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Delta Corp

BSE: 532848|NSE: DELTACORP|ISIN: INE124G01033|SECTOR: Construction & Contracting - Real Estate
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Mar 16
Notes to Accounts Year End : Mar '17

*Aryanish Finance and Investments Private Limited, Bayside Property Developers Private Limited and Delta Real Estate Consultancy Private Limited are holding Equity Shares in the capacity of trustees for Aarti J Mody Trust, Aditi J Mody Trust and Anjali J Mody Trust respectively.

* Amount not ascertainable

** The assessments are completed in the month of December 2016 and no liabilities has been arised.

(iii) Other commitment

The Company has obtained licenses under the Export Promotion Credit Guarantee (''EPCG'') Scheme for importing capital goods at a concessional rate of custom duty against submission of bank guarantee and bonds.

Under the terms of the respective schemes, the Company is required to earn foreign exchange value equivalent to, eight times and in certain cases six times of the duty saved in respect of licenses where export obligation has been fixed by the order of the Director General Foreign Trade, Ministry of Finance, as applicable within a specified period from the date of import of capital goods. The Export Promotion Capital Goods Schemes, Foreign Trade Policy 2009-2014 as issued by the Central Government of India, covers both manufacturer''s exports and service providers. Accordingly, in accordance with the Chapter 5 of Foreign Trade Policy 2009-2014, the Company is required to export goods of FOB value of Rs, 3,675.66 Lakhs (Previous Year : Rs, 4,495.99 Lakhs). Non fulfillment of the balance of such future obligation, if any entails to the Government to recover full duty saved amount and other penalties under the above referred scheme.

1.EMPLOYEE BENEFITS :

Brief description of the Plans:

The Company has various schemes for employee benefits such as Provident Fund, ESIC, Gratuity and Leave Encashment. The Company''s defined contribution plans are Provident Fund (in case of certain employees) and Employees State Insurance Fund (under the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans.

A Defined Benefits Plans

The Company''s defined benefit plans include Gratuity (Unfunded). The gratuity plan is governed by the Payment of Gratuity Act, 1972 under which an employee who has completed five years of service is entitled to specific benefits. The level of benefits provided depends on the member''s length of service and salary at retirement age.

The current service cost and the net interest expenses for the year are included in the ''Employee benefits expenses'' line item in the statement of profit & loss account.

iii. Expenses Recognized in the Other comprehensive income (Oci)

The remeasurement of the net defined benefit liability is included in other comprehensive income.

The Plan typically to expose the Company to actuarial risk such as Interest Risk, Longevity Risk and Salary Risk

a) Interest Risk:- A decrease in the bond interest rate will increase the plan liability.

b) Longevity Risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

c) Salary Risk: The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan''s participants will increase the plan''s liability.

The above sensitivity analyses are based on change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

B. Defined contribution plans

The Company also has certain defined contribution plans. The contributions are made to registered provident fund, Employee State Insurance Corporation and Labour Welfare Fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognized during the period towards defined contribution plans are as follows:

c. Leave obligations

The leave obligations cover the Company''s liability for earned leave.

The amount of the provision of Rs, 42.21 Lakhs (31st March, 2016 Rs, 92.14 Lakhs, 1st April 2015 Rs, 80.38 Lakhs) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations.

(ii) Key Management Personnels (KMP):

- Mr. Jaydev Mody (JM) - Chairman

- Mr. Ashish Kapadia (AK) - Managing Director

- Mr. Hardik Dhebar (HD) - Group CFO

- Mr. Alpana Chinai (AC) - Director

- Mr. Rajesh Jaggi (RJG) - Director

- Mr. Rakesh Jhunjhunwala (RJ) - Director

- Mr. Vrajesh Udani (VU) - Director

- Mr. Ravi Jain (RJN) - Director

- Mr. Chetan Desai (CD) - Director

- Mr. Homi Aibara (HI) - Director (till 12th October, 2015)

(iii) Relatives of Key Management Personnels:

- Mrs. Zia Mody (ZM) - Wife of Chairman

- Mrs. Urvi Piramal (UP) - Sister of Chairman

- Mrs. Kalpana Singhania (KS) - Sister of Chairman

- Ms. Anjali Mody (AM) - Daughter of Chairman

(iv) Enterprises over which persons mentioned in (ii) and (iii) above exercise significant influence:

- AAA Holding Trust (AAAHT)

- Aarti J Mody Trust (AAJMT)

- Aditi J Mody Trust (ADJMT)

- Anjali J Mody Trust (ANJMT)

- Arrow Textiles Limited (ATL)

