Notes:
(i) Fully paid secured rated redeemable non-convertible debentures issued to Reliance Mutual Fund -
- As at the year end, the paid up value of these debentures is Nil including current maturities of longterm debt) [i.e., Nil secured rated redeemable non convertible debentures of Rs.1 million each (31 March 2017 : Rs.1,722 million)]
- Security
- Pledge of a proportion of the shares of Mindtree Limited and Tanglin Development Limited held by the Company;
- Personal guarantee of Mr. V. G. Siddhartha.
- These debentures carry fixed maturity internal rate of return of 14.25% p.a. including quarterly payable coupon interest rate of 6.5% p.a.
- Any delay in repayment of interest entails payment of penal interest @ 2% p.a. for the period of delay.
- The principal amount shall be repaid in 9 equal quarterly installments beginning from 18 March 2017 and expiring on the scheduled maturity date (i.e., 15 March 2019).
- The Company has an option of voluntary prepayment under certain circumstances as set out in the agreement.
- The company has prepaid these debentures during the year."
(ii) Secured rated redeemable non-convertible debentures issued to ICICI Prudential Asset Management Company -
"Fully paid secured rated redeemable non-convertible debentures of Rs. 1,000,000 each issued to ICICI Prudential Asset Management Company -
- As at the year end the paid up value of these debentures is Rs. 1,000 million including current maturities of long-term debt [i.e, 1000 secured rated redeemable non-convertible debentures of Rs.
1,000,000 each (31 March 2017: Rs. 1000 million)]
- These debentures carry interest @ MIBOR plus 600 base points subject to a minimum of 10.99% and maximum of 11.01%
- Security
- Pledge of shares of Mind tree where the aggregate amount shall be equal to the principal amount.
- Pledge of shares of CDGL where the aggregate amount shall be 2.5 times the benchmark amount from the allotment date and at least 1.5 times the benchmark amount from the effective date of issue of mind tree shares.
- Personal guarantee of Mr. V. G. Siddhartha.
The Company at all times shall maintain a minimum reserve which shall be equal to the money due and payable to the debenture holders.
- The amount shall be paid on bullet repayment basis on the expiry of the term. (i.e; 14 March 2019)
- Amounts unpaid on due date will attract overdue interest at 2% p.a over and above the cash coupon rate.
- The Company can redeem such debentures before maturity by giving one day notice of the same."
(iii) Secured rated redeemable non-convertible debentures issued to ICICI Prudential Asset Management Company -
"- As at the year end, the paid up value of these debentures is Rs. 850 [i.e., 850 secured rated redeemable non convertible debentures of Rs.1 million each (31 March 2017 :Nil)]
- Security
- Pledge of shares of Mind tree where the aggregate amount shall be equal to the principal amount.;
- Pledge of shares of CDGL where the aggregate amount shall be 2.5 times the benchmark amount from the allotment date and at least 1.5 times the benchmark amount from the effective date of issue of mind tree shares.
- Personal guarantee of Mr. V. G. Siddhartha.
- MIBOR plus 600 base points subject to a minimum of 10.99% and maximum of 11.01%
- Any delay in repayment of interest entails payment of penal interest @ 2% p.a. for the period of delay.
- The amount shall be paid on bullet repayment basis on the expiry of the term of 2 years.
- The Company has an option of voluntary prepayment under certain circumstances as set out in the agreement."
(iv) Secured rated redeemable non-convertible debentures issued to ICICI Prudential Asset Management Company -
"- As at the year end, the paid up value of these debentures is Rs. 600 [i.e., 600 secured rated redeemable non convertible debentures of Rs.1 million each (31 March 2017 :Nil)]
- Security
- Pledge of shares of Mind tree where the aggregate amount shall be equal to the principal amount.;
- Pledge of shares of CDGL where the aggregate amount shall be 2.5 times the benchmark amount from the allotment date and at least 1.5 times the benchmark amount from the effective date of issue of mind tree shares.
- Personal guarantee of Mr. V. G. Siddhartha.
- These debentures carry a fixed maturity internal rate of return of 11% p.a
- Any delay in repayment of interest entails payment of penal interest @ 2% p.a. for the period of delay.
