Petron Engineering Construction Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2018

1. The Hon'ble National Company Law Tribunal (NCLT), Mumbai Bench, had admitted the petition filed by an operational Creditor for initiating Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC) vide its Order dated March 23, 2018 and appointed Mr. Rajeev Mannadiar as the IRP. Pursuant to the said order of NCLT and in line with the provisions of IBC presently all the powers of the Board of Directors are exercised by the IRP.

IRP took control of the management and operations of the Company w.eJ April 11, 2018. A Public announcement was made on April 13, 2018 and a Committee of Creditors (CoC) was formed on May 4, 2018 under Section 21 of the IBC. CoC has appointed another Insolvency Professional as Resolution Professional and the Order of Hon'ble NCLT is awaited confirming his appointment. Present IRP has been authorized to continue by the CoC till the RP takes over. Consequent to the resignation of all the Directors of the Company prior to the Order of NCLT, at present there are no members in the Board of Directors. Hence, the above results have been signed by Mr. Himanshu Mohapatra, Chief Financial Officer of the Company and the IRP for filing with the Stock Exchanges.
As the CIRP is currently in progress and it is expected that a Resolution Plan for the Company might be approved, adopted and implemented before the stipulated Resolution Period, the financial statements have been prepared on 'going concern' basis. There is however, material uncertainty in this respect as on this date, since the same is dependent upon the Resolution Plan for the Company would be submitted by a prospective Resolution Applicant and will be approved by CoC and NCLT within the stipulated Resolution
Period.

2. The Company has adopted Indian Accounting Standards (Ind AS) prescribed under section 133 of the Companies Act, 2013, read with the Companies (Accounting Standard) Rules, 2015 w.e.f. April 1, 2017 and the above results have been prepared in compliance with Ind AS. Consequently, the financial results for the quarter and year ended March 31, 2017 have been restated to comply with Ind AS to make them comparable. The figure for the quarter ended March 31, 2018 are the balancing figures between audited figures in respect
of full financial year and unaudited year to date figure upto December 31, 2017.

3. The figures for the quarter / year ended March 31, 2017 are based on previously issued and audited financial results prepared in accordance with applicable AS. Such information for the quarter ended / year ended have been adjusted / regrouped / recast for the difference in the accounting principle adopted by the Company in the process of transition to IndAS.

4. Post adoption of Ind AS and due to adoption of fair valuation of Property Plant and Equipment during the quarter the net worth the company became' positive (refer note 8(b)).

5. The Company is primarily engaged in the business of "Engineering, Procurement & Construction" and operates in a single business segment based on the nature of the products and services, the risks and returns etc. Accordingly, these financial results have been prepared for this single segment.

6. The Auditors have commented on: For Table, kindly refer Corporate Announcements on www.bseindia.com.

7 a) During the Financial year, one of the Company's clients have to undergo Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC). The Company preferred its claim as per the prescribed procedure under CIRP. However, the said claim being of an operational cred itor, it stands in a lower priority amongst the creditors. The Company has given effect of these unfavourable developments in its Profit and Loss Accounts for this year by making a provision/write off against doubtful advances to the tune of Rs.7,523.20 lacs (out of which Rs.6,256 lacs was provided in December quarters and the balance Rs.1,267 lacs provided in the current quarter) and the same is reflecting under 'Other Expenses'.
b) Further, during the year, considering some elements of uncertainty, on a conservative basis, receivables, un billed revenue, advance to vendors and security deposits amounting to Rs.2,282.65 lacs, Rs.8024.85 lacs (out of which Rs.996.74 lacs was provided in December quarter), Rs.214.87 lacs and Rs.46.11 lacs respectively have been written off/ provided for and the same is reflecting under 'Other Expenses' . Trade payables amounting to Rs. 193.97 lacs has been written back in respect of certain closed projects/sites.
c)The Company has made claims on some of its clients over and above the contracted value amounting to Rs. 1,05,561 lacs towards extra costs incurred because of change in scope of work, extended stay by the project team at the site attributable to the clients, extra costs incurred because of change in law etc. Corresponding costs relating to the claims have been absorbed by the company during the year or previous years. These claims will be accounted for as income in the year in which it is settled by the clients.

8. (a) The reconciliation of profit/(loss) after tax and Equity as previously reported on account of transition from previous Indian GAAP to Ind- AS for the quarter and year ended March 31, 2017 are as under: For Table, kindly refer Corporate Announcements on www.bseindia.com.

(b) During the quarter the Company has considered fair value for Property, Plant and Equipment (PPE) situated in India and the impact of Rs. 5,315.87 lacs , in line with option allowed of Ind AS 101 with resulted impact being accounted for In the reserves. Further, on re-assessment of lives of assets (as assessed and estimated by the management and a technical valuer), depreciation reflected in the statement of Profit and Loss is higher by Rs.29.71 lacs forthree months ended March 31, 2018 and Rs.118.83 lacs for the year ended March 31, 2018 and to that extent profit for the current quarter and year is lower.

9. Due to continuous losses and liquidity constraints, the Company has not been able to make payments, including due instalments of borrowings, and outstanding interest obligations, both in respect of term loans and working capital facilities. Accordingly, there were delays/ defaults in repayment. There are certain overdue amounts as stated in note no. 36 of the financial statements for the year ended 31st March 2018. During the financial year 2017·18 majority of banks have classified the accounts as Non Performing Assets (NPA) and some banks have given loan recall notice for the outstanding loan amount.

10. Subsequent to the Balance sheet date, one of the customers has encashed a Performance bank guarantee of Rs. 900 Lacs and Advance bank guarantee of Rs. 894.92 Lacs. The company's management/ IRP are in the process of discussion with the customer and also initiated the proceeding through NCLT to recover the Performance Bank Guarantee amount which in the opinion of the Company has been wrongly encashed. The Company's management/ IRP is confident of favourable order from NCLT in the said Performance Guarantee claim. In view of stated facts above, no adjustment has been carried out in the financial statements;

11. During the year Mr. Manoj Kumar Gaur was appointed as Managing Director for a period of 3 years w.eJ. November 1, 2017, subj ect to the approval of shareholders but has resigned w.eJ. February 14, 2018. However, prior approval of secured creditors has not been obtained before his appointment as per the provisions of Section II of Part II of Schedule V of the Companies Act, 2013, although intimation to the banks have been made regarding his appointment. As per the Company's management/ IRP post facto approval will be taken in the ensuing meeting of Committee of Creditors.

12. During the current year as per the past practice, the Company has revised the estimated revenue, cost and project related provisions on account of prolongation of the contracts' tenure as per the requirement of the clients owing to uncertainty surrounding completion of the projects which were due to reasons beyond the Company's control. This is being done in line with the general business practice followed in the industry, however additional steps have been initiated for fair estimation of revenue and project related provisions. Accordingly, adjustments on this account and/also on cost reassessment done during the year has been charged/carried out to the Statement of Profit / Loss. (read with note no. 6 (d))

13. The previous period figures have been regrouped/rearranged / recast to make them comparable with that of current period wherever necessary.

Himanshu Mohapatra
Chief Financial Officer