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Resonance Specialties Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 60.78 Cr. P/BV 1.99 Book Value (₹) 26.45
52 Week High/Low (₹) 66/25 FV/ML 10/1 P/E(X) 11.04
Bookclosure 13/03/2020 EPS (₹) 4.77 Div Yield (%) 1.90
Year End :2018-03 


Segment Reporting as per Ind AS 108

The company does have any reportable segment as per Ind AS 108 and thus Segment Reporting is not applicable NOTE-33

First-time adoption of Ind AS Transition to Ind AS

Theses financial statements, for the year ended 31st March 2018, are the first the company has prepared in accordance with Ind AS. For the periods upto and including the Year ended 31st March 2017, the company has prepared its financial statements in accordance with accounting standards notified under Section 133 of the Companies Act 2013, read with rule 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). Accordingly the company has prepared financial statements which comply with Ind AS applicable for the periods ending 31st March 2018, together with the comparative period data as at for the year ended 31st March 2017, as discribed in the summary of significant accounting policies. In preparing these financial statements, the company's opening balance sheet was prepared as at 1st April 2016, the company's date of transition into Ind AS, This note explains the Principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1st April 2016 and the financial statement for the year ended 31st March 2017.

A. Exceptions and Exemptions availed

Ind AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The company has applied the following exemptions:

1. Since there is no change in the functional currency, the company has elected to continue with the carrying value for all its investment property as recognized in its Indian GAAP financial as deemed cost at the transition date. Accordingly, the Company has not revalued the property, plant & equipment as on 1st April 2016

Ind AS mandatory exceptions: 1. Estimates

“An entity's estimates in accordance with IndASs at the date of transition to IndAS shall be consistent with estimates made for the same date in accordance with previos GAAP. As there is no 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 in conformity with the previous GAAP.”

2. Classification and measurement of Financial assets

Ind AS 101 requires classification and measurement of Financial assets on the basis of facts and circumstances existing as on date of transition to Ind AS.

A. 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.

Figures of previous year have been regrouped wherever necessary, to confirm to current year's presentation.

Note 1- Classification and presentation of assets and liabilities

Under previous GAAP, the Company was not required to present its assets and liabilities bifurcating between financial assets / financial liabilities and non-financial assets / non-financial liabilities . Under Ind AS, the Company is required to present its assets and liabilities bifurcating between financial assets / financial liabilities and non-financial assets / non-financial liabilities . Accordingly, the Company has classified and presented its assets and liabilities.

Note 2- Reassesment of lease rent

Under Indian GAAP, lease security deposit (that are refundable in the nature on the completion of the lease term) are recorded at the transaction value. As per Ind AS 109, Financial Instruments, all financial assets and liabilities are required to be recognized at fair value. Since lease security are refundable in cash, they would generally meet the definition of financial asset under Ind AS 109. As the security deposits are interest free, the difference between the deposit amount and the fair value would then be recognized in the statement of profit and loss on straight line basis over the lease term.


Employee benefit obligation Post Employment Benefit Plans

(a) Gratuity:

The Company provides for gratuity for employees as per the Payment of Gratuity Act,1972. Employees who are in continuous service for the period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employee last drawn salary per month computed proportionately for 15 days salary multiplied for the number of services.

Sensitivity Analysis Method

Sensitivity analysis is performed by varying a single parameter while keeping all other parameters unchanged. Hence, the result may vary if two or more variables are changed simultaneously. It fails to focus on the interrelationship between underlying parameters. The methods used does not indicate anything about the likelihood of change in any parameter and the extent of the change if any.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.

(C) Risk Exposure

Though its defined benefit plans, the Company is expose to number of risks, the most significant of which are detailed below:

1. Acturial risk :

“It's the risk that benefit will cost more than expected. This can arise due to following reasons:"

(a) Adverse salary growth experience : salary hikes that are higher than the assumed salary escalation will result in an increase in obligation at a rate that is higher than expected.

(b) Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the Gratuity benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

(c) Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.

2. Investment Risk

For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

3. Liquidity Risk:

Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the Company there can be strain on the cash flows.

4. Market Risk:

Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

5. Legislative Risk:

Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/ regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

NOTE-6 Fair values

Fair value measurement include both the significant financial instruments stated at amortized cost and at fair value in the statement of financial position. The carrying values of current financial instruments approximate their fair values due to the short-term maturity of these instruments and the disclosures of fair value are not made when the carrying amount of current financial instruments is a reasonable approximation of the fair value.


Financial risk management objectives and policies

The risk management policies of the Company are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities.

The Management has overall responsibility for the establishment and oversight of the Company's risk management framework. In performing its operating, investing and financing activities, the Company is exposed to the Credit risk, Liquidity risk and Market risk.

Carrying amount of financial assets and liabilities:

The following table summarizes the carrying amount of financial assets and liabilities recorded at the end of the period by categories:

(Amount in Rs.)

Credit risk on financial assets

The company is engaged in business of manufacturing of Pyridine, Picoline, Cynopyridine and derivatives of the same. Bulks drugs and nutritional products are toll converted. Receivables are typically not secured by any form of credit support such as letters of credit, performance guarantees or escrow arrangements. Credit risk is the risk that counterparty will not meet its obligations under a financial instrument, leading to a financial loss. The Company is exposed to credit risk from its operating activities and from its financing activities, including deposits with banks and other financial instruments.

Financial assets that are potentially subject to concentrations of credit risk and failures by counter-parties to discharge their obligations in full or in a timely manner consist principally of cash, cash equivalents and other receivables. Credit risk on cash balances with Bank are limited because the counterparties are entities with acceptable credit ratings. The exposure to credit risk for loan to related parties is limited because the related parties are entities with acceptable credit rating.

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 parent. The primary objective of the Company's capital management is to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company's policy is to keep optimum gearing ratio. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.

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. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2016 and 31 March 2015.


Related Party Disclosures

In accordance with the requirements of IND AS 24, on related party disclosures, name of the related party, related party relationship, transactions and outstanding balances including commitments where control exits and with whom transactions have taken place during reported periods are:

b) Key Management Personnel of Company

Chairman & Managing Director Dr Atma Bandhu Gupta

Whole time Director Mr. Satish Chander Mathur

Independent Director Mrs. Archana Surendra Yadav

Independent Director Dr. Yaqoob Ali

Independent Director Mr. Laxmi Ratan Daga

Non-Executive Director Mr. Bishwanath Prasad Agrawal

Chief Financial Officer Mrs. Shital Churi

Company Secretary Mrs. Minal Bhosale

NOTE-9 Capital Commitments

a) Capital expenditure contracted at the end of the reporting period but not recognized as liability is as follows : There were no capital liability yet to be recognized

b) The Company had cancellable operating leases which expired as on 31 st March'18.

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