1. Corporate information
Amrit Corp. Limited (the Company) is a public limited Company incorporated and domiciled in India and has its Registered office in Ghaziabad, State of Uttar Pradesh, India. The Company has its primary listings on the BSE Limited. The Company is engaged in producing & distributing of Milk Products; development/ sale of Real Estate projects and Services.
2A The earmarked deposit accounts of Rs.90 lakhs- (Previous Rs. 100 lakhs) has been lien against the Punjab National Bank overdraft facility and Rs. 5 lakhs (Previous year nil) against margin money (for FLC) with Punjab National Bank.
3A The ICDs given to others at the interest rate of 13% p.a. payable quaterly. The amount is receivable on or before 12 months from the date of balance sheet.
Note:
4A Vehicle loan(s) are secured by hypthecation of the vehicles purchased out of the said loans. The vehicle loan has been taken for the period of 36 months at the rate varying from 8.50% to 10% on reducing balance.
4B Security Deposits from the Dealers of the Company repayable upon the discontinuation of dealership carrying interest at 7% per annum.
NOTE:
5A - The working capital (cash credit) borrowings are secured by:
(i) Hypothecation of raw materials, stores, finished goods, stock-in-trade (refer note 8), book-debts (refer note 10);
(ii) Ist charge on Current Assets ranking parri-passu with the existing chargeholders;
(iii) Second charge on the fixed assets of the company ranking parri-passu with the existing chargeholders; and
(iv) Personal guarantees of S/Shri N.K. Bajaj, A.K. Bajaj and V.K. Bajaj.
(v) Interest Rate is 1.60% (previous year 1.65%) over Base Rate.
5B - The Loan against pledge of securites from Kotak Mahindra Investments Ltd.,payable upon exercise put/call options quarterly carrying rate of interest varing from 8.00 % to 10.00% p.a. payable monthly.
5C - The Over draft against fixed deposits (or not more than one year term) from Punjab National Bank at the interest rate of 1% more on FD rate placed with bank either payable on demand or on the maturity of fixed deposit, whichever is earlier .
6. The Company continues to have an exposure of Rs. 57.57 Lakhs on account of commodity trade done on National Spot Exchange Ltd. (NSEL). NSEL has not been able to adhere to its payment obligations. The Company has filed criminal complaint in Economic Offences Wing (EOW), Delhi Police through M/s Mount Shikhar Commodities LLP ( formerly known as Mount Shikhar Commodities Pvt. Ltd.), Member - NSEL, which has been transferred to CBI, Mumbai. NSEL and its holding company, Financial Technologies (India) Ltd., name now changed to “63 Moons Technologies Ltd.” have been involved in litigations at various legal and other forums, including Supreme Court of India, Bombay High Court, NCLT, CBI (EOW), SFIO etc. Orders were passed for amalgamation of NSEL with its holding company and restraining the holding company from selling/alienating or creating third party rights against its assets and investments, which have been challenged at higher forums and are pending there. In view of uncertainty of recovery, the Company made provision of Rs. 57.80 Lakhs towards the above due in the financial year 2013-2014. In the course of time, some recoveries have been made which have been adjusted from the provision and the amount outstanding as on 31.03.2018 stands at Rs. 57.57 Lakhs.
7. The auditors have issued letters of confirmation in duplicate to the major parties for trade receivables/payables, debtors, creditors & others for confirming their balances. Balance confirmations have been received from major parties, except some parties whose outstanding are not material and some of whom are in dispute and/or under litigation with the company. The balances of such parties have been incorporated in the financial statements at the value as per the books of account. The company, to the extent stated, has considered them as good and necessary provisions have been made in respect of debtors/advances under litigation and where recovery is considered doubtful.
8. The Company has taken certain commercial premises under cancellable operating lease arrangements. The total aggregate Lease Rentals recognized as expense in the profit & loss account under cancelable operating lease is Rs. 46.10 Lakhs & Rs. 50.87 Lakhs (including indirect taxes) for the year ended 31st March, 2018 & 31st March, 2017 respectively. There is no Lock in period of aforementioned 0perating leases as on 31st March, 2018 therefore the same are considered as cancellable operating leases and the disclosure under non cancellable operating leases as per Ind AS - 17 is not required to be furnished.
