1. COMPANY OVERVIEW
Jiya Eco-Products Limited is a company incorporated on 27th December 2011 with the basic object of manufacturing Bio- Fuel from agricultural waste having registered office at Survey Number 202-2, Navagam, Vallabhipur, Bhavnagar-364313.
2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
Basis of preparation of financial statement:
The financial statements of company have been prepared in accordance with Indian Accounting Standards (“IND AS”) notified under the Companies (Indian Accounting Standards) Rules, 2015.
For all periods up to and including the year ended March31, 2017, the company prepared its financial statements in accordance with Accounting standards notified under Section 133 of the Companies Act, 2013(“The Act”) read together with paragraph 7 of the Companies (Accounts) Rules, 2014(“Indian GAAP”).These financial Statements for the year ended March31, 2018 are the first the company has prepared in accordance with IND AS .Refer Note 30 for first time adoption of INDAS.
The Financial Statements have been prepared on the historical cost convention basis except for certain financial assets and liabilities which have been measured at fair value. Refer accounting policy regarding financial instruments (financial assets and financial liabilities).
The financial statements were authorised for issue in accordance with a resolution of the Board of Directors at its meeting held on May 30, 2018.
3 Significant accounting estimates and assumptions:
The preparation of the company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosures of contingent liabilities. Uncertainty about these assumption and estimates could result in outcomes that require a material adjustments to the carrying amount of assets or liabilities affected in future periods.
Estimates and assumptions:
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are describes below. The Company based its assumptions and estimates on parameters available when the Financial Statements were prepared. Existing circumstances and assumptions about future developments, however may change due to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.
a) Defined benefit plans(gratuity benefits):
The cost of the defined benefits gratuity plan and the present value of the gratuity obligation are determined using actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rates, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rates for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
The mortality rate is based on publically available mortality tables for India. These mortality tables tend to change only at intervals in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for India.
Future details about gratuity obligations are given in note- 29.
b) Fair value measurement for financial instruments.
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer note-3.4 for further disclosures.
4.1. Entire inventory has been hypothecated as security against certain bank borrowings of the Company as at March 31, 2018, March 31, 2017 and April 1,2016, respectively. For more details of lien/charge against inventories refer note no. 14
5.1. For lien/charge against trade receivables refer Note 14
5.2. No trade receivables are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade receivables are due from firms or private companies respectively in which any director is a partner, a director or a member.
6.1 Rights, preferences and restrictions attached to shares
The Company has one class of equity shares having a par value of Rs.10 per share. Each holder of equity is entitled to one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend, which is paid as and when declared by the Board of Directors. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
Note 7.1
7.1.1. Industrial plot at Survey No.202/P-2/P-1, Navagam, Taluka Valbhipur, Bhavnagar
7.1.2. Industrial plot at Survey No.202/P-2/P-2, Navagam, Valbhipur, Bhavnagar, admeasuring 12535 Sqmtrs
7.1.3. Industrial plot at Survey No.202/P-2/P-1, Navagam,Valbhipur, Bhavnagar admeasuring 26191 Sqmtrs
7.1.4. Flat No: 201, 307 Residency, Near Nirma University, Tragad, Ahmedabad
7.1.5. FF11- First Floor,Rururaj Complex,Manekwedi, Bhavnagar-364001
7.1.6. Commercial Office at Royal Platinum, Survey No 40, Palanpur Surat.
7.2. Personal Guarantee:
7.2.1 . Mr. Bhavesh J Kakadiya
7.2.2 . Mr. Harshad M Monpara
7.2.3 .Mr. Yogesh Patel
7.2.4 .Mr. Babubhai Kakadiya
The company does not have suppliers who are registered as micro or small enterprise under the Micro,Small and Medium Enterprises Development Act,2006 as at March 31,2018.The information regarding Micro or small enterprises has been determined on the basis of information available with the management, which has been relied up on by the auditors.
8. FIRST TIME ADOPTION OF IND AS
Transition to Ind AS
These are the Company’s first financial statements prepared in accordance with Ind AS.
The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 31 March 2018,the comparative information presented in these financial statements for the year ended 31March 2017 and in the preparation of an opening Ind AS balance sheet at 1April 2016 (the Company’s date of transition).In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules,2006(as amended)and other relevant provisions of the Act (previous GAAP or Indian GAAP).An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position and financial performance is set out in the following tables and notes.
