Mobile Nav

Market

NOTES TO ACCOUNTS

JHS Svendgaard Laboratories Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 69.04 Cr. P/BV 0.43 Book Value (₹) 36.03
52 Week High/Low (₹) 37/13 FV/ML 10/1 P/E(X) 0.00
Bookclosure 17/09/2019 EPS (₹) 0.00 Div Yield (%) 0.00
Year End :2018-03 

Background

JHS Svendgaard Laboratories Limited (“the Company") is a public limited company domiciled in India and incorporated under the provisions of the Companies Act. The Company is engaged in manufacturing a range of oral and dental products for elite national and international brands. The main portfolio of the Company is to carry out manufacturing and exporting of oral care and hygiene products including toothbrushes, toothpastes and mouthwash. The Company's shares are listed for trading on the National Stock Exchange and the Bombay Stock Exchange in India.

1. Basis of preparation

a) Compliance with Indian Accounting Standard

These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) read with Rule 3 of the Companies (Indian Accounting Standards) Rules,2015 and Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act.

For all the period upto and including the financial statements for the year ended 31 March 2017 were prepared in accordance with the Indian Accounting Standards (Ind AS) notified under the section 133 Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules, 2014 (as amended) and other relevant provisions of the Act (hereinafter referred to as 'Previous GAAP').

These financial statements for the year ended 31 March, 2018 are the first financial statements that are prepared in accordance with Ind AS. Refer to note 43 for information on how the transition from Previous GAAP to Ind AS has affected the financial position, financial performance and cash flows.

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Division II Ind AS Schedule III, unless otherwise stated.

b) Basis of measurement

An entity shall prepare its financial statements, except for cash flow information, using the accrual basis of accounting.

c) Critical estimates and judgments

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgment in applying the Company's accounting policies

This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

The areas involving critical estimates and judgments are:

i. Useful life of property, plant and Equipment

The estimated useful life of property, plant and equipment is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.

The Company reviews, at the end of each reporting date, the useful life of property, plant and equipment and changes, if any, are adjusted prospectively, if appropriate.

ii. Recoverable amount of property, plant and equipment

The recoverable amount of plant and equipment is based on estimates and assumptions regarding in particular the expected market outlook and future cash flows. Any changes in these assumptions may have a material impact on the measurement of the recoverable amount and could result in impairment.

iii. Estimation of defined benefit obligation

Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, the rate of salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate and documented. However, any changes in these assumptions may have a material impact on the resulting calculations.

iv. Estimation of deferred tax assets for carry forward losses and current tax Expenses

The Company review carrying amount of deferred tax assets and Liabilities at the end of each reporting period. The policy for the same has been explained under Note No 2(c).

v. Impairment of trade receivables

The Company review carrying amount of Trade receivable at the end of each reporting period and provide for Expected Credit Loss based on estimate.

vi. Fair value measurement

Management uses valuation techniques in measuring the fair value of financial instrument where active market codes are not available. Details of assumption used are given in the notes regarding financial assets and liabilities. In applying the valuation techniques management makes maximum use of market inputs and uses estimates and assumptions that are, as fast as possible, consistent with observable data that market participant would use in pricing the instrument where application data is not observable, management uses its best estimate about the assumption that market participant would make. These estimates may vary from actual prices that would be achieved in an arm's length transaction at the reporting date.

Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

d) Others

Financial statements has been prepared on a going concern basis in accordance with the applicable Indian Accounting Standards prescribed in the Companies (Indian Accounting Standards) Rules, 2015 issued by the Ministry of Corporate Affairs.

e) Current versus non-current classification

The Company presents assets and liabilities in the financial statement based on current/ non-current classification.

An asset is treated as current when it is:

- Expected to be realized or intended to be sold or consumed in normal operating cycle

- Expected to be realized within twelve months after the reporting period, or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in normal operating cycle

- It is due to be settled within twelve months after the reporting period, or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.

f) Foreign currency translation

i) Functional and presentation currency

Items included in the Financial Statements are measured using the currency of the primary economic environment in which the entity operates i.e. 'the functional currency'. The Financial Statements are presented in Indian rupee ( INR), which is Company's functional and presentation currency.

ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using exchange rates at the date of the transaction. Foreign exchange gains and losses from settlement of such transactions and from translation of monetary assets and liabilities denominated in foreign currency at the reporting date exchange rates are recognized in the Statement of Profit and Loss. Foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis within other income/ expenses.

(c) In view of recurring losses and in absence of reasonable certainty, the Company had not recognized deferred tax assets on 01 April,2016.

However, during the year ended 31 March, 2017, the Company has, based on its operational parameters and future earnings, assessed and recognized deferred tax asset on unabsorbed depreciation and carried forward business losses. The management is confident about its virtual certainty that sufficient future taxable income will be available against which such asset can be realized."

* As per the terms of Business Transfer Agreement (BTA) dated March 21, 2016 with Avalon Cosmetics Private Limited to sell/ transfer one of its undertakings known as “Waves Hygiene Products" on a 'slump sale' basis for a lump sum consideration without values being assigned to individual assets and liabilities. The agreed total consideration for sale of undertaking under slump sale was Rs. 1625 lakhs. Out of which Rs.1420 lakhs (March 31, 2017: Rs.1419 lakhs, April 01, 2016: Rs.414 lakhs) has been received and balance is receivable.

“* Pursuant to approval of shareholders by way of special resolution in accordance with section 42 & 62 of the Companies Act, 2013 and Rules made thereunder and as per SEBI (ICDR) Regulations, 2009 the Company approved preferential allotment of 34,974,748 nos. fully convertible warrants of Rs.10 each at an issue price of C11 per warrant. Out of this, the Company has converted 16,780,000 nos.,[upto 31 March, 2017: 18,164,748 nos. (upto 31 March, 2016: 13,539,748 nos.)] fully convertible share warrants into equal number of fully paid up equity shares after receiving full issue price of Rs.11/- per warrant from the respective allottees during the year ended 31 March, 2018. For remaining 30,000 warrants, application money was received at 25% of Issue price i.e. Rs.2.75 /- per warrant. However, no call money was received till final allotment date 06 July, 2017 hence, the warrants were forfeited and adjusted through Capital Reserve amounting to Rs.0.82 lakh.

Pursuant to special resolution passed in the Extraordinary General Meeting held on 10 January, 2017, the Company has approved and issued on preferential basis, 1,860,465 nos. fully paid equity shares at an issue price of Rs.43/- per share to HT Media Limited via Share Subscription Agreement dated 25 January, 2017. These shares have subsequently been listed.

Paid up equity share capital includes 1,63,60,000 equity shares alloted pursuant to conversion of share warrants. These shares are under process for listing.

d. Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.10/- per share referred to herein as equity share. Each holder of equity shares is entitled to one vote per share held.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in the case where interim dividend is distributed. During the year ended 31 March, 2018 and 31 March, 2017, no dividend has been declared by the Company.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive all of the remaining assets of the Company, after distribution of all preferential amounts, if any. Such distribution amount will be in proportion to the number of equity shares held by the shareholders.

Aggregate number of shares issued for consideration other than cash during the period of five years immediately preceding the reporting date:

65,45,245 equity shares issued to the shareholders of merged entities pursuant to the scheme of amalgamation in the financial year 2012-13.

B. Nature and purpose of reserve Capital reserve

Out of total preferntial allotment of 34,974,748 warrants, till the year ending 31 March, 2018, 34,944,748 warrants were successfully allloted. For remaining 30,000 warrants, application money was received at 25% of Issue price i.e. Rs.2.75 /- per warrant. However, no call money was received till final allotment date 06 July, 2017 hence, the warrants were forfeited and adjusted through Capital Reserve amounting to Rs.0.82 lakhs.

b. Security premium account

Securities premium account is used to record the premium on issue of shares. The reserve is utilise in accordance with the provisions of the Companies Act, 2013.

c. General reserve

This represents appropriation of profit by the Company and is available for distribution of dividend.

* Respective assets are hypothecated against the loans taken to acquire such vehicles. Loan is repayable within a period of 60 months at interest rate in the range of 8% p.a. to 12% p.a.

**It represents deferred payment for acquisition of machine. Payment is to be made in 36 equal installments of Rs.3.13 lakh each starting from 15 April, 2015. This has been carried at amortised cost.

