1. D. Corporate Debt Restructuring
As approved by the Corporate Debt Restructuring Cell (“CDR Cell”), the company has restructured its Term and working capital debts due to consortium of banks(CDR lenders) with cutoff date 1st August, 2013 . A “Master Restructuring Agreement” (MRA) has been executed between the company and the cDr Lenders and thus the restructured facilities are governed by the provisions specified therein .
The Key feature/status of the CDR Proposal are as follows:
1 Repayment of Restructured Term Loans ('RTL') after moratorium of 2 years from cutoff date in 32 structured quarterly installments commencing from quarter ending 30th September 2015 to 30th June 2023.
2 Conversion of various irregular/outstanding/devolved financial facilities into Working Capital Term Loan ('WCTL') Repayment of WCTL after moratorium of 3 years 6 months from cutoff date in 26 structured quarterly installments commencing from Quarter ending 31 st March 2017 to 30th June 2023, subject to mandatory prepayment obligation on realization of proceeds from certain asset sale and capital infusion.
3 Restructuring of existing fund based and non fund based financial facilities, subject to renewal and reassessment every year. Priority loans shall be sanctioned for meeting the immediate operational and capital requirements of the company. The Priority Debt disbursed by the lenders is Rs. 55,081.29 lacs till 31 st March 2016.
4 The interest payable on RTL and WCTL during moratorium period of 2 years and 3 years 6 months respectively from cutoff date are also converted to Funded Interest Term Loan (FITL). Out of Total FITL facility amounting to Rs 156100 lacs an an amount aggregating to Rs. 1,00000 lacs shall be compulsorily converted into equity shares or 0.01 % Compulsorily Convertible Preference Shares (CCPS) before 31 st March 2016. Pursuant to the scheme of CDR, the Company has allotted total 3336,46,056 Nos. of 0.01 % Compulsorily Convertible Preference Shares (CCPS) of Face Value Rs.10/- each and 31,09,047 nos. of equity shares of Rs. 10 /-each at a premium of Rs. 265.92 per equity shares to CDR lenders towards conversion of the Funded interest Term Loan (FITL)/Interest on FITL up to 31st March, 2016.
5 The rate of interest of RTL, WCTL, FITL and fund based working capital facilities is base rate 1% for initial two years and thereafter with annual reset option in accordance with MRA.
6 Right of Recompense to CDR Lenders for the relief and sacrifice extended, subject to provisions of CDR Guidelines and MRA, in lieu of which contribution of Rs. 30200.29 lacs in the Company is infused by promoters.
7 In case of financial facilities availed from the non-CDR Lenders, the terms and conditions shall continue to be governed by the provisions of the existing financing documents.
8 Additional Security for the CDR debt - Personal Guarantee of Promoter , Pledge of Promoter's entire shareholding of ABG Shipyard Limited and Corporate Guarantee of ABG International Pvt Ltd. (Holding company)
9 Due to extreme financial constraints and limited operations , the company has delayed and/or defaulted in the payment of interest as per the CDR Scheme. The defaults are reported in Note no 4C above.
10 The company has defaulted in repayment of loans and covenants of CDR schemes of lenders. As regards contingency related to 'Compensation payable in lieu of Bank Sacrifice' the outcome is materially uncertain and cannot be determined in terms of monetary impact on the financial results. The company is of the view that the company is an operative company and such contingency may not arise.
The company has reversed Deferred Tax Liability created in previous financial years on account of lower depreciation allowable under the Income Tax Act,1961 as compared to the depreciation debited to Profit and Loss account.
iii) Impairment charges of Rs.Nil (P.Y. Nil)
iv) No amounts were written off due to reduction of capital / written off on revaluation or were added to assets on revaluation during the previous 5 years.
v) Borrowing cost capitalized Rs. Nil (P.Y Rs.1058.98 lacs). Due to suspension of capitalization at sites, no borrowing cost is capitalized during the year.
vi) On the basis of the report of Chartered Engineers and Government approved Valuers, the Company had revalued the Freehold Land, Factory Building, Other Building and Dry Docks on 30th June, 1994 and again on 30th June 2002 and consequently an amount of Rs.1090.28 lacs and Rs.5999.45 lacs respectively being the differences between the amount of fair market value of the same and depreciated value as per books as on those dates, have been added to the value of Fixed Assets and corresponding credit shown as Revaluation Reserve.
