Mobile Nav

Market

NOTES TO ACCOUNTS

The Indian Wood Products Company Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 403.03 Cr. P/BV 1.17 Book Value (₹) 54.07
52 Week High/Low (₹) 96/58 FV/ML 2/1 P/E(X) 23.80
Bookclosure 17/09/2019 EPS (₹) 2.65 Div Yield (%) 0.32
Year End :2018-03 

Notes to Account

40. Financial Risk Management Objectives and Policies

The Company's financial liabilities comprise loans, Trade and other payables. The main purpose of these financial liabilities is to finance the Company's operation. The Company's principal financial assets include Investments, Short term loans and advances, Trade and other receivables and cash and cash equivalents that derive directly from its operations. The Company is exposed to market risk, credit risk and liquidity risk. The Company regularly assess these risks, monitor, evaluate and deploy mitigation measures to manage the risks within risk appetite. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:

a. Market Risk

Market risk is the risk that the fair value of future cash flows of a financial assets will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowing, investments ,trade payables,trade receivables etc.

b. Interest Rate Risk and Sensitivity

The Company's exposure to the risk of changes in market interest rates relates primarily to the long term debt obligations with Floating rate of interest.

The following table demonstrates the sensitivity to a reasonably possible changes in interest rates on that portion of loans and borrowings affected. With all other variables remaining constant, the company's profit before tax and equity before tax is affected through the impact on floating rate borrowings, as follows:

Particulars

Increase/ decrease in Basis points

Effect on Profit before tax

Effect on Pre tax Equity

31.03.2018

50

(3.14)

(3.14)

-50

3.14

3.14

31.03.2017

50

3.14

3.14

-50

(3.14)

(3.14)

The assumed movement in basis points for interest rate sensitivity is based on the currently observable market environment.

c. Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates.The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities.Such foreign currency exposures are hedged by the Company.

d. Credit Risk

Credit risk is the risk that the counter party will not meet its obligation under a financial instruments or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables).

The Company extends credit to customers in normal course of business. The Company considers factors such as credit track record in the market and past dealings for extension of credit to customers. The Company monitors the payment track record of the customers and Outstanding receivables are regularly monitored.

e. Liquidity Risk

Liquidity Risk is the risk that the company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses.

The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of Bank loans, Credit purchases etc.

The table below provides undiscounted cash flows towards Financial Liability into relevant maturity based on the remaining period at the balance sheet date to the contract maturity date.

As at 31st March'2018

Particulars

On Demand

Less than 1 year

1 to 5 years

More than 5 years

Total

Interest Bearing Loans (including Current maturities)

2,918.00

274.85

354.00

-

3,546.68

Trade Payables

-

3,217.79

-

-

3,217.79

Total

2,918.00

3,492.64

354.00

-

6,764.47

As at 31st March'2017

Particulars

On Demand

Less than 1 year

1 to 5 years

More than 5 years

Total

Interest Bearing Loans (including Current maturities)

2,664.13

245.99

440.98

-

3,351.10

Trade Payables

-

3,351.18

-

-

3,351.18

Total

2,664.13

3,597.17

440.98

-

6,702.28

41 Capital Management

For the purpose of the Company's Capital Management, Capital includes issued equity capital, shares premium and all other Equity Reserves attributable to the Equity holders of the Parent. The Primary objective of the Company's capital management is to maximise the Shareholder value.

The Company manages its capital structure and makes adjustments inlight of changes in economic conditions and the requirements of the financial covenants.

Particulars

31st March 2018

31st March 2017

Borrowings

748.00

850.88

Trade Payables

3,217.79

3,351.18

Short term Borrowings

3,067.55

3,502.47

Net Debt

7,033.35

7,704.52

Equity

33,248.35

31,561.21

Total Capital

33,248.35

31,561.21

Gearing Ratio

21.15%

24.41%

There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

42 First Time Adoption of Ind AS

These financial statements for the year ended 31 March 2018, are the first financial statements of the Company prepared in accordance with Ind AS.

