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NOTES TO ACCOUNTS

Adlabs Entertainment Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 18.49 Cr. P/BV 0.40 Book Value (₹) 5.28
52 Week High/Low (₹) 15/2 FV/ML 10/1 P/E(X) 0.00
Bookclosure 01/08/2019 EPS (₹) 0.00 Div Yield (%) 0.00
Year End :2018-03 

1) CORPORATE INFORMATION:

Adlabs Entertainment Limited (the Company) is a public limited company incorporated and domiciled in India whose shares are publicly traded. The registered office is located at 30/31, Sangdewadi, Off Mumbai- Pune Express Highway, Khopoli Pali Road ,Khalapur, Pin- 410203.

The Company is engaged in the business of development and operations of theme based entertainment destinations in India, including theme parks, water parks, snow park and associated activities including retail merchandising and food and beverages. The flagship project of the company is located at Khalapur, on Mumbai Pune Expressway and is branded ''Imagica - Theme Park" for the theme park component, "Imagica - Water Park" for the water park component and "Imagica - Snow Park" for the snow park component. During the F.Y 2015 2016 the company has launched Hotel at the same location by the name " Novotel Imagica" with 116 room out of 287 rooms in the first phase.

(b) Terms/ rights attached to equity shares

The Company has only one class of equity shares having par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. 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.

Estimated amount remaining to be executed on capital account and not provided for is Rs. 428.39 Lakhs as on 31st March, 2018.

The timing differences result in a net deferred asset, relating mainly to unabsorbed depreciation and carried forward losses under the Income Tax Act, 1961.

The management of the company expects following business changes

- 171 hotels rooms (balance 60% of Total rooms) shall be operational in FY 2018-19 and will result in higher revenues in the coming years and ahead.

- The aggressive cost reduction efforts by the Company have resulted in lower fixed costs compared to previous year.

- The Company has chalked out a comprehensive plan to ramp up footfalls for FY 2018-19 onwards, which is expected to result in a revenue growth.

NOTE 2: DETAILS OF DUES TO MICRO AND SMALL ENTERPRISES AS PER MSMED ACT, 2006

Under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) which came into force from 2nd October, 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises (MSME). On the basis of the information and records available with the Company, the following disclosures are made for the amounts due to the Micro and Small enterprises.

NOTE 3: LEASE

(a) Where the Company is a Lessee:

The Company has taken certain assets like Land, Office premises, furniture and fixtures and apartments on lease. They are on rental lease term which range between 10 months to 5 years. The lease rentals expense during the year amount to Rs. 140.74 Lakhs.

The above lease payments are exclusive of service tax / GST.

(b) Where the company is a Lessor:

The Company has given on lease three premises / place for period of 5 years to 15 years. The lease rentals income during the reporting year amount to Rs. 13.66 Lakhs.

NOTE 4: POST RETIREMENT BENEFIT PLANS

Defined Benefits Plan:

Gratuity:

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. The gratuity plan is funded through an 'Approved Trust'. The Trust has taken a Policy from the HDFC Life Insurance and the management / investment of the fund is undertaken by the insurer.

The Company Contributes all ascertained liabilities towards gratuity to the " Adlabs Entertainment Limited Employee's Gratuity Trust " Trustee Administer contributions made to the trust as of 31st March, 2018 and 31st March, 2017, the plan assets have been primarily invested in insurer -managed funds.

As per Actuarial Valuation as on 31st March, 2018 and 31st March, 2017 and recognised in the financial statements in respect of Employee Defined Benefit Schemes:

Note

1. Figures in the bracket represent previous year figures

2. The Company has paid the Consultancy fees to Ms. Aarti Shetty Rs. 35.18 Lakhs (P.Y. Rs. 60.32 Lakhs), and Ms. Pooja Deora Rs. 11.58 Lakhs (P.Y. Rs. 60.33 Lakhs).

