Background
TCI Industries Limited (the Company) is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed on Bombay Stock Exchange (BSE) in India. The registered office of the Company is located at 1-7-293, Mahatma Gandhi Road, Secunderabad-500 003, Telangana.
The Company is principally engaged in the rendering services by providing space for film shooting, TV serials and advertisements.
1. Significant Accounting Policies
1.1 Basis of preparation
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind-AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended).
The financial statements have been prepared on a historical cost basis, except for the freehold land, buildings and Plant & equipment which were revalued under the previous GAAP (Indian GAAP) and shown at revalued price deemed as cost.
2. Significant accounting judgements, estimates and assumptions
The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expense for the periods presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.
Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the company and that are believed to be reasonable under the circumstances.
Terms/rights attached to equity shares:
The Company has only one class of equity shares having a par value of INR 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. 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 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 shareholders.
Terms/rights attached to preference shares:
Each preference share has a par value of INR 100 per share issued at premium of Rs.300/- each. The preference shares rank ahead of the equity shares in the event of liquidation. The Preference shares issued are 0% Non-Convertible Redeemable Preference Shares. Each Preference shares shall be non-participating in the surplus-funds, not carry any dividend do not carry voting rights except in accordance with the provisions of Sec. 47 (2) of the Companies Act, 2013, be non-convertible and be redeemed within 20 years from the date of issue or on an earlier date only at the discretion of the issuer company, at a premium of 18% (Simple) p.a. on the issue price, payable at the time of redemption.
Note: During the year 2004-05, company had introduced a scheme duly approved by Hon’ble High Court of Andhra Pradesh at Hyderabad for consequential reduction of Capital whereby the company proposed the reduction, cancellation and extinguishments of small-lot of Shareholdings (Shareholders holding 10 or less than 10 no. of shares) subject to such terms and conditions as specified in the scheme at a predetermined price. At the same time the company had created the liability for making the repayment to shareholders called as "Payable as per Scheme of Arrangement 2003". The company is still making payments to the shareholders as and when the request is received.
Note 3- Earnings per share (EPS)
Basic EPS amounts are calculated by dividing the profit for the quarter attributable to equity holders by the weighted average number of Equity shares outstanding during the quarter.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of equity shares outstanding during the quarter plus the weighted average number of equity shares that would be issued on conversion of all dilutive potential Equity shares into Equity shares.
Note 4- Non-Convertible Redeemable Preference Shares:
During the year, Company has issued 28,159 0% Non-Convertible Redeemable Preference Shares of Rs. 100/- each at an issue price of Rs. 400/- each including premium of Rs. 300/- for consideration in cash, which are redeemable within 20 years from the date of issue or on an earlier date only at the discretion of the issuer company, at a premium of 18% (Simple) p.a. on the issue price, payable at the time of redemption. The Indian GAAP does not prescribe distinction between equity and liability of a financial instrument.
As per Ind-AS 32, a financial instrument may be classified as an equity or financial liability based on its substance rather than its legal form. The said Ind-AS 32 also explains when a financial instrument can be classified as equity or financial liability. To determine the classification of the said preference shares issued, the Company has taken a legal opinion relying on which the said preference shares have been classified as Equity.
Note 5- Contingent liability and commitments: (to the extent not provided for)
Claim against the company not acknowledgement as debt:-
a) The Hon’ble. Bombay High Court, by a judgment dated 1st March 2012, awarded a decree in favour of Cotton Corporation of India Ltd for Rs. 22,78,578/- which together with interest amount to Rs. 89,26,844/- as on 31st March 2013. The Company has filed in a earlier year SLP before the Hon’ble Supreme Court, against the said judgement, which has been admitted and stay has been granted on the execution of impugned decree. As directed by the Hon’ble Supreme Court an amount of Rs. 50 Lakhs has been deposited with Cotton Corporation of India Ltd. The SLP is pending for hearing.
b) The Brihanmumbai Electric Supply & Transport Undertaking of The Brihan Mumbai Mahanagarpalika filed in an earlier year writ petition in The Hon’ble Bombay High Court in respect of electricity charges of the Ex Workers of the Company. As per the directions given by the Hon. Bombay High Court, the BEST calculated and demanded a sum of Rs. 8,55,168/- comprising energy charges of Rs. 83,366/- and interest charges of Rs. 7,71802/-. The company has paid the energy charges and challenged the interest demand by way of a writ petition in the Hon. Bombay High Court and also deposited with BEST Rs. 2.50 Lakhs as per Court order. The writ is pending for hearing.
c) With regard to the proposed property development, the Hon. Bombay High Court in an earlier year rejected the writ petition filed by the Company upholding the rejection by Municipal Corporation of the plans submitted by the Company on the ground of absence of “No Objection” from the Defence /Navy. The Company has preferred SLP in the Hon. Supreme Court against the said order of Bombay High Court, which has been admitted and is pending for final hearing.
d) Municipal Corporation of Greater Mumbai in an earlier year revised property taxes in Mumbai with retrospective effect from 1st April 2010 by migrating to capital value system from erstwhile rateable value system. In terms of the same the company received notices from the corporation, from time to time, demanding tax of Rs. 36.51 lakhs for the period 1-4-2010 to 31-3-2015 for various structures.
Writ petitions were filed in Bombay High Court by certain parties challenging the said revision in property taxes and by an interim order, the property owners were allowed to pay taxes at old rate plus 50 % of the difference between old and revised rates, pending disposal of the writ petitions. In terms of which the Company paid property taxes for the period upto 31st March, 2015 amounting to Rs. 27.50 lakhs. For the financial year 2015-16 and 2016-17, the Corporation raised demand of Rs. 18.42 lakhs. However, the Corporation did not accept the payment as per the aforesaid interim order and accepted Rs. 4.21 lakhs only. The Corporation subsequently in the year 2017-18, accepted payment of Rs. 9.30 lakhs for the aforesaid period in terms of the interim order of Bombay High Court, in respect of the structures for which in earlier years it had not accepted payment.
