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NOTES TO ACCOUNTS

A Infrastructure Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 149.26 Cr. P/BV 2.87 Book Value (₹) 12.19
52 Week High/Low (₹) 54/16 FV/ML 5/1 P/E(X) 17.71
Bookclosure 24/08/2018 EPS (₹) 1.98 Div Yield (%) 0.29
Year End :2018-03 

1. COMPANY INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES

A. Company Information:

A INFRASTRUCTURE LIMITED (the ‘Company’) is a public limited company domiciled in India and is listed on the Bombay Stock Exchange (BSE). The Company is incorporated on 30th August 1980 and formerly known as ‘Shree Pipes Ltd.’ The Company is mainly engaged in the business of manufacturing of A.C. Pressure Pipes, Couplings, A.C. Sheet & Moulded Goods and laying & jointing of Asbestos Cement Products.

B. Basis of Preparation

1. Statement of Compliance

The financial statements are prepared on accrual basis of accounting and comply in all material aspects with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereto, the Companies Act, 2013 (to the extent applicable), applicable provisions of the Companies Act, 1956. These are Company’s first Ind AS compliant financial statements and Ind AS 101 ‘First Time Adoption of Indian Accounting Standards’ has been applied.

For all period upto and including 31st March 2017, the company prepared its financial statements in accordance with Generally Accepted Accounting Principles (GAAP) in India, accounting standards specified under Section 133 of the Companies Act, 2013, the Companies Act, 2013 (to the extent notified and applicable), applicable provisions of the Companies Act, 1956. The Company followed the provisions of Ind AS 101 in preparing its opening Ind AS Balance Sheet as on the date of Transition, viz. 1st April 2016. Some of the Company’s Ind AS Accounting policies used in the opening Balance sheet are different from its previous GAAP policies applied as at 31st March 2016, accordingly the adjustment were made to restate the opening balance as per Ind AS. The resulting adjustment arose from events and transaction before the date of transition to Ind AS. Therefore, as required by Ind AS 101, those adjustments were recognized directly through retained earnings as at 1st April 2016. This is the effect of the general rule of the Ind AS 101 which is to apply Ind AS retrospectively.

An Explanation of how the transition to Ind AS 101 has affected the reported financial position, financial performance and cash flows of the Company is provided in note 56.

2. Basis of measurement/Use of Estimates

(i) The Financial Statements are prepared on accrual basis under the historical cost convention except certain financial assets and liabilities that are measured at fair value. The methods used to measure fair values are discussed in notes to financial statements.

(ii) The preparation of financial statements requires judgments, estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized

3. Functional and presentation currency

These financial statements are presented in Indian Rupees (INR), which is the Company’s functional currency. All financial information presented in INR has been rounded to the nearest Lakhs (upto two decimals), except as stated otherwise.

Notes:

4.1 For Property, Plant and Equipment exisiting as on 1st April 2016, i.e. the date of transition to Ind AS for the company, the company has considered previous GAAP (i.e., IGAAP) carrying value as deemed cost as per the option available under para D7AA of Ind AS 101 “First Time Adoption”.

4.2 Vehicles and Leasehold Land having value of Rs. 1,109.78 Lacs (PY-Rs. 88.90 lacs) are held as security towards Borrowings as specified in Note. 16

4.3 Information regarding gross block of property, plant and equipments and accumulated depreciation/amortisation under previous GAAP is as follows:

4.4 Information regarding the gross block of Property, Plant and Equipment as per Previous GAAP:

5.1 During the year, there is no change in issued, subscribed and paid up Preference Share Capital and Equity Share Capital.

5.2 The Company has only one class of equity shares having a par value of Rs. 10 per share. Each Shareholder is eligible for one vote per share. The dividend proposed by the Board of Directors is subject to the approval of shareholders, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion of their shareholding.

6.1 The Company has elected to recognise changes in the fair value of equity investments in other comprehensive income. These changes are accumulated within FVTOCI reserve. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised/sold out.

7.1 Nature of Security

All term loans are secured by way of first charge on specific assets of the Company to banks and the personal guarantees of two Directors of the company.

Vehicle loans are secured by hypothecation of vehicles and repayable over a period of 4 to 7 years.

7.2 Terms of Repayment

Term Loan amounting to Rs. 1,570 Lacs and Rs. 399 Lacs repayable in 120 and 86 equal monthly installments. Unsecured Term loan amounting to Rs. 1000 Lacs, Rs. 343 Lacs, Rs. 266 Lacs and Rs. 370 Lacs repayable in 120, 84,120 and 75 equal monthly installments.

