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NOTES TO ACCOUNTS

Trident Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 2812.97 Cr. P/BV 0.94 Book Value (₹) 58.57
52 Week High/Low (₹) 76/52 FV/ML 10/1 P/E(X) 7.57
Bookclosure 10/08/2019 EPS (₹) 7.30 Div Yield (%) 5.43
Year End :2018-03 

NOTE 1 Key sources of estimation uncertainity

In the application of the Company accounting policies, the management of the Company is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The following are the areas of estimation uncertainty and critical judgements that the management has made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements: -

Useful lives of Intangible assets

The intangible assets are amortised over the estimated useful life. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Useful lives of depreciable tangible assets

Management reviews the useful lives of depreciable assets at each reporting date. As at March 31, 2018 management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no significant change in the useful lives as compared to previous year. Defined benefit plans

The cost of the defined benefit plan and other post-employment benefits and the present value of such obiigat ion are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

Notes:

1. Additions to plant and equipment include exchange fluctuation Loss of Nil (Previous year Rs, 13.1 million).

2. All tangible assets have been hypothecated/mortgaged to secure borrowings of the Company, (refer note 17 and 19)

3. The amount of borrowing costs capitalised during the year is Rs, 27.1 million (Previous year Nil) at the actual rate of interest of the specific borrowing.

4.In accordance with Ind AS 101, the Company had carried out fair valuation of all its freehold land on first time adoption as at April 1, 2015 consequent to which deemed cost of land increased by Rs, 8,782.3 million.

(b) Rights, preferences and restrictions attached to the equity shareholders:

The Company has only one class of equity shares having par value of Rs, 10 per share. Each shareholder is eligible for one vote per equity share held. In the event of liquidation of the Company the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the board of directors is subject to approval of the shareholders in the Annual General Meeting.

Term loans

a) Term loans except for loans referred in b, c and d below from banks and financial institution are secured by way of equitable mortgage created or to be created on all the present and future immovable properties except for charges created for loan referred in b, c and d below including all land, buildings, structures, all plant and equipment attached thereon of the Company and hypothecation of all the movable properties except for charges created for loan referred in b, c and d below including movable machinery, spares, tools and accessories, etc., present and future, subject to prior charges created and / or to be created in favour of the Company’s bankers on stocks of raw materials, semi-finished and finished goods, consumable stores and other movable assets excluding vehicles specifically hypothecated against vehicle loans, as may be required for working capital requirements in the ordinary course of business. The mortgages and charges referred to above rank pari-passu among the lenders (refer note 42(A) (i) and 42(B) (i)

b) The Company has pledged receipts of fixed deposits amounting to Rs, 1,000 million (previous year Rs, 500 million) for rupee term loan from Yes Bank Limited, (refer note 42(A) (ii))

c) Term loan from Indusind Bank amounting to Rs, 656.4 million (previous year Nil) is secured by way of mortgage created on related property, (refer note 42(A) (iii))

d) With respect to the term loans from banks obtained by erstwhile Trident Corporation Limited (the Amalgamating Company), amalgamated with the Company with effect from the appointed date i.e. April 1,2014, the same are secured by way of equitable mortgage created on the immovable properties including all buildings, structures, plant and machinery attached thereon and hypothecation of all the movable properties including movable machinery, spares, tools and accessories stocks of raw materials, semi finished goods, consumable stores and other moveable’s of the Amalgamating Company, as existing immediately prior to the amalgamation of the Amalgamating Company with the Company, (refer note 42(A) (iv))

The interest rates range from 4.7% to 10.4% per annum before subsidy.

a) Defined contribution plans

The Company makes contribution towards employees’ provident fund scheme. Under the scheme, the Company is required to contribute a specified percentage of salary, as specified in the rules of the scheme. The Company has recognized Rs, 184.3 million (Previous year Rs, 180.5 million) during the year as expense towards contribution to this plan. Rs, 2.2 million (Previous year Rs, 2.3 million) has been included under Property, plant and equipment / Capital work in progress.

b) Defined benefit plans Gratuity scheme

The Company has a defined gratuity plan (Funded) and the Gratuity plan is governed by The Payment of Gratuity Act 1972 (“Act”). Under the Act, employee who has completed five years of service is entitled for specific benefit. The amount of benefit depends on respective employee’s salary, the years of employment and retirement age of the employee and the gratuity benefit is payable on termination/retirement of the employee. There is no maximum limit for the payment of gratuity benefit. The present value of obligation is determined based on an actuarial valuation as at the reporting date using the Projected Unit Credit Method.

