Section B:
Gain on sale of Investments in subsidiaries considered in books of account in Consolidated Financial Statements
Adani Enterprises Ltd (CFS) (31-3-2013)
From Notes to Financial Statements
Exceptional Items
(a)
The Company has disposed off its investment in a wholly owned
subsidiary, ‘Adani Infrastructure and Developers Private Limited
(‘AIDPL’) representing the Real Estate Business, to its promoters at a
valuation done by an independent valuer. The Company has accounted a
gain of Rs. 453.63 crore against the disposal of the above said
Investment.
(b) During the financial year 2012-13, during the
year, Adani Ports & Special Economic Zone Limited (APSEZ) a
subsidiary of the Company had initiated and recorded the divestment of
its entire equity holding in Adani Abbot Point Terminal Holdings Pty
Limited (AAPTHPL) and entire Redeemable Preference Shares holding in
Mudra Port Pty Ltd (MPPL) representing Australia Abbot Point operations
to promoter Company, Abbot Point Port Holdings Pte Ltd, Singapore for
consideration of AUD 235.71 million. The Company entered Share Purchase
Agreement (‘SPA’) on 30th March, 2013 to sell its holdings in AAPTHPL
and MPPL. In terms of the SPA the conditionality as regards regulatory
and lenders approvals was obtained except in respect of approval from
one of the lenders who have given specific line of credit to MPPL, which
the APSEZ is following up with lender and is confident of obtaining the
same.
The Company, based on the legal counsel opinion,
concluded that on the date of signing of SPA, AAPTHPL and MPPL cease to
be subsidiaries of the Company w.e.f. 31st March, 2013 and accordingly
not been consolidated as per provisions of Accounting Standard 21
“Consolidated Financial Statements” notified in Companies (Accounting
Standards), Rules, 2006. Adani Ports & Special Economic Zone Limited
(APSEZ) has accounted gain of Rs. 419.57 crore against disposal of
investment.
From Auditors Report
We draw attention to
Note 41(b) to the consolidated financial statements recording sale of
investments in Australia step down subsidiaries, on the basis indicated
in the note, whereby gain of Rs. 419.57 crore have been recognised in
the books. Our opinion is not qualified in respect of this matter.
Reliance placed on judgement of the management on various matters
Lok Housing & Constructions Ltd (31-3-2013) From Notes to Financial Statements Accounting Policies Revenue Recognition
a)
The Company in respect of its construction activity follows substantial
completed contract method of accounting. Under this method profit in
respect of units sold is recognised only when work in respect of the
relevant units is substantially completed which is determined on
technical estimates as certified by management. The auditors have relied
upon such management certificate.
b) Revenue recognition in
respect of transactions for sale of properties/development rights is
done on the date on the date of execution of agreement and the same are
subject to conclusion of formalities such as conveyance and compliance
of applicable legal formalities.
c) Revenue recognition in
respect of constructed premises is on the basis of booking done by the
prospective customers and the same is subject to execution of registered
sale deed under the Maharashtra Ownership Flats Act (MOFA) and payment
of consideration.
d) Sales in respect of a particular project are accounted net of cancellation during the same accounting period.
e)
The completion status of a project at the end of each accounting
period, the estimated cost for completion of the construction and
development work relating to the units sold, which are considered for
profit are estimated on the basis of technical evaluation and are so
certified by the management. The auditors have relied upon such
management certificate.
Other Notes (extracts)
a) The
Company is in the process of restructuring and renegotiating its
outstanding unsecured loans. Consequently provision for interest due on
the outstanding unsecured loans has been made on simple interest basis
@18% p.a. Interest is not provided on the original/ last contracted rate
and also no provision for interest is made on the unpaid interest
amount. On account payments made by the Company to its lenders, this
practice results in reduction in the provision.
b) The Company
has entered into debt resettlement with Ranbaxy Laboratories Ltd.
However the Company has failed in its re-structured debt obligations to
Ranbaxy Laboratories Ltd. At the time of resettlement the Company has
received benefit of interest waiver amounting to Rs. 21.77 lakh which
was credited to Work in Progress account. In the opinion of the Company
the revised liabilities as per the settlement with Ranbaxy Laboratories
Ltd is valid and subsisting, because the Company has not received any
legal notice from the concerned Lender for termination of the
settlement. The liability in respect of Ranbaxy Laboratories Ltd., as
reflected in the Books of Accounts of the Company is Rs. 70.77 lakh
(previous year Rs. 60 lakh).
c) In case of disputed/defaulted
loans taken by the Company, provision for interest due on the
outstanding secured loans has been made at the last contractual rate of
interest. No provision is being made for interest on unpaid interest as
also for any penal interest and other charges.
d) The balances
in overdue secured and unsecured loans are subject to confirmation. The
management has been advised that for tactical reasons not to obtain
confirmations from its lenders as the same would impact the ongoing
negotiations of the Company. The Company has also requested the auditors
not to directly write to the lenders to obtain confirmations. The
auditors have relied on the judgement of the management in this regard.
e)
The balances in trade payables, secured and unsecured loans are subject
to confirmation. During the year under review balances in the accounts
of the several trade payables and other current liabilities have been
written off, as in the opinion of the management the same are no longer
payable. The auditors have relied on the judgment of the management in
this regard.
f) The balances in receivables are subject to
confirmation. The management is of the opinion that all the receivables
reflected in the financial statements are fully realisable and that
there is no impairment in them. During the year under review balances in
the accounts of the several receivables have been written off because
in the opinion of the management the same are no longer receivable. The
auditors have relied on the judgement of the management in this regard.
