1. COMPANY INFORMATION
Kkalpana Industries (India) Limited (the Company) was incorporated in India on 03rd of September 1995. The Company is domiciled in India whose shares are listed on the Bombay Stock Exchange (BSE). The registered office is located at 2B Pretoria Street. Kolkata The Company is engaged in the manufacturing of Plastic Compounds. Plastic Processors and Exporters Pvt Limited is a subsidiary of the Company.
The financial statements of the Company for the year ended 31st March, 2018 were authorised for issue in accordance with a resolution of the Board of Directors as on 30.05.2018
2 Basis of Preparation of Financial Statements
2.1 Statement of Compliance
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the 'Ind AS') as notified by Ministry of Corporate affairs pursuant to section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
These financial statements for the year ended 31st March, 2018 are the first Company has prepared under Ind AS. For all periods upto and including the year ended 31st March, 2017, the Company prepared its financial statements in accordance with the Accounting Standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as 'Previous GAAP') used for its statutory reporting requirement in India immediately before adopting Ind AS. The financial statements for the year ended 31st March, 2017 and the opening Balance Sheet as at 1st April, 2016 have been restated in accordance with Ind AS for comparative information.
Reconciliations and explanations of the effect of the transition from Previous GAAP to Ind AS on the Company's Balance Sheet, Statement of Profit and Loss and Statement of Cash Flows are provided in Note no. 52 of the financial statements.
The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements, including the preparation of the opening Ind AS Balance Sheet as at 1st April, 2016 being the 'date of transition to Ind AS'
All Assets and Liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
The financial statements are presented in Indian Rupees (Rs.), which is the Company's functional currency and transactions and balances with values below the rounding off norm adopted by the Company have been reflected as "0" in the relevant notes in these financial statements.
2.2 Basis of Measurement
The financial statements have been prepared on a historical cost basis (which includes deemed cost as per Ind AS 101), except for the following assets and liabilities which have been measured at fair value:
(i) Derivative financial instruments
(ii) Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments).
(iii) Defined benefits plans - Plan assets measured at fair value
2.3 FIRST TIME ADOPTION OF IND AS
The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from 1st April, 2017 with a transition date of 1st April, 2016. These financial statements for the year ended 31st March, 2018 are the first financial statements the Company has prepared under Ind AS. For all periods upto and including the year ended 31st March, 2017, the Company prepared its financial statements in accordance with the Accounting Standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 ('Previous GAAP').
The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. Ind AS 101 requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements be applied retrospectively and consistently for all financial years presented, Accordingly, the Company has prepared financial statements which comply with Ind AS for year ended 31st March, 2018, together with the comparative information as at and for the year ended 31st March, 2017 and the opening Ind AS Balance Sheet as at 1st April, 2016, the date of transition to Ind AS. The figures for the previous periods and for the year ended 31st March, 2016 have been restated, regrouped and reclassified, wherever required to comply with Ind-AS and Schedule III to the Companies Act, 2013 and to make them comparable.
In preparing these Ind AS financial statements, the Company has availed certain exemptions and exceptions in accordance with Ind AS 101, as explained below. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at the transition date under Ind AS and Previous GAAP have been recognized directly in equity (retained earnings or another appropriate category of equity). These notes explain the adjustments made by the Company in restating its financial statements prepared under previous GAAP, including the Balance Sheet as at 1st April, 2016 and the financial statements as at and for the year ended 31st March, 2017.
TA! Exemptions from requirement of Other IND AS
A-1 1 Deemed cost for Property, Plant and Equipment, Investment Properties and Intangible Assets
The Company has elected to measure all its Property, Plant and Equipment, Investment Properties and Intangible Assets at the Previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS.
TA-2 1 Business Combination
The Company has not elected to apply IND AS 103- Business Combination , retrospectively to past business combination that are occurred before the date of transition to IND AS.