- AZB & Partners (AZB)

- Delta Magnets Limited (DML)

- Delta Foundation (DF)

- Freedom Registry Limited (FRL)

- Goan Football Club Private Limited (FCG)

- Highland Resorts Private Limited (HRPL)

- J M Township and Real Estate Private Limited (JMT)

- NMRT Partners Communication and Consultancy LLP (SKR)

- Peninsula Land Limited (PLL)

- Skarma Consultancy Private Limited (SCPL)

- Urvi Ashok Piramal Foundation (UAPF)

2. cREDiT RISK

Credit risk arises from the possibility that the counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses financial reliability of customers and other counter parties, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets. Individual risk limits are set and periodically reviewed on the basis of such information.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of default occurring on asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as:

i) Actual or expected significant adverse changes in business,

ii) Actual or expected significant changes in the operating results of the counter party,

iii) Financial or economic conditions that are expected to cause a significant change to the counter party''s ability to meet its obligations,

The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.

Trade receivables:

The ageing of trade receivables and expected credit loss analysis on these trade receivables is given in below table:

3.CAPITAL RISK MANAGEMENT

a) The Company manages its capital to ensure that it will be able to continue as going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in Note no. 18, 20 and 22 offset by cash and cash equivalents) and total equity of the Company.

The Company determines the amount of capital required on the basis of annual as well as long term operating plans and other strategic investment plans. The funding requirements are met through long-term and short-term borrowings. The Company monitors the capital structure on the basis of net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

4.LIQUIDITY RISK

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Company''s liquidity position and cash and cash equivalents on the basis of expected cash flows.

*Excluding Rs, 94.15 Lakhs as prepaid finance charges.

5. INTEREST RATE RISK & SENSITIVITY ANALYSIS

Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimize the Group''s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

The sensitivity analyses below have been determined based on the exposure to interest rates for assets and liabilities at the end of the reporting period. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year and the rates are reset as per the applicable reset dates. The basis risk between various benchmarks used to reset the floating rate assets and liabilities has been considered to be insignificant.

If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Company''s Profit for the year would decrease/increase by amount as stated below.

This is mainly attributable to the Company''s exposure to borrowings at floating interest rates.

6. OTHER PRICE RISKS

The Company is exposed to equity price risks arising from equity investments. Certain of the Company''s equity investments are held for strategic rather than trading purposes.

Equity price sensitivity analysis:

The sensitivity analysis below have been determined based on the exposure to equity price risks at the end of the reporting period.

7. In accordance with Ind AS 108 ''Operating Segment '', segment information has been given in the consolidated financial statements and therefore, no separate disclosure on segment information is given in these financial statements.

8. An exceptional items included in financial statement is on account of gain of Rs, 2.10 Lakhs (Previous Year : Nil Lakhs ) arising on Sale of Shares of Subsidiary Companies and previous year''s exceptional item includes provision made for transfer of Casino License from Victor Hotel and Motels Limited to Delta Corp Limited payable to Goa Government of Rs, 500 Lakhs.

9. MAT Credit Entitlement of Rs, 1,431.63 Lacs (Previous Year Rs, 2,000.59 Lacs) is based on future business projections of Company as projected by Management, and the same have been relied upon by the auditors. MAT paid can be carried forward for a period of 15 years and can be set off against future tax liabilities.

10. EVENT OCCURRING AFTER BALANCE SHEET DATE:-

a) The Board of Directors has recommended Equity dividend of Rs, 0.35 per share (Previous Year Rs, 0.20) for the Financial Year 2016-17.

b) Subsequent to the year end, the Qualified Institutional Placement (QIP) Committee of the Board of Directors of the Company at its meeting held on 18th May, 2017 have allotted 3,54,83,874 Equity Shares of Rs, 1/- each, issued at Rs, 155/- per equity share to Qualified Institutional buyer. In this QIP company have raised Rs, 55,000 Lakhs.

11 SHARE-BASED PAYMENTS

Details of the employee share option plan of the Company

The options are granted at the price determined by the Compensation Committee. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of Rs, 1/- each. The option granted in Financial Year 2013-14 shall vest in one installment only. The option granted in Financial Year 2014-15 shall vest in three installments. Details of options granted during the Financial Year 2014-15 and 2013-14 duly approved by the Nomination Remuneration Compensation Committee under the said scheme are given below.

Each employee share option converts into one equity share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

The following share-based payment arrangements were in existence during the current and prior years:

Exercise period will expire after five years from the date of vesting of options or such other period as may be decided by the Committee.

