Note:
*Aryanish Finance and Investments Private Limited, Bayside Property Developers Private Limited, Delta Real Estate Consultancy Private Limited are holding Equity Shares in the capacity of trustees for Aarti J Mody Trust, Aditi J Mody Trust and Anjali J Mody Trust respectively.
1.EMPLOYEE BENEFITS
Brief Description of the Plans:
The Company has various schemes for employee benefits such as Provident Fund, ESIC, Gratuity and Leave Encashment. The Company’s defined contribution plans are Provident Fund (in case of certain employees) and Employees State Insurance Fund (under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans.
A. Define Benefit Plans:
The Company’s defined benefit plans include Gratuity. The gratuity plan is governed by the Payment of Gratuity Act, 1972 under which an employee who has completed five years of service is entitled to specific benefits. The level of benefits provided depends on the member’s length of service and salary at retirement age.
The level of benefits provided depends on the member’s length of service and salary at retirement age.
The Plan typically to expose the Company to actuarial risk such as Interest Risk, Longevity Risk and Salary Risk;
a) Interest Risk:- A decrease in the bond interest rate will increase the plan liability.
b) Longevity Risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.
c) Salary Risk: The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan’s participants will increase the plan’s liability.
The above sensitivity analyses are based on change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
B. Defined Contribution Plans
The Company also has certain defined contribution plans. The contributions are made to registered provident fund, Employee State Insurance Corporation and Labour Welfare Fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognized during the period towards defined contribution plans are as follows:
2. INFORMATION IN ACCORDANCE WITH THE REQUIREMENTS OF Ind AS 24 ON RELATED PARTY DISCLOSURES
A LIST OF RELATED PARTIES
(i) Subsidiary Companies:
MMG India Private Limited (MMG - I)
MagDev Limited (MagDev UK)
(ii) Step Down Subsidiaries:
Pilamec Limited (Pilamec UK)
(iii) Key Management Personnel’s (KMP):
Mr. Jaydev Mody (JM) - Chairman
Mr. Dr. Ram H. Shroff (RHS) - Executive Vice Chairman & Managing Director
Ms. Ambika Kothari (AK) - Non-executive Director
Mr. Mr. Javed Tapia (JT) - Independent Director
Dr. Vrajesh Udani (VU) - Independent Director
Mr. Mr. Rajesh Jaggi (RJ) - Independent Director
Mr. Darius Khambatta (DK) - Non-executive Director
Mr. Samir Chinai (SC) - Independent Director
Mr. Abhilash Sunny (AS) - Chief Financial Officer
Ms. Snehal Oak (SO) - Company Secretary
(iv) Relatives of KMP:
Mrs. Zia Mody (ZM) - Wife of the Chairman
(v) Enterprises over which persons mentioned in (iii) and (iv) above exercise significant influence/control directly or indirectly:
AZB & Partners (AZB)
Freedom Registry Limited (FRL)
Aarti Management Consultancy Private Limited (AAMPL)
Aditi Management Consultancy Private Limited (ADMPL)
Anjoss Trading Company Private Limited (ATCPL)
AAA Holding Trust (AAAHT)
3. SEGMENT REPORTING
In accordance with Ind AS 108 ‘Operating Segment’, segment information has been given in the consolidated financial statements and therefore, no separate disclosure on segment information is given in these financial statements.
4. MAT CREDIT ENTITLEMENT
MAT Credit Entitlement of ' 1,839.31 (‘000) [Previous Year ' Nil] is based on business projections of Company provided by Management, and the same have been relied upon by the Auditors.
5. CREDIT RISK
Credit risk arises from the possibility that the counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses financial reliability of customers and other counter parties, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets. Individual risk limits are set and periodically reviewed on the basis of such information
The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of default occurring on asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as:
i) Actual or expected significant adverse changes in business;
ii) Actual or expected significant changes in the operating results of the counterparty,
iii) Financial or economic conditions that are expected to cause a significant change to the counterparty’s ability to meet its obligations,
The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.
6.CAPITAL RISK MANAGEMENT
a) The Company manages its capital to ensure that it will be able to continue as going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in notes 17, 21 and 23 offset by cash and bank balances) and total equity of the Company.
The Company determines the amount of capital required on the basis of annual as well as long term operating plans and other strategic investment plans. The funding requirements are met through long-term and short-term borrowings. The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company.
7. INTEREST RATE RISK & SENSITIVITY ANALYSIS
Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimize the Group’s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.