- The amount shall be paid on bullet repayment basis on the expiry of the term of 2 years.
- The Company has an option of voluntary prepayment under certain circumstances as set out in the agreement."
(v) Secured rated redeemable non-convertible debentures issued to ICICI Prudential Asset Management Company -
- As at the year end, the paid up value of these debentures is Rs. 900 [i.e., 900 secured rated redeemable non convertible debentures of Rs.1 million each (31 March 2017 :Nil)]
- Security
-- Pledge of shares of Mind tree where the aggregate amount shall be equal to the principal amount.;
- Pledge of shares of CDGL where the aggregate amount shall be 2.5 times the benchmark amount from the allotment date and at least 1.5 times the benchmark amount from the effective date of issue of mind tree shares.
- Personal guarantee of Mr. V. G. Siddhartha.
- MIBOR plus 600 basis points subject to a minimum of 10.99% and maximum of 11.01%.
- Any delay in repayment of interest entails payment of penal interest @ 2% p.a. for the period of delay.
- The amount shall be paid on bullet repayment basis on the expiry of the term of 2 years.
- The Company has an option of voluntary prepayment under certain circumstances as set out in the agreement."
(vi) Secured rated redeemable non-convertible debentures issued to DSP Blackrock Income opportunities Fund -
"- As at the year end, the paid up value of these debentures is Rs. 1,050 million including current maturities of long-term borrowings (31 March 2017 : Rs. 1,050 million)
- Security
- Pledge of shares of Mind tree where the aggregate value is equal to the benchmark amount
-- Pledge of Tangling Shares where the aggregate value of the shares is equal to the benchmark amount
- The Company shall at all times, deposit monies in the designated accounts which is due and payable to the debenture holders on the Scheduled Maturity Date.
- Personal guarantee of Mr. V G Siddhartha.
- These debentures carry fixed redemption premium of 11.50 % with an interest rate of 8% p.a. cash coupon
- Any delay in repayment of interest entails payment of penal interest @ 2% p.a. for the period of delay.
- These debentures are redeemable by way of bullet repayment at the end of 19 months and 6 days from the date of issue, (i.e., 5 November 2018)
The Company has an option of voluntary prepayment under certain circumstances as set out in the agreement."
(vii) Secured rated redeemable non-convertible debentures issued to Birla Sun Life-
"- As at the year end, the paid up value of these debentures is Rs. 1,200 million including current maturities of long-term borrowings (31 March 2017: Rs. 1,200 million)
- Security
- Pledge of a proportion of the shares of Mind tree Limited and Coffee Day Global Limited held by the Company;
- Pledge of a proportion of the shares of Sical Logistics Limited held by Tanglin Retail Reality Developments Private Limited
- Personal guarantee of Mr. V. G. Siddhartha
- These debentures have been allotted in two tranches- 27 April 2015- Rs. 600 million and 12 May 2015- Rs. 600 million.
- These debentures carry an interest rate of 14.5% p.a. (increases to 15.5% after one year from date of allotment)
- Any delay in repayment of interest entails payment of penal interest @ 2% p.a. for the period of delay.
- These debentures are redeemable by way of bullet repayment at the end of 36 months from the date of issue i.e., 27 April 2018 (Rs. 1200 million)
The Company has an option of voluntary prepayment under certain circumstances as set out in the agreement."
(viii) (a) From Aditya Birla Finance Limited [Principal amount of loan amounting to Rs. 600 million including current maturities of long-term borrowings(31 March 2017 Rs. 600 million) - Secured by
- Security
- Pledge of a proportion of the shares of Mind tree Limited, Coffee Day Global Limited, Sical Logistics Limited held by the Company;
- Personal guarantee of Mr. V. G. Siddhartha
- The loan carries an interest rate of 13.75% p.a. payable quarterly
- Any delay in repayment of interest entails payment of penal interest @ 24% p.a. for the period of delay.
- The Company has an option of voluntary prepayment under certain circumstances as set out in the arrangement. Further, the Company has an option to repay the loan in advance with a prepayment premium of 2% on the principal amount outstanding as on the date of prepayment.
