Forbes & Company Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Dec 2023
Auditor and Management Disclosures and Notes for the quarterly results dated 31 Dec 2023
Notes:
1. The above results have been reviewed by the Audit Committee and approved by the Board of Directors of the Company at their respective meetings held on 25th January, 2024 and have been subjected to a Limited Review by the statutory auditors of the Company in terms of Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
2. The above financial results of the Company have been prepared in accordance with the Indian Accounting Standard ("Ind AS") as prescribed and Section 133 of the Companies Act, 2013 read with the relevant rules issued there under and the other accounting principles generally accepted in India.
3. Exceptional items:
(Rs. in Lakhs)
Particulars Quarter ended Nine months ended Year ended
(i) Impairment of investments, loans (Including interest accrued thereon) and other receivables in a subsidiary/ Provision for Guarantees/ lien Fixed Deposit given to a subsidiary/ bank (Forbes Technosys Limited/Forbes Concept Hospitality Services Private Limited) (114) - - (114) (401) (419)
(ii) Gain on sale of Associate (Shapoorji Pallonji Forbes Shipping Limited) - - - - 144 144
(iii) Reversal of provision and Sale / Gain on Sale of shares of Forbes Facility Services Private Limited 115 - - 115 3,202 3,202
(iv) Capital reduction of Forbes Technosys Limited pursuant to Composite scheme of Arrangement - - - - (13,183) (13,183)
(v) Reversal of provision for impairment of investment in Forbes Technosys Limited - - - 13,183 13,183
(vi) Provision for doubtful trade receivables and contractual reimbursement of FTL - - (19) - (19) (22)
(vii) Reversal of Provision of Forbes Concept Hospitality Services Private Limited 18 18
(viii) Consideration for Sale of investment in Forbes Concept Hospitality Services Private Limited # - - - - - -
TOTAL 19 - (19) 19 2,926 2,905
(i) The Company has made a provision for doubtful debts on loans & advances given to the following companies: -
a) Forbes Technosys Limited (FTL) - In view of continuing losses in FTL, the Company has made a provision for obligation of bank guarantees of Rs. 114 lacs for the quarter ended 31st December 2023 and for provisions for loan and advances of Rs. 401 lakhs for the nine months ended 31st December 2022.
b) Forbes Concept Hospitality Services Private Limited (FCHSPL): The Company has made a provision for loans & advances amounting to Rs. 18 Lakhs for the quarter ended 31st March 2023 as the recoverability of loan is doubtful.
Accordingly, the total provision for the loans and advances as at 31st March, 2023 was Rs. 419 Lakhs.
(ii) The Board of Directors of the Company, at their meeting held on 30th May 2022, have approved the sale of the entire shareholding in SPFSL. The Company has sold 3,75,000 equity shares of Rs. 10 each and 2,21,50,000 Zero Percent Redeemable Preference Shares of Rs. 10 each of SPFSL to M/s G.S Enterprises, a related party for an aggregate purchase consideration of Rs. 2,900 Lakhs during the nine months ended 31st December 2022. The net carrying value of the investments in SPFSL (reflected as asset held for sale on 31st March 2022) as at the date of sale was Rs. 2,756 Lakhs and consequently, the Company has recognized an exceptional gain of Rs. 144 Lakhs for the nine months ended 31st December 2022. The capital gains tax impact of the aforesaid transaction has been appropriately considered during the nine months ended 31st December 2022 and year ended 31st March 2023.
(iii) The Board of Directors of the Company at their meeting held on 23rd February 2022 has approved entering into a binding term sheet for the sale of its entire shareholding in Forbes Facility Services Private Limited (FFSPL), a wholly-owned subsidiary of the Company to SILA Solutions Private Limited. This binding term sheet was executed on 23rd February 2022 and agreement for sale was executed on 20th May 2022. The transaction was completed on 1st July 2022 a sales consideration of Rs. 4,200 Lakhs. The Company has received the consideration of Rs.3,960 Lakhs after deduction of Rs. 240 Lakhs for the legal disputes with multiple customers. The difference between the net disposal proceeds and the carrying amount of investment and expenditure incurred on the transactions and provision made on account of the obligations undertaken by the company under the agreement for sale the net amount of Rs. 3,202 Lakhs was recognized as gain on disposal during the quarter ended 30th September 2022 & year ended 31st March 2023 and reflected in Exceptional items in these financial results. The capital gains tax impact of the aforesaid transaction was appropriately considered in the quarter ended September 2022 & year ended 31st March 2023. Additionally, as per the terms of the agreement to sale, the Company has taken over current receivables and payable balances of FFSPL to/ from related parties aggregating Rs. 122 Lakhs and Rs. 237 Lakhs respectively and receivable from non-related party amounting to Rs. 54 Lakhs and the net amount of Rs. 60 Lakhs is received by the Company from FFSPL and the same was paid against payables.
During the quarter ended 31st December 2023, the company has received an amount of Rs. 74 lacs and Rs.41 Lakhs in the month of January, 2024 on settlement of legal disputes between FFSPL and customers against the previously withheld amount of Rs. 240 lacs. The provision made earlier on account of legal disputes is reversed to the extent of Rs. 115 lacs and recognized as gain in the profit & loss account.
