1 Corporate information
Rishi Techtex Limited is a public company incorporated and domiciled in India. its shares are listed on the recognized stock exchanges, namely BSE Limited, in India. The registered office of the Company is located at 612, V.K.Industrial Estate, 10-14, Pais Street, Byculla (West), Mumbai 400011.
The Company is engaged in manufacturing of Shade nets and Plastic Woven Sacks and supplying to fertilizer and cement Industry. Company has consistently developed number of products to cater to a wide spectrum of Industries such as cement, fertilizer, chemical Petrochemical, etc.
These financial statements were authorised for issue by the Board of Directors on May 26, 2018.
2 Basis of preparation
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
a. Compliance with lnd AS:
The financial Statements comply in all material respects with Indian Accounting Standards (lnd AS) notified under Section 133 of the Companies Act, 2013 (“the Act”) [Companies (Indian Accounting Standards) Rules, 2015] other relevant provisions of the Act.
The Financial Statements up to the year ended March 31,2017 were prepared in accordance with the Accounting Standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) (“Previous GAAP”) and other relevant provisions of the Act.
These financial statements are the first financial statements of the company prepared in accordance with lnd AS. Refer note 41 for an explanation of how the transition from Previous GAAP to lnd AS has affected financial position, financial performance and cash flows of the company.
Historical cost convention:
The Financial Statements have been prepared on a historical cost basis except for the following:
a) Certain financial assets and liabilities that are measured at fair value
b) Defined benefit plans: plan assets measured at fair value
Rounding of Amounts:
The financial statements are presented in INR and all values are rounded to the nearest lakhs, except when otherwise Indicated.
b. Significant estimates, judgements and assumptions
The preparation of financial statements in conformity with lnd AS requires the management to make estimates, assumptions and exercise judgment in applying the accounting policies that affect the reported amount of assets, liabilities and disclosure of contingent liabilities at the end of the financial statements and reported amounts of income and expense during the year.
The management believes that these estimates are prudent and reasonable and are based on management's best knowledge of current events and actions. Actual results could differ from these estimates and difference between actual results and estimates are/ shall be recognised in the period in which results are known or materialised.
c. Current non-current classification
All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle (12 months) and other criteria set out in the Schedule ill to the Act.
Amendment to Ind AS 7
Amendment to Ind AS 7 effective from 01 April, 2017 require the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance sheet for liabilities arising from financing activities, to meet disclosure requirement. Accordingly, the Company has given the said disclosure as below:
b) Rights, preferences, restrictions of equity shares
The Company has only one class of equity shares having a face value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share.
The equity shares are entitled to dividend proposed by Board of Directors subject to approval of the share holders in the Annual General Meeting except in case of interim dividend. in the event of liquidation of the Company, holder of equity shares are entitled to receive remaining assets of the Company, after distribution of all preferential amounts in proportion to their share holding.
Note 3 Employee Benefits
a. Defined benefit plan: Gratuity
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on retirement / resignation or retirement at 15 days salary (last drawn salary) for each completed year of service. The present value of gratuity obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation
Sensitivity Analysis
Below is the sensitivity analysis determined for significant actuarial assumption for determination of defined benefit obligation and based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period.
Note 4 Financial Instrument and Risk Management
i) Financial risk management objective and policies
The Company's principal financial liabilities, 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 investments, loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The company's senior management oversees the management of these risks.
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, foreign currency risk and other price risk such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, other financial instruments.
Interest rate risk
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair value of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that future cash flows of floating interest bearing investments will vary because of fluctuations in interest rates.
Interest rate sensitivity
The borrowing of the Company includes vehicle loans which carries fixed coupon rate and hence the Company is not exposed to interest rate risk.
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, deposits and loans given, investments and balances at bank. The Company measures the expected credit loss of trade receivables based on historical trend, Industry practices and the business environment in which the entity operates. Expected Credit Loss is based on actual credit loss experienced and past trends based on the historical data.
ii) Capital Management
For the purpose of the Company' s capital management, capital includes issued capital and all other equity reserves. The Company manages its capital structure to ensure that it will be able to continue as a going concern while maximising the return to the stakeholders.