***Repayable in 2 equal yearly installment commencing from 31st December, 2016 @ interest rate of 15% p.a.

The Company has recognized net income amounting to Rs.2727.21 lakhs during the year ended 31 March, 2018 on account of compensation received pursuant to the Settlement Agreement dated 28 March, 2017. The Arbitral Tribunal has given its Final Award on 3 April, 2017 and two SLP's from the Supreme Court were withdrawn on 06 April, 2017 & 12 April, 2017.

2. Contingent Liability

I. Claims/litigations made against the Company not acknowledged as debts:

Matters under litigation:

Claims against the Company by employees, vendors & customers amounting to Rs.149.39 lakh (Previous Year Rs.77.60 lakh). The management of the Company believes that the ultimate outcome of these proceedings will not have a material/adverse effect on the Company's financial condition and results of operations.

II. Others:

Bank Guarantee issued by Bank amounting to Rs.71.11 lakh (Previous Year Rs.71.11 lakh).

3. Government Grant

During the financial year ended 31 March, 2012, the Company had received capital subsidy under the Central Capital Investment Subsidy Scheme, 2003 of the Government of India. The subsidy received is being apportioned to Statement of Profit & Loss over the useful life of the assets which is estimated as 10 years. During the year the Company has recognised Rs.3 lakh (previous year Rs.3 lakh) as government grant based on useful life of the assets.

4. Segment Reporting

The Company is engaged in manufacturing a range of oral and dental products for elite national and international brands. Information reported to and evaluated regularly by the Chief Operational Decision Maker (CODM) for the purpose of resource allocation and assessing performance focuses on business as a whole. The CODM reviews the Company's performance on the analysis profit before tax at overall level. Accordingly, There is no other separate reportable segmental as defined by IND AS 108 “Segment Reporting".

Information about major customers

Revenue of Rs.9316.49 lakh, (Previous year Rs.8272.17 lakh) arising from two customers in India and Rs.2224.61 lakh (Previous year Rs.397.05 lakh) from one customer outside India contribute more than 10% of the Company's revenue individually. No other customer contribute 10% or more than 10% to the Company's revenue for the current year ended 31 March, 2018 and previous year ended 31 March, 2017. The Company does not hold any non current assets outside India.

5. Employee benefit obligations

The Company has classified various employee benefits as under:

a) Defined contribution plans

i.) Employees Provident fund

ii.) Employee State Insurance Scheme

The Company has recognised the following amounts in the Statement of Profit and Loss for the year: (Refer Note- 31)

b Defined benefit plans

i.) Gratuity

c Other long-term employee benefits

ii.) Leave encashment

Gratuity is payable to eligible employees as per the Company's policy and The Payment of Gratuity Act, 1972. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit (PUC) method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligations.

Provision for leave benefits is made by the Company on the basis of actuarial valuation using the Projected Unit Credit (PUC) method.

Liability with respect to the gratuity and leave encashment is determined based on an actuarial valuation done by an independent actuary at the year end and is charged to Statement of Profit and Loss.

Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognized immediately in the Other Comprehensive Income as income or expense.

The discount rate has been assumed at 7.70% p.a. (Previous year 7.30% p.a.) based upon the market yields available on Government bonds at the accounting date for remaining life of employees. The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market on long term basis.

Description of Risk Exposures :

Risks associated with the plan provisions are actuarial risks. These risks are: - (i) investment risk, (ii) interest risk (discount rate risk), (iii) mortality risk and (iv) salary risk.

i) Investment Risk- The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to Government Bonds Yield. If plan liability is funded and return on plan assets is below this rate, it will create a plan deficit.

ii) Interest Risk (discount rate risk) - A decrease in the bond interest rate (discount rate) will increase the plan liability.

iii) Mortality Risk - The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants. For this report we have used Indian Assured Lives Mortality (2006-08) ultimate table. A change in mortality rate will have a bearing on the plan's liability.

iv) Salary Risk - The present value of the defined benefit plan liability is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan's liability.

