SEPC Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2020

1. The Standalone results for the Quarter and year ended March 31, 2020 were reviewed and recommended by the Audit Committee and approved by the Board of Directors at their respective meetings held on June 24, 2020 and have been subjected to audit by the Statutory Auditor of the Company. The audited Standalone financial results are prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed under Section 133 of the Companies Act, 2013.

2. Financial Assets Loans (Non-Current) and Other Trade Receivables under "Other Non-Current Financial Assets" include Rs. 4,110.44Lakhs (March 31, 2019: Rs. 4,134.15 Lakhs), due from Leitwind Shriram Manufacturing Pvt Limited (LSML) (a related party). LSML is in the process of restructuring their operations and the dues are expected to be recovered earlier than the original repayment plan. Considering the developments the management is confident of realising the dues. The auditors have qualified this matter in their report for the Quarter and Year ended March 31, 2020.

3. Exceptional Items for the quarter and year ended March 31, 2020 represents :
a. Exceptional items for the quarter and year ended March 31, 2020 represents write off of trade and other receivables subject to litigation amounting to Rs. 3,858.02 lakhs, and write off of contract assets amounting to Rs. 2,748.97 lakhs based on estimation of potential stress on project completion in a project, considering COVID 19 pandemic.

Exceptional items for the quarter and year ended March 31, 2019 represents :
a. Rs. 4,702.65 Lakhs Loss recorded on sale of advances receivable from an associate company and its subsidiary amounting to Rs. 29,702.65 Lakhs to the Company's Investing party for a total consideration of Rs. 25,000 Lakhs along with rights attached to it.
b. Rs.6,649.03 lakhs recorded as gain resulting from discounting of amount payable to M/s ACRE (an Asset Reconstruction Company) pursuant to a settlement agreement as the dues are to be settled over a period of seven years ending 2025 on deferred payment basis without interest.
c. Rs.2,406.35 Lakhs charged off being net amount after discounting the amount payable for a claim from vendor, by way of deferred settlement agreement over a period of three years ending 2021 without interest.

4. Against the carried forward loss of Rs. 1,82,359 lakhs, the company has recognized deferred tax asset on a carry forward loss to the extent of Rs. 1,28,911 lakhs which results in DTA of Rs. 43,520.00 Lakhs. Considering potential order book as on date, future business plan, projects in pipeline etc., the management is confident of adjusting these carry forward losses and reversal of DTA before the expiry of the period for which this benefit is available. The auditors have qualified this matter in their report for the Year ended March 31, 2020.

5. The outbreak of Coronavirus (COVID -19) pandemic globally and in India is causing significant disturbance and slowdown of economic activity coupled with total lockdown announced from March 25, 2020 due to COVID-19 pandemic which was gradually lifted based on the impact of outbreak.
The Company's assessment of impairment loss allowance on its loans and other assets is subject to a number of management judgments and estimates. While the methodologies and assumptions applied in the determination of the impairment loss allowance calculations remained unchanged from those applied while preparing the financial results for the period ended December 2019, the Company has separately incorporated estimates, assumptions and judgments specific to the impact of the COVID-19 pandemic based on early indicators of delayed payments metrics observed along with an estimation of potential stress on project completion in certain projects.
Accordingly, the Company has measured additional impairment loss allowance on loans and other assets which has been disclosed under exceptional item in the Standalone Financial Results. The Company will continue to monitor any material changes to the future economic conditions based on the dynamic situation arising out of COVID - 19 pandemic situation.

6. Consequent to the initiation of insolvency proceedings of Haldia Coke and Chemicals Private Limited (HCCPL) by the shareholders of HCCPL during March 2019, the investments in HCCPL amounting to Rs.4007.22 Lakhs has been written off against the provision carried towards this investment.

7. Revenue includes Rs. 5,144.77 lakhs (for the quarter ended March 31, 2020), Rs. 30,380.40 lakhs (for the year ended March 31, 2020), being share of revenue relating to the Basra project, billed from Mokul Shriram EPC JV ( MSJV), a jointly controlled operation, wherein the company owns 50% interest

8. There is no provision for tax in view of the brought forward Losses / unabsorbed depreciation relating to earlier years, available for set off, while computing income, both under the provisions of 115 JB and those other than Sections 115 JB of the Income Tax Act 1961.

9. The Company has not opted to exercise the option under Section 115BAA of the Income Tax Act, 1961, as introduced by the taxation laws (Amendment) Ordinance, 2019 and decided to continue with the existing rate of income tax for the purpose of deferred tax computation.

10. The Company is engaged in the sole activity of carrying on the business of "Engineering, Procurement and Construction" (EPC) and therefore, has only one reportable segment in accordance with Ind AS 108 "Operating Segments". Hence no separate segment reporting is applicable to the Company.

11. Ind AS 116 "Leases", has been introduced effective April 01, 2019, and its application did not have any significant impact on recognition and measurement of Leases in the financial results including the retained earnings as at April 01, 2019.

12. Figures for the quarter ended March 31, 2020 and March 31, 2019 are the balancing figures between the audited figures in respect of the full financial year ended March 31, 2020 and March 31, 2019 respectively and the published year to date figures for nine months ended December 31, 2019 and December 31, 2018 respectively, as regrouped.

13. Previous period figures have been regrouped / reclassified to be in conformity with current period's classification / disclosure, wherever necessary.