Exemptions Applied:

Ind AS 101 allows certain exemptions from the retrospective application of certain requirements under Ind AS

a. Deemed Cost Ind AS 101 allows a first time adopter to continue with the carrying value for all its Property, Plant and Equipment and Intangible Assets as recognised in its previous GAAP financials on the date of transition. Accordingly, the Company has opted for this exemption and decided to carry its Property, Plant and equipment (except Land ) at carrying value as per Indian GAAP on the date of transition i.e. 1 April, 2016 after making necessary adjustments . Freehold Land is revalued as on 1 April, 2016.

The company has considered Fair Value for Property, i.e, Freehold measuring 2,10,222 sq. mt. situated at Bareily, India with impact of Rs. 28375.45 lakhs (net of deffered tax) in accoradance with stipulations of Ind AS 101 with the resultant impact being accounted for in the Reserves and Surplus.

b. Estimates The preparation of the Company's financial statements requires management to make judgements, estimates and assumptions as described below that affect the reported amounts and the accompanying disclosures. The Company based its assumptions and estimates on parameters available when the financial statements were prepared.Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

- Cost of Defined Benefit Plan and the Present Value of the defined benefit obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future.

- Impairment of Trade receivables based on Expected Credit Model

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1 April, 2016, the date of transition to Ind AS and as of 31 March 2017

c. Classification and measurement of Financial Assets The Company has assessed the classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS in accordance with Ind AS 101.

d. The Company has adopted to measure investments in Joint Ventures and Associates at cost in accordance with Ind AS 27 and therefore has measured such investments in its separate opening Ind AS balance sheet at carrying amount as per Indian GAAP at the date of transition in accordance with Ind AS 101.

e. Proposed Dividend Under Indian GAAP, proposed dividend (including Dividend Distribution Tax) is recognized as a liability in the period to which it relates, irrespective of when it is declared. Under Ind AS, proposed dividend is recognized as a liability in the period in which it is declared by the company usually when approved by shareholders in a general meeting or paid.

43. The main Products of the Company i.e. Katha & Cutch along with its Raw Materials like Khair Wood, Katha Lugdi, Cutch Lugdi, are covered under U. P. Forest Act and a transit fee has to be paid on movement of all these items.. Uttar Pradesh Government by its various amendments changed the transit fee from Rs. 38/- Per M.T to Rs. 200/- Per Cubic Meter and Subsequently 5% advolrum.

Honorable Supreme Court in its interim order dated 26/04/2016, directed the Uttar Pradesh Government to collect transit fees @ 5% advolrum subject to final outcome of the case and also directed U. P. Government to keep the said amount in a separate account so that it can be paid back to the effected parties with interest @ 9% Per Annum if final order is in favour of the parties.

Subsequently Honorable Supreme Court by its final order dated 15/09/2017 directed Uttar Pradesh Government to collect transit fees @ Rs 38/- Per M.T only and refund the excess amount collected from parties along with interest @ 9% per annum.

In view of the above, an excess amount of Rs. 1000.29 lakhs paid as transit fees to the Forest Department of Uttar Pradesh is refundable with interest @ 9% per annum. The company has made necessary applications which is under process and will be accounted for as and when the company will get the refund.

44 Contingent Liabilties and Commitments

a) "Katha" the main product of the Company was brought within the Ambit of Central Excise Duty w.e.f. 1st March, 2011 under Chapter 14 of Central Excise Tariff. However, the Central Excise Authority issued Show Cause notices with the contention that Raw Katha produced by processing Gambler ( an excisable item) is also liable to duty. Hence a demand of Rs.35.95 crores was raised on the Company for the period up to March 2010 Rs.31.03 crores and from April 2010 to February,2011 Rs.4.92 cores. Against such orders in one of our appeal, the appellate authority not only accepted our ground of valuation of the product as per CAS4 but also reduce the demand of Rs. 11.93 crores to Rs. 2.48 crores. On the same ground total demand of Rs. 35.95 crores could get reduce to Rs. 11.62 crores. Consequently as per legal advice obtained, no provision was made till 2017 and was shown as contingent liability.

