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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 526217ISIN: INE120D01012INDUSTRY: Packaging & Containers

BSE   ` 197.75   Open: 192.15   Today's Range 192.15
203.50
+1.05 (+ 0.53 %) Prev Close: 196.70 52 Week Range 153.85
308.85
Year End :2018-03 

1. CORPORATE INFORMATION

Hitech Corporation Limited (formerly known as Hitech Plast Limited) (the Company) is engaged in manufacturing of rigid plastic containers specially catering to customers relating to Paints, Lube and Pharmacy product as well as export market. The Company is a public limited Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India, namely the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). The Company's registered office is at 201, Welspun House, 2nd floor, Kamala City, Lower Parel (W), Mumbai- 400 013.

2. BASIS OF PREPARATION, MEASUREMENT, KEY ACCOUNTING ESTIMATES AND JUDGEMENTS

2.1. Basis of preparation

The financial statements of the Company are prepared in accordance with Indian Accounting Standards (‘Ind AS') as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (‘Act') read with the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) Rules, 2016 and other relevant provisions of the Act.

The financial statements up to year ended March 31, 2017 were prepared in accordance with the accounting standards notified under the Companies (Accounting Standard) Rules 2006 and other relevant provisions of the Act, considered as the “Previous GAAP”.

These financial statements are the Company's first Ind AS financial statements and are covered by Ind AS 101, First-time adoption of Indian Accounting Standards. An explanation of how the transition to Ind AS has affected the Company's equity financial position, financial performance and its cash flows is provided in Note 45.

Current versus non-current classification

All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time taken between acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle as twelve months for the purpose of the classification of assets and liabilities into current and non-current.

2.2. Basis of Measurement

These financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value or revalued amount:

- Certain financial assets and liabilities (including derivative instruments) measured at fair value (refer accounting policy regarding financial instruments),

- Defined benefit plans - plan assets measured at fair value.

The accounting policies have been applied consistently over all the periods presented in these financial statements.

Key estimates and assumptions

In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.

Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

The areas involving critical estimates or judgements are:

i. Determination of the estimated useful lives of tangible assets and the assessment as to which components of the cost may be capitalized; (Note 3.1)

ii. Determination of the estimated useful lives of intangible assets (Note 3.2)

iii. Recognition and measurement of defined benefit obligations, key actuarial assumptions; (Note 39)

iv. Recognition and measurement of provisions and contingencies, key assumptions about the likelihood and magnitude of an outflow of resources; (Note 16)

v. Fair value of financial instruments (Note 30A)

vi. Significant judgements are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions

2.3. Measurement of Fair Value

The Company's accounting policies and disclosures require financial instruments to be measured at fair values.

The Company has an established control framework with respect to the measurement of fair values. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

The Company is eligible for Industrial Promotion Subsidy under the Package Scheme of Incentive (PSI) 2007. Accordingly, in terms of the Indian Accounting Standard (Ind AS 20) “Accounting for Government Grants and Dislosure of Government Assistance”, the Company is eligible for an incentive of Rs. 61.91 Lakhs for the year ended March 31, 2018 (Previous Year : Rs.63.10 Lakhs) and the same is credited in the Statement of Profit and Loss under the head “Other operating income” on accrual basis. The movement in the amount receivable is as as under:

Inventory hypothecated against secured borrowings (Refer Note 42)

The cost of inventories recognised as an expense during the year is disclosed in Note 24 & 25

The cost of inventories recognised as an expense includes Rs.134.98 lakhs (Previous year Rs.321.75 lakhs) in respect of write down of inventory to net realisable value. The reversal of such write down during the current year amounted to Rs.NIL.(Previous year Rs.NIL)

The carrying amounts of the trade receivables include receivables which are subject to invoice discounting facility as stated above. Under this facility, the Company has transferred the relevant receivables to the banks in exchange for cash and is prevented from selling or pledging the receivables. However, the Company has retained late payment and credit risk and therefore continues to recognise the transferred assets in their entirity in its Balance Sheet. The amount repayable under the invoice discounting facility is presented under unsecured borrowings.

