1. CORPORATE INFORMATION
La Tim Metal & Industries Limited is a Public Limited Company registered under the Companies Act, 1956. Registered office of the Company is situated in Mumbai. The Company was incorporated as a Private Limited Company on 28th January, 1975 and on 22nd August,1975, it was converted into a Public Limited Company.
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
a) Basis of preparation
In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2017. The transition from previous GAAP to Ind AS has been accounted for in accordance with the Ind AS 101 “First Time Adoption of Indian Accounting Standards”, with April 1, 2016 being the transition date. In accordance with the Ind AS 101 “First time adoption of Indian Accounting Standard”, the Company has presented a reconciliation [from the presentation of financial statements under accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (“Previous GAAP”) to Ind AS] of total equity as at April 1, 2016, March 31, 2017 and Statement of Profit and Loss for the year ended March 31, 2017.
b) Functional and presentation currency
These financial statements are presented in Indian rupee, which is the Company’s functional currency. All amounts have been rounded to the nearest lakh, unless otherwise indicated.
c) Basis of measurement
The financial statements have been prepared on historical cost basis, except certain financial assets and liabilities which have been measured at fair value (refer accounting policy regarding financial instruments), defined benefits plans - plan assets and contingent consideration. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.
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 Act. Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purposes of current / non-current classification of assets and liabilities.
Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
a. Expected to be realized or intended to be sold or consumed in normal operating cycle
b. Held primarily for the purpose of trading
c. Expected to be realized within twelve months after the reporting period, or
d. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current. A liability is current when:
a. It is expected to be settled in normal operating cycle
b. It is held primarily for the purpose of trading
c. It is due to be settled within twelve months after the reporting period, or
d. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
2A. use of estimates
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgment in applying the group’s accounting policies. This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be adjusted due to estimates and assumptions turning out to be different from those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
Critical estimates and judgments
The areas involving critical estimates or judgments are:
a) Estimation of current tax expense and payable - Refer accounting policies - 3.9
b) Estimated useful life of property, plant & equipment and intangible assets - Refer accounting policies - 3.1
c) Estimation of defined benefit obligation - Refer accounting policies - 3.8
d) Estimation of fair values of contingent liabilities - Refer accounting policies - 3.12
e) Recognition of revenue - Refer accounting policies - 3.4
f) Recognition of deferred tax assets for carried forward tax losses - Refer accounting policies - 3.9
g) Impairment of financial assets - Refer accounting policies - 3.2 & 3.5
Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the group and that are believed to be reasonable under the circumstances.
Notes:
Investments in Subsidiaries, Associates and Joint ventures are measured at cost and tested for impairment. Impairment(if any) denotes permanent diminution and charged to Statement of Profit and loss. Impairment in cases of unlisted securities is determined based on the valuation reports and in case of listed securities the same is determined basedon the prevaling market prices.
Investments in other than Subsidiaries, Associates and Joint ventures are measured at FVTOCI. and is charged/ added to “Other Comprehensive Income”. Fair Valuation of unlisted securities is determined based on the valuation reports and in case of listed securities the same is determined based on the prevaling market prices.
Allowance for Doubtful Loans
The Company has analysed any allowance for doubtful loans based on the 12 months expected credit loss model. - Refer Note - 35
* During the current year ended 31 March, 2018, pursuant to the approval of shareholders at the Extra ordinary General Meeting held on 10th February, 2017, the Company has issued and alloted an aggregate of 19,02,125 Equity shares of Rs.10 each at a price of Rs. 20 per share (Inclusive of a premium of Rs. 10 per equity share) on preferential allotment to various parties.
1.1. Terms/Rights attached to the equity shares
The Company has one class of shares referred to as equity shares having a par value of Rs. 10 each. Each shareholder 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. 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.
The convertible warrant alloted on preferential basis shall be locked in from the date of Trading approval granted from all the stock exchange for such period as prescribed in regulation 78 of SEBI (Issue of Capital and Disclosure Requirements) Regulation, 2009.