Consequent to the revaluation there is an additional depreciation of Rs.181.35 lacs (P. Y Rs. 219.63 lacs), which has been withdrawn from Revaluation Reserves and credited to Statement of Profit and Loss.
# Includes an amount of Rs. 2336.81 lacs in respect of exchange loss of foreign loans which is debited to the Profit and Loss a/c during the year.
Due to suspension in Project construction, no further capitalization has been done during the year in accordance with Accounting Standard AS 10.
viii) The company had chosen to avail the option under AS-11 notification issued by Companies (Accounting Standard) Amendment Rules 2011 GSR 913 (E) & 914 (E) dated 29.12.2011 issued by Ministry of Corporate Affairs. The company has exercised the option with respect to foreign currency long term loan availed by it. The company has no other long term monetary Assets / Liabilities.
Due to the exercise of aforesaid option, the impact on Statement of Profit and Loss for the year is Rs.Nil (P.Y. Gain Rs.953.50 lacs) due to foreign currency exchange loss (net) which has been capitalized with CWIP.
ix) Acquisition through business combinations / Assets reclassified as held for sale - Nil (P.Y. Nil)
x)The company has been constructing shipyard facilities at Dahej shipyard to increase the shipbuilding capacities. Due to financial constraints there has been a prolonged suspension of construction activities. The management considers such suspensions as temporary in nature. The physical condition of these assets under construction is good and further construction would resume on availability of funds. At such time, the management will assess any increase in cost, replacement etc. in view of the management the recoverable amount within the meaning of AS-28 is more than carrying value and as such no amount needs to be recognized in the financial statement as impairment loss.
a) Aggregate amount of quoted investments Rs.3131.73 lacs (P.Y Rs.3131.73 lacs) . Aggregate market value of quoted investments Rs.3992.95 lacs (P.Y. Rs. 4478.37 lacs)
b) Aggregate amount of unquoted investments Rs.18880.78 lacs (P.Y. Rs.18880.78 lacs)
c) 151808733 (P.Y 151808733) Equity shares of the subsidiary - Western India Shipyard Ltd. have been pledged with banks in respect of facilities availed by such subsidiary company from the banks.
d) As the investments are in operating companies, considering the economic scenario and the underlying assets of such companies, the management does not consider diminution in value, if any, to be other than temporary in nature.
a. The Company had undergone Corporate Debt Restructuring with its lenders in Financial Year 2013-14. During the year the company has made efforts to revive its operations but progress of construction of the vessels was affected due to factors such as unavailability of working capital finance resulting into non availability of required materials, reduced production levels at various yards, etc. The company is in the process of completing the pending work on few identified vessels only. Due to such exceptional circumstances, the manufacturing process over the remaining vessels is suspended. Hence, overhead absorption over such vessels has also been suspended. Accordingly, overhead and interest absorption had been done only over ongoing vessels.
b. A technical evaluation of the inventory of Ships and Rigs under construction (contractual/own) and for the future foreseeable losses in the current economic scenario, was carried on by the Company. The technical evaluation has been done in phases and is not completed for certain ships and rigs. On the basis of such evaluation an impairment of Rs.97150.41 lacs in the inventory of Work in Progress, Rs 6700.00 lacs in Raw Material & Components and Rs 459.68 lacs of loss in Goods in Transit, aggregating to Rs 104310.09 lacs has been considered. The said amount has been given effect in the following manner by way of :
Decrease in value of closing stock [Refer note 22] 42,114.37 lacs
Loss on impairment of Inventory - other expenses [Refer note14 above and note 25] 62,195.72 lacs
c. The Company has concluded Rig building contract with respect to two rigs. The Company is in the process of negotiating the final settlement with the said customer. Pending settlement, company continues to show inventory of rigs under the head Work in Progress and Advance received under Progress Money from customers. The effect on Work in Progress due to these Rigs is Rs. 175221.86 Lacs.