The Company also received in earlier years notices from the Corporation demanding property tax under the capital value system as follows- (i) Rs. 201.10 lakhs per annum with retrospective effect from 1st April, 2010 to 31st March, 2015, and Rs. 281.55 lakhs for the year 2015-16, treating the property as Open land instead of structures as earlier assessed. The Corporation also during the year 2015-16, by its notices cancelled earlier demands/bills for the retrospective period of 2010-2015 amounting to Rs. 4.03 lakhs for structures, against which the Company had paid an amount of Rs. 3.00 lakhs as per the aforesaid court order. (ii) for the years 2016-17 & 2017-18 Rs. 289.75 lakhs per year on the basis of open land & structures.
(iii) for the year 2018-19 under review Rs. 289.75 lakhs treating the property as Open Land & Structures.
The company has filed with concerned authorities, from time to time it’s replies/ objections to the aforesaid notices which are to be heard. The Honourable Bombay High Court vide its judgment dated 24-4-2019 has disposed off all the above mentioned petitions filed by various parties & struck down certain rules regarding fixing of Capital Value of lands & buildings, made by the Corporation. The Company is consulting its lawyers and will thereafter decide on further course of action.
Capital Commitments:
The company has no other capital commitments requiring separate disclosure. Such capital commitments will be disclosed as and when it arises.
Note 6 - Financial risk management:
The Company has exposure to the following risks arising from financial instruments:
- Credit risk;
- Liquidity risk; and
- Market Risk - Interest rate
Risk management framework
The Companys board of directors have overall responsibility for the establishment and oversight of the Company’s risk management framework. The board of directors have authorized respective business Managers to establish the processes, who ensures that executive management controls risks through the mechanism of properly defined framework.
The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed by the business managers periodically to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
(i) Credit risk
The maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the Balance Sheet
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.
The Company’s Management has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes market check, industry feedback, past financials and external ratings, if they are available, and in some cases bank references. Receivable limits are established for each customer and any receivable exceeding those limits require necessary approval.
The gross carrying amount of receivables is Rs. 0.10 lakhs.
(ii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial assets. The Company’s approach to manage liquidity is to have sufficient liquidity to meet it’s liabilities when they are due, under both normal and stressed circumstances, without incurring unacceptable losses or risking damage to the Company’s reputation.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of 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 credit facilities.
Liquidity risk results from the Company’s potential inability to meet the obligations associated with its financial liabilities, for example settlement of financial debt and paying suppliers. The Company’s liquidity is managed by Company Treasury. The aim is to ensure effective liquidity management, which primarily involves obtaining sufficient committed credit facilities to ensure adequate financial resources and, to some extent, tapping a range of funding sources.
Net financial debt is used internally by Company Treasury to monitor the Company’s credit resources available. Net financial debt is the Company’s net interest-bearing debt, excluding interest-bearing assets, as these assets are not actively managed in relation to liquidity risk.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The contractual cash flow amounts are gross and undiscounted, and includes interest accrued but not due on borrowings.
(iii) Market risk
Market risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk namely: currency risk and interest rate risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
A. Currency risk
Currency risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. As the Company has taken borrowings in INR only, therefore, currency risk will not arise.
B. Interest rate risk
Interest rate risk is the risk that the 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 borrowings with floating interest rates.
Exposure to interest rate risk
The Company’s interest rate risk arises majorly from the carrying fixed rate of interest. These obligations exposes the Company to cash flow interest rate risk. The exposure of the Company’s borrowing to interest rate changes as reported to the management at the end of the reporting period are as follows:
Note 7 - Segment Information:
During the year, the Company operated in a single segment- “Income from rendering services by providing space for film shooting, TV serials and advertisements”. Therefore, separate segment disclosures have not been given.
Note 8- Related Party Disclosures*:
1. Key Management Personnel of the entity:
1. Shri S. K. Warerkar - Executive Director
2. Other Related Parties:
a. Individuals and their close family members:
b. Other related entities:
3. Related Party Transactions during the year:
(a) Key managerial personnel compensation
Note 9. Employee benefit obligations:
Defined benefit plans:
Gratuity
The Company operates a gratuity plan through the ‘TCI Industries Ltd Employees Group Gratuity Assurance Scheme’. Every employee is entitled to a benefit equivalent to 15 days salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972 or Company scheme whichever is beneficial. The same is payable at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after 5 years of continuous service.
Risk exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:
Interest rate risk: A fall in the discount rate which is linked to the G. Sec. rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.
Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan’s liability.
Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.
Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.
Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.
Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance company and a default will wipe out all the assets. Although probability of this is very less as insurance companies have to follow regulatory guidelines.
The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognised in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
Note 10 - Deferred Tax
As there is no reasonable certainty that sufficient future taxable income will be available against which deferred tax assets can be realized, no deferred tax assets have been recognized in the books.
Note 11 - Disclosure requirement under MSMED Act, 2006
As required to be disclosed under Micro, Small & Medium Enterprises Development Act, 2006 and to the extent such parties are identified on the basis of information available with the Company, there are no Micro enterprises or Small scale enterprises to whom the Company owes any due which are outstanding for more than 45 days as at 31st March 2019.
Note 12 - Authorisation for issue of the Financial Statements
The Financial Statements were authorised for issue by the Board of Directors on May 18, 2019.
Note 13 - Regrouped / Recast / Reclassified
Previous year figures been regrouped/rearranged wherever considered necessary.
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