9. There are no Small, Micro and Medium Enterprises to whom the Company owes dues which are outstanding for more than 45 days during the year and as on 31st March, 2018.
# Pursuant to Ind AS 109, security deposits are recognized at present value and it is bifurcated between security deposit (refer note 5A) and deferred rent (refer note 7).
C. The transactions with the Related Parties have been entered in the ordinary course of business and are at arm’s length.
10. Segment reporting
(a) Operating Segments
Based on the guiding principles given in Ind-AS-108, the Company’s reportable segments include milk/ milk products (i.e. manufacture and distribution of dairy milk & milk products), real estate & hospitality and services. The Company’s organizational structure and governance process are designed to support effective management of multiple business segments while retaining focus on each of them. The operating segments are reported in a manner consistent with the internal reporting provided to the Corporates Review Committee which is the Chief Operating Decision Maker.
(b) Geographical Information
Since the company’s activities/operations are within the country and considering the nature of products it deals in, the risks and returns are the same and as such, there is only one geographical segment.
(c) Segment Accounting Policies
In addition to significant accounting policies applicable to the business segments, the accounting policies in relation to segment accounting are as under:
(i) Segment revenue and expenses
The revenue and expenses of segments are directly attributable to the segments.
(ii) Segment assets and liabilities
Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets net of allowances and provisions which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets do not include income tax assets and interest bearing assets. Segment liabilities do not include interest bearing liabilities and income-tax liabilities.
B. Revenues from four customers of milk/milk products reporting segment represent approximately Rs. 3,748.12 lakhs (i.e 70.20%) of the company’s total revenues.
11. Employee Benefit Plan
(i) The Company makes contributions to the provident fund and employees state insurance for eligible employees. Under these plans, the Company is required to contribute a specified percentage of payroll costs. The Company has recognized Rs. 55.96 Lakhs (previous year Rs. 49.47 Lakhs) as expenses in the Statement of Profit and Loss during the year towards contribution to these funds.
Out of the total contributions made in provident fund, a sum of Rs. 19.25 Lakhs (previous year Rs. 17.15 Lakhs) is made to “Amrit Corp. Ltd. Employees Provident Fund T rust”. The members of the Provident Fund T rust are entitled to the rate of interest declared by the Central Govt. under the Employees Provident Fund and Miscellaneous Provision Act, 1952. The shortfall, if any, is made good by the Company in the year in which it arises. The T rustees of the PF T rust are responsible for overall governance of the plan and to act in accordance with the provisions of the T rust Deed and the relevant provisions under the laws on the subject. The funds of the Provident Fund Trust have been invested in various securities in accordance with the pattern of investment prescribed by the Govt. of India.
(ii) The Company provides for the gratuity and leave encashment to eligible employees under the Defined Benefit Plans. The Gratuity Plan provides for a lump sum payment to employees upon vesting at retirement, death while in employment or on termination of employment. The gratuity vesting occurs upon completion of five years of service. The gratuity benefits are funded and leave encashment benefits are unfunded in nature.
The liability arising in the Defined Benefit Plans are determined in accordance with the advice of independent professionally qualified Actuary, using the projected unit credit method at the year-end. The Company makes contribution to the Amrit Corp, Ltd. Gratuity Fund Trust, the Trustees of which are responsible for the overall governance of the plan and go act in accordance with the provisions of the Trust Deed and the related laws on the subject.
The T rustees have appointed SBI Life Insurance Company Ltd. for managing the funds of the T rust and making the investment in securities in accordance with the investment pattern prescribed by the Govt. of India.
(iii) The Defined Benefit Plans expose the Company to risk of actuarial deficit, interest rate risk and salary cost inflation risks. The investment risk may arise from volatility in asset values due to market fluctuations and impairment of assets due to credit losses. The interest rate risk may arise as the decrease in yield will increase the fund liability and vice-versa. Increase in salary due to adverse inflationary pressure might also lead to higher liabilities. The Trustees regularly monitor the funding and investments of these plans and risk mitigation system are in place to ensure that the health of the portfolio is regularly reviewed and investments do not pose any significant risk of the impairment.
