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HOME / MARKET TODAY / COMPANY SNAPSHOT / NotestoAccount

NSE BSE
17.4 -0.40 (-2.25%)
Last Updated on: 19 Dec 2014 15:58 Hrs
17.4 -0.45 (-2.52%)
Last Updated on: 19 Dec 2014 15:56 Hrs
Himachal F. Comm NotestoAccount March 2014 
A Equity Shares

(i) Nil (Previous year 278,180) shares of Rs. 1/- each represent Global Depository Receipts.

(ii) 1,45,50,000 (Previous year 1,45,50,000) shares of Rs. 1/- each issued for consideration other than cash pursuant to the amalgamation of erstwhile Himachal Telematics Ltd. with the Company.

(iii) 52,96,01,640 shares of Rs. 1/- each have been allotted for a consideration other than cash pursuant to the Composite Scheme of Arrangement and Amalgamation between Sunvision Engineering Company Private Limited (SECPL), its Share holders &the Optionally Convertible Debenture (OCD) holders and the Company & its Shareholders, sanctioned by the Hon'ble High Court of Himachal Pradesh at Shimla vide its Order passed on 5th January, 2011.

B Preference Shares

The Cumulative Redeemable Preference Shares (CRPS) aggregating to Rs. 80.50 crore 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 6.50% from new cut off date i.e. 1st January, 2011 as mentioned in the rework package approved by the CDR EG on 29.03.2011. However, dividend accrued on notional basis, as same has not been declared and fallen due for payment, and penal interest thereon, till the cut-off date, stands waived as per CDR rework package.

E Terms/right attached to Equity/Preference Shares

The Company has issued equity share of Rs. 1/-each and preference share of Rs.100/-each. On a show of hands, every holder of equity shares is entitled for one vote and upon a poll shall have voting rights in proportion to the shares of the paid up capital of the Company held by them. Preference shareholders shall have voting right in proportion to the shares of the paid up capital provided if the dividend due on such capital or any part of such dividend has remained unpaid. The Company declares dividend, if any, in Indian Rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of shareholders in the 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 amount in proportion to their shareholdings.

Secured Long Term Borrowings

a) Term loan of Rs.63.28 crore (Previous year Rs.71.19 crore) and Funded interest term loan of Rs.28.92 crore (Previous yearRs. 33.92 crore) from one of the bank are secured on pari passu basis by way of first charge on all the immovable properties, both present and future, by way of equitable mortgage and first charge on the entire sales proceeds of the contracts covered under the aforesaid loan to be credited to the Escrow/designated account.

b) Term loan of Rs.18.69 crore (Previous yearRs.21.02 crore) from a bank, Working capital term loan ofRs.14.56 crore (Previous year Rs.16.38 crore) and Funded interest term loan of Rs.31.06 crore (Previous year Rs. 31.06 crore) are secured by way of pledge of shares and also secured on pari passu basis by way of hypothecation of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. as well as by way of second charge on immovable properties pertaining to the Company.

c) Working capital term loans of Rs.20.09 crore (Previous year Rs.22.57 crore) from banks and Funded interest term loans of Rs.20.77 crore (Previous year Rs.20.77 crore) are secured on pari passu basis by way of hypothecation of stocks of raw materials, finished and semi- finished goods, stores and spares, book debts etc. as well as by way of second charge on immovable properties pertaining to Wireline, Wireless and Cable divisions of the Company.

d) All the secured loans from banks are secured by Pledge of equity shares up to 51 % (239700000) of new co-opted promoters.

e) All the secured loans as stated above are also personally guaranteed by Managing Director of the Company.

f) Term loans and FITLare repayable in 7 years/3 years commencing from Financial year2012-13/2016-17 with rate of Interest @10% p.a. or at the rate as re-set by the lenders as detailed herein below:

Secured Short Term Borrowings

Working capital loans from banks aggregating to Rs.33.86 crore (Previous year Rs. 30.67 crore) are secured on pari passu basis by way of hypothecation of stocks of raw materials, finished and semi-finished goods, stores and spares, book debts etc. as well as by way of second charge on immovable properties pertaining to Wireline, Wireless and Cable Divisions of the Company and further secured by way of pledge of equity shares up to 51% (239700000) of new co-opted promoters and are also personally guaranteed by Managing Director of the Company.

