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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 500148ISIN: INE516A01017INDUSTRY: Packaging & Containers

BSE   ` 404.95   Open: 404.45   Today's Range 402.35
406.90
+1.70 (+ 0.42 %) Prev Close: 403.25 52 Week Range 325.80
499.85
Year End :2018-03 

1 COMPANY OVERVIEW AND SIGNIFICANT ACCOUNTING POLICIES

I. COMPANY OVERVIEW

The Company is a public limited company, domiciled in India and registered with the ROC, Delhi & Haryana under the Registration number 55-32166 dated 21st June 1988. Old Registration number has been converted into new Corporate Identification Number (CIN) L74899DL1988PLC032166.

Registered office of the Company is situated at 305, 3rd Floor, Bhanot Corner, Pamposh Enclave, Greater Kailash-I, New Delhi- 110 048 and Corporate Office at A-108-109, Sector-4, Noida, Uttar Pradesh-201301.

The Company is a leading Indian Multinational, engaged in the manufacture and sale of flexible packaging products & offers a complete flexible packaging solution to its customers across the globe.

2. EQUITY SHARE CAPITAL A AUTHORISED

The Company’s authorised Capital is of Rs.34000.00 Lacs (Previous Year Same) distributed into 1,90,00,000 (Previous Year Same) Preference Shares of Rs.100/- each and 15,00,00,000 (Previous Year Same) Equity Shares of Rs. 10/- Each.

A Issued, Subscribed & Paid-Up

The Issued and Subscribed Capital of the Company as at 31st March 2018 is of Rs. 7228.42 Lacs, represented by 72284187 Equity Shares (Including 72701 Equity Shares forfeited) of Rs. 10/- each and the paid-up Capital as at 31st March 2018 is of Rs.7221.15 Lacs, represented by 7,22,11,486 Equity Shares of Rs. 10/- each as at 31st March 2018. The reconciliation of the Equity Share Capital of the Company is given as under:

b) RESTRICTION ON VOTING RIGHTS

The company has only one class of issued equity share capital as on the date of the balance sheet and each holder of equity share is entitled for one vote per share and right to receive the dividend, if any, declared on the equity shares.

c) DIVIDEND

The Board of Directors of the company has recommended a final dividend of Rs. 2.00 (Previous Year Rs.3.50) per share share aggregating to Rs.1741.10 lacs (Previous Year Rs. 3041.92 Lacs) (Including the dividend distribution tax of Rs.296.87 lacs (Previous Year Rs. 514.52 Lacs)) for the financial year ended 31st March 2018 subject to the approval of the shareholder in their ensuing annual general meeting.

1 Working capital facilities from banks are secured a) on first pari passu basis, by way of hypothecation of stock of raw materials, semi-finished goods, finished goods and book debts of the Company, both present and future, b) by way of second pari passu charge on specific fixed assets of the Company, situated at Malanpur (M.P.), Jammu (J & K), NOIDA (U.P.) and Sanand (Gujarat), and c) by guarantee of Chairman & Managing Director of the Company. However, second pari passu equitable mortgage on enhanced working capital facilities is yet to be created.

2 Loan from Body Corporate is secured by way of pledge of listed Equity Shares held as an Investment by the Company. (Refer Note No 3B)

# Includes Rs.4531.66 Lacs (Previous Year 2568.20 Lacs) in respect of deferred letters of credits for capital goods secured by way of hypothecation of specific machines under the letters of credits and pledge of fixed deposits of Rs. 590.65 Lacs (Previous Year Rs.312.88 Lacs).

3. DISCLOSURES FOR ASSETS UNDER OPERATING LEASES

The Company has taken certain vehicles on operating Lease. The required disclosures are as under: Minimum future Lease Rentals on assets under Operating Leases taken:

4. DEFINED BENEFIT PLAN

a) Gratuity

The employees’ Group Gratuity Scheme is managed by ICICI Prudential Life Insurance Company Limited. 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 additional disclosure in terms of Ind AS 19 on “Employee Benefits”, is as under:

The expected benefits increases are based on the same assumptions as are used to measure the Company’s defined benefit plan obligations as at 31st March 2018. The company is expected to contribute Rs. 279.48 lacs to defined benefits plan obligations fund for the year ending 31st March 2019.

The significant accounting assumptions are the discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonable possible changes of the respective assumptions occurring at the end of the reporting period while other assumptions constant.

If the discount rate increases /(decreases by 0.5%), the defined benefit plan obligations would decrease by Rs.139.25 Lacs (increase by Rs.150.25 Lacs) as at 31st March 2018.

