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NOTES TO ACCOUNTS

20 Microns Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 126.33 Cr. P/BV 0.76 Book Value (₹) 47.11
52 Week High/Low (₹) 50/31 FV/ML 5/1 P/E(X) 5.07
Bookclosure 13/08/2019 EPS (₹) 7.06 Div Yield (%) 0.00
Year End :2018-03 

Authorization of financial statements:

The Standalone Financial Statements were authorized for issue in accordance with a resolution passed in meeting of Board of the Directors held on 24th May, 2018.

Notes to Standalone Financial statements for the year ended 31st March 2018

Note 1 - Corporate Information

20 Microns Limited (“Company”) is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The registered office of the Company is located at 9 - 10, GIDC, Waghodia, Vadodara -391760, Gujarat, India.

The Company is engaged in Business of Industrial MicronisedMinerals and Speciality Chemicals.

Note 2 - Recent accounting pronouncements

Ministry of Corporate Affairs (“MCA”) through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind ASs which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2018:

Ind AS 115 Revenue from Contracts with Customers Ind AS 21 The effect of changes in Foreign Exchange rates Ind AS 115- Revenue from Contract with Customers:

Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 Revenue, Ind AS 11 Construction Contracts when it becomes effective.

The core principle of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:

- Step 1: Identify the contract(s) with a customer

- Step 2: Identify the performance obligation in contract

- Step 3: Determine the transaction price

- Step 4: Allocate the transaction price to the performance obligations in the contract

- Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer.

Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The standard permits two possible methods of transition:

- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors

- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)

The Company has completed its evaluation of the possible impact of Ind AS 115 and the effect on adoption of Ind AS 115 is expected to be insignificant.

Ind AS 21 - The effect of changes in Foreign Exchange rates

The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. Company is evaluating the impact of this amendment on its financial statements.

3.1 The balances in dividend accounts are not available for use by the Company and the money remaining unpaid will be deposited in the Investor Protection and Education Fund after the expiry of 7 years from the date they became due for payment. No amount is due at the end of the period for credit to Investor Protection and Education fund.

4.1 Terms/ rights attached to equity shares

i The Company has only one class of shares referred to as equity shares having a par value of Rs. 5 each.

ii Each holder of equity shares is entitled to one vote per share which can be exercised either personally or by an attorney or by proxy.

iii The dividend proposed if any by the Board of Directors is subject to approval of the shareholders in the ensuing general meeting except in the case of interim dividend.

iv In the event of liquidation of the Company, the holders of equity shares shall be entitled to receive assets of the Company, after distribution of all preferential amounts. The amount distributed will be in proportion to the number of equity shares held by the shareholders.

4.2 The Company has not bought back any equity shares, has not allotted any shares as fully paid up pursuant to contracts without payment being received in cash and has not allotted bonus shares, for the period of five years immediately preceding March 31, 2018

Nature and purpose of reserves :

i General reserve

The general reserve is used from time to time to transfer profits from retained earnings for appropriation purpose. As the general reserve is created by transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to profit and loss.

ii Equity instrument through OCI

The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the Equity instrument through OCI reserve within equity.

*Amount disclosed under the head “Current financial liabilities : Others” (Note 25)

The Company does not have any continuing defaults in repayment of loans and interest as at the reporting date.

Maturity Profile of Borrowings [ as at March 31, 2018 ]

Secured Borrowings

The principal amount of the loans to each of the lenders shall be repayable in equated monthly instalments ranging over a period from 36 months to 72 months. The repayment scheduled as per the sanction terms for sanction amounts of loans is as under:

Details of Securities

The term loans obtained as consortium loans are secured by way of

1 First pari-passu charge by way of mortgage / hypothecation over :

i. Plot No. 157 Mamura, Bhuj (admeasuring 3.20 acres )

ii. Negative lien on Plot No. 158,156,149 of Mamuara, Bhuj (admeasuring 74399 sq.mtrs.)

iii. Plot No. 172,174 & 175, Vadadala, Baroda (admeasuring 03.00.01 hectares)

iv. Plot No. F-75/76/82/85 & H-83/84, RIICO I.A., Swaroopganj, Rajasthan (admeasuring 9,457.50 sq.mtrs.)