TA-3 1 Lease
The Company has assessed the classification of each element as finance or operating lease at the date of transition to Ind AS on the basis of the facts and circumstances existing as at that date.
TA-4 1 Long Term Foreign Currency Monetary Items
The Company has elected to continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP The policy is detailed in Note No. 17(c) of notes to Financial Statements for the year ended 31st March 2018 .
TA-51 Investments in subsidiaries and Associates
The Company has elected to measure all its Investments in Subsidiaries & Associates at the Previous GAAP, carrying amount as its deemed cost on the date of transition to Ind AS.
TB1 Mandatory Exceptions from retrospective application
The Company has applied the following exceptions to the retrospective application of Ind AS as mandatorily required under Ind AS 101.
TB-11 Estimates
On assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under Previous GAAP are made by the Company for the relevant reporting dates reflecting conditions existing as at that date.
These are as under:
- Fair Valuation of financial instrument.
- Impairment of financial assets based on expected credit loss model
- Determination of the discounted value for financial instruments carried at amortised cost
TB-21 Classification and measurement of Financial Assets
The classification of financial assets to be measured at amortised cost or fair value through other comprehensive income or through profit & loss is made on the basis of the facts and circumstances that existed on the date of transition to Ind AS.
TC1 Transition to Ind AS - Reconciliations
The following reconciliations provide the explanations and quantification of the differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101 :
[C-1] Reconciliation of Equity as at 1st April, 2016 - Refer Note no 52 (A)
[C-2] Reconciliation of equity as at 31st March, 2017 - Refer Note no. 52 (B)
[C-3] Reconciliation of Statement of Profit and Loss for the year ended 31st March, 2017 - Refer Note no. 52 (C)
[C-4] Adjustments to statement of Cash Flows for the year ended 31st March, 2017 - Refer Note no. 52 (E) Previous GAAP figures have been reclassified/regrouped wherever necessary to conform with financial statements prepared under Ind AS.
KEY ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires management to make judgments, estimates and assumptions in the application of accounting policies that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Continuous evaluation is done on the estimation and judgments based on historical experience and other factors, including expectations of future events that are believed to be reasonable. Revisions to accounting estimates are recognised prospectively.
Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year, are included in the following notes :
Other Notes to Note No 04 to 07
A Disclosures for Property, Plant & Equipment (PPE) ,Capital Work-in-Progress (CWIP) and Intangible Assets
A1. Refer Note No 47 for information on Property, Plant and Equipment and Intangible Assets pledged as security by the Company.
A2. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for the year ended 31st March, 2018 is Rs. 70.65 lacs ( 31st March, 2017: Rs.49.94 Lacs and 1st April, 2016: Rs. 140.28 Lacs ).
A3. There has been no impairment loss on above assets during the year.
A4. The Company has elected optional exemption under Ind AS 101 to measure Property, Plant and Equipment at previous GAAP carrying value.
A5. Borrowing costs capitalised for the year ended 31st March , 2018 is Rs. Nil (31st March , 2017 Rs. Nil And 31st March, 2016 Rs. 92.58 lacs).
B Disclosures for Investment Property
B1. The Company has identified and reclassifed Land at West Bengal amounting Rs 1281.67 Lacs. Immovable Properties as Investment Properties on the date of transition i.e. 1st April, 2016 on the basis of currently undermined future use.
B2. No amount of Income / Expenses has been recognised in Profit and Loss in relation to the above Investment Property.
B3. The Company has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements.
B4. The Company has elected optional exemption under Ind AS 101 to measure Investment Property at previous GAAP carrying value.
B5. Since the Land at West Bengal are partial agricultural in natrue, the management has not determined the Fair Market Value of these properties from the accredited independent valuer and hence the disclosure requirement of fair value has not been furnished.
- During the year ended 31st March, 2018 and year ended 31st March, 2017 no amount was recognised as an expense for the inventories carried at net realisable value.