(iv) The board of directors of Forbes Technosys Limited (FTL) have pursuant to provisions of Section 230 to 232 applied to the National Company Law Tribunal (NCLT) for merger of Forbes Campbell Service Limited (“FCSL”) and FTL for a consideration of Rs. 3 Lakhs effective 1st October 2021 and also proposed for reduction in the share capital of FTL. The NCLT, in its order dated 16th September 2022 (‘the Order’) approved the Composite Scheme of Arrangement for amalgamation of Forbes Campbell Service Limited (‘FCSL’) into FTL and reduction of share capital of FTL. The appointed date of the Scheme was 1st October 2021, and the scheme has been effective from 29th September, 2022 i.e., the last date on which the certified copy of the order was filed with the Registrar of Companies. Pursuant to the scheme, the Company has written off the investment of Rs. 13,183 Lakhs and provision created for the investment amounting to Rs. 13,183 Lakhs is reversed in the quarter ended 30th September 2022 and year ended 31st March 2023.
(v) The Company has made provision for doubtful trade & contractual receivable amounting to Rs. 19 Lacs for the quarter ended 31st December 2022 and Rs. 22 Lakhs for the year ended 31st March 2023 with respect to FTL.
(vi) # The Company was holding 50% shareholding in Forbes Concept Hospitality Services Private Limited (FCHSPL), a Joint Venture of the Company. The Board of Directors of the Company at their meeting held on 3rd August 2023 has approved sale of its 60% shareholding in FCHSPL, to Metamix Technologies Private Limited and balance 40% shareholding to Floral Finance Private limited for a consideration of Rs. 0.03 Lakh and Rs. 0.02 Lakh respectively. Pursuant to the said sale of the entire shareholding in FCHSPL, it has ceased to be a Joint Venture of the Company effective from 3rd August 2023.
(vii) The Company has made provision for doubtful debts amounting to Rs. 18 Lakhs in earlier years with respect to Forbes Concept Hospitality Services Private Limited (FCHSPL). During the quarter ended 31st December 2023, the company has received the said loan & advances from FCHSPL and accordingly the provision made in earlier years is now reversed and recognized as a gain in profit & loss account.
4. Ind AS 115 'Revenue from Contracts with Customers', a new accounting standard notified by the Ministry of Corporate Affairs (MCA) on 28th March 2018 was effective from accounting period beginning on or after 1st April, 2018 and replaced the existing revenue recognition standards. The application of Ind AS 115 had a significant bearing on the Company's accounting for recognition of revenue from real estate development projects.
The Company has recognized revenue of Rs. Nil for the quarter and nine months ended 31st December 2023 and Rs. 201 Lakhs for the nine months ended 31st December 2022 and year ended 31st March 2023.
5. The Board of Directors of the Company, in their meeting held on 26th May 2023, approved for sale of approximately 0.53 acres of land at Chennai for an aggregate consideration of Rs. 15 Crores. The transaction got concluded on 1st June, 2023 by executing sale deed in favour of the buyer. Accordingly, the difference between the net disposal proceeds and the carrying amount of the land amounting to Rs. 1,447 Lakhs has been recognized as gain on disposal during the quarter ended 30th June 2023 and nine months ended 31st December 2023 and reflected in other income in these financial results. The capital gains tax impact of the aforesaid transaction has been appropriately considered during the quarter ended 30th June 2023 and nine months ended 31st December 2023.
6. The Board of Directors of the Company, in their meeting held on 22nd December 2020, approved entering into a Memorandum of Understanding (“MOU”) for sale of approximately 3.804 acres of land at Chandivali. Accordingly, the net carrying value aggregating Rs. 2,316 Lakhs [including Rs. 2,277 Lakhs paid towards seeking permission under the Urban Land (Ceiling & Regulation) Act, 1976 for the transfer/ sale/ development/ redevelopment of the land during the quarter ended 31st March 2022], has been reflected as asset held for sale as on 31st March, 2022.
Pursuant to the Board of Directors meeting dated 24th March 2022, the Company entered into a new Agreement for Sale (AFS) for the aforesaid land, with Equinix India Private Limited (Equinix) for an aggregate consideration of Rs. 23,500 Lakhs, which was executed on 24th March 2022 and completion of the said transaction was subject to fulfilment of conditions precedent.
The transaction for sale of Chandivali land with Equinix got concluded on 28th June 2022 post completion of the conditions precedent and the Company received entire consideration of Rs. 23,500 Lakhs during the nine months ended 31st December 2022. The difference between the net disposal proceeds and the carrying amount of the land amounting to Rs. 20,684 Lakhs has been recognized as gain on disposal during the nine months ended 31st December 2022 and reflected in other income in these financial results. The capital gains tax impact of the aforesaid transaction has been appropriately considered during the nine months ended 31st December 2022 and year ended 31st March 2023.
