Himachal Futuristic Communication
BSE: 500183 | NSE: HIMACHLFUT | ISIN: INE548A01010 | Telecommunications - Equipment
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Notes to Accounts | Year End : Mar '09 |
As at As at
31.03.2009 31.03.2008
(Rs) (Rs)
1 Contingent Liabilities not
provided for in respect of:
(a) Unexpired Letters of Credit 26,170,384 34,679,788
(margin money paid Rs.2,617,038
Previous year Rs.4,554,544)
(b) Guarantees given by banks on 440,057,738 834,176,692
behalf of the Company (margin money
kept by way of fixed deposits
Rs. 123,704,763 Previous year
Rs. 153,700,542)
(c) Counter Guarantees given by
the Company to the financial
institutions/banks for 7,225,671,621* 7,225,671,621
providingguarantees on behalf of
companies promoted by the Company.
(margin money kept by the banks by
way of fixed deposits Rs. Nil;
Previous year Rs. Nil)
* This excludes Companys counter guarantees of Rs.56.70 crore in
respect of guarantees provided by the banks and institutions on behalf
of HFCL Bezeq Telecom Ltd. for bid bonds to Department of
Telecommunications (DoT) towards tender for operation of basic
telephone services as the guarantees have already expired and the
Honble Delhi High Court vide its order dated 19.09.97 granted
permanent injunction restraining the DoT from invoking the said
guarantees. The appeal filed by Do against this also stands dismissed.
The DoT has filed application for restoration of appeal before the
Double Bench of the Honble High Court of Delhi which has been allowed
and matter is now pending for decision.
(d) Arrears of Dividend on Cumulative
redeemable preference shares (net
of advances) 596,181,325 543,856,325
2 Estimated amount of contracts 18,019,868 18,318,194
remaining to be executed on capital
account and not
provided for (net of advances)
* As the Company has no profits to pay remuneration to managerial
personnels, the appointment of and remuneration to the managerial
personnels required approval of Central Government. Pending the
approval of the Central Government, tbi remuneration of Rs.16,572,014
(Previous year Rs. 18,204,389) has been paid to the managerial
personnels during the year 2008-09. Accordingly amount paid
aggregating to Rs.34,776,403(Previous year Rs. 18,204,389) is shown as
recoverable from them as at 31st March,2009.
3 Interest income from loans and advances and others is net of interest
charges amounting to Rs.l,014,949/-(Previous year Rs.782,875/ -) on
loans raised and utilised for the purpose.
4 a The Company had approached its lenders viz. Banks and Financial
Institutions for financial restructuring and a financial restructuring
package, has been approved under the Corporate Debt Restructuring (CDR)
mechanism by the CDR Empowered Group of lenders vide letter dated 6th
April ,2004. Subsequently the CDR Empowered Group in its meeting held
on 8th June, 2005 has approved modifications to the aforesaid CDR
package with the cut off date as 1st April 2005 and communicated to the
company vide their letter No. BY CDR(ALB)/No 404 dated 24.06.2005. The
modification in the CDR package include, inter-alia, reduction of
interest rate on loans with effect from new cut off date,
re-schedulement of repayment of loans and Cumulative Redeemable
Preference Shares (CRPS) and conversion of certain loan amounts into
Zero Coupon Premium Bonds (ZCPBs) . The said CDR package also
stipulates conditions to be complied with by the Company and
arrangement of additional infusion of working capital from existing or
new lenders.
b The Company has complied with most of the conditions as stipulated in
CDR package and Master Restructuring Agreement (MRA) has been signed
with the lenders. Pursuant to the modified CDR package :
i) Interest to banks and financial institutions has been accounted for
at the rates specified in the said package.
ii) The Cumulative Redeemable Preference Shares (CRPS) aggregating to
Rs. 805,000,000 shall be. redeemed at the rate of 25% and 75% of the
face value in the financial years ending 31st March 2018 and 31st
March, 2019, respectively and will carry the coupon rate of 9% from old
cut off date till new cut off date and 6.50% from new cut off date.