- Refer Note No :- 48 for details of Carrying amount of Inventories pledged with banks against Working Capital loans.
- Stores and Spares does not include machinery spares which can be used only in connection with an item of Fixed Assets.
- There are no debts due by directors or other officers of the Company or any of them either severally or jointly with any other persons or debts due by firms or private companies respectively in which any director is a partner or a director or a member.
- The Company has done the Impairment Assesement for Trade Receivables based on expected credit loss model considering the credit risk as significantely low. The Company has used a simplified approach based on a 12 months ECL. A provison matrix has been prepared based on historical credit loss experience adjusted as appropiate to reflect the current conditions and supportable forecast of future economic conditons. The Company has used the adjustment rate of 5% for worsening of future economic conditons.
(b) Terms/ Rights attached to Equity Shares
The Company has issued only one class of equity shares having a par value of Rs. 2 per share. Each equity shareholder is entitled to one vote per share.
In event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts in propotion of their shareholding.
(d) Aggregate number of bonus shares issued, shares alloted as fully paidup persuant to contract without payment being received in cash and shares bought back during the period of five years immediately preceding the reporting date: Nil
(c) Foreign Currency Monetary Item Transalation Difference Account
Exchange rate differences arising on long term foreign currency monetary items which are not directly related to property , plant and equipment are accumulated in the 'Foreign Currency Monetary Item Translation Difference Account' and amortised over the remaining life of concerned monetary item.
Details of terms of security for long term borrowings
a) ECB Loan from Standard Chartered are secured by exclusive charge by way of equitable mortgage over all present and future immovable properties located at Bhasa Unit.
b) ECB Loan from Standard Chartered , DCB and Rupee Loan from SBI are secured by 1st pari passu charge by way of equitable mortgage over all present and future movable and immovable properties located at Surangi Unit and all present and future movable properties located at Daman Unit.
c) Rupee Term Loan from HDFC and IDFC are secured by 1st pari passu charge by way of equitable mortgage over all present and future movable and immovable properties located at Silvasa, Surangi, Daman and Bhasa Units.
d) Veichle Loan are secured by hypothecation against Motor Car.
* These Loans are repayable on demand and carries interest as applicable from time to time.
* Working capital facilities (fund based & non fund based limits) are secured by:-
1. 1st pari passu charge by way of hypothecation over entire current assets, stock and book debts of the Company both present & future.
2. 1st pari passu charge by way of equitable mortgage over property located at D-403, Dharam Place, CHS Limited, Shantivan, Borivalli (E), Mumbai - 400066.
3. 2nd pari passu charge by way of equitable mortgage over all fixed assets both present & future except immovable assets of Daman, Dankuni & Falta.
The Company has not received any intimation from the suppliers regarding their status under Micro, Small and Medium Enterprises Act 2006 and hence disclosures, if any relating to amounts unpaid as at the year end together with interest paid/ payable as required under the said act has not been given.
3 Disclosure on Corporate Social Responsibility Expenses
(a) Gross amount required to be spent by the Company during the year in pursuance to the provisions of Section 135 of the Companies Act, 2013 and rules made thereunder : Rs. 72 Lacs (PY Rs. 66.61 Lacs).
(b) Amount unspent as on 31st March 2017 is Rs.63.41 lacs.
(c) Amount spent during the year 2017-18 and shown under Other Expenses in the Statement of Profit and Loss (Refer Note No. 33):
(b) Defined benefit plan:
Gratuity
The Employee's Gratuity Fund Scheme, which is defined benefit plan, is managed by Trust maintained with Life Insurance Corporation of India. The liabilities with respect to Gratuity Plan are determined by actuarial valuation on projected unit credit method on the balance sheet date, based upon which the Company contributes to the Group Gratuity Scheme. The difference, if any, between the actuarial valuation of the gratuity of employees at the year end and the balance of funds with Life Insurance Corporation of India, is provided for as assets/ (liability) in the books. Actuarial gains/ (losses) for defined benefit plans are recognised in full and are immediately taken to the statement of profit and loss and Other Comprehensive Income accordingly as per Acturial Valuation Report.. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount equivalent to 15 to 30 days' salary for each completed year of service . Vesting occurs upon completion of five continuous years of service in accordance with Indian law. The gratuity fund is separately administered by a Gratuity Fund Trust.
