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CORE Education & Technologies
BSE: 512199|NSE: COREEDUTEC|ISIN: INE247G01024|SECTOR: Computers - Software - Training
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« Mar 13
Notes to Accounts Year End : Mar '14
i) Option on Unissued Share Capital
 
 a.  4,500,000 Equity Shares are reserved for allotment of equity shares
 under Core Employee Stock Option Scheme 2007. Out of this, 532,002 (PY
 532,002) equity shares have been issued and allotted to the employees
 against exercise of Options under Core ESOS 2007.
 
 b.  7,500,000 Equity Shares are reserved for allotment of equity shares
 under Core Employee Stock Option Scheme 2009. Out of this, 1,010,634
 (PY 1,010,634) equity shares have been issued and allotted to the
 employees against exercise of Options under Core ESOS 2009.
 
 c.  Refer Note 3.4 for option vested on share capital in respect of
 foreign currency convertible bonds.
 
 ii) Terms/rights attached to equity shares
 
 The Company has only one class of equity shares having a par value of
 Rs. 2/- per share. Each holder of equity shares is entitled to one vote
 per share. The Company declares and pays dividends in Indian rupees.
 The dividend, if any, proposed by the Board of Directors is subject to
 the approval of shareholders in the ensuing Annual General Meeting.
 
 In the event of liquidation of the Company, the holders of equity
 shares will be entitled to receive remaining assets of the Company,
 after distribution of all preferential amounts. The distribution will
 be in proportion to the number of equity shares held by the
 shareholders.
 
 1 Term Loans comprising of:
 
 (a) Rs. 458242,136 (PY. Rs. 490,973,717 ) is secured by way of an
 exclusive charge on the project assets and project receivables.
 
 (b) Rs. 79,305,158 (PY. Rs. 85,436,786 ) is secured by an exclusive
 charge on the assets to be created under the Gujarat school project.
 
 (c) Rs. 264,704,800 (PY. Rs. 264,704,800) is secured by first exclusive
 charge on its property at Mahape, Navi Mumbai (CORE Knowledge Centre),
 measuring 38,300 square feet.
 
 (d) Rs. 282,000,000 (PY. Rs. 329,000,000 ) is secured by equitable
 mortgage over its properties located at units No. 1 and 1A, 2nd and 5th
 Floor, Plot No. 797, United Infotech Park Building, Trans Thane Creek
 Industrial Area, Savli Village, Opposite Millennium Business Park,
 Mahape, Navi Mumbai.
 
 (e) Rs. 1,201,996,000 (PY. Rs. 1,087,786,000 ) is secured by a first
 pari passu charge and mortgage over its properties located at Office
 Nos. 1 to 7, 10th Floor, Lotus Nilkamal Business Park, New Link Road,
 Andheri, Mumbai, a first pari passu charge over all movable assets of
 and project receivables from the ICT project at Haryana and the
 non-interest bearing escrow account maintained by Standard Chartered
 Bank, Delhi branch.
 
 (f) Rs. 1,813,637 (PY. Rs. 4,915,516 ) is secured by hypothecation of
 respective vehicles.
 
 (g) Finance lease obligations are secured against lease assets.
 
 (h) Rs. 1,184,444,348 (PY. Rs.1,300,000,000) secured against pledge of
 shares.
 
 (i) Rs. 315,789,472 (PY.Rs. 378,947,368) secured against Gujarat ICT
 receivables.
 
 2 In the year the Company had issued foreign currency convertible
 bonds of USD 75 million which matures on 7th May, 2015. The intial
 conversion price of the said bonds was fixed at 10% premium over the
 reference share price of Rs. 247.09 calculated in accordance with the
 applicable rule and regualtions governing the issue, issued by the
 Reserves Bank of India and the SEBI in this regards and, which works
 out to Rs. 271.80 the fix exchange rate for the issue was USD 1 =
 44.43.
 
 During the year 2010-11 to 2012-13 FCCB of USD 26.07 million were
 converted into 4,995,987 equity shares at the conversion price of Rs.
 271.80 comprising face value of Rs. 2/- and premium of Rs. 269.80 for
 each equity share as on 31st March, 2014 USD 48,937 million bonds are
 outstanding for conversion.
 
 3 Working Capital Loan and other short term loan are Secured by
 hypothecation of entire stocks, book debts and other current assets of
 the Company (present and future); further secured by equitable mortgage
 on the immovable properties of the company situated at Unit No.: 1 to
 8, Sector III, Building No.: 4, Millennium Business Park, Navi Mumbai
 and Unit No. 1, 4th floor, United Infotech Park, TTC Industrial Area,
 Navi Mumbai; and further secured by immovable properties of the Company
 situated at a) 10th floor, Lotus Neelkamal Business park, Near Fun
 Republic, Off Andheri Link Road, Andheri (W). b) Unit No. 1, 1st Flr,
 United Infotech Park, (CKC), Plot No. R-797, Navi Mumbai c) Unit No. 1,
 3rd Flr, United Infotech Park, (CKC), Plot No. R-797, Navi Mumbai, d)
 Land admeasuring 50 acres situated at Hyderabad.
 