If the expected salary growth increases /(decreases by 0.5%), the defined benefit plan obligations would increase by Rs.149.85 Lacs (decrease by Rs.139.75 Lacs) as at 31st March 2018.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Further in presenting the above sensitivity analysis, the present value of the defined benefit obligations has been calculated using the Projected Unit Credit Method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the Balance Sheet.

b) Leave Encashment

The Company has provided for its Liability towards Leave encashment, based on the actuarial valuation, disclosure whereof in terms of Indian Accounting Standard (Ind AS)- 19, “Employee Benefits” is as under:

5. Balances of some of the parties are subject to reconciliation & confirmations.

6. Previous Year figures have been recasted / regrouped/ reclassified, wherever considered necessary.

7. Impact of Implementation of Goods and Services Tax (GST) on the financial statements

In accordance with Ind AS 18 on “Revenue” and Schedule III of the Companies Act, 2013, Revenue from Sales of Goods and Services for the previous year ended 31st March 2017 and for the period from 1st April 2017 to 30th June 2017 were reported gross of Excise Duty and Net of Value Added Tax (VAT) / Sales Tax. Excise Duty was reported as separate expense item in Note No “32(A)” as Duties paid on Revenues. Consequent to introduction of Goods and Service Tax (GST) with effect from 1st July 2017, VAT/Sales Tax, Excise Duty etc. have been subsumed into GST. GST has not been recognized as part of Revenue from Sales of Goods and Services as per the requirement of Ind AS 18. This has resulted into lower reported sales in the current year in comparison to the sales reported under the pre-GST structure of indirect taxes. With the change in the structure expenses are also reported net of taxes (where credit is available). Accordingly, financial statements for the year ended 31st March 2018 and in particular, sales, absolute expenses, Inventory and ratios in percentage to Revenues are not comparable with the figures of previous year.

8. SEGMENT DISCLOSURE :

Segment disclosure in accordance with the Ind AS 108 on “ Operating Segments” are as under:

Accounting Principles and policies, as reported in Significant Accounting polices, used in the preparation of financial statements are consistently applied to record revenue, expenditure, assets and liabilities, in each segment.

9. RELATED PARTY DISCLOSURES

(a) List of Related Parties (as per IND AS-24):

i) Subsidiaries : Flex Middle East FZE , Uflex Europe Ltd., Uflex Packaging Inc., Upet Holdings Ltd., U Tech Developers Ltd., Digicyl Pte. Ltd. and USC Hologram (P) Ltd.

ii) Fellow Subsidiaries : Flex Films Europa Sp. z.o.o,Flex P Films (Egypt) S.A.E., UPET (Singapore) PTE. Ltd., Flex Americas S.A. de C.V.,SD Buildwell Pvt.Ltd., Flex Films (USA) Inc., Refex Energy (Rajasthan) (P) Ltd. (upto 30/05/2017) and Bundelkhand Projects Pvt. Ltd. (upto 30/05/2017)

iii) Associates : Flex Foods Limited

iv) Key Management Personnel & their relatives/ HUF (also exercising significant influence over the Company) : Mr. Ashok Chaturvedi, Chairman & Managing Director (relatives, Mrs. Rashmi Chaturvedi, Mr.Anant Shree Chaturvedi, Mr. Apoorva Shree Chaturvedi & Ms. Anshika Chaturvedi), Ashok Chaturvedi (HUF) and Mr. Amitava Ray, Wholetime Director

v) Enterprises in which the persons referred in (iv) along with their relatives exercise significant influence : AKC Retailers Pvt. Ltd., Anshika Investments Pvt. Ltd., Anant Overseas Pvt. Ltd., Apoorva Extrusion Pvt. Ltd., Anshika Consultants Pvt. Ltd., A.R. Leasing Pvt. Ltd., A.R.Infrastructures & Projects Pvt. Ltd., AC Infrastructures Pvt. Ltd., Cinflex Infotech Pvt. Ltd.,Flex International Pvt. Ltd., Ultimate Infratech Pvt. Ltd., Ultimate Flexipack Ltd., Ultimate Prepress LLP, Naveli Collections Pvt. Ltd., Modern Info Technology Pvt. Ltd., Flex Industries Pvt. Ltd., Club One Airways Pvt. Ltd., Niksar Finvest Pvt. Ltd., Ganadhipati Infraproject Pvt. Ltd., Nirman Overseas Pvt. Ltd., Kaya Kalpa Medical Services Pvt. Ltd., Sungrace Products (India) Pvt. Ltd., Virgin Infrastructures Pvt. Ltd., Liberal Advisory Services Pvt. Ltd.(up to 15/02/2018), Minor Hotel Pvt. Ltd.(upto 15/02/2018),East Coast Star Hotel Pvt. Ltd..(upto 15/02/2018), Saga Realtors Pvt. Ltd., Ganadhipati Infrastructure & Projects Pvt. Ltd., Gangotri Management Pvt. Ltd., Manpasand Marketing Pvt. Ltd., Magic Consultants Pvt. Ltd., A.L.Consultants Pvt. Ltd., First Flexipack Corporation, Ultra America Inc., AR Airways Pvt. Ltd., A-one Catering LLP, Refex Energy (Rajasthan) Pvt. Ltd.(w.e.f. 31/05/2017), Bundelkhand Projects Pvt. Ltd.(w.e.f. 31/05/2017), Affatus Gravures Pvt. Ltd.(w.e.f. 30/06/2017), Affatus Graphics Pvt. Ltd.(w.e.f. 30/06/2017), RCMT Clothings Pvt. Ltd.(w.e.f. 05/09/2017) and Manushree Creations Pvt. Ltd.(w.e.f. 24/02/2018)