The sensitivity analyses below have been determined based on the exposure to interest rates for assets and liabilities at the end of the reporting period. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year and the rates are reset as per the applicable reset dates. The basis risk between various benchmarks used to reset the floating rate assets and liabilities has been considered to be insignificant.
The Company is exposed to Currency Risk arising from its trade exposures and Capital receipt / payments denominated, in other than the Functional Currency. The Company has a detailed policy which includes setting of the recognition parameters, benchmark targets, the boundaries within which the treasury has to perform and also lays down the checks and controls to ensure the continuing success of the treasury function. The Company has defined strategies for addressing the risks for each category of exposures (e.g. for imports, for loans, etc.). The centralized treasury function aggregates the foreign exchange exposure and takes prudent measures to hedge the exposure based on prevalent macro-economic conditions.
b) Fair Value Hierarchy and Method of Valuation
Except as detailed in the following table, the Company considers that the carrying amounts of financial instruments recognized in the financial statements approximate their fair values.
Level 1 : Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2: Input other than quoted prices included within level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
The fair value of other financials assets and financial liabilities are approximate to their carrying values.
8. FIRST TIME ADOPTION OF IND AS
These are the Company’s first financial statements prepared in accordance with Ind AS. The Company has prepared the its opening balance sheet as per Ind AS as at April 01, 2016 (“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.
In preparing these financial statements, the Company has availed optional exemptions and mandatory exceptions in accordance with Ind AS 101 as explained below:
(a) Past Business Combinations
The Company has elected not to apply Ind AS 103 ‘Business Combinations’ retrospectively to past business combinations that occurred before the transition date.
(b) Deemed Cost for Property, Plant and Equipment and Intangible Assets
While measuring the property, plant and equipment in accordance with Ind AS, the Company has elected to measure certain items of property, plant and equipment at the date of transition to Ind AS at its fair value and used that fair value as its deemed cost at transition date.
The Company has elected to continue with the carrying value of all of its intangible assets recognized as at transition date measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
(c) Estimates
The Company’s estimates in accordance with Ind ASs at the transition date are in consistent with estimates made for the same date in accordance with previous GAAP after adjustments to reflect any difference in accounting policies.
(d) Investments in Subsidiaries
The Company has elected to continue with the carrying value of its investments in subsidiaries recognized as at transition date measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
Transition to Ind AS - Reconciliations
The following reconciliations provide the explanations and quantification of the differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101:
I. Reconciliation of Equity as at 1st April, 2016 and as at 31st March, 2017.
II. Reconciliation of Statement of Profit and Loss for the year ended 31st March, 2017.
III. Adjustments to Statement of Cash Flows for the Year Ended 31st March, 2017.
Previous GAAP figures have been reclassified/regrouped wherever necessary to conform with financial statements prepared under Ind AS.
Footnotes:
A In accordance with Ind AS 101, the Company has elected to measure certain items of property, plant and equipment at fair value as at transition date. This fair values are considered as deemed cost. All other assets are measured in accordance with Ind AS 16. This resulted in increase in deemed cost of land held under finance lease by ' 28,818.34(‘000). Depreciation expenses has been provided accordingly over the balance useful life.
B The Company has received long term interest free loans from its promoters. Under Ind AS, the such loans availed are measured at fair value at the date of transaction. The difference of loan amount received and its fair value is directly taken to equity as ‘deemed equity contribution’. Subsequently, these loans are measured at amortized cost by charging interest expenses using effective interest method.
C Under Ind AS the financial guarantees given on behalf of loans availed by subsidiaries are measured at fair value on the date on giving the guarantee and subsequently unwound over the period of guarantee given by way of income over the period of guarantee. Under previous GAAP, there was no accounting of financial guarantees given.
D Under Ind AS, actuarial gains or losses on remeasurement of defined benefit obligation is recognized in other comprehensive income (including its tax effect) which was recognized in statement of profit and loss under previous GAAP.
E Other adjustments includes discounting of interest free rental deposits, reversal of foreign exchange fluctuation on foreign currency advances considered as non-monetary items and derecognition of intangible assets which does not satisfy recognition criteria under Ind AS.
III. Effect of Ind AS adoption on the Statement of Cash Flow for the year ended 31st March, 2017
The Ind AS adjustments are either non cash adjustments or are regrouping among the cash flows from operating, investing and financing activities. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended 31st March, 2017 as compared with the Previous GAAP.
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