.4 The Company has not been declared a wilful defaulter by any bank or financial institution or any other lender during the current period.
The Company is exposed to various financial risks. These risks are categorized into market risk, credit risk and liquidity risk. The Company''s risk management is coordinated by the Board of Directors and focuses on securing long term and short term cash flows. The Company does not engage in trading of financial assets for speculative purposes.
(A) 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 and financial instruments.
(i) 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 outstanding debt in local currency is on fixed rate basis and hence not subject to interest rate risk.
(ii) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities (when revenue or expense is denominated in a different currency from the Company''s functional currency).
The net exposure to foreign currency in respect of recognized financial assets, recognized financial liabilities and derivatives is as follows:
a) Forward exchange contracts entered into by the Company and outstanding as on March 31,2024 - Nil (March 31, 2023- Nil)
b) Foreign Currency exposure
(B) Credit risk
The credit risk to the company arises from two sources:
a) Customers, who default on their contractual obligations, thus resulting in financial loss to the Company
Company evaluates the credentials of a customer at a very early stage of the bid. Company has adopted a policy of 3 tier verification before participating for any bid. The first step of such verification includes verification of customer credentials. The company, as part of verification of the customer credentials, ensures the compliance with the following criterion
(i) Customer''s financial health by examining the audited financial statements
(ii) Whether the Customer has achieved the financial closure for the work for which the company is bidding
(iii) Where the customer is Public Sector Undertaking, sanction and availability of adequate financial resources for the proposed work.
Company makes provision on it''s financial assets, on every reporting period, as per Expected Credit Loss Method. The provision is made separately for each financial assets of each business line. The percentage at which the provision is made, is determined on the basis of historical experience of such provisions, modified to the current and prospective business and customer profile.
Trade receivables consist of large number of customers, spread across diverse industries and geographical areas. Majority of the customers of the company comprise of Public Sector Undertakings, with whom the company does not perceive any credit risk. As regards the customers from private sector, company carries out financial evaluation on regular basis and provides for any amount perceived as non realisable, in the books of accounts.
b) Non certification by the customers, either in part or in full, the works billed as per the contract, being non claimable cost as per the terms of the contract with the customer
Non certification of works billed The Company has contract claims from customers including costs on account of account of delays / changes in scope / design by them etc. which are at various stages of discussions / negotiations or under arbitrations. The realisability of these claims are estimated based on contractual terms, historical experience with similar claims as well as legal opinion obtained from internal and external experts, wherever necessary. Changes in facts of the case or the legal framework may impact realisability of these claims
The Company provides for doubtful receivables/advances and expected credit loss based on 12 months and lifetime expected credit loss basis for following financial assets:
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. The primary objective of the Company''s capital management is to maximize the shareholder value and to ensure the Company''s ability to continue as a going concern.
The Company has not distributed any dividend to its shareholders. The Company monitors Net Debt to Capital ratio i.e. total debt in proportion to its overall financing structure, i.e. equity and debt. Total debt comprises of term loans and cash credits. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
58 There are no transactions with vendors under the Micro, Small and Medium Enterprises Development Act, 2006, this has been determined on the basis of information available with the Company.
59 The Company (SEPC) and Twarit Consultancy Services Private Limited (TCPL) were the Respondents in respect of an International Arbitration before The Singapore International Arbitration Centre (SIAC) filed by GPE (INDIA) Ltd, GPE JVILtd, Gaja Trustee Company Private Ltd (the Claimants) in connection with the investments made by the claimants in an associate company of the Company. SIAC vide its award dated January 07, 2021 awarded damages jointly and severally on the Respondents to the tune of ''19,854.10 lakhs and a sum of SGD 372,754.79 towards Arbitration expenses. These are to be paid along with simple interest @ 7.25% pa from July 21,2017 until the date of payment.
The Respondents preferred an appeal before the High Court of Republic of Singapore against the award of SIAC and the same is held in favour of the claimants. Recognition and Enforcement petition was filed by the claimants before Madras High Court which recognised the foreign award subject to obtaining of prior approval from the RBI. Aggrieved by this the claimants have moved the Supreme Court for certain directions. Supreme Court vide Order dated 17.05.2024 directed the respondents to remit ''12,500 lakhs with Interest @ 7.25% pa from 07.09.2021 till the date of payment, on or before July 29, 2024 being the date of next hearing. However, the Company has entered into an Inter-se arrangement dated September 29, 2015 with TCPL and Shri Housing Pvt Ltd by which, Company will be fully indemnified, in case of any liability arising out of any Suits, Proceedings, Disputes, Damages payable by the Company on any defaults arising out of the above.
The management is confident that there will be no liability which would devolve on the Company from the proceedings as the Company is fully indemnified by virtue of the said Inter-se arrangement.
60 Mokul Shriram EPC JV (JV Company) where SEPC Limited is a JV partner, have won the complaint against Export Credit Guarantee Corporation of India Limited (ECGC) before the National Consumer Disputes Redressal Commission,(NCDRC) New Delhi, in connection with the project executed in Basra, Iraq. NCDRC, vide their order dated January 27, 2021, allowed the
claims and directed ECGC to pay a sum of '' 26,501 lakhs along with simple interest @ 10% pa. with effect from September 19, 2016 till the date of realisation to the JV Company within a period of three months from the date of order, failing which ECGC will be liable to pay compensation in the form of simple interest @ 12% pa. ECGC had filed an appeal against the order of NCDRC New Delhi, before Supreme Court, and the case is pending for disposal.
61 The Company has made net profit during the year ended March 31, 2024 amounting to ''2,267.13 lakhs and as of that date has accumulated losses aggregating '' 2,13,382.14 Lakhs. Considering the positive developments of implementation of resolution plan approved in the previous year, completion of Rights issue, additional funding by Investor for working capital together with plans to meet financial obligations in future out of the cash flows from execution of the pipeline of orders in hand, business plans, sanctioned non-fund based facilities etc, these financial statements are prepared on a going concern basis.
62 The Code on Social Security 2020 (''the Code'') relating to employee benefits, during the employment and post-employment, has received Presidential assent on September 28, 2020. The Code has been published in the Gazette of India. Further, the Ministry of Labour and Employment has released draft rules for the Code on November 13, 2020. However, the effective date from which the changes are applicable is yet to be notified and rules for quantifying the financial impact are also not yet issued.
The Company will assess the impact of the Code and will give appropriate impact in the financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
63 Relationship with Struck off Companies under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956,
The Company does not have transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956 , during the year
64 Utilisation of Borrowed funds and Securities Premium:
(i) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
ii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries"
65 Compliance with number of layers of companies
The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
66 Undisclosed income
The Company does not have any undisclosed income which is not recorded in the books of account that has been surrendered or disclosed as income during the year (previous year) in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.)
67 Details of Crypto Currency or Virtual Currency
The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
68 Registration of charges or satisfaction with Registrar of Companies (ROC)
The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
69 Subsequent events
1) The Board of directors in their meeting held on January 29, 2024,have approved the issuance of equity shares of the Company for an amount not exceeding ''20,000 lakhs by way of rights issue to the eligible equity shareholders in accordance with the applicable laws, including Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2015 , Companies Act 2013 and Rules made thereunder from time to time, subject to regulatory and statutory approvals. Consequently on April 17, 2024, the Company has filed the Draft letter of Offer with the Securities and Exchange Board of India (''SEBI'') for which requisite regulatory approval is awaited.
2) Subsequent to year ended March 31, 2024,the Company has newly incorporated a wholly owned subsidiary namely -SEPC Arabia Limited One Person Company, in Saudi Arabia for the purpose of exploiting the market potential in the kingdom of Saudi Arabia as well as strengthen our presence in Gulf Cooperation Council region (GCC) using Company''s qualifications and promoter MARK AB experience in that region.
70 The Board, duly taking into account all the relevant disclosures made has approved these financial statements in its meeting held on May 28, 2024.
71 The figures for the previous year have been reclassified/ regrouped wherever necessary for better understanding and comparability.
Summary of significant accounting policies 2
The accompanying notes are an integral part of the standalone financial statements
As per our report of even date For and on behalf of the Board of Directors of
For MSKA & Associates SEPC Limited
Chartered Accountants CIN - L74210TN2000PLC045167
Firm Registration No. 105047W
Geetha Jeyakumar N K Suryanarayanan R Ravichandran
Partner Managing Director & CEO Director
Membership No: 029409 DIN: 01714066 DIN: 01920603
T.Sriraman R S Chandrasekharan
Company Secretary Chief Financial Officer
Membership No:A68102
Place: Chennai Place: Chennai
Date: May 28, 2024 Date: May 28, 2024
Mar 31, 2023
16.1 The average credit period allowed to customers is between 30 days to 60 days. The credit period is considered from the date of Invoice. Further, a specified amount of bill is held back by the customer as retention money, which is payable as per the credit period, from the date such retention becomes due. The retention monies held by customers become payable on completion of a specified milestone or after the Defect Liability Period of the project, which is normally 1 year after the completion of the project, as per terms of respective contract. No Interest is payable by the customers for the delay in payments of the amounts over due. The Company evaluates, the financial health, market reputation, credit rating of the customer, before entering into the contract. The company''s customers comprise of public sector undertakings as well as private entities.
*The stock exchanges vide their letters dated February 02, 2023 has approved Mark AB Capital Investment LLC, Dubai as promoters and SVL Limited has been reclassified under Public holding with effect from February 03, 2023.
(d) Terms/rights attached to the shares
The Company has issued equity shares having a par value of '' 10 per share. All these shares have the same rights and preferences with respect to payment of dividend, repayment of capital and voting rights.
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.
The Company has only one class of share capital, i.e., equity shares having face value of '' 10 per share. Each holder of equity share is entitled to one vote per share.
f) The Resolution Plan (RP) was implemented by the Company and Lenders, upon completion of compliance of all conditions precedent to the satisfaction of the consortium lenders and RP was effective from September 30, 2022, with change in Management as per the RP formulated under the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 vide its circular dated June 07, 2019 (''the RBI Circular" / "Regulatory Framework"). Consequent to the implementation of resolution plan, Mark AB Capital Investment LLC, Dubai acquired 26.48% in equity of the Company.
During the year ended March 31, 2023, pursuant to the Resolution Plan, Company has received Rs. 35,000 Lakhs of equity and has allotted 35,00,00,000 equity shares of Rs. 10 each on preferential basis to Mark AB Capital Investment LLC, Dubai and shall be subject to lock-in for such period as may be prescribed under the ICDR Regulations. As at September 30, 2022 the Company has utilized the entire proceeds towards the intended purpose. The paid-up equity capital of the Company as on date is Rs. 1,32,152.90 Lakhs - divided into 1,32,15,29,018 equity shares of Rs.10/- each.
During the Year ended March 31, 2023, pursuant to the Resolution Plan, Company has issued 1,75,00,000 Compulsorily Convertible Debentures(CCD) of Rs. 100/- each and 1,75,00,000 Non-Convertible Debenture(NCD) of Rs. 100/- each aggregating to Rs. 35,000 Lakhs by way of conversion of existing loans of lenders. (Refer Note no 24.2)
Nature and Purpose of Reserves Securities premium reserve
Securities premium reserve is used to record the premium on issue of shares. The reserve will be utilised in accordance with provisions of the Act.
General Reserve
The Company created a General Reserve in earlier years pursuant to the provisions of the Companies Act wherein certain percentage of profits were required to be transferred to General Reserve before declaring dividends. As per the Companies Act 2013, the requirement to transfer profits to General Reserve is not mandatory. General Reserve is a free reserve available to the Company.
Capital reserve
Capital reserve was created under the previous GAAP out of the profit earned from a specific transaction of capital nature. Capital reserve is not available for the distribution to the shareholders.
Security
*Primary Exclusive charge on 5 Wind Electric Generator of 1.5 MW
**First Paripassu charge on Pooled Assets ie., all movable (both fixed, current and non-current) Immovable assets of the company and Corporate Guarantee of MARK AB LLC Dubai, Mark AB Capital Investments India Private Limited ,SVL Ltd and SVL Trust.However, the Corporate Guarantees of SVL ltd and SVL Trust shall be released after 18 months from the date of RP , if there is no default for a consecutive period of 12 months as defined in RBI Circular dated 7th June 2019.
24.2 Implementation of Resolution Plan
The Company submitted a debt resolution plan to the lenders for restructuring of the debt ("Resolution Plan") under the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 issued by Reserve Bank of India vide its circular dated June 7, 2019 (the "RBI Circular"), which was approved by the consortium lenders and implemented on 30th September 2022.