(Rs. in crore)

As at As at

NOTE 2 Contingent Liabilities not provided for in respect of 31.03.2014 31.03.2013

(a) Unexpired Letters of Credit (margin money paid Rs.7.61 crore ; Previous year Rs.1.82 crore) 26.54 1.82

(b) Guarantees given by banks on behalf of the Company (margin money kept by way of fixed 56.03 32.93 deposits Rs.15.79 crore; Previous year Rs.10.64 crore)

(c) Counter Guarantees given by the Company to the financial institutions/banks for providing 20.16 20.16 guarantees 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)

(d) Arrears of Dividend on Cumulative redeemable preference shares - 18.90

NOTE 3 Interest charges on loans is net of Interest income from loans and advances amounting to Rs.0.43 crore (Previous year Rs.0.45 crore).

NOTE 4 The disclosures as per the Accounting Standard 7 on 'Construction Contracts' issued by the Institute of Chartered Accountants of India are as under:

NOTE 5 (a) Debt of the Company were earlier restructured under Corporate Debt Restructuring (CDR) mechanism in April 2004 which was subsequently modified in June 2005 with cut-off date as 1st April, 2005. CDR Empowered Group at its meeting held on 9th February, 2011 has approved the Rework Package of the Company with the cut off date as 1st January 2011 and communicated its sanction vide their letter No. BY CDR(JCP)/No 8643/2010-11 dated 29th March, 2011. The Rework Package includes inter-alia reduction in the existing rate of interest, re-schedulement for repayment of loans, conversion of overdue interest into funded interest term loan (FITL), conversion of Zero Coupon Premium Bonds (ZCPB's), part of their premium and part of working capital loans into Equity, conversion of part of working capital loan into working capital term loan (WCTL), waiver of unpaid dividend on preference shares, waiver of penal interest etc. The conditions as stipulated by CDR EG while sanctioning Rework Package have been complied with by the Company. Accordingly, the impact of the rework package has been considered in the Financial Statements.

(b) Subsequent to the implementation of Rework Package, lenders have reset the rate of interest on certain loans in view of improved performance of the Company.

(c) Further, lenders have the right to claim recompense from the Company on account of various sacrifices & waivers made by them in the CDR Rework Package. The amount of recompense and the manner of repayment shall be ascertained upon exit from CDR mechanism by the Company.

NOTE 6 Pursuant to the disinvestment by the Government of India, the Company had acquired 11,10,000 equity shares of Rs.100/- each of HTL Limited representing 74% of its equity capital at total consideration of Rs. 55.00 crore 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 Hon'ble Arbitral Tribunal has since given the award in favour of the Company on 12th October, 2007 upholding the claim of the Company on account of the above to the extent of Rs.55.00 crore and interest from the date of award till actual date of payment. The said award has been upheld by the single Judge of Hon'ble High Court of Delhi on 5th December, 2012 and again by the Division Bench on 25th February, 2013. SLP filed by DoT against Order of Division Bench of Hon'ble High Court of Delhi was also dismissed on 1 st November, 2013, by the Hon'ble Supreme Court of India. The Review Petition filed by DoT was also dismissed on 16th January, 2014 by the Hon'ble Supreme Court of India. However, the consequential effect has not been given in the books of accounts as DoT is entitled to file Curative Petition before Hon'ble Supreme Court of India.

NOTE 7 The Company had made payment of Rs.9.70 crore (Previous year Rs.0.24 crore) to certain Cumulative Redeemable Preference Shareholders as per contractual obligations. The said amount has been shown as "advances recoverable in cash or kind or for value to be received".

NOTE 8 Payment made to lenders towards guarantee contract/obligation amounting to Rs.Nil on behalf of associates companies (Previous year 9.82 crore) has been accounted for under the head Exceptional items.

NOTE 9 In accordance with the Company's Policy, the Company has reviewed the outstanding receivables and has written off a sum of Rs.87.14 crore during the year as bad, which in the opinion of the Management is adequate.