8.1 Working capital loans from banks and SLC are secured by way of hypothecation of all present and future inventories and book-debts and other current assets of the company on pari-passu on all Property, Plant & Equipments both present & future and personal guarantees of two directors of the company.

b) Share Split and Bonus Issue

The Board of Directors of the Company at their meeting held on 10th March, 2018 has approved (Subject to approval of members) sub division of Equity Shares of the Company having a face value of Rs. 10/- each fully paid up into 2 (Two) Equity Shares of Rs. 5/- (Rupees Five only) each fully paid up and the Board further approved issue of bonus share in the proportion of 1 (One) Equity Share for every 1 (One) fully paid- up equity shares held by the Members.

Note No. 9 - DISCLOSURE AS PER IND AS 17 LEASES’

The Company acquires land on leasehold basis from the government authorities which can be renewed further based on mutually agreed terms and conditions. The leases are non cancellable. These leases are capitalised at the present value of the total minimum lease payments to be paid over the lease term. Future lease rentals are recognised as ‘Finance lease obligation’ at their present values. The leasehold land is amortised considering the signifcant accounting policies of the Company.

Note No. 10 - DISCLOSURE AS PER IND AS 19 ‘EMPLOYEE BENEFIT’

A) Defined contribution plan

During the year company has recognised the following amounts in the Statement of Profit and Loss account.

The amount recognized as expenses for this defined contribution plan in the financial statement is Rs. 183.07 Lakhs (P.Y.-Rs. 178.01 Lakhs) which includes Rs. 10.47 Lakhs (P.Y.- Rs. 10.47 Lakhs) towards contribution for key managerial personnel.

B) Defined Benefits Plan Gratuity

The company has a defined benefit gratuity plan. Every employee who has rendered continuous service of 5 years or more is entitled to gratuity at 15 days salary (15/26 * last drawn basis salary plus dearness allownaces) for each completed year of five years or more (service of 6 Months and above is rounded off as 1 completed year) subject to maximum of Rs. 20 lakhs on Superannuation, Resignation, Termination, Disablement or on Death.

* The discount rate of 7.47% p.a compound is assumed which is determined by reference to the market yield at the Balance Sheet Date on Government Bonds.

** The expected rate of return on plan assets is determine considering several appliacble factor mainly the composition of plan assets held, assessed risk of assets management and historical return from plan assets.

*** The estimates of future salary increase considered in actuarial valuation, taking account of inflation, seniority promotion and other relevent factors, such as supply and demand in the employment market

II) Sensitivity analysis

Reasonable possible change at the reporting date to one of the relevant actuarial assumption, holding other assumption constant, would have effected the defined benefit obligation by the amount shown below.

III) Risk exposure

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follow -

A) Salary Increases - Actual salary increases will increase the Plan’s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

B) Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.

C) Discount Rate - Reduction in discount rate in subsequent valuations can increase the plan’s liability.

D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan’s liability.

Note No. 11 - Disclosure as per Ind AS- 23 ‘Borrowing Cost’

The amount of Rs. 131.16 Lakhs (31st March, 2017 - Rs. 103.98 Lakhs) has been capitalised during the year.

Note No. 12 - Disclosure as per Ind AS 21 ‘The Effects of Changes in Foreign Exchange Rates’

The amount of exchange difference (net) debited to the Statement of Profit & Loss is Rs. 90.16 Lakhs (31st March 2017: credit of Rs. 29.55 Lakhs).

Terms and conditions:

All the transactions were made on normal commercial terms and conditions and at market rates. All outstanding balances are unsecured and are repayable through banking transactions.

Note No. 13 - DISCLOSURE AS PER IND AS 37 PROVISIONS, CONTINGENT LIABILTIES AND CONTINGENT ASSETS’

(i) Contingent liabilities :

a) Claims against the company not acknowledged as debts :

Excise duty, Sales tax and Income tax demand (Net of amount charged to Statement of Profit & Loss Rs. Nil) (Previous Year- Rs. Nil) under appeal Rs. 1693.34 Lacs (31st March, 2017- Rs. 1698.57 Lacs and 01st April, 2016- Rs. 1733.91 Lacs)

b) Corporate Guarantee given to bank aggregating Rs. Nil (31st March, 2017 - Rs. 775 Lakhs and 01st April, 2016 -Rs. 775 Lakhs) in respect of working capital facilities granted to other body corporate.

c) Municipal Corporation, Ahmedabad had demanded octroi @ 4% in place of @ 2.25% on imported mineral fibre while clearance of first consignment after imposition of octroi, against which Company has filed civil suit. The Company has deposited the demand under protest. For subsequent clearances, Municipal Corporation had accepted octroi @2.25%.