(Also refer Note no.8(d) below)
iii) The Company has issued 23,600,000 and 8,318,000 Zero Coupon
Premium Bonds (ZCPBs) of Rs.100 each on 30th October, 2004 and 8th
October, 2005 respectively in lieu of the part of term loans and
debentures from financial institutions and banks. ZCPBs are to be
redeemed in 48 monthly installments, from 30th April 2011 and ending
31st March 2015 on ballooning basis to ensure yield of 8.5% p.a. on
simple interest basis by way of premium payable in 36 monthly interest
free installments commencing from 30th April, 2015 till 31st March,
2018.
iv) Secured and unsecured working capital loans from banks amounting to
Rs. 315,000,000 and Rs. 76,405,937 respectively have been converted
into working capital term loans to be repaid in 48 monthly
installments, on ballooning basis, from 30th April 2011 and ending 31st
March 2015 to ensure yield of 8.5% p.a.on simple interest basis.
v) The outstanding principal amount of secured and unsecured term loans
(after conversion into OFCDs and ZCPBs) amounting to Rs. 1,756,819,801
(Previous year Rs.1,756,819,801) and Rs. 131,594,949 (Previous year Rs.
131,594,949) respectively from financial institutions and banks have
been rescheduled so as to be repaid on ballooning basis in monthly
installments commencing from 30th April, 2007 till 31st March 2013. The
installments fallen-due/repayable during the year amounted to
Rs.89,204,858 (Previous year Rs.61,927,498) and Rs. 6,705,512 (Previous
year Rs.4,190,330) which have not been paid respectively for Secured
and unsecured loans.
vi) Funded Interest Term Loan (FITL) amounting to Rs.889,683,307
(Previous year Rs.871,947,456) is repayable in twenty four monthly
installments commencing from 30th April 2017 till 31st March 2019 and
shall not carry any interest.
vii) The Company is required to open and operate Trust and Retention
Account and the rights, title and interest in all bank accounts have to
be assigned to the lenders by way of first ranking security interest.
viii) The Company has to create securities as stipulated by the CDR
Empowered Group.
c Due to continued cash losses and very tight liquidity conditions, the
company could not meet its interest and repayment obligations towards
its lenders under CDR package its over due amount towards such lenders
as on 31st March, 2009 is Rs. 556,912,155 including interest Rs.
394,883,957/-. However the company is in continuous discussions with
lenders in respect of such default / possibility of further
restructuring /modification in the CDR package in view of this, the
company does not expect withdrawal of any relief.
d Some of the Cumulative Redeemable Preference Share (CRPS)
shareholders have disputed the modified terms of redemption and rate of
dividend as per CDR package on the ground that they have not agreed to
any of the restructuring granted by CDR empowered group and hence
original terms and conditions of 12% CRPS continues to be in force and
accordingly are insisting for redemption and dividend as per the
original terms of the issue of CRPS. The management has requested the
said CRPS shareholders to accord their approval to revised package in
view of the present financial position of the company. One of the
shareholders, has, however filed case against the company for recovery
which is being contested.
e The company is in process of reconciliation of balances with the
lenders i.e. financial institutions and banks. Adjustments, if any, on
account of interest/ principal will be made when the same are confirmed
by them.
5 In terms of the modified CDR package, Company has to pay interest on
term loans on ballooning basis over the period 2006 to 2013 at the
ballooning rates of interest from 2% to 15.5% p.a. . The Company
accounts for interest at the rate it is required to pay during the
respective year in terms of the aforesaid package on monthly rests for
this year, in place of @ 8.50% p.a. i.e. on YTM basis. Had the interest
been provided for on YTM basis, the loss for the year would have been
lower by Rs 88,862,684/- and the accumulated debit balance in the
Profit and Loss Account would have been higher by Rs.218,951,740/-.
