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NOTES TO ACCOUNTS

Bharat Rasayan Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 2732.28 Cr. P/BV 6.68 Book Value (₹) 962.18
52 Week High/Low (₹) 7020/3325 FV/ML 10/1 P/E(X) 24.50
Bookclosure 25/09/2019 EPS (₹) 262.49 Div Yield (%) 0.02
Year End :2018-03 

1. General Information

Bharat Rasayan Limited is a public limited company domiciled in India and was incorporated on May 15, 1989 for the business of manufacturing of technical grade pesticides. It has a backward integration project to manufacture Technical Grade Pesticides Intermediates and their formulations confirming to International Standards. It is Listed on National Stock Exchange of India Limited.

The address of its registered office is 1501, Vikram Tower Rajendra Place, New Delhi - 110008.

2.1: The Company has adopted to continue with carrying of its property, plant and equipment as recognised in the financial statement as at the date of transition to Ind-AS measured as per previous GAAP.

2.2: Impairment of Assets (Ind-AS 36): The Management periodically assess using external and internal source, whether there is an indication that an assets may be impaired and Company foresee on such impairment indication as on the Balance Sheet Date.

2.3: Land includes leasehold lands by GIDC (Gujarat): (i) Factory land located at Dahej (Gujarat) valued Rs.743.16 Lacs (lease period starts from 11.08.2010 is valid till 99 years); (ii) Residential Plot at Atali, Dahej (Gujarat) valued Rs.78.50 Lacs (lease period for 99 years); and (iii) Located at Saykhea valued Rs.1525.81 Lacs (lease period starts from February 2018 and is valid till 99 years).

3.1 Company has adopted to continue with carrying value of its Capital Work in Progress as recognized in the financial statements as at the date of transition to Ind AS measured as per previous GAAP.

4.1 Company has adopted to continue with carrying value of its Intangible Assets as recognized in the financial statements as at the date of transition to Ind AS measured as per previous GAAP.

5.1.1:- Security deposits amounting Rs.146.06 Lacs ( 31.03.2017: Rs.107.02 Lacs and 01.04.2016: Rs.107.07 Lacs) is related to the Government Departments.

6.1.1: Rs.363.09 Lacs [31.03.2017: Rs.218.47 Lacs and 01.04.2016: Rs.225.35 Lacs] represents fixed deposit placed with the banks against LC/BG issued.

1. Rights, Preferences and Restrictions attaching to shares

Equity Shares: The Company has one class of Equity Shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. 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 to their shareholding.

7.3 Aggregate no. of equity shares issued as fully paid by way of bonus during the period of five years immediately preceding the reporting date

*Note-A : Primary Security : First charge on Pari-Passu basis with Axis Bank on the fixed assets of the company at Dahej including Equitable Mortgage (EM) of Land and Building at Plot No. 42/4, GIDC, Village Dahej, Distt. Bharuch, Gujarat. Collateral Security : Second charge on Pari-Passu basis on the residual fixed assets of the company (excluding Dahej & Medak Property) including factory land and building located at Village Mauza Mokhra, Tehsil Meham, Distt. Rohtak, Haryana.

Second charge on Pari-Passu basis on the residual current assets of the company.

*Note-B : Primary Security : First charge on pari-passu basis including hypothecation of stocks of raw material, stores and spares, stock-in-process, finished goods including goods in transit, book debts/receivables/foreign bills and all other current assets of the Company. Collateral Security : A) First charge on pari-passu basis with all the working capital lenders on the fixed assets of the Company (excluding WDV of all fixed assets of Dahej unit and excluding WDV of land & building at Medak, including equitable mortgage of factory, land and building and all other fixed assets located at village Mauza Mokhra, Tehsil Meham, Distt. Rohtak, Haryana. B) Second charge on pari-Passu on the fixed assets at Dahej unit of the Company (excluding land and building) for securing working capital facilities.

*Note: R&D Expenses:- The Company is registered as Research & Development Unit (R&D) with Ministry of Science & Technology, Govt. of India, Department of Scientific & Industrial Research, New Delhi, hence eligible for weighted deduction U/S 35(2AB) of the Income Tax Act on expenditure incurred for the purpose. Total expenditure of Rs.115.52 Lacs {Revenue Expense of Rs.94.79 Lacs net of depreciation of Rs.6.54 Lacs and Capital Expenditure of Rs.20.72 Lacs} (During the F.Y 2016-17 Rs.74.09 Lacs {Revenue Expense of Rs.73.15 Lacs net of depreciation of Rs.7.40 Lacs and Capital Expenditure of Rs.0.94 Lacs}) are eligible for weighted deduction U/S 35(2AB) of the Income Tax Act, 1961.

8.1 Basic/Diluted Earning per Share

The earnings and weighted average number of equity shares used in calculation of basic and diluted earning per share.

NOTE NO. 9 : Capital Management

The company objective to manage its capital in a manner to ensure and safeguard their ability to continue as a going concern so that company can continue to provide maximum returns to share holders and benefit to other stakeholders.

Further, company manages its capital structure to make adjustments in light of changes in economic conditions and the requirements of the financial covenants. The company maintain an optimal capital structure of Debt equity to reduce the cost of capital. The company’s debts includes interest bearing borrowings from Promoter’s Directors.

(a) The carrying amounts of trade receivables, cash and cash equivalents, bank balance other than cash and cash equivalent, other financial assets, trade payables and financial liabilities are considered to the same as their fair values, due to short term nature.