The loan is repayable by way of bullet repayment at the end of 36 months from the date of issue (i.e., 26 May 2018)."
(viii) (b)From Aditya Birla Finance Limited [Principal amount of loan amounting to Rs. 930 million including current maturities of long-term borrowings (31 March 2017 Rs. 930 million;) - Secured by
- Security
- Pledge of a proportion of the shares of Mindtree Limited and Tanglin Developments Limited held by the Company;
- Personal guarantee of Mr. V. G. Siddhartha
- The loan carries an interest rate of 12.50% p.a. payable quarterly
- Any delay in repayment of interest entails payment of penal interest @ 24% p.a. for the period of delay.
- The Company has an option of voluntary prepayment under certain circumstances as set out in the arrangement. Further, the Company has an option to repay the loan in advance with a prepayment premium of 2% on the principal amount outstanding as on the date of prepayment.
The loan is repayable by way of bullet repayment at I the end of 36 months from the date of issue (i.e., 26 May 2018)."
(ix) From Axis Bank Limited [Principal amount of loan amounting to Rs. 3,150 million (31 March 2017 -Rs. 1,000 million) - Secured by
- Security
- Pledge of Mind tree shares (55% of total security cover).
- Listed shares of Sical Logistics Ltd./ Lakshmi Vilas Bank/ CDEL/ any other listed entity acceptable to the lender (65% of total security cover), held by promoter/ group covering 120% of exposure.
- Personal guarantee of Mr. V G Siddhartha
- Security cover by way of listed shares of at least 1.2x of the outstanding/ disbursed facility amount to be maintained during the tenor of the loan on MTM basis.
- The interest rate for the loan is as follows:
- 1 year MCLR 1%(Spread) p.a, payable monthly (First three years)
- 1 year MCLR 1.75%(Spread) p.a, payable monthly (subject to minimum effective rate of interest of 10.65% p.a) (Post three years)
- The lender can exercise the call option at the end of three years
- The Company has an option of voluntary prepayment with no penalty
- The loan amount shall be repaid in 4 half yearly installments beginning from 42nd month of first disbursement (i.e., 28 June 2020)
- Amounts unpaid on due date will attract overdue interest at 2% p.a"
(xi) There are no continuing default in the repayment of the principal loan and interest amounts with respect to the above loans.
(xii) The aggregate amount of borrowing secured by personal guarantee of Director amounts to Rs. 10,280 million (31 March 2017: Rs. 10,030 million).
Micro, Small and Medium Enterprises
The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2018 has been made in the financial statements based on information received and available with the Company. The Company has not received any claim for interest from any supplier under the said Act. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material.
(i) Secured rated redeemable non-convertible debentures issued to ICICI Prudential Asset Management Company
- As at the year end the paid up value of these debentures is Rs. 949.87 million [i.e, 950 secured rated redeemable non-convertible debentures of Rs. 1.000.000 each (31 March 2017: Rs. 950 million)]
- These debentures carry interest @ 13% p.a payable quarterly
- Security
- Pledge of Mind tree shares equal to one time the principal amount with security cover being maintained at all times
- Pledge of CDGL shares aggregate of which shall be equal to 1.5 times the face value of the debentures
- Personal guarantee of Mr. V. G. Siddhartha.
- Company shall at all points of time maintain in a account designated for this purpose amount equal to the cash coupons payable by the Company in the financial quarter in which such date occurs.
- The amount shall be paid on bullet repayment basis on the expiry of the term. (i.e; 16 April 2017)
- Amounts unpaid on due date will attract overdue interest at 2% p.a over and above the cash coupon rate.
- The Company has redeemed the debentures during the year."
(ii) Secured rated redeemable non-convertible debentures issued to ICICI Prudential Asset Management Company
"- As at the year end the paid up value of these debentures is Rs. 799.62 million [i.e, 800 secured rated redeemable non-convertible debentures of Rs.
1.000.000 each (31 March 2017: Rs.800)]
- These debentures carry interest @ 13% p.a payable quarterly
- Security
- Pledge of Mind tree shares equal to one time the principal amount with security cover being maintained at all times
- Pledge of CDGL shares aggregate of which shall be equal to 1.5 times the face value of the debentures
- Personal guarantee of Mr. V. G. Siddhartha.