6 Advances recoverable in cash or in kind or for value to be received
includes an amount of Rs.22,170,704 (Previous year Rs.22,170,704) on
account of work contract undertaken by the Company which was terminated
by the customer on the ground of non completion in the agreed time. The
Company had disputed the same and took the dispute in arbitration for
decision. The Arbitral Tribunal has given the award in favour of the
Company. However, the other party has appealed against the award in the
Honble High Court at Delhi which is still pending for decision by the
High Court. Pending final outcome of the appeal, the above amount is
shown under the head advances recoverable and the loss, if any, arising
therefrom shall be adjusted/accounted for on receipt of the order of
the High Court.
7 Pursuant to the disinvestment by the Government of India, the
Company had acquired 1,110,000 equity shares of Rs.100/- each of HTL
Limited representing 74% of its equity capital at total consideration
of Rs. 550,000,000 in terms of Shareholders Agreement dated 16.10.2001.
The above consideration paid by the Company is subject to post closing
adjustments on account of difference in net worth of HTL Limited as on
31.03.2001 and as on the date of purchase of shares in terms of Share
Purchase Agreement dated 16.10,2001.The Company has submitted its claim
on account of Closing Date Adjustment to the Government in respect of
such reduction in net assets of HTL Limited which has not been settled
by the Government. Due to this, the Company has invoked the provisions
of the Share Purchase Agreement for settlement of dispute by
Arbitration. The Honble Arbitral Tribunal has since given the award in
favour of the company on 10th October, 2007 upholding the claim of the
company on account of the above to the extent of Rs. 550,000,000/- and
interest from the date of award. Since the Government of India has gone
in appeal against the above arbitral award which is yet to be decided
by the Honble High Court, no adjustment has been made in the accounts
in respect of above award. It shall be made as and when the appeal is
decided finally.
8 The Company had made a payment of Rs.113,375,183 to certain
cumulative preference shareholders as per contractual obligations in
the earlier years. The said amounts paid have been treated as
advances to be adjusted against future expected liability of dividend
on cumulative preference shares.
9 In the previous year Company had inadvertently sold 1,500,000,
equity share of Rs.10/ each of HFCL Infotel Ltd, which were locked- in-
period in terms of BSE letter no. DCS/SMG/RCG/2005/511li6 dated
14/03/2006, at a consideration of Rs.20/- per share and accounted for
profit of Rs. 15,000,000/- accordingly. The transaction has been
reversed during the year and the profit accounted for in pervious year
has been reversed during the year under prior period, as the said
shares could not be transferred.
10 During the year the Company has paid Guarantee contract/obligation
amounting to Rs. 107,405,392/-. It includes Rs.94,673,033/- on account
of compensation to its customers/ invocation of performance bank
guarantees due to non fulfillment of contractual obligations in terms
of work orders and Rs. 12,732,359/- towards obligation payments ( as
Corporate guarantor ) to the lenders of promoted companies against
their over dues.
11 In earlier year, one of the banks has transferred 30,000,000 equity
shares of Rs.10/- each of HFCL Infotel Ltd, which were pledged with
them as security against loan, in their name as beneficial owner and
adjusted their loan amount against the value of those shares. The
difference between the cost of the said securities and loan outstanding
has been accounted for in earlier year as loss on sale of investment.
Adjustment, if any, on account of actual realisation of securities by
the bank shall be made as and when the same are disposed off.
12 The Accumulated losses of the company as at the end of the financial
year have resulted in erosion of more than fifty per cent of its peak
net worth during the immediately preceding four financial years. The
Company, has reported the fact of such erosion to the BIFR and such
erosion was considered by the shareholders in the Extra Ordinary
General Meeting held on 25/02/2008, in compliance with the provisions
of section 23 of the Sick Industrial Companies (Special Provision) Act,
1985.
13 Sundry debtors include debtors outstanding for more than two years
amounting to Rs. 1,584,058,706/- after assignment to third party and
provisioning. The Company is in continuous process of working out
different modalities of recovery for its remaining long outstanding
debtors. Pending outcome of such exercise, provision of Rs.