The fund has the form of an irrevocable trust and it is governed by Board of Trustees. The Board of trustees is responsible for the administration of the plan assets and for the definition of investment strategy. The scheme is funded with qualifying insurance policies. The Company is contributing to trusts towards the payment of premium of such company gratuity schemes.

The following table sets out the details of defined benefit plan and the amounts recognised in the financial statements:

NOTE 2 - EMPLOYEE BENEFITS (contd..)

VII Acturial risks

Through its defined benefit plans the Company is exposed to a number of risks, the most significant of which are detailed below: Interest rate risk

The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

Salary Inflation risk

Higher than expected increases in salary will increase the defined benefit obligation.

Demographic risk

This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and ret i reme nt. The effect ofthesedecrementsonthedefinedbenefitobligationisnotstraightforwardanddependsuponthecombination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

The sensitivity analysis presented above may not be representative of the actual changes in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumption may be correlated.

Furthermore, in presenting the above sensitivity analysis the present value of the defined benefit obligations has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the financial statements.

There was no change in the methods and assumption used in preparing the sensitivity analysis from prior years.

The sensitivity analysis above have been determined based on reasonably possible changes of the respective assumption occurring at the end of the reporting period, while holding all other assumptions constant.

The following benefit payments are expected in future years:

The average duration of the defined benefit obligation at the end of the reporting period is 13 years (previous year 11 years) The expected employer contribution for the year ended March 31,2018 is Nil (previous year Rs, 155.9 million)

* comprises of:

(i) Rs, 111.2 million (previous year Rs, 80.0 million) on specific borrowings taken.

(ii) Rs, 21.2 million (previous year Nil) on general borrowings for other qualifying assets using the weighted average interest rate applicable during the year which is 9.6% p.a

NOTE 3 - RELATED PARTY DISCLOSURES

The related party disclosures as per Ind AS-24 are as under:

A. Name of related party and nature of related party relationship (i) Enterprises where control exists:

a) Enterprise that controls the Company

- Madhuraj Foundation (directly or indirectly holds majority voting power)

b) Enterprise that have significant influence over the Company

- Trident Group Limited

c) Enterprises that are controlled by the Company i.e. subsidiary company.

- Trident Global Corp Limited

- Trident Europe Limited

(ii) Other related parties where transactions have taken place during the year:

a) Enterprises under the common control as the Company

- Trident Institute of Social Sciences

- Trident Industrial Corp Limited

- Trident Capital Limited

- Trident Corp Limited

- Trident Corporate Solutions Limited

- Trident Corporate Services Limited

- Trident Comtrade LLP

b) Enterprise on which Company exercises significant influence

Trident Global, Inc. USA Trident Infotech, Inc. USA

- Lotus Texpark Limited

- Narmada Infrabuild Limited

c) Key management personnel and other relatives

- Ms. Pallavi Shardul Shroff- Chairperson

- Mr. Raj inder Gupta- Co-Chairman

- Mr. Rajiv Dewan- Director

- Mr. Deepak Nanda- Managing Director Mr. Gunjan Shroff-CFO

- Ms. Ramandeep Kaur (w.e.f. January 18, 2017)- Company Secretary

- Mr. Pa wan Babbar (ceased to be Company Secretary of the Company w.e.f. December 31,2016) - Company Secretary

- Mr. Surender Kumar Tuteja (ceased to be Director of the Company w.e.f. January 20,2017)- Director Mr. Dinesh Kumar M ittal (w.e.f August 12,2017)- Director

Mr. Abhishek Gupta - Relative Ms. Madhu Gupta - Relative

- Ms. Gayatri Gupta - Relative

d) Post Employment Benefit Plans

- TridentTrust

* Gratuity and Leave benefits are actuarialy determined on overall basis and hence not separately provided.

C. The amounts outstanding are unsecured and will be settled in cash except Rs, 49.1 million (Previous year Nil) given to Madhuraj Foundation being advance given against purchase of property. No guarantees have been given or received except given for Lotus Temper Limited (as mentioned in Note no. 32 above). No expense has been recognised in the current or prior years for bad or doubtful debts in respect of the amounts owed by related parties. Further, the Company has executed a non-disposal undertaking in favour of various banks that have provided financial assistance to the Lotus Texpark Limited.