Trade receivables hypothecated against secured borrowings (Refer Note 42)

Movement in Allowance for doubtful receivables

b. Terms/rights attached to equity shares

The Company has only one class of Equity Shares referred to as Equity Shares having a par value of Rs.10/- per share. Each holder of Equity Shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. Payment of dividend is also made in foreign currency to shareholders outside India. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

As per the Companies Act, 2013, the holders of Equity Shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts in the event of liquidation of the Company. The distribution will be in proportion to the number of Equity Shares held by the shareholders.

# As per the records of the Company, including its register of members.

d. Information regarding aggregate number of shares during the immediately preceeding five years

The Company has not issued any bonus shares or shares for consideration other than cash and has not bought back any shares during the past five years.

The Company has not allotted any shares pursuant to contract without payment being received in cash.

e. There are no calls unpaid on equity shares

f. No equity shares have been forfeited

During the financial year 2017-18 the Company redeemed 46,41,624 9% Non-Convertible Redeemable Cumulative Preference shares of Rs.10 each (by redeeming 15 Preference shares out of every 100 Preference shares held by the shareholders) aggregating to Rs.464.16 lakhs out of the accumulated profit available for dividend as per the provisions of Section 55 of the Companies Act, 2013. The Capital Redemption Reserve to the extent of the redemption of preference share capital has been created accordingly.

Description of nature and purpose of each reserve

1 Securities Premium

The amount received in excess of face value of equity shares is recognised in Securities Premium Reserve.The reserve is utilised in accordance with the provisions of the Companies Act, 2013

2. General Reserve

The Company has transferred a portion of net profit of the Company before declaring dividend to general reserves pursuant to the earlier provisions of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.

3. Capital Redemption Reserve

This reserve was created for redemption of preference shares in accordance with the provisions of the Companies Act, 2013.

4. Retained Earnings

This Reserve represents the cumulative profits of the Company and effects of remeasurement of defined benefit obligations. This Reserve can be utilised in accordance with the provisions of the Companies Act, 2013.

i) Term Loans:

a) Foreign Currency Loan

External Commercial Borrowings (ECB) loan from Standard Chartered bank carries interest @ LIBOR plus 350 basis points. The loan is secured by exclusive first charge on all the movable / immovable fixed assets, present & future (Land, Building, Plant & Machinery) located at the Khandala Plant. The principal repayment and coupon are both hedged for the entire period of loan. The loan is fully repaid as at March 31, 2018.

b) Rupee Term Loan from Bank balance outstanding Rs.4000 lakhs (March 31, 2017 Rs.1500 lakhs)

Term loan from HDFC Bank is repayable over a period of five years including a moratorium of one year commencing from the date of draw down. The loan has been fully availed and is repayable in 16 quarterly installments based on draw downs. The loan carries interest based on One year Marginal Cost of Lending Rate (MCLR) plus NIL Spread (adjustable annually).The present effective rate of interest is 8.15% p.a. The loan is secured by exclusive first charge on Plant & Machinery at Rohtak unit and charge on immovable fixed assets comprising of Land and Building at Rohtak.

c) Rupee Term Loan from Bank balance outstanding Rs.2300 lakhs (March 31, 2017 Nil)

Term loan from Kotak Bank is repayable over a period of six years including a moratorium of two years commencing from the date of draw down.The loan is repayable in 16 quarterly installments based on draw down. The loan carries fixed interest @ 8.35% p.a.for the amount drawn upto April 30,2018. The loan is secured by exclusive first charge on present and future movable fixed assets at Mysuru and Mortgage of Land and Building situated at Mysuru Plant. The execution of mortgage is under process.

ii) Deposits

Deposits from Director & Shareholders carry interest @ 9% to 10.50% p.a. and are repayable after 1-3 years from the date of deposit. The deposits are repayable by September 2018.

iii) 9% Non Convertible Redeemable Cumulative Preference Shares of Rs.10/- each

Preference Shares issued under the Scheme of Arrangement approved by the Hon’ble Bombay High Court on terms as under:

