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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Dhir India | LSE:DHIR | London | Ordinary Share | IM00B1YC5V43 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 42.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMDHIR
RNS Number : 4392N
Dhir India Investments plc
01 September 2011
1 September 2011
Dhir India Investments plc
("Dhir India", "DII", or the "Company")
Final Results
Dhir India (AIM: DHIR), a company established to invest in the US$50 billion Indian non-performing assets sector, announces final results for the year ended 31 March 2011.
Highlights:
- The portfolio still comprises interests in five projects and one quoted business on the Bombay Stock Exchange
- Headline net asset value per share, including deferred tax provisions was 125p (130p at 31 March 2010)
- Total consolidated cash balances at the period end were GBP5.18 million (GBP6.3 million at 31 March 2010)
- Review of investment and realisation strategy commenced in May 2011
Charlie Hambro, Chairman of Dhir India, commented:
"The year under review has seen slower progress than expected. The Board has decided to seek to accelerate the process of returning value to shareholders through a review of the investment and realisation strategy and over the next twelve months steps will be taken to try and achieve this aim. A number of options are being considered and shareholders will be informed as soon as the Board is able to update them on any further progress."
Alok Dhir, Non-Executive Director of Dhir India, added:
"Despite suffering from a number of unexpected delays, the management team is in the final stages of realising a number of the Company's assets."
For further information, please contact:
Hot Features
Premium
Shiva Consultants Evolution Tavistock Dhir India
Securities Communications
Alok Dhir Jeremy Ellis Jeremy Carey Charles Hambro
Shivi Agarwal Chris Clarke Simon Compton
Tel: + 91 11 4241 Tel: +44 (0) 20 Tel: + 44 (0) 207 Tel: + 44 (0)
0000 7071 4300 920 3150 7776 1966 74
Chairman's Statement
In previous reports I have noted that progress has been slower than anticipated in achieving realisations from our investment portfolio and since my last report this has continued to be the case.
The majority of the investments were made approximately three years ago and during that period the fundamental macro-economic background has changed considerably from when the Company floated in 2007. Taken as a whole, your Board believes that the investment portfolio may have a significant potential underlying value over a longer time period. However, realisation has proved much more complicated and difficult to achieve, principally, though not totally, due to legal issues. The SARFAESI Act, which, when introduced in 2002, was expected to speed up and simplify the resolution process has yet to show that it is capable of achieving this aim.
Given this background the Board decided in May 2011 to implement a review of the Company's investment and realisation strategy. Prior to, during and after this period the Board attempted to amend some of the terms of the Management Agreement that the Board felt were inappropriate given the present corporate position and lack of progress to date on realisations. It is with great regret that I have to report that Shiva Consultants Private Limited were unwilling to consider the proposals in a positive light. The Board issued the Investment Manager, Shiva Consultants Private Limited, notice of termination as per the 2007 Management Agreement in May 2011. The notice period is twelve months. During this period, the Board is considering a number of options to accelerate the process of realising the Company's investments whilst maximising returns to shareholders. These options include, but are not limited to, appointing a new manager or seeking to amend the structure and governance of the Company. The Board is aware that accelerating the process of realisation may result in somewhat lower values to shareholders and balance sheet valuations after this reporting period are likely to reflect this.
As reported previously, there are a number of investments that are in the latter stages of realisation and further efforts will made to complete the realisation process during the review. We will announce any progress in this area as soon as it is made.
As I mentioned in my last report, your Board continues to be aware of the importance of controlling operating costs and preserving the satisfactory cash position of the Company.
Results
The portfolio now comprises interests in five projects and one quoted business on the Bombay Stock Exchange and they are reviewed in detail in the Investment Managers' Review below. The total cost to date of the investments is GBP17.99 million.
The underlying investments have been valued by PriceWaterhouseCoopers India as at 31 March 2011. However, as in the previous financial year, given the ever changing economic outlook and greater visibility on each of the investments, the Board considered it prudent to take a more conservative and individual approach to the valuation of the portfolio. After taking into account both individual issues and the general arithmetic valuation calculations, the Board decided to continue its cautious policy. However, during the reporting period, the rupee has appreciated against sterling by some 7.25% and consequently, the fair value of our share of these underlying investments at the reporting date was GBP20.33 million (GBP20.5 million at 31 March 2010), excluding deferred tax provisions of GBP1.46 million (GBP2.05 million at 31 March 2010).
Headline net asset value per share, including deferred tax provisions, for Dhir India at the period end was 125p (130p at 31 March 2010). The adjusted net asset value, excluding the deferred tax provision of GBP1.46 million, which the Directors anticipate should not be payable, is 134p (143p at 31 March 2010). The consolidated statement of comprehensive income shows loss attributable to shareholders of GBP0.86 million and a loss per share of 5.17p (31 March 2010: loss of 6.02p). Total consolidated cash balances at the period end were GBP5.18 million (GBP6.3 million at 31 March 2010). The Company has no borrowings.
The investments
The investment portfolio is diversified both by regional geography and realisation strategy. As previously noted, over the past year there has been progress on a number of our investments. The appropriate exit strategies for each investment continue to be reviewed and range from the turnaround and resale of operating businesses to the break-up and sale of underlying assets.
Outlook
The Board has decided to seek to accelerate the process of returning value to shareholders through a review of the investment and realisation strategy and over the next twelve months steps will be taken to try and achieve this aim. A number of options are being considered and shareholders will be informed as soon as the Board is able to update them on any further progress.
Charlie Hambro
31 August 2011
Investment Manager's Review
Introduction
The Company's Investment Manager is Shiva Consultants Private Limited, which is responsible for sourcing, appraising and managing investment opportunities.
The Investment Manager's senior team between them has over 60 years' experience in the Indian distressed assets market. This includes the structuring and resolving of distressed assets transactions on a professional basis, as well as investing in NPAs as principal and undertaking the turnaround of distressed assets. The Investment Manager is very well connected within the business and financial community in India in all the regions in which it operates.
Recently, a transaction for the realisation of part of the investment made by one of its Special Purpose Vehicles ("SPVs") has been finalised for a consideration of approximately GBP2.15 million, all of which has now been received but its appropriation is subject to the direction of the High Court.
Investment Policy
The Company has a risk-diversified portfolio of six current investments in Indian NPAs, largely sourced from Indian lending banks and financial institutions. The exits from such investments are based on the different realisation strategies outlined in the AIM Admission Document; turnaround and resale or break-up and sale of acquired assets. When determining the appropriate realisation strategy, the Board considers in each case the nature of the asset, together with the management skills and resources required for resolution.
Going forward, looking to the current recessionary trends in different parts of the world which has delayed the exits from current investments, the Board is of the view that any further investment should appropriately take into consideration the need to conserve cash.
Project Aquamarine (Uttar Pradesh)
The investment is in respect of a company which was originally engaged in the manufacturing of styrene butadiene rubber, nitrite rubber, styrenated phenol and alcohol. It suspended works in July 1999, due to severe capital constraints and labour and power supply issues. Its plant is located over 1,200 acres of land which is situated in a tier II industrial city in Uttar Pradesh, North India.