The key features of the Resolution Plan are as follows:
1. Equity Infusion by Prospective Investor - Minimum of Rs. 35,000 Lakhs. Preferential Issue of Equity Shares subject to the pricing as per the SEBI (ICDR) Regulations 2015 to the Investor for 26.48% stake in the Company.
2. Conversion of a part of the existing bank debts into Rs. 17,500 Lakhs of Non-Convertible Debentures (NCD) and Rs. 17,500 Lakhs of Compulsory Convertible Debenture (CCD).
3. Charging rate of interest on the CC facility @ 9.00% p.a. (1 year MCLR 1.75%) w.e.f 1st October 2020.
4. Banks to allow utilization of vacancy in Non-Fund Based Facilities and Fund based limits already sanctioned and available to the Company, post implementation of the plan.
5. Prospective Investor to provide Corporate Guarantee to lenders for entire facilities in liee of Corporate Guarantees of SVL Ltd and SVL Trust. However, the Corporate Guarantees of SVL ltd and SVL Trust shall be released after 18 months from the date of RP , if there is no default for a consecutive period of 12 months as defined in RBI Circular dated 7th June 2019.
6. Continuation of Margin of 15% on stock and book debts and cover period of 270 days for receivable.
The Company has accounted for the CCD and NCD as per IND AS 109- Financial Instruments
The CCD and NCD have been classified as financial liability as there is contractual obligation to deliver cash over a period of 14 years in terms of repayment of principal and interest. CCD and NCD are initially recognised at amortised cost using the
effective interest method at 9.00%. The resultant gain or loss at initial recognition is recognised as exceptional gain in the statement of profit and loss. (Also refer Note no 42)
24.3 During the year, the Company has obtained unsecured loan amounting to Rs.900 Lakhs. The terms of repayment is bullet repayment of principal on 31-Dec-2035. The loan carries interest rate at 0.10% p.a payable half yearly from March 2023 till December 2035. The said loan has been recognised at amortised cost and the resultant gain on initial recognition is credited to the statement of profit and loss
24.4 The Company has not been declared a wilful defaulter by any bank or financial institution or any other lender during the current period.
28.1 Secured by First Paripassu charge on Pooled Assets ie., all movable (both fixed, current and non-current) Immovable assets of the company and Corporate Guarantee of MARK AB LLC Dubai, Mark AB Capital Investments India Private Limited ,SVL Ltd and SVL Trust.However, the Corporate Guarantees of SVL ltd and SVL Trust shall be released after 18 months from the date of RP , if there is no default for a consecutive period of 12 months as defined in RBI Circular dated 7th June 2019.
28.2 The quarterly statements filed by the Company with the banks and financial institutions are in agreement with the books of accounts
28.3 The Company has utilised the funds as per the terms of the Borrowings. Also, the Company has not used funds raised on short term basis for long term purpose.
29.1 The average credit period ranges from 30 days to 90 days, depending on the nature of the item or work. The work orders include element of retention, which would be payable on completion of a milestone, completion of the contract or after a specified period from completion of the work. The terms also would include back to back arrangement wherein, certain amounts are payable on realisation of corresponding amounts by the company from the customer. No interest is payable for delay in payments, unless otherwise specifically agreed in the order or as required by a legislation, like Micro, Small and Medium Enterprises Development Act ("MSMED Act"). The company has a well defined process for ensuring regular payments to the vendors.
29.2 Based on the information available with the Company, there are no outstanding dues and payments made to any supplier of goods and services beyond the specified period under Micro, Small and Medium Enterprises Development Act, 2006 [MSMED Act]. There is no interest payable or paid to any suppliers under the said Act.
34.1 Revenue for the current year (2022-23) includes Nil (Previous year Rs. 8,624 lakhs), being share of revenue relating to the Basra project, billed from Mokul Shriram EPC JV (MSJV), a jointly controlled operation, where in the company owns 50% interest.
34.2 Unsatisfied performance obligation: Management expects that the transaction price allocated to partially or fully unsatisfied performance obligation of ''1,10,900 lakhs (Order book value) (March 31, 2022: ''1,19,664 Lakhs) will be recognised as revenue over the project life cycle.
42.1 (i) Year ended March 31,2023 includes an amount of Rs. 19,634.82 Lakhs resulting from implementation of Resolution Plan with the lenders , on account of reduction in interest cost with effect from October 01,2020 till June, 30, 2022, the difference between the carrying amounts of the facilities before restructuring as at September 30, 2022 and the fair values of the new facilities recognised as income in accordance with INDAS 109 - Financial Instruments.
(ii) During the year ended March 31, 2023,contract assets amounting to Rs. 5,819.69 lakhs was written off, in respect of projects stopped by the client consequent to an order of the National Green Tribunal restraining the client from proceeding with the project and on account of wrongful termination of a contract and consequent legal disputes / arbitration proceedings initiated during the year in respect of projects with the customers.
(iii) During the previous year ended March 31, 2022 represents provisions for trade, other receivables and contract assets amounting to Rs. 6,361.26 lakhs , based on estimation of potential stress on project completion and collections, considering the continuing impact of COVID 19 pandemic.
43 Income Tax
(A) Components of Deferred Tax Assets and Liabilities recognised in Balance Sheet:
(B) The Company has business losses which are allowed to be carried forward and set off against available future taxable income under Income Tax Act, 1961. Against the carried forward loss amounting to Rs. 1,37,510.14 lakhs, the Company has recognised Deferred Tax Asset (DTA) on a carry forward loss of Rs. 1,11,216.10 lakhs in an earlier year resulting in DTA of Rs. 33,289.92 lakhs (March 31, 2022 - Rs. 39,645 Lakhs). During the current year, the company has written off DTA amounting to Rs. 3,021.95 lakhs(net) due to carry forward business losses which is expiring by AY relevant to accounting year ended March 31, 2023. Considering potential order book as on date, future business prospects in the light of implementation of resolution plan, projects in pipeline etc, the management is confident of adjusting these carry forward losses and reversal of DTA before the expiry of the period for which this benefit is available. The auditors have qualified this matter in their report for the year ended March 31,2023.
(C) The Company has business losses and unabsorbed depreciation which are allowed to be carried forward and set off against available future taxable income under Income Tax Act, 1961. Against the carried forward loss of Rs.2,11,013 lakhs, the company has recognized deferred tax asset on a carry forward loss to the extent of Rs.1,28,547 lakhs which results in DTA of Rs. 39,645 lakhs. During the current year, the company has written off DTA amounting to Rs. 4,278 lakhs(net) due to carry forward business losses which is expiring by AY relevant to accounting year ended March 31, 2022. Considering potential order book as on date, future business plan, projects in pipeline etc, the management is confident of adjusting these carry forward losses and reversal of DTA before the expiry of the period for which this benefit is available.
47 Disclosure in respect of leases pursuant to Indian Accounting Standard (Ind AS) 116, "Leases"
(A) Finance leases where Company is a lessee:
The following is the summary of practical expedients elected on application:
1. Used a single discount rate to a portfolio of leases with reasonably similar characteristics
2. Applied the short-term leases exemptions to leases with lease term that ends within 12 months of the date of initial application
3. Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application
The Company has lease contracts for its head office building and furniture and fixtures. lessee is restricted from assigning and subleasing the leased assets. The Company applies the "short term Lease" and "lease of Low value assets" recognition exemptions for these leases.
The effective interest rate for lease liabilities is 9%.
* The company has not disclosed the fair value for Financial instruments mentioned above because their carrying amounts are a reasonable approximation of fair value.
53 Financial risk management objectives and policies
The Company is exposed to various financial risks. These risks are categorized into market risk, credit risk and liquidity risk. The Company''s risk management is coordinated by the Board of Directors and focuses on securing long term and short term cash flows. The Company does not engage in trading of financial assets for speculative purposes.
(A) 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 and financial instruments.
(i) 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 outstanding debt in local currency is on fixed rate basis and hence not subject to interest rate risk.
(ii) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities (when revenue or expense is denominated in a different currency from the Company''s functional currency).
The net exposure to foreign currency in respect of recognized financial assets, recognized financial liabilities and derivatives is as follows:
a) Forward exchange contracts entered into by the Company and outstanding as on March 31,2023 - Nil (March 31, 2022- Nil)
b) Foreign Currency exposure
Foreign currency sensitivity analysis:
Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company''s revenues from its operations. Any weakening of the functional currency may impact the Company''s import payments and cost of borrowings.
The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents Management''s assessment of the reasonably possible change in foreign exchange rates.
The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments. The following table details the Company''s sensitivity movement in the increase / decrease in foreign currencies exposures (net):
The credit risk to the company arises from two sources:
a) Customers, who default on their contractual obligations, thus resulting in financial loss to the Company evaluates the credentials of a customer at a very early stage of the bid. Company has adopted a policy of 3 tier verification before participating for any bid. The first step of such verification includes verification of customer credentials. The company, as part of verification of the customer credentials, ensures the compliance with the following criterion
(i) Customer''s financial health by examining the audited financial statements
(ii) Whether the Customer has achieved the financial closure for the work for which the company is bidding
(iii) Where the customer is Public Sector Undertaking, sanction and availability of adequate financial resources for the proposed work. Company makes provision on it''s financial assets, on every reporting period, as per Expected Credit Loss Method. The provision is made separately for each financial assets of each business line. The percentage at which the provision is made, is determined on the basis of historical experience of such provisions, modified to the current and prospective business and customer profile. Trade receivables consist of large number of customers, spread across diverse industries and geographical areas. Majority of the customers of the company comprise of Public Sector Undertakings, with whom the company does not perceive any credit risk. As regards the customers from private sector, company carries out financial evaluation on regular basis and provides for any amount perceived as non realisable, in the books of accounts.
b) Non certification by the customers, either in part or in full, the works billed as per the contract, being non claimable cost as per the terms of the contract with the customer
Non certification of works billed The Company has contract claims from customers including costs on account of account of delays / changes in scope / design by them etc., which are at various stages of discussions / negotiations or under arbitrations. The realisability of these claims are estimated based on contractual terms, historical experience with similar claims as well as legal opinion obtained from internal and external experts, wherever necessary. Changes in facts of the case or the legal framework may impact realisability of these claims
The Company provides for doubtful receivables/advances and expected credit loss based on 12 months and lifetime expected credit loss basis for following financial assets:
Company being an EPC contractor, has a constant liquidity pressures to meet the project requirements. These requirements are met by a balanced mix of borrowings and project cash flows. Cash flow forecast is made for all projects on monthly basis and the same are tracked for actual performance on daily basis. Shortfall in cash flows are matched through short term borrowings and other strategic financing means. The daily project requirements are met by allocating the daily aggregated cash flows among the projects. Company has established practice of prioritising the site level payments and regulatory payments above other requirements.
54 Capital 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. The primary objective of the Company''s capital management is to maximize the shareholder value and to ensure the Company''s ability to continue as a going concern.
The Company has not distributed any dividend to its shareholders. The Company monitors Net Debt to Capital ratio i.e. total debt in proportion to its overall financing structure, i.e. equity and debt. Total debt comprises of term loans and cash credits. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
"Sanctioned limit with various Banks for various facilities has been Secured by First Paripassu charge on Pooled Assets ie., all movable (both fixed, current and non-current) Immovable assets of the company and Corporate Guarantee of MARK AB LLC Dubai, Mark AB Capital Investments India Private Limited ,SVL Ltd and SVL Trust. However, the Corporate Guarantees of SVL ltd and SVL Trust shall be released after 18 months from the date of RP , if there is no default for a consecutive period of 12 months as defined in RBI Circular dated 7th June 2019. The quarterly statements filed by the Company with the banks and financial institutions are in agreement with the books of accounts"
|
57 |
Commitments |
||
|
As at 31 March 2023 |
As at 31 March 2022 |
||
|
Estimated amount of contracts remaining unexecuted on capital account (net of advances paid) and not provided for |
Nil |
Nil |
|
|
58 |
Contingent liabilities |
||
|
Particulars |
As at 31 March 2023 |
As at 31 March 2022 |
|
|
a) Claims against the Company not acknowledged as debts1 |
10,188.40 |
15,835.06 |
|
|
b) Central Excise, Service Tax and customs Duties demands contested in Appeals , not provided for1 |
408.00 |
408.00 |
|
|
c) Disputed VAT/ Central Sales tax demands contested in Appeals, not provided for1 |
3,166.00 |
9,669.88 |
|
|
d) Bank Guarantees given to Customers for performance and advances # |
33,636.06 |
32,002.18 |
60 There are no transactions with vendors under the Micro, Small and Medium Enterprises Development Act, 2006, this has been determined on the basis of information available with the Company
61 "The Company (SEPC) and Twarit Consultancy Services Private Limited (TCPL) were the Respondents in respect of an International Arbitration before The Singapore International Arbitration Centre (SIAC) filed by GPE (INDIA) Ltd, GPE JVILtd, Gaja Trustee Company Private Ltd (the Claimants) in connection with the investments made by the claimants in an associate company of the Company. SIAC vide its award dated January 07, 2021 awarded damages jointly and severally on the Respondents to the tune of Rs.19,854.10 lakhs and a sum of SGD 372,754.79 towards Arbitration expenses. These are to be paid along with simple interest @ 7.25% pa from July 21,2017 until the date of payment.
