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NOTES TO ACCOUNTS

ACCEL Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 35.63 Cr. P/BV 0.55 Book Value (₹) 11.36
52 Week High/Low (₹) 11/3 FV/ML 2/1 P/E(X) 6.93
Bookclosure 25/06/2018 EPS (₹) 0.90 Div Yield (%) 0.00
Year End :2018-03 

Company Information:

Accel Transmatic Limited (the company) is a public limited company domiciled in India and is listed in the Bombay stock exchange (BSE). The company presently offers animation services and engineering services from its facilities in Trivandrum and Chennai. The Company, as part of its business operations is also in the process of development of its surplus land both freehold and leasehold at Trivandrum.

i) Lease Hold Land

Land under Fixed Assets includes Rs.67.60 lacs being the value of land allotted and possession handed over by KINFRA Film & Video Park (KINFRA), a Government of Kerala Undertaking to the Company for construction of building to house its operations for which the registration formalities are yet to be completed. As per the agreement with " the party ", the said land is on a 90 year lease and has to be developed within a period of 3 years from the date of allotment i.e. on or before 05.04.2010. The said land could not be developed within the time frame agreed on account of the difficult scenario being faced by the Animation Industry in general and the company in particular. KINFRA , in the meantime has changed the status of the SEZ from Animation to include IT/ITES also. This has been approved by the Ministry of Industries & Commerce vide its letter dated 7th February 2012 . The company is taking steps in consultation with KINFRA, to obtained a Co-developer status and develop the land.

ii.) Impairment of Assets

In the opinion of the management there is no impairment as on the date of the balance sheet in the value of the carrying cost of Intellectual Property Rights (IPR) of the company within the meaning of Accounting Standard - 28 on Impairment of Assets issued under Companies (Accounting Standards) Rules 2006, considering the revenue earning potential of the company and based on the estimated future cash flows upon crystallization of enquiries received by the company for the intellectual property rights carried in the books as intangible assets.

iii.) Fixed assets , capital work in progress & Inventory of intangible assets

The animation division of the company is engaged in the development of Animation contents, which can be under a service / co production contract or for creating its own IPR. The cumulative expenses incurred under co production and IPR creation activities are carried forward under capital work-in-progress, till the assets are ready for commercial exploitation. The expenses incurred under service contracts are carried forward as work in progress inventories till the milestone billing are achieved. As a result Rs. Nil (PY Nil)are carried forward in the Accounts as at the year end.

During the year under review Rs.7,32,052/- has been incurred towards developmental expense for Gandhipuram land location at Thiruvananthapuram. The Closing work in progress stands at Rs.17,41,666/-

iv.) Land & Building

a. During the year under review the Company has disposed of land and building at 75, Nelson Manickam Road, Aminjikari, Chennai 600 029. (Land area 8000 sqft and building 14,850 sq ft). The resultant profit arising out of this transaction is reflected in other income.

b. The company has created a mortgage on one office building, in favour of the bank, towards banking facilities extended by the bank, to a subsidiary company.

(i) Investments in subsidiary and associates are stated at cost using the exemption provided as per Ind AS 27 "Separate Financial Statements"

(ii) The investment includes investment in Accel Frontline Limited(AFL) an erstwhile subsidiary company, which became a subsidiary of the JV partner, CAC Holdings Corporation, Japan, (CAC) and as a part of this arrangement , the company had signed a Shareholders' agreement with AFL and CAC and the company also had given certain Representations and Warranties and also given Indemnities. The JV Arrangement resulted in certain disputes in respect of Representation and Warranties and on account of litigation before NCLT as well as SIAC between parties , a settlement was arrived at between the Parties, warranting the company to transfer its balance holding in AFL, without any consideration, to a Trust during the financial year 2017-18, AFL being the beneficiary.

b. Terms / rights attached to equity shares Equity shares

The company has one class of equity shares having a par value of Rs. 2 each. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion to their shareholding.

d. During the period of five years immediately preceding the date at which the Balance Sheet is prepared , the Company has not

- alloted fully paid up shares pursuant to contract without payment being received in cash.