NOTE 10 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 is partially managed by HDFC Standard Life Insurance Company Limited which is 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 11 The Company has carried out Impairment Test on its Fixed Assets as on 31.3.2014 and the Management is of the opinion that there is no asset for which impairment is required to be madeasperAccountingStandard-28on Impairment of Assets issued by the ICAI. (Previous year Rs. Nil)

NOTE 12 The Board of Directors has recommended a dividend of Rs. 6.50 p.a. on each 80,50,000 Cummulative Redeemable Preference Shares of Rs. 100/- each for the period from 1 st January, 2011 to 31 st March, 2014. The dividend for the financial year 2010-11 would be proportionate which is Rs. 1.60 per Preference Share.

NOTE 13 As required by Accounting Standard 18 "Related Party Disclosures"

(i) Name and description of related parties.

Relationship Name of Related Party

(a) Subsidiaries: HTLLtd. Moneta Finance Pvt. Ltd.

(b) Associates: Microwave Communications Ltd.

Exicom Tele-systems Ltd.

HFCL Satellite Communications Ltd.

HFCL Dacom Infochek Ltd.

HFCL Bezeq Telecom Ltd.

Westel Wireless Ltd.

Polixel Security Systems Pvt. Ltd.

DragonWave HFCL India Pvt. Ltd.

ANM Enginnering and Works Pvt. Ltd.

NextWave Communications Pvt. Ltd.

(c) Key management personnel : Mr. Mahendra Nahata

Mr. Arvind Kharabanda

Note : Related party relationship is as identified by the Company and relied upon by the auditors.

(a) Primary segment information

The Company's operations primarily relates to manufacturing of telecom products, executing turnkey contracts and providing services relating thereto. Accordingly segments have been identified in line with Accounting Standard on Segment Reporting 'AS-17'. Telecom products and Turnkey contracts and services are the primary business segments whereas Others constituting less than 10% of the segment revenue/results/assets and accordingly have been considered as other business segments and are disclosed in the financial statements. Details of business segments are as follows:

(b) Secondary segment information

The Company caters mainly to the needs of Indian market and the export turnover being 0.72% (Previous year 0.02%) of the total turnover of the Company, there are no reportable geographical segments.

NOTE 14 Details of business advances outstanding from Subsidiary for the year ended 31st March, 2014 - Disclosure required under Clause 32 of the

NOTE 15 Derivative Instruments

a) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Company's strategy, which provides principles on the use of such forward contracts consistent with Company's Risk Management Policy. The Company does not use forward contracts for speculative purposes.

NOTE 16 Previous year figures have been regrouped/reclassified wherever necessary and the figures have been rounded off to the nearest rupees in lakh. NOTE 52 Value of imported and indigenous raw material and stores & spares consumed

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Registered Office: Sharekhan Limited, 10th Floor, Beta Building, Lodha iThink Techno Campus, Off. JVLR, Opp. Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai – 400042, Maharashtra. Tel: 022 - 61150000. Sharekhan Ltd.: SEBI Regn. Nos. BSE- INB/INF011073351 ; CD-INE011073351; NSE– INB/INF231073330 ; CD-INE231073330; MCX Stock Exchange- INB/INF261073333 ;
CD-INE261073330; DP-NSDL-IN-DP-NSDL-233-2003 ; CDSL-IN-DP-CDSL-271-2004 ; PMS-INP000000662 ; Mutual Fund-ARN 20669 ;
Commodity trading through Sharekhan Commodities Pvt. Ltd.: MCX-10080 ; (MCX/TCM/CORP/0425) ; NCDEX-00132 ; (NCDEX/TCM/CORP/0142) ; NCDEX SPOT-NCDEXSPOT/116/CO/11/20626;
For any complaints email at igc@sharekhan.com ;

Sharekhan Financial Services Pvt. Ltd: Corporate agents for ICICI Prudential Life Insurance Company Ltd. with corporate agency License no: ICI 8419765

Disclaimer: Client should read the Risk Disclosure Document issued by SEBI & relevant exchanges and Do’s & Don’ts by MCX & NCDEX and the T & C on www.sharekhan.com before investing.

Company Identification Number (CIN): Sharekhan Ltd: U99999MH1995PLC087498; Sharekhan Commodities Pvt Ltd: U67120MH2000PTC127261; Sharekhan Financial Services Pvt Ltd: U65920MH2004PTC149518; Sharekhan.Com India Pvt Ltd: U80904MH2000PTC126954; Sharekhan Insurance Broking Ltd: U67120MH2000PLC127257