The Respondents preferred an appeal before the High Court of Republic of Singapore against the award of SIAC and the same is held in favour of the claimants. Recognition and Enforcement petition was filed by the claimants before Madras High Court which recognised the foreign award subject to obtaining of prior approval from the RBI. Aggrieved by this the claimants have moved the Supreme Court for certain directions which is pending.
However, the Company has entered into an Inter-se arrangement dated September 29, 2015 with TCPL and Shri Housing Pvt Ltd by which, Company will be fully indemnified, in case of any liability arising out of any Suits, Proceedings, Disputes, Damages payable by the Company on any defaults arising out of the above.
62 Mokul Shriram EPC JV (JV Company) have won the complaint against Export Credit Guarantee Corporation of India Limited (ECGC) before the National Consumer Disputes Redressal Commission,(NCDRC) New Delhi, in connection with the project executed in Basra, Iraq. NCDRC, vide their order dated January 27, 2021, which has allowed the claims and directed ECGC to pay a sum of Rs. 26,501 lakhs along with simple interest @ 10% pa. with effect from September 19, 2016 till the date of realisation to the JV Company within a period of three months from the date of order, failing which ECGC will be liable to pay compensation in the form of simple interest @ 12% pa. ECGC had filed an appeal against the order of NCDRC New Delhi, before Supreme Court, and the case is pending for disposal.
63 The Company has incurred net loss during the year ended March 31, 2023 amounting to Rs. 1,132.24 Lakhs and as of that date accumulated losses is aggregating to Rs. 2,15,649.26 Lakhs. Resolution Plan submitted in accordance with the requirement set out in the circular issued by the Reserve Bank of India No RBI/20119/203DBR.No>BPBC.45/21.04.048./2018-19 dated June 07, 2019 has been approved and implemented by Company and Lenders on September 30, 2022. Considering the positive developments of implementing the resolution plan, infusion of equity by the investor, completion of Rights issue post year-end and the change in management, additional funding by Investor for working capital together with plans to meet financial obligations in future out of the cash flows from execution of the pipeline of orders in hand, business plans,sanctioned non-fund based facilities etc,the financial statements are prepared on a going concern basis.
64 "The Code on Social Security 2020 (''the Code'') relating to employee benefits, during the employment and post-employment, has received Presidential assent on September 28, 2020. The Code has been published in the Gazette of India. Further, the Ministry of Labour and Employment has released draft rules for the Code on November 13, 2020. However, the effective date from which the changes are applicable is yet to be notified and rules for quantifying the financial impact are also not yet issued.
The Company will assess the impact of the Code and will give appropriate impact in the financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published."
65 Relationship with Struck off Companies under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956,
The Company does not have transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956 , during the year
66 Utilisation of Borrowed funds and Securities Premium:
(i) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
ii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries"
67 Details of Benami Property held
The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
68 Compliance with number of layers of companies
The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
69 Undisclosed income
The Company does not have any undisclosed income which is not recorded in the books of account that has been surrendered or disclosed as income during the year (previous year) in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.)
70 Details of Crypto Currency or Virtual Currency
The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
71 Registration of charges or satisfaction with Registrar of Companies (ROC)
The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period."
72 During March 2023,the Company has obtained Services Investment License to incorporate a 100% subsidiary namely - SEPC Arabia Limited Company, in Saudi Arabia for the purpose of exploiting the market potential in the kingdom of Saudi Arabia as well as strengthen the presence in Gulf Cooperation Council region (GCC) using Company''s qualifications and promoter MARK AB experience in that region.
73 Subsequent events
Pursuant to the approval of the Board of Directors of the Company at its Meeting held on December 27, 2022 final Letter of Offer (LOF) was filed with the Stock Exchanges on March 23, 2023 for Issue of 4,99,00,000 Equity Shares under Rights Issue for an amount aggregating to Rs.4,999 Lakhs. The Rights Issue opened for subscription on April 10, 2023 and closed on April 24, 2023. The Rights Issue Committee, at its Meeting held on May 02, 2023 allotted 4,99,00,000 Rights Equity Shares to the eligible Shareholders.
74 The Board, duly taking into account all the relevant disclosures made has approved these financial statements in its meeting held on May 25, 2023.
75 The figures for the previous year have been reclassified/ regrouped wherever necessary for better understanding and comparability.
Management is confident of winning the appeals in respect of the above , hence no provision has been made. Future cash outflows in respect of the above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities.
#In respect of matters at (d), the cash outflows, if any, could generally occur up to two years, being the period over which the validity of the guarantees extends.
Mar 31, 2017
Management is of the opinion that the Appeals preferred by the Company will be decided in its favour. Future cash outflows in respect of the above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities.
Estimated amount of contracts remaining to be executed on capital account (Net of advances) and not provided for Rs.340.63 lakhs (31 March 2016: Rs 309.52 lakhs )
Though the Company had obtained its Shareholdersâ approval through Postal Ballot on August 21, 2008, for transfer of 250 KW Wind Turbine Business to its Joint Venture, Leitwind Shriram Manufacturing Limited (LSML ) with effect from April 1, 2008, the Company would continue to sell the 250 KW Wind Turbines till the time LSML obtains all statutory approvals to manufacture and sell the same. Consequently, the Company has not recognized the Profit/ Loss in the Statement of Profit and Loss for the year ended 31 March 2017.
1. The Company had secured an EPC Contract from M/s Abhijeet Projects Limited (APRL) for execution of a Solar Thermal power project at Rajasthan with technology support from M/s EnerT international limited, Israel. The contract should have been executed by 28th February 2013. But due to the financial encumbrances of APRL, the project came to standstill since March 2013. The amount outstanding under Trade Receivables, Unbilled revenue and Short Term loans and advance net of advance received from APRL aggregates to Rs.9,867.91 lakhs. The Company and the customer have been in negotiations with potential financial and strategic investors which would enable the company to recover its dues. However, there has been no progress in these negotiations. Consequently, considering the increasing uncertainty in the ultimate realization of the said dues, the company as a matter of abundant caution has made a provision of Rs. 6,707.38 lakhs in the previous year - Refer Note No. 7, (after adjusting the value of trade liabilities in respect of this project), which has been included in exceptional items in the statement of Profit and Loss for the year ended 31st March 2016.
(a) The Company''s investment in its associate, Haldia Coke and Chemicals Private Limited is Rs. 4,007.22 lakhs. Considering the erosion of net worth and continuing losses being incurred by it, the Management is of the opinion that the diminution in carrying value of the investment as at 31 March 2016 in the associate is other than temporary in nature. Consequently the company made a provision for diminution in the previous year , for the said amount and disclosed the same under exceptional item in the statement of Profit and Loss.
2. (b) The Company''s investment in Leitwind Shriram Manufacturing Limited (a related party) is Rs. 407.56 lakhs. Considering the erosion of net worth and continuing losses being incurred by it, the Management is of the opinion that the diminution in carrying value of the investment in that entity is other than temporary in nature and accordingly, the Company has made a provision for diminution, for the said amount and disclosed the same under exceptional item in the statement of Profit and Loss.
ii The Company was in the course of executing project for Governorate of Basra, Government of Iraq (âthe customerâ). There were some delays in commencement of the project due to regulatory compliances. However the said contract has been cancelled by the Customer during February 2014. The construction activities has been ceased, and the legal dispute with the customer for the recovery of the amounts so far incurred in respect of the said project, or for re-commencement of the project and its completion thereon, are in progress. The Government of India has also been extremely supportive for revival of the project. The customer has opened a Letter of credit (âLCâ) for a value of USD 235 million (INR 139,590 Lakhs) which is an irrevocable LC backed by 100% margin deposited by the customer. Cancellation of this LC is possible only on settlement being reached with the company. Further, Company has also filed a claim with concerned authorities and insurers towards compensation for cancellation of contract. The total amounts due to Company recorded under Trade Receivables, Unbilled revenue representing the actual cost incurred (after excluding the margin which has been written off) and Short Term loans and advances, in respect of this project, aggregate to Rs. 12,141.62 Lakhs. For the above reasons, the management is confident of realizing the monies and do not expect any shortfall in realization.
The Company entered into a contract to construct Ammonia plant for Bharath Coal and Chemicals Limited (BCCL) (related party). The project is stalled due to delay in statutory approvals. The total exposure in this project recorded under Unbilled Revenue and Contract Work In Progress is Rs. 8,300.19 lakhs. Considering the positive development in BCCLâs efforts in identifying alternate options to complete the project, the management is of the view that BCCL will be in a position to complete the Ammonia Plant project and thereby the Company will be able to realize these amounts in full.
3. Ka) Long term Loans and advances include Rs. 12,309.62 Lakhs (including interest accrued up to 31 March 2016 of Rs. 2,489.57 Lakhs), and Other Non - Current Assets includes Trade Receivables(Net) of Rs. 1,023.58 Lakhs, due from Leitwind Shriram Manufacturing Limited (LSML) (a related party). As part of the Corporate Debt Restructuring (CDR) package entered into by LSML with its bankers, the dues to SEPC is subordinated to the dues to Bankers and hence expected to be recovered substantially before March 2030 and the balance thereafter. Considering the extended repayment period and future business potential for Wind Energy Business, the management is confident of realizing the dues. However as a matter of prudence, the Company has stopped recognizing interest from 01st April 2016 on the principal amount outstanding.
4. (b) Long term loans and advances include Rs 78,011.70 lakhs due from an associate company and its subsidiary. In order to secure these dues the company has entered into an arrangement, effective from 1st March 2017, with the said associate and another wholly owned subsidiary of the associate which is engaged in coal mining operations in USA by which the company has acquired absolute and unconditional mining operation rights to exploit the coking coal reserves in relation to the mines of the said subsidiary, and the right to surplus cash flows, (after meeting subsidiaryâs commitments), to the extent of the above mentioned dues. Also the associate company has given an undertaking that it will not divest its holdings in the said subsidiary company till the dues to the company are settled. Based on the projected operations of the mines and consequential projected cash flows, the outstanding dues are expected to be recoverable over a period of 11 years. In view of a mining asset and its cash flows being secured towards the outstanding due to the Company, no provision is considered necessary for these dues at this stage. However, as a matter of prudence the company has stopped recognizing interest from April 1, 2016 on principal amounts outstanding.
5. The Company had entered into a Turnkey contract with a customer in Chennai, in an earlier year for construction of a thermal power plant. The project is on hold, as the customer is awaiting project financial closure from the banks. The total exposure in this project included under Trade Receivables and Unbilled Revenue (Net of advances received and Trade Liabilities) is Rs. 5,634.41 Lakhs .Considering the long standing relationship with the customer and history of prompt realization of dues in respect of projects completed for the customer in earlier years, the management is confident of realizing the monies due under this project within one year.
6. Previous period figures have been regrouped / reclassified to be in conformity with current year classification/ disclosure, wherever necessary.
7. The Board of Directors of the Company has reviewed the realizable value of all the current assets and has confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognized in the financial statements. In addition, the Board has also confirmed the carrying value of the noncurrent assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these financial statements in its meeting held on 30 May 2017.
Mar 31, 2016
Notes:
a. The estimate of future salary increase takes into account inflation, likely increments, promotions and other relevant factors.
b. The discount rate is based on the prevailing market rate as applicable for risk free investments as at balance sheet date for the estimated term of the obligation.
1. Employee Stock Compensation Expenses
The Company has two Employee Stock Option Schemes (A) Employee stock option scheme 2006,(B) Employee stock option scheme 2007. As per the Guidance Note on Accounting for Employee Share- based Payments issued by Institute of Chartered Accountants of India, the Company has considered the best available estimate of the number of shares or stock options expected to vest based on the current attrition rates of its employees and measured the compensation expense at fair value on the date of grant.
2. Shriram EPC Limited 2006 ESOP Scheme (the 2006 Scheme)
In Pursuance of a special resolution approved by the shareholders at the extra-ordinary general meeting held on November 20, 2006 the Company instituted an ESOP Scheme for all its eligible employees including those of its subsidiaries and associates Companies.