The above loans are given for business purposes
c. Loans, advances and receivables amounting to Rs. 175619.71 lacs (P.Y. Rs. 213188.12 lacs) are outstanding from related parties. Out of these, due from Private companies/firm in which directors are directors/members/partner amounts to Rs.16596.03 lacs (P. Y Rs. 34067.73 lacs). The management is of the view, that considering the relationship of the company with the related parties, charging of interest is not expedient. Further in view of the Management even though these outstanding are old, they are considered good and recoverable.
d. There are advances to other parties that are outstanding for a long time. In view of reduction in activities, the materials and services could not be called from such parties. The management considers that no provision is required to be done and these are considered good and recoverable.
The Company has recognized subsidy under Ship Building Subsidy Scheme as on 31st March, 2016 - Rs. 49964.89 lacs (P.Y. Rs. 49964.89 lacs). The receipt of aforesaid Subsidy is dependent upon completion of vessels and compliance with other terms and conditions of the Ship Building Subsidy Scheme of the Government of India. The completion of vessels depends on availability of working capital as well as ship owners capability to make progress payment and to take delivery of these vessels in a depressed shipping market economic scenario. The management believes that it will be able to get funds to complete the vessels and deliver the same.
In respect of Claims against the company not acknowledged as debts, the Company has received claims from certain customers / creditors, wherein such customers/creditors have filed petition for winding up pending clearance of dues for penal interest and charges. Some statutory authorities have also initiated recovery proceedings against the Company. The Company is confident of arbitration with such parties and does not recognize the payable over and above the liability already recognized in the books. The liability of the Company is contingent on the outcome of such petitions and the amount is not quantifiable as on 31st March, 2016.
The Company is currently constructing various vessels ordered from international customers as well as domestic customers including Government of India - Ministry of Defense. As per the international trade practice, the Company has issued refund bank guarantees to customers against various advance stage payment received by the company. Considering the acute financial crisis and delay, probability exists of future invocations of the bank guarantees. As per the Company's policy, the loss on invocation, if any, is contingent upon, and will be quantified and accounted only on the happening of the event.
12. Disclosure in respect of Operating Leases (Assets taken on lease):
(a) The company has taken commercial / residential premises under cancellable operating leases or leave and license. These are usually renewable by mutual consent on mutually agreeable terms.
The Gross amount due from customers reflects the net amount for all contracts in progress for which cost incurred plus recognized profit (less recognized losses) exceeds progress billing.
The Gross amount due to customers reflects the net amount for all contracts in progress where progress billing exceeds cost incurred plus recognized profits (less recognized losses).
During the year, advances from customers to the extent of work done amounting to Rs.299804.97 lacs .(P.Y.Rs 515081.68 lacs) is adjusted against Work in Progress in Note No 14. Advances received in excess of work done and advances pending commencement of work are disclosed in Current Liabilities under Advances from Customers in Note No 9.
The company follows accounting practice of recognizing revenue under Accounting Standard 7 on the basis of estimated cost, cost so far incurred and estimated profit or loss out of shipbuilding contracts. A technical evaluation of the inventory of Ships and Rigs under construction, the valuation of Work in progress recognized as per AS 7 and for the future foreseeable losses in the current economic scenario, was carried on by the Company. The technical evaluation has been done in phases and is not completed for certain ships and rigs. Adequate provision for estimated future foreseeable losses is provided in the books of accounts.
The WIP includes contracts with the related parties amounting to Rs. 515553.59 lacs (P.Y Rs. 566900.00 lacs)
Defined Benefit Plan
The employees' gratuity fund scheme managed by SBI Life Insurance is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in same manner as gratuity.
The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary and relied upon by auditors.
The expected rate of return of Plan Assets is determined considering several applicable factors, mainly the composition of Plan Assets held, assessed risks, historical returns on Plan Assets and the Company’s policy on Plan Assets Management.
13. Information on Foreign Currency Exposure:
(a) Outstanding forward exchange contracts/ options entered by the company for the purpose of hedging its foreign currency exposures is Nil (P Y Nil)
(b) Notional value of Interest Rate Swaps to hedge against fluctuation in interest rate is Nil (P.Y Nil)
(c) Currency swap to hedge against fluctuations in exchange rate and interest rate is Nil (P. Y Nil )
(d) Foreign Currency exposure that is not hedged by derivative instruments is as under:
14. Corporate Social Responsibity.
As the Company has incurred a loss in average of last three years , provisions of Sec 135 of the Companies Act 2013, read with Companies (Corporate Social Responsibility Policy) Rules, 2014 ,are not applicable to the company.