As at 31 March 2011 an amount of GBP1.81million had been invested through an SPV, of which the Company's contribution is GBP1.36 million. The SPV has since acquired interest in the company through agreements executed with creditors having 33.46% of the secured debt of the target company. Such interest has been acquired at a cost lower than the original projected cost and the SPV is therefore in negotiations with other stakeholders for acquiring further interest in the target company within the original projected cost in conjunction with resolving the asset.
Project Cygnet (Haryana)
The investment is in respect of a company which was originally engaged in the manufacture of stainless steel located on a 51 acre site in Haryana, on the outskirts of Delhi.
The total acquisition cost was originally projected at GBP12.79 million, of which the Company's share was proposed at GBP11.51 million. As at 31 March 2011 an amount of GBP11.69 million had been invested through an SPV, of which the Company's contribution was GBP10.52 million. The SPV has entered into agreements with all the secured creditors of the company for acquisition of the unit and company. Recently, a transaction was undertaken for the realisation of this investment, by way of the sale of the plant and machinery of the unit. This has been finalised for a consideration of approximately GBP2.15 million, of which the funds have now been received. The funds can be appropriated subject to obtaining permission from the High Court which is outstanding.
Public Auction for the sale of the residual assets, namely the land & buildings, has been made and a bidder has been finalised for the amount of GBP12.42 million who has deposited GBP0.62 million as monetary deposit. However payment of the balance of funds will be made only after the plant and machinery has been cleared from the site. The funds, as and when received, can be appropriated only after obtaining consent of the Honourable High Court.
Project Destination India (Goa)
The investment is in respect of a company which had proposed to set up a resort in Goa on 369,814 sqm of land, for which the company obtained all permissions and consents and had commenced construction. Goa is a popular tourist destination and the land, with its planning consent, is an attractive site with significant development potential.
The total acquisition cost was originally projected at GBP8.10 million, of which the Company's share was proposed at GBP7.70 million. However, in view of various litigations, the offer to secured creditors for the purchase of the hotel assets has been reduced. Consequently, the projected acquisition cost has come down to GBP5.56 million of which the Company's share is proposed at GBP5.28 million. As at 31 March 2011 an amount of GBP1.82 million had been invested through an SPV of which the Company's contribution was GBP1.73 million. The SPV has entered into an agreement with the first charge holder, holding just over 25% of the total secured debt, for acquisition of the hotel asset of the company. The SPV is now negotiating with the other secured creditors and promoters / stakeholders to complete the acquisition of the hotel asset. In the meantime, Debt Recovery Tribunal Mumbai has passed a judgement awarding INR176.8 million (GBP2.43million) with respect to the Investment made by the SPV, although these funds are yet to be received.
Project LCAL (Alwar, Rajasthan)
LCAL manufactures caustic soda based products, supplying the paper, soap, dyes, chemicals and plastic industries. It performed satisfactorily until 1997 when it incurred significant losses as a result of lengthy power cuts and increases in input production costs. Thereafter, from 2003, a new management team has effected a recovery of the business.
The Company acquired 1,500,000 new equity shares in LCAL at a price of 74p per share, representing 5.96% of the issued share capital, for a total of GBP1.2 million. The proceeds of the issue were utilised by LCAL, inter alia, towards the purchase of 230 TPD plant of Standard Industries, Mumbai. Of this, LCAL has completed installation of 130 TPD plant, which along with its existing capacity has taken the total installed capacity to 230 TPD and the balance 100 TPD plant shall be installed in due course. Due to recent down trend in the caustic soda industry, the company incurred operating losses in 2009-10 and 2010-11. Some disputes have arisen with JVVNL and consequently the electricity connection has been disconnected.
The shares of LCAL have been listed on at the Bombay Stock Exchange; however, they are presently being thinly traded. The Company plans to exit from its investments by sale of the shares.
Project Triton (Gujarat)
The investment is in respect of a company which was engaged in the manufacture of edible oil at its refining unit in Gujarat. It has a factory, with a daily capacity of 250 MT per day and is built on a 21,524 sqm site in the prominent city of Gujarat. The unit has been lying closed since 2006.
The total acquisition cost was originally projected at GBP2.24 million, of which the Company's share was GBP2.13 million. It was initially proposed that the edible oil unit could be turned around and managed. However, after extensive discussions, the Board thought it more appropriate that the exit should be by way of a re-sale of assets and mandated the Investment Manager to obtain suitable offers for re-sale of the assets. Accordingly, since the plant is not required to be operated, the projected costs have been reduced to GBP1.15 million, of which the Company's share is projected at GBP1.09 million. As at 31 March 2011 an amount of GBP1.10 million had been invested through an SPV of which the Company's contribution was GBP1.05 million. The SPV has entered into agreements with all the secured creditors of the company in respect of acquisition / sale of the unit of the company.
The investment with respect to the asset is proposed to be realised through sale of the unit by public auction, for which advertisements have been placed in Newspapers. Negotiations are ongoing with the prospective acquirers for the asset.
Project Turquoise (Rajasthan)
The investment is in respect of a company which was originally engaged in the manufacturing of electrical and electronic meters but ceased production in 1998 due to an inability to restructure the business and invest in plant and machinery. The plant is located on a 41,000 sqm site in the centre of a prominent city of Rajasthan.
The total acquisition cost is projected at GBP6.55 million, of which the Company's share is estimated to be GBP4.91 million. As at 31 March 2011, an amount of GBP1.71 million had been invested through an SPV, of which the Company's contribution is GBP1.28 million. The SPV has entered into an agreement with the first charge holder, holding 33% of the total secured debt for acquisition of the unit of the company. The SPV is now negotiating with the other secured creditors and stakeholders for completing acquisition of the unit. Vigorous efforts are being made for the resolution of the assets including negotiations with various stakeholders, such as workers and promoters, to resolve the asset.
Risks
In spite of the Company investing in diversified assets and industries, the investments are exposed to certain illiquidity and market risks as they are principally investments in assets and liabilities of distressed companies and unquoted equity securities. Further, investments in such companies are inherently difficult to value. In addition, the Company's operations are conducted in jurisdictions which generate revenue, expenses, assets and liabilities in currencies other than Sterling. As a result, the Company is subject to the effects of exchange rate fluctuations with respect to these currencies. The currency giving rise to this risk is primarily the Indian Rupee.
Outlook
The Company was able to commit a large part of the IPO proceeds within a short period post Admission and has progressed significantly in completing the resolution of four of the six assets that it has invested into, with the remaining two indicating a longer time frame. There has been some delay in exits from such assets, partly on account of recession and liquidity issues in economies across the world, including India. Therefore, while the Investment Manager is taking more intensive steps for realisation of such assets, the valuations provided in this Annual Report reflect suitable discounts on account of such illiquidity and delay in realisation.
Investing Policy
Investing Objective
The Company intendsto invest in distressed companiesand distressed assets in India with the objective of providing shareholders with income and capital growth.