In accordance with the 2006 Scheme the Company has granted on November 22, 2006 (Grant date) options to eligible employees at an exercise price of ''10/- per equity share. Under the terms of the 2006 Scheme the options will vest in the employees in the following proportion :
The employees stock options granted shall be capable of being exercised within a period of eight years from the date of grant. Modifications in the Terms of the 2006 Scheme
The Company has carried out a modification in "The 2006 scheme" and accordingly additional grants of 424,952 options were made during the year ended March 31, 2008. Those grants have been made as at April 1, 2007 and will vest with the employees in same proportion as in the original scheme.
Deferred Stock Compensation Expense
During the period , an amount of '' Nil (Previous period: '' Nil ) being employee compensation expense to the extent of options vested net off lapses, has been charged to Statement of Profit and Loss.
The values of services rendered in return for share options granted are measured by reference to the fair value of the share options granted and this is evaluated on the basis of an independent valuation carried out as on the grant date.
3. Shriram EPC Limited - 2007 - ESOP Scheme (the 2007 Scheme)
The Company instituted another Scheme for all eligible employees in pursuance of a special resolution approved by the shareholders at the extra-ordinary general meeting held on September 20, 2007.
In accordance with the 2007 Scheme the Company has granted on October 1, 2007 and January 1, 2008 (grant dates) options to eligible employees including those of its subsidiaries and associate companies at an exercise price of Rs.10/- per equity share. Under the terms of the 2007 Scheme the options will vest in the employees in the following proportion :
Modification in the Terms of the 2007 Scheme
The Company has carried out a modification in "The 2007 scheme" in an earlier year and accordingly additional grants of 10,000 options have been made. These grants have been made as at June 14, 2010 and will vest with the employee in 2 years in equal proportion from the end of 1 year from the date of grant.
Deferred Stock Compensation Expense
During the period, Rs. Nil (Previous Year Rs. Nil Lakhs) being employee compensation expense to the extent of options vested net off lapses, has been charged to Statement of Profit and Loss.
4. Fair value of Options Granted:
The estimated fair value of each stock option granted under the employee stock option Scheme 2006 is Rs.80. The fair value was arrived at based on a transaction entered into between a willing buyer and a seller for purchase of shares recent to the grant date of the options.
The estimated fair value of each stock option granted under the employee stock option Scheme 2007 is Rs.68.42 as per the Fair value method. The model inputs were the weighted average price arrived under the following methods :
5. Related Party Disclosures under Accounting Standard 18
6. Disclosure of related party transactions in accordance with Accounting Standard -18 - Related Party Disclosures notified by Central Government of India under Companies (Accounting Standards) Rules, 2006.
7 Leases
8. Operating Lease
The Company has operating lease arrangements primarily for office premises, the lease period of which is about 6 to 8 years. An amount of Rs.402 Lakhs (Previous period - Rs.524.71 lakhs) has been debited towards lease rental and other charges. The future expected minimum lease payments under operating leases are given below.
9. International Transactions
The Company has entered into transactions with related parties. The Management is of the opinion that the Company maintains the necessary documents as prescribed by the Income Tax Act, 1961 to prove that these international transactions are at arm''s length and believes that the aforesaid legislation will not have any impact on the financial statements, particularly on account of tax expense and provision for taxation.
10. Capital Commitments
Estimated amount of contracts remaining to be executed on capital account (Net of advances) and not provided for Rs.309.52 lakhs (31 March 2015: Rs Nil lakhs )
11. Sale of WEG Business
Though the Company had obtained its Shareholders'' approval through Postal Ballot on August 21, 2008, for transfer of 250 KW Wind Turbine Business to its Joint Venture, Leitwind Shriram Manufacturing Limited (LSML ) with effect from April 1, 2008, the Company would continue to sell the 250 KW Wind Turbines till the time LSML obtains all statutory approvals to manufacture and sell the same. Consequently, the Company has not recognized the Profit/Loss in the Statement of Profit and Loss for the year ended 31 March 2016.
12. Dues from Subsidiaries and Associates - Disclosure under clause 32 of the listing agreement
13. Details on derivative instruments and unhedged foreign currency exposures
(i) Outstanding forward exchange contracts entered into by the Company and outstanding as on 31 March 2016 - Nil (PY - USD 979,943)
(ii) Unhedged foreign currency exposure Rs.in Lakhs
14. The Company had secured an EPC Contract from M/s Abhijeet Projects Limited (APRL) for execution of a Solar Thermal power project at Rajasthan with technology support from M/s EnerT international limited, Israel. The contract should have been executed by 28th February 2013. But due to the financial encumbrances of APRL, the project came to standstill since March 2013. The amount outstanding under Trade Receivables, Unbilled revenue and Short Term loans and advance net of advance received from APRL aggregates to Rs.9,867.91 lakhs. The Company and the client have been in negotiations with potential financial and strategic investors which would enable the Company to recover its dues.However,there has been no progress in these negotiations. Consequently, considering the increasing uncertainty in the ultimate realization of the said dues, the Company as a matter of abundant caution has made a provision of Rs. 6,707.38 lakhs (after adjusting the value of trade liabilities in respect of this project), which has been disclosed under exceptional items in the statement of Profit and Loss.
15. The Company''s investment in its associate, Haldia Coke and Chemicals Private Limited is Rs. 4,007.22 lakhs. Considering the erosion of net worth and continuing losses being incurred by it, the Management is of the opinion that the diminution in carrying value of the investment in the associate is other than temporary in nature. Consequently the Company has made a provision for diminution, for the said amount and disclosed the same under exceptional item in the statement of Profit and Loss.
16. The Company was in the course of executing project for Governorate of Basra, Government of Iraq (''the customer''). There were some delays in commencement of the project due to regulatory compliances. However they said contract has been cancelled by the Customer during February 2014. The construction activities has been ceased, and the legal dispute with the customer for the recovery of the amounts so far incurred in respect of the said project, or for re-commencement of the project and its completion thereon, are in progress. The Government of India has also been extremely supportive for revival of the project. The customer has opened a Letter of credit (''LC'') for a value of USD 235 million (INR 139,590 Lakhs) which is an irrevocable LC backed by 100% margin deposited by the customer. Cancellation of this LC is possible only on settlement being reached with the Company. Further, Company has also filed a claim with concerned authorities and insurers towards compensation for cancellation of contract.
The total amounts due to Company recorded under Trade Receivables, Unbilled revenue representing the actual cost incurred (after excluding the margin which has been written off/not recognized during the year) and Short Term loans and advances, in respect of this project, aggregate to Rs. 12,208.22 Lakhs. For the above reasons, the management is confident of realizing the monies and do not expect any shortfall in realization.
17. The Company entered into a contract to construct Ammonia plant for Bharath Coal and Chemicals Limited (BCCL, Fellow subsidiary). The project is stalled due to delay in statutory approvals. The total exposure in this project recorded under Unbilled Revenue and Contract Work In Progress is Rs 8,300.19 lakhs. Apart from various options/ plans considered by BCCL to commence the project, BCCL has submitted proposal to set up a Coal gasification based plant to a third party and also parallely considering the option of re-export of the equipments. In addition BCCL has received a letter from Industrial Promotion and Investment Corporation of Odisha Limited , dated 06th November 2015, offering land for setting up the project in Odisha and the matter is under negotiation. Considering these developments, management is of the view that BCCL will be in a position to complete the Ammonia Plant project and thereby the Company will be able to realize these amounts in full.
18. Previ ous period figures have been regrouped / reclassified to be in conformity with current year classification/ disclosure, wherever necessary.
19. The Board of Directors of the Company has reviewed the realizable value of all the current assets and has confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognized in the financial statements. In addition, the Board has also confirmed the carrying value of the noncurrent assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these financial statements in its meeting held on 23 May 2016.
Mar 31, 2015
1. Employee Stock Compensation Expenses
The Company has two Employee Stock Option Schemes (A) Employee stock
option scheme 2006,(B) Employee stock option scheme 2007. As per the
Guidance Note on Accounting for Employee Share- based Payments issued
by Institute of Chartered Accountants of India, the Company has
considered the best available estimate of the number of shares or stock
options expected to vest based on the current attrition rates of its
employees and measured the compensation expense at fair value on the
date of grant.
2. Shriram EPC Limited 2006 ESOP Scheme (the 2006 Scheme)
In Pursuance of a special resolution approved by the shareholders at
the extra-ordinary general meeting held on November 20, 2006 the
Company instituted an ESOP Scheme for all its eligible employees
including those of its subsidiaries and associates Companies.
3. Segment Information
The Company has considered business segment as the primary segment for
disclosure. The Company's operations comprises of three segments namely
Construction Contracts, Wind Turbine Generators and Trading. The above
segment has been identified taking into account the organization
structure as well as the differing risks and return of these segments.
Separate secondary segment disclosure is not required as more than 98%
of the company's sale is in the Domestic Market.
4. Related Party Disclosures under Accounting Standard 18
5. Disclosure of related party transactions in accordance with
Accounting Standard -18 - Related Party Disclosures notified by Central
Government of India under Companies (Accounting Standards) Rules, 2006.
6. The Company accounts for costs incurred by Related parties based
on the actual invoice/debit notes raised and accruals as confirmed by
such parties. The related parties have confirmed to the Management that
as at 31 March 2015 and as at 31 March 2014, there are no further
amounts payable to/receivable from them, other than disclosed above.
7 Leases
7.1 Operating Lease
The company has operating lease arrangements primarily for office
premises, the lease period of which is about 6 to 8 years. An amount of
Rs.524.71 Lakhs (Previous period - Rs.509.80 lakhs) has been debited
towards lease rental and other charges. The future expected minimum
lease payments under operating leases are given below.
8 Taxes on income
8.1 Current Tax
The Current tax has been computed based on the estimated taxable income
for the year ended 31 March 2015. However, Company is not liable to
current tax in view of losses incurred.
9. International Transactions
The Company has entered into transactions with related parties. The
Management is of the opinion that the Company maintains the necessary
documents as prescribed by the Income Tax Act, 1961 to prove that these
international transactions are at arm's length and believes that the
aforesaid legislation will not have any impact on the financial
statements, particularly on account of tax expense and provision for
taxation.
10 Contingent Liabilities Rs.in Lakhs
Particulars As at March
31, 2015 As at March
31, 2014
Arrears of Fixed Cumulative
Dividend 3,780.82 780.82
Compensation payable in lieu
of bank sacrifice (Refer
Note 5.1) 18,500.00 -
Corporate Guarantees issued 1,600.00 1,600.00
Claims against the Company
not acknowledged as debts 12,482.32 8,126.60
Central Excise, Service tax
and Custom duties demands
contested in 428.82 322.21
Appeals, not provided for
Disputed VAT/Central Sales
Tax demands contested in
Appeals, not 10,179.02 3,574.65
provided for
Income tax demands
contested in Appeals, not
provided for 1,732.88 1,366.16
Management is of the opinion that the Appeals preferred by the Company
will be decided in its favour. Future cash outflows in respect of the
above matters are determinable only on receipt of judgments / decisions
pending at various forums / authorities.
11 Capital Commitments
Estimated amount of contracts remaining to be executed on capital
account (Net of advances) and not provided for Rs. Nil (31 March 2014:
Rs.503.87 lakhs)
12 Sale of WEG Business
Though the Company had obtained its Shareholders' approval through
Postal Ballot on August 21, 2008, for transfer of 250 KW Wind Turbine
Business to its Joint Venture, Lietner Shriram Manufacturing Limited
(LSML ) with effect from April 1, 2008, the Company would continue to
sell the 250 KW Wind Turbines till the time LSML obtains all statutory
approvals to manufacture and sell the same. Consequently, the Company
has not recognised the Profit/Loss in the Statement of Profit and Loss
for the year ended 31 March 2015.
13 Dues from Subsidiaries and Associates - Disclosure under clause 32
of the listing agreement
14 Details on derivative instruments and unhedged foreign currency
exposures
I. The following derivative positions were open as at 31 March, 2014.
These transactions have been undertaken to act as economic hedges for
the Company's exposures to various risks in foreign exchange markets
and may qualify to be designated as hedging instruments. The accounting
for these transactions is stated in Notes 2.21
Forward exchange contracts (being derivative instruments), which are
not intended for trading or speculative purposes but for hedge purposes
to establish the amount of reporting currency required or available at
the settlement date of certain payables and receivables.
15 The Company has granted advances/loans to its subsidiaries and group
companies for the purpose of carrying on operations, based on the
business needs and exigencies of those Companies. Some of these
advances/loans are interest free. However in the opinion of the
management, all these advances/loans (including the interest free
loans) are conducive to the interest and development of the business of
the group and hence are not prejudicial to the interests of the
company.