The following table shows the Levels within the hierarchy of financial assets and liabilities measured at fair value on a recurring basis: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or Indirectly. Level 3: unobservable inputs for the asset or liability
Note 5 Micro, Small and Medium Enterprises
The Company has not received the required information from Suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006. Hence, disclosures, if any, relating to amounts unpaid as at the year end together with interest paid / payable as required under the said Act are NiL as given below. This information has been relied upon by the auditor.
Note 6 Operating Leases
a At the reporting date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
b The total of future minimum sublease payment expected to be received under non - cancellable subleases at the end of reporting period is NIL
c Lease payment s recognised as an expense in the period in which it is incurred.
Note 7 Transition to Indian Accounting Standard
FIRST TIME ADOPTION OF IND AS
For all periods upto and including the year ended 31 March 2017, the Company had prepared its financial statements in accordance with the Accounting Standards notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the companies (Accounts) Rules, 2014 (Previous GAAP). This note explains the principal adjustments made by the Company in restating its financial statements prepared under Previous GAAP
Exemptions and exceptions availed
in preparing these Ind AS Financial Statements, the Company has availed certain exemptions and exceptions in accordance with Ind AS 101 First-time Adoption of Indian Accounting Standards, as explained below. The resulting difference between the carrying values of the assets and liabilities in the Financial Statements as at the transition date under Ind AS and iGAAP have been recognised directly in equity (retained earnings or another appropriate category of equity). This Note explains the adjustments made by the Company in restating its iGAAP Financial Statements, including the Balance Sheet as at April 01, 2016 and the Financial Statements as at and for the year ended March 31, 2017.
a) Ind AS optional exemptions:
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from IGAAP to Ind AS.
i) Deemed cost
Para D7 AA of Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the Financial Statements as at the date of transition to Ind AS, measured under iGAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities.
The company has exercised this option of adopting deemed cost.
ii) Designation of previously recognised financial instruments
Ind AS 101 allows an entity to designate investments in equity instruments at Fair Value through Other Comprehensive income on the basis of the facts and circumstances at the date of transition to Ind AS. The Company has elected to apply this exemption for its investment in equity investments.
iii) Investments in equity instruments:
An entity may make an irrevocable election at initial recognition of a financial asset to present subsequent changes in the fair value of an investment in an equity instrument in other comprehensive income. Ind AS 101 allows such designation of previously recognized financial assets, as ‘Fair value through Other Comprehensive income'.
The Company has accordingly designated certain equity instruments as at 1st April 2016 as fair value through other comprehensive income.
b) Ind AS Mandatory exceptions:
I. Estimates
An entity's estimates in accordance with Ind AS at the date of transition 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.
II. Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
III. De-recognition of financial assets and liabilities
Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. Accordingly, the Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.
First-time Ind AS adoption reconciliations
(i) Effect of Ind AS adoption on the balance sheet as at 31st March, 2017 and 1st April 2016
Notes to first time adoption of Ind AS:
(i) Deferred Tax
The previous GAAP required deferred tax accounting using the which focused on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using 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. various transitional adjustments has resulted in recognition of temporary differences.
(ii) Expected credit loss
Under Indian GAAP allowances of doubtful debt was provided as per management estimate whereas under Ind AS allowances are based on expected credit loss model as per Ind - AS 109 - Financial instruments.
(iii) Other comprehensive income (OCI)
Ind-AS requires preparation of Statement of Other Comprehensive income in addition to Statement of profit and loss. Re-Measurement gain/loss on defined benefit plans earlier accounted for in statement of profit and loss under Indian GAAP has been reclassified to OCi as required by Ind-AS 19 - Employee Benefits.
(iv) Investments
Under the Ind AS, investments are measured at fair value as at reporting date whereas, under the Indian GAAP current investments was valued at lower of cost or market value and non-current investments was valued at cost except for any permanent diminution in value of long term investments was to be provided for.
(v) Security Deposit
Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly the Company has fair valued these security deposits under Ind AS and the difference between the fair value and the transaction value of the security deposit has been recognised as prepaid rent.
Retained earnings
Retained earnings as at 1st April 2016 have been adjusted consequent to the above Ind AS transition adjustments.
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