(b) The Company has entered into transactions with certain parties listed above during the year under consideration. Details of these transactions are as follows :

The company has extended corporate guarantees to the lenders of its subsidiary(ies) / Fellow Subsidiary(ies). The outstanding amount of corporate guarantees extended by the company as on the balance sheet date has been disclosed in Note No 34(B).

10. FINANCIAL RISKS MANAGEMENT

In the course of business, amongst others, the Company is exposed to several financial risks such as Credit Risk, Liquidity Risk, Interest Rate Risk, Exchange Risk and Commodity Price Risk. These risks may be caused by the internal and external factors resulting into impairment of the assets of the Company causing adverse influence on the achievement of Company’s strategies, operational and financial objectives, earning capacity and financial position.

The Company has formulated an appropriate policy and established a risk management framework which encompass the following process.

- identify the major financial risks which may cause financial losses to the company

- assess the probability of occurrence and severity of financial losses

- mitigate and control them by formulation of appropriate policies, strategies, structures, systems and procedures

- Monitor and review periodically the adherence, adequacy and efficacy of the financial risk management system.

The Company enterprise risk management system is monitored and reviewed at all levels of management, Internal Auditors, Audit Committee and the Board of Directors from time to time.

Credit Risk

Credit Risk refers to the risks that arise on default by the counterparty on its contractual obligation resulting into financial loss to the company. The company may carry this Risk on Trade and other receivables, liquid assets and some of the non current financial assets.

In case of Trade receivables, the company has framed appropriate policy for extending credits period & limit to each customer based on their profile, financial position and their external rating etc. The collections of trade dues are strictly monitored . In case of Export customers, even credit guarantee insurance is also obtained wherever required.

Company’s exposure to Credit Risk is also influenced by the concentration of risk from top five customers. The details in respect of the% of sales generated from the top customer and top five customers are given hereunder.

The credit risk on cash & cash equivalent, investment in fixed deposits, liquid funds and deposits are insignificant as counterparties are banks or mutual funds with high credit ratings assigned by the rating agencies of international repute.

Liquidity Risk

Liquidity Risk arises when the company is unable to meet its short term financial obligations as and when they fall due.

The company maintains adequate liquidity in the system so as to meet its all financial liabilities timely. In addition to this, the company’s overall financial position is very strong so as to meet any eventuality of liquidity tightness.

Contractual maturities of financial liabilities are given as under:

Interest Rate Risk

Generally market linked financial instruments are subject to interest rate risk. The company does not have any market linked financial instruments both on the asset side as well liability side. Hence there no interest rate risk linked to market rates.

However the interest rate in respect of major portion of borrowings by the Company from the banks and others are linked with the Benchmark / Base Prime lending rate of the respective lender and in case of foreign currency borrowings by way of ECB, the same is linked with the LIBOR. Any fluctuation in the same either on higher side or lower side will result into financial loss or gain to the company.

The amount with is subjected to the change in the interest rate is of Rs. 126384.09 lacs out of the total debt of Rs. 141838.53 Lacs.

Based on the Structure of the debt as at year end, a one percentage point increase in the interest rate would cause an additional expense in the net financing cost of Rs. 1263.84 Lacs.

Foreign Currency Risk

The company is exposed to the foreign currency risk from transactions & translation. Transactional exposures are arising from the transactions entered into foreign currency. Management keeps a close watch of the maturity of the financial assets in foreign currency and payment obligations of the financial liabilities.

Based on five percentage point variations in the exchange rate, the profit before tax for the year based on the foreign currency transaction entered during the period will be effected by Rs. 815.58 Lacs

Commodity Price Risk

The main raw materials which company procures are global commodities and their prices are to a great extent linked to the movement of crude prices directly or indirectly.

The pricing policy of the Company’s final product is structured in such a way that any change in price of raw materials is passed on to the customers in the final product however, with a time lag which mitigates the raw material price risk.

With regard to the finished products, the Company has been operating in a global competitive environment which continues to keep downward pressure on the prices and the volumes of the products.

In order to combat this situation, the Company formulated manifold plans and strategies to develop new customers & focus on new innovative products. In addition, it has also been focusing on improvement in product quality and productivity. With these measures, Company counters the competition and consequently commodity price risk.