(b) Long term variable rate borrowings are evaluated by Company on parameters such as interest rates, specify country risk factors and other risk factors. Based on this evaluation, the fair value of such payables are not materially different from their carrying amount.

(c) For Other Financial assets and liabilities that are measured at fair value, the carrying amount are equal to fair values.

NOTE NO. 10 : Financial Risk Management

The Company’s principal financial liabilities comprise Borrowings (including Cash Credits), Trade Payables and other payables. The main purpose of these financial liabilities is to finance the company’s operations and to provide guarantees to support its operation. The Company’s principal financial assets includes trade receivables, other receivables and cash and cash equivalents that derive directly from its operations.

The Company is expose to market risk, credit risk and liquidity risk. The company financial risk activities are governed by appropriated policies and procedures and that financial risk are identified, measured and managed in accordance with the companies policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risk which are summarized below:-

a) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of changes in market prices. Market risk comprises Interest rate risk. Financial instruments affected by market risk includes Borrowings.

b) Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of change in market interest rate. The company manages its interest risk in accordance with the companies policies and risk objective.

c) Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s receivables from customers. The company is exposed to credit risk from its financial activities including trade receivable, Security deposits and other financial instruments. The maximum credit risk as on the reporting risk is equal to the carrying value of the financial instruments.

d) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due.

The Company’s corporate 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. Company having Cash Credit facilities from various banks for maintaining the short term financial requirement.

NOTE NO. 11 : Key sources of Estimation uncertainty

The followings are the key assumptions concerning the future and the key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities with next financial year.

a) Fair valuation measurement and valuation process

The fair values of financial assets and financial liabilities are measured using the valuation techniques including DCF model. The inputs to these methods are taken from observable markets where possible, but where this it is not feasible, a degree of judgement is required in arriving at fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

b) Taxes

Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which losses can be utilized significant management judgement is required to determine the amount of deferred tax asset that can be recognized, based upon the likely timing and level of future taxable profit together with future tax planning strategies.

c) Useful Life of PPE

Company has defined useful life of property plant and equipment in accordance with Schedule-II of the Companies Act, 2013.

12.1 : Contingent Assets

Company having contingent assets of Rs.13.13 Lacs as on 31.3.2018 from various customers in respect of claims against bounced cheques.

Sensitivity analysis:

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be co-related. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating the defined benefit obligation recognised within the statement of financial position.

NOTE NO. 13 : Corporate Social Responsibility

As per the requirement of the provisions of Companies Act, 2013, the Company has made Corporate Social Responsibility contribution.

NOTE NO. 14 : Operating segment are reported in the manner consistent with the internal reporting provided to Chief Operating Decision Maker (CODM). CODM has identified only one operating segment, hence no separate disclosure are required.

NOTE NO. 15 : Approval of Financial Statements

The financial statements were approved for issue by the Board of Directors on 30.05.2018.

NOTE NO. 16 : First time adoption of Ind AS

These financial statements, for the year ended 31st March, 2018, are the first the company has prepared in accordance with Ind-AS. For periods up to and including the year 31st March, 2017, the company prepared its financial statements in accordance with the Indian GAAP, including accounting standards notified under the companies (Accounting Standards) Rules, 2006 (as amended).

Accordingly the company has prepared financial statements which comply with Ind-AS applicable for the periods on or after 31st March, 2018, together with the comparative period data as at and for the year ended 31st March, 2017, as described in the summary of the significant accounting policies. In preparing these financial statements, opening balance sheet of the Company was prepared as at 1st April, 2016, date of transition to 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 statements as at and for the year ended 31st March, 2017.

Exemptions applied Ind-AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind-AS Company has applied the following exemptions:

(1) Estimates

The estimates at 1st April, 2016 and at 31st March, 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies). The estimates used by the entity to present these amounts in accordance with Ind AS reflect conditions at 1st April, 2016, the date of transition to Ind-AS and as at 31st March, 2017.

(2) Deemed Costs

The Company has elected to continue with the previous GAAP carrying value of all Property Plant and Equipment and Intangible Asset as recognised in the previous GAAP financial statements as deemed cost at the transition date, as there is no change in the functional currency of the Company.

(3) Long term Foreign Currency Monetary Items

Company continuing the previous GAAP accounting policy for exchange differences arising from translation of existing long term foreign currency monetary items recognised in the financial statements on the loan taken on or before 31st March, 2017.

NOTES TO FIRST TIME ADOPTION OF IND-AS

Note :- 1 Proposed Dividend

Under the previous GAAP, dividends proposed by the Board of Directors after the Balance Sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind-AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs.50.98 Lacs and Dividend Distribution Tax of Rs.10.38 Lacs thereon as at April 1, 2016 included under provisions under previous GAAP which has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

Note:- 2 Adjustment of Tax related to the Prior Years

Tax related to previous year during FY 2016-17 has been regrouped to Statement of Profit and Loss account from retained earning, which results in to decrease in Profit after Tax for the FY 2016-17 amounting to Rs.12.83 Lacs, however there is no impact on other equity.

Note:- 3 Remeasurement of Defined Benefit Liability

Under Ind AS, remeasurements i.e. actuarial gains & losses of Rs.22.40 Lacs on the net defined benefit liability are recognised in the other comprehensive income which was earlier recognised in profit and loss under previous GAAP. However, due to reclassification of this items of Profit and Loss as Other Comprehensive income, there is no impact on total equity.

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