# Money received against share warrants represents amounts received towards convertible warrants which entitles equivalent number of equity shares of the face value of Rs 10 each. During the previous year, the Company had issued 40,00,000 Convertible Warrants of Rs 10/- each at a Premium of Rs. 10/- each to Promoter/ Promoter Group and Non Promoters, on preferential allotment basis in compliance with Chapter VII of SEBI (ICDR) Regulations, 2009 . The holder of the warrants would need to exercise the option to subscribe to shares on or before August 22, 2018. The Company has alloted 19,02,125 Equity Share of Rs. 10/- each pursuant to conversion of warrants by the allotees as on 31st March, 2018.
a. Natue of security, interest rate and installments
Vehicle Loans are Secured by hypothecation of specified vehicles against which the finance is obtained. Repayable in 36 months installment from the date of availment of loan.
Interest rate is 10%
4 - SEGMENT REPORTING
The Company has only one primary business segment viz. Trading of Steel Products and operates only within India and hence the disclosure as required under Ind-AS 108 on “Operating Segments” is not required.
5 - DISCLOSURES AS REQUIRED BY INDIAN ACCOUNTING STANDARD (IND AS) 19 EMPLOYEE BENEFITS
Short-term employee benefits are recognized as expenses at the undiscounted amount in the statement of profit and loss for the year in which the employee has rendered services. The expenses are recognized at the present value. The company did not have any eligible employees for the payment of Gratuity. The employees are required to exhaust their leave entitlement during the Financial year itself due to which there was no accumulated earned leave to the credit of any employee. Hence the provision has been made for the Retirement Benefits as required by Ind AS 19.
6 - HEDGED AND UNHEDGED DERIVATIVE INSTRUMENTS
(a) The amount of foreign currency exposures that are not hedged by a derivative instrument or otherwise as at 31st March, 2018, 31st March, 2017 and 1st April, 2016 are as under:
7 - OPERATING LEASES
The Company has entered into agreements in the nature of lease / leave and license agreement with different lessors / licensors for the purpose of establishment of premises and accommodation of executives. These lease are cancellable in the nature. Lease payments have been recognised as an expense in the Statement of Profit & Loss.
8 - RELATED PARTY DISCLOSURES AS PER INDIAN ACCOUNTING STANDARD-24
A Detail of related party and nature of the related party relationship where control exists
1 Subsidiary
a. Latim Sourcing (India) Pvt. Ltd.
2 Key Management Personnel
a. Rahul Timbadia Managing Director
b. Kartik Timbadia Director
c. Vikram Shah Chief Financial Officer
d. Rahul Patel Company Secretary
3 Relatives of Key Management Personnel
a. Parth Timbadia
b. Amita Timbadia
c. Almitra Timbadia
d. Radhika Timbadia
e. Jalpa Timbadia
f. Karna Timbadia
g. Suchita Timbadia
4 Enterprise over which Key Managerial Personnel are able to exercise significant influence.
a. Latim Investments & Finance Co.
b. Latim Lifestyle & Resorts Ltd.
c. Latim Sourcing (India) Pvt Ltd.
d. Saj Hotels Pvt Ltd.
9 - DETAILS OF LOANS, GUARANTEES, OR INVESTMENTS BY THE COMPANY DURING THE YEAR UNDER SECTION 186 OF THE COMPANIES ACT, 2013
10. FINANCIAL INSTRUMENTS - ACCOUNTING CLASSIFICATIONS AND FAIR VALUE MEASUREMENTS
The fair values of the 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 values 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 counterparty. Based on the evaluation, allowances are taken to account for the expected losses of these receivables.
The company uses the following hierarchy for determining and disclosing the fair values of financial instruments by valuation technique: Level 1 : Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 : Other techniques for which all inputs which have a significant effects on the recorded fair value are observable, either directly or indirectly.
Level 3 : Techniques which use inputs that have a significant effects on the recorded fair value that are not based on observable market data.
11. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company’s financial risk management is an integral part of how to plan and execute its business strategies.
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 majority of the company’s sales come from the steel trading business, and fluctuations in the demand for or supply of steel could have an impact on earnings. In addition, at a time of fierce competition, any changes in the company’s competitiveness in terms of technology, cost, quality, or other aspects could have an impact on earnings.
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.
The company is not exposed to significant interest rate risk as at the specified reporting date on account absence of any instruments whose interest rate is dependent on foreign exchange fluctuation.
Refer Note to accounts for interest rate profile of the Company’s interest-bearing financial instrument at the reporting date.
Foreign currency risk
The Company imports steel from international market, consequently, the Company is exposed to foreign exchange risk in foreign currencies. The Company has laid down procedures to de-risk itself against currency volatility and out sources expert advice whenever required.
The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies.
