Scheduleforming part of the Balance Sheet - Domain-b

Annual Report 2007-2008
Schedule forming part of the Balance Sheet
Schedule 14 : Notes to the Balance Sheet and the Profit and Loss Account
(n) Accounting for Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognised in terms of Accounting Standard 29 – ‘Provisions, Contingent Liabilities and Contingent
Assets’ (AS-29), notified by the Companies (Accounting Standards) Rules, 2006, when there is a present legal or
statutory obligation as a result of past events, where it is probable that there will be outflow of resources to settle the
obligation and when a reliable estimate of the amount of the obligation can be made. Contingent Liabilities are
recognised only when there is a possible obligation arising from past events due to occurrence or non-occurrence of
one or more uncertain future events, not wholly within the control of the Company, or where any present obligation
cannot be measuredin terms of future outflow of resources or where a reliable estimate of the obligation cannot be
made. Obligations are assessed on an ongoing basis and only those having a largely probable outflow of resources are
provided for. Contingent Assets are not recognised in the financial statements.
(o) Borrowing Costs (Other than on Debentures) :
Interest and other borrowing costs on specific borrowings, attributable to qualifying assets, are capitalised. Other
borrowing costs are charged to revenue over the tenure of the loan.
(p) Debenture Issue Costs :
These are adjusted against the Securities Premium Account, in accordance with Section 78 of the Companies Act,
1956.
2 Rights Issue of simultaneous but unlinked issue of Equity Shares and Non-Convertible Debentures with Detachable
Warrants to the equity shareholders of the Company
i. The Board of Directors, at its meeting held on August 13, 2007 and September 27, 2007, approved the rights issue of
a) Equity Shares in the ratio of 1: 5, at a price of Rs. 70 per share, aggregating Rs. 843.99 crores ;
b) 6% Non-Convertible Debentures with detachable warrants in the ratio 1 : 10, of the face value of Rs. 100 each,
aggregating Rs. 602.85 crores ;
c) An option to receive one equity share for every detachable warrant held exercisable at a price of Rs. 150 per share
commencing from September 1, 2009 to September 30, 2009. Assuming that all the warrant holders exercise their
option, the Company would additionally raise Rs. 904.28 crores.
ii. The Company has filed the Letter of Offer on February 27, 2008, with the Securities Exchange Board of India,
subsequent to which the Rights issue opened on March 14, 2008 and closed on on April 24, 2008.
iii. The Company has allotted the 6% Secured Non-Convertible Debentures on May 13, 2008 and Equity Shares on
May 23, 2008.
3. Non-Convertible Debentures:
The Company has, during the year, issued 9.86% Secured Non-Convertible Redeemable Debentures, having a face value
of Rs. 10,00,000/- each, aggregating Rs. 300 crores. The expenses in relation to the said issue, amounting to Rs. 1.05 crores,
have been set off against the ‘Securities Premium Account’ net of tax Rs. 0.36 crore, in accordance with Section 78 of the
Companies Act, 1956.
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