Investing Strategy
The investmentswill be structured primarily in the following four types of transaction:
Turnaround of companies
In these transactions, the objective is to acquire an interest in a target company through its secured debt (and a minorityequity interest, where appropriate). The aim will be to benefit from the control taken of the target company, its operationsand its assets and, if appropriate, to change or motivate existing management and implement a new strategy to turn around the business.
Target companies will typically be under-performing due to financial, operational or management constraints and an overhang of debt, but with the potential for achieving a turnaround through restructuring. In such transactions, the Manager may arrange to provide the target company with a range of technical, legal, management and financial inputs, as required.
The Directorsbelieve that exits from such an investment will be achieved principally through sellingthe controlling interest in the target company to a third party, to the target's existing management, or via public offering. The Company intends to work to a time frame of 24-36 months from acquisition to exit in such transactions.
Re-sale of assets or companies
The objective in thesetransactions is to obtain benefit from a change in control of the target company or its assets through the secured debt. The Company and its subsidiaries will consider acquiring a minority equity interest in target companiesand/or assets but the Companywould not acquire a majority of the equity interest.
The value in such transactions lies in being able to acquire or settle the debts of the target company at a discount to the market value of the underlying assets of the business as a whole, and then to restructure the debts so as to achieve the desired return upon a sale of the target company or its assets.
An exit is achieved throughthe sale of its assets to a third party purchaserand/or the equity when sold. The Manager will seek to identify such transactions in sectors where there is demand for consolidation and capacity addition.
The Company intends to work to a time frame of 9-12 months from acquisition to exit in such transactions.
Break-up and sale of assets
The objective of thesetransactions is to obtain benefitfrom a change in control of the target company or its assets by taking a secureddebt position with a view to realising latent value through the sale of individualassets or parts of the businessto different buyers. The Companywill consider acquiringa minority equity interest in target companiesand/or assets, but the Company would not acquire a majority of the equity interest. This process will entail the negotiationand restructuring of debts with creditorsand lenders, the consolidation of security and the sale of assets to third party buyers.
The Directorsconsider that this type of transaction is particularly attractive where there are high value assets in the target company, and the Companyexpects that the debt can be settled at a discountto market value. The Company intends to work to a time frame of 12-15 months from acquisition to exit insuch transactions.
Bridge financing
In these transactions the objective is to provide short term bridge financing to target companies that are in need of immediatefunds to completeone time settlements with secured creditorsand which have cash flows to support the repayment of the financing(together with the Company's desired return) to the Group over a period of 6-9 months.
Gearing
The Directors anticipate that, due to a lack of sophisticated distress lenders in India and with the exception of bridge financing transactions, the Group's transactions will generally be funded by the Group from the proceeds of equity investmentsinto the Group and not through debt.
InvestingRestrictions
The Company will only invest in Indian distressedcompanies and distressedassets. The Company will not have a predetermined preference of allocation in the type of transactions outlined above, but will aim to build a diversified portfolio by:
- investing no more than GBP5 million in transactions relating to one single entity;
- investing no more than 50 per cent of the net asset value of its portfolio in one single transaction type; and
- not investing in transactions where the intrinsic value of the underlying assets is believed to be less than the amount of the investment required.
The Board may however consider deviation from the above parameters while evaluating specific proposals. These investment restrictions will apply at the time of the initialinvestment in a particular opportunity and subsequent transactions which affect these ratios will not lead to a requirement to divest any investmentto rebalance the portfolio. There are no obligations on the Company or the Managerto make any investmentsor to return monies to shareholders within a minimumperiod of time.
Note: The amounts mentioned in the Investment Managers Review may vary from year to year due to exchange rate differences.
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2011
Year ended
Year ended 31 March
Note 31 March 2011 2010
GBP'000 GBP'000
Interest income on cash balances 44 42
Dividend income 159 107
Excess provision written-off - 2
----------------------------------- ----- --------------- -----------
Investment income 203 151
----------------------------------- ----- --------------- -----------
Investment management fees 6 (408) (445)
Other administration expenses 7 (680) (683)
----------------------------------- ----- --------------- -----------
Total expenses (1,088) (1,128)
----------------------------------- ----- --------------- -----------
Loss before taxation (885) (977)
Taxation 8 (1) (48)
Loss for the year (886) (1,025)
=================================== ===== =============== ===========
Other comprehensive (loss)/income
Unrealised change in fair value
of available-
for-sale financial assets 12 611 (1,273)
Add/(less) deferred taxation 8 592 (190)
Foreign currency translation
differences for
foreign operations (1,341) 2,185
----------------------------------- ----- --------------- -----------
Other comprehensive income
for the
year, net of income tax (138) 722
----------------------------------- ----- --------------- -----------
Total comprehensive loss for
the year (1,024) (303)
=================================== ===== =============== ===========
Loss attributable to:
Equity holders of the Company (862) (1,003)
Non-controlling interest (24) (22)
----------------------------------- ----- --------------- -----------
Loss for the year (886) (1,025)
=================================== ===== =============== ===========
Total comprehensive loss attributable
to:
Equity holders of the Company (767) (537)
Non-controlling interest (257) 234
------------------------------------- -------- -------
Total comprehensive loss for
the year (1,024) (303)
===================================== ======== =======
Basic and diluted loss per
share (pence) 9 (5.17) (6.02)
===================================== ======== =======
The Directors consider that all results derive from continuing activities
Consolidated Statement of Financial Position
As at 31 March 2011
At 31 March At 31 March
Note 2011 2010
GBP'000 GBP'000
-------------------------------- ----- ------------ ------------
Current assets
Available-for-sale financial
assets 12 20,332 20,502
Trade and other receivables 13 77 56
Cash and cash equivalents 14 5,181 6,304
-------------------------------- ----- ------------ ------------
Total assets 25,590 26,862
================================ ===== ============ ============
Equity
Share capital 15 1,667 1,667
Share premium 15 21,355 21,355
Fair value reserve (880) (2,112)
Foreign currency translation
reserve 1,656 2,793
Retained loss (2,942) (2,080)
Total equity attributable to
equity holders of the Company 20,856 21,623
-------------------------------- ----- ------------ ------------
Non-controlling interest 2,772 3,019
-------------------------------- ----- ------------ ------------
Total equity 23,628 24,642
-------------------------------- ----- ------------ ------------
Non-current liabilities
Deferred tax liabilities 8 1,460 2,052
Total non-current liabilities 1,460 2,052
-------------------------------- ----- ------------ ------------
Current liabilities
Trade and other payables 16 502 168
Total current liabilities 502 168
-------------------------------- ----- ------------ ------------
Total liabilities 1,962 2,220
-------------------------------- ----- ------------ ------------
Total equity and liabilities 25,590 26,862
================================ ===== ============ ============
Approved by the Board of Directors on 31 August 2011.