The Preference Shares carry preferential (cumulative) right to dividend, at the above said coupon rate, when declared. The Preference Shares do not carry any voting rights except in case of any Resolution placed before the Company which directly affects the rights attached to such shares or otherwise provided in the Companies Act, 2013 (the Act).The Preference Shares have the maximum redemption period of 20 years. However, the same may be redeemed fully or in such tranches, before the aforesaid period, by the express mutual consent of the holders of such Preference Shares and Company as may be allowed under the Act. The Preference Shares will be redeemed at face value out of profits of the Company which would otherwise be available for dividend or out of the proceeds of a fresh issue of capital made for the purposes of the redemption.

During the F.Y .2017-18 the Company has redeemed 46,41,624 preference shares at face value of Rs.10 each.

iv) Other Borrowings

a) Working capital facilities including cash credit from Banks are secured on first charge basis by way of hypothecation of inventories and book debts of specific units and collaterally secured by hypothecation of specific plant and machinery and equitable mortgage on land and building of specific units. The borrowings carries interest @ 8.00% to 11.05 % p.a.(P.Y. 8.20 % to 11.05 % p.a.).

b) The packing credit is granted by bank for purchase of trade mechandise against confirmed orders upto 90% of its value for a maximum tenure of 90 days .The average rate of interest is 8% p.a.

v) Invoice Discounting

Invoice discounting relate to customer sales invoices discounted by banks for a period not exceeding 90 days and carries interest @ 7.85% p.a. to 8.15% p.a (March 17: 8.15% p.a.to 8.90% p.a.)(April 1,2016: 9.50% p.a.)

vi) There is no default in repayment of principal and interest

vii) For carrying amount of assets offered as collateral against the above borrowings (Refer Note 42)

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income in which the relevant entity operates and the period over which deferred income tax assets will be recovered.

The Government of India introduced the Goods and Services Tax (GST) with effect from July 1, 2017. Consequently, revenue from operations thereafter is net of GST. However, revenue till June 30 ,2017 of the current financial year and the previous financial year is inclusive of excise duty amounting to Rs.923.32 lakhs and Rs.3,630.80 lakhs, the sales net of excise duty is Rs.38,548.22 lakhs and Rs.36,505.75.lakhs respectively.

ii) Corporate Social Responsibility expenses

The Company has spent Rs.12.45 lakhs during the financial year (March 31, 2017 Rs.54.99 lakhs) as per the provisions of section 135 of the Companies Act 2013, towards Corporate Social Responsibility (CSR) activities.

a) Gross Amount required to be spent by the Company during the year 2017-18 Rs.31.25 lakhs (March 31, 2017 Rs.55.23 lakhs).

b) Details of amount spent during the year

Note 3A : Financial Risk Management Objectives and Policies

The Company's overall policy with respect to managing risks associated with Financial Instruments is to minimise potential adverse effects of Financial Performance of the Company. The policies of managing specific risks are summarised below:

a Foreign Currency Risk Management

The Company undertakes transactions denominated in foreign currencies; consequently exposures to exchange rate fluctuations arise. Exchange rate fluctuations are managed within approved policy parameters.

The carrying amounts of the Company's foreign currency denominated assets and liabilities as at the end of the reporting periods are as follows:

Foreign Currency Sensitivity Analysis

The company is mainly exposed to changes in USD. The below table demonstrates the sensitivity to a 10 % increase or decrease in the USD against INR with all other variants held constant. The sensitivity analysis is prepared under net un-hedged exposure of the company as at the reporting date.

b Credit Risk Management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The credit risk arising from Trade Receivables is managed in accordance to the Company's established policy and control relating to customer credit risk management. The credit quality of the customer is assessed based on the credit worthiness and past experience. The expected credit is based on the ageing of the days of receivables.

c Interest Rate Risk Management

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 Management is responsible for monitoring of the Company's interest rate position. Various variables are considered by management in structuring the company's borrowing to achieve a reasonable competitive cost of funding.