I Segment Accounting Policies:

a. Product and Services from which reportable segment derive their revenues (Primary Business Segments)

Based on the nature and class of product and services, their customers and assessment of differential risks and returns and financial reporting results reviewed by Chief Operating Decision Maker (CODM), the Company has identified the following business segments which comprised:

Textiles : Yarn, Towel, Bedsheets, Dyed Yarn manufacturing (Including utility services)

Paper and Chemical: Paper and Sulphuric Acid (Including utility services)

Till the previous year, the Company was showing “Sale of software and related services” as a saperate segment, however, CODM does not consider the same as separate segment and hence the same is included under unallocated segment in the previous year as well as current year.

b. Geographical segments (Secondary Business Segments)

The geographical segments considered and reviewed by Chief Operating Decision Maker for disclosure are based on markets, broadly as under:

India

USA

Rest of the world

c. Segment accounting policies

Segment accounting policies: In addition to the significant accounting policies applicable to the business segment as set out in note 2, the accounting policies in relation to segment accounting are as under:

i. Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of cash, debtors, inventories and Property, Plant and Equipment including capital work in progress, net of allowances and provisions, which are reported as direct offset in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

ii Segment revenue and expenses:

Joint revenue and expenses of segments are allocated amongst them on reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

iii Inter segment sales:

Inter segment sales are accounted for at cost plus appropriate margin (transfer price) and are eliminated in consolidation.

iv Segment results:

Segment results represents the profit before tax earned by each segment without allocation of central administration costs, other non-operating income as well as finance costs. Operating profit amounts are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

* Excludes financial instruments and post-employment benefits assets.

Information about major customers Refer Note45 (Credit Risk)

NOTE 4 - LEASES AS LESSEE

The Company has entered into operating lease agreements for taking various office premises, guest houses, factory premises (including plant & equipment) on operating lease. The lease rentals charged to the statement of profit and loss during the year is Rs, 101.4 million (Previous year Rs, 119.8 million).

The operating lease arrangements, are renewable on a periodic basis and leases extend unto a maximum of ten years from their respective dates of inception.

NOTE 5 - EMPLOYEES1 STOCK OPTION PLANS

The erstwhile Compensation Committee of Board of Directors of the Company has granted options to the employees pursuant to Trident Employees Stock Options Plan 2007 (‘the Plan’) on July 09, 2007 (Grant I) and July 23, 2009 (Grant II). These options were granted at Rs, 17.55 and Rs, 11.20 per option respectively, being the latest available closing market price prior to the date of grant of options in accordance with SEBI guidelines. The quoted price of share on grant and the exercise price of option is equal and therefore there is no impact on statement of profit and loss due to Employee Share-based options as the Company is following intrinsic value method.

The Company has allotted 16,307 equity shares (previous year 208,234 equity shares) to employees during the year under the Trident Employees Stock Options Plan, 2007.

Capital management

For the purpose of Company’s capital management, capital includes Issued Equity capital and all reserves attributable to equity holders of the Company

The Company’s capital management objectives are:

- to ensure the Company’s ability to continue as a going concern

- to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Company manages capital risk in order to maximize shareholders ‘profit by maintaining sound/optimal capital structure through monitoring of financial ratios, such as net debt-to-equity ratio on a monthly basis and implements capital structure improvement plan when necessary. There is no change in the overall capital risk management strategy of the Company compared to last year. Debt-to-equity ratio as of March 31,2018 and March 31,2017 is as follows:

The management assessed that fair value of trade receivables, cash and cash equivalents, other bank balances, other current financial assets, short term borrowings, trade payables and other current financial liabilities (except derivative financial liabilities) approximate their carrying amounts largely due to short-term maturities of these instruments.

The fair value of the Financial assets and liabilities is 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.

Financial Risk Management Framework

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include trade and other receivables, receivables from government authorities, security deposits and cash and cash equivalents that derive directly from its operations. The Company also holds investments and enters in to derivative transactions.

The Company’s corporate treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Company seeks to minimise the effects of these risks by using derivative financial instruments to hedge risk exposures. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The Corporate Treasury function reports quarterly to the Board of Directors of the Company for monitoring risks and reviewing policies implemented to mitigate risk exposures.

CREDIT RISK

Credit risk arises when a counterparty defaults on its contractual obligations to pay resulting in financial loss to the Company The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs, 4,777.6 million and Rs, 3,816.8 million as of March 31, 2018 and March 31, 2017, respectively. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Credit risk has always been managed by the group through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business.