Arun Singh John Bourbon
Director Director
Company Statement of Financial Position
As at 31 March 2011
At 31 March At 31 March
Note 2011 2010
GBP'000 GBP'000
------------------------------ ----- ------------ ------------
Non-current assets
Investment in subsidiary 11 19,573 19,998
------------------------------ ----- ------------ ------------
Total non-current assets 19,573 19,998
------------------------------ ----- ------------ ------------
Current assets
Trade and other receivables 13 6 6
Cash and cash equivalents 14 718 1,100
Total current assets 724 1,106
------------------------------ ----- ------------ ------------
Total assets 20,297 21,104
============================== ===== ============ ============
Equity
Share capital 15 1,667 1,667
Share premium 15 21,355 21,355
Retained loss (2,808) (2,029)
------------------------------ ----- ------------ ------------
Total equity 20,214 20,993
------------------------------ ----- ------------ ------------
Current liabilities
Trade and other payables 16 83 111
Total current liabilities 83 111
------------------------------ ----- ------------ ------------
Total liabilities 83 111
------------------------------ ----- ------------ ------------
Total equity and liabilities 20,297 21,104
============================== ===== ============ ============
The Company made a loss for the year of GBP779,308 (2010: loss of GBP919,627)
Approved by the Board of Directors on 31 August 2011.
Arun Singh John Bourbon
Director Director
Consolidated Statement of Changes in Equity
For the year ended 31 March 2011
Foreign
currency Fair Total
Share Share translation value Retained shareholders' Non-controlling
capital premium reserve reserve loss funds interest Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 April
2009 1,667 21,355 855 (640) (1,077) 22,160 2,674 24,834
------------------------ -------- -------- ------------ -------- --------- -------------- ---------------- ------------------
Total comprehensive
loss for the year:
Loss for the year - - - - (1,003) (1,003) (22) (1,025)
Other comprehensive
income
Foreign currency
translation
differences - - 1,938 - - 1,938 247 2,185
Net change in fair
value of available-
for-sale financial
assets net of tax - - - (1,472) - (1,472) 9 (1,463)
Total other
comprehensive
income/(loss) - - 1,938 (1,472) - 466 256 722
------------------------ -------- -------- ------------ -------- --------- -------------- ---------------- ------------------
Total comprehensive
income/(loss) for the
year - - 1,938 (1,472) (1,003) (537) 234 (303)
------------------------ -------- -------- ------------ -------- --------- -------------- ---------------- ------------------
Transactions with
owners recorded
directly in equity:
Contributions from
non-controlling
interest - - - - - - 111 111
Total transactions with
owners - - - - - - 111 111
------------------------ -------- -------- ------------ -------- --------- -------------- ---------------- ------------------
Balance at 31 March
2010 1,667 21,355 2,793 (2,112) (2,080) 21,623 3,019 24,642
======================== ======== ======== ============ ======== ========= ============== ================ ==================
Consolidated Statement of Changes in Equity (continued)
For the year ended 31 March 2011
Foreign
currency Fair Total
Share Share translation value Retained shareholders' Non-controlling
capital premium reserve reserve loss funds interest Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 April
2010 1,667 21,355 2,793 (2,112) (2,080) 21,623 3,019 24,642
------------------------ -------- -------- ------------ -------- --------- -------------- ---------------- ---------------
Total comprehensive
loss for the year:
Loss for the year - - - - (862) (862) (24) (886)
Other comprehensive
income
Foreign currency
translation
differences - - (1,137) - - (1,137) (204) (1,341)
Net change in fair
value of available-
for-sale financial
assets net of tax - - - 1,232 - 1,232 (29) 1,203
Total other
comprehensive
income/(loss) - - (1,137) 1,232 - 95 (233) (138)
------------------------ -------- -------- ------------ -------- --------- -------------- ---------------- ---------------
Total comprehensive
income/(loss) for the
year - - (1,137) 1,232 (862) (767) (257) (1,024)
------------------------ -------- -------- ------------ -------- --------- -------------- ---------------- ---------------
Transactions with
owners recorded
directly in equity:
Contributions from
non-controlling
interest - - - - - - 10 10
Total transactions with
owners - - - - - - 10 10
------------------------ -------- -------- ------------ -------- --------- -------------- ---------------- ---------------
Balance at 31 March
2011 1,667 21,355 1,656 (880) (2,942) 20,856 2,772 23,628
======================== ======== ======== ============ ======== ========= ============== ================ ===============
Company Statement of Changes in Equity
For the year ended 31 March 2011
Share Retained
capital Share premium loss Total
GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 April 2009 1,667 21,355 (1,110) 21,912
------------------------------ --------- -------------- --------- --------
Total comprehensive income
for the year:
Loss for the year - - (919) (919)
Other comprehensive income - - - -
Total comprehensive loss for
the year - - (919) (919)
------------------------------ --------- -------------- --------- --------
Balance as at 31 March 2010 1,667 21,355 (2,029) 20,993
============================== ========= ============== ========= ========
Balance as at 1 April 2010 1,667 21,355 (2,029) 20,993
------------------------------ --------- -------------- --------- --------
Total comprehensive loss for
the year:
Loss for the year - - (779) (779)
Other comprehensive income - - - -
------------------------------ --------- -------------- --------- --------
Total comprehensive loss for
the year - - (779) (779)
------------------------------ --------- -------------- --------- --------
Balance as at 31 March 2011 1,667 21,355 (2,808) 20,214
============================== ========= ============== ========= ========
Consolidated Statement of Cash Flows
For the year ended 31 March 2011
Year ended
Year ended 31 March
31 March 2011 2010
GBP'000 GBP'000
-------------------------------------- --------------- -----------
Cash flows from operating activities
Loss for the year (886) (1,025)
Adjustments for:
Interest income on cash balances (44) (42)
Dividend income (159) (107)
(1,089) (1,174)
(Increase) in trade and other
receivables 1 (19)
Increase in trade and other
payables 334 8
Interest and dividends received 181 264
-------------------------------------- --------------- -----------
Net cash used in operating
activities (573) (921)
-------------------------------------- --------------- -----------
Cash flows from investing activities
Receipt of refund from asset
reconstruction
company 18 628
Acquisition of investments (630) (1,251)
Net cash used in investing
activities (612) (623)
-------------------------------------- --------------- -----------
Cash flows from financing activities
Proceeds from non-controlling
interest 10 111
Net cash flow from financing
activities 10 111
-------------------------------------- --------------- -----------
Net (decrease) in cash and
cash equivalents (1,175) (1,433)
Cash and cash equivalents at
start of year 6,304 7,408
Effect of foreign exchange
rate changes on
cash and cash equivalents 52 329
-------------------------------------- --------------- -----------
Cash and cash equivalents at
31 March 5,181 6,304
====================================== =============== ===========
Notes to the preliminary results
1 The Company
Dhir India Investments Plc ("the Company") was incorporated and registered in the Isle of Man under the Isle of Man Companies Acts 1931 to 2004 on 20 June 2007 as a public company with registered number 120065C.
Following the close of the placing on 12 July 2007, 16,666,665 shares were issued.
The Shares of the Company were admitted to trading on the Alternative Investment Market of the London Stock Exchange ("AIM") on 12 July 2007 when dealings also commenced.
The Company's agents and the investment manager perform all significant functions. Accordingly, the company itself has no employees.
The annual report of the Company for the year ended 31 March 2011 comprises the Company and its subsidiaries (together referred to as the "Group").
2 Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs).
The consolidated financial statements were authorised for issue by the Board of Directors on 31 August 2011.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for available-for-sale financial instruments that are measured at fair value in the statement of financial position.