16 The Company had secured an EPC Contract from M/s Abhijeet Projects
Limited (APRL) for execution of a Solar Thermal power project at
Rajasthan with technology support from M/s EnerT international limited,
Israel. The contract should have been executed by 28th February 2013.
But due to the financial encumbrances of APRL, the project came to
standstill since March 2013. The effort of the Company and APRL to
identify potential financial and strategic investor which would enable
the company to complete the project is still in process and a banker
has been identified to take this proposal forward. During the year, the
Company has reviewed the outstanding dues from APRL and written off
Rs.5,948 Lakhs as irrecoverable. The balance amount outstanding after
this write off under Trade Receivables, Unbilled revenue and Short Term
loans and advance (net of advance received) aggregates to Rs.9,538.08
lakhs. Considering the steps initiated by the Company along with the
customer to complete the project the dues are considered good and
recoverable by the Management.
17 The Company was in the course of executing project for Governorate
of Basra, Government of Iraq ('the customer'). There were some delays
in commencement of the project due to regulatory compliances. However
the said contract has been cancelled by the Customer during February
2014. The construction activities for the project has been ceased, and
the legal dispute with the customer for the recovery of the amounts so
far incurred in respect of the said project, or for re-commencement of
the project and its completion thereon, was decided in our favour at the
trial court. Governorate of Basra went on appeal and the appeal court
reversed the decision of the trial court and Company has gone on appeal to Supreme Court in Iraq. Based on legal advice company is confident that
if the Basra Court decides against restoration of the contract, the court
would award a compensation or damages to us as per existing Iraqi law The Government of India has also been extremely supportive for revival of the project.
The customer has opened a Letter of credit ('LC') for a value of USD
235 million (INR 139,590 Lakhs) which is an irrevocable LC backed by
100% margin deposited by the customer. Cancellation of this LC is
possible only on settlement being reached with the company. Further,
the Company has also filed a claim with concerned authorities and
insurers towards compensation for cancellation of contract. The total
amounts due to Company under Trade Receivables, Unbilled revenue
representing the actual cost incurred and Short Term loans and advances
aggregate to Rs.12,257.73 Lakhs. For the reasons mentioned above, the
management is confident of realizing the monies and do not expect any
shotfall in realization of the dues
18. The Company has an exposure amounting to Rs.8,300.19 Lacs in respect
of a project which has been inordinately delayed. Company is
considering various options available with the Company to recommence
the project and financial and operation support extended by the Holding
Company, the Company's management believes that the project is viable
and these dues are considered fully realizable.
19. The Board of Directors of the Company has reviewed the realizable
value of all the current assets and has confirmed that the value of
such assets in the ordinary course of business will not be less than
the value at which these are recognized in the financial statements. In
addition, the Board has also confirmed the carrying value of the
non-current assets in the financial statements. The Board, duly taking
into account all the relevant disclosures made, has approved these
financial statements in its meeting held on 28 May 2015.
20. Current year figures are for a period of twelve months as against
previous period of nine months and hence not comparable. Previous
period figures have been regrouped and reclassified wherever necessary
to conform with the current year's presentation / disclosure.
Mar 31, 2014
Corporate Information
Shriram EPC Limited (the "Company" or "SEPC") is the flagship company
of the Shriram Group. The Shriram Group has diverse interests across
Financial Services, IT Services, Project Engineering & Construction,
Property Development, Life Insurance and General Insurance. Company
provides end-to-end solutions to engineering challenges, offering multi
disciplinary design, engineering, procurement, construction and project
management services. SEPC is focused on providing turnkey solutions for
ferrous & non ferrous, cement, aluminium, copper and thermal power
plants, water treatment & transmission, renewable energy, cooling
towers & material handling.
1. Terms/rights attached to the shares
The Company has issued equity shares having a par value of Rs. 10 per
share. All these shares have the same rights and preferences with
respect to payment of dividend, repayment of capital and voting rights.
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.
The Preference shares have a face value of Rs. 100 each, and are
entitled to receive a cumulative dividend at the rate of 10%. The
preference shares shall have a maximum tenure of 10 years. The
preference shares are redeemable before 1 0 years at the option of the
shareholders.
2. Employee Stock Compensation Expenses
The Company has two Employee Stock Option Schemes (A) Employee stock
option scheme 2006, (B) Employee stock option scheme 2007. As per the
Guidance Note on Accounting for Employee Share- based Payments issued
by Institute of Chartered Accountants of India,the Company has
considered the best available estimate of the number of shares or stock
options expected to vest based on the current attrition rates of its
employees and measured the compensation expense at fair value on the
date of grant.
3. Shriram EPC Limited 2006 ESOP Scheme (the 2006 Scheme)
In Pursuance of a special resolution approved by the shareholders at
the extra-ordinary general meeting held on November 20, 2006 the
Company instituted an ESOP Scheme for all its eligible employees
including those of its subsidiaries and associate Companies.
Modifications in the Terms of the 2006 Scheme
The Company has carried out a modification in "The 2006 scheme" and
accordingly additional grants of 424,952 options were made during the
year ended March 31, 2008. Those grants have been made as at April 1,
2007 and will vest with the employees in same proportion as in the
original scheme.
4. Contingent Liabilities in respect of Jointly Controlled entities as
at 31 March 2014
Rs. in Lakhs
As at 31 March 2014 As at 30 June 2013
Particulars
LSML HSCL LSML HSCL
Directly incurred by
the Company - - - 2,100.00
Share of the company - - 8,044.07 573.53
in contingent
liabilities incurred
by jointly controlled
entity
Share of other
venturers in contingent - - 8,213.15 573.77
liabilities incurred
by jointly controlled
entity
5. Contingent Liabilities
Particulars Year
Corporate Guarantees issued
Claims against the Company not acknowledged
as debts
Disputed Service tax demands contested in
Appeals, not provided for *
Appeal pending before
Customs Excise and Service Tax Appellate 2006-07 to 2008-09
Tribunal - Tamil nadu
Commissioner of Service Tax (Appeals) 2008-09 to 2011-12
Customs Excise and Service Tax Appellate 2006-07 to 2008-09
Tribunal - West Bengal
Disputed VAT/Central Sales Tax demands
contested in Appeals, not provided for *
Appeal pending before
Supreme Court 2008-09 to 2009-10
High court of Madras 2008-09 to 2012-13
West Bengal Commercial Taxes Appellate &
Revisional Board
Joint Commissioner (Appeals) 2008-09 to 2010-11
Ld. Joint Commissioner (Appeals) of West 2008-09 & 2010-11
Bengal Commercial Taxes
Deputy Commissioner of Commercial Taxes 2007-08 to 2008-09
Bokaro
Commercial Tax Officer, Ranchi 2007-08 - 2009-10
Appellate Deputy Commissioner (CT), Kurnool 2008-09 & 2011-12
Disputed income tax demands contested in
Appeals not provided for*
Appeal pending before
Commissioner of Income Tax ( Appeals) 2005-06
Commissioner of Income Tax ( Appeals) 2006-07
Commissioner of Income Tax ( Appeals) 2007-08
Commissioner of Income Tax ( Appeals) 2008-09
Commissioner of Income Tax ( Appeals) 2009-10
Commissioner of Income Tax ( Appeals) 2010-11
Commissioner of Income Tax ( Appeals) 2011-12
Rs. in Lakhs
As at As at
Particulars 31 March 30 June
2014 2013
Corporate Guarantees issued 1,600.00 6,100.00
Claims against the Company not 8,126.60 9,300.14
acknowledged as debts
Disputed Service tax demands contested in
Appeals, not provided for *
Appeal pending before
Appeal pending before
Customs Excise and Service Tax Appellate 207.67 261.73
Tribunal - Tamilnadu
Commissioner of Service Tax (Appeals 114.54 114.54
Customs Excise and Service Tax Appellate - 106.61
Tribunal - West Bengal
Disputed VAT/Central Sales Tax demands
contested in Appeals, not provided for *
Appeal pending before
Supreme Court 223.33 223.33
High court of Madras 1,123.31 -
West Bengal Commercial Taxes Appellate & 558.45 558.45
Revisional Board
Joint Commissioner (Appeals) 500.39 500.39
Bengal Commercial Taxes
Ld. Joint Commissioner (Appeals) of West 408.00 86.63
Bengal Commercial Taxes
Deputy Commissioner of Commercial Taxes, - 412.95
Bokaro
Commercial Tax Officer, Ranchi 721.00 -
Appellate Deputy Commissioner (CT), Kurnool 40.17 -
Disputed income tax demands contested in
Appeals not provided for*
Appeal pending before
Commissioner of Income Tax ( Appeals) 76.52 76.52
Commissioner of Income Tax ( Appeals) 91.96 91.96
Commissioner of Income Tax ( Appeals) 130.19 130.19
Commissioner of Income Tax ( Appeals) 519.95 519.95
Commissioner of Income Tax ( Appeals) 11.48 11.48
Commissioner of Income Tax ( Appeals) 156.12 156.12
Commissioner of Income Tax ( Appeals) 312.43 -
Management is of the opinion that the Appeals preferred by the Company
will be decided in its favour.
5 Capital Commitments
5.1 Estimated amount of contracts remaining to be executed on capital
account (net of advances) and not provided for Rs. 503.87 Lakhs (30
June 2013: Rs. 1,437.84 lakhs )
6 Sale of WEG Business
Though the Company had obtained its Shareholders'' approval through
Postal Ballot on August 21, 2008, for transfer of 250 KW Wind Turbine
Business to its erstwhile Joint Venture, Leitwind Shriram Manufacturing
Limited (LSML ) with effect from April 1, 2008, the Company would
continue to sell the 250 KW Wind Turbines till the time LSML obtains
all statutory approvals to manufacture and sell the same. Consequently,
the Company has not recognised the Profit/Loss in the Statement of
Profit and Loss for the nine months period ended March 31, 2014
7 Details on derivative instruments and unhedged foreign currency
exposures
The following derivative positions are open as at 31 March, 2014. These
transactions have been undertaken to act as economic hedges for the
Company''s exposures to various risks in foreign exchange markets and
may qualify to be designated as hedging instruments. The accounting for
these transactions is stated in Notes 2.20 Forward exchange contracts
(being derivative instruments), which are not intended for trading or
speculative purposes but for hedge purposes to establish the amount of
reporting currency required or available at the settlement date of
certain payables and receivables.
8 The Company has granted advances/loans to its subsidiaries and group
companies for the purpose of carrying on operations, based on the
business needs and exigencies of those Companies. Some of these
advances/loans are interest free. However in the opinion of the
management, all these advances/loans (including the interest free
loans) are conducive to the interest and development of the business of
the group and hence are not prejudicial to the interests of the
company.
9 The Company was in the course of executing project for Governorate
of Basra, Government of Iraq (''the customer''). There were some delays
in commencement of the project due to regulatory compliances. However
the said contract has been cancelled by the Customer during February
2014, and the company has filed a legal suit in the High Court of
Madras and with the Higher Judicial Council, Iraq, for stay on the
invocation of the performance bank guarantee. The construction
activities have been ceased, and the legal dispute with the customer
for the recovery of the amounts so far incurred in respect of the said
project, or for re-commencement of the project and its completion
thereon, are in progress. The Government of India has also been
extremely supportive for revival of the project. The customer has
opened a Letter of credit(''LC'') for a value of USD 235 million (INR
139,590 Lakhs) which is an irrevocable LC backed by 1 00% margin
deposited by the customer. Cancellation of this LC is possible only on
settlement being reached with the company. The total amounts due to
Company recorded under Trade Receivables, Unbilled revenue representing
the actual cost incurred (after excluding the margin which has been
written off/not recognized during the year) and Short Term loans and
advances, in respect of this project, aggregate to Rs. 15,696.02 Lakhs.
For the above reasons, the management is confident of realizing the
monies and do not expect any shortfall in realization.
10 The Company had secured an EPC Contract from M/s Abhijeet Projects
Limited (APRL) for execution of a Solar Thermal power project
at Rajasthan with technology support from M/s Ener T international
limited, Israel. The contract should have been executed by 28th
February 2013. But due to the financial encumbrances of APRL, the
project came to standstill since March 2013. The amount outstanding
under Trade Receivables, Unbilled revenue and Short Term loans and
advance net of advance received from APRL aggregates to Rs. 16,486.69
lakhs. The Company and the client are in negotiations with potential
financial and strategic investors which would enable the company to
recover its dues. Accordingly, the company is hopeful of recovering all
the amounts due to them and does not expect any short fall in the
recovery of the dues.
11 The Company has over the years made investments in certain companies
(Refer Note 13) and has given advances to certain companies (Refer Note
14). The interest on these advances is also receivable by the Company.