15. The Company has defaulted in repayment of loans and covenants of the CDR scheme of lenders. There has been suspension of operations at Dahej yard and low key operation at Surat yard and the net worth has eroded. However, the management plans to resume normal activities in the company, and hence the financial statements have been prepared assuming that the company will continue as a going concern
16. Related Parties Disclosure as per Accounting Standard (AS) 18:_
_A. LIST OF RELATED PARTIES__
Western India Shipyard Limited Subsidiaries / Controlling stake ABG Shipyard Singapore Pte. Limited
ABG FPSO Private Limited Companies over which directors / relatives are ABG International Private Limited
able to exercise control or significant influence (Ceased to be holding Company w.e.f. 24.07.2015)_
PFS Shipping (India) Limited
Varada One Pte. Ltd.
ABG Solar Project Private Limited
ABG Energy Limited
ABG Energy (MP) Limited
Varada Marine Pte. Limited (Along with its SPV's)
PFS Offshore Pte. Ltd.
ABG Infralogistics Limited
ABG Cement Limited
ABG Cement Holdco Private Limited
ABG Energy (Gujarat) Limited
ABG Power Private Limited
Tusker Crane Private Limited (Formerly ABG Crane Private Limited) ABG Foods Private Limited ABG Acquafarm Private Limited ABG Glass Private Limited
BABA Gangaram Investment Services Private Limited ABG Engineering & Construction Limited Tirupati Landmark Private Limited
Tirupati Management & Investment Services Private Limited (Formerly ABG Mercantile & Investment Services Pvt Ltd )_
Eleventh Land Developers Private Limited
ABG Resources Private Limited (Formerly Second Land Developers
Private Limited)_
ABG Motors Limited
Banal Investment & Trading Private Limited Jarrow Finance & Trading Private Limited Onaway Industries Limited Agbros Leasing & Finance Private Limited Aries Management Services Private Limited
G.C. Property Private Limited Gold Croft Property Private Limited Somerset Estate Private Limited
ABG Enterprises & Trading Private Limited (Formerly Nibodh Trading
Private Limited)_
ABG Energy Himachal Pradesh Limited
Vipul Shipyard ( Partnership Firm)
ABG Business Ventures Pte. Limited Drilling & Offshore Pte. Limited Drilling & Offshore One Pte. Limited Drilling & Offshore Two Pte. Limited Global Bulk Carriers Pte. Limited Varada Ventures Pte. Limited Varada Drilling One Pte. Limited Varada Drilling Two Pte. Limited Varada Two Pte. Limited
Companies over which directors / relatives are Varada Three Pte. Limited able to exercise control or significant influence Varada Four Pte. Limited
Varada Five Pte. Limited Varada Six Pte. Limited Varada Seven Pte. Limited Varada Nine Pte. Limited Varada Ten Pte. Limited Varada Eleven Pte. Limited Varada Twelve Pte. Limited Varada Global Pte. Limited Varada Fourteen Pte. Limited Individuals owning directly or indirectly an Shri. Rishi Agarwal interest in the voting power that gives them control or significant influence
Key management personnel Shri. Syed Abdi
Shri. Dhananjay Laxman Datar (ceased w.e.f 30.09.2015 ) Shri. S.Muthuswamy
Notes :
a. Guarantees taken / given comprise of guarantees given to third parties on behalf of the Company / related parties.
b. The Company has not provided Managerial Remuneration for the managing director after October 2015 as it would then exceed the provision of section 197 read with Schedule V to the Companies Act, 2013.
c. Related Parties have been identified by the management and relied upon by the auditors.
d. Previous Year figures are shown in brackets.