(c) Functional and presentation currency
These consolidated financial statements are presented in Sterling, which is the Company's functional currency. All financial information presented in Sterling has been rounded to the nearest thousand.
(d) Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. 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 in any future periods affected.
The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5 and 12 (assessment of fair value of available-for-sale financial assets).
3 Summary of significant accounting policies
3.1 Basis of consolidation
Subsidiaries
Subsidiaries are those enterprises controlled by the Company. Control exists where the Company has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
3.2 Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the presentation currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the presentation currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the presentation currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments, which are recognised in other comprehensive income.
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Sterling at exchange rates at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to Sterling at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income. When a foreign operation is disposed of, in part or in full, the relevant amount in the Foreign Currency Translation Reserve (FCTR) is transferred to profit or loss as part of the profit or loss on disposal.
3.3 Investments
The Group recognises financial assets initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group has the following non-derivative financial assets, available-for-sale financial assets.
Investments represent investments for acquisition of assets/units and unquoted shares. The investments are designated in the category of 'available for sale' and stated at fair value. In valuing these investments, the Directors follow the principles recommended in the International Private Equity and Venture Capital Valuation Guidelines which were effective from January 2005. Subsequent to initial recognition, the investments are measured at fair value and changes therein, other than impairment losses (see note 3.10) and foreign currency differences on available-for-sale equity instruments (see note 3.2), are recognised in other comprehensive income and presented within equity in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in other comprehensive income is transferred to profit or loss. In the small minority of cases where fair value cannot be reliably measured, existing book value, less any impairment, is used as the basis of valuation.
Fair value represents the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction. In estimating fair value, the Directors use a methodology which is appropriate in light of the nature, facts and circumstances of the investment and its materiality in the context of the total investment portfolio. Methodologies are applied consistently from one period to another except where a change results in a better estimate of fair value. Because of the inherent uncertainties in estimating the value of private equity investments, the Directors exercise due caution in applying the various methodologies. See note 12 regarding valuation methodology.
3.4 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.
3.5 Cash and cash equivalents
Cash in hand and in banks and short-term deposits, which are held to maturity, are carried at cost. Cash and cash equivalents are defined as cash in hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value.
For the purpose of the cash flow statement, cash and cash equivalents consist of cash in hand and deposits at banks.
3.6 Revenue and expense recognition
Interest income is recognised in the financial statements on an accruals basis using the effective interest rate basis. Dividend income is recorded when declared.
Expenses are accounted for on an accrual basis. Expenses are charged to the profit or loss except for expenses incurred on the acquisition of an investment which are included within the cost of that investment. Expenses arising on the disposal of an investment are deducted from the disposal proceeds.
3.7 Dividends
Dividends are recognised as a liability in the period in which they are declared and approved.
3.8 Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
3.9 Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost.
3.10 Impairment
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.
Impairment losses on available-for-sale investment securities are recognised by transferring the cumulative loss that has been recognised in other comprehensive income, and presented in the fair value reserve in equity, to profit or loss. The cumulative loss that is removed from other comprehensive income and recognised in profit or loss is the difference between the acquisition cost and the current fair value, less any impairment loss previously recognised in profit or loss.
If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised in profit or loss, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income.
3.11 Income tax expense
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.
3.12 Future changes in accounting policies
IASB (International Accounting Standards Board) and IFRIC (International Financial Reporting Interpretations Committee) have issued the following standards and interpretations with an effective date after the date of these financial statements:
New/Revised International Financial Reporting Effective date
Standards (IAS/IFRS) (accounting periods
commencing on
or after)
------------------------------------------------------- ---------------------
IAS 1 Presentation of Financial Statements* IAS 1 1 January 2011
Presentation of Financial Statements - amendments to 1 July 2012
revise the way other comprehensive income is
presented
IAS 12 Income Taxes - Limited scope amendment 1 January 2012
(recovery of underlying assets) (December 2010)
IAS 19 Employee Benefits - Amendment resulting 1 January 2013
from the Post-Employment Benefits and Termination
Benefits projects
IAS 24 Related Party Disclosures - Revised definition 1 January 2011
of related parties
IAS 27 Consolidated and Separate Financial Statements* 1 July 2010
IAS 27 Consolidated and Separate Financial Statements 1 January 2013
- Reissued as IAS 27Separate Financial Statements
(as amended in May 2011)
IAS 28 Investments in Associates - Reissued as 1 January 2013
IAS 28 Investments in Associates and Joint Ventures
(as amended in May 2011)
IAS 34 Interim Financial Reporting* 1 January 2011
IFRS 3 Business Combinations* 1 July 2010
IFRS 7 Financial Instruments: Disclosures* 1 January 2011
IFRS 7 Financial Instruments: Disclosures - Amendments 1 July 2011
enhancing disclosures about transfers of financial
assets (October 2010)
IFRS 9 Financial Instruments - Classification 1 January 2013
and Measurement
IFRS 10 Consolidated Financial Statements** 1 January 2013
IFRS 11 Joint Arrangements** 1 January 2013
IFRS 12 Disclosure of Interests in Other Entities** 1 January 2013
IFRS 13 Fair Value Measurement** 1 January 2013
------------------------------------------------------- ---------------------
IFRIC Interpretation
------------------------------------------------------ ---------------
IFRIC 13 Customer Loyalty Programmes* 1 January 2011
IFRIC 14 The Limit on a Defined Benefit Asset, 1 January 2011
Minimum Funding Requirements and their Interaction
- November 2009 amendments with respect to voluntary
prepaid contributions
IFRIC 19 Extinguishing Financial Liabilities with 1 July 2010
Equity Instruments
*Amendments resulting from May 2010 Annual Improvements to IFRSs
** Original issue May 2011
The Directors do not expect the adoption of the standards and interpretations to have a material impact on the Group's financial statements in the period of initial application. However, IFRS 9 Financial Instruments issued in November 2009 will change classification of financial assets.
IFRS 9 deals with the classification and measurement of financial assets and its requirements represent a significant change from the existing IAS 39 in respect of financial assets. The standard contains two primary measurement categories for financial assets: at amortised cost and fair value. A financial asset would be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and the asset's contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. All other financial assets would be measured at fair value. The standard eliminates the existing IAS 39 categories of held to maturity, available for sale and loans and receivables.
For an investment in an equity instrument that is not held for trading, the standard permits an irrevocable election, on initial recognition, on an individual share-by-share basis, to present all fair value changes from the investment in other comprehensive income. No amount recognised in other comprehensive income would ever be reclassified to profit or loss. However, dividends on such investments are recognised in profit or loss, rather than other comprehensive income unless they clearly represent a partial recovery of the cost of the investment. Investments in equity instruments in respect of which the entity does not expect to present fair value changes in other comprehensive income would be measured at fair value with changes in fair value recognised in profit or loss.
4. Segment reporting
The Group operates as one business and geographic segment, being investment in distressed debt, in India.
5. Critical accounting estimates and assumptions
These disclosures supplement the commentary on financial risk management (see note 20).