During the year vide order No.A/70281 - 70288/2018 EX (DB) dt.25.01.2018 and Order No. A/70819-70823/2018 EX (DB) Dt. 22.02.2018 CESTAT Appellate Tribunal passed final order in favour of the Company setting aside the impugned orders passed by Commissioner of Central Excise of Customs Meerut II demanding duty, penalties and interest thereon amounting to Rs.35.95 crores.

In view of the above, though the contingent liability now does not exist, but the department as may move to the higher court. Hence this note is continuing.

b) Katha manufactured by the Company commonly known as Indian Katha on which Company was paying central excise duty @ 5/6 % under Chapter Heading No. 14049050 was not acceptable to the Department and raised a demand of Rs.15.74 crores under chapter Heading No.32019090. This was shown as Contingent Liability till March,2017. Inspite of CESTAT, Allahabad's order in favour of the Company as the Excise Authority Preferred S L P before Hon'ble Supreme Court. During the year Supreme Court rejected the Appeal vide its order dt. 28.07.2017. Accordingly the said Contingent Liability, hence forth, does not exist.

c) Demand for sales tax amounting to Rs. 148.48 lacs (Rs. 139.98 lacs) which are not acknowledged as debts. Against the same company has paid under protest a total of Rs. 27.32 lacs (Rs. 18.20 lacs) included in loans and Advances and TDR of Rs. 2.64 lacs (Rs. 2.64 lacs) are deposited with the sales tax authorities.

d) Mandi Samitee demand on Katha amounting to Rs. 2.38 lacs (Rs. 2.38 Lacs) has been disputed by the Company and stayed by Honorable High Court, Allahabad.

e) During the year, Commissioner of Customs, Nhava Sheva had passed an Ex-Party Judgement and raised a demand of Rs. 3,41,77,9367- together with a penalty of Rs 3,41,77,9367- against a Show Cause Notice issued by the Additional Director General, Directorate of Revenue Intelligence, Kolkata in the year 2010. The said order passed by the Commissioner being contrary to law and against the principle of natural justice, based on assumption and presumptions without any evidence on record and was not acceptable to the Company, hence an appeal was preferred by the Company before CESTAT Nhava Sheva by producing evidence of pre-deposit of Rs.40.00 lacs being 11.7% of duty demanded against the requirement of 7.5% of the duty demanded while filing the appeal.Simultaneously, (2) two of the Whole Time Directors were also made liable in the above said order on whom a penalty of Rs.15.00 lacs and Rs.10.00 lacs respectively imposed. An appeal was also preferred on their behalf and a sum of Rs.1.90 las was deposited by the Company and the amount is appearing in Loans & Advances account.Consequently, as per the legal advice obtained, no provision is made at this stage. Final adjustment if any will be done as and when the matter is crystalized.

45. For better presentation previous year's figures have been regrouped 7 re-arranged wherever necessary.

For and on behalf of Board of Directors of

For Agrawal Sanjay & Company

Chartered Accountants

The Indian Wood Products Co. Ltd.

Firm Registration Number- 329088E

K.K. Damani

Bharat Mohta

R.P.Chetani

Radhakrishan Tondon

Executive Direct

ar WTD&CEO

Director

Partner

DIN:01385252

DIN: 00392090

DIN: 00392215

Membership No.: 060534

Place: Kolkata

R.K. Agarwal

Anup Gupta

Date: May 30, 2018

Chief Financial Officer

Company Secretary

Attention Investors :
Prevent Unauthorised transactions in your account --> Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile / email at the end of the day .......... Issued in the interest of investors
Attention Investors :
Prevent Unauthorized Transactions in your demat account --> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from NSDL on the same day......................issued in the interest of investors.
Attention Investors :
KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
Attention Investors :
No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account.
“Investment in securities market are subject to market risks, read all the related documents carefully before investing”.