Since the company has insignificant variable interest bearing borrowings the exposure to the risk of change in the market interest rates is minimal.

Exposure to interest rate risk

The interest rate profile of the company's interest bearing financial instruments as reported to the management of the company is as follows

Fair Value Sensitivity Analysis for fixed rate instruments

The company does not account for any fixed rate financial assets and liabilities at fair value to profit or loss. Therefore, a change in interest rates at the reporting date would not affect Profit or Loss.

Cash flow sensitivity Analysis for variable rate instruments

A reasonable possible change of 100 BPS in interest rates would result in variation in interest expenses for the company by the amounts indicated in the table below. This calculation also assumes that the changes occur at the Balance Sheet date and has been calculated based on its exposure outstanding as at that date. The year end balances are not necessarily representative of the average debt outstanding during the period

d Liquidity Rate Risk Management

Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. The company's exposure to liquidity risk arises primarily from mis-matches of the maturities of financial assets and liabilities. The company manages the liquidity risk by maintaining adequate funds in cash and cash equivalents. The company also has adequate credit facilities arranged with banks to ensure there is sufficient cash to meet all its normal operating commitments on a timely and cost effective manner. The following are the remaining contractual maturities of financial liabilities at the reporting dates

Note 3B : Capital Management

For the purpose of the Company's capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value. As at March 31,2018 the Company had equity shares and prefence shares. Inorder to maintain and achieve optimal capital stucture the Company redeploys the earnings into the business based on its long term financial plans

Proposed Dividend

The Board of Directors at its meeting held on 14th May, 2018 have recommended payment of dividend of Rs.0.90 (Paise Ninety only) per Equity Share of Rs.each for the financial year ended March 31, 2018. The same amounts to Rs.186.05 lakhs including corporate dividend tax of Rs.31.47 lakhs. The above is subject to the approval by the shareholders at the ensuing Annual General Meeting of the company and hence is not recognised as a liability.

The Company has recognition for its In-house R & D unit situated at 28/9, D-2 Block, MIDC, Chinchwad, Pune (Unit- Technology Centre) upto March 31, 2020, issued by Government of India, Ministry of Science and Technology, Department of Scientific and Industrial Research, New Delhi. During the year the Company has incurred following expenditure on Research and Development :

Note 4 : Change in accounting policy for Inventories

In the current financial year, the Company has voluntarily changed its accounting policy on valuation of inventory of raw material from weighted average cost to First in First Out (FIFO) cost method as the Management is of the opinion that FIFO is more reflective of the consumption pattern of the Company.

As required by IND AS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors' the said change in accounting policy has been applied retrospectively and the figures of the previous period have been restated to that extent.

The profits for the year ended March 31, 2018 and March 31, 2017 are higher by Rs.76.93 lakhs and by Rs.39.21 lakhs respectively. Accordingly the EPS for the year ended March 31, 2018 and March 31, 2017 is higher by Rs.0.29 and Rs.0.15 respectively.

Note 5 : Insurance claim

The manufacturing operations of Company's plant at Rohtak (Haryana) were disrupted in February 2016 owing to fire which resulted in extensive damage to properties. Thereafter the Company rebuilt the factory building and plant and resumed operations in March 2017. The production and the level of operations has since increased gradually during the current financial year and reached normalcy.

The Company had lodged a property damage claim on reinstatement basis, against which an on account payment of Rs.1,905.71 lakhs was received from the insurance company in 2016-17. Final settlement of the Company's claim towards the property damage is under assessment with the Insurance Company.

During the current year the Company has received a sum of Rs.567.32 lakhs towards the business interruption claim i.e. Loss of profit and standing charges during the indemnity period and the same has been duly reflected in the financials under the head “Other Income”.

The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading or speculative purposes. During the year, Company has not entered into any forward exchange contract.

Note 6 : Disclosure pursuant to Indian Accounting Standard (IndAS - 17) Leases Assets given on operating lease

The Company does not have any asset given on operating lease during the reporting period.