v. 307/308, Arundeep Complex, Race Course, Baroda (admeasuring 1,405 super built up area)

vi. 134,135 1st Floor, Hindustan Kohinoor Ind. Complex, LBs Marg, Vikhroli (W), Mumbai (admeasuring 870 sq. ft.)

vii. Plot No. B-77 (Admeasuring 8825 sq. mts.) and B-78 (Admeasuring 8480 sq. mts), Matsya Industrial Area, Alwar, Rajasthan.

viii. Plot no. 253-254 (area 3000 sq.mtrs.) GIDC, Waghodia

ix. Plot no.23 & 24 (area 3.29 acre), SIPCOT Industrial Estate, Phase-II, Hosur, Krishnagiri, Tamil Nadu

x. Plot no.104/3 of land located at survey no 65, village Puthur, Tirunvelli, Tamil Nadu (admeasuring 20,261 sq.mtrs.)

xi. Plot No. F 140, Alwar, Rajasthan

xi Plant and machinery, both present and future, wherever situated at all factories and premises pertaining to above locations.

2 Second pari-passu charge by way of mortgage / hypothecation over :

Current assets, both present and future, wherever situated, but pertaining to the division/factory/premises at Vadadala, Waghodia and Bhuj (all in Gujarat), Alwar and Swaroopganj (both in Rajasthan), Hosur and Tirunvelli (both in Tamil Nadu) and Vikhroli (W), Mumbai.

3 All the term loans are further collaterally secured by personal guarantee of Executive Chairman, CEO and Managing Director, of the companyand corporate guarantee by “Eriez Industries Private Limited” ( Previously known as Eriez Finance & Investment Limited ), a company where significant influence exists and pledge of entire shareholding of promoters of the Company i.e. of 85,00,547 shares including 15,50,235 unencumbered shares of Corporate Promoter being “Eriez Industries Private Limited ( Formerly known as “ Eriez Finance and Investment Limited”)

4 Term loans of Rs. 214.07 Lakhs (31/03/2017: Rs. 124.51 Lakhs,01/04/2016 : Rs. 47.90 Lkahs ) obtained for acquisition of assets (vehicles) are secured only by the hypothecation of the respective assets financed.

The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Significant management judgment is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income by each jurisdiction in which the relevant entity operates and the period over which deferred income tax assets will be recovered.

Current Assets, both present and future, wherever situated, but pertaining to the division/factory/premises at Vadadala, Waghodia and Bhuj (all in Gujarat), Alwar and Swaroopganj (both in Rajasthan), Hosur and Tirunvelli (both in Tamil Nadu) and Vikhroli (W), Mumbai.

Second pari-passu charge on factories and premises and plant and machineries, both present and future, wherever situated, but pertaining to the locations stated in note 20.

The working capital finance facilities are further collaterally secured by personal guarantee ofExecutive Chairman, CEO and Managing Director, Managing Director of the companyand corporate guarantee by “Eriez Industries Private Limited”, a company where significant influence exists and pledge of entire share holding of promoters of the company i.e. of 85,00,547 shares including 15,50,235 unencumbered shares of corporate promoter being “eriez Industries Private Limited” (Formerly known as “Eriez Finance and Investment Limited”)

5.1 The balance with the bank for unpaid dividend is not available for use by the Company and the money remaining unpaid will be deposited in Investor Protection and Education Fund u/s 124(5) of Companies Act, 2013 after the expiry of seven years from the date of declaration of dividend. No amount is due at the end of the period for credit to Investors education and protection fund.

6.1 Company has entered into a settlement agreement with one of the supplier in respect of winding up petition filled by the supplier pending before hon’ble High Court of Gujarat. As per the agreement company has agreed to make payment of Rs. 65.59 lakhs in excess of liability in Books of Accounts to the supplier towards settlement as against which supplier accepts to irrevocably release and waive the all claims and entitlements. (Refer Note 41.2(a))

6.2 The monetary ceiling under the payment of Gratuity Act, 1972 was enhanced from Rs. 10,00,000 to Rs. 20,00,000 with effect from March 29, 2018. The enhanced gratuity liability of Rs. 85.26 Lakhs due to change in monetary ceiling of gratuity as per the law has been shown as exceptional item.