7. The Board of Directors of the Company in their meeting dated 26th September 2022 have approved the Scheme of Arrangement ("Scheme”) between the Company (“FCL” or the “Demerged Company”) and Forbes Precision Tools and Machine Parts Limited (“FPTL” or the “Resulting Company”) and their respective shareholders under Section 230 to 232 of the Companies Act, 2013 and other applicable provisions and the Rules framed thereunder. This Scheme is a Scheme of Arrangement involving demerger of “Precision Tools business” of the Company into Forbes Precision Tools and Machine Parts Limited. The appointed date of the scheme is 1st April, 2023.
The Scheme is subject to necessary approvals by the Stock Exchanges, Securities and Exchange Board of India, Shareholders and Creditors of the Company, as may be applicable, Jurisdictional Bench of the National Company Law Tribunal ("NCLT") and such other statutory and regulatory approvals as may be required.
Accordingly, the Company have received the “no objection” from BSE Limited / SEBI. The Company has filed an application along with all the relevant documents with the NCLT for their approval, the NCLT has admitted the application and directed the Company to comply with the certain regulatory and other requirements and submit the reports to the NCLT which has been complied with. The Company is now awaiting for the final order from the NCLT.
FPTL has been incorporated on 30th August 2022 as a wholly-owned subsidiary of the Company.
8. The Company and MACSA ID, S.A., have entered into a 50:50 Joint Venture Agreement on December 5, 2022 (JVA) for providing innovative laser marking and traceability solutions for the entire range of materials metal and non-metals. Pursuant to the terms of the JVA, a joint venture company viz., FORBES MACSA PRIVATE LIMITED has been incorporated on December 9, 2022. The JV partners have infused equity and preference shares capital to the tune Rs. 2.5 Crs. each in the JVC. The JVC and shareholders have executed the technology and trademark license agreement and brand and technology licensing agreement with respect to their respective brands. The operations of JVC started from 1st March 2023.
9. Forbes Lux International AG (FLIAG), a subsidiary of the Company, along with its subsidiary Lux International AG (LIAG) and step-down subsidiaries, has been facing with a severe liquidity crisis for the past several years. Given the ongoing losses and financial difficulties, the management of FLIAG, LIAG, and Lux Schweiz AG submitted an application on April 11, 2023, seeking a provisional debt restructuring moratorium from the Bülach District Court in Wallissellen, Switzerland. By an order dated April 17, 2023, the court granted a provisional moratorium, which will be in effect for four months, until August 17, 2023, to facilitate the restructuring of these companies. A Provisional Administrator was appointed to assess the prospects for this restructuring. The Provisional Administrator submitted the final report to the Court on August 2, 2023. Based on the Administrator's final report, the Court determined that FLIAG, being a pure holding company that hasn't generated any income for a considerable period and has ceased its operational activities, is not viable. Similarly, Lux Schweiz AG has also discontinued its operational activities and income generation, leading to the decision to initiate bankruptcy proceedings for these companies. As for LIAG, the court has granted an extension of the moratorium period until December 1, 2023. Consequently, FLIAG and Lux Schweiz have been declared bankrupt by an order dated August 14, 2023.
Subsequently, following due process, the bankruptcy officials issued a publication on September 8, 2023, announcing the closure of the bankruptcy proceedings due to lack of assets unless a creditor requests implementation within a specified 10-day period. Since no opposition was filed with the Bankruptcy Officer during the stipulated timeline, Forbes Lux International AG, in Liquidation and Lux Schweiz AG, in Liquidation were liquidated and dissolved. In the context of FLIAG's bankruptcy proceedings, Lux International AG, in Liquidation (LIAG), a subsidiary of FLIAG, has been disposed of by the bankruptcy official. Consequently, FLIAG and its subsidiaries are no longer considered subsidiaries of the Company.
10. In the matter of Svadeshi Mills Company Limited (Svadeshi), the Hon’ble High Court, Bombay vide order dated October 9, 2023 has allowed the Interim Application (IA) filed by Grand View Estate Private Limited (GVEPL) granting permanent stay on the winding up of Svadeshi along with directions to Official Liquidator (OL) to handover entire undertaking of Svadeshi including all its properties, assets, books of accounts etc., to GVEPL. OL has been discharged as the liquidator of Svadeshi except for carrying out certain directions. Directors have been appointed on the Board of Svadeshi. ROC has been directed to restore status of Svadeshi as active.
The Company as a shareholder of Svadeshi has secured the funding availed by GVEPL for revival of Svadeshi by way of exclusive pledge of entire equity shares of the Company and its wholly-owned subsidiary Forbes Campbel Finance Limited (FCFL) in Svadeshi, assignment of secured debt due to the Company from Svadeshi together with the underlying security and hypothecation of receivables due to the Company from Svadeshi.
11. The Indian Parliament has approved the Code on Social Security, 2020 ("the code") which, inter alia, deals with employees benefits during employment and post-employment. The code has been published in the Gazette of India. The effective date of the code is yet to be notified and the rules for quantifying the financial impact are also yet to be issued. In view of this, the impact of change, if any, will be assessed and recognised post notification of the relevant provisions.
12. Figures for the previous periods are re-classified/ re-arranged/ regrouped, wherever necessary, to correspond with the current period’s classification/ disclosure.