 Unsecured other short-term loan of Rs. 850,000,000 (Previous year Rs.
 850,000,000) is secured by the shares of the Company held by promoters.
 
 4 Micro and Small Entities
 
 The particulars required to be disclosed under the Micro, Small and
 Medium Enterprises Act, 2006 (MSMED Act) in respect of principal amount
 remaining unpaid to any supplier as at the end of the year, amount due
 to the suppliers beyond the appointed day during the year, amount of
 interest if any, accrued and remaining unpaid as at the end of the year
 etc. could not be disclosed for want of information whether sundry
 creditors include dues payable to any such undertakings. The Company
 has initiated the exercise of identifying the status of the suppliers
 as required under MSMED Act where supplier confirmations are awaited.
 
 Disclosure in respect of significant related party transaction during
 the year.
 
 1 Purchase/Subscription of Investments includes Rs. 9,459,070 (Previous
 Year -Rs. 7,882,066,028) in CORE Education and Consulting Solutions Pte
 Ltd., Rs. 12,405,760 (Previous Year Rs. 401,594,155) CORE Project FZE,
 Rs. 45,350,800 (Previous Year Rs. 1,670,337,345 in CORE Information
 Technology Solutions Inc. USA.
 
 2 Rs. 2,057,092,049 (Previous Year Nil) received from CORE Education
 Consulting Solution Inc towards Share Application Money.
 
 3 Loan repaid Rs. 26,383,941 (Previous Year Rs. 251,292,194) of CORE UK
 Limited, Rs. 299,1 19,757 loan given (Previous Year Rs. 434,684,213 of
 CORE Education and Consulting Solutions Inc., Loan given of Rs.
 32,613,156 (Previous Year Nil) to CORE Education Technologies Inc.,
 Loan repaid Rs. 71,541,443 (Previous Year Nil) from CORE Education
 Technologies Inc., Loan repaid Rs. 157,157,259 (Previous year Nil) and
 loan taken Rs. Nil (Previous Year Rs. 9,698,400) of Wisdom Global
 Export Pte Ltd., Loan given Rs. 124,054,672 (Previous Year Nil) to Core
 Education Infratech Ltd. and repaid includes Rs. Nil (Previous year Rs.
 28,568), Loan taken Rs. 83,132,959 (Previous Year Nil) from Aarman
 Software Pvt.  Ltd., Loan taken Rs. 244,642,500 (Previous Year Rs.
 31,462,944) from Core Infrapower Limited, Loan taken Rs. 246,203,700
 (Previous Year Rs. 600,059,480) from Wisdom Global Enterprises Limited.
 
 4 Income from Operations includes export of software developed of Rs.
 1,181,327,493 (previous year Rs. 2,526,878,406) to Core Education &
 Consulting Solution Inc. USA.
 
 5 Interest Income represents income from Core Education & Consulting
 Solution Inc. USA Rs. Nil (Previous year Rs. 463,788,189).
 
 6 In Payment to Key Management Personnel includes Rs. 5,000,004 to Mr.
 Nikhil Morsawala ( Previous Year Rs. 5,000,004), Rs. 4,078,887 to Ms
 Maya Sinha (Previous Year Rs. 15,000,000), Rs. 1,955,556 to Prof. Arun
 Nigavekar ( Previous Year Rs. 3,480,000) and Rs. 4,800,000 to Mr Naresh
 Sharma (Previous Year Rs. 4,800,000).
 
 7 Rent paid to Relatives of Key Managerial person Mrs. Neelam Mansotra
 amounts to Rs. 3,600,000 (Previous year Rs. 3,600,000).
 
 8 Advance taken from Promotor Contribution Rs. 991,631,540.
 
 CONTINGENT LIABILITIES:
 
                                                        (Amount in Rs.)
                                For the year ended   For the year ended
                                  31st March, 2014     31st March, 2013
 
 Guarantees:
 
 Bank Guarantees                       546,816,815        1,428,618,390
 
 Corporate Guarantee given 
 on behalf of Core Education 
 & Consulting Inc. USA & Core        5,643,039,710        5,106,855,261
 Education & Consulting Inc. 
 U K a wholly owned 
 subsidiary Company
 
 Total                               6,189,856,525        6,535,473,651
 
 Based on the award, the Company started work on these projects. The
 company was unable to achieve financial closure for these projects.  As
 a result, the projects were left incomplete and consequently the
 contracts were terminated by the respective State Governments. Since
 implementation had already commenced and was in progress, the Company
 had already incurred a expenditure of Rs. 614,598,31 1 for this partial
 implementation. On the termination of the contract, the Company had to
 write off the expenditure incurred on these projects. Also, the bank
 guarantees of Rs. 131,376,081 given for these projects has been invoked
 by the respective State Governments which has been charged off as
 project expenses written off.
 