(g) Terms and Conditions

Outstanding balances at the year end are unsecured, interest free and recoverable/repayable on demand. There has been no guarantee provided or received for any related party receivable and payable, other than disclosed. For the year end 31 March, 2018 the company has provided for impairment of receivables owed by the related party Rs. Nil in 31 March, 2018 and 31 March, 2017 Rs.0.73 lakh ). This assessment undertaken each financial year through examining the financial position of related party and market in which related party operates.

a) Fair valuation of financial assets and liabilities with short term maturities is considered as approximate to respective carrying amount due to the short term maturities of these instruments.

b) Fair value of non-current financial assets and liabilities has not been disclosed as there is no significant differences between carrying value and fair value

- 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 maximize the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

- Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. The fair value of financial assets and liabilities included in Level 3 is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes of similar instruments.

6. FINANCIAL RISK MANAGEMENT

Risk management objectives and policies

The Company is exposed to various risks in relation to financial instruments. The Company's financial assets and liabilities by category are summarised in Note 43. The main types of risks are market risk, credit risk and liquidity risk. The Company's risk management is coordinated by its board of directors, and focuses on actively securing the Company's short to medium-term cash flows by minimising the exposure to volatile financial markets. The Company does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Company is exposed to, are described below:

Market risk

Market risk is the risk that changes in market prices will have an effect on Company's income or value of the financial assets and liabilities. The Company is exposed to various types of market risks which result from its operating and investing activities. The most significant financial risks to which the Company is exposed are described below:

Foreign currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD and EURO. Foreign exchange risk arises from future commercial transactions and recognise assets and liabilities denominated in a currency that is not company's functional currency(INR). The Risk is measured through a forecast of highly probable foreign currency cashflows.

To mitigate the Company's exposure to foreign exchange risk, cash flows in foreign currencies are monitored and net cash flows are managed in accordance with Company's risk management policies. Generally, the Company's risk management procedures distinguish short term foreign currency cash flows (due within 6 months) from longer term cash flows (due after 6 months). Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no hedging activity is undertaken.

These percentages have been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis given in the table below is based on the Company's foreign currency financial instruments held at each reporting date.

Sensitivity analysis for entities with foreign currency balances in INR

The following tables illustrate the sensitivity of profit/loss and equity in regards to the Company's financial assets and financial liabilities and the movement of exchange rates of respective functional currencies' against INR, assuming 'all other things being constant'.

If the respective functional currencies had strengthened/weakened against the INR by the afore mentioned percentage of market volatility, then this would have had the following impact on profit/loss:

(b) Price risk

The Company is mainly exposed to the price risk due to investment in mutual funds. The price risk arises due to uncertainties about the future market values of these investments. In order to minimise pricing risk arising from investment in mutual funds, Company invest in highly rated mutual funds.

(c) 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 rates. The Company is not exposed to significant interest rate risk because funds are borrowed at fixed interest rates. The borrowings of the Company are principally denominated in rupees and fixed rates of interest.

1 CREDIT RISK

Credit risk arises from cash and cash equivalent, investments in mutual funds, deposits with the banks, as well as credit exposure to customers including outstanding receivables.

Credit risk management

For Bank and Financial Institutions, only high rated banks/ institutions are accepted

For other counter parties, the company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of account receivables. Individual risk limits are set accordingly. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls. The Company's policy is to deal only with creditworthy counterparties only.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. The company considers reasonable and supportive forward-looking information.

The company based on internal assessment which is driven by the historical experience/current facts available in relation to default and delays in collection thereof, the credit risk for trade receivable is considered low. The Company estimates its allowance for trade receivable using life time expected credit loss. The balance past due for more than 6 months( net of expected credit loss allowance), excluding receivable from group companies is Rs.580 lakh (31 March, 2017 Rs.226.10 lakh; 01 April, 2016 Rs.123.30 lakh).

The credit risk for cash and cash equivalents and other financial instruments is considered negligible and no impairment has been recorded by the Company.

Significant estimates and judgments Impairment of financial assets

The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company's past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

2 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

The Company's is responsible for managing the short term and long term liquidity requirements. Short term liquidity situation is reviewed daily. Longer term liquidity position is reviewed on a regular basis by the Board of Directors and appropriate decisions are taken according to the situation.

7 Capital Management A Risk Management

For the purposes of Company capital management, Capital includes equity attributable to the equity holders of the Company and all other equity reserves. The primary objective of the Company capital management is to ensure that it maintains an efficient capital structure and maximize 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 or issue new shares. The Company is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the year ended 31 March, 2018, 31 March, 2017 and 01 April, 2016.

