1. CORPORATE INFORMATION
Gini Silk Mills Limited is a Public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange Limited, Mumbai. The Company is engaged in the manufacturing and selling of Shirting and Suiting with reputed brand name "GINI" and processing fabric on jobwork basis.
Estimation of fair value :
The fair valuation is based on current price in active market for similar properties. The main inputs used are quantum, area, location, demand, restrictive entry to the complex, age of building and trend of fair market in respective area.
Ind AS 101 Exemption : The Company has availed the exemption available under Ind AS 101, whereas the carrying value of property plant and equipment has been carried forward at the amount as determined under the previous GAAP netting off Ind AS adjustments such as government grants. Considering the FAQ issued by the ICAI, regarding application of deemed cost, the company has disclosed the cost as at 1st April, 2016 net off accumalated depreciation.
Aggregated amount of unquoted investments as at March 31, 2018 Rs. 9.11 Lakh (P.Y. Rs.9.11 Lakh)
Aggregated amount of quoted investments as at March 31, 2018 Rs. 495.24 Lakh, Market value Rs. 495.24 Lakh (P.Y. Rs. 42.57 Lakh Market value Rs. 42.57 Lakh)
# Held as lien by bank against Bank Gurantee amounting to Rs. 35,00,000/- to the Maharashtra Pollution Control Board for compliance for consent conditions/ direction for providing adequate and satisfactory pollution control device.
# In respect of Demand raised by Central Excise department under Rule 8 of Central Excise Valuation Rule, 2000 for Deemed Credit (15% Profit),Order has been passed in our favour by the Tribunal under section 35(1) of the central Excise Act, 1944, Section 129(B) of the Customs Act, 1962 and Finance Act, 1994.Order no.A/86296/17/EB Dated 10.03.2017 and Order No. A/89829-89831/17/SMB
iv) Rights, Preference and Restrictions attached to Equity Shares
The Company has only one class of equity shares referred to as equity shares of Rs. 10/- each. Each holder of equity shares is entitiled to the same rights in all respects.
Nature of Security, Terms of Repayment and Interest rate
The Term loan from Kotak Mahindra Bank (in P.Y. Outstanding term loan of State Bank of India taken over by Kotak Mahindra Bank Ltd as on 15.03.2017) are primary secured by entire Plant and Machinery at Tarapur plant acquired out of this loan and entire stock of trading goods. The Company has provided collateral security of equitable mortgage of leasehold Factory land & Building at Tarapur. The Director Mr. Vishwanath S. Haralalka and Mr. Deepak V. Harlalka has provided personal guarantee for the said loan. The rates of interest for these loans vary between 9% to 10%, with a repayment period of 4-5 yea' Rate of interest vary based on the credit risk assessment of the company. (Rate of Interest is without considering interest subsidy available under State and Central Government Scheme.)
(There are no dues to Micro & Small Enterprises as on 31st March 2018. This information as required to be disclosed under the Micro, Small & Medium Enterprise Development Act,2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.)
NOTE 2 - RELATED PARTY DISCLOSURES :
As per Ind AS 24, the disclosures of transactions with the related parties as defined in the Accounting Standard are given below. List of related parties where control exists and related parties with whom transactions have taken place and relationships :
(a) Key Management Personnel (KMP)
Vishwanath Harlalka
Deepak Harlalka Anjali Harlalka
(b) Partnership Firm Shree Enterprises Gini Construction Co.
Gini Citicorp Reality LLP
(c ) Other Related Parties ( Enterprises in which KMP having significant influence)
Gini Tex Private Limited Gini Constructions Pvt Ltd Shreem Reality Private Limited
Notes:
i) Parties identified by the Management and relied upon by the Auditors.
ii) No amount in respect of the related parties have been written off/back or are provided for during the year
NOTE 3 - The Company is engaged only in Textile business and there are no separate reportable segments as per Ind AS 108.
NOTE 4 - Operating Lease
a) Premises Taken on Operating Lease:
The company has significant operating lease for premises. These lease arrangements range for a period of 5 years.
