| 1. CORPORATE INFORMATION
Everonn Education Limited (the 'Company') is a pioneer in using
technological breakthroughs to make quality education a reality even in
the most remote parts of the country. Everonn's passion for enabling
cutting-edge education delivery has seen us grow dramatically in the
past two decades. The company is a public listed company and is listed
on the Bombay Stock Exchange (BSE) and the National Stock Exchange
(NSE)
2. SHARE CAPITAL
a) Rights, preferences and restrictions attached to shares
Equity Shares: The Company has one class of equity shares having a par
value of Rs.10 per share. Each Shareholder is eligible for one vote per
share held. The equity shareholders are eligible to receive in the
remaining assets of the company after distribution of all preferential
amounts, in proportion to their shareholding.
b) During the year the company had issued 10,91,303 equity shares of
Rs. 10 each at the rate Rs.39.69 on account of conversion of Optionally
Convertible Debenture of Rs. 4,33,14 ('000) as per the terms of
Debenture Agreement
3. EMPLOYEE BENEFITS EXPENSE
The disclosure under Accounting Standard 15 "Employee Benefits"
notified in the notified under Section 133 of the Companies 2013, read
with Rule 7 of the Companies (Accounts) Rules, 2014, are given below
Defined benefit Plan
The Employees fund scheme managed by SBI Life Insurance Co. Limited is
a defined benefit Plan. The present value of obligation is determined
based on actuarial valuation using the Projected Unit Method.
4. CONTINGENT LIABILITIES AND COMMITMENTS TO BE UPDATED
Rs. in '000
Particulars As at As at
March 31 March 31,
2015 2014
a) Claims against the company not
acknowledged as debt
Income Tax Matters 9,78,339 10,84,200
Service Tax Matters - 11,155
b) Bank Guarantees 5,75,108 5,76,837
c) Corporate Guarantee issued by parent on behalf of Subsidiary
Companies Rs. 46,46,700 ('000) (PY Rs. 26,59,500 ('000)) against which
the loan outstanding is Rs. 18,70,078 ('000) and (PY Rs. 17,05,591
('000)respectively
d) Corporate Guarantee issued by parent to banks for Secured loans to
third party Rs. 3,20,000 ('000) (PY Rs. 4,20,000 ('000)) against which
the loan outstanding is Rs. 1,83,050 ('000) and (PY Rs. 3,13,118
('000)) respectively
In respect of items above, future cash outflows in respect of
contingent liabilities is determinable only on receipt of judgments
pending at various forum/ settlement of matter. The management believes
that, based on
legal advice or internal assessment, the outcome of these contingencies
will be favorable and the loss is not probable. Accordingly no
provisions have been made for the same.
e) A Civil suit has been filed by The ICFAI Academy for permanent
injunction for creating third party rights, or disposing the assets,
both tangible and intangible, in the plaintiff's campuses and control
offices from the academic year 2011 onwards. ICFAI has also claimed
damages of Rs.5,000('000) along with interest at the rate of 18% p.a
and the Company is contesting the case and the said suit is still
pending in the Hon'ble Madras High Court.
f) A Civil suit has been filed by Prometric BV towards damages
amounting to Rs. 15,000('000) (PY Rs. 15,000('000)) and the Company is
contesting the case.
g) A civil suit has been filed by M/s PAE for recovery of outstanding
Rs. 2498 ('000) (PY Nil) which is being contested
h) HPFS has initiated winding up proceeding against the Company for the
alleged nonpayment of lease charges. Since the claim made by HPFS is
disputed by the Company the said Winding up proceeding is not
maintainable. The Company is contesting the said Petition.
i) Estimated amount of contracts remaining to be executed on capital
account and not provided for is Rs. Nil (PY (Rs. Nil))
j) Counter guarantee from third parties have not been taken for the
corporate guarantee given on behalf of them.
k) The company has received notices from certain parties alleging
defaults in respect of services/payments due to them by the company.
The management is discussing with its legal team for evaluating the
financial impact of these claims. Any adjustments/disclosures, if
required, would be made, upon the claims being settled.