- Company shall at all points of time maintain in a account designated for this purpose amount equal to the cash coupons payable by the Company in the financial quarter in which such date occurs.
- The amount shall be paid on bullet repayment basis on the expiry of the term. (i.e; 8 April 2017)
- Amounts unpaid on due date will attract overdue
i) Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgments/decisions pending with various forums/authorities.
ii) The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. Based on the advice from the Company's legal counsel, management does not expect the outcome of these proceedings to have a materially adverse effect on its financial position. The Company does not expect any reimbursements in respect of the above contingent liabilities.
iii) Income tax department conducted search/survey under Section 132/132A of the Income Tax Act, 1961 on the
31 LEASES
The Company leases land for operating resort under non-cancellable operating lease agreement. The Company intends to renew such lease in the normal course of its business. Total rental expense under non-cancellable operating lease was Rs. 5.02 million (Previous year: Rs. 4.90 million).
The Company leases office premises and staff quarters under cancellable operating lease agreements. The Company intends to renew such leases in the normal course of its business. Total rental expense under cancellable operating leases was Rs. 0.16 million (Previous year: Rs. 0.16 million)
32 SEGMENT INFORMATION
A Basis for segmentation
In accordance with Ind AS 108, Operating segments, segment information has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial results.
33 RELATED PARTY TRANSACTIONS
A. Enterprises where control exists:
The related parties where control exists include subsidiaries, associates and joint ventures as referred in Note 1
* Section 186 (7) of the Companies Act, 2013 ('the Act') states that no loan shall be given at a rate of interest lower than the prevailing yield of one year, three year, five year or ten year Government Security closest to the tenor of the loan. However, section 186 (11) of the Act grants exemption from application of Section 186 of the Act, to loans made by companies engaged in the business of providing infrastructure facilities. Schedule VI of the Act has defined infrastructure facilities to include tourism, including hotels, convention centers and entertainment centres. Since, the Company is in the business of operating resorts, it has obtained a opinion that it is exempt from the provisions of Section 186 of the Act. Accordingly, the Company has not charged interest in relation to loan provided to its wholly owned subsidiary.
The remuneration of key executives is determined having regard to the performance of individuals and market trends. Post employment benefit comprising gratuity and compensated absences are not disclosed as these are determined for the Group as a whole.
34 EMPLOYEE BENEFITS OBLIGATIONS
A. Defined benefit plan
The Company has a defined benefit gratuity plan in India, governed by the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the company makes contributions to recognized funds in India.
The estimates of future salary increases, considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.
Assumptions regarding future mortality have been based on published statistics and mortality tables. The current longevities underlying the values of the defined benefit obligation at the reporting date were as follows.
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.
The Company has not disclosed the fair values for financial instruments for loans (current and noncurrent), other financial assets (current and noncurrent) , trade receivables, cash and cash equivalents and bank balances other than cash and cash equivalents, Trade payables, other financial liabilities (current and noncurrent) because their carrying amounts are reasonably approximation of fair value. Investment in equity shares are not appearing as financial asset in the table above being investment in subsidiaries accounted under Ind AS 27, Separate Financial Statements is scoped out under Ind AS 109.
Fair value hierarchy
Fair value hierarchy explains the judgment and estimates made in determining the fair values of the financial instruments that are
a) recognized and measured at fair value
b) measured at amortized cost and for which fair values are disclosed in the financial statements.
To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table:
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV
Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3
B. Measurement of fair values
(i) Valuation techniques and significant unobservable inputs
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
- The fair values of the Company's interest-bearing debentures and loans are determined by using DCF method using discount rate that reflects the issuer's borrowing rate as at the end of the reporting period. The own nonperformance risk as at 31 March 2018 was assessed to be insignificant.
The following tables show the valuation techniques used in measuring Level 3 fair values. The significant unobservable inputs used have not been disclosed as no financial assets and liabilities have been measured at fair value:
C. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- credit risk (see (b));
- liquidity risk (see (c)); and
- market risk (see (d)).