The weighted average duration of the defined benefit plan obligation at the end of the reporting period is 5.52 Years (31st March,2017: 8.28 years).
The best estimate contribution for the company during the next year would be Rs 55.61 lacs.
(31st March,2017: Rs. 50.09 lacs).
Amount payable upon discontinouance of all employment is INR 263.82 lacs.
(31st March,2017: Rs. 206.90 lacs).
4 Disclosures as required by Ind AS 108, Operating Segments
(a) Identification of Operating Segments:
The Compnay Operate in a Single Reportable Operating Segment i.e. manufacturing and sale of PVC , XLPE, AF and EP Compound which have similar risk and returns and are of similar nature.
No other operating segments have been aggregated to form the above reportable operating segments as per the criteria specified in the Ind AS.
(b) Business Segment wise revenue/results/assets/liabilities
Since there is Single Reportable Operating Segment hence disclosure of Operating Segment wise Assets,Liabilities, Revenue and Results are not applicable.
(d) The Company does not have material amount of tangible, intangible assets and non current operating assets located outside India.
(e) Product wise revenue from external customers has been detailed in Note No 27.
(f) Revenue from five customers is INR 19,471.97 (P.Y 23,386.18) lacs which is more than 10% of the total revene of the Company
The transactions with related parties are net of taxes & reimbursement of expenses and have been made on terms equivalent to those that prevail in arm's length transactions. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
5 Fair Value Measurement
The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
(1) Fair value of cash and short-term deposits, trade and other short term receivables, trade payables , other current liabilities, short-term loans from banks and other financial institutions approximate their carrying amounts largely due to the short term maturities of these instruments.
(2) Financial instruments with fixed and variable interest rate are evaluated by the Company based on parameter such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken into account for the expected losses of these receivables.
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.
Level 1 : quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 : other techniques for which all inputs which have a significant effects on the recorded fair value are observable, either directly or indirectly.
Level 3 : techniques which use inputs that have a significant effects on the recorded fair value that are not based on observable market data.
6 Financial Risk Management Objective and Policies:
The Company's principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables and advances from customers. The main purpose of these financial liabilities is to finance the Company's operations, projects under implementation and to provide guarantees to support its operations. The Company's principal financial assets include Investment, loans and advances, trade and other receivables and cash and bank balances that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. 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 policy is set by the Managing Board.
All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company's policy that no trading in derivatives for speculative purposes to be undertaken. The Board of Directors reviews and finalises policies 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 commodity price risk. Financial instruments affected by market risk include investments and deposits, foreign currency receivables, payables, loans and borrowings and derivative financial instruments.
The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies and ensuring compliance with market risk limits and policies.
(i) 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. In order to optimize the Company's position with regard to interest income and interest expenses 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.
(ii) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating and financing activities. The Company manages its foreign currency risk by hedging transactions that are expected to realise in future.
Foreign Currency Sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in exchange rates, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of unhedged monetary assets and liabilities.
Derivative Financial Instrument
The company holds Derivative financial instrument such as foreign currency forward and option contracts to mitigate the risk of changes in exchange rate on foreign currency exposures. The counterparty for this contract is generally a Bank. Although the company believes that these derivatives constitute hedges from an economic perspective these do not qualify for hedge accounting as per IND AS 109, Financial instrument. Since the above derivatives are not designated as hedges, such derivatives are categorised as financial asset or financial liability at fair value through profit & loss.