5. DIMUNITION IN VALUE OF INVESTMENT
The company has an investment of Rs 247.48 Crores in its subsidiaries
and Rs. 7.07 in other associates and has also extended loans and
advances of Rs. 150.40 Crores to these subsidiaries/associates as of
March, 31,2015. The proposals which were submitted by the consultants
for the consideration of management to realign its core investments and
recognize and eliminate those investments which have not yielded any
return till date has not been very encouraging and prima facie, these
proposals appears to be against the investor and stake holders'
interest, as it is expected to result in further net worth erosion at
least in the beginning. The company at present has approached one of
the leading consultants to advise regarding the future business
opportunities which these entities can exploit gainfully or whether the
operation of these entities need to be scaled down/revamped/wound of
all its subsidiaries. The management has decided to recognize the exact
quantum in the diminution in the value of investments upon receipt of
final proposal which is expected to be submitted shortly by the
consultants. The company at present is confident of arriving at a final
conclusion in this matter. As already stated elsewhere, the balance
available in BRR which has been approved by Honorable Madras High Court
allows a small flexibility to the company and a window to capture
appropriately the diminution in the value of investments.
6. OPERATING LEASES
The company has entered into operating lease arrangement for its office
facilities and equipment. These Leases are for a period ranging from 1
to 5 years with an option to the company for renewing at the end of the
initial term. Equipment rental/ Rental for operating leases is added
in Profit and Loss account for the year Rs. 2,212 ('000) (March 31 2014
Rs. 3,124 ('000))
The Future minimum lease payments under non-cancellable operating
leases are as follows
7. RELATED PARTY DISCLOSURE List of Related Parties
Name Nature of relationship
1. Everonn Educational Resources Solutions Subsidiary Companies
Limited (Direct and indirect
holding)
2. Toppers Tutorial Private Limited
3. Everonn Infrastructure Limited "
4. Everonn Business Education Limited "
5. Everonn Technical Education India "
Limited
6. Everonn Medical Education Limited "
7. Everonn School Limited "
8. Edifications India Limited "
9. Everonn Sport Management Limited "
10. Everonn knowledge & Education Corridor "
Limited
11. Everonn Skilling India Limited "
12. Everonn Skill Products Development "
Limited
13. Everonn Skill Development Limited "
14. AEG Skill Update Private Limited "
15. Everonn Dassani Literate Limited "
16. Varkey Group Limited Enterprise over which
some of the directors
17. SKIL Infrastructure Limited exercise significant
influence
18. Gems Education (Asia) 1 Limited "
19. The Concorde Residential Schools "
(Kerala) Private Limited
20. Premier Educational Establishments "
Private Ltd
21. Gems Education India Private Limited "
22. Zanskar Properties private Limited "
23. VG School Developments Private Ltd "
24. Dream Solutions Private Ltd "
25. Mr. A Srinivasan* Key Managerial
Personnel
26. Mr. N P MathiLingan "
27. Mr. Ganapathy Puranik* "
28. Mr. CN. Radhakrishnan "
29. Mr. Sandeep Maniyar "
*resigned during the year
8. SEGMENT REPORTING
The Company is engaged in the business of providing education and
training and related sale of equipment's. There being only one
'business segment' and 'geographical segment' the segment information
is not provided
9. DUES TO MICRO AND SMALL ENTERPRISES
The company has circulated a letter to all creditors to ascertain the
applicability of MSMED Act on the transaction which the company had
with them. Provision for interest if any under the Act will be made
upon receipt of their responses and after examining the validity of
their claim.
10. TRANSACTIONS WITH ASSOCIATED ENTERPRISES
The company has transactions with "Associated Enterprises" which are
subject to Transfer Pricing regulations in India. The Management of the
Company is of the opinion that such transactions with the associate
enterprises are at arm's length. Consequently, this will not have any
impact on the financial statements, particularly on account of tax
expenses and that of provision for taxation.
11. BALANCE CONFIRMATION
Confirmations of Balance from Sundry Debtors, Deposit accounts, Loans
and Advances, certain Banks and Sundry Creditors have not been
obtained. Accounts of certain sundry debtors, loans and advances,
deposits and creditors are being reviewed as an ongoing process. As
there is an inordinate delay in receipt of confirmations from
Government Contracts adjustments, if any will be made on completion of
review/ reconciliation/ identification of doubtful debts/advances.
12. IMPAIRMENT OF ASSETS
As explained under the head Business Reconstruction Reserve under the
Note No. 2.56 the company had utilized the BRR reserve by wring off the
balance appearing in Capital work in progress as well as certain long
outstanding non recoverable advances and receivables. In respect other
assets the company is confident that once restructuring exercise is
fully completed, it will have clearer picture with regard to exact
quantum of impairment that need to be recognized. The company is of the
view that these will be appropriately dealt during the next financial
year, after taking into account the available balance in BRR and the
write back if any that may arise due to the successful negotiations
with the creditors in respect of the outstanding of the company.