- alloted fully paid up shares by way of bonus shares and

- brought back shares

Details of Security

(i) Asset Backed Loan

(a) The Asset Backed Loan (ABL) from bank is secured by equitable mortgage of Company's immovable properties and corporate guarantee by the Company and personal guarantee by the Promoter Director. ABL has fully being repaid before close of year ended 31st March, 2018.

(b) Closure of Loans:

The Asset Backed Loans has been fully repaid on 06-11-2017 and the overdraft / loan was a availed form The Federal Bank Limited, RM Nagar, Chennai secured against fixed deposit of RS.1 Crore.

( c) Charge Creation:

The charge against Asset Backed Loan as per MCA database has been closed on 04-01-2018

(ii) HP Loan

The HP Loan is availed from Kotak Mahindra Prime and The Federal Bank Limited Secured against Vehicle purchased against the respective loan.

Dues to Micro , Small & Medium Enterprises

The company has initiated the process of identifying the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act 2006. Since no intimation has been received from the suppliers regarding their status under the said Act as at 31st March 2018 , disclosures relating to amounts unpaid as at the year end, if any, have not been furnished. In the opinion of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material.

(i) Revenue from operations, computed in accordance with IndAS "Revenue", for the current year is not comparable with previous year since the same is net of Goods & Service Tax (GST) whereas excise duty form part of expenses in previous year and current year (upto 30th June, 2017) (Iby way of a Settlement Agreement and Release dated 15.03.2017, signed by and between the company, Accel Limited and other Promoters M/s. CAC Holdings Corporation, Japan and Accel Frontline Limited, a settlement has been arrived at wherein all the parties have withdrawn their disputes and the litigation and as a part of the settlement, the company had transferred its holding in Accel Frontline Limited to a Trust without any consideration, the beneficiary of which will be Accel Frontline Limited. The accounts includes loss on disposal of shares amounting to Rs.7,38,33,247/-which has been shown under Exceptional Items.

2.Tax Expenses

Provision for current tax is made on the basis of the assessable Income and /or Mat Provisions, at the tax rate applicable to the relevant assessment year. No tax provision is made under normal as well under MAT considering the brought forward losses of the company as a whole. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date The net Deferred Tax Asset at the year end is not recognized as a matter of prudence.

Sensitivity Analysis

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:

3. Dividend

The Board of directors of the Company in its meeting held on 30th May 2018 has declared an interim dividend of 20% (Rs.0.40 per equity share) to equity shareholders amounting to Rs.22,802,960.40 and the same will be paid out of the profits of the company for the year ending 31st March 2018 subject to DDT.

4. Financial risk management

The company presently offers animation services and engineering services from its facilities in Trivandrum and Chennai. The Company, as part of its business operations is also in the process of development of its surplus land in the factory area located at Sreekariyam, Trivandrum.

The company has exposure to the following risks:

(1) Credit Risk

(2) Liquidity Risk

(3) Market Risk

(1) Credit Risk

Credit risk is a risk that counter party will not meet its obligation under the financial instrument or customer contract leading to financials loss. This risk consists primarly of default being experienced in trade receivables. The Company has provided for expected losses and hence there is no significant credit risk to the company. Before accepting any new customer, Company asses the potential customer's credit quality.

(2) Liquity Risk

Refers to risk the company cannot meet its financial obligations. Since the Company has access to Varity sources of funding and is also continuously monitoring actual cash flows, this is not a significant risk to the company.

(3) Market Risk

Market risk is that the fair value of the future cash flows of financials instrument will fluctuate because of changes in market price. However this is not a significant risk since the company has provided in the books the fluctuation in market price of financial instruments as on the date of balance sheet for Mutual Funds.

5. GENERAL

The comparative financial information of the Company for the year ended 31 March 2017 and the transition date opening balance sheet as at 01 April 2016 included in these Standalone Ind AS Financial Statements, are based on the previously issued Statutory Financial Statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by the predecessor auditor whose report for the year ended 31 March 2017 and 31 March 2016 dated 25 May 2017 and 14 July 2016 respectively expressed an unmodified opinion on those Standalone Financial Statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by statutory auditors.

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