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NOTES TO ACCOUNTS

Navkar Urbanstructure Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 178.36 Cr. P/BV 4.25 Book Value (₹) 21.12
52 Week High/Low (₹) 95/13 FV/ML 10/1 P/E(X) 350.39
Bookclosure 28/12/2020 EPS (₹) 0.26 Div Yield (%) 0.00
Year End :2018-03 

Note 1 : Company Overview

Navkar Corporation Limited (“the Company”) is a public limited Company domiciled in India having its registered office at 205-206, J. K. Chambers, Sector-17, Vashi, Navi Mumbai, - 400 705. The Company was incorporated on September 29, 2008 under the provision of the Companies Act, 1956. The Company is engaged in providing Container Freight Station (CFS) facilities and Inland Container Depot (ICD) and is focused on capitalizing the available opportunities in the logistics space in western India. Our CFS is largely dependent on EXIM container traffic in and out of Indian port - JNPT. The equity shares of the Company were listed on The National Stock Exchange of India Limited and BSE Limited on September 9, 2015.

Notes:

a) The Investment Property consist of Land and Land Developments.

b) Gross carrying amount of Investment Property includes certain land and development having gross block value of Rs. Nil (March 31, 2017: Rs. 278.48 lakhs) situated at different locations, which are in the name of the Directors of the Company and are yet to be transferred in the name of the Company.

c) The Board of Directors has decided in the meeting held on November 25, 2016 for development of Residential Township on approximately 45 acres of land of the Company situated at Narpoli and Dahivali in Panvel, District Raigarh, Maharashtra, located in close proximity to the other residential projects.

d) Amounts are recognised in the statement of profit and loss for the above investment properties is Rs. Nil during the financial year ended March 31, 2018 and March 31, 2017.

f) Description of valuation techniques used and key inputs to valuation on investment properties

As at March 31, 2018 and March 31, 2017, the fair values of the properties are Rs. 11,779.06 lakhs and Rs. 10,968.40 lakhs respectively. These valuations are based on valuations performed by Ramachandra & Associates, an accredited independent valuer. Ramachandra & Associates is a specialist in valuing these types of investment properties.

(a) Terms / rights attached to:

Equity Shares

The Company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts in proportion to their share holding.

(d) Pursuant to approval of the shareholders of the Company accorded in the Annual General Meeting of the Company held on August 24, 2017, the Board of Directors, on November 01, 2017, has issued and allotted 79,11,158 Equity Shares of Rs. 10 each of the Company at an issue price of Rs. 183/- per Equity Share (including premium of Rs. 173/- per Equity Share) to Qualified Institutional Buyers pursuant to the Qualified Institutions Placement under Chapter VIII of the Securities Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, Section 42 of the Companies Act, 2013 and other applicable provisions and rules made thereunder.

The gross proceeds of QIP issue Rs. 14,477.42 lakhs has been utilised for the objects stated in the Placement Document dated October 30, 2017 and there has been no deviation in the use of QIP proceeds from the objects stated therein.

(e) Shares allotted as fully paid up equity shares as bonus issue (during 5 years immediately preceding March 31, 2018):

91,420,665 Equity Shares of Rs. 10 each fully paid up were issued as bonus shares on March 3, 2015 in the ratio of five fully paid up equity share for every equity share held on March 2, 2015, being the record date through capitalisation of surplus from the Statement of Profit and Loss.

Note:

The Company has issued redeemable non-convertible Preference Share. Accordingly, the Companies (Share Capital and Debentures) Rules, 2014 (as amended), require the Company to create CRR out of profits of the Company available for payment of dividend. CRR is required to be created for an amount which is equal to 100% of the amount to be redeemed of Preference Shares issued at the time of maturity. The CRR is required to be created over the life of Preference Share, the Company has created CRR out of retained earnings for an proportionate amount (March 31, 2018: 44.8% and March 31, 2017: 36.46% ).

(c) Nature of security and terms of repayment for Preference Share :

0% Cumulative Redeemable Preference Shares: The Company has one class of preference shares having a par value of ‘

10 per share. They have been issued for a period of 12 years and are redeemable thereafter. These shares do not carry any dividend. In the event of liquidation, the preference shareholders are eligible to receive repayment of the capital. They do not have any rights to participate in the profits or assets of the Company. The effective interest rate used for these shares are 12.00% p.a.

6% Cumulative Redeemable Preference Shares

The Company has one class of preference shares having a par value of Rs. 100 per share and the same would be redeemed at the end of 10 years from the date of allotment. In the event of liquidation, the preference shareholders are eligible to receive repayment of the capital along with the dividend. They do not have any rights to participate in the profits or assets of the Company. Also the Company has call option to redeem the preference shares at any time after the end of one year from the date of allotment. The effective interest rate used for these shares are 12.00% p.a.