3. The Company has paid the Remuneration to Mr. Kapil Bagla Rs. 91.08 Lakhs (P.Y. Rs. 134.32 Lakhs), Mr Harjeet Chhabra Rs. Nil (P.Y. Rs. 52.99 Lakhs), Mr Ashutosh Kale Rs. 52.57 Lakhs (P.Y. Rs. 36.53 Lakhs), Mr Rakesh Khurmi Rs. Nil (P.Y. Rs. 35.74 Lakhs), Mr. Dhimant Bakshi Rs. 71.36 Lakhs (P.Y. Rs. 33.15 Lakhs )and Mr. Mayuresh Kore Rs. 53.06 Lakhs (P.Y. Rs. 26.12 Lakhs)

4. The Company has paid Rent for use of office premises located at 9th floor, Lotus Business Park, New Link Road, Andheri-West, Mumbai-400053. to Mr.Manmohan Shetty amounted to Rs. 105.53 Lakhs (P.Y. Rs. 116.29 Lakhs) and rent paid towards use of furniture and fixtures to Walkwater Properties Pvt. Ltd. amounted to Rs. 10.53 Lakhs (P.Y. Rs. 21.80 Lakhs).

5. The Company has paid royalty of Rs. 1.18 Lakhs (P.Y. Rs. 1.15 Lakhs) to Mr. Manmohan Shetty.

6. The Company has paid Interest of Rs. 515.54 Lakhs (P.Y. Rs. 878.68 Lakhs) on Loan taken from Mr. Manmohan Shetty .

7. The Company during the year made 100% investment in M/s Blue Haven Entertainment Pvt. Ltd. with total consideration of Rs. 1.00 Lakh.

8. The leasehold Assets purchased from Walkwater Properties Pvt. Ltd for the total Consideration of Rs. 54.00 Lakhs , and adjusted against Security Deposit.

NOTE 5: FAIR VALUE MEASUREMENT

Financial Instrument by category and hierarchy

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying amounts largely due to short term maturities of these instruments.

2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments is not materially different from their carrying amounts.

The fair values for Non-Current borrowings, loans and security deposits were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

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

NOTE 6: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company's financial risk management is an integral part of how to plan and execute its business strategies. The Company's financial risk management policy is set by the Management Board.

Market Risk is the risk of loss of future earning, fair values or future cash flow that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market Risk is attributable to all market risk sensitive financial instruments including investment and deposits , foreign currency receivables, payables and loans and borrowings.

The Company manages market risk through its finance department, which evaluate and exercises independent control over the entire process of market risk management. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.

Interest Rate Risk:

Interest rate risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Foreign Currency Risk:

The Company is not exposed to significant foreign currency risk as at the respective reporting dates.

Liquidity Risk:

Liquidity Risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company's finance department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company's net liquidity through rolling forecasts on the basis of expected cash flows.

Credit Risk:

Credit risk arises from the possibility that counter party may not be able to settle their obligation as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking in to account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limit are set accordingly.

NOTE 7: CAPITAL RISK MANAGEMENT

The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to our shareholders.

The capital structure of the Company is based on management's judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. The Company may take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

NOTE 8: SEGMENTAL REPORTING

DISCLOSURES AS REQUIRED BY INDIAN ACCOUNTING STANDARD (Ind AS) 108 OPERATING SEGMENTS

Operating Segments:

Tickets : Theme Park, Water Park and Snow Park

Food and Beverage : Park Restaurant and Hotel Restaurant

Merchandise : Park Merchandise and Hotel Merchandise

Rooms : Hotel Accommodation

Other Operations : Parking, Lockers, Sponsorship, SPA, Revenue Sharing agreements

& Lease Rentals

Identifications of Segments :

The chief operational decision maker monitors the operating results of its Business segment separately for the purpose of making decision about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements, Operating segment have been identified on the basis of nature of products and other quantitative criteria specified in the Ind AS 108.

Segment revenue and results:

The expenses and income which are not directly attributable to any business segment are shown as unallocable expenditure & income. Segment assets and liabilities:

Segment assets include all operating assets used by the operating segment and mainly consist of property, plant and equipments, trade receivables, Inventory and other operating assets. Segment liabilities primarily includes trade payable and other liabilities. Common assets and liabilities which can not be allocated to any of the business segment are shown as unallocable assets / liabilities.