Key sources of estimation uncertainty
Determining fair values
The determination of fair values for financial assets for which there is no observable market prices requires the use of valuation techniques as described in accounting policy 3.3 and note 12. For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument. See also "Valuation of financial instruments" below.
Critical judgements in applying the Group's accounting policies
Critical judgements made in applying the Group's accounting policies include:
Valuation of financial instruments
The Group's accounting policy on fair value measurements is discussed in accounting policy 3.3. The Company measures fair value using the following hierarchy that reflects the significance of inputs used in making the measurements:
-- Level 1: Quoted market price (unadjusted) in an active market for and identical instrument. -- Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments: quoted market prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data. -- Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.
Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments the Group determines fair values using valuation techniques.
The Group holds ownership interests in the debt of certain unquoted Indian distressed companies and one direct investment in the equity of one listed distressed company. The fair value of investments, as shown in note 12, is based on independent valuations.
The table below analyses financial instruments measured at fair value at the end of the reporting period, by the level in the fair value hierarchy into which the fair value measurements are categorised:
Level Level Level
1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Available-for-sale financial assets
Turquoise Metals and Electricals
Private Limited - - 4,967 4,967
Aquamarine Synthetics and Chemicals
Private Limited - - 3,130 3,130
Triton Projects India Private
Limited - - 527 527
Destination India Projects Private
Limited - - 977 977
Cygnet Projects Private Limited - - 10,216 10,216
Lords Choloro Alkali Limited - - 515 515
--------- --------- -------- --------
- - 20,332 20,332
========= ============================================== ======== ========
The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in level 3 of the fair value hierarchy:
31 March 2011
GBP'000
Fair value brought forward 20,502
Additional investment 631
Refund from asset reconstruction company (18)
Movement in fair value 611
Effect of foreign exchange fluctuations (1,394)
--------------
Fair value at year end 20,332
==============
6. Investment management fees
Management fee
Shiva Consultants Private Limited (the "Investment Manager") was entitled to a management fee of 1.8 per cent per annum of the NAV (payable quarterly in advance) in the first year and a management fee of 2 per cent per annum of the NAV (payable quarterly in advance) thereafter, provided that any fee for any commencing or terminating period shall be the pro-rated amount. For the year ended 31 March 2011, the Investment Manager agreed to reduce the management fee from 2% to 1.5%.
The NAV calculation of each financial year is based on semi-annual independent valuations of such investments in accordance with IFRS as at the end of the relevant financial year and at the date which is six months after the relevant financial year end. Throughout the relevant financial year, the management fee paid on each quarter date is based on the latest NAV calculation. The management fee payments are then adjusted retrospectively following the next NAV calculation.
Annual management fees paid during the year ended 31 March 2011 amounted to GBP408,498 (2010: GBP445,588) and no fees were outstanding as at 31 March 2011 (2010: GBPnil).
Performance fee
The Investment Manager is entitled to a performance fee, calculated as follows, in respect of net proceeds received by the relevant member of the Group in respect of an investment:
-- the net investment proceeds will first be allocated to the Group, until the Group has received an amount equal to the investment outlay and an investment IRR of 12 per cent.
-- any remaining balance of the net investment proceeds will then be allocated to the Investment Manager until the Investment Manager has received an amount equal to 25 per cent of the return already allocated to the Group;
-- any remaining balance of the net investment proceeds will then be allocated between the Group and the Investment Manager in the ratio 80:20 up to an investment IRR of 25 per cent; and
-- any remaining balance of the net investment proceeds will then be allocated between the Group and the Investment Manager in the ratio 65:35.
Due to decrease in the fair value of investments, relative to their cost, no performance fee has been provided in the financial statements for the year ended 31 March 2011 (2010: GBPnil).
7. Other administration expenses
Year ended Year ended
31 March 2011 31 March 2010
GBP'000 GBP'000
Professional fees 214 224
Directors' remuneration 130 127
Administration fees 51 77
Nominated and broker fees 47 45
Public relations fees 27 13
Accounting fees 32 33
Audit fees 81 53
Other expenses 98 111
--------------------------- --------------- ---------------
Total 680 683
=========================== =============== ===============
8. Taxation
The standard rate of income tax for companies in the Isle of Man is 0%. No provision for taxation has, therefore, been made in the Company.
The Mauritian entity is a Global Business License Category 1 (GBL1) company in Mauritius and under the current laws and regulations is liable to pay income tax on their net income at a rate of 15%. The entity is however entitled to a tax credit equivalent to the higher of actual foreign tax suffered and 80% of the Mauritian tax payable in respect of the foreign source income thus reducing the maximum effective tax rate to 3%. No Mauritian capital gains tax is payable on profits arising from the sale of securities, and any dividends and redemption proceeds paid by the entity to their members will be exempt in Mauritius from any withholding tax.
The Indian subsidiaries are incorporated for acquiring assets of targeted companies. As such, the funds remitted by Agate India Investments Limited, are utilized for acquiring the secured assets of the target companies. Only surplus funds are held in short-term deposits and short-term liquid mutual funds. The income earned in the form of interest on deposits is taxable as "income from other sources". The income earned in the form of Dividend on funds invested in short term liquid mutual funds is exempt from tax as per section 10(23G) of the Income Tax Act.
For the assessment year 2010-11, the five Indian subsidiaries - Turquoise Metal & Electricals Pvt. Ltd., Aquamarine Synthetics & Chemicals Pvt. Ltd., Triton Projects Private Limited, DestinationIndia Projects Private Limited and Cygnet Projects Private Limited, do not have taxable income under the Income Tax Act 1961. As such, no income tax is levied on them. However, one Indian subsidiary, DestinationIndia Projects Private Limited, has book profit and as such, per the provisions of Section 115JB of the Income Tax Act, 1961, Minimum Alternate Tax will be charged at 18.54% on the profits of DestinationIndia Projects Private Limited.
Deferred taxation has been recognised within each individual subsidiary on the basis that the fair valued investments are realised within the subsidiary rather than as a sale of the shares of the subsidiary.
The actual income tax expense is as follows:
Year ended Year ended
31 March 2011 31 March 2010
GBP'000 GBP'000
Income tax expense 1 48
Deferred tax (credit)/charge (592) 190
(591) 238
============================== =============== ===============
Deferred Taxation
The movement in deferred tax during the year was as follows:
31 March 2011 31 March 2010
GBP'000 GBP'000
Opening balance 2,052 1,862
(Credit)/charge for the year (592) 190
Balance at 31 March 1,460 2,052
============================== ============== ==============
Deferred taxation provided in the financial statements is as follows:
31 March 2011 31 March 2010
GBP'000 GBP'000
Revaluation of available-for-sale
financial assets 1,460 2,052
==================================== ============== ==============
The deferred taxation has been provided at the standard rate for the subsidiaries of 33.66%. The Company has no deferred taxation.
9. Loss per share
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.
Year ended Year ended
31 March 2011 31 March 2010
Loss attributable to equity
holders of the Company (GBP'000) (862) (1,003)
Number of ordinary shares
in issue 16,666,677 16,666,677
Basic loss per share (pence) (5.17) (6.02)
=================================== =============== ===============
There is no dilutive earnings per share number shown as there are no share options in issue and the warrants have expired.