The leases are renewable for a further period on mutually agreeable terms
NOTE 5 - PROVISION FOR EMPLOYEE BENEFIT OBLIGATION
The Company contributes to the following post-employment plans in India.
Defined Contribution Plans:
The Company pays Provident Fund Contributions to publicly administered Provident Funds as per local regulations and are recognised as expense in the Statement of Profit and Loss during the period in which the employee renders the related service. There are no further obligations other than the contributions payable to the appropriate authorities.
The Company recognised 23.48 Lakhs for the year ended March 31, 2018 (March 31, 2017 Rs. 16.67 lakhs) towards Provident Fund Contribution.
Defined Benefit Plan:
The employees' gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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. The obligation for leave encashment is recognized in the same manner as gratuity.
The rate of escalation in salary considered in actuarial calculation is estimated taking into account inflation, seniority, promotion and other relevant factors.
iii. Sensitivity Analysis
The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the method (Projected Unit Credit Method) used to calculate the liability recognised in the balance sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change as compared with the previous period
6) FAIR VALUE MEASUREMENT
The fair values of financial Assets and Liabilities are included at the amount at which the instrument 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 values:
1) Fair value of Cash and Short Term Deposits, Trade and other Short Term Receivables, Trade Payables, Other Current Liabilities, Short Term Loans from Banks and other Financial Institutions approximate their carrying amounts largely due to short term maturities of these instruments.
2) 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 counter party. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments is not materially different from their carrying amounts.
The Company uses the following hierarchy for determining and disclosing the fair value of financial instrument by valuation technique:
Level 1: Quoted (unadjusted) price in active markets for identical Assets or Liabilities
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
ii) Financial instrument measured at amortised cost
The carrying amount of financial assets and liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be recieved or settled.
Note 7 Financial instruments - Fair values
A Financial Risk Management objectives and policies
In the course of business, the Company is exposed to certain financial risk that could have considerable influence on the Company's business and its performance. These include market risk ( including currency risk, interest risk and other price risk), credit risk and liquidity risk. The Board of Directors review and approves risk management structure and policies for managing risks and monitors suitable mitigating actions taken by the management to minimise potential adverse effects and achieve greater predictability to earnings.
In line with the overall risk management framework and policies, the treasury function provides service to the business, monitors and manages through an analysis of the exposures by degree and magnitude of risks. It is the Company's policy that no trading in derivatives for speculative purposes may be undertaken. The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company's policies as approved by the board of directors.
B 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 risks: interest rate risk, currency risk and other price risk. Financial instruments affected by market risk includes borrowings, investments, trade payables, trade receivables and loans.
1) 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. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's total debt obligations with floating interest rates.
Interest rate sensitiviy
The following table demonstrates the sensitiviy to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company's profit before tax is affected through the impact on floating rate borrowings, as follows :
2) Foreign Currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. At the reporting date, company does not have any foreign currency exposure.
3) Equity Price Risk
Equity price risk is related to the change in market reference price of the investments in quoted equity securities. The fair value of some of the Company's investments exposes the company to equity price risks. At the reporting date, the companies equity shares are carried at fair value.
C Credit Risk
Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on customer profiling, credit worthiness and market intelligence. Trade receivables consist of a large number of customers, spread across geographical areas. Outstanding customer receivables are regularly monitored.
The average credit period is 30 days. The Company's Trade receivables consist of a large number of customers, across geographies hence the Company is not exposed to concentration risk.
D Liquidity Risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company has obtained term loan from banks and working capital loans from directors.
8 Section 135 of Companies Act,2017 on Corporate Social Responsibility is not applicable to the company for F.Y 2017-18.
9 Balances of Trade Receivables, Loans and advances and Trade Payables, Advances from Customers and to Suppliers have been taken as per books awaiting respective confirmation.
10 Income Tax assessment is completed up to the Assessment Year 2015- 2016
11 The Company is in process of appointing the Company Secretary and Chief Financial Officer, however during the year under audit the company unable to appoint the same.
12 Previous year's figures have been regrouped/ reclassified wherever necessary to correspond with the current year's classification/ disclosure.
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