Tech Mahindra Limited —
(31-3-2010)
From Notes to Accounts :
During the year, a customer
has restructured long-term contracts with the Company from April 1, 2009, which
involves changes in commercial, including rate reduction, and other agreed
contract terms. As per the amended contracts the customer has paid the Company
restructuring fees of Rs.9,682 million. The services under the restructured
contracts would continue to be rendered over the life of the contract. The
restructuring fees received would be amortised and recognised as revenue over
the term of the contract on a straight-line basis. An amount of Rs.2,005 million
has been recognised as revenue for the year from April 1, 2009 to March 31, 2010
and the balance amount of Rs.7,677 million has been carried forward and
disclosed as deferred revenue in the Balance Sheet.
3. Non availability of
financial statements of step-down associate for consolidation purposes
Tech Mahindra Limited —
(31-3-2010)
From Notes to Accounts to
Consolidated Financial Statements :
TML through Venturbay
Consultants Private Limited, a wholly-owned subsidiary has acquired stake in
Satyam Computer Services Limited (SCSL), on May 5, 2009 through preferential
allotment, representing 31% of equity share capital. Thereafter the share
holding has further increased to 42.70% by July 10, 2009 through a combination
of open offer and a further preferential allotment. As per the share
subscription agreement dated April 13, 2009, these investments have a lock-in
period of three years from the date of allotment. As a result of this investment
SCSL has become an associate of TML as per Accounting Standard 23 ‘Accounting
for Investments in Associates in Consolidated Financial Statements’. Venturbay
Consultants Private Ltd. holds 42.67% of the shareholding of SCSL as of March
31, 2010.
SCSL is in the process of
restating its financial statements. The Honourable CLB vide its order dated
April 16, 2009 has given extension of time till December 31, 2009 to SCSL for
filing of the documents with various statutory authorities already due or to
become due, the same is further extended till June 30, 2010 vide the Honourable
CLB order dated October 15, 2009.
In the absence of audited
financials the amount of goodwill/capital reserve in the investment value as at
March 31, 2010 could not be computed and the investment in SCSL as at March 31,
2010 has been accounted for at cost. TML’s share of profit/loss in SCSL and its
subsidiaries for the year ended March 31, 2010 in accordance with Accounting
Standard 23 ‘Accounting for investments in associates in consolidated financial
statements’ has not been accounted in the consolidated financial statements of
the Company.
From Auditors’ Report :
4. As stated in Note 23 to
the consolidated financial statements, Venturbay Consultants Private Limited
(100% subsidiary of the Company) has acquired 31% stake in Satyam Computer
Services Limited (SCSL) on 5th May 2009 and subsequently increased the stake to
42.70% on 10th July 2009. SCSL is in the process of restating its financial
statements. The Honorable CLB vide its order dated October 15, 2009 has given
extension of time till June 30, 2010 to SCSL for filing of the documents with
various statutory authorities already due or to become due. We are informed that
the Accounts of SCSL are not available for consolidation and in the absence of
financial statement of SCSL we are unable to comment on the impact of
post-acquisition profit/loss of SCSL on ‘share of profit of associate’,
investment in associates and reserve and surplus in the consolidated financial
statement of the group.
5. . . . . . .
6. Based on our audit and on
consideration of the separate audit reports on individual financial statements
of the Company, its aforesaid subsidiaries and to the best of our information
and according to the explanations given to us, subject to our
observations in Para 4 above, in our opinion, . . . . . .
4. Adoption of Exposure
Draft of AS-10 (revised) for change in the method of accounting of costs on
major repairs and maintenance of its engines.
Kingfisher Airlines Limited
— (31-3-2010)
From Notes to Accounts :
During the year, the Company
has adopted the exposure draft on Accounting Standard-10 (Revised) ‘Tangible
Fixed Assets’ which allows such costs on major repairs and maintenance incurred
to be amortised over the incremental life of the asset. The Company has extended
the same treatment to costs and maintenance for engines pertaining to aircrafts
acquired on operating lease. Earlier, the Company used to charge off the cost of
such repairs and maintenance of its engines to the Profit and Loss Account as
and when incurred. Had the Company not changed its method of accounting, the
loss before and after tax for the year would have been higher by Rs.16,390.25
lacs and Rs.10,945.82 lacs, respectively. This revised accounting policy has
been confirmed by an independent expert and in the opinion of the management,
this accounting treatment has resulted in a fair depiction of the working
results and the state of affairs of the Company.
From Statement of
Significant Accounting Policies :
Fixed assets and Intangible
assets :
Fixed assets and intangible assets are stated at cost of acquisition less accumulated depreciation/ amortisation and impairment losses (if any). Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use and also includes cost of modification and improvements to leased assets.
Borrowing costs relating to acquisition of fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use.
Advances paid towards the acquisition of fixed assets and the cost of fixed assets not ready for intended use as of the balance sheet date are disclosed under capital work-in-progress.
Depreciation:
Depreciation on fixed assets, except non-compete fees, trademarks, design — aircraft interiors, software, leasehold improvements, is provided on a straight-line basis at the rates prescribed under Schedule XIV to the Companies Act, 1956 which are estimated to be the useful life of fixed assets by the management. Additions are depreciated on a pro-rata basis from the date of installation till the date the assets are sold or disposed.
— Non-compete fees are amortised over the period of agreement (i.e., five years).
— Trademarks are amortised over the period of four years.
— Design — Aircraft Interiors are amortised over the period of seven years.
— Software is depreciated over a period of 1-4 years, based on estimated useful life as ascertained by the management.
— Leasehold improvements on operating leases are depreciated over the shorter of the period of the lease and their estimated useful lives.
— Cost of major maintenance and overhaul of the engines are amortised over the period of estimated useful life of the repairs.
— Movable cabins and mobile phones are depreciated over the period of five and two years, respectively, on a straight-line method.
From Auditors’ Report:
…….
Attention is invited to Note 29 of Schedule 21 regarding change in the method of accounting of costs incurred on major repairs and maintenance of engines of aircrafts taken on operating lease during the year aggregating to Rs.20,700.76 lacs which have been included under fixed assets and amortised over the estimated useful life of the repairs. In our opinion, the revised accounting treatment is not in accordance with current accounting standards.
From Directors’ Report:
……
As regards the observations in para 6 of the Auditors’ Report, your Company has adopted the Exposure draft on Accounting Standard-10 (Revised) ‘Tangible Fixed Assets’, which allows such costs on major repairs and maintenance incurred to be amortised over the incremental life of the asset. Your Company has extended the same treatment to costs incurred on major repairs and maintenance for engines pertaining to aircrafts acquired on operating lease.