10. Net asset value per share
Net Asset Value (NAV) per share is calculated by dividing the net assets attributable to equity holders of the Company by the number of ordinary shares in issue as at 31 March 2011.
31 March 2011 31 March 2010
Net assets attributable to shareholders
(GBP'000) 20,856 21,623
Number of ordinary shares in
issue 16,666,677 16,666,667
Net asset value per share (pence) 125 130
========================================= ============== ==============
11. Investments in subsidiaries
For efficient portfolio management purposes, the Company has established the following subsidiary companies:
Ownership
Name Country of Incorporation interest
Agate India Investments Limited Mauritius 100%
Turquoise Metal and Electricals
Private Limited* India 75%
Aquamarine Synthetics & Chemical
Private Limited* India 75%
Triton Project India Private Limited* India 95%
Destination India Projects Private
Limited* India 95%
Cygnet Projects Private Limited* India 90%
-------------------------------------- -------------------------- ----------
*Subsidiaries of Agate India Investments Limited
12. Available-for-sale financial assets
Investments in unquoted Indian incorporated investee companies are designated as available-for-sale financial assets and are carried at fair value in the statement of financial position. The Group has invested in the debt of identified distressed companies (secured by way of charges on the assets) with the intention of acquiring the assets of these companies.
The Group's investments in the underlying investee companies are as follows as at 31 March 2011:
Foreign
Capital Fair value exchange rate
Investments invested adjustment effect Fair value
GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------------- --------------- -------------- -----------
Indirect
investments
Turquoise
Metals and
Electricals
Private
Limited 1,850 3,030 87 4,967
Aquamarine
Synthetics
and Chemicals
Private.
Limited 1,675 1,309 146 3,130
Triton
Projects
India Private
Limited 1,032 (586) 81 527
Destination
India
Projects
Private
Limited 1,598 (841) 220 977
Cygnet
Projects
Private
Limited 10,726 (1,523) 1,013 10,216
Direct
investments
Lords Choloro
Alkali
Limited 1,108 (721) 128 515
--------------- --------------- --------------- -------------- -----------
17,989 668 1,675 20,332
=============== =============== =============== ============== ===========
The movements in the fair value of the financial assets held by the above investee companies are as follows:
31 March 2011 31 March 2010
GBP'000 GBP'000
Fair value brought forward 20,502 19,296
Additional investment 631 1,251
Refund from asset reconstruction company (18) (628)
Movement in fair value 611 (1,273)
Effect of foreign exchange fluctuations (1,394) 1,856
------------------------------------------ -------------- --------------
Fair value at end of the year 20,332 20,502
========================================== ============== ==============
Valuation methodology
The value of the Group's interest in the assets of the underlying investee companies had been determined by the Directors with the advice of an independent valuer. The value of the assets of the distressed companies is based on the Directors' best estimate of a fair value basis in a forced sale scenario. Physical assets of the distressed companies, against which the debts are secured, are valued by independent valuers and the fair value is discounted at appropriate rates taking into account costs to dispose the assets and time of realisation of the assets. Statutory liabilities which have a preference over secured debt, and resolution costs of between 1% and 10% (based on the valuer's opinion of the asset) of realisable value are deducted from the realisable value. Discounts are also applied based on the level of aggregation of debt achieved.
In determining the valuation of the investment in Lords Choloro Alkali Limited ("LCAL"), the Directors have reviewed the quoted share price in the period from 1 January 2011 to the date of agreement of the valuations by the Directors, 3 May 2011. The Directors have also examined further factors, such as the level of trading of LCAL shares as well as the size of the shareholding, and have determined the value of the investment to be INR25 per share.
13. Trade and other receivables
Group Company Group Company
31 March 31 March 31 March 31 March
2011 2011 2010 2010
GBP'000 GBP'000 GBP'000 GBP'000
Prepayments and accrued
income 77 6 56 6
77 6 56 6
========================= ========= ========= ========= =========
14. Cash and cash equivalents
Group Company Group Company
31 March 31 March 31 March 31 March
2011 2011 2010 2010
GBP'000 GBP'000 GBP'000 GBP'000
Bank balances 1,274 718 909 99
Short-term deposits 3,907 - 5,395 1,001
--------------------------- --------- --------- --------- ---------
Cash and cash equivalents 5,181 718 6,304 1,100
=========================== ========= ========= ========= =========
15. Share capital
No. of shares Share capital Share premium
GBP'000 GBP'000
Ordinary shares of GBP 0.10
each 16,666,677 1,667 21,355
16,666,677 1,667 21,355
============== ============== ==============
The authorised share capital of the Company is GBP10,000,000, divided into 100,000,000 Ordinary Shares of GBP0.10 each. The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company's assets.
Warrants originally issued expired on 12 July 2009.
16. Trade and other payables
Group Company Group Company
31 March 31 March 31 March 31 March
2011 2011 2010 2010
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 403 12 128 35
Accruals 99 71 40 76
---------------- --------- --------- --------- ---------
502 83 168 111
================ ========= ========= ========= =========
17. Directors' remuneration
Details of the Directors' annual remuneration are as follows:
Directorship
Fee for fee as Fees paid by
Dhir India member of Agate India
Name of Investments audit Investments
Director plc committee Limited* Total Total
2011 2011 2011 2011 2010
GBP GBP GBP GBP GBP
C E Hambro 30,000 - - 30,000 30,000
A Singh 29,532 5,906 12,000 47,438 45,953
J Bourbon 29,532 5,906 - 35,438 34,688
M Y Khan 25,000 - - 25,000 25,000
-------------- ------------ ------------- ------------- -------- --------
Total 114,064 11,812 12,000 137,876 135,641
============== ============ ============= ============= ======== ========
The Directors are each entitled to receive reimbursement of any expenses in relation to their appointment. Total fees paid to the Directors for the year ended 31 March 2011 is GBP137,876 (2010: GBP138,790).
18. Related party transactions
Management arrangement
Alok Dhir and his associates are the significant shareholders of Shiva Consultants Private Limited (the Investment Manager) and a Director of Dhir India Investments plc. The management fee and performance fee arrangements are set out in note 6.
Legal services
Alok Dhir is also one of the partners of Dhir & Dhir Associates, the Company's lawyers in India. During the year the Company used the legal services of Dhir & Dhir Associates and incurred the following charges:
Year ended Year ended
31 March 2011 31 March 2010
GBP'000 GBP'000
------------------------------------ --------------- ---------------
Legal and professional fees 32 23
Balance outstanding as at 31 March 19 21
------------------------------------ --------------- ---------------
Amounts were billed based on normal market rates for such services and were due and payable under normal payment terms.
Save as disclosed above, none of the Directors had any interest during the year in any material contract for the provision of services which was significant to the business of the Company.
Alchemist Asset Reconstruction Company Limited (formerly Dhir & Dhir Asset Reconstruction and Securitisation Company Limited)
One of the Directors of the Company, Alok Dhir, is also a director of Alchemist Asset Reconstruction Company Limited ("AARCL"). The SPVs have entered into transactions with AARCL for acquisition of various assets/units in respect of the companies in which investments have been made. AARCL also act as trustee of the various trusts.
