The Company and nature of its operations
The Indian Card Clothing Company Limited having its registered and corporate office in Pune, Maharashtra, India carries business in card clothing and real estate segments. The Company is a public limited company and is listed on the National Stock Exchange of India Limited and the BSE Limited.
Terms and rights attached to equity shares
Equity shares have a par value of INR 10. They entitle the holder to participate in dividends, and to share in the proceeds of winding up the company in proportion to the number of and amounts paid on the shares held.
Every holder of equity shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
The Board of Directors proposed a final dividend of INR 2.50 per equity share for the financial year ended 31 March 2016 and the same was approved by the shareholders at the Annual General Meeting held on August 12, 2016. The amount was recognized as distributions to equity shareholders during the year ended 31 March 2017. This event is considered as non-adjusting event.
The Board of Directors declared an interim dividend of INR 10.00 per equity share during the financial year 2016-17. Further, final dividend of INR 2.00 per equity share was approved by the members at the Annual General Meeting held on August 11, 2017. These amounts were recognized as distributions to equity shareholders during the year ended 31 March 2017 and 31 March 2018 respectively.
The Board of Directors proposed a final dividend of INR NIL for the financial year ended 31 March 2018.
Leave Obligations
The leave obligations cover the Company’s liability for sick and earned leave.
The amount of the provision of Rs. 207.24 lakhs is presented as current as well as non current. Though the Company does not have an unconditional right to defer settlement for any of these obligations, as based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The amounts that reflect leave that is not expected to be taken or paid within the next 12 months is shown under non current portion.
Defined Contribution Plan Superannuation
The Company provides retirement benefits in the form of contribution to superannuation fund at the rate of 15% of annual salary.
Defined Benefit Plan a) Gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India. The cost of providing benefits under above mentioned defined benefit plan is determined using the projected unit credit method with actuarial valuations being carried out at the balance sheet date.
b) Provident Fund
The Company has a Provident Fund Plan, which is a defined benefit plan, which is managed through the Provident Fund Trust of the Company. The contributions are made to the Trust and shortfall in interest obligation, if any is met by the Company. The cost of providing benefits under above mentioned defined benefit plan is determined using the projected unit credit method with actuarial valuations being carried out at the balance sheet date.
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
To comply with the requirement of The Micro, Small And Medium Enterprises Development Act, 2006, the Company requested its suppliers to confirm whether they are covered as Micro, Small or Medium enterprise as is defined in the said Act. The Company has received no communication from any vendor conforming that they are covered as Micro, Small or Medium enterprise as is defined in the said Act.
(B) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, treasury maintains flexibility in funding by maintaining availability under committed credit lines.Management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. These limits vary by location to take into account the liquidity of the market in which the entity operates. In addition, the Company’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
Note 1 : Names of related parties and relationship
A. Ultimate Parent
Multi-Act Industrial Enterprises Limited, Mauritius
B. Subsidiaries
1 ICC International Agencies Limited
2 Garnett Wire Limited, UK
3 Shivraj Sugar and Allied Products Private Limited
C. Key Management Personnel (KMP)
Directors -
i) Mr. Kunjbihari Trivedi
ii) Mr. Prashant Trivedi
iii) Mr. Mehul Trivedi
iv) Mr. Hemraj Asher
v) Mr. Jyoteendra Kothary
vi) Mr. Sudhir Merchant
vii) Dr. Sangeeta Pandit
KMPs other than directors -
i) Mr. Vinod Vazhapulli (CEO)
D. Enterprises over which KMP or relatives of KMP are able to exercise significant influence
1 Multi Act Constructions Private Limited
2 Multi Act Realty Enterprises Private Limited
3 Multi Act Trade & Investments Private Limited
4 Crawford Bayley & Co.
5 Encore Business Centre LLP
6 Acre Street India Private Limited
7 Multi Act Equity Consultancy Private Limited
Note 2: 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 31st March 2018, the comparative information presented in these financial statements for the year ended 31st March 2017 and in the preparation of an opening Ind AS balance sheet at 1st April 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, financial performance and cash flows is set out in the following tables and notes.
