July 2008
Disclosures regarding Premium payable on redemption of FCCB
By Himanshu V. Kishnadwala, Chartered Accountant
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Section B : Miscellaneous
5 Disclosures regarding Premium payable on redemption of FCCB
WOCKHARDT LTD. — (31-12-2007)
From Notes to Accounts :
(d) 108,500 (previous year — 108,500) Zero-coupon Foreign
Currency Convertible Bonds of USD 1,000 each are :
(i) Convertible by the holders at any time on or after
November 24, 2004 but prior to close of business on September 25, 2009. Each
bond will be converted into 94.265 fully paid-up equity shares with par
value of Rs.5 per share at a fixed price of Rs.486.075 per share.
(ii) redeemable, in whole but not in part, at the option
of the Company at any time on or after October 25, 2007, but not less than
seven business days prior to maturity date i.e., October 25, 2009,
subject to the fulfillment of certain terms and obtaining requisite
approvals.
(iii) redeemable on maturity date at 129.578 percent of
its principal amount, if not redeemed or converted earlier.
The bonds are considered as monetary liability. The bonds are
redeemable only if there is no conversion of the bonds earlier. Hence the
payment of premium on redemption is contingent in nature, the outcome of which
is dependent on uncertain future events. Hence no provision is considered
necessary, nor has it been made in the accounts in respect of such premium
amounting to a maximum of Rs.775.98 million. (Previous Year — Rs.581.74 million)
From Auditors’ Report :
Without qualifying our opinion, we state that the financial
statements are without provision for premium payable on 108,500 Zero-Coupon
Foreign Currency Convertible bonds of USD 1000 each [refer note 30(d) to the
financial statements] as the premium payable on redemption which is contingent
upon a future uncertain event, namely, the redemption of such bonds is presently
not determinable.
