Note :1. Basic of Preparation of Financial Statement
i.) Statement of compliance with Ind AS
In accordance with the notification issued by the Ministry of Corporate Affairs, the Company, with effect from 1 April 2017, has adopted Indian Accounting Standards (the 'Ind AS') notified under the Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended by Companies (Indian Accounting Standards) (Amended) Rules, 2016 and other relevant provisions of the Act. The financial statements up to the Year ended 31stMarch, 2017 were prepared in accordance with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and other provisions of the Act. (Referred to as 'Indian GAAP').
These financial statements are the first financial statements of the Company under Ind AS. The date of transition to Ind AS is 1st April, 2017 The company has adopted all the Ind AS and the adoption was carried out in accordance with Ind AS 101 - First time adoption of Indian Accounting Standards. The transition was carried out from accounting principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP. Reconciliations and description of the effects of the transition have been summarized in Note 42. The details of the first time adoption exemptions availed by the Company are given in Note 42 series.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
ii.) Functional and Presentation Currency
The financial statements are presented in Indian Rupees, which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates. All values are in Rupees except when otherwise indicated
iii.) Historical Cost Convention
The financial statements are prepared on accrual basis of accounting under historical cost convention in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act, 2013 including Indian Accounting Standards notified there under, except for certain financial instruments which are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
a. Defined benefit plan-plan assets measured at fair value.
b. Certain financial assets and liabilities.
c. Assets held for sale measured at the lower its carrying amount and fair value less cost to sell.
Note 1.2 First-time adoption optional exemptions Overall principle
The Company has prepared the opening balance sheet as per Ind AS as of 1 April, 2016 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to the certain exception and certain optional exemptions regarding retrospective application, availed by the Company as detailed below.
1.3 The company has only one class of equity shares, having a par value of Rs.10 per share. Accordingly, all equity shares rank equally with regard to dividends and share in the Company' s residual assets. Each shareholder is eligible to one vote per share held. The dividend proposed, if any, by the Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend. The repayment of equity share capital in the event of liquidation and buy back of shares are possible subject to prevalent regulations. In the event of liquidation, normally the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
1.4 Issued, subscribed and paid-up capital of the company includes:-
(i) 4238967 shares (Previous Year 4238967) alloted as Bonus Shares by way of Capitalisation of Profits
(ii) 2640000 Shares (Previous Year 2640000) issued by way of conversion of Optionally Convertible Warrants into equity shares Rs.10/- each at a premium of Rs.20/- each.
2.1 Term Loan from banks is secured by way of equitable mortgage of Factory Land & Building and Hypothecation of Plant & Machinery of all the units at Bisalpur Road and Bareilly Road, Stock and Book Debts, Personal guarantees of Mr. Anil Modi, Mrs. Nita Modi and Mr. Akshay Modi
2.2 Working Capital facility comprises cash credit from bank and is secured against hypothecation of raw materials, semi finished goods, finished goods, consumable stores, book debts, all securities of units at Bisalpur Road and Bareilly Road, Pilibhit and personal guarantees of Mr. Anil Modi, Mrs. Nita Modi and Mr Akshay Modi.
2.3 Vehicle Loans are secured against hypothecation of respective Vehicles
14.1 Based on the information so far obtained by the Company, payment to enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) has been made within 45 days and disclosure in accordance with section 22 of the MSMED Act is as under:
Principal amount remaining unpaid Principal amount remaining unpaid above 45 days Interest due on above Total of above
Interest paid in terms of section 16
Interest due and payable for the period of delay in payment
Interest accrued and remaining unpaid
Interest due and payable even in succeeding years
Based on legal advice, discussions with the solicitors, etc., the management believes that there is fair chance of decisions in the company's favour in respect of all the items listed at (i) to (iv) above and hence no provision is considered necessary against the same. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the company's financial position and results of operations.
Sensitivities due to mortality and withdrawals are not material & hence impact of change not calculated.
Sensitivities as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable being a lump sum benefit on retirement.
The estimates of future salary increase considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors. The above information is certified by the actuary and relied upon by the auditors.
The employer's best estimate of contribution expected to be paid during the next year is Rs. 41,52,334.00.
B Defined Benefit plans - Leave Encashment
Liability in respect of leave encashment is not applicable since the company pays leave encashment to employees every year.
C Defined Contribution plans - Provident Fund and ESI
The Company has recognized Rs. 77,37,596 (As on 31 March,2017: Rs. 77,59,349) in statement of profit and loss as Company's contribution to provident fund and ESI.
Note 3: Financial Instruments Capital Management
The Company manages its capital to ensure that the entities in the Company will be able to continue as going concern while maximizing the return to shareholders and also complying with the ratios stipulated in the loan agreements through the optimization of the debt and equity balance.
The capital structure of the Company consists of net debt (borrowings as detailed in note 13 offset by cash and bank balances as detailed in note 7 & 10) and total equity of the Company.
The Company is not subject to any externally imposed capital requirements.
Note:
i. Debt is defined as long and short-term borrowings (excluding derivative, financial guarantee contracts), as described in note 13.
ii. In order to achieve this overall objective, the Group'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. Breaches in meeting the financial covenants would permit the bank to call loans and borrowings or charge some penal interest. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.