Notes on Financial Statements for the Year ended 31st March, 2016 Disclosure in respect of Related Party transactions during the year:
1 Revenue from Operations include Western India Shipyard Limited Rs. Nil (Previous Year Rs. 119.57 lacs)
2 Balance Written back Includes Tusker Cranes Private Limited Rs. Nil (Previous Year Rs. 88.46 lacs)
3 Balance Written off Includes Eleventh Land Developers Private Limited Rs.3825.48 lacs (Previous Year Rs. Nil )
4 Rent Expenses include Aries Management Services Private Limited Rs. 70.13 lacs (Previous Year Rs. 62.56 lacs).
5 Hire Charge Received from ABG Infralogistices Limited Rs Nil (Previous Year Rs . 2.11 lacs).
6 Services Received from ABG Resources Private Limited Rs. Nil (Previous Year Rs. 30.00 lacs).
7 Interest/ Guarantee Commission/ Other Income Charged to Vipul Shipyard Rs. Nil (Previous Year Rs. 64.20 lacs).
8 Finance Charges Paid to Western India Shipyard Limited Rs. Nil (Previous Year Rs 556.10 lacs), Varada Marine Pte Ltd Rs. Nil (Previous Year Rs. 272.00 lacs).
9 Payment to Key Management Personnel include to Syed Abdi Rs. 194.39 lacs (Previous Year Rs. 258.41 lacs) , Shri. Dhananjay Datar Rs. 39.50 lacs (Previous Year Rs. 63.55 lacs), Shri. S. Muthuswamy Rs. 58.51 lacs (Previous Year Rs. 59.53 lacs).
10 Purchases of Fixed Assets include to ABG Motors Limited Rs. Nil (Previous Year Rs. 0.25 lacs ).
11 Sale of Fixed Assets include to ABG Resources Private Limited Rs. 26.97 lacs (Previous Year Rs.Nil ), Western India Shipyard Limited Rs. Nil (Previous Year Rs 55.88 lacs)
12 Stage Payment Received include from Varada Four Pte. Limited Rs. 4493.90 lacs (Previous Year Rs. 6246.56 lacs),Varada Nine Pte. Limited Rs.6101.94 lacs (Previous Year Rs. 6326.20 lacs),Varada Eleven Pte. Limited Rs.1732.31 lacs (Previous Year Rs. 2121.40 lacs),Drilling & Offshore Two Pte. Limited Rs. 6101.65 lacs (Previous Year Rs. 6326.20 lacs),Varada Twelve Pte. Ltd. Rs. 2856.67 lacs (Previous Year Rs. 2247.39 lacs ).
13 Stage Payment Refunded include Drilling & offshore Pte Ltd Rs. 180221.38 lacs (Previous Year Rs. Nil )
14 Loans and Advances Given/ Repaid include ABG International Private Limited Rs. 501.43 lacs (Previous Year Rs. 9548.74 lacs), Western India Shipyard Limited Rs.20.05 lacs (Previous Year Rs. 8390.51 lacs), ABG Shipyard Singapore Pte. Limited Rs. Nil (Previous Year Rs. 12549.34 lacs), AbG Business Venture Pte.Limited Rs. 12487.05 lacs (Previous Year Rs. 14081.40 lacs),Banal Investment & Trading Private Limited Rs. 19627.21 lacs (Previous Year Rs. 11240.98 lacs), Varada Seven Pte. Limited Rs. Nil (Previous Year Rs. 12524.23 lacs).
15 Loans and Advances Taken/ Refunded include ABG International Private Limited Rs. 513.67 lacs (Previous Year Rs. 32975.17 lacs), ABG Resources Private Limited Rs.15.52 lacs (Previous Year Rs. 13263.15 lacs), Western India Shipyard Limited Rs. 5555.23 lacs (Previous Year Rs. 5638.95 lacs )
16 Deposit Given to ABG Resources Private Limited Rs. Nil (Previous Year Rs. 6000.00 lacs )
17 Deposit Received Back from G.C. Property Private Limited Rs. 1400.00 lacs (Previous Year Rs. Nil ), Gold Croft Property Private Limited Rs. 1800.00 lacs (Previous Year Rs. Nil), Somerset Estate Private Limited Rs. 1400.00 lacs (Previous Year Rs. Nil )
18 Sett off of stage payment / advances includes Varada Marine Pte. Ltd Rs. 45738.50 lacs (Previous Year Rs. Nil ),Global Bulk Carriers Pte Ltd Rs. 29021.03 lacs (Previous Year Rs. Nil ).
Note : Name of the Related Parties have been given in cases where the amount of transaction exceeds 10% of the total related party transaction of the same type
19. The figures for the previous year have been arranged/rearranged/regrouped wherever considered necessary.
|