B Dividends

The Company has not proposed any dividend for the year (31 March,2017: Rs. Nil 01 April, 2016: Rs. Nil).

8. Leases Operating lease

The Company has taken premises under cancellable operating leases with an option of renewal at the end of the lease term with mutual consent. There are scheduled escalation clauses. Lease rental expense of Rs.39.24 lakh (31 March, 2017: Rs.22.93 lakh) charged to the Statement of Profit and Loss during the year.

9. Suppliers registered under Micro, Small and Medium Enterprises Development Act, 2006

The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED), promulgated by Government of India came into force with effect from 2 October 2006. As per the Act, the Company is required to identify the Micro and Medium suppliers and pay them interest on overdue beyond the specified period irrespective of the terms agreed with the suppliers. The Company has not received information from any suppliers regarding their status under MSMED and hence disclosures relating to amount unpaid as at the year end together with interest paid/payable under this Act have not been given.

10 During the year under review, Section 135 of Companies Act 2013 read with (Companies Corporate Social Responsibility )Rules, 2014 has become applicable on the company and in compliance with the provisions of the aforesaid Section read with the said Rules , the company has duly constituted a CSR committee and framed the CSR policy. However, the company has not spend any amount due to the accumulated lossess in preceeding years.

11 Consequent to the introduction of Goods and Services Tax (GST) with effect from 01 July, 2017,the indirect taxes like Central Excise, VAT etc. have been replaced by GST. In accordance with Indian Accounting Standard 18 on Revenue and Schedule III of Companies Act, 2013, GST is not to be included in Gross Revenue from sale of products. In view of aforesaid restructuring of indirect taxes, Gross Revenue from sale of products and Excise duty for quarter and year ended 31 March, 2018 are not comparable with previous periods. Following additional information is being provided to facilitate such comparison.

12 First-time adoption of Ind AS

These are the first financial statements prepared in accordance with Ind AS by the Company.

The accounting policies set out in Note 2 have been applied in preparing 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 preparation of an opening Ind AS balance sheet at 1 April, 2016 (the transition date). In preparing its opening Ind AS balance sheet , the Company 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).

An explanation of how the transition from previous GAAP to Ind AS has affected the Company's financial position, financial performance and cash flows is set out in following tables and notes.

A. Exemptions and exceptions availed

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

A.1 Ind AS optional exemptions A1.1 Deemed cost

Para D7AA of appendix C to Ind AS 101 permits a first time adopter to elect to continue with the carrying value for all of its Property, Plant and Equipment and Intangible Assets as recognised in the financial statements as 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 as per Ind AS 101.

The Company has elected to measure all of its Property, Plant and Equipment and Intangible Assets at their previous GAAP carrying value.

A.1.2 Leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. 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, except where the effect is expected to be not material.

The Company has elected to apply this exemption for such contracts/arrangements.

A1.3 Investment in subsidiaries

As per Ind AS 101 , If a first-time adopter measures such an investment at cost in accordance with Ind AS 27, it shall measure that investment at one of the following amounts in its separate opening Ind AS Balance Sheet:

(a) cost determined in accordance with Ind AS 27; or

(b) deemed cost. The deemed cost of such an investment shall be its:

(i) fair value at the entity's date of transition to Ind ASs in its separate financial statements; or

(ii) previous GAAP carrying amount at that date

The Company has availed the exemption and has measured these investments in subsidiaries at deemed cost being the previous GAAP carrying amount at the transition date.

A.2 Ind AS mandatory exceptions A.2.1 Estimates

An entity's estimates in accordance with Ind ASs 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 estimate were in error.

Ind AS estimates as at 1st April 2016 are consistent with the estimates as at the same date made in confirmity with previous GAAP.

Further, the Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Investment in equity instruments carried at FVTPL or FVOCI; and

- Investment in debt instruments carried at amortised cost

A.2.2 Classification and measurement of financial assets

Ind AS 101 requires an entity to assess 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.

A.2.3 De-recognition of financial assets and liabilities

As per Ind AS 101, an entity should apply de-recognition requirement of Ind AS 109, “ Financial Instruments", prospectively for transactions occurring on or after the date of transition to Ind AS.