The limits upto which the loans and investments are made are subject to
Section 372A of the Companies Act, 1956 and also the resolution passed
by the members of the company on 27 August 2012 by Postal Ballot. The
said resolution gives the company the right to make loans and
investments in certain companies within the limits stated against each
companies, in the said resolution. The limits stated in the resolution
is over and above the limits contemplated by Section 372A of the
Companies Act, 1 956. The aggregate amount of loans and advances, in
the view of the company, as at 31st March, 2014 is within the overall
limits granted by the shareholders and is not within the limits
specified against each companies. Howeever, necessary approvals will be
obtained from the members, in the ensuing Annual General Meeting.
12 Current and previous period financial statements are for a period of
nine months and fifteen months respectively and hence not comparable.
Previous period''s figures have been regrouped and reclassified wherever
necessary to correspond with the current period''s
classification/disclosure.
Jun 30, 2013
1 Corporate Information
Shriram EPC Limited (the "Company" or "SEPC") is the flagship company
of the Shriram Group. The Company provides end-to-end solutions to
engineering challenges, offering multi disciplinary design,
engineering, procurement, construction and project management services.
SEPC is focused on providing turnkey solutions for ferrous & non
ferrous, cement, aluminum, copper and thermal power plants, water
treatment & transmission, renewable energy, cooling towers & material
handling.
2 Basis of Preparation
The abridged financial statements have been prepared, on the basis of
the complete set of audited standalone financial statements for the
period ended June 30, 2013, (hereinafter referred to as ''Annual
Standalone Financial Statements''), in accordance with the requirements
of Rule 7 A of the Companies (Central Government''s) General Rules and
Forms, 1956.
3.1 [19.1] Balances with banks include margin monies amounting to
Rs.1,818.11 lakhs (March 31, 2012. Rs.2,418.83) which have an original
maturityrof more than 12 months.
4.1 Pursuant to an ''Agreement for Sale'' dated 1 June 2013, the
investments held by the Company in Orient Green Power Company Limited
aggregating to Rs.2,827.50 Lakhs have been agreed to be sold to Shriram
Industrial Holdings Limited (Investing Party), for a consideration of
Rs.44.22 Lakhs. The resultant loss of Rs.2,783.28 Lakhs has been disclosed
above.
4.2 [39.3] The Company has carry forward losses and unabsorbed
depreciation, which give rise to deferred tax asset of Rs.11,383.21 lakhs
(Previous Year Rs. Nil). However in the absence of virtual certainty
supported by convincing evidence that sufficient future taxable income
will be available against which such deferred tax assets can be
realized, the said deferred tax asset that can be recognized is
restricted to the net deferred tax liability of Rs.4.00 lakhs (Previous
Year Rs. Nil).
Pursuant to the approval of shareholders obtained by means of a Postal
Ballot on 5 August 2013, the Company has recognized deferred tax asset
on long term capital losses as at 30 June 2013 considering the Long
term capital gains, arising on sale of Power generation business on a
slump sale basis on August 05, 2013 pursuant to the approval of
shareholders obtained by means of postal ballot on the said date.
Further, consequent to the above there has been a significant reversal
in deferred tax liability arising on account of depreciation subsequent
to Balance Sheet date.
5 [44] Sale of WEG Business
Though the Company had obtained its Shareholders'' approval through
Postal Ballot on August 21, 2008, for transfer of 250 KW Wind Turbine
Business to its Joint Venture, Lietner Shriram Manufacturing Limited
(LSML) with effect from April 1, 2008, the Company would continue to
sell the 250 KW Wind Turbines till the time LSML obtains all statutory
approvals to manufacture and sell the same. Consequently, the Company
has not recognised the Loss / Profit in the Statement of Profit and
Loss for the fifteen months period ended June 30, 2013.
6 [52] Subsequent Events
6.1 [52.1] Investment, receivables and Interest accrued
in Sree Jayajothi Cements Limited and Spark Environmental Technology
Limited.
6.1.1 [52.1.1] The Company had in an earlier year executed an EPC
contract for Sree Jayajothi Cements Limited (''SJCL'') and an aggregate
amount of Rs.42,325.42 was due from it, which was outstanding for a
considerable period of time. Apart from this, the company has
investment in Equity shares of SJCL amounting to Rs.10,856.45 lakhs.
Further, on 19th April 2012, company had invested an amount of
Rs.25,676.56 lakhs in Optionally Convertible Debentures (OCD) issued by
Spark Environmental Technology Limited (''Spark'' a group company and a
fellow Shareholder in SJCL), who in turn had subscribed to 256,765,645
shares of Rs.10 each in SJCL.
6.1.2 [52.1.2] The company along with Spark and the original promoter
of SJCL has entered into an Agreement to sell their invesments in
equity in SJCL, to My Home Industries Ltd (MHIL) vide agreement dated
11th August 2013. Based on this agreement the Company assessed the
realisability of trade and other receivables and the carrying amount of
its investments in SJCL and Spark, and has made the following
adjustments in the financial statements as an ''exceptional item'':
i) Rs.16,725.60 lakhs has been provided for diminution in value of
investments in SJCL and Spark.
ii) Trade Receivables to the extent of Rs.6,1 76.34 lakhs has been
written off."
6.1.3(52.1.3] In addition, the interest accrued on Optionally
Convertible Debentures amounting to Rs.3,689.98 lakhs for the period 19th
April 2012 to 31st March 2013 has now been derecognized.
6.2 [52.2] Issue of Optionally Convertible Debentures and Issue of
Cumulative Redeemable Preference Shares
6.2.1 [52.2.1] Board of Directors in their meeting held on August
29th, 2013, subject to approval of the Shareholders of the Company and
other regulatory authorities have approved Issue of Optionally
Convertible Debentures amounting to Rs.10,000 lakhs and Issue of
Cumulative Redeemable Preference Shares amounting to Rs.20,000 lakhs, on
preferential basis to the investing party/parties.
7 [53] Current financial statements are for a period of fifteen months
and hence not comparable with the Previous Year. Previous Year''s
figures have been regrouped and reclassified wherever necessary to
correspond with the current period''s classification/ disclosure.
Mar 31, 2012
1. Corporate Information
Shriram EPC Limited (the "Company" or lSEPC"), the flagship Company of
the Shriram Group. The Shriram Group has diverse interests across
Financial Services, IT Services, Project Engineering & Construction,
Property Development, Life Insurance and General Insurance. Company
provides end-to-end solutions to engineering challenges, offering
multi-disciplinary design, engineering, procurement, construction and
project management services. SEPC is focussed on providing turnkey
solutions for Ferrous & Non-Ferrous, Cement, Aluminium, Copper and
Thermal power plants, Water Treatment & Transmission, Renewable energy,
Cooling towers & Material Handling.
An operating cycle is the time between the acquisition of assets for
processing and their realization in cash or cash equivalents. The
normal operating cycle of the entity for Construction Contracts is the
duration of 2 to 3 years depending on each contract. For all other
segments, the normal operating cycle has been considered as a duration
of 1 2 months.
1.1 Terms/rights attached to the Equity Shares
The Company has issued equity shares having a par value of Rs.1 0 per
share. All these shares have the same rights and preferences with
respect to payment of dividend, repayment of capital and voting rights.
For the year ended March 31, 2012, the amount of dividend recognized as
distributions to equity share holders is Rs.1.20 per share (March 31, 201
1 Rs.1.20 per share). The dividend proposed by the Board of Directors is
subject to the approval of the Share Holders at the ensuing Annual
General Meeting.
In the event of liquidation of the company, the holders of equity
shares will be entitled to receive remaining assets of the company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
2.1 Balances with banks include margin monies amounting to Rs.2,41 8.83
Lakhs (March 31, 201 1: Rs.1,276.63 Lakhs) which have an original
maturity of more than 1 2 months.
3 Employee Stock Compensation Expenses
The Company has two Employee Stock Option Schemes (A) Employee stock
option scheme 2006, (B) Employee stock option scheme 2007. As per the
Guidance Note on Accounting for Employee Share-based Payments issued by
Institute of Chartered Accountants of India, the Company has considered
the best available estimate of the number of shares or stock options
expected to vest based on the current attrition rates of its employees
and measured the compensation expense at fair value on the date of
grant.
3.1 Shriram EPC Limited 2006 ESOP Scheme (the 2006 Scheme)
In Pursuance of a special resolution approved by the shareholders at
the extra-ordinary general meeting held on November 20, 2006 the
Company instituted an ESOP Scheme for all its eligible employees
including the subsidiaries and associates Companies.
In accordance with the 2006 Scheme the Company has granted on November
22, 2006 (Grant date) options to eligible employees at an exercise
price of Rs.1 0/- per equity share. Under the terms of the 2006 Scheme
the options will vest in the employees in the following proportion :
Modifications in the Terms of the 2006 Scheme
The Company has carried out a modification in 'The 2006 scheme" and
accordingly additional grants of 4,24,952 options were made during the
year ended March 31, 2008. Those grants have been made as at April 1,
2007 and will vest with the employees in same proportion as in the
original scheme.
#Out of lapsed options during the previous year, Employee Compensation
Expense of Rs. 1 5.06 Lakhs recognised till date in respect of 21,508
options has been transferred to General Reserve.
Deferred Stock Compensation Expense
During the year, an amount of Rs.Nil Lakhs (March 31, 201 1: Rs.267.04
Lakhs) being employee compensation expense to the extentof options
vested net off lapses, has been charged to Statement of Profitand Loss.
The values of services rendered in return for share options granted are
measured by reference to the fair value of the share options granted
and this is evaluated on the basis of an independent valuation carried
out as on the grant date.
3.2 Shriram EPC Limited - 2007 - ESOP Scheme (the 2007 Scheme)
The Company instituted another Scheme for all eligible employees in
pursuance of a special resolution approved by the shareholders at the
extra-ordinary general meeting held on September 20, 2007.
In accordance with the 2007 Scheme the Company has granted on October
1, 2007 and January 1, 2008 (grant dates) options to eligible employees
including subsidiaries and associate companies at an exercise price of
Rs.1 0/- per equity share. Underthe terms ofthe 2007 Scheme the options
will vest in the employees in the following proportion :
The employees stock options granted shall be capable of being exercised
within a period of eight years fom the date of grant. Modification in
the Terms of the 2007 Scheme
The company has carried out a modification in "The 2007 scheme" in the
previous year and accordingly additional grants of
10,000 options have been made. These grants have been made as at June
14, 201 0 and will vest with the employee in 2 years in equal
proportion from the end of 1 yearfrom the date of grant.
Deferred Stock Compensation Expense
During the year, an amount of Rs.1 4.43 Lakhs (Previous Year Rs.14.63
Lakhs) being employee compensation expense to the extent of options
vested net off lapses, has been charged to Statement of Profit and
Loss.
3.3 Fair valur of Options Granted :
The estimated fair value of each stock option granted under the
employee stock option Scheme 2006 is Rs.80. The fair value was arrived at
based on a transaction entered into between a willing buyer and a
seller for purchase of shares recent to the grant date ofthe options.
The estimated fair value of each stock option granted under the
employee stock option Scheme 2007 is Rs.68.42 as per the Fair value
method. The model inputs were the weighted average price arrived under
thefollowing methods :
4 The Company has considered business segment as the primary segment
for disclosure. The Company's operations comprises of three segments
namely Construction Contracts, Wind Turbine Generators and Trading. The
above segment has been identified taking into account the organisation
structure as well as the differing risks and return of these segments.
The generally accepted accounting principles used in the preparation of
the financial statements are applied to record revenue and expenditure
in individual segments.
5 Related Party Disclosures under Accounting Standard 18
5.1 Disclosure of related party transactions in accordance with
Accounting Standard -1 8 notified by Central Government of India under
Companies (Accounting Standards) Rules, 2006.
5.2 Contingent Liabilities In Respect Of Jointly Controlled Entities
As On 31 st March, 2012 Rs. in Lakhs
I Mar 31,2012 I Mar 31,2011 Particulars r HSCL LSML HSCL
(i) Directly incurred by the Company - 2,100.00 - 2,100.00
(ii) Share of the Company in contingent liabilities incurred by jointly
controlled 8,044.07 573.55 6,440.20 264.50 entity
(iii) Share of other venturers in contingent liabilities incurred by
jointly controlled 8,213.15 573.77 6,575.56 264.61 entity
6 Sale Of Weg Business
Though the Company had obtained its Shareholders' approval through
Postal Ballot on August 21, 2008, fortransfer of 250 KW Wind Turbine
Business to its Joint Venture, Leitner Shriram Manufacturing Limited (
LSML) with effect from April 1, 2008, the Company would continue to
sell the 250 KW Wind Turbines till the time LSML obtains all statutory
approvals to manufacture and sell the same. Consequently, the Company
has not recognised the Loss / Profit in the Statement of Profit and
Loss forthe yearended March 31,2012.