Assets taken on operating lease

a. The Company has taken certain assets such as cars and premises on an operating lease basis, the lease rentals are payable by the Company on monthly basis.

b. Future minimum lease rentals payable as at March 31, 2018 as per the lease agreements:

Note 7 : Employee benefits

(1) Post employment benefits:

a Defined Contribution plan

Provident Fund and Employee State Insurance Scheme

Defined contribution plans are Provident Fund Scheme and Employee State Insurance Scheme. The Company contributes to the Government administered provident funds on behalf of its employees.

b Defined Benefit plan

Gratuity scheme

The Company operates a defined benefit gratuity plan for employees. The liability for the Defined Benefit Plan is provided on the basis of a valuation, using the Projected Unit Credit Method, as at the Balance Sheet date, carried out by an independent actuary. The Company has a gratuity trust. However, the Company funds its gratuity payouts to the trust from its cash flows. Accordingly, the Company creates adequate provision in its books every year based on actuarial valuation. These benefit plans expose the Company to actuarial risks, such as longevity risk, interest rate risk and investment risk.

c Amounts Recognised as Expense

i Defined Contribution Plan

Employer's Contribution to Provident Fund including contribution to Family Pension Fund amounting to Rs.129.30 lakhs (previous year Rs.119.81 lakhs) has been included under Contribution to Provident and Other Funds in Note 26 ‘Employee Benefit Expenses'.

ii Defined Benefit Plan

Gratuity cost amounting to Rs.43.48 Lakhs (previous year Rs.33.29 lakhs) has been included in Note 26 ‘Employee Benefit Expenses'.

(2) Long Term Employee Benefits:

The liability towards compensated absences (annual leave) as at March 31, 2018, based on actuarial valuation carried out by using the Projected Unit Credit Method amounting to Rs.95.09 lakhs (March 31, 2017 : Rs.47.38 lakhs ) has been recognised in the Statement of Profit and Loss.

Effective April 1, 2017 the Company adopted the amendment to Ind AS 7, which requires the Company to provide disclosure that will enable users of financial statements to evaluate changes in liabilities from financing activities, including changes arising from cash flow and non cash changes. In order to meet this disclosure requirement, the reconciliation between the opening and closing balances for liabilities arising from financing activities in the Balance Sheet, is as stated below:

The Company's Chief Operating Decision Maker, examines the Company's performance on an entity level. The Company has only one reportable segment i.e.' Plastic Containers'.

The Company's revenue from external customer attributed to country other than India are not material.

Revenue aggregating to Rs.27,074.74 lakhs (March 31, 2017 Rs.27,904.90 lakhs) are derived from two external customers.

Note 8 : First Time Adoption of IndAS

As stated in Note 2, the Company's financial statements for the year ended March 31, 2018 are the first annual financial statements prepared in compliance with Ind AS. The adoption of Ind AS was carried out in accordance with Ind AS 101, using April 1, 2016 as the transition date. Ind AS 101 requires that all Ind AS standards that are effective for the first Ind AS financial statements for the year ended March 31, 2018, be applied consistently and retrospectively for all fiscal years presented.

All applicable Ind AS have been applied consistently and retrospectively wherever required. The resulting difference between the carrying amounts of the assets and liabilities in the financial statements under both Ind AS and Previous GAAP as of the transition date have been recognized directly in equity at the transition date.

In preparing these financial statements, the Company has availed itself of certain exemptions and exceptions in accordance with Ind AS 101 as explained below:

a) Optional Exemptions from retrospective application availed:

(i) Business combination exemption: The Company has applied the exemption as provided in Ind AS 101 on non- application of Ind AS 103, “Business Combinations” to business combinations consummated prior to the date of transition (April 1, 2016).

(ii) Property, plant and equipment exemption: The Company has elected to apply the exemption available under Ind AS 101 to continue 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 as per the previous GAAP and use that as its deemed cost as at the date of transition (April 1, 2016).

b) Mandatory exceptions from retrospective application:

(i) Estimates: On assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under Previous GAAP are made by the Company for the relevant reporting dates reflecting conditions existing as at that date.