The following table summarizes the components of net benefit expenses recognized in the statement of Profit & loss and the funded status and the amount recognized in Balance Sheet for Gratuity Fund during 2017-18
The Sensitivity Analysis above has been determined based on reasonably possible change of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. These sensitivities show the hypothetical impact of a change in each of the listed assumptions in isolation. While each of these sensitivities holds all other assumptions constant, in practice such assumptions rarely change in isolation and the asset value changes may offset the impact to some extent.
The following table summarizes the components of net benefit expenses recognized in the statement of Profit & loss and the unfunded status and the amount recognized in Balance Sheet for leave encashment during 2017-18
The Sensitivity Analysis above has been determined based on reasonably possible change of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. These sensitivities show the hypothetical impact of a change in each of the listed assumptions in isolation. While each of these sensitivities holds all other assumptions constant, in practice such assumptions rarely change in isolation and the asset value changes may offset the impact to some extent.
12. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
A. Capital Management
The Company’s capital management objective is to ensure that a sound capital base is maintained to support long term business growth and optimize shareholders value. Capital includes equity share capital and other equity reserves. The Company’s operations are funded primarily through internal accruals. Return to shareholders through dividend is monitored as per the laid down dividend distribution policy.
The Company determines the fair value of its financial instruments on the basis of the following hierarchy:
Level 1: The fair value of financial instruments that are quoted in active markets are determined on the basis of quoted price for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market are determined on the basis of net asset value as per last available audited financial statements.
Level 3: If one or more of the significant inputs is not based on observable market data, the fair value is determined using discounted cash flow method with the most significant inputs being the discount rate that reflects the credit risk of the counter-party.
The fair value of trade receivables, trade payables and other current financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short-term nature.
D. Financial Risk Management objectives
(i) Liquidity risk
Liquidity risk refers to risk that the Company may encounter difficulties in meeting its obligations associated with financial liabilities that are settled in cash or other financial assets. The Company regularly monitors the rolling forecasts to ensure that sufficient liquidity is maintained on an ongoing basis to meet operational needs. The Company manages the liquidity risk by planning the investments in a manner such that the desired quantum of funds could be made available to meet any of the business requirements within a reasonable period of time. In addition, the Company also maintains flexibility in arranging the funds by maintaining committed credit lines with bank(s) to meet the obligations.
(ii) Credit risk
Credit risk refers to risk of financial loss to the Company if a customer or a counter-party fails to meet its contractual obligations. The Company has following categories of financial assets that are subject to credit risk evaluation.
Investments
The Company has made investments in tax free long term bonds, short term bonds, deposit with banks, mutual funds etc. Funds are invested in accordance with the Company’s established Investment policy that includes parameters of safety, liquidity and post tax returns. Company avoids the concentration of credit risk by spreading them over several counterparties with good credit rating profile and sound financial position. The Company’s exposure and credit ratings of its counterparties are monitored on an ongoing basis. Based on historical experience and credit profiles of counterparties, the company does not expect any significant risk of default except as provided in the financial statements.
Trade receivables
Credit risk arising from trade receivables is managed in accordance with the Company’s established policy with regard to credit limits, control and approval procedures. The Company provides for expected credit losses on trade receivables based on a simplified approach as per Ind AS 109. The Company’s historical experience of collecting receivable indicate that credit risk is low, consequently trade receivables are considered to be a single class of financial assets. All overdue customer balances are evaluated taking into account the age of the dues, track record of the counter party etc. Loss allowances and impairment is recognized where considered appropriate by the management.
Other financial assets
Other financial assets include employee loans, security deposits etc. Based on historical experience and credit profiles of counterparties, the Company does not expect any significant risk of default.
The Company’s maximum exposure to credit risk for each of the above categories of financial assets is their carrying values as at the reporting dates.
(iii) Market Risk Interest rate risk
Interest rate risk refers to risk that the fair value of future cash flows of a financial instrument may fluctuate because of changes in market interest rates. The Company is not exposed to any significant interest rate risk as its investments are primarily in fixed debt instruments. Also, there are no significant borrowings as at the balance sheet date.
Price risk
Price risk refers to risk that the fair value of a financial instrument may fluctuate because of the change in the market price. The Company is exposed to the price risk mainly from investment in mutual funds and investment in equity instruments. Investments in mutual funds are made primarily in units of fixed maturity and liquid funds and are not exposed to significant price risk.