7 Earning per Share -(EPS)

Earnings per equity share of FV of Rs. 5 each

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

8.1 Claims against the company not acknowledged as debt

a In the previous year, the Company had received Notice from the Hon’ble High Court of Gujarat intimating that one of the supplier had filed a winding-up petition against the Company for non-payment of outstanding dues of the supplier of Rs. 541.98 Lakhs. The company had filed a response with the Hon’ble High Court of Gujarat stating that the outstanding dues were not paid due to unresolved issues with the supplier for shortfall in material dispatch, default in payment of cost & freight to shipper, detention charges, default towards issuance of telex/ bill of lading, etc., and the matter is sub judicial. The company had provided for the said liability to the extent of Rs. 319.24 Lakhs in the books of account in prior years and the difference of amount claimed by supplier and provision made by the company has been reflected in contingent liability for the FY 2016-17. However, the Company has entered into a settlement agreement with the supplier in the month of April 2018, according to which the company is required to make additional payment of Rs. 65.59 Lakhs which has been provided in the books of accounts in the financial year 2017-18 as litigation settlement expenses (Refer note 37.1). Therefore there is no contingent liability as at March 31, 2018 in respect of the said matter.

b The Company had received an Order dated 06th August, 2016, from Geology and Mining Department, Bhuj, Kutch for excavating the mine beyond the approved lease area, situated at Survey No. 483, Mamuara, Bhuj, Kutch whereby a penalty of Rs. 419.13 lakhs is levied on the Company. Company had filed an appeal against the order of the Geology and Mining Department with the appellate authority as per the rules of Gujarat Mineral (Prevention of Illegal Mining, Transportation and Storage) Rules, 2005. The appellate authority, vide its order dated 17th September, 2016 has given Interim Stay against the aforesaid order issued by Geology and Mining Department, Bhuj, Kutch and further ordered to resume mining activity. The matter is pending for hearing before appellate authority.

c In terms of loan arrangement with the lenders, the lenders have right to recompense the reliefs/sacrifice/waiver/ concession extended to the company over the tenor of restructuring done in earlier years. The liability with respect to the same cannot be ascertained.

B) CONTINGENT ASSETS

The company is having certain claims which are pursuing through legal processes. The Management believe that probable outcome in all such claims are uncertain. Hence, the disclosure of such claims is not required in the financial statements.

C) CAPITAL COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account, not provided for amounting to Rs. 256.40 Lakhs (Net of Advance Rs. 828.75 Lakhs [31.03.2017 Rs. 6.96 lakhs (Net of Advances of Rs. 1360.94 lakhs) [01.04.2016 Rs. 27.97 lakhs (Net of Advances of Rs. 792.46 lakhs)]

Investment in subsidiaries are carried at cost.

# Fair value of financial assets and liabilities which are measured at amortised cost is not materially different from the carrying value (i.e...amortised cost).

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 (for example, traded bonds, over-the counter derivatives) is determined using valuation techniques which maximise 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. This is the case for unlisted equity securities included in level 3.

B. Measurement of fair values

i) Valuation techniques and significant unobservable inputs

The fair value of investment in equity shares of other entity is determined based on market value of the shares. The approach taken for valuation is Book value of the equity instruments which is further adjusted for market value of the investments made by the investee company.

Financial instruments measured at fair value - FVTOCI in unquoted equity shares

ii) Transfers between Levels 1 and 2

There have been no transfers between Level 1 and Level 2 during the reporting periods

iii) Level 3 fair values

Movements in the values of unquoted equity instruments for the period ended 31st March 2018, 31 March 17 and 1 April 16 is as below:

Transfer out of Level 3

There were no movement in level 3 in either directions during the year ended 31st March 2018 and the year ended 31st March 2017.

Ind AS 101 allows an entity to designate certain investments in equity instruments as fair valued through the OCI on the basis of the facts and circumstances at the transition date to Ind AS.The Company has elected to apply this exemption for its investment in equity shares.

Sensitivity analysis

Based on the valuation report for investments in unquoted shares, the sensitivity as as 31st March 2018 is provided below.

C. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

- Credit risk;

- Liquidity risk; and

- Market risk

i. Risk management framework

The Company’s board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company has a well-define Risk Management framework for reviewing the major risks and taking care of all the financial risks. The risk management framework aims to :

a. create a stable business planning environment by reducing the impact of currency and interest rate fluctuation on company’s business plan.

b. achieve greater predictability to earnings by determining the financial value of the expected earning in advance. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The audit committee oversees how management monitors compliance with the company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee. The Board of Directors reviews and agrees policies for managing each of these risks.

ii. 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 and investments in debt securities and loans given.

The carrying amount of following financial assets represents the maximum credit exposure:

(a) Cash and Cash equivalent and Other Bank Balances

The company maintains its Cash and cash equivalents and Bank deposits with banks having good reputation, good past track record and high quality credit rating and also reviews their credit-worthiness on an on-going basis.

(b) Trade and other receivables

The Company’s exposure to credit Risk is the exposure that Company has on account of goods sold or services rendered to a contractual counterparty or counterparties, whether with collateral or otherwise for which the contracted consideration is yet to be received.The Company’s major customer base is paints, plastic, rubber and other misc. industries.

The Commercial and Marketing department has established a credit policy.

The Company raises the invoice based on the quantities sold.The Company provides for allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables.

For trade receivables, as a practical expedient, the Company computes credit loss allowance based on a provision matrix. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates.

Assets are written off when there are no reasonable expectation of recovery such as debtor declaring bankruptcy or failing to engage in a repayment plan with group. Where receivables have been written off the company continues to engage in enforcement activity to attempt to recover the receivables. where recoveries are made, these are recognised in profit and loss.

The maximum exposure to the credit risk at the reporting date from Trade Receivable is as amounts mentioned in Note No. 11

The impairment provisionsabove are based on management judgment / 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 as well as forward looking estimates at the end of each reporting period.

(c) Loans and deposits

Company has given loans to employees and security deposits. The maximum exposure to the credit risk at the reporting date from Loans given amounts to Rs. 101.29 Lakhs on March 31, 2018, Rs. 102.33 Lakhs on March 31, 2017 and Rs. 55.81 Lakhs on April 01, 2016.

iii. 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 maintains the following lines of credit outstanding:

(a) Term loans from banks and financial institution of Rs. 5733.06 Lakhs (at amortised cost) that is secured as mentioned in Note 20. Interest would be payable at the rate of varying from 9.35% to 16%.

(b) The company has also accepted deposit from share holders and directors amounting to Rs. 2388.30 Lakhs (at amortised cost) of unsecured nature. Interest would be payable at the rate of varying from 10.25% - 13.62%.

(c) For maintaining working capital liquidity company avails cash credit limit from bank. The amount availed as at 31/03/2018 is Rs. 4734.84 Lakhs (at amortised cost). The said loan is having rate of interest of 12.25%.

Exposure to liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and exclude the impact of netting agreements.

The gross inflows/(outflows) disclosed in the above table represent the contractual undiscounted cash flows relating to non-derivative financial liabilities held for risk management purposes and which are not usually closed out before contractual maturity.

iv. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits and FVTOCI investments.

a) Currency risk

The functional currency of the Company is Indian Rupee. The Company have transaction of import of materials, other foreign expenditures and export of goods. hence the company is exposed to currency risk on account of payables and receivables in foreign currency. Company have outstanding balances in Euro, USD and GBP

Sensitivity analysis

Profit or loss is sensitive to higher/lower Exchange rate of currency. A possible 5% change in exchange rate would affect profit/loss at the reporting date by amount shown below:

b) Interest rate risk

Interest rate risks is measured by using the cash flow sensitivity for changes in variable interest rates. Any movement in the reference rates could have an impact on the Company’s cash flows as well as costs. The Company’s interest rate exposure is mainly related to debt obligation. On period under review the Company do not have any term loans at fixed rate andhas not entered into interest rate swaps for its exposure to long term borrowings at floating rate. The company have accepted deposits from share holders which are fixed rate instruments.