13. INCOME TAX
During the year, the Company reviewed the position with regard to the
income tax assessments till date and has taken certain decisions to
mitigate the tax outflow especially by filing revised
returns/computations in respect of all the pending assessments. The
company received assessment order for AY 2006-07 to 2012- 13 which is
also being contested. The various appeals filed by the company against
the demands raised by the Income tax department were heard subsequent
to close of the accounting year and based on the favorable
judgements rendered in other cases of similar natures; the management
is of the view that there is no need to recognize any additional tax
provision. The company has been advised that there are reasonable
chances of obtaining favorable orders reducing the quantum of demand to
a great extent (as against any additional outgo on account of new
demands) in case the judicial precedents are followed fully in deciding
these appeals, which will re-inforce the stand taken by the company.
No provision is made in this regard, as the Company has been advised
that the stand of the Company will be accepted in appeal. Any
additional tax provision arising out of the tax demands (inclusive of
interest and penalty) will be made upon reaching the finality in
respect of the assessments.
14. EXCEPTIONAL ITEMS
The break up is as under
15. Due to erosion in the net worth, the company's is unable to expand
in confident manner its various operations and also arrest the
continued losses sustained by it. The company's business plans that are
evaluated by the bankers have re-in forced the belief of the company
that its future lies in successfully exploiting its strength in running
schools across the country to take care of increasing demand. With the
funds raised from the bankers, the company has judiciously allocated
its resources so that its operations across the group especially the
operating companies are carried out in smooth manner without creating
any bottle necks. In other words the company continues to use the funds
raised for all common purposes so that the returns that expected flow
in near future will be adequate to defray all the possible liabilities
of the company.
The promoters of the company, who are one of the world leaders in
education and running schools of repute, all over the world, have
brought in major changes in the operation of the entire group's
activities, the emphasis now being focused on establishing and running
of high quality schools across the country. Accordingly, the
management of the company has now decided to shed all unviable
businesses which were started earlier by the old management and has now
decided to have a leaner structure without carrying on the multiple
subsidiary companies. The management is fully aware that any abrupt
closure of these subsidiaries without evaluating the risks attached in
relation thereto will further cripple the inflow of the bank finances
which are necessary for the running the operations of the company. At
the same time, the company has also consulted best legal minds who have
advised the management to take recourse to certain legal proceedings to
ensure that the interest of the company is fully secured, in recouping
its dues, which the management is of the view, has not been properly
safeguarded in the past. A new team of officials have been brought in,
almost at the beginning of the current calendar year who are constantly
pursuing various alternatives to ensure that some of the assets which
are held by the subsidiaries (whether in the form of loans/advances or
any interest in immovable properties - whether directly or otherwise)
properly realigned in the company's books so that the company's net
worth is fully protected.
The company's financial position has been constantly reviewed by the
lenders who have been monitoring closely all the activities and with
their cooperation the management is of the view that it will wipe out
all the legacy issues and embark on a new direction. The management is
of the view that despite the losses which are already forming part of
the holding company as well as in the books of certain inoperative
subsidiaries, the company is and will remain as a going concern and on
this basis the financials / assets / liabilities are stated in the
books of accounts. The Company is also taking various steps to reduce
costs and improve efficiencies to make its operations profitable and
accordingly the financial statements have been prepared on the basis
that the Company is a going concern.
16. In respect of advances given to various parties and Debts due from
government agencies and others, in view of legal advices and other
opinion received no provision is considered necessary at this juncture,
as the company at present is hopeful of recovering major portion of
outstanding dues.
17. BUSINESS RESTRUCTURING RESERVE
The Hon 'ble High Court of Madras permitted the Company to reduce the
Securities Premium Account to an amount not exceeding Rs. 150 Crores to
be transferred to a separate reserve styled as "Business Restructuring
Reserve"(BRR). The resolution passed by the Share Holders and approved
by the Court permitted the BRR should be utilized for setting off
against diminution in the value of investments, and consequent
impairment of goodwill and accumulated losses, unrealized debtors and
loans and advances etc.,
The Company has given effect to this order of the Hon 'ble High Court
by carving out of the Share Premium Account, a sum of Rs. 150 Crore to
BRR.
Out of the balance of Rs. 150.00 Crores under head BRR, during the year
company has utilized a sum of Rs. 65.66 Crores, in accordance with the
permission granted by the Honorable High Court of madras. The reaming
balances will be utilized for the purposed approved by court in the
current financial year.
18. PREVIOUS YEAR FIGURES
Previous years' figures have been regrouped / reclassified wherever
necessary to conform to the current year presentation.
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