Foreign currency risk
Foreign currency risk refers to risk that the fair value of future cash flows of an exposure may fluctuate due to change in the foreign exchange rates. The Company is exposed to foreign currency risk arising out of transactions in foreign currency. Foreign exchange risks are managed in accordance with Company’s established policy for foreign exchange management. The impact of strengthening/weakening of foreign currencies on the outstanding exposure at the year-end is not significant.
13. The previous year’s figures have been regrouped/re-arranged, wherever necessary, to make them comparable with the figures for the current year.
14. FirstTime adoption of Ind AS
(i) 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 March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS balance sheet at April 1, 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 IGAAP”). An explanation of how the transition from IGAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.
(ii) Reconciliations between IGAAP and Ind AS
Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from IGAAP to Ind AS. The presentation requirements under IGAAP differs from Ind AS and hence the IGAAP information has been reclassified for ease of reconciliation with Ind AS. The reclassified IGAAP information is derived based on the audited financial statements of the Company for the year ended April 1, 2016 and March 31, 2017.
(iii) Ind AS 101 mandates certain exceptions and allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions in the financial statements:
a. Ind AS 103 (Business Combinations) has not been applied retrospectively to business combinations that occurred prior to 1 st April, 2016. Use of this exemption means that in the opening Balance Sheet, goodwill and other assets and liabilities acquired in previous business combinations remain at the previous GAAP carrying values.
b. Property, plant and equipment and intangible assets were carried in the Balance Sheet prepared in accordance with previous GAAP on 31st March, 2016. Under Ind AS, the Company has elected to regard such carrying values as deemed cost at the date of transition.
c. Under previous GAAP, investment in subsidiaries and associates were stated at cost and provisions made to recognise the decline, other than temporary. Under Ind AS, the Company has considered their previous GAAP carrying amount as their deemed cost.
(iv) In addition to the above, the principal adjustments made by the Company in restating its previous GAAP financial statements, including the Balance Sheet as at 1 st April, 2016 and the financial statements as at and for the year ended 31st March, 2017 are detailed below:
a. Under previous GAAP, dividend payable on equity shares (including the tax thereon) was recognised as a liability in the period to which it relates. Under Ind AS, dividends (including the tax thereon) to shareholders are recognised when declared by the members in a general meeting.
b. Under previous GAAP, non-current investments were stated at cost. Where applicable, provision was made to recognise a decline, other than temporary, in valuation of such investments. Under Ind AS, equity instruments [other than investment in subsidiaries and associates], mutual funds and alternative investment funds (equity) have been classified as Fair Value through profit or loss (FVTPL).
Investment in PSU bonds (Tax free), non-convertible debentures and alternative investment funds (debt) classified as non-current under previous GAAP and carried at cost as on 31 st March, 2017, through Profit or Loss (FVTPL).
Investment in preference shares and alternative investment funds (real estate) classified as non-current under previous GAAP have been classified at fair value through Other Comprehensive Income (FVTOCI).
c. Under previous GAAP, current investments were stated at lower of cost and fair value. Under Ind AS, these financial assets have been classified as Fair Value through Profit or Loss (FVTPL) on the date of transition and fair value changes after the date of transition has been recognised in profit or loss
d. Under previous GAAP, actuarial gains and losses related to the defined benefit schemes for gratuity and liabilities towards employee leave encashment were recognised in profit or loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of the net defined benefit liability/asset which is recognised in OCI. Consequently, the tax effect of the same has also been recognised in OCI instead of profit or loss.
e. Under the IGAAP, interest free 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 recognized at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognized as deferred expenses.
f. Under the IGAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented under “Other expense” head of the Statement of Profit and Loss as part of expense. This change has resulted in increase in total revenue and total expenses. There is no impact on retained earnings.
g. Under Ind AS deferred tax has been recognized on the adjustments made on transition to Ind AS.
h. Under Ind AS sales related expenses are to be reduced from Revenue from sale of products to record revenue on net basis. There is no impact on retained earnings.
i. Retained earnings as at April 1, 2016 has been adjusted consequent to the above Ind AS transition adjustments.
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