(iii) Commodity price risk
Principal Raw Material for Company's products is variety of plastic polymers which are primarily Derivatives of Crude Oil. Company sources its raw material requirement from across the globe. Domestic market prices are also generally remains in sync with international market price scenario. Volatility in Crude Oil prices, Currency fluctuation of Rupee vis-a-vis other prominent currencies coupled with demand-supply scenario in the world market affect the effective price and availability of polymers for the Company. Company effectively manages with availability of material as well as price volatility through:
1. Widening its sourcing base
2. Appropriate contracts and commitments
3. Well planned procurement & inventory strategy and
4. Prudent hedging policy on foreign currency exposure
Risk committee of the Company comprising members from Board of Directors and operations has developed and enacted a risk management strategy regarding commodity Price risk and its mitigation.
(b) Credit Risk
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables and advances to suppliers) and from its financing activities, including deposits and other financial instruments.
(i) Trade Receivables
Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. An impairment analysis is performed at each reporting date on an individual basis for major clients.
The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.
The ageing analysis of the receivables (gross of provisions) have been considered from the date of the invoice falls due.
(ii) Financial Instruments and Cash and bank balances
Credit risk from balances with banks and financial institutions is managed by the Company's treasury department in accordance with the Company's policy. Credit limits of all authorities are reviewed by the Management on regular basis. All balances with banks and financial institutions is subject to low credit risk due to good credit ratings assigned to these entities.
(c) Liquidity Risk
The Company monitors its risk of a shortage of funds using a liquidity planning tool. The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of cash credit, letter of credit, factoring,bill discounting and working capital limits.
The table below summarises the maturity profile of the Company's financial liabilities based on contractual payments.
7 Capital Management:
A. For the purpose of the Company's capital management, equity includes issued equity capital, securities premium and all other equity reserves attributable to the equity share holders, including capital reserve and net debt includes interest bearing loans and borrowings except cash and cash equivalents. The primary objective of the Company's capital management is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The funding requirement is met through a mixture of equity, internal accruals, long term borrowings and short term borrowings. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.
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.
B. Proposed Dividend
The Board of directors in its Board meeting held on 30th May 2018 have recommended the payment of a final dividend of Rs 0.24 paise per fully paid up equity share (March 31,2017 - Rs NIL ), The proposed dividend is subject to the approval of shareholders in the ensuing annual general meeting.
(D) Notes to the Reconciliation
1. Property Plant & Equipment
The Company has elected to measure all its Property, Plant and Equipment at the Previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS i.e., 1st April, 2016. However, the Company has identified and reclassifed Land at West Bengal amounting Rs 1281.67 Lacs immovable properties as Investment Properties on the date of transition i.e. 1st April, 2016 on the basis of currently undermined future use and the same has been adjusted accordingly on the 1st April 2015 & 31st March 2016.
2. Non Current Investments
The company holds certain investments in Quoted Equity shares as well as unquoted equity shares. As per IND AS 109, these investments are to be measured at Fair value through profit & loss. Loss at the time of transition of Rs. 60.22 lacs is recognised in retained earnings and subsequent gain of Rs. 135.10 only is recognised in statement of profit and loss. Also investment amounting to Rs 7.32 lacs has been written back in the statement of profit and loss in the financial year 2016-17 as the same has been written off as on the transition date.
The company also holds certain Investments in Government and trust securities such as Kisan Vikas Patra, National Saving Certificate etc. The company has no expectations of recovering such investment in its entirety such investment has been written off and adjusted with Retained earnings amounting to Rs 0.40 lacs.