The outstanding balance of advances made by the SPVs to AARCL, and its related trusts, in consideration for the purchase of the aforementioned assets are as below:
31 March 2011 31 March 2010
GBP'000 GBP'000
----------------------------------------- -------------- --------------
Turquoise Metals and Electrical Private
Limited 1,704 1,846
Aquamarine Synthetics and Chemicals
Private Limited - 427
Triton Projects India Private Limited 66 71
Destination India Projects Private
Limited - -
Cygnet Projects Private Limited 2,748 2,873
----------------------------------------- -------------- --------------
Total 4,723 5,217
========================================= ============== ==============
Included in the total consideration paid by the Company for certain assets is an amount payable to AARCL in its capacity as an asset reconstruction company. The amount of the enhanced consideration payable to AARCL is noted below:
31 March 2011 31 March 2010
GBP'000 GBP'000
----------------------------------------- -------------- --------------
Turquoise Metals and Electrical Private
Limited 84 79
Aquamarine Synthetics and Chemicals
Private Limited 20 19
Triton Projects India Private Limited 4 26
Destination India Projects Private
Limited - 39
Cygnet Projects Private Limited 124 116
----------------------------------------- -------------- --------------
Total 232 279
========================================= ============== ==============
The following amounts remain payable to AARCL as at 31 March 2011:
31 March 2011
GBP'000
----------------------------------------- --------------
Turquoise Metals and Electrical Private
Limited 234
Aquamarine Synthetics and Chemicals
Private Limited 20
Triton Projects India Private Limited 14
Destination India Projects Private
Limited -
Cygnet Projects Private Limited 82
----------------------------------------- --------------
Total 350
========================================= ==============
Co-investment
During the year to 31 March 2011, Alok Dhir has in terms of the co-investment commitments along with Turnaround Consultants Private Limited and Sopan Securities Private Limited, which are some of his connected persons, co-invested with the Group's subsidiary Agate India Investments Limited in the following Group SPVs subsidiaries:
Equity Holding Investment
(%) GBP'000
Turquoise Metals and Electrical Private
Limited 25% 492.10
Aquamarine Synthetics and Chemicals
Private Limited 25% 533.72
Triton Projects India Private Limited 5% 59.93
Destination India Projects Private
Limited 5% 261.78
Cygnet Projects Private Limited 10% 1,201.26
----------------------------------------- --------------- -----------
Lords Chloro Alkali Limited
Alok Dhir is also a shareholder in Lords Chloro Alkali Limited. As at 31 March 2011, the Group has subscribed for 1.5 million equity shares at INR 60 per share in Lords Chloro Alkali Limited (see note 12).
19. Exchange rates
The following exchange rates were used to translate assets and liabilities into the reporting currency at 31 March 2011:
2011 2011 2010 2010
Closing Average Closing Average
rate rate rate rate
UK Sterling : Indian Rupee 72.79040 71.41314 67.86850 76.19825
---------------------------- --------- --------- --------- ---------
20. Financial risk management
The Group's activities expose it to a variety of financial risks: market risk (including market price risk, foreign currency risk and interest rate risk), credit risk and liquidity risk. This note presents information about the Group's exposure to each of the above risks and the Group's objectives, policies and processes for measuring and managing risk.
The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework.
The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group Audit Committee oversees how management monitors compliance with the Group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
Market risk
Market risk embodies the potential for both losses and gains and includes currency risk, interest risk and price risk. The Group invests in the distressed debt of unquoted companies. The Group's strategy on the management of market risk is driven by its investment objective as outlined in the Investment Manager's report.
Price risk
The Group invests in a range of investments including unquoted equity securities and secured debt in a range of sectors. The Board monitors the Group's investment exposure against internal guidelines specifying the proportion of total assets that may be invested in various sectors. Investments in such companies are inherently difficult to value.
Currency risk
The Groups' operations are conducted in jurisdictions which generate revenue, expenses, assets and liabilities in currencies other than Sterling. As a result, the Group is subject to the effects of exchange rate fluctuations with respect to these currencies. The currency giving rise to this risk is primarily Indian Rupee.
An analysis of net assets by currency exposure is as follows:
31 March 2011 31 March 2010
GBP'000 GBP'000
------------- -------------- --------------
UK Sterling 1,146 1,983
India Rupee 22,482 22,659
------------- -------------- --------------
23,628 24,642
============= ============== ==============
The Group's exposure to foreign currency risk was as follows based on notional amounts:
31 March 2011 31 March 2010
GBP'000 GBP'000
------------------------------------- -------------- --------------
Available-for-sale financial assets 20,332 20,502
Trade and other receivables 3,948 49
Cash and cash equivalents 72 4,189
Trade and other payables (410) (29)
Provisions for other liabilities (1,460) (2,052)
------------------------------------- -------------- --------------
Net exposure 22,482 22,659
===================================== ============== ==============
The significant exchange rates applied during the year are shown in note 19.
A 10 percent strengthening / weakening of Sterling against the following currencies at 31 March would have increased / (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
Profit Equity
GBP'000 GBP'000
-------------------- -------- --------
31 March 2010: INR 9 2,266
31 March 2011: INR 8 2,248
-------------------- -------- --------
Interest rate risk
The Company is exposed to risks associated with the effects of fluctuations in prevailing market interest rates on its cash balances. Cash is invested at short-term market interest rates.
At the reporting date the interest rate profile of the Group's interest-bearing financial instruments was:
31 March 2011 31 March 2010
GBP'000 GBP'000
--------------------------- -------------- --------------
Variable rate instruments
Financial assets 5,181 6,304
--------------------------- -------------- --------------
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss.
A change of 100 basis points in interest rates would have increased or decreased equity by GBP52,000 (2010: GBP63,000).
Credit risk
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. Management does not expect any counterparty to fail to meet its obligations.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
Carrying amount
31 March 2011 31 March 2010
GBP'000 GBP'000
------------------------------------- -------------- --------------
Available-for-sale financial assets
at fair value 20,332 20,502
Trade and other receivables 77 56
Cash and cash equivalents 5,181 6,304
------------------------------------- -------------- --------------
Total 25,590 26,862
===================================== ============== ==============
There was no significant concentration of credit risk at 31 March 2011.
Liquidity risk
The Group maintains sufficient cash balances for working capital, and had no financial liabilities other than trade payables and provisions for liabilities and charges. The Group had no derivative financial liabilities. The contractual cash flows are considered to be due within six months and equal to their carrying amount.
Fair values
All assets and liabilities at 31 March 2011 are considered to be stated at fair value.
Capital Management
The Board's policy is to maintain a strong capital base. Group capital comprises share capital and reserves.
There has been no change in the Group's approach to capital management in the year. Neither the Company nor any of its subsidiaries are subject to any externally forced capital requirements.
21. Subsequent events
On 18 May 2011 the Board issued the Investment Manager, Shiva Consultants Private Limited, notice of termination as per the 2007 Management Agreement. The notice period is twelve months.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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