Fair value of share options granted in the year

Options were priced using a Black Scholes Option Pricing Model. Where relevant, the expected life used in the model has been adjusted based on managementRs,s best estimate for the effects of non-transferability, exercise restrictions and behavioral considerations. Expected volatility is based on the historical share price volatility over the past 3 years.

b) Fair Value Hierarchy and Method of Valuation

Except as detailed in the following table, the Company considers that the carrying amounts of financial instruments recognized in the financial statements approximate their fair values.

Level 1 : Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

The following table presents fair value of assets and liabilities measured at fair value on recurring basis as of 31st March, 2017

12. FIRST-TIME ADOPTION OF IND AS

These are the Company''s first financial statements prepared in accordance with Ind AS.

The Company has adopted Indian Accounting Standards (Ind AS) notified by the Ministry of Corporate Affairs with effect from 1st April, 2016, with a transition date of 1st April, 2015. Ind AS 101- First-time Adoption of Indian Accounting Standards requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements which is for the year ended 31st March, 2017 for the company, be applied retrospectively and consistently for all Financial Years presented. Consequently, in preparing these Ind AS financial statements, the Company has availed certain exemptions and complied with the mandatory exceptions provided in Ind AS 101, as explained below. The resulting difference in the carrying values of the assets and liabilities as at the transition date between the Ind AS and Previous GAAP have been recognized directly in equity (retained earnings or another appropriate category of equity).

Set out below are the Ind AS 101 optional exemptions availed as applicable and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

(I) Exemptions availed

(a) Deemed Cost

The Group has recorded certain property, plant and equipment at fair value and for the remaining items comprising property, plant and equipment is measured in accordance with Ind AS 16. For Intangible Assets, previous GAAP value is considered as deemed cost.

(b) Investments in subsidiaries

The Company has opted para D14 and D15 and accordingly considered the Previous GAAP carrying amount of Investments as deemed cost as at the transition date and going forward at cost less impairment if any.

(c) Designation of previously recognized financial instruments

Paragraph D19B of Ind AS 101 gives an option to an entity to designate investments in equity instruments in other than equity investment in subsidiaries, associates and joint venture at FVTOCI on the basis of the facts and circumstances at the date of transition to Ind AS. The company has opted to fair value of other equity instruments, quoted and unquoted investment through OCI.

(d) Past business combination

The Company has chosen to not to restate past business combination under Ind AS.

(e) Share-based payment transactions

Ind AS 101 encourages, but does not require, first time adopters to apply Ind AS 102 Share based Payment to equity instruments that were vested before the date of transition to Ind AS. The Company has elected not to apply Ind AS 102 to options that vested prior to 1st April, 2015.

(II) Applicable Mandatory Exceptions

(a) Estimates

An entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies).

Ind AS estimates as at 1st April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Investment in equity instruments carried at FVTPL or FVTOCI ;

- Investment in debt instruments carried at amortized cost ; and

- Impairment of financial assets based on expected credit loss model.

(b) Classification and measurement of financial assets

As required under Ind AS 101 the company has assessed the classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that existed at the date of transition to Ind AS.

(iii) Transition to ind AS - Reconciliations

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to Ind AS as required under Ind AS 101:

I. Reconciliation of Balance sheet as at 1st April, 2015 (Transition Date) .

II. A. Reconciliation of Balance sheet as at 31st March, 2016

B. Reconciliation of Total Comprehensive Income for the year ended 31st March, 2016

III. Reconciliation of Equity as at 1st April, 2015 and as at 31st March, 2016

The presentation requirements under Previous GAAP differs from Ind AS, and hence, Previous GAAP information has been regrouped for ease of reconciliation with Ind AS. The Regrouped Previous GAAP information is derived from the Financial Statements of the Company prepared in accordance with Previous GAAP.

Note: a) Borrowings

As required under the Ind AS 109 transactions costs incurred towards origination of borrowings have been deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in the profit and loss over the tenure of the borrowing as interest expense, computed using the effective interest rate method corresponding effect being in Long term borrowings and to the extent attributable to Current maturity of long term debts.