Sensitivity analysis

Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of change in interest rates

Based on the composition ofdebt a reasonably possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) Equity and Profit or Loss by the amount shown below:

c) Commodity Price Risk

Commodity price risk arises due to fluctuation in prices of raw Material and other consumables. The company has risk management framework aimed at prudently managing the risk arising from the volatility in commodity prices and freight costs.

The company’s commodity risk is managed centrally through well established trading operations and control processes.

d) Equity Price Risk

The Company do not have any investment in quoted equity shares hence not expose to equity price risk.

9 Capital Management

The Company’s objectives when managing capital are to

- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

The Company determines the amount of capital required on the basis of the annual business plan coupled with long term and short term strategic investments and expansion plans. The funding needs are met through equity, cash generated from operations, long terms and short term bank borrowings and deposits.

The Company monitors capital using a ratio of ‘adjusted net debt’ to ‘adjusted equity’. For this purpose, adjusted net debt is defined as total liabilities, comprising interest-bearing loans and borrowings, less cash and cash equivalents. Adjusted equity comprises all components of equity.

10 Disclosure of Employee Benefits

The Company has implemented Ind AS - 19 on “Employee Benefits”.

(a) Provident Fund - Defined Contribution Plan

All employees are entitled to provident fund benefits and amount charged to Statement of Profit and Loss during the period of 12 months ended is Rs. 161.27 Lakhs (Previous year Rs. 32.30 Lakhs)

(b) Gratuity and Leave Encashment - Defined Benefit Plans (payable in future)

Provision has been made for gratuity and leave encashment as per actuarial valuation. The principal assumptions used in actuarial valuation and necessary disclosures are as below:

(i) Entity responsibilities for the governance of the plan Risk to the Plan

Following are the risk to which the plan exposes the entity :

A Actuarial Risk:

It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:

Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected.

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

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

B Investment Risk:

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

C Liquidity Risk:

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

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

E Legislative Risk:

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

(ii) The company has participated in Group Gratuity Scheme Plan with SBI Life insurance to meet its gratuity liability. The present value of the plan assets represents the balance available at the end of the year.

(b) The trustees of the plan have outsourced the investment management of the fund to an insurance company. The insurance company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it may not be possible to explicitly follow an asset-liability matching strategy to manage risk actively in a conventional fund.

(g) Other Notes:

(i) The expected rate of return on Plan Assets is determined considering several applicable factors, mainly the composition of Plan Assets held, assessed risks, historical results of return on Plan Assets and the Company’s policy for the Plan Assets management.

(ii) The actuarial valuation takes into account the estimates of future salary increases, inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. The management has relied on the overall actuarial valuation conducted by the actuary.

Notes

1 The following are the list of Independent Directors with whom no transaction have been occurred during the Financial Year 2017-18 other than payment of sitting fees:

a) Mr. Pravinchandra M Shah

b) Mr. Ram Devidayal

c) Mr. Atul Patel

d) Dr. Ajay Ranka

2 20 Microns Nano Minerals Ltd, 20 Microns SDN BHD, 20 Microns FZE have been using software package being “SAP” by 20 Microns Limited without payment of Consideration.

11 Segment Reporting

The Company primarily operates in the segment of Micronized Minerals. The MD/CEO of the Company allocate resources and assess the performance of the Company, thus are the Chief Operating Decision Maker (CODM). The CODM monitors the operating results of the business as a one, hence no separate segment need to be disclosed.

a) Information about product and services:

Sale of Minerals : Rs. 38718.08 Lakhs

Sale of Herbal Products : Rs. 18.81 Lakhs

Sale of Construction Chemicals : Rs. 30.47 Lakhs

b) Information about geographical areas:

1. The Company have revenues from external customers attributable to all foreign countries amounting to Rs. 5193.48 Lakhs and entity’s country of domicile amounting to Rs. 33573.88 Lakhs.

2. None of the company’s Non Current assets are located outside India hence entity wide disclosure is not applicable to the Company.

c) Information about major customers:

There is three customers to the company which accounts for more than 10% of aggregate sales. Net sales made to this customer amounts to Rs. 15,854.38/- lakhs.

12 RESEARCH AND DEVELOPMENT EXPENDITURE

The company has incurred expenses during the year for research and development of product of the company. The break up of research and development expenses grouped under various head are as under :

13 Transition to Ind AS:

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

The accounting policies set out in note 1 have been applied in preparing the 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 the preparation of an opening Ind AS balance sheet at 1 April 2016 (the “transition date”).