Exemption and exceptions availed: Ind AS optional exemptions
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 recognized 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. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets.
Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.
IND AS mandatory exceptions:
An entity’s estimates in accordance with Ind ASs 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 reflectany difference in accounting policies), unless there is objective evidence that those estimates were in error.Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP.
Explanatory Notes to the transaction from previous GAAP to Ind AS:
1. Re-measurement cost of net defined liability:
Both under Indian GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to statement of Profit and Loss. Under Ind AS, re-measurements comprising of actuarial gains and losses, the effect of the asset selling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets are recognized immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through OCI.
2. Other comprehensive income:
Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately.
Hence, it has reconciled Indian GAAP Statement of Profit and loss to Statement of Profit and loss as per Ind AS. Further, Indian GAAP Statement of Profit and loss is reconciled to total comprehensive income as per Ind AS.
3. Deferred tax adjustments:
Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the 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. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognized in co-relation to the underlying transaction either in retained earnings or a separate component of equity.
4. Statement of cash flow:
The transaction from Indian GAAP to Ind AS does not have material impact on the Statement of Cash Flow.
5. Classification of fair value measurement of Financial assets and Financial Liabilities
The company has assessed the classification of fair valuation impact of financial assets and liabilities under Ind AS 32 / Ind AS 109 on the basis of the facts and circumstances at transition date. Impact of fair value changes as on date of transition, is recognised in opening reserves and changes thereafter recognised in Statement of Profit and Loss or Other Comprehensive Income, as the case may be.
Borrowings (part of financial liabilities)- Under Indian GAAP , transaction costs incurred in connection with borrowings are amortised upfront and charged to Statement of Profit and loss. Under Ind AS, transition costs are included in the initial recognition amount of financial liabilities and measured at amortised cost and charged to Statement of Profit and loss using the Effective Interest Rate (EIR) method.
Note No. 9.1 - Financial Risk Management
The company’s Board of Directors has overall responsibility for the establishment and oversight of the company’s risk management framework. The company’s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls and to monitor risks. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the company’s activities.
Note No, 9.1.1 - Credit Risk Management
Credit risk arises from the possibility that counterparty may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends and ageing of accounts receivable. Individual risk limits are set accordingly.
(a) The ageing analysis trade receivables from the date the invoice falls due is given below :
(c) Details of single customer accounted for more than 10% of the accounts receivable as at 31st March 2018, 31st March 2017 and 1st April 2016 :
(d) Details of single customer accounted for more than 10% of revenue for the year ended at 31st March 2018, 31st March 2017 and 1st April 2016 :
Note No. 9.1.2 - 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 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 forecast 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 discounted payments.
Note No. 9.1.3 - Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loan borrowings.
The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, borrowing strategies, and ensuring compliance with market risk limits and policies.
a)
Interest rate risk
Interest rate risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. In order to optimize the company’s position with regards to the 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 it total portfolio.
10. Capital management
For the purposes of the Company’s capital management, capital includes issued capital and all other equity reserves.
The primary objective of the Company’s Capital Management is to maximise shareholder value. The company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirement of the financial covenants.
11. Letters of balance confirmation have been sent to various parties and are subject to confirmation and reconciliation, if any.
12. Previous year’s figures have been regrouped/re-arranged/recasted, wherever necessary, so as to make them comparable with current year’s figures.
13. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated in the balance sheet, if realised in the ordinary course of the business. Provision for depreciation and all known liabilities have been made in accounts, except for litigation against Duke Enterprise Private Limited for demand of Rs.10,00,000/- for which company has tendered a notice under section 406,420 of the Indian Penal Code. The Company is positive about the legal outcome to turn in their favour.
14. In terms of Ind AS 36 - Impairment of Assets issued by ICAI, the management has reviewed its Property, Plant and Equipment and arrived at the conclusion that impairment loss which is difference between the carrying amount and recoverable value of assets, was not material and hence no provision is required to be made.
15. EVENTS OCCURRED AFTER THE BALANCE SHEET DATE:
The company evaluates events and transactions that occur subsequent to the balance sheet date but prior to the approval of the financial statements to determine the necessity for recognition and/or reporting of any of these events and transactions in the financial statements. As of May 30, 2018, there were no subsequent events to be recognized or reported that are not already previously disclosed.
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