Under the previous GAAP, these transaction costs were charged to the profit and loss over period of life of loan. Consequently, borrowings as at 31st March, 2016 have been reduced by Rs, 29.71 Lakhs (1st April, 2015- Rs, 89.73 Lakhs) with a corresponding adjustment to retained earnings resulting in increase/ decrease in total equity. The profit under the previous GAAP for the year ended 31st March, 2016 has been reduced by Rs, 35.29 Lakhs.

b) Property, Plant, Equipment and intangible Assets (PPE)

The Company has considered fair value of certain items forming part of Property, Plan and Equipments with impact of Rs, 981.24 Lakhs in accordance with stipulator of Ind AS 101 with resulted impact being accounted for in the result. Further due to retrospective adjustment of depreciation based on estimated useful life as on 1st April, 2015 decrease by Rs, 111.27 Lakhs which have been provided as additional depreciation to PPE and in the year 2015-16 Rs, 123.39 Lakhs decreased.

c) Proposed dividend

Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events and accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs, 555.24 Lakhs as at 31st March, 2016 and Rs, 277.62 Lakhs as at 1st April, 2015 included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity has been increased by an equivalent amount.

d) Fair Valuation of investments

Under the previous GAAP, investments in equity instruments, mutual funds were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under IND AS, these investments (except other than investment in subsidiaries which are accounted at cost) are required to be measured at fair value. The resulting fair value changes of these investments have been recognized in retained earnings as gain of Rs, 949.62 Lakhs as at 31st March, 2016 (loss of Rs, 2,226.80 Lakhs As at 1 April, 2015).

Fair value changes with respect to investments in equity instruments designated as FVTPL have been recognized in FVTPL - Equity investments reserve as at the date of transition and subsequently in the Profit and Loss for the year ended 31st March 2016. As on 1st April 2015 increased for Rs, 3.09 Lakhs.

e) Security deposits

Under the previous GAAP, interest free security deposits are recorded at their transaction value. Under IND AS, all financial assets are required to be recognized at fair value. Accordingly, the Company has fair valued the security deposits under IND AS. Difference between fair value of security deposits and the carrying value (transaction value) as per Previous GAAP has been recognized as prepaid rent. Consequently, the amount of security deposits has been decreased by Rs, 278. 11 Lakhs as at 31st March, 2016. The prepaid rent increased by Rs, 267. 82 Lakhs as at 31st March, 2016 (Rs, Nil Lakhs as at 1st April, 2015).The profit for the year and total equity as at 31st March, 2016 decreased by Rs, 10.29 Lakhs (net) due to amortisation of the prepaid rent of Rs, 38.26 Lakhs is partially off-set by the notional interest income of Rs, 27.97 Lakhs recognized on these security deposits.

f) Fair Valuation of debt instruments

As per Ind AS 32 and Ind AS 109, a debt instruments are required to fair valued. Accordingly, debt instruments were fair valued and resulted to increase in Interest Income of Rs, 14.00 Lakhs and resulted to increase in profit before tax and equity as at 31st March,2016 (Previous Year decreased by Rs, 22.13 Lakhs).

g) Re-measurements of post-employment benefit obligation

Under Ind AS, re-measurements i.e. actuarial gains and losses, on the net defined benefit liability are recognized in other comprehensive income instead of profit and loss.

Under the previous GAAP, these re-measurements were forming part of the profit and loss for the year. As a result of this change, the profit for the year ended 31st March, 2016 increase by Rs, 9.80 Lakhs There is no impact on the total equity as at 31st March, 2016.

h) Employee Stock Option

Under previous GAAP ESOP were recognized at intrinsic value of equity instrument on date of option grant, while under Ind AS, ESOP need to be recognized at Fair Value on the date of Grant of Option. Fair Value of the equity instrument is used to determine the ESOP compensation to be amortized over vesting period.

i) Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as Rs,other comprehensive income'' includes re-measurements of defined benefit plans and fair value of investment through OCI. The concept of other comprehensive income did not exist under previous GAAP.

j) Deferred Tax

The impact of transition adjustments together with Ind AS mandate of using balance sheet approach (against profit and loss approach in the previous GAAP) for computation of deferred taxes has resulted in charge to the Reserves, on the date of transition, with consequential impact to the Statement of Profit and Loss for the subsequent periods.

k) Current Tax

Tax component on Actuarial Gains and losses which is transferred to Other Comprehensive Income under Ind AS which was debited to Profit & Loss account under previous GAAP. As required under the Ind AS, the same has been debited to Other Comprehensive income.

l) The Ind AS adjustments are either non cash adjustments or are regrouping among the cash flows from operating, investing and financing activities. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended 31st March, 2016 as compared with the previous GAAP.

13. Assets held for Sale represents a ship owned by the company and it was available for immediate sale.

14. The Company has filed a Scheme of Amalgamation dated 29.03.2017 with an appropriate authority, u/s 391 to 395 of The Companies Act, 1956 where by Gauss Network Private Limited will merge with the Company, w.e.f . 1st April, 2016. The Scheme is yet to be approved by Bombay High Court.

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