Exemptions and exceptions availed
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
Ind AS optional exemptions 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 previous 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 previous GAAP carrying value.
Designation of previously recognised financial instruments
Financial assets and financial liabilities are classified as fair value through profit and loss or fair value through other comprehensive income based on facts and circumstances as at the date of transition to Ind AS i.e. April 1, 2016. Financial assets and liabilities are recognised at fair value as at the date of transition to Ind AS i.e. April 1, 2016 and not from the date of initial recognition.
Investments in subsidiaries and associates
The Company has elected to apply previous GAAP carrying amount for its investment in subsidiaries and associates as deemed cost at the date of transition to Ind-AS.
Ind AS mandatory exceptions 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 previous 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 1st April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:
- Investment in financial instruments carried at FVPL or FVOCI;
- Investment in debt instruments carried at FVPL;
- Impairment of financial assets based on expected credit loss model.
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 de-recognised as a result of past transactions was obtained at the time of initially accounting for those transactions.
The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.
Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
Notes to first-time adoption a Proposed dividend
Under Previous GAAP, proposed dividends including Dividend Distribution Tax (DDT) are recognised as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognised as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid.
In the case of the Company, the declaration of dividend for March 2016 had ocurred after period end. Therefore, the liability of Rs. 795.03 lakh for the year ended on 31st March, 2016 recorded for dividend has been reversed with corresponding adjustment to retained earnings. Correspondingly, total equity increased by this amount.
b Fair value adjustments on investments
Current investments: Under Previous GAAP, current investments in equity instruments, mutual funds and government securities are recognized at cost or net realizable value, whichever is lower. Long-term investments in equity instruments are recorded at cost unless there is an other than temporary decline in the value of investments.
Ind-AS 101 allows considering fair value as deemed cost for the Company’s investment in subsidiaries and associates. This choice is available for each investment individually. The deemed cost for all investment in equity instruments has been considered as the cost under the Previous GAAP.
The Company holds investment in securities with the objective of both collecting contractual cash fows which give rise on specified dates to cash fows that are solely payments of interest on principal amount outstanding and selling financial asset. The resulting fair value changes of these investments have been recognised in retained earnings as at the date of transition and subsequently in the Statement of Profit & Loss. This resulted in gross income in retained earnings as at 31st March, 2017 by Rs 257.17 lakh (1st April,2016: Rs 325.07 lakh).
c Provision for expected credit loss under Ind AS 109
Under Previous GAAP, the Company has created provision for impairment of receivables which comprises only in respect of specific amount for incurred losses. Under Ind AS, impairment allowance has been determined based on Expected Credit Loss (ECL) model. The total ECL provision amounting to Nil considered as on the transition date has been adjusted against the retained earnings. Impact of Rs 6.00 lakh for the year ended 31st March, 2017 has been charged to the Statement of profit and loss.
d Actuarial loss transferred to Other Comprehensive Income
Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of statement of profit and loss. As a result of this change, the profit for the year ended 31st March, 2017 has increased by Rs. 57.18 lakh .
e Others
These adjustments pertain to fair valuation of security deposits which has resulted into gross decrease in retained earnings by Rs. 3.22 lakh as at 31st March, 2017 (1 stApril,2016: increase by Rs. 3.44 lakh)
f Other comprehensive income
Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit and loss but are shown in the Statement of profit and loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans.
The concept of other comprehensive income did not exist under the Previous GAAP. g Deferred tax
The various transitional adjustments have led to temporary differences and accordingly, the Company has accounted for such differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.
Note 3 : Previous year’s figure have been re-grouped wherever necessary to conform to current year’s grouping.
Note 4 : Previous year figures are given in bracket.
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