(a) Risk management framework
The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Company's risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
Board oversees how management monitors compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. Board is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
(b) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers; loans and investments in debt securities.
The carrying amounts of financial assets represent the maximum credit risk exposure.
i) Trade receivables and loans:
The Company's trade receivable primarily includes receivables from related parties and others from Customers.
The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company's standard payment and delivery terms and conditions are offered. The Company's review includes external ratings, if they are available, financial statements, credit agency information, industry information and in some cases bank references.
The Company's loans include recoverable from loans given to wholly owned subsidiaries The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information.
Based on the above analysis, the Company does not expect any credit risk from its trade receivables and loans recoverable for any of the years reported in this financial statements.
(c) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. The Company uses activity-based costing to cost its products and services, which assists it in monitoring cash flow requirements and optimizing its cash return on investments.
Maturities of financial liabilities
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted contractual cash flow, and include contractual interest payments and exclude the impact of netting agreements.
(d) Market risk
"Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, which will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return."
i) Currency risk
The Company is not exposed to any currency risk. The currencies in which these transactions are denominated is INR.
ii) Interest rate risk
The Company's main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk.
Exposure to interest rate risk
The interest rate profile of the Company's interest-bearing financial instruments as reported to management is as follows:
Sensitivity analysis
Fair value sensitivity analysis for fixed-rate instruments
The Company does not have any significant impact on interest cost on the fixed rate instruments.
Cash flow sensitivity analysis for variable-rate instruments
A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant.
36 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 of the parent. The primary objective of the Company's capital management is to maximize the shareholder value.
The Company monitors capital using a ratio of net debt to equity. For this purpose, net debt is defined as total liabilities, comprising borrowings and trade payables less cash and cash equivalents. Equity comprises all components of equity. The Company's net debt to equity ratio at 31 March 2018 was as follows.
In order to achieve this overall objective, the Company's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current year.
37 SCHEME OF AMALGAMATION OF COFFEE DAY OVERSEAS PRIVATE LIMITED WITH THE COMPANY
During the year, the Company obtained approval from the National Company Law Tribunal (NCLT) dated 31 August 2017 to merge Coffee Day Overseas Private Limited (CDOPL) with itself. CDOPL is a Private limited Company and holds 3.21% of shares in Coffee Day Global Limited, a subsidiary of CDEL. The appointed date of the scheme is 1 August 2016 which is the effective date of merger as approved by NCLT. The Company has considered the said merger as an asset acquisition from the appointed date and accordingly have restated its financials for the year ended 31 March 2017.
The consideration for the said asset acquisition has been discharged by issue of 52,50,000 shares of Rs.10 each at premium of Rs.235 per share.
Salient features of the Scheme
Salient features of the Scheme as approved by NCLT are given below:
(i) all of the assets (whether movable or immovable, tangible or intangible), properties, rights, interests and claims including all benefits and entitlements of CDOPL will be deemed to have been vested with the Company so as to become as and from the appointed date , the estate, assets, rights, title and interest of the Company;
(ii) All the profits or incomes accruing or arising to the Company, or expenditure or losses arising or incurred (including the effect of taxes , f any, thereon) by CDOPL shall, for all purposes , be treated and be deemed to be and accrue as the profits or incomes or expenditure or losses or taxes of the CDOPL, as the case may be.
(iii) all liabilities, debts (secured and unsecured), obligations and duties of the CDOPL shall also stand transferred to and vest in the Company;
(iv) all suits, actions and proceedings by or against CDOPL pending and/or arising on or before the date on which the certified copy of the order of the High Court confirming the Scheme is filed with the Registrar of Companies, Karnataka ('the Effective Date') shall continue and be enforced by or against the Company;
(v) For every 1 share of equity shareholders of CDOPL,
21 fully paid equity shares, each having a face value of Rs. 10/- each of the Company shall be issued as consideration1
Accounting treatment in the books of the Company1
The Company shall, upon the scheme becoming operative, record the assets and liabilities of CDOPL vested in it pursuant to this scheme in accordance with Indian Accounting Standard 103 - Business combination.1
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