Credit Risk Exposure

The Company has used a practical expedient by computing the expected loss allowance for trade receivables based on historical credit loss experience and adjustments for forward looking information

The allowance for lifetime expected credit loss on customer balances for the year ended March 31, 2018 was Rs, 6.3 million. The allowance for lifetime expected credit loss on customer balances for the year ended March 31,2017 was Rs, 91.0 million.

LIQUIDITY RISK

(i) Liquidity risk management

The Company’s objective is to maintain optimum levels of liquidity to meet its cash and collateral requirements at all times. The Chief Financial Officer of the Company is responsible for liquidity risk management who has established an appropriate liquidity risk management framework for the management of the Company’s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The Chief Financial Officer reports the same to the Board of Directors on quarterly basis.

(ii) Maturities of financial liabilities

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment period s. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay The tables include both interest and principal cash flows.

Derivative financial instruments

The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are values based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.

MARKET RISK

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: currency risk and interest rate risk. Financial instruments effected by market risk includes loan and borrowings and derivative financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Company uses derivatives to manage market risks. Derivatives are only used for economic hedging purposes and not as speculative investments. All such transactions are carried out within the guidelines set by the Board of Directors and Risk Management Committee.

There has been no significant changes to the Company’s exposure to market risk or the methods in which they are managed or measured.

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 undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company’s exposure to currency risk relates primarily to the Company’s operating activities and borrowings when transactions are denominated in a different currency from the Company’s functional currency.

The Company manages its foreign currency risk by hedging transactions that are expected to occur within a maximum 12 month period for hedges of forecasted sales and borrowings.

For the year ended March 31,2018, every one ru pee depreciate on/appreciation in the exchange rate against US$, might have affected the Company’s incremental margins (profit as a percentage to revenue) approximately by 0.60%. The Company’s exposure to foreign currency changes for all other currencies is not material.

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’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations with floating interest rates. The borrowings as at March 31, 2018 is Rs, 27,998.7 million which are interest bearing and interest rates are variable.

Interest rate sensitivity

For the year ended March 31, 2018, every 1 percentage increase/decrease in weighted average bank interest rate might have affected the Company’s incremental margins (profit as a percentage to revenue) approximately by 0.60 %.

Price risk

The Company’s investments in listed securities, mutual funds and other funds are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the price risk through diversification and by placing limits on individual and total equity instruments. Reports on the portfolio are submitted to the Company’s senior management on a regular basis.

At the reporting date, the exposure to listed equity securities at fair value wasRs, 142.0 million. A decrease of 5% on the NSE market index could have an impact of approximately of Rs, 7.1 million on the OCI or equity attributable to the Company. An increase of 5% in the value of the listed securities would also impact OCI and equity by the same amount. These changes would not have an effect on profit or loss. At the reporting date, the exposure in mutual funds and other funds is Rs, 120.3 million. A decrease or increase in NAVof 5% mutual funds and other funds could have an impact of approximately of Rs, 6.02 million on the profit or loss.

NOTE 6-

The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

NOTE 7-

The Board of Directors has recommended a final dividend of 3% (Rs,0.30 per equity share of Rs, 10/- each) for the financial year 2017-18 subject to the approval of the shareholders in the forthcoming Annual General Meeting of the Company. This final dividend is in addition to the two interim dividends of 6% each (Rs,0.60 per equity shares of Rs, 10/- each) declared during the financial year 2017-18. The total dividend for the financial year 2017-18 is 15% (Rs, 1.50 per equity shares of Rs, 10/- each).

NOTE 8-

Revenue from operations for the periods up to 30June2017 includes excise duty, wherever not exempted. From 01 July 2017 onwards, the excise duty and most indirect taxes in India have been replaced with Goods and Service Tax (GST). The Company collects GST on behalf of the Government. Hence, GST is not included in Revenue from operations. In view of the said change in indirect taxes, Revenue from operations for the year ended 31 March 2018 is not comparable with Revenue from operations for the year ended 31 March 2017.

NOTE 9 -

Disclosure required under Section 186(4) of the Companies Act, 2013

The Company has given corporate guarantees for business purposes to Punjab National Bank on behalf of Lotus Temper Limited, associate of the Company.

NOTE 10 -

Employee benefits expense is lower during the current year compared to previous year due to rationalization of manpower cost including structuring of salary and manpower.

NOTE 11-

The figures of previous year were audited by Deloitte Haskins & Sells, Chartered Accountants and has been taken as per the figures audited by them and relied upon by the current statutory auditors.

NOTE 12-

Previous year’s figures have been regrouped/reclassified wherever necessary to correspond with the current year’s classification/ disclosure.

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