(ii) Committments

Estimated amount of contract remaining to be executed on capital account and not provided for amounting to Rs. 37.11 Lakhs (31st March, 2017- Rs. 37.09 Lakhs and 01st April, 2016 - Rs. 756.53 Lakhs)

Note No. 14 - DISCLOSURE AS PER IND AS 107 ‘FINANCIAL INSTRUMENT DISCLOSURES’

A) Capital management

The capital structure of the Company is based on management’s judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence. The management and the Board of Directors monitors the return on capital as well as the level of dividends to shareholders. The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The Company may take appropriate steps in order to maintain, or if necessary adjust, its capital structure. The primary objective of Company’s capital management is to maximize shareholder’s value and to maintain an appropriate level of debt and equity. The company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of financial covenants.

The company manages its capital using the Capital Gearing Ratio which is Net debt divided by total equity. For the purpose of Company’s Capital Management , capital includes issued equity share capital and other equity (excluding preference share capital) and net debt comprises of long term and short term borrowings less cash and cash equivalent.

B) Financial risk management

The Company’s Financial Risk Management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management is set by the Managing Board. The Company’s prinicipal financial liabilities comprise loans and borrowings, trade payables and other payables. The main purpose of these financial liabilities is to finance the company’s operations. The company’s principal financial assets include trade & other receivables and cash and short term deposits.

In the below mentioned table, there are some risks which the company is exposed from its use of financial instrument:

i) Market Risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Company’s income. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Board of Directors is responsible for setting up of policies and procedures to manage market risks of the Company. All such transactions are carried out within the guidelines set by the risk management committee.

a) Foreign Currency Risk

Majorally, the company is operating their business in its functional currency, therefore the company is not exposed to any significant risk with regards to fluctuation in foreign currency rates.

b) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. In order to optimize the Company’s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

At the reporting date the interest rate profile of the Company’s interest-bearing financial instruments is as follows:

Interest rate sensitivity

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

c) Price risk

The company’s exposure towards price risk arises from investments held in equity shares and classified in Balance Sheet as fair value through Other Comprehensive Income or Fair Value through Profit & Loss. To manage its price risks arising from investments in equity securities, the company diversifies its portfolio. Diversification of portfolio is done in accordance with the limits set by the company except one as stated in Note No.5. All of the company’s equity investments are publicly traded and are listed in the NSE and BSE respective stock exchanges.

ii) Credit risk

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. It encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks. To manage this, the Company periodically assesses the financial reliability of customers, taking into account financial conditions, current economic trends, analysis of historical bad debts and ageing of accounts receivable and based upon that categories the same for write off. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized in Statement of Profit and Loss.

A. Provision for Expected Credit or Loss

(a) Financial assets for which loss allowance is measured using 12 month expected credit losses:

The Company has assets where the counter-parties have sufficient capacity to meet the obligations and where the risk of default is very low. Accordingly, no loss allowance for impairment has been recognized.

(b) Financial assets for which loss allowance is measured using life time expected credit losses:

The Company provides loss allowance on trade receivables using life time expected credit loss and as per simplified approach.

B. Exposure to Credit Risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was Rs. 7,132.38 Lakhs as at 31st March, 2018, Rs. 6,797.92 Lakhs as at 31st March, 2017 and Rs. 6,104.54 Lakhs as at 1st April, 2016, being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables, margin money, loans & advances and other financial assets excluding equity investments.

iii) Liquidity Risk

Liquidity risk is defined as the risk that the Company will not be able to settle of meet its obligations on time or at a reasonable price. The Company’s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management moniters the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows.

Note No. 15 - DISCLOSURE AS PER IND AS 108 ‘OPERATING SEGMENTS’

The Company is mainly engaged in the business of manufacturing of A.C.Pressure Pipes, Couplings, A.C.Sheet & Moulded Goods and laying the jointing of Asbestos Cement Products, which as per Indian Accounting Standard - 108 ‘Operating Segments’ and in the opinion of the management, is considered to be the only reportable operating segment.

Note No. 16 - DISCLOSURE AS PER IND AS 113 ‘FAIR VALUE MEASUREMENT’

Fair Value Hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are:-

(a) recognised and measured at fair value and

(b) measured at amortised cost and for which fair values are disclosed in financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the accounting standard.

