president & cfo - UB Group

Schedules forming part of account for the year ended March 31, 2009 (Contd.)d. Rs.7,860.187 Million, being the difference between the value of net assets of the Transferor Companiestransferred to the Company (determined as stated above) and the face value of equity shares to beissued and after adjusting for the equity shares directly held by the Company in the Transferor Companieswhich are cancelled, is credited to General Reserve of the Company. This accounting treatment of thereserve has been prescribed in the Scheme. Had the Scheme not prescribed this treatment, this amountwould have been credited to Capital Reserve.e. The Company, based on the reports by an Independent valuer, has revalued, at their respective fairvalues, all fixed assets being Land, Buildings, Plant and Machinery, Furniture and Fixtures and OfficeEquipment and Vehicles, at one location, as at April 1, 2007 and an amount of Rs. 80.704 Million, beingdiminution in value of certain Plant and Machinery determined based on their respective disposal valueas estimated by the independent valuer, has been debited to General Reserve. This accounting treatmenthas been prescribed in the Scheme. Had the scheme not prescribed this treatment, Rs.80.704 Millionbeing diminution in value of certain fixed assets would have been debited to the Profit and Loss Accountfor the year instead of General Reserve, having corresponding impact on the net profit for the year.B. The Scheme of Amalgamation under Section 391 to 394 of the Companies Act, 1956 for the amalgamation ofZelinka Limited (‘Zelinka’ or the ‘Transferor Company’), Cyprus, with the Company (‘the ZL Scheme’) and theirrespective shareholders, with April 1, 2007 being the Appointed Date, has been sanctioned by Hon’ble High Courtof Karnataka and the certified copy of the Order of the Hon’ble High Court of Karnataka has been filed withthe Registrar of Companies. Zelinka has complied with the procedure required to be followed under the localcorporate laws of Cyprus to give effect to the ZL Scheme. Accordingly, the ZL scheme became operative fromMarch 26, 2009. The Company has given effect to the ZL Scheme in these accounts with effect from April 1, 2007being the Appointed Date. Consequently, in terms of the ZL Scheme:a. The entire business and undertaking of Zelinka including all assets and liabilities, as a going concern, standtransferred to and vested in the Company with effect from April 1, 2007 being the Merger AppointedDate.b. Zelinka ceased to be a subsidiary of the Company. Palmer Investment Group Ltd, British Virgin Islands andMontrose International SA, Panama have become direct wholly owned subsidiaries of the Company. LiquidityInc has become direct subsidiary of the Company.(I)Zelinka was engaged in Investment related activities.As Zelinka was a wholly-owned subsidiary of the Company, no consideration was payable pursuant to theamalgamation of Zelinka with the Company.(II) Accounting treatmentThe amalgamation of Zelinka with the Company is accounted for on the basis of the Purchase Method asenvisaged in the Accounting Standard (AS) -14 on Accounting for Amalgamations specified in the Companies(Accounting Standard) Rules 2006 and in terms of the Scheme, as below:a) All assets and liabilities of the Transferor Company at their respective book values.b) The investment held by the Company in the equity share capital of the Transferor Company standscancelled and debited to General Reserve of the Company [refer (c) below].c) Rs.11.152 Million being the difference between the value of net assets of the Transferor Companytransferred to the Company (determined as stated above) after adjusting for investments cancelledis debited to General Reserve of the Company. This accounting treatment of the reserve has beenprescribed in the ZL Scheme. Had the ZL Scheme not prescribed this treatment, this amount would havebeen debited to Goodwill, which would have been charged to the Profit and Loss Account for the year asper the accounting policy of the Company, with a corresponding impact on the net profit for the year.48