Shares allotted as fully paid up 6% Cumulative Redeemable Preference shares pursuant to the ‘Scheme of Amalgamation (during 5 years immediately preceding March 31, 2018):

99,790 6% Cumulative Redeemable Preference shares of Rs. 100 each fully paid up were issued to the erstwhile shareholders of Navkar Terminals Limited pursuant to the ‘Scheme of Amalgamation’ between the Company, Navkar Terminals Limited and their respective shareholders without payment being received in cash.

Note:

(a) These facilities are secured against the following charge on various assets of the Company :

1. Primary : Hypothecation charge on the entire current assets of the Company, both present & future.

2. Collateral :

Office number 1303, 1304 on 13th floor of the building known as Goodwill Infinity on the land bearing plot no. E/3A Sector 12, Kharghar, Navi Mumbai.

Exclusive charge on the below mentioned assets :

1) Kalmar bearing registration number NL 02-L-1411 (Model no. DRF 450 65S5)

2) Kalmar bearing registration number NL 02-L-0425 (Model no. DRF 450 65S5)

3) Kalmar bearing registration number NL 02-L-0424 (Model no. DRF 450 65S5)

4) Kalmar bearing registration number MH 46 B1546 (Model no. DRF 450 65S5)

5) Kalmar bearing registration number MH 46 B1548 (Model no. DRF 450 65S5)

6) kalmar bearing registration number MH 46 B1549 (Model no. DRF 450 65S5)

3. A undated cheque issued in the favour of bank of facility amount.

4. Personal Guarantees of Mr. Shantilal J Mehta.

(b) Working Capital Loan from HDFC Bank amounting to Rs. Nil (March 31, 2017 1,013.93 lakhs) repayable on demand.

At March 31, 2018, the Company had available Rs. Nil. (March 31, 2017: Rs. 524.50 lakhs) of undrawn committed borrowing facilities.

Note:

The Company has taken appropriate steps for refund of share application money received in Initial Public Offering in case of unallotted/ partially allotted applications. The balance is kept in a separate bank account ‘Share Application Money Refund Account’ and the Company can not freely use this amount.

Note: The above other financial liabilities includes Foreign Currency Forward and Options Contracts. Only observable inputs directly and indirectly are available to recognise the same at fair value, accordingly fair value measurement is done considering the Level -2 of Fair Value Hierarchy as per the Ind-AS 113.

Note 2 : Financial Risk Management Objectives and Policies

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support its operations directly or indirectly. The Company’s principal financial assets include investments, loans, trade and other receivables, cash and cash equivalents that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The below note explains the sources of risk which the entity is exposed to and how the entity manages the risk :

Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions and other financial instruments.

Trade receivables

Customer credit risk is managed by the Company’s established policy, procedures and control relating to customer credit risk management. The Company is in the business of CFS activities. Credit quality of a customer is assessed by the management on regular basis with market information and individual credit limits are defined accordingly. Outstanding customer receivables are regularly monitored and any further services to major customers are approved by the senior management.

An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 10.

On account of adoption of Ind-AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors and the Company’s historical experience for customers.

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s finance department in accordance with the Company’s policy. Investments of surplus funds are made generally in the fixed deposits. The investment limits are set to minimise the concentration of risks and therefore mitigate financial loss to make payments for vendors.

The Company’s maximum exposure to credit risk for the components of the balance sheet at March 31, 2018 and March 31, 2017 is the carrying amounts as stated in balance sheet .The Company’s maximum exposure relating to financial derivative instruments is noted in the liquidity table below.

Liquidity Risk

The Company monitors its risk of a shortage of funds using a liquidity planning tool.

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans, preference shares and unsecured loans. The Company has access to a sufficient variety of sources of funding which can be rolled over with existing lenders. The Company believes that the working capital is sufficient to meet its current requirements.

Market risk comprises two types of risk: interest rate risk and currency risk. Financial instruments affected by market risk include loans and borrowings, deposits and derivative financial instruments.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Company’s policy is to keep balance between its borrowings at fixed rates of interest. To manage this, the Company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected, after the impact of hedge accounting. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings, as follows:

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the borrowings converted in the foreign currency and purchase of stores and spares from out of the India. The Company manages its foreign currency risk by hedging repayment of principals that are expected to be paid within the period of loan. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. The Company hedges its exposure to fluctuations on the translation into ‘ of its foreign payables in foreign currencies and by using foreign currency option and forward contracts.