7 During the first quarter of the previous year, the company had sold
its entire investment in Ennore Coke Ltd. to Haldia Coke & Chemicals
Pvt. Ltd (HCCL). The profit on this sale (Rs.2,336.28 Lakhs) is disclosed
as an exceptional item.
8 The company has granted advances/loans to its subsidiaries and group
companies for the purpose of carrying on operations, based on the
business needs and exigencies on those Companies. Some of these
advances/loans are interest free. However in the opinion ofthe
management, all these advances/loans(including the interest free loans)
are conducive to the interest and development of the business of the
group and hence are not prejudicial to the interests of the company.
9 Subsequent to the date of approval of the annual accounts for the
year ended March 31, 201 2 by the Board and before the book closure
date 32,559 Equity Shares (March 31, 201 1: 28,1 49 Equity Shares) were
allotted under the Shriram EPC Limited Employee Stock option Scheme
2006 & 2007 to employees and dividends of Rs.0.59 Lakhs (March 31, 2011:
Rs.0.65 Lakhs) on these shares were paid. The total amount of Rs.0.70 Lakhs
(March 31, 2011: Rs.0.76 Lakhs) including dividend distribution tax have
been appropriated from the Surplus in Statement of Profit and Loss.
10 Subsequent Events
10.1 Subsequent to the date of Balance Sheet 2,450 Equity Shares were
allotted under the Shriram EPC Employee Option Scheme 2006 & 2007.
10.2 Investment in Sree Jayajothi Cement Limited and Spark
Environmental Technology Limited
10.2.1 The company had executed an EPC contract for Sree JayaJothi
Cement Limited ('SJCL') in an earlier year and the total amount
outstanding under Trade Receivables of Rs.30,472.62 Lakhs, Debentures of
Rs.Nil (Net of cheques in transit of Rs. 12,1 86 Lakhs) and loans and
advances of Rs.Nil (Net of cheques in transit of Rs. 1 7,978 Lakhs) is
outstanding for a considerable period of time. Apart from this the
company also has investment in Equity shares of SJCL amounting to Rs.
1,500 Lakhs. These amounts aggregating to Rs.31,972.62 Lakhs have been
secured by assets ofthe investee company.
10.2.2 On April 2, 201 2, the company has invested Rs.9,323.45 Lakhs in
SJCL constituting 1 7.81 % of the entire issued, subscribed and paid up
capital of SJCL. The company has also entered into an agreement with
SJCL, for recovering its balance dues over a period of time. The
company has appointed its representative as a member on the Board of
Directors in SJCL, to monitor the operations of the company and to
ensure recovery of its dues. The company is convinced about the
viability of cement vertical and accordingly, the company is hopeful of
recovering all the amounts due to them and does not expect any
shortfall in the recovery of the dues. With respect to the investment,
the management is of the view that there is significant upside
potential in the business and as the investment is of long term nature,
the diminution in the value of investment is not other than temporary
in nature.
10.2.3 On April 19, 2012, the company has invested an amount of
Rs.25,676.56 Lakhs in Spark Environmental Techonology Limited ('Spark' a
fellow Shareholder in SJCL), towards subscription of 2,56,76,565
Optionally Convertible Debentures (OCD) of a face value of Rs.100 each,
carrying an interest rate of 12%. The terms of Debentures are as
follows:
- On the expiry of 5 years from date of allotment, all OCD shall be
either be converted to Equity Shares, redeemed in full, or partly
converted and partly redeemed.
- At or prior to maturity date, the holder of OCD has the option to
either convert into Equity Shares or redeem, all or part of the OCD.
- Upon conversion, each debenture shall be converted into 10 Equity
Shares.
10.2.4 Spark has subscribed to 25,67,65,645 shares of Rs.10 each
constituting 49.05 % of SJCL Equity during April 201 2.
11. The revised Schedule VI has become effective from April 1,2011 for
the preparation of financial statements. This has significantly
impacted the disclosure and presentation made in the financial
statements. Previous Year's figures have been regrouped and
reclassified wherever necessary to correspond with the current year's
classification/disclosure.
Mar 31, 2011
1. A. CONTINGENT LIABILITIES:
Sl. Particulars As at Mar As at Mar
No. 31,2011 31,2010
(a) Letters of Guarantee issued
by the Banks 22,219.83 25,458.50
(b) Letters of Credit issued by
the Banks 20,181.70 49,049.67
(c) Bills discounted 22,710.00 -
(d) Corporate Guarantees issued 3,400.00 9,500.00
(e) Claims against the Company not
acknowledged as debts 905.80 1,205.11
(f) Disputed Income Tax demands
contested in Appeals not
provided for Civil Cases. * 1,052.86 982.74
Assessment yean Appeal pending before
2000-01 Appellate Tribunal 48.08 55.94
2001-02 Appellate Tribunal - 21.59
2002-03 Appellate Tribunal 49.15 51.90
2003-04 Appellate Tribunal 155.33 163.25
2004-05 Commissioner of Income
Tax (Appeals) 26.24 30.58
2005-06 Commissioner of Income
Tax (Appeals) 298.48 340.53
2006-07 Commissioner of Income
Tax (Appeals) 219.68 318.95
2007-08 Commissioner of Income
Tax (Appeals) 192.24 -
2008-09 Commissioner of Income
Tax (Appeals) 63.56 -
* Management is of the opinion that the Appeals preferred by the
Company will be decided in its favour.
B. The Company has in addition to (d) above issued letters of comfort
/awareness to banks, with reference to compliance of terms and
conditions of the facilities granted to its Associate.
2. CAPITAL COMMITMENTS
A) Estimated amount of contracts remaining to be executed on capital
account (net of advances) and not provided for: NIL( Previous year Rs.
Nil lakhs)
B) Debenture Purchase Obligations
Particulars
As at 31-03-2011 As at 31-03-2010
Debenture Purchase
Obligations 11,000 21,000
3. SECURED LOANS:
3.1 Banks
a) Cash Credit facilities:
Cash credit facilities are secured by hypothecation of current assets,
Inventories of Raw Materials, work in progress, finished goods, stores,
spares and consumables and Receivable on a pari passu basis with other
participating lenders and a first charge on the Company's fixed assets
on a pan-possu basis with other lending banks.
b) Term Loans
SI. Bank Name Nature of Security
No.
1 Jammu and Kashmir Subservient charge on Current Assets
Bank Limited of the Company.
2 Syndicate Bank Subservient charge on movable fixed Assets
of the Company.
3 DBS Bank Ltd First pari passu Charge on the Current assets
including stock and receivables (both present
and future), second pari passu charge on the
Fixed Assets.
4 UCO Bank Subservient charge on the assets of the
company.FDR of Rs.500 Lakhs under lien to Bank
with matching tenor of loan as collateral
security
5 State Bank of Subservient charge on all the movable assets
Bikener and of the Company
Jaipur
6 Lakshmi Vilas First charge by way of hypothecation of
Bank Ltd inventories,receivables and other current
assets and unencumbered fixed assets of
the company on pari passu basis with other
lending banks
7 Axis Bank Ltd Hypothecation of the equipment financed under
this loan facility
8 Induslnd bank Exclusive charge over the Wind Energy Generator
Ltd acquired out of this Term Loan Hypothecation
charge(first charge) over receivables from TNEB
and Karnataka State Electricity Board
9 IDBI Bank Ltd First pari passu charge on current assets of
the company and other securities offered to
other Banks under multiple Banking.
Second charge on fixed assets as collateral
10 Punjab National First charge on the immovable properties
Bank Ltd and assets of the project, present and future
First pari-passu charge on the entire fixed
assets of the company including Project assets
other than those specifically charged to the
Term Lenders
11 State Bank of Subservient charge on all the movable assets
Mysore Ltd of the company with a minimum cover of 1.25
times during : the entire tenure of the loan
4.2 Financial Institutions
SREI Infrastructure Finance Limited:
Loan is secured by way of mortgage of land to the satisfaction of the
Lender. Further, Promissory note is given covering the principal
repayment and interest.
4.3 Hire Purchase Finance:
Hire Purchase Finance is secured by hypothecation of the Assets
acquired under Hire Purchase Agreement.
5. SALE OF WEG BUSINESS
Pursuant to the approval of the board, the Company obtained
Shareholders' approval through Postal Ballot on 21st August 2008 to
transfer the business of 250 KW Wind Turbines effective April 1, 2008,
to its Associate, Leitner Shriram Manufacturing Limited (LSML). The
Company continues to sell the 250 KW Wind Turbines till the time LSML
obtains all statutory approvals to manufacture and sell 250 KW Wind
Turbines, and the gross margins on such sales are transferred to
Leitner Shriram Manufacturing Limited.
6. The total amount required to be disclosed under Micro, Small and
Medium Enterprises Development Act, 2006 has been determined to the
extent such parties have been identified on the basis of information
available with the Company.
7. The Company has considered business segment as the primary segment
for disclosure. The Company's operations comprises of three segments
namely Construction Contracts, Wind Turbine Generators and Trading. The
above segment has been identified taking into account the organisation
structure as well as the differing risks and return of these segments.
Separate secondary segment disclosure also is not reguired as more than
98% of the Company's sale is in the Domestic Market.
The generally accepted accounting principles used in the preparation of
the financial statements are applied to record revenue and expenditure
in individual segments.
8. Related Party Disclosures under Accounting Standard 18
Disclosure of related party transactions in accordance with Accounting
Standard -18 notified by Central Government of India under Companies
(Accounting Standards) Rules, 2006.
(As identified by the management and relied upon by the auditors)
Name Name of Related Party
2010-11
Subsidiaries Shriram EPC (Singapore) Pte Ltd
Blackstone Group Technologies (Pvt) Limited
Chemprojects Consulting Pvt Ltd.
Jointly
Controlled
Entities Hamon Shriram Cottrell Private Limited
Leitner Shriram Manufacturing Limited
Associates Haldia Coke and Chemicals Pvt Limited
(with effect from 29.06.2010)
Ennore Coke Limited (upto 21.06.2010)
Ennore Coke Limited (Subsidiary of Haldia
Coke and Chemicals Pvt Limited with effect
from 01.07.2010)
Shriram SEPL Composites Pvt Ltd
Shriram Angerlehner Composites P Ltd
Enterprise over
which Key Orient Green Power Company Limited
Management
Personnel is
able to exercise
significant
influence Subsidiaries of Orient Green Power
Company Limited
P S R Green Power Projects P Ltd
Amrit Environmental Technologies Private
Limited
SM Environmental Technologies Private Limited
Orient Bio Power Limited
Orient Green Power Company (Ra-jasthan)
Private Limited
Sanjog Sugars and Eco Power Private Limited
Bharath Wind Farm Limited
Clarion Windfarms Private Limited
Gamma Green Power Private Limited
Beta Wind Farm Private Limited
Key Management
Personnel T.Shivaraman - Managing Director
M.Amjad Sbariff - Joint Managing Director
Name
Subsidiaries Shriram EPC (Singapore) Pte Ltd
Blackstone Group Technologies (Pvt) Limited
Chemprojects Consulting Pvt Ltd.
Jointly Hamon Shriram Cottrell Private Ltd
Controlled
Entities Leitner Shriram Manufacturing
Limited
Associates Ennore Coke Limited
Shriram SEPL Composites Pvt Ltd
Shriram Angerlehner Composites P Ltd
Enterprise over Orient Green Power'Company Limited
which Key
Management
Personnel is
able to
exercise
significant
influence
Key Management T.Shivaraman - Managing Director
Personnel
M.Amjad Shariff - Joint Managing Director
21. EMPLOYEE STOCK COMPENSATION EXPENSES
The Company has two Employee Stock option Schemes (A) Employee stock
option scheme 2006, (B) Employee stock option scheme 2007. As per the
Guidance Note on Accounting for Employee Share-based Payments issued by
Institute of Chartered Accountants of India, the Company has considered
the best available estimate of the number of shares or stock options
expected to vest based on the current attrition rates of its employees
and measured the compensation expense at fair value on the date of
grant.
A. Shriram EPC Limited 2006 ESOP Scheme (the 2006 Scheme)
In pursuance of a special resolution approved by the shareholders at
the extra-ordinary general meeting held on 20th November, 2006 the
Company instituted an ESOP Scheme for all its eligible employees
including the subsidiaries and associates Companies.
The employees stock options granted shall be capable of being exercised
within a period of eight years from the date of the grant.
