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NOTES TO ACCOUNTS

APM Industries Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 42.79 Cr. P/BV 0.35 Book Value (₹) 56.51
52 Week High/Low (₹) 48/16 FV/ML 2/1 P/E(X) 5.83
Bookclosure 28/09/2019 EPS (₹) 3.40 Div Yield (%) 2.53
Year End :2018-03 

1. Financial risk management and policies 43.1 Capital Management

(a) Risk Management

The Company aim to manages its capital efficiently so as to safeguard its ability to continue as a going concern and to optimize returns to our shareholders.

The capital structure of the Company is based on management's judgment of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

The Company's policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as equity as shown in the balance sheet plus all other reserves attributable to equity shareholders of the Company.__

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants.

2. Financial-Risk-Management

The Company's principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance and support the Company operations. The Company's principal financial assets comprise investments, cash and bank balance, trade and other receivables.

The Company is exposed to various financial risks such as market risk, credit risk and liquidity risk. The financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives.

a) Market Risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loans and borrowings.

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 recommend 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, 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.

(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 import of store and spare and other materials. The Company's foreign currency risks are identified, measured and managed at periodic intervals in accordance with the Company's policies.

b) Credit Risk:

Credit risk is the risk that counterparty will default on its contractual obligations resulting in financial loss to the company. The Company has adopted a policy of only dealing with creditworthy customers.

The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors such as financial condition, ageing of accounts receivable and the Company's historical experience for customers.

As at March 31, 2018, the company did not consider there to be any significant concentration of credit risk, which had not been adequately provided for. The carrying amount of the financial assets recorded in the financial statements, grossed up for any allowances for losses, represents the maximum exposure to credit risk.

c) Liquidity Risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Company's treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company liquidity position through rolling forecasts on the basis of expected cash flows.

The table below summarizes the maturity profile of the Company's financial liabilities based on contractual undiscounted payments:

The fair value of the financial assets are included at amounts at which the instruments 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 value:

(a) Fair value of cash and short term deposits, trade and other short term receivables, trade payables, other current liabilities, approximate their carrying amounts largely due to the short-term maturities of these instruments.

(b) Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.

3. Segment Reporting

The Company has identified a second reportable segment of Finance and Investment during the current year as the same is added in the main object w.e.f. August 22, 2017. Accordingly, there are two reportable segment of Yarn Manufacturing and Finance and Investment. The Chief Operating Decision Maker reviews the operating results of these two segment. Segment data for the new reportable segment for the previous financial year ended March 31, 2017 presented for comparative purpose only. In the prior periods, such segment revenue was included under “Other Income”.

a) Business segment:

The Company has considered “Manufacturing” and “Finance and Investment” as business segment for disclosure in the context of Indian Accounting Standard 108 “Operating Segment”.

b) Geographical Segment:

During the period under report, the Company has engaged in its business primarily within India. The conditions prevailing in India being uniform, no separate geographical disclosure is considered necessary.

4. The Board of Directors of the Company vide resolution dated January 11, 2018, approved the Scheme of Arrangement (“Scheme”) under section 230-232 read with section 66 of the Companies Act, 2013 (“Act”) between APM Industries Limited (“Demerged Company”) and APM Finvest Limited (“Resulting Company”), a wholly owned subsidiary of the Demerged Company, and their respective shareholders and creditors. The Company had filed the Scheme with the BSE for approval on February 22, 2018 for Observation/No Objection letter which is still awaited. However, the Scheme is subject to approval of BSE Limited, the Securities and Exchange Board of India, Shareholders and Creditors of both the Companies and such other statutory authorities as may be required and sanction thereof by the Hon'ble National Company Law Tribunal, New Delhi Bench. The Appointed date being April 1, 2018 (or such other date as may be decided by the Board of both the companies with consent or as per the direction by the Tribunal), the proposed transaction will not have any effect in the current performance and state of affairs of the Company for the financial year ended March 31, 2018.

5. All amounts in the financial statements and notes have been rounded off to the nearest lakhs as per requirement of Schedule III except per share data and as otherwise stated. Figures in brackets represent corresponding previous year figures.

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