 Receivables w/off
 
 During the year, customers have raised quality issues relating to
 assessment and intervention segment of the products. A management
 committee was formed to analyise and suggest the future course of
 action. Customers in this segment would, generally make additional
 improvements on the products sold to them and further sell the
 upgraded/final product to their customers. During negotiations, these
 customers have alleged that due to defective products supplied by CORE,
 they have lost their contracts with reputed clients and have claimed
 compensation. To avoid the legal claims and disputes in future and to
 have continuity in overseas operations, the committee has decided to
 write off the receivables of Rs. 1,769,918,589 and settle with
 customers.
 
 IPR Impairment
 
 During the year, management has reviewed the carrying value of it''s IPR
 in view of the adoption of Common Core States Standard
 Initiative(CCSSI) in the United States of America (USA) where these
 assets were substantially used. The CCSSI is an education initiative in
 the USA that seeks to establish consistent education standards across
 the states as well as ensure that students graduating from high school
 are prepared to either two or four year college programs or enter the
 workforce. Prior to the CCSSI, each state had its own education
 standards and Company had the required resources and capability to
 deliver the solutions. However with the change in regulations and
 requirements, company has been investing in upgrading to the CCSSI to
 deliver the solutions consistently and as per requirement. With the
 CCSSI now in place, all the old products of the company that were
 aligned to the erstwhile State Standards have become partially
 redundant. Whilst the erstwhile State Standards will run parallel with
 the CCSSI for a few years, thus making the old products still
 commercially relevant, the company has, out of abundant caution, and
 with a conservative view, decided to fully write down these products.
 Management has made provision for impairment of Rs. 129,15,27,671
 towards the carrying cost of such IPRs which has been treated as
 exceptional item. The IPRs aligned to CCSI are carried at cost.
 
 (b) Going Concern
 
 The Company''s finances continued to be under stress which is evident
 from decrease in sales revenue, increase in overdue trade receivables
 and payables, salary arrears and arrears of statutory dues, over dues
 (interest and repayment of borrowings) of banks, financial institutions
 and finance lease obligations. To mitigate the financial stress, the
 company has taken various steps including cost cutting exercise and
 opted for Corporate Debt Restructuring (CDR) plan which has been
 admitted and is subject to final approval from its lenders. Also,
 during the year a promoter company has infused Rs. 512,080,907 as an
 advance under the aforesaid restructuring Plan.  The management is
 confident of approval of the restructuring package of the loans under
 CDR, improve the operating margins and collection from trade
 receivables. Despite there being possible material uncertainty in this
 regard, management is confident of meeting its financial obligations.
 and hence, these financial statements have been prepared on the basis
 of going concern assumption.
 
 (c) Haryana ICT
 
 The Company had entered into a contract with the State of Haryana on
 25.03.2011 to install and maintain computer labs in 2,622 schools under
 the ICT program. The project was completed as per the contract and the
 maintenance part of the contract was in operation since last couple of
 years. Due to various reasons, chief among them being non-receipt of
 payments from the State Government, the Company had partially ceased to
 service the contract during the year. In spite of on-going negotiations
 taking place between the company and the State Governments to revive
 the project, the Company received a termination order from the State on
 23.04.2014 and forfeiture of bank guarantee of Rs. 295,000,000. The
 Company filed a Special Leave Petition with the Supreme Court on
 28.04.2014 and in response to which the Supreme Court granted a stay on
 the termination Order and forfeiture of bank guarantee for a period of
 3 weeks. The stay is currently in operation.  The company believes that
 it has strong case in this matter. Pending outcome of the legal
 proceedings, no adjustment has been made to the carrying value as at
 31st March, 2014 of receivables of Rs. 748,319,014 and of the fixed
 assets of Rs. 1,002,144,968 at this stage, for this project.
 
 (d) Trade receivable overdue for more than six months period includes
 Rs. 1,379,392,375 dues from customers in assessment segment. Based on
 the discussion with the customers, management is confident of
 recovering the dues. The customers have confirmed the year end balances
 and therefore no provision is considered necessary at this stage.
 
 (e) Company had purchased computer equipments for ICT projects on
 financial lease and has taken term loan from Hewlett Packard Financial
 Services (India) Private Limited (HPFS). During the year, a
 restructuring agreement has been entered into and a repayment schedule
 has been restructured for both finance lease and the loan as a
 consolidated amount. In the absence of breakup of future repayments of
 lease and loan, the disclosures pertaining to finance lease obligations
 has not been made.
 
 (f) In the opinion of the Board of Directors, other current assets have
 a value on realisation in the ordinary course of the company''s
 business, which is at least to the amount at which they are stated in
 the balance sheet.
 
 (g) Advances, Trade payables and few trade receivable balances are
 subject to confirmation and reconciliation, if any.
 
 (h) These accounts of Core Education & Technologies Ltd. include
 accounts of its two overseas branches.
 
 (i) Previous year''s figures have been regrouped / reclassified wherever
 necessary to correspond with the current year''s
 classification/disclosure.
Source : Dion Global Solutions Limited
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