1,112,043,706/- made during the year, is considered adequate in the
opinion of the management.
14 Excise duty on sales has been deducted from gross sales on the face
of profit and loss account and Tncrease/(decrease) in excise duty on
finished goods has been shown under the head manufacturing and other
expenses in schedule 17 as required by Accounting Standard - 9,
Revenue Recognition read with Accounting Standard Interpretation 14
(Revised) Disclosure of Revenue from Sales Transactions.
15 During the year, Company has recognised the following amounts in the
financial statements as per Accounting Standard 15 (Revised) Employees
Benefits issued by the ICAI :
b) Defined Benefit Plan
The employees gratuity fund scheme managed by HDFC Standard Life
Insurance Company Limited a defined benefit plan. The present value of
obligation is determined based on actuarial valuation using the
Projected Unit Credit Method, which recognises each period of service
as giving rise to additional unit of employee benefit entitlement and
measures each unit separately to build up the final obligation and the
obligation for leave encashment is recognised in the same manner as
gratuity.
Note-1: The estimates of rate of escalation in salary considered in
actuarial valuation, take into account inflation, seniority, promotion
and other relevant factors including supply and demand in the
employment market. The above information is certified by the actuary.
Note-2: The discloser requirements and accounting treatment as required
under Accounting Standard 15 (Revised 2005) are being first time
implemented during the previous year accordingly the difference
amounting to Rs.55,26,287/- between existing provisions for employees
benefits (Rs.92,61,197/-, as per erstwhile company policy) and
provision for employees benefits in terms of AS-15(R) as at 01/04/ 2007
(Rs. 1,47,87,484/-), have been added with accumulated Losses as at
01/04/2007.
16 In accordance with the Accounting Standard (AS-28) on-Impairment of
Assets the management has appointed an outside agency for conducting
an exercise of identifying the assets that may have been impaired, if
any. Since the exercise still in process,- the effect of diminution in
value of assets due to impairment if any shall be given in the accounts
upon such determination.
17 Balances of some of the sundry debtors, creditors, lenders Joans and
advances are subject to confirmations from the respective parties and
consequential adjustments arUiBg from reconciliation, if any. The
Management, however is of the view that there will be no material
adjustments in this regara.,
18 As required hy Accounting Standard 18 Related Party Disclosures A.
Name of related parties and description of relationship:
Relationship Name of Related Party
(a) Subsidiaries:
Name of Related Party
HFCL Infotel Ltd.
HTLLtd.
Moneta Finance Pvt. Ltd.
Infotel Tower Infrastructure Pvt. Ltd.
(b) Associates:
HFCL Bezeq Telecom Ltd
HFCL Dacom Infochek Ltd (HDIL)
Infotel Business Solutions Ltd.( formerly known as HFCL
Internet Services Ltd)
HFCL Kongsung Telecom Ltd
HFCL Satellite Communications Ltd
Exicom Tele-systems Ltd. (formerly known as Himachal
Exicom Communications Ltd )
The Investment Trust of India Limited
Microwave Communications Ltd.
Pagepomt Services (India) Pvt. Ltd.
Westel Wireless Ltd
WPPLLtd.
(c) Key management personnel :
Mr. Mahendra Nahata
Dr. RMKastia
Mr. Arvind Kharabanda
(d) Relatives of key management personnel : Mrs. Kamala Kastia
(with whom transactions have taken place during the year)
Note : Related party relationship is as identified by the Company and
relied upon by the auditors.
(b) Secondary segment information
The Company caters mainly to the needs of Indian market and the export
turnover being 3.77% (Previous year 1.16%) of the total turnover of the
Company, there are no reportable geographical segments.
19. Previous years figures have been regrouped/reclassified wherever
necessary and the figures have been rounded off to the nearest rupee.
20 Additional information pursuant to Paragraphs 3,4C and 4D of Part-II
of the Schedule VI to The Companies Act, 1956 (Previous years figures
are in brackets unless otherwise shown in separate columns). |
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| Source : Religare Technova | |
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