In preparing the opening Ind AS balance sheet, the company has adjusted amounts reported in financial statements prepared in accordance with IGAAP An explanation of how the transition from IGAAP to Ind AS has affected our financial performance, cash flows and financial position is set out in the following tables and the notes that accompany the tables. On transition, we did not revise estimates previously made under IGAAP except where required by Ind AS.

A Exemptions and exceptions availed

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

A1 Ind AS optional exemptions A1.1 Business Combination

Ind AS 101 permits an entity to apply the requirements of Ind AS 103 - Business combinations (Ind AS 103) prospectively from the transition date or opt for retrospective application of Ind AS 103. Retrospective application could be either done since inception or from a date determined by the management. The exemption for past business combinations also applies to past acquisitions of investments in associates, interests in joint ventures and interests in joint operations in which the activity of the joint operation constitutes a business, as defined in Ind AS 103. Accordingly, the company has elected not to restate past business combinations with an acquisition date prior to the transition date.However, any consequential deferred tax adjustments as required by Ind AS) have been duly considered. An explanation of the same has been provided in the note no. 53.10 subsequently.

A1.2 Leases

Ind AS 101 permits an entity to assess whether a contract or an arrangement contains a lease on the basis of facts and circumstances existing at the transition date to Ind AS. The Company has elected to apply this exemption for such contracts/arrangements.

A1.3 Effect of Changes in Exchange rate

In respect 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, the company has elected to recognise exchange differences on translation of such long term foreign currency monetary items in line with its previous GAAP accounting policy. In respect of long term foreign currency monetary items recognised in the financial statements beginning with the first Ind AS financial reporting period, exchange differences are recognised in the statement of profit and loss.

A1.4 Recognition of financial instruments through OCI

Ind AS 101 allows an entity to designate certain investments in equity instruments as fair valued through the OCI on the basis of the facts and circumstances at the transition date to Ind AS.

The Company has elected to apply this exemption for its investment in equity instruments other than subsidiary. A1.5 Disclosure of investments in subsidiaries

Under, Ind AS 101 an entity can determine the value of investment in a subsidiary, associate or joint arrangement as either of the below:- Cost determined in accordance with Ind AS 27 (i.e. retrospective application of Ind AS 27)

- Fair value at the entity’s date of transition to Ind AS

- Previous GAAP carrying amount

Accordingly, if an entity chooses to measure its investment at fair value at the date of transition then that is deemed to be cost of such investment for the company and, therefore, it shall carry its investment at that amount (i.e. fair value at the date of transition) after the date of transition.

The Company has elected to carry forward the fair value as deemed cost for investment in equity shares of subsidiaries in the standalone financial statements.

A2 Mandatory Exceptions A2.1 Estimates

An entity’s estimates in accordance with Ind ASs at the transition date 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 estimates were in error.

Ind AS estimates as at 1 April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP The Company made estimates for following items in accordance with Ind AS at the transition date as these were not required under previous GAAP:

- Investment in financial instruments carried at FVTPL or FVTOCI; and

- Impairment of financial assets based on expected credit loss model

- Determination of the discounted value for financial instrument carried at amortised cost.

A2.3 Classification and measurement of financial asset

Ind AS 101 provides exemption to certain classification and measurement requirement of financial assets under Ind AS 109, where these are impracticable to implement. Classification and measurement is done on the basis of facts and circumstances existing on the transition date.

Accordingly the Company has determined classification of financial asset based on facts and circumstances existing on the transition date.

*IGAAP figures have been reclassified to confirm to Ind AS presentation requirements for the purposes of this note.

Footnotes to the above reconciliation are as under:

1 Property, Plant and Equipment

The company has availed option of considering fair value as deemed cost as on transition date for freehold and lease hold lands. Accordingly the said lands have been revalued as on 01.04.2016 and gain arising due to fair value amounting to Rs. 1906.74 Lakhs is added to opening Profit and Loss account. The amortisation of lease hold land is calculated on fair valued amount i.e on deemed cost for FY 2016-17 which amounts to Rs. 27.91 Lakhs which is provided in books of accounts.