Fair value are categorised into different level in a fair value hierarchy which are as follows:

Level 1 Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2 The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market Level 3 If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

Valuation Techniques used to determine fair values:

Specific valuation technique is used to determine the fair value of the financial instruments which include:

i) For Investments in Equity Investments- Quoted Market prices are used

ii) For financial liabilities (domestic currency loans) :- appropriate market borrowing rate of the entity as of each balance sheet date used.

Fair Value of Financial instrument measured at Amortised Cost

The fair value of the short term borrowings, trade payables, trade receivables, cash & cash equivalents, other financial assets and liabilities are considered to be the same as their carrying amounts, due to their short term nature.

Note No. 17 - STANDARDS ISSUED BUT NOT YET EFFECTIVE

The standard issued, but not yet effective up to the date of issuance of the Company financials statement is disclosed below. The Company intends to adopts this standard when it becomes effective.

Ind AS 115 Revenue from Contracts with Customers

The effective date for adoption of Ind AS 115 is financial periods beginning on or after 1st April, 2018. The company will adopt the standard on 1st April, 2018 by using the cumulative catch-up Transition method and accordingly comparatives for the year ending or ended 31st March, 2018 will not be retrospectively adjusted. The company is evaluating the requirements of the amendment and the effect on the financial statement is being evaluated.

Ind AS 21 -The Effect of Changes in Foreign Exchange Rates

The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. During the current year, the Company performed a preliminary assessment of Ind AS 115, which is subject to changes arising from a more detailed ongoing analysis.

Note No. 18 - DISCLOSURE AS PER IND AS 101 ‘FIRST TIME ADOPTION OF IND AS

These are the company’s first standalone financial statements prepared in accordance with Ind AS. The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS Balance Sheet as at 1 April 2016 (the Group’s date of transition). In preparing its opening Ind AS Balance Sheet, the Group has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the group’s financial position, financial performance and cash flows is set out in the following tables and notes.

Any resulting differences between carrying amounts of assets and liabilities according to Ind AS 101 as of 1st April, 2016 compared to those presented in the Indian GAAP Balance Sheet as of 31st March 2016, were recognised in the equity under retained earnings with Ind AS Balance Sheet.

Exemptions and Exceptions availed

Accordingly the Company has prepared the financial statements in accordance with IND AS for the year ending 31st March, 2018. In preparing such statements the Opening Balance Sheet was prepared as at 1st April 2016, the company’s date of transition to IND AS. This note explains principal adjustments made in order to restate its Indian GAAP financial statements including the Balance Sheet as at 1st April, 2016 and Financial Statements as at and for the year ended 31st March, 2017.

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from Previous GAAP to Ind AS.

Ind AS Optional Exemptions:

i) Deemed Cost

As per Ind AS 101, para D7AA, a first-time adopter to Ind AS may elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities.Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

ii) Borrowings

Ind AS 101 permits that if it is impracticable for an entity to apply retrospectively the effective interest method in Ind AS 109 ‘Financial Instruments’, the fair value of the financial liability at the date of transition to Ind AS shall be the new amortised cost of that financial liability at the date of transition to Ind AS Accordingly, Company has elected to apply this exemption.

(iii) Arrangements Containing a Lease

Appendix C, Ind AS 17 requires an entity to assess whether an arrangement contains a lease at its inception. However, para D9 of Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS. The Company has elected to apply this exemption for such arrangements.

(iv) Designation of previously recognised Financial Instrument

As per para D19B of Ind AS 101, an entity can designate investments in Equity instruments at FVTOCI on the basis of the facts and circumstances that exists at the date of transition to Ind AS.The Company has elected to apply this exemption for its investment in equity instruments in Balrampur Chinni Mills Limited and Bajaj Hindustan Sugar Limited.

Ind AS Mandatory Exceptions:

i) Estimates

An entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1st April, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The company made estimates for following items in accordance with the Ind AS at date of transition as these were not required under previous GAAP.

- Investment in equity instrument carried at FVTOCI

- Investment in equity instrument carried at FVTPL

ii) Classification and Measurement of financial assets

As per Ind AS 101, para B8, an entity is required to assess the classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

iii) Derecognition of financial assets and financial liabilities

As per Ind AS 101. para B2, a first-time adopter shall apply the derecognition requirements in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

Reconciliations between previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.