No changes were made in the objectives, policies or processes for managing capital during the current years and previous years.
3.1 Financial risk management
The Company's activities expose it to a variety of financial risks which includes market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
The Company's focus is to ensure liquidity which is sufficient to meet the Company's operational requirements. The Company monitors and manages key financial risks so as to minimize potential adverse effects on its financial performance. The Company has a risk management policy which covers the risks associated with the financial assets and liabilities. The details for managing each of these risks are summarized ahead.
3.2 Market risk
Market risk is the risk that the expected cash flows or fair value of a financial instrument could change owing to changes in market prices. The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates
3.3 Credit risk management
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. The Company's exposure to credit risk primary arises from trade receivables, balances with banks, investments and security deposits. The credit risk on bank balances is limited because the counter parties are banks with good credit ratings.
3.4 Trade Receivables
Credit risk is managed through credit approvals, establishing credit limits, continuous monitoring of creditworthiness of customers to which the company grants credit terms in the normal course of business. The Company also assesses the financial reliability of customers taking into account the financial condition, current economic trends and historical bad debts and ageing of accounts receivables.
3.5 Cash & Cash Equivalents
With respect to credit risk arising from financial assets which comprise of cash and cash equivalents, the Company s risk exposure arises from the default of the counter party, with a maximum exposure equal to the carrying amount of these financial assets at the reporting date. Since the counter party involved is a bank, Company considers the risks of non-performance by the counter party as non-material.
3.6 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 a reasonable price. The company's treasury department 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's net liquidity position through rolling forecasts on the basis of expected cash flows.
Maturity profile of financial liabilities
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.
3.7 Fair value measurements
This note provides information about how the company determines fair values of various financial assets and financial liabilities.
Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required)
The directors consider that the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values.
Note 4. Operating Segment
The company's sole business segment is manufacturing and marketing of Oils & De-oiled Cakes and the geographical segment is India. Consequently no separate disclosure, as required under Indian Accounting Standard 108 - Operating Segment, is considered relevant.
Note 5. Other Disclosures
5.1 During the previous year, the Board of Directors of the Company in its meeting held on 15 December, 2016 approved to create, offer, issue and allot upto 1538463 (Fifteen Lakh Thirty Eight Thousand Four Hundred and Sixty Three) Warrants, entitling the holder (s) thereof to apply for and be allotted one fully paid up equity share of face value of Rs.10 each at a price of Rs.130/- (including a premium of Rs.120/-each),in one or more tranches, within 18 months from the date of allotment of Warrants, on preferential basis to non-promoters group entities as under:
subject to the approval of the shareholders in the General Meeting and the approval of the appropriate authorities.
The Company by way of Special Resolution passed at Extra Ordinary General Meeting dated 9 January, 2017 approved issue of the said Warrants, at a price of Rs. 130/- per Warrant on such terms and conditions, as placed before them in the meeting. Thereafter, Inprinciple approval for the issue of the said Warrants was obtained from the Bombay Stock Exchange Limited (BSE) on 11 January, 2017.
Afterwards, the Company issued and allotted 1538463 (Fifteen Lakh Thirty Eight Thousand Four Hundred and Sixty Three) Warrant in its Board Meeting held on 19 January, 2017.
The Company has received Rs.100000095.00 being 50% of the allotment amount as advance toward the issue of said Warrants and same is shown in shareholders fund after the capital of the Company. The funds raised have been used for the purposes for which the funds were raised and there is no unutilized amount of proceeds of issue of said Warrants.
The Warrants may be converted into equivalent number of fully paid up equity shares on payment of balance amount at any time, not exceeding 18 (eighteen) months from the date of allotment of such warrants.
Further, the said Warrants, subject to the terms and conditions stipulated at the time of their issue, are under a lock-in upto 18 July, 2018.
5.2 Disclosure in respect of operating leases under Indian Accounting Standard (AS) - 17 "Leases".
(a) General description of the Company's operating lease arrangements:
The Company enters into operating lease arrangements for leasing area offices, factory building, equipments and residential premises for its employees.
Some of the significant terms and conditions of the arrangements are:
- Agreements for most of the premises may generally be terminated by the lessee or either party by serving two to three month's notice or by paying the notice period rent in lieu thereof.
- The lease arrangements are generally renewable on the expiry of lease period subject to mutual agreement.
- The company shall not sublet, assign or part with the possession of the premises without prior written consent of the lessor.
(b) Lease rent charged to the Profit and Loss Account on account of Minimum lease rentals Rs.77,91,110/- (Previous year Rs. 90,91,954/-)
Notes to the reconciliation
1. Under previous GAAP, actuarial gains and losses were recognized in profit or loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of the net defined benefit liability/asset which is recognized in other comprehensive income.
2. Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of statement of profit and loss as part of expenses. There is no impact on the total equity and profit.
3. Under Previous GAAP, there was no concept of other comprehensive income. Under Ind AS, specified items of income, expenses, gains, or losses are required to be presented in other comprehensive income.
The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018.
The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The company is evaluating the effect on adoption of Ind AS 115.
Note: 6.
Approval of financial statements
The financial statements for the year ended 31 March, 2018 were approved by the Board of Directors and authorize for issue on 30th May, 2018.
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