3 Other Non Current Financial Assets/ Non Current Assets & Current Assets
The Company has recognized the present value of security deposit receivable as on the transition date due to which Rs. 3.20 lacs has been de-recognised from the security deposit receivable and Prepaid Rent of the same amount has been recognised. In the financial year 2016-17 Rs. 0.96 Lacs has been de-recognised from the security deposit receivable and Prepaid Rent of the same amount has been recognised. Subsequent to the date of transition to IND AS interest income has been recognised by increasing the security deposit receivable on account of discounting factor and also prepaid rent would be subsequently expensed off over the life of such security deposits, accordingly 0.76 lacs has been expensed off and Rs. 0.71 lacs has been recognised as interest income in Retained earnings as on transition date. Subesquently in the financial year 2016-17 Rs. 1.51 lacsof rent has been expensed off and Rs. 1.46 lacs has been recognised as interest income in Retained earnings. Prepaid portion of Security deposit has also been further sub classified as Current , Non - Current based on realisation criteria.
4 Current Trade Receivables
The Company has applied practical expediency in calculation of the expected credit losses on trade receivables by using the provision matrix for each business segment as detailed in Note No. 13 of notes to the financial statements. Outstanding balance of provision as at 31st March, 2017: Rs.9.95 crores and as at 1st March, 2016: Rs.10.98 Crore.
5 Other Equity
The adjustments pertaining to opening balance sheet at the time of transition to Ind AS are adjusted into retained earnings and subsequently , the adjustments are made into Profit or Loss or Other Comprehensive Income as prescribed under Ind AS. _
6 Borrowings
Under Indian GAAP, transaction costs incurred in connection with borrowings were amortised upfront and charged to profit or loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and subsequently charged to profit or loss using the effective interest method. Accordingly as on the transition date, processing fees of Rs. 38.00 lacs has been included in the initial recognition amount of the borrowings by crediting Retain earnings. In the subsequent year 2016-17 processing fees of Rs. 49.07 Lacs has further been included in the initial recognition amount of borrowings by subsequently crediting Profit & loss account and Rs. 9.89 Lacs has been debited to Profit & Loss a/c on account of amortisation of processing fees. The company has taken unsecured loan from related parties at lower interest rate and the same has been measured at amortised cost using present value technique considering interest rate prevailing in market. Accordingly Rs. 14.04 crores has been credited to Retain earnings on account of fair valuation as on transition date and subsequently Rs. 1.59 crores has been debited to profit & Loss on account of interest provision on such unsecured loan.
7 Deferred Tax Liability/Asset
Indian GAAP required deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its 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. On the date of transition, the net impact on deferred tax liabilities of Rs.98.18 lacs has been recognised in retained earnings and for the year ended 31st March 2017,deferred tax liability reversal of Rs.60.57 lacs has been recognised in statement of profit and loss.
8 Sale of Goods
Under IND AS volume discount are to be netted off from sale of product which was accounted as expense under Indian GAAP. Hence sale of product is reduced by Rs. 477.36 lacs for the period ended 31st March 2017. Under Indian GAAP sale of goods was presented as net of excise duty. However under INDAS sale of goods include excise duty. Excise duty on sale of goods is seperately presented on the face of statement of profit & loss. Accordingly sale of goods under INDAS for the year ended 31st march 2017 has increased by 18699.98 lacs.
9 Employee Benefit Expenses
Both under Indian GAAp and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, remeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognised in the balance sheet through OCI. Thus the employee benefit expense is reduced by Rs.4.53 Lacs and remeasurement gains/ losses on defined benefit plans has been recognized in the OCI net of tax.
(E) There is no material impact on the Statement of Cash Flows due to the transition from previous GAAP to Ind AS.
8 Standard issued but not yet effective
Ministry of Corporate Affairs (“MCA”) through Companies (Indian Accounts Standards) Amendment Rules, 2018 has notified the following amendments to Ind AS viz. Ind AS 115- Revenue from contracts with Customers, Ind AS-21- The effect of charges in Foreign Exchange Rates, Ind AS 12 - Income Taxes, Ind AS 40 - Investment Property & Ind AS 28 - Investments in Associates and Joint Ventures which the Company has not applied as they are effective for annual periods beginning on or after 1st April, 2018.
Previous year figures have been regrouped/rearranged/ reclassified where necessary to correspond with current year figures.