Modification in the Terms of the 2006 Scheme
The Company has carried out a modification in "The 2006 scheme" and
accordingly additional grants of 424,952 options were made during the
year ended 31 -03-2008. Those grants have been made as at 1st April
2007 and will vest with the employees in same proportion as in the
original scheme.
Deferred Stock Compensation Expense
During the year, an amount of Rs.267.04 Lakhs (Previous year Rs. 248.08
Lakhs) being employee compensation expense to the extent of options
vested net off lapses, has been charged to profit and loss account.
The values of services rendered in return for share options granted are
measured by reference to the fair value of the share options granted
and this is evaluated on the basis of an independent valuation carried
out as on the grant date.
B. Shriram EPC Limited 2007 ESOP Scheme (the2007Scheme)
The Company instituted another Scheme for all eligible employees in
pursuance of a special resolution approved by the shareholders at the
extra-ordinary general meeting held on 20th September, 2007.
The employees stock options granted shall be capable of being exercised
within a period of eight years from the date of the grant.
Modification in the Terms of the 2007 Scheme
The company has carried out a modification in "The 2007 scheme" in the
current year and accordingly additional grants of 10,000 options have
been made. These grants have been made as at June 14,2010 and will vest
with the employee in 2 years in equal proportion from the end of 1 year
from the date of grant.
Deferred Stock Compensation Expense
During the year, an amount of Rs.1 4.63 Lakhs (Previous year Rs.27.92
Lakhs) being employee compensation expense to the extent of options
vested net off lapses, has been charged to profit and loss account.
The values of services rendered in return for share options granted are
measured by reference to the fair value of the share options granted
and this is evaluated on the basis of an independent valuation carried
out as on the grant date.
C. Fair value of Options Granted:
The estimated fair value of each stock option granted under the
employee stock option Scheme 2006 is Rs.80. The fair value was arrived
at based on a transaction entered into between a willing buyer and a
seller for purchase of shares recent to the grant date of the options.
9. The Company has granted advances/loans to its subsidiaries and
group companies forthe purpose of carrying on operations, based on the
business needs and exigencies of those Companies. Some of these
advances/ loans are interest free. However in the opinion of the
management, all these advances /loans (including the interest free
loans) are conducive to the interest and development of the business of
the group and hence are not prejudicial to the interests of the
company.
10. Subsequentto the date of balance sheet 32,559 equity shares were
allotted underthe Shriram EPC Limited Employee stock Option Scheme 2006
& 2007.
11. Subsequentto the date of approval of the annual accounts for the
year ended March 31, 2010 by the Board and before the book closure
date, 28,149 equity shares (Previous Year 70,575 equity shares) were
allotted under the Shriram EPC Limited Employee Stock Option Scheme
2006 & 2007 to employees and dividends of Rs.0.65 Lakhs (Previous Year
Rs.0.84 Lakhs) on these shares were paid. The total amount of Rs.0.76
Lakhs (Previous Year Rs.0.99 Lakhs) including dividend distribution tax
have been appropriated from the opening balance of Profit and Loss
Account.
12. Figures of the previous year have been reclassified and regrouped
wherever necessary to conform to the classification and groupings
adopted in the current year.
Mar 31, 2010
1. Contingent Liabilities : Amount in Rs. lakhs
Sl. No Particulars As at As at
31.03.2010 31.03.2009
(a) Letters of Guarantee
issued by the Banks 25,458.50 16,812.23
(b) Letters of Credit issued
by the Banks 49,049.67 17,379.47
(c) Bills discounted - 1,833.72
(d) Corporate Guarantees issued 9,500.00 9,192.50
(e) Claims against the Company
not acknowledged as debts 1,205.11 910.70
(f) Disputed Income Tax demands
contested in Appeals not
provided for. * 982.74 982.74
As at As at
31st March 2010 31st March 2009
Assessment Appeal pending
year before Rs. Lakhs. Rs. Lakhs.
2000-01 Appellate Tribunal 55.94 55.94
2001-02 Appellate Tribunal 21.59 21.59
2002-03 Appellate Tribunal 51.90 51.90
2003-04 Appellate Tribunal 163.25 163.25
2004-05 Commissioner of
Income Tax (Appeals) 30.58 30.58
2005-06 Commissioner of
Income Tax (Appeals) 340.53 340.53
2006-07 Commissioner of
Income Tax (Appeals) 318.95 318.95
2. Secured Loans:
2.1 Banks
a) Cash Credit facilities:
Cash credit facilities are secured by hypothecation of current assets,
Inventories of Raw Materials, work in progress, finished goods, stores,
spares and consumables and Receivable on a pari passu basis with other
participating lenders and a first charge on the Companys fixed assets
on a pari-passu basis with other lending banks.
b) Term Loans
Term loans from Banks are for meeting working capital requirements and
are secured by a first pari-passu charge on the current assets of the
Company.
c) IndusInd Bank Limited:
Term Loan from IndusInd Bank Limited is secured by an exclusive charge
over the 1.35 MW Wind Electric Generators acquired out of the Term Loan
and an hyphothecation charge (first charge) over receivables from
Tamilnadu Electricity Board.
d) Punjab National Bank :
Term Loan from Punjab National Bank sanctioned for setting up a
windmill project is secured by the windmills procured and in addition
collateral security by way of pari- passu first charge on Block assets
other than vehicles and windmills specifically charged to Term Lenders,
pari-passu with other working capital bankers.
Corporate Term Loan of Rs 15,000 lakhs sanctioned for meeting working
capital requirements against exclusive charge on specific deferred
receivable from M/s Shree Jayajyothi Cements Ltd. and a second charge
by way of hypothecation on other current assets.
2.2 Financial Institutions
L & T Infrastructure Finance Company Limited :
Term Loan from L & T Infrastructure Finance Company Limited is secured
by a first pari - Passu charge on all the movable assets of the
Company.
2.3 Hire Purchase Finance:
Hire Purchase Finance is secured by hypothecation of the Assets
acquired under Hire Purchase Agreement.
3. Sale of WEG Business
During the Previous Year, pursuant to the approval of the board, the
Company obtained Shareholders approval through Postal Ballot on 21st
August 2008 to transfer the business of 250 KW Wind Turbines effective
April 1, 2008, to its subsidiary Shriram Leitwind Ltd. (SLL) and
Associate Leitner Shriram Manufacturing Ltd. (LSML). The Company
continues to sell the 250 KW Wind Turbines till the time LSML obtains
all statutory approvals to manufacture and sell 250 KW Wind Turbines,
and the gross margins on such sales are transferred to Leitner Shriram
Manufacturing Ltd.
4. Segment Financials - (A) Primary Segment Analysis
The Companys operations are organised into major divisions -
Construction Contracts and manufacturing of wind turbine generators.
Accordingly, the divisions comprise the primary basis of segmental
information. Secondary segmental reporting of Revenue is based on
geographical location of customers.
The generally accepted accounting principles used in the preparation of
the financial statements are applied to record revenue and expenditure
in individual segments.
5. Employee Stock Compensation Expenses
The Company has two Employee Stock option Schemes à A. Employee stock
option scheme 2006. B. Employee stock option scheme 2007. As per the
Guidance Note on Accounting for Employee Share-based Payments issued by
Institute of Chartered Accountants of India, the Company has considered
the best available estimate of the number of shares or stock options
expected to vest based on the current attrition rates of its employees
and measured the compensation expense at fair value on the date of
grant.
A. Shriram EPC Limited 2006 ESOP Scheme ( the 2006 Scheme)
a. In pursuance of a special resolution approved by the shareholders at
the extra-ordinary general meeting held on 20th November, 2006 the
Company instituted an ESOP Scheme for all its eligible employees
including the subsidiaries and associates Companies.
In accordance with the 2006 Scheme the Company has granted on November
22, 2006 ( Grant date) options to eligible employees at an exercise
price of Rs.10/- per equity share. Under the terms of the 2006 Scheme
the options will vest in the employees in the following proportion:
Deferred stock compensation expense:
Options granted under the 2006 Scheme gives rise to a Deferred stock
compensation expense of Rs. 1,045.55 lakhs. For the year ended 31st
March, 2010, an amount of Rs.248.08 lakhs ( Previous year Rs. 247.13
lakhs), (including Rs. Nil lakhs, (Previous year Rs. 53.74 lakhs on
account of the above modification) being proportionate employee
compensation expense to the extent of options vested, has been charged
to profit and loss account.
The values of services rendered in return for share options granted are
measured by reference to the fair value of the share options granted
and this is evaluated on the basis of an independent valuation carried
out as on the grant date.
B. Shriram EPC Limited 2007 ESOP Scheme (the 2007 Scheme)
The Company instituted another Scheme for all eligible employees in
pursuance of a special resolution approved by the shareholders at the
extra-ordinary general meeting held on 20th September, 2007.
In accordance with the 2007 Scheme the Company has granted on October
1, 2007 and January 1, 2008 (Grant dates) options to eligible employees
including susbidiaries and associate companies at an exercise price of
Rs. 10/- per equity share. Under the terms of the 2007 Scheme the
options will vest in the employees in the following proportion:
C. Fair value of Options Granted:
The estimated fair value of each stock option granted under the
employee stock option Scheme 2006 is Rs. 80. The fair value was arrived
at based on a transaction entered into between a willing buyer and a
seller for purchase of shares recent to the grant date of the options.
NOTES:
Previous year figures not furnished since both the entities become
Jointly Controlled Entities only during the current year. In respect
of LSML, the Income and Expenditure pertains to the period of fourteen
months ended 31st March 2010.
6. Subsequent to the date of approval of the annual accounts by the
Board and before the book closure date 70,575 equity
shares were allotted under the Shriram EPC Ltd. Employee stock Option
Plan 2006 & 2007 to employees and dividends of Rs. 0.84 lakhs on these
shares were paid. The total amount of Rs. 0.99 lakhs including dividend
distribution tax have been appropriated from the opening balance of
Profit and Loss Account.
7. Figures of the previous year have been reclassified and regrouped
wherever necessary to conform to the classification and groupings
adopted in the current year.
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Stock Market Update: मार्च में क्रैश हुआ बाजार, अप्रैल में कैसी रहेगी बाजार की चाल? -
Stock Market Crash: शेयर बाजार में हाहाकार, Sensex 1,700 अंक टूटा तो Nifty 24,300 के नीचे फिसला -
Stock Market Bloodbath: शेयर मार्केट में आज 'रेड' फ्राइडे, Nifty और Sensex धड़ाम! -
Stock Market Holiday Today: राम नवमी पर शेयर बाजार बंद! जानें इस हफ्ते कितने दिन नहीं होगा कारोबार -
Stock Market Today: शेयर बाजार में 4 कारणों से जोरदार तेजी, एक्सपर्ट्स से समझिए आगे क्या होगा? -
Stock Market Today: लगातार दूसरे दिन शेयर बाजार में उछाल! निफ्टी 23,000 के पार, इन शेयरों ने लगाई दौड़ -
Stock Market Today: ट्रंप के बयान से शेयर बाजार में धमाका! Sensex 800 अंक से ज्यादा चढ़ा, Nifty 22,800 के पार -
Stock Markets Today: Trump की धमकी से बाजार में हड़कंप, Sensex-Nifty लुढ़के -
Stock Market Crash: सेंसेक्स 1700 से ज्यादा अंक टूटा, एक घंटे में 12 लाख करोड़ स्वाहा! रुपया 94 के करीब -
Stock Market Crash: युद्ध के डर से बाजार में हड़कंप, सेंसेक्स 900 अंक टूटा, बढ़ी बिकवाली, निवेशक हुए सतर्क -
Stock Market Crash: जंग का असर बाजार में हाहाकार, सेंसेक्स 2500 अंक से ज्यादा लुढ़का, निफ्टी 700 अंक क्रैश -
Stock Market Outlook: होर्मुज स्ट्रेट में संकट! क्या आने वाला है भारतीय शेयर बाजार में बड़ा गिरावट का दौर? -
मिडिल ईस्ट के बढ़ते तनाव ने बिगाड़ा बाजार का मूड, सेंसेक्स 1500 अंक लुढ़का, निफ्टी भी बुरी तरह फिसला -
Stock Market Today: मिडिल ईस्ट तनाव! शेयर बाजार में कोहराम, सेंसेक्स 900+ अंक टूटा, निफ्टी 24,900 के नीचे -
Stock Market: Anthropic के दावे से बढ़ी टेंशन! Nifty-Sensex में बड़ी गिरावट, शेयर बाजार किन 5 कारणों से धड़ाम? -
Stock Markets Today: कारोबारी हफ्ते की शानदार शुरुआत, Sensex और Nifty 50 जबरदस्त बढ़त के साथ बंद
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