Foreign Currency Sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in foreign exchange rate, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities.

Note 3 : Capital Management

For the purpose of the Company’s capital management, capital includes issued equity share capital, securities premium and all other reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximise the value of the share and to reduce the cost of capital.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company can adjust the dividend payment to shareholders, issue new shares, etc. The Company monitors capital using a gearing ratio, which is net debt divided by total equity. The Company includes within net debt, interest bearing loans and borrowings, less cash and cash equivalents.

Note 4 : Segment Information:

Information about Primary Business Segment

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. The Company is engaged in CFS Operations and related activities during the year, consequently the Company does not have separate reportable business segment for the year ended March 31, 2018.

Information about Secondary Geographical Segment

The Company is engaged in providing services to customers located in India, consequently the Company does not have separate reportable geographical segment for the year ended March 31, 2018.

Note 5 : Merger of Subsidiary Company:

Board of Directors in their meeting held on March 30, 2017 approved the Scheme of Amalgamation of Navkar Terminals Limited (‘NTL’) with the Company (‘the Scheme’). The Company holds 50,000 equity shares fully paid up in NTL, representing 100% of the total paid up equity share capital of NTL, which shall stand extinguished upon the Scheme becoming effective. The Scheme has been approved by the shareholders of both the companies and other regulatory authorities as prescribed in the law. The scheme was approved by the NCLT by its order dated March 28, 2018.

Pursuant to the Scheme, all assets and liabilities of the Transferor Company has been transferred to and vested in the Transferee Company on the appointed date (i.e. March 1, 2016) at their book values. The Transferee Company has issued one fully paid up 6% Cumulative Redeemable Preference Shares of Rs. 100 each for every Preference Shares of Rs. 100 each held in the Transferor Company pursuant to the Scheme. As per the NCLT order, this amalgamation is in nature of merger and the accounting treatment is to be given using the ‘Pooling of Interest Method of Accounting’. The details of assets and liabilities transferred by the Transferor Company as a result of amalgamation are as under:

Accordingly, the Company has given effect in the financial statements with effect from March 1, 2016, being the Appointed Date, as provided in the Scheme. Therefore, the figures for the previous year ended March 31, 2017 have been restated considering the effect of amalgamation.

Note 6 : Employee Benefits:

The Company has classified the various benefits provided to employees as under:

I. Defined Contribution Plans

a. Employers’ Contribution to Provident Fund and Employee’s Pension Scheme

b. Employers’ Contribution to Employee’s State Insurance

During the year, the Company has incurred and recognised the following amounts in the Statement of Profit and Loss:

III. Other Employee Benefit

The liability for leave entitlement as at March 31, 2018 is Rs. 67.13 lakhs (March 31, 2017: Rs. 51.57 lakhs) disclosed under Long Term Provisions (Refer Note 19) and Short Term Provision (Refer Note 25).

IV. Sensitivity Analysis

The below sensitivity analysis are based on a 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 recognised in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

Note 7 : Expenditure on Corporate Social Responsibility:

As per Section 135 of the Companies Act, 2013, a Company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the Company as per the Act. The Company is spending amount for these activities, which are specified in Schedule VII of the Companies Act, 2013.

(a) Gross amount required to be spent by the Company during the year Rs. 216.11 Lakhs (previous year Rs. 205.38 Lakhs)

(b) Amount spent during the year on:

Note 8 : Qualified Institutional Placement:

Pursuant to approval of the shareholders of the Company accorded in the Annual General Meeting of the Company held on August 24, 2017, the Board of Directors, on November 01, 2017, has issued and allotted 79,11,158 Equity Shares of Rs. 10 each of the Company at an issue price of Rs. 183/- per Equity Share (including premium of Rs. 173/- per Equity Share) to Qualified Institutional Buyers pursuant to the Qualified Institutions Placement under Chapter VIII of the Securities Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, Section 42 of the Companies Act, 2013 and other applicable provisions and rules made thereunder.

The gross proceeds of QIP issue Rs. 14,477.42 lakhs has been utilised for the objects stated in the Placement Document dated October 30, 2017 and there has been no deviation in the use of QIP proceeds from the objects stated therein.

Note 9 : Previous Years’ Figures:

The financial statements have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS) prescribed under Section 133 of the Companies Act, 2013 and other recognised accounting practices and polices to the extent applicable. The Company has adopted Ind-AS on April 1, 2016 with the transition date as April 1, 2015, and adoption was carried out in accordance with Ind-AS 101 - First Time Adoption of Indian Accounting Standards. The previous period’s figures have been regrouped or rearranged wherever necessary.

The accompanying notes are an integral part of the these financial statements

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