(ii) Classification and measurement of financial assets: The Company has classified and measured the financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

(iiii) Derecognition of financial assets and financial liabilities: The Company has opted to apply the exemption available under Ind AS 101 to apply the derecognition criteria of Ind AS 109 prospectively for the transactions occurring on or after the date of transition to Ind AS.

c) Transition to Ind AS Reconciliations:

The following reconciliations provide the explanations and quantifications of the differences arising from the transition from previous GAAP to Ind AS in accordance with Ind AS 101:

I. Reconciliation of Total Equity as at March 31, 2017 and April 1, 2016

II. Reconciliation of Total Comprehensive income for the year ended March 31, 2017

III. Adjustments to Statement of Cash Flows for the year ended March 31, 2017

Notes to the reconciliation:

a Non Convertible Redeemable Cumulative Preference Shares re-classified as Financial Liabilities

Under IndAS 109 ‘Financial Instruments' Non Convertible Redeemable Cumulative Preference Shares have been classified as Financial Liabilities and disclosed under Borrowings, since the distribution of dividend is at the discretion of the issuer but a contractual obligation. Accordingly the liablity for dividend and dividend distribution tax thereon is treated as Finance Cost.

b Proposed Equity Dividend

In the financial statements prepared under Indian GAAP, dividend on equity shares recommended by the Board of Directors after the end of reporting period but before the financial statements were approved for issue, was recognised as a liability in the financial statements in the reporting period relating to which dividend was proposed. Under Ind AS, such dividend is recognised in the reporting period in which the same is approved by the members in a general meeting.

c Change in valuation of stock from weighted average to FIFO basis

As per IND AS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors' when an entity changes its accounting policy voluntarily the said change is applied retrospectively to that extent. During the current financial year, the Company has voluntarily changed its accounting policy on valuation of inventories from weighted average cost to First in First out (FIFO) basis as the management is of the opinion that FIFO method is more reflective of the consumption pattern of the Company and accordingly figures for the previous years have been restated.

d Mark to Market Loss on Derivatives

The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading or speculative purposes. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently Marked to Market at the end of each reporting period. Exchange differences on such contracts are recognised in the Statement of Profit or Loss in the period in which exchange rate changes.

e Re-measurement cost of net defined benefit liability (net of tax)

In the financial statements prepared under Previous GAAP, remeasurement benefit of defined plans (gratuity), arising primarily due to change in actuarial assumptions was recognised as employee benefits expense in the Statement of Profit and Loss. Under Ind AS, such remeasurement benefits relating to defined benefit plans is recognised in OCI as per the requirements of Ind AS 19 Employee benefits. Consequently, the related tax effect of the same has also been recognised in Other Comprehensive Income.

Under previous GAAP, the interest cost on defined benefit liability was recognised as employee benefit expenses in the Statement of Profit and Loss. Under Ind AS the Company has recognised the net interest cost on defined benefit plans as finance cost.

f Invoice Discounting

Under the previous GAAP, on discounting of bills receivables, such receivables were derecognised and shown as contingent liability. Under Ind AS, as such bill discounting arrangement does not comply the derecognition criteria stated in Ind AS 109 Financial Instruments, such receivables are not derecognised and liability in the form of bill discounted has been recognised as borrowings.

g Cash credits from banks

Under Ind AS, cash credits from banks repayable on demand, which form an integral part of the cash management process are included in cash and cash equivalents for the purpose of presentation of statement of cash flows. Under previous GAAP, such cash credits were considered as part of borrowings and movements in cash credits were shown as part of financing activities.

Note 9 : Approval of financial statements

The financial statements are approved for issue by the Board of Directors in their meeting dated May 14, 2018.

Note 10 : Other Notes

The financial statements of the Company for the year ended March 31, 2017 were audited by another firm of Chartered Accountants vide their unqualified opinion dated May 9, 2017 and have been relied upon in respect of the Indian GAAP figures for the previous year by the auditors. Previous year's figures have been regrouped / reclassified where necessary to confirm with financial statements prepared under Ind AS.