NOTE 9:

The Term Loan facility availed by the Company is secured by pari passu first charge on movable and immovable fixed assets of the Company including mortgage of 298 acres of land (137 acres of land held by Walkwater Properties Pvt. Ltd., wholly owned subsidiary of the Company) to consortium lead by Union Bank of India in favour of IDBI Trusteeship Services Ltd.

The said loan is also secured by first pari passu charge on Current assets of the Company.

Term Loan availed from Banks will be repaid over period of 5 to 10 years in unequal monthly installments starting from April 2017.

Term Loan availed from Financial Institutions will be repaid over period of 10 years in unequal monthly installments starting from April 2015.

Interest rate on term loan taken from Banks and Financial institutions varies from one year MCLR plus 2.25 to 2.50.

NOTE 10:

The Company equity shares are in dematerialized form with the Central Depository Services (India) Limited (CDSL) and with National Securities Depository Limited (NSDL) having ISIN No. INE172N01012.

NOTE 11:

The Company has entered into settlement agreement with I.E Park, whereby the Company has settled dispute for EURO 4,50,000 being EURO 1,50,000 as compensation and EURO 3,00,000 in the form of discount on future purchase of rides/equipment.

The Compensation received (net of expenses incurred) is grouped under the head Other Income.

NOTE 12:

With a view to reduce debt, the Company has decided to off load its non core assets as under:

a) The Company has entered into a term sheet with Shaan Agro and Realty Private Limited (SARPL) for sale of 65 acres Surplus land and 100% investment in wholly owned subsidiary M/s Walkwater Properties Private Limited (WPPL) for ' 15,000 Lakhs. However, the closure of the said transaction depends upon the No Objection Certificate from Lenders. Therefore, the Company has not yet classified the Land and investment in subsidiary as "held for sale" in terms of para 6 of Ind AS 105 as "Non Current Assets held for sale and discontinued operations"

b) Further, the company has entered into a term sheet with Bright Star Investments Private Limited for sale of its Hotel Segment. However, the closure of the said transaction depends upon the No Objection Certificate from Lenders and consent to operate for of 171 rooms from Maharashtra Pollution Control Board. Consequently, the asset along with liabilities, revenue and expenses related thereto have not been classified as assets "held for sale" in terms of para 6 of Ind AS 105 as "Non Current Assets held for sale and discontinued operations"

Upon effective completion of the said transaction, the Company anticipates a positive impact on the overall financial position.

NOTE 13:

The Company has entered into a Share cum Warrant Subscription Agreement dated 19th June, 2017 with BENNETT COLEMAN AND COMPANY LIMITED ( BCCL ) to subscribe to,

- 12,48,684 equity shares for Rs. 95/- per share for an aggregate consideration of Rs.1,186.25 Lakhs.

- 5 ( Five ) Warrants for Rs.2,37,25,000/- per Warrant.

On 20th June, 2017, Company has allotted 12,48,684 equity shares at Rs.95/- per share (Premium ' 85/- per share) and 5 ( Five ) Warrants for Rs.2,37,25,000/- per Warrant (Premium Rs.2,37,24,990/- per warrant).

Utilisation of funds received through preferential issue of Equity Shares and Warrants in the following table:

NOTE 14:

On 15th December, 2017, Company has allotted 69,15,629 equity shares of FV Rs.10 each at a price of Rs.72.30/- per share (Premium Rs.62.30/- per share) to Shaan Agro and Realty India Private limited for an aggregate consideration of Rs.5,000.00 Lakhs

NOTE 15:

Thrill Park Limited has filed a suit bearing no. 270/2013 against Dr. Bhakti Kumar Dave and 77 other defendants (land owners) in the Court of Civil Judge, Senior Division, Panvel for specific performance of contract. Thrill Park Limited had entered into a letter of commitment and memorandum of understanding (as amended from time to time) with Dr. Bhakti Kumar Dave whereby Dr. Bhakti Kumar Dave agreed to buy certain parcels of land on behalf of Thrill Park Limited from the other defendants. However, Dr. Bhakti Kumar Dave did not fulfill his obligations under the letter of commitment and the memorandum of understanding. Therefore, Thrill Park Limited filed a suit for specific performance.

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