I. Foreign Currency Exposure
Refer Note related to foreign exchange exposure as at March 31, 2018, March 31, 2017 and April 01, 2016 respectively.
II. Foreign Currency Sensitivity
1% increase or decrease in foreign exchange rates will have the following impact on the profit before tax - loss / (profit)
Credit risk
Credit risk arises from the possibility that counter party 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 analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly.
The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is significant increase in credit risk the company compares the risk of a default occurring an the asset at the reporting date with the risk of default as the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as:
(i) Actual or expected significant adverse changes in business,
(ii) Actual or expected significant changes in the operating results of the counterparty.
(iii) Financial or economic conditions that are expected to cause a significant change to the counterparty’s ability to mere its obligation,
(iv) Significant increase in credit risk on other financial instruments of the same counterparty.
(v) Significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements.
Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. The Company categorises a loan or receivable for write off when a debtor fails to make contractual payments greater than reasonable period of time decided by the Management. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.
12. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Contd.)
I. Financial assets for which loss allowance is measured using 12 months Expected Credit Losses (ECL)
II. Financial assets for which loss allowance is measured using 12 months Life Time Expected Credit Losses (ECL)
Grand Total (A B)
Balances with banks are subject to low credit risks due to good credit ratings assigned to these banks.
III. The ageing analysis of these receivables (gross of provision) has been considered from the date the invoice falls due
IV. Provision for expected credit losses again “II” and “III” above
The company has assets where the counter- parties have sufficient capacity to meet the obligations and where the risk of default is very low. Hence based on historic default rates, the Company believes that, no impairment allowance is necessary in respect of above mentioned financial assets.
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 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 undiscounted payments.
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.
The company monitors capital using gearing ratio, which is total debt divided by total capital plus debt.
13 - FIRST TIME ADOPTION OF IND AS First-time Adoption of Ind AS
The company has prepared its first Financial Statements in accordance with Ind AS for the year ended March 31, 2018. For periods up to and including the year ended 31 March 2017, the Company prepared its financial statements in accordance with Indian GAAP, including accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended). The effective date for Company’s Ind AS Opening Balance Sheet is 1 April 2016 (the date of transition to Ind AS).
The accounting policies 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 01, 2016 (the Company’s date of transition). According to Ind AS 101, the first Ind AS Financial Statements must use recognition and measurement principles that are based on standards and interpretations that are effective at March 31, 2018, the date of first-time preparation of Financial Statements according to Ind AS. These accounting principles and measurement principles must be applied retrospectively to the date of transition to Ind AS and for all periods presented within the first Ind AS Financial Statements.
Any resulting differences between carrying amounts of assets and liabilities according to Ind AS 101 as of April 01, 2016 compared with those presented in the Indian GAAP Balance Sheet as of March 31, 2016, were recognized in equity under retained earnings within the Ind AS Balance Sheet.
An explanation of how the transition from previous GAAP to Ind AS has affected the company’s financial position, financial performance and cash flows is set out in the following notes and reconciliations.
I. Exemptions and exceptions availed:
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from Indian GAAP to Ind AS.
A) Deemed cost:
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 as per the Indian GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. 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 Indian GAAP carrying values.
B) Leases:
Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The Company has elected to apply this exemption for such contracts/arrangements.
C) Designation of previously recognised financial instruments:
Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI 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.
D) Estimates:
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 Indian GAAP [after adjustments to reflect any difference in accounting policies], unless there is objective evidence that those estimates were in error. Ind AS estimates as at April 1, 2016 are consistent with the estimates as at the same date made in conformity with Indian GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under Indian GAAP:
i. Investment in equity instruments carried at FVPL or FVOCI;
ii. Investment in debt instruments carried at FVPL; and
iii. Impairment of financial assets based on expected credit loss model.
E) Classification and measurement of financial assets:
Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
F) 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. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entity’s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.
** Fair Valuation adjustments for financial assets and financial liabilities:
- Under IGAAP, security deposits given were required to be carried at book value. Under Ind AS, the said concept has shifted from book value to fair value hence the same has been adjusted after considering FVTPL
A Others:
Lease rent equilisation:
Under Ind AS, Lease payment under operation leases is recognised as expenses on straight line basis over the lease term in accordance with respective lease agreement.
Statement of cash flows:
The transition from IGAAP to Ind AS has not had a material impact on the statement of cash flows.
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