Notes to Reconciliation

1. Land under Finance Lease

Under Previous GAAP, leasehold land was capitalized at an amount equal to the Upfront Payments made at the time of lease. However, under Ind AS, such lease are to be capitalised at the present value of the total Minimum Lease Payment to be paid over the lease term. Accordingly, future lease rentals have now been recognised as a ‘finance lease obligation’ at their present values. The effect of the adjustment has resulted in reduction in retained earnings by Rs. 8.11 lakhs with corresponding increase in Property, Plant and Equipment by Rs. 0.33 Lakh, Non Current Financial Liabilities by Rs. 7.36 lakh and Current Financial Liabilities by Rs. 1.08 lakh towards finance lease obligation as at 1st April 2016 and 31st March, 2017.

2. Fair Valuation of Investments

Under previous GAAP, the long-term investments were measured at cost less permanent diminution in value, if any and current investments at lower of cost or market value. However, Ind AS requires all investments are to be measured at fair value at the reporting date and all changes in the fair value subsequent to the transition date to be recognised either in the Statement of profit and loss or Other Comprehensive Income (based on the category in which they are classified).This has resulted in increase in value of investment and other equity by Rs. 0.65 Lakhs and Rs. 0.71 Lakhs as at 31st March 2017 and 1st April 2016 respectively.

3. Bank Balance Other than Cash and Cash Equivalents

Certain amount of Cash and cash equivalents has been reclassified to Other Bank Balances in accordance with Ind AS 7-Statement of Cash Flows and Divison II of Schedule III of Companies Act, 2013.

4. Other equity

Retained earnings as at 1st April 2016 has been adjusted consequent to the above Ind AS transition adjustments. Refer ‘Reconciliation of total equity as at 31st March 2017 and 1st April 2016 as given above for details.

5. Borrowings

Under previous GAAP, the Company has followed the policy of charging the transaction costs to the Statement of Profit and Loss as and when incurred. However under Ind AS, transaction costs are amortized as an interest expense over the term of the related loan using Effective Interest Rate Method. The Company has raised secured and unsecured loans from banks and financial institutions on which it has incurred transaction costs.The above resulted in reduction in borrowings as at 31st March 2017 by Rs. 13.66 lakhs with corresponding reduction in Statement of Profit and Loss.

6. Deferred Tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 ‘Income Taxes’ requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of asset or liability in the balance sheet and its corresponding tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction in Retained Earnings.

7. Proposed Dividend and Dividend Distribution Tax

Under Previous GAAP, proposed dividends are recognized as liability in the period to which they relate irrespective of the approval by shareholders. Under Ind AS, proposed dividend is recognised as a liability in the period in which it is declared by the company (on approval of Shareholders in a general meeting) or paid. Therefore, the liability amounting Rs. 64.16 Lakhs (inclusive of Dividend Distribution Tax) recorded under previous GAAP has been derecognised as on 31st March, 2017 and 01st April, 2016. The same is now recognised in the Financial Year 2017-18 and 2016-17, when dividend was approved by shareholders in the Annual General Meeting.

8. Revenue From Operations

Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is regrouped under Other Expenses in the Statement of Profit and Loss accordingly.

9. Other Income

Under Previous GAAP, any gain/loss on sale of property, plant and equipment or long term investment are shown as an exceptional items. However, under Ind AS, the same will be shown under the head ‘Other Income’.

10. Actuarial Gain or Loss on Defined Benefit Plans

Both under Indian GAAP and Ind AS, the company recognized costs related to its post employment defined benefits plan on an actuarial basis. Under Indian GAAP, the entire cost including actuarial gain/loss are charged to Statement of Profit and Loss. However, under Ind AS, remeasurements are recognized in Other Comprehensive Income.As a result Profit for the year ended 31st March 2017 has decreased by Rs. 8.26 Lakhs (net of tax) with corresponding increase in Other Comprehensive Income during the year.

11. Depreciation

Under Previous GAAP, the company had Revaluation Reserve in their books of accounts from which the depreciation relating to revaluation of assets was deducted. However, under Ind AS, the company has transferred the balance of Rs. 478.13 Lakhs from Revaluation Reserve to Retained Earnings. This has resulted the increase in the amount of depreciation by Rs. 63.35 Lakhs with a corresponding decrease in the Profits of the company for the year ending 31st March, 2017.

