(a) The Company has elected the previous GAAP carrying amount (i.e. Gross cost less accumulated depreciation and impairment) of PPE as at April 1,2016 (transition date) as deemed cost and has accordingly disclosed the same as ‘Deemed Cost as on 1.4.2016’.
(b) The Company has made an assessment of the PPE considering product and technological obsolescence, process change, replacement and realisable value as at 1.4 2016 to bring down the carrying value less cost of disposal and recognise impairment, if any, through the Statement of Profit and Loss. Impairment recognised during the year is Rs. Nil (2017-Nil). Refer Note.9
Note:
1.1. Cost of materials consumed (including cost of purchased goods) during the year is Rs.57.68 lakhs (2016-17 Rs.31.64 lakhs)
1.2 The amount of write down of inventory recognised as expense during the year is Rs. Nil
1.3 I n respect of stores and spares and raw materials, the carrying amount representing cost of item purchased in earlier year is estimated to realise higher values and hence no adjustments have been made to their carrying values
1.4 Reversal of write down is recognised as a reduction in the amount of inventories recognised as an expense due to the increase in sale prices in the future periods Rs. Nil ( 2016-17 Rs.40.03 lakhs)
2.1 Rights, preferences and restrictions in respect of equity shares issued by the Company
The equity shareholders are entitled to receive dividends as and when declared, a right to vote in proportion to holding etc.,and their rights, preferences and restrictions are governed by / in terms of their issue under the the provisions of the Companies Act, 2013.
2.2 Shares issued in preceding 5 years
Aggregate number of shares allotted as fully paid up pursuant to contract without payment being received on cash, bonus shares and shares bought back in the 5 years immediately preceding the Balance Sheet date- Nil ( 2017-Nil)
Notes:
3.1 Capital Reduction Reserve of Rs.754.44 lakhs arose out of reduction in Equity Share Capital effected in Financial Year 2002-03 in terms of the order of the Board for Industrial and Financial Reconstruction (BIFR) dated December 18, 2002 represents a reserve created towards adjustment of possible impairment in value of Property, Plant and Equipment under the rehabilitation scheme sanctioned by BIFR in 2002.Independant Valuation carried out during the current year has indicated impairment in value of building as at April 1,2017 to the extent of Rs.376.20 lakhs only. Steps are being initiated to adjust the impairment in value against the reserve with the approval of National Company Law Tribunal.
3.2. Retained earnings represent surplus in the Statement of Changes in Equity column (B).
3.3. Capital Subsidy from the Government of India has been adjusted under retained earnings as per the provisions of Ind AS 101 ‘First time adoption of Ind AS’.
4.1 The Loans from Banks carried interest of Prime Lending Rate(PLR) plus a rate applicable to the Company based on norms, which varies depending upon “credit rating” by the lender and external agency.
4.1 Refer Note 36 for Related party transactions.
4.3 The company has not received any information from the “suppliers” regarding their status under Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any relating to the amount unpaid as at the end of the year/period together with interest paid/payable if any under the said Act have not been furnished.
Note 5 - Notes to Reconciliations
5.1 Under previous GAAP, actuarial gains and losses on employees defined benefit obligations were recognised in profit or loss. Under Ind AS, the actuarial gains and losses on re-measurement of net defined benefit obligations are recognised in other comprehensive income. This resulted in a reclassification between profit or loss and other comprehensive income.
6. Income taxes
There is no tax for the current year as per the Income Tax Act, 1961, considering the allowances/exemptions and consequently, the tax effect on the components in Other Comprehensive income is nil.
The tax rate used for the reconciliations above is the corporate tax rate of 26% (for the year 2017-18) and 33.06% (for the year 2016-17) payable by corporate entities in India on taxable profits under tax law in Indian jurisdiction.
Note: The unused tax losses will expire in various years
Considering the provisions of Ind AS12 ‘Income taxes’ and as a matter of prudence, accrual of deferred tax asset as at March 31, has been restricted to the amount of deferred tax liability.
7. Retirement benefit plans
Defined contribution plans
In accordance with Indian law, eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees’ salary. The contributions, as specified under the law, are made to registered provident fund administered by the Government.
The total expense recognised in profit or loss of Rs.2.40 lakhs (for the year ended March 31, 2017: Rs.1.71 lakhs) represents contribution payable to these plans by the Company at rates specified in the rules of the plan.
Defined benefit plans
“The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at retirement, death, while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company accounts for the liability for gratuity benefits payable in the future based on an actuarial valuation. Company’s liability towards gratuity (unfunded), other retirement benefits and compensated absences are actuarially determined at each reporting date using the projected unit credit method.”
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
The actual return on plan assets was Rs.0 Lakhs (2016-17: Rs.0 Lakhs).
Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumption occurring at the end of the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from previous year.
Weighted Average remaining duration of Defined benefit obligation as at March 31, 2018 is 4.64 ( as at March 31, 2017 : 4.91)
8. Segment Information
The Company’s Operating segment is identified based on the nature of services, risks, returns and the internal business reporting system. The Company is primarily engaged in vitrified tiles including Feldspar, a raw material used in vitrified tiles and accordingly there are no other reportable segment in terms of Ind AS 108 ‘Operating Segments’.
9. Information about major customers- Disclosure of amount of revenues from transactions with single customer amounting to 10% or more of the Company revenue.
Revenue from Customer 1- Rs. 36.96 Lakhs
Revenue from Customer 2- Rs. 18.33 Lakhs
Revenue from Customer 3- Rs. 8.76 Lakhs
10. Financial risk management objectives and policies
The Company’s principal financial liabilities, comprise of loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support its operations. The Company’s principal financial assets include 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’s risk management is undertaken by the management under the guidelines and framework approved by the financial risk committee. Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives which is reviewed and adopted by The Board of Directors 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 instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk. Financial instruments affected by market risk include Borrowings, Advances and deposits.
(i) Foreign Currency Risk
There are no foreign currency transactions during the year.
ii) Interest rate risk
There is no exposure to interest rate risk for the current and previous year as there are only short term borrowings. Borrowings from banks have been repaid before 31st March 2017 and subsequently no impact on interest rate risks.
iii) Other Price risk
There are no Equity price risk as there are no investments.
B) Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, resulting in a financial loss to the Company. Credit risk arises from outstanding trade receivables and from its financing activities, including deposits with banks and institutions.
For banks only high rated banks are accepted.
The Company operates predominantly on cash and carry basis except to certain customers which are on credit basis. The average credit period is in the range of upto 90 days. Customer credit risk is managed based on the Company’s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. The Company has customer base across diverse industries.
An impairment analysis is performed at each reporting date on an individual basis for major clients. The Company makes an allowance for doubtful debts using expected credit loss model and on a case to case basis. To measure the expected credit losses , trade receivables have been grouped based on shared credit risk charateristics and the days past due. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
During the period the Company has made no write offs of trade receivables. It does not expect to receive future cash flows or recoveries from cash flows previously written off.
C) Liquidity risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations.The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company has obtained fund and non-fund based working capital limits from banks. The Company invests its surplus funds in bank fixed deposit which carry minimal mark to market risks.
10.1 Fair Value Measurements
The management considered that the carrying amounts of financial asset and financial liabilities recognised in the financial statements approximate their fair values so no further disclosure is given.
10.2 Capital Management
For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximise the shareholder value.
The Company’s objective when managing capital are to ensure their ability to continue as going concern, so that they can leverage maximise returns for shareholders and benefits of other stakeholders; and to maintain an optimal capital structure to reduce cost of capital. Capital management and funding requirements is met through equity, internal accruals and long and short term debt instruments. The Company monitors capital management though gearing ratio which considers Debt (net of cash and cash equivalents) and equity.
In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements where applicable.
11. Related party disclosure Holding Company
Solomed Capital Pte. Ltd
Companies under Common Control with transactions Sologuard Medical Devices (P) Limited
Athreya Finance Pvt Ltd Bell Granito Ceramica Limited
Key management personnel
Mr. Tribhuvan Simh Rathod - Managing Director
Mr.Nalinkant Amratlal Rathod - Chairman
Mr. Subba Rao Maddula - Chief Financial Officer
Ms. Rekha Singh - Compliance Officer and Company Secretary
Ms.Bharathi Rathod - Director
As per section 149(6) of the Companies Act 2013, Independent Directors are not considered as “Key Managerial Personnel”. Also, considering the roles and functions of Independent directors stated under Schedule IV of the Companies Act 2013, they have not been disclosed as “Key Managerial Personnel” for the purpose of disclosure requirements of Ind AS 24 “Related Parties”.
12. Disclosure as required under section 186(4) of the Companies Act, 2013 is not applicable as there are no loans, investments or guarantees.
A case has been filed against the Company in 1997 regarding alleged sale and lease back of certain fixed assets belonging to the company. The Company has disputed the veracity of the sale and lease back arrangement particularly since there was no evidence of appropriate approvals on behalf of the Company. The case is pending adjudication before the High Court and consequently, the said Company books assets continue in possession of and properly reflected in the account.
Note: Further cash outflows in respect of above are determinable only on receipt of judgement/ decisions pending with various forums/authorities.
13. Corporate Social Responsibility Obligation (CSR)
The Provisions of section 135 of the Companies Act 2013, (Corporate Social Responsibility) are not applicable to the company for current and previous financial year.