B. 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 on first time adoption

Note 1. The Company has elected to take the exemption of para D7AA, Appendix C of Ind-AS 101 for all items of Property, Plant and Equipment, and Intangible Assets as at the date of transition to Ind AS. Hence, as at the date of transition to Ind AS there is no change in the carrying values under previous GAAP .

Note 2 Under pevious GAAP, the Company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled previous GAAP profit to total comprehensive income as per Ind AS.

Note 3 Under previous GAAP, non-current liabilities are recognised on undiscounted basis. Ind AS requires such liabilities to be recognised initially at fair value and then to be carried at amortised cost. The discounted value of the liabilty is increased over the period of term by recognising the notional interest expense under 'finance cost' .

Note 4 Under previous GAAP, the Company recognises settlement liabilty on undiscounted basis. Under Ind AS, financial liabilty is to be recognised at fair value and carried at amortised cost. D1Accordingly the difference between settlement amount and its fair value is adjusted through the asset recognised and subsequently, Notional Interest charged to Statement of Profit & Loss as finance cost over the term. The impact on depreciation is also considered.

Note 5 : Under previous GAAP, the interest free security deposits for leases are accounted at an undiscounted value. Under Ind AS, the security deposits for leases have been recognised at discounted value and the difference between undiscounted and discounted value has been recognised as 'Deferred lease rent' which has to be amortised over respective lease term as rent expense under 'other expenses'. The discounted value of the security deposits is increased over the period of lease term by recognising the notional interest income under 'other income'.

Note 6 The changes in the deferred tax assets are on account of adjustments made on transition to Ind AS.

Note 7 Investment in mutual funds have been fair valued in accordance with Ind AS 109.Under previous GAAP these investments were carried at cost net of diminution in their value as at the Balance Sheet date. Accordingly,fair value changes are recognised in the statement of profit and loss for the year ended on 31 March, 2017.

Note 8 Under previous GAAP, the Company has recognised share issue expenses in profit and loss. Ind AS requires the transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided. (Rs.in lakhs)

Note 9 Under the previous GAAP the net effect of periodical cost reconciliation with customer were grouped under other expenses/income, however, under Ind AS 18 “Revenue, these expenses are netted off against sale of goods.

Note 10 : Both under previous GAAP and Ind AS, the Company recognised costs related to its postemployment defined benefit plan on an actuarial basis. Under previous GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS 19, Actuarial gains and losses pertaining to defined benefit obligations and re-measurement pertaining to return on plan assets are recognised in Other Comprehensive Income and are not reclassified to profit or loss. Thus the employee benefit cost is reduced by Rs.540,858 and Remeasurement gains/ losses on defined benefit plans has been recognized in the OCI net of tax.

Note 11 : Under previous GAAP, written down of inventories to net relisable value as well as the reversal of such write down disclosed as expense or income respectively. Ind AS 2 “Inventories", the amount of any reversal of any write-down of inventories, shall be recognised as a reduction in the amount of inventories recognised as an expense in the period in which reversal occurs.

Under previous GAAP, discount received from supplier is disclosed as Other Income. Ind AS requires that all rebates and discounts, including prompt settlement discount, should be deducted from the cost of inventories.

Note 13: The Company had taken a loan from Banks which had been waived off during the year 2015. The Company had shown the effect of waiver of loan in Capital Reserve. Under Ind AS, the same as has been reclassified under Retained earnings as an reclassification entry amounting to Rs.3082.89 lakh.

Note 14 : Under the previous GAAP, all the Bank Balances were part of Cash & Cash Equivalents. However, as per Ind AS, only short term Bank Deposit with original maturity of less than three months shall be part of Cash & Cash Equivalent. Accordingly Bank deposits amounting to Rs.37.53 lakh (previous year Rs.34.95 lakh ) which were classified as Cash & Cash Equivalents in previous GAAP are classified as “Financial Assets - Current - Bank Balances Other than Cash & Cash Equivalents" in Ind AS. The changes in Bank deposits which are not classified as Cash & Cash Equivalents of Rs.15.70 lakh forms the part of Operating Activities in Cash Flow Statement.

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”.