12. Other comprehensive income

Under previous GAAP, the Company has not presented other comprehensive income (OCI) separately. Items that have not been reclassified from Statement of Profit and Loss to Other Comprehensive Income includes Remeasurement of Defined Benefit Plans and Fair Value Gain/Loss on FVTOCI designated Equity Instruments. Hence, Previous GAAP Profit & Loss is reconciled to Total Comprehensive Income as per Ind AS.

13. Cash Flow Statement

Cash flow from Operating activities under Ind AS has increased mainly due to including the Other Borrowing cost and Bank Balance Other than Cash and Cash Equivalents under the Interest expense, Cash flow from investing activity has incresed by adding the gain on sale of investments. Further, the increase of Other Borrowing Cost in operating activity leads a corresponding effect of decrease in the Cash flow from Financing Activity.

NOTE NO. 19- OTHER DISCLOSURES

a) Tax Assessment

Liability, if any, arises on completion of pending assessment in respect of VAT, Service Tax, Income Tax, etc. will be provided in the year of completion of such assessment.

b) Details of Dues to the Micro and Small Enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006*

*The Company has initiated the process of identification of suppliers registered under Micro and Small Enterprise Development Act, 2006, by obtaining confirmations from all suppliers. Information has been collated only to the extent of information received.

c) Licensing agreement with Gujarat Composite Ltd.

The Company has entered into License Agreement with Gujarat Composite Limited (GCL-Licensor) on 07.04.2005 for running their unit for manufacturing of AC Sheet and Cement manufacturing units at Digvijaynagar, Ranip, Ahmedabad for a period of 84 month on license basis, extendable to further period of 84 months on mutual consent. As per the License Agreement upon expiry of license period, the GCL would be under obligation to take over all the current assets of A Infrastructure Ltd. (Licensee) pertaining to or in connection with the operation of AC Sheet and Cement manufacturing units at their book value and make the payment if any for this to the Licensee forthwith. Further, after expiry of the license period or the extended period, the Licensee shall vacate and handover the possession of AC Sheet and Cement manufacturing units to the Licensor upon receipt of payment if any due to be received from the Licensor under this agreement. The company served notice in March, 2012 to GCL to pay all dues including book value of current assets pertaining to or in connection with the operation of AC sheet and Cement manufacturing unit as per the license agreement. However the Licensor has failed to take over the possession of Unit by making payment of dues on expiry of the license period. Subsequently an application dated 23.05.12 was filed by Labour Union viz Gujarat Mazdoor Panchayat , the Hon’ble Industrial Tribunal Ahmedabad, has directed vide its order dated 07.06.2012 to A Infrastructure Ltd. to run the Production activities & continue to pay wages, in the same manner to all those workers who are employed and utilized by A Infrastructure Ltd for the production activities at the factory situated at Digvijay Nagar, Ranip, Ahmedabad provided that no hindrance, obstructions and the like is caused by M/s GCL and/or other authorities. M/s GCL is party in the said proceeding and had given an undertaking to the Industrial Tribunal to this effect. In spite of several notices being served to Licensor from time to time, possession of the Unit has not been taken back by GCL. Based on the above facts, circumstances and uncertainty of time regarding taking back of the possession of the Unit by making payment of dues in terms of licence agreement, the company has decided not to charge interest on balance recoverable from GCL from Financial Year 2014-15 onwards. Further Bonus in addition to leave and license fees recoverable from GCL has also not been provided in the books since Financial Year 2014-15 onwards. Year wise amount not provided in the books since financial year 2014-15 are as under :-

These will be provided in the books upon its receipt from GCL. Therefore total Amount recoverable from GCL as on 31.03.2018 is Rs. 3812.03 Lakhs including amount already provided in the books Rs. 1843.33 lakhs shown under Current Assets sub heading short term loans and advances as per accounting policies consistently following by the company. (Previous year Rs. 3264.41 Lacs including amount provided in the books Rs. 1862.76 lakhs). The company has filed civil suit for recovery of the amount and other reliefs in the Commercial Court, Ahmedabad and GCL has filed an appeal for appointment of Arbitrator under section 8 of the Arbitration Act, 1996 bearing reference IAAP No.63/2017 with Hon. High Court which was subsequently withdrawn by GCL with a liberty to file fresh petition. Thereafter GCL had again filed an appeal bearing reference IAAP No.90/2017 on 13-07-2017 under section 11 of the Arbitration Act, 1996. Confirming to decision of High Court the appeal deserve to be dismissed and was, accordingly, dismissed.

NOTE NO. 20

Previous Year’s figures have been regrouped/reclassified wherever necessary to correspond with the current year’s classification/disclosure.

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