2 Capital works in Progress

The company has impaired mining lease rights on transition date as they do not qualify for recognition as per recognition criataria mentioned under the IND AS. This resulted in to decrease in other equity by Rs. 4.11 Lakhs as on transition date

3 Investments in subsidiaries

The company has availed option of considering fair value as deemded cost as on transition date for investments in Subsidiary Companies. These resluted in to 501.51 lakhs increase in opening profit and loss account as on transition date

4 FVTOCI financial assets: Investment in unquoted equity shares

Under IGAAP the company accounted for long term investments in unquoted shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the company has designated such investments as FVTOCI investments. At the transition date, difference between the fair value and IGAAP carrying amount has been recognised as a separate component of equity, net of related deferred taxes. This has resulted in a increase in total equity by Rs. 135.86 Lakhs on 01/04/2016(net of tax).

5 Loans(Security Deposits)

The company has impaired Deposits paid for mining on transition date as they do not qualify for recognition as financial assets per recognition criataria mentioned under the IND AS. This resulted in to decrease in other equity by Rs. 10.34 Lakhs as on transition date

6 Trade Receivable

Under IGAAP company was providing provision for bad and doubtful debts which are due more than 270 days. Under IND AS, company provides for imparement loss allowance on financial assets based on expected credit loss method. The equity is decreased by rs. 2.04 Lakhs as on 01.04.2016.

7 Interest accrued but not due on Financial Assets and Financial Liabilities

The company has financial assets and liabilities which carried interest accrued but not due as on transition date as well as 31.03.2017. The interest accrued on financial assets and liabilities at each reporting date is disclosed separately under IGAAP Under Ind AS, those financial assets and liabilities are to be reported at amortised cost. Accordingly interest accrued but not due on the transition date and 31st March 2017 respectively has been reclassified to respective financial assets and liabilities. There is no impact on the total equity or profit as a result of this adjustment.

8 Interest bearing loans and borrowings

Under IGAAP transaction costs incurred in connection with interest bearing loans and borrowings were charged to profit or loss when incurred. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the EIR method. Accordingly the total equity increased by Rs. 171.58 Lakhs on the transition date and Rs. 144.12 Lakhs on 31st March 2017. The profit for the year ended 31st March 2017 reduced by Rs. 27.46 Lakhs as a result of additional interest expense.

9 Accounting for excise duty on sale of goods:

Under IGAAP sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty which is considered as an expense. This adjustment has no impact on the total equity on the transition date as well as 31 March 2017.

10 Discount on sale of goods:

Under IGAAP discount was shown as an expense in the financial statement. However, under Ind AS, sale of goods is shown for net consideration received or receivable. hence discount is deducted from sales and not shown as expense. This adjustment has no impact on the total equity on the transition date as well as 31 March 2017.

11 Employee benefits:

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under IGAAP these remeasurements were forming part of the profit or loss for the year. This adjustment has no impact on the total equity on the transition date as well as 31 March 2017.

12 Deferred tax Liabilities (net) :

IGAAP requires 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 certain temporary differences which was not required under IGAAP as discussed below. Further, company has reclassified MAT credit entitlement to deferred tax assets.

C Cash flow statement

There were no significant reconciliation items between cash flows prepared under Indian GAAP and those prepared under Ind AS.

14 Lease

a Expenses

The Company has obtained several premises for its business operations under leave and license agreements. These are generally not non-cancellable lease and are renewable on mutual consent on mutually agreeable terms. Lease payments are recognized in the statement of profit and loss as rent expenses amounting to Rs. 267.52 Lakhs ( Previous Year Rs. 237.81 lakhs) b Income

The Company has given land and building on operating lease for period ranging from 11 months to 60 months. During the year, the company has also given plant and machinery on operating lease and has recognized the lease rent on both assets in the statement of profit and loss amounting to Rs. 61.42 lakhs (Previous Year Rs. 123.75 lakhs)

15 Previous year figures

Previous year’s figures have been regrouped or reclassified wherever necessary to confirm to the current period’s presentation.

The Accompanying Notes are an integral part of the financial Statements.

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