1. General Information
Advance Metering Technology Limited (“AMTL” or “the Company”) was incorporated on 7th February,2011 under the provisions of the Companies Act,1956. The Company operates in the Energy Sector and within the business segment Energy Generation, Energy Measurement and Energy Management. The Company is engaged in manufacturing and selling of Energy Meters, provides technical services relating to Energy Sector and in the business of Wind Power Generation through Wind Mills/ other renewable energy sources. Its shares are listed on Bombay Stock Exchange Limited.
The AMTL was incorporated as a Special Purpose Vehicle (SPV) to take over the Metering Division and proposed power generation business/undertakings of Eon Electric Limited (formerly Indo Asian Fuse gear Limited) as a going concern. The Hon’ble High Court for the States of Punjab & Haryana at Chandigarh vide its order dated 27th March 2012, has approved the Scheme of Arrangement ( ‘Scheme’ ) u/s 391 to 394 of the Companies Act,1956 between the Company and Eon electronic Limited ( Eon ) and their respective shareholders and creditors for demerger of the Metering Division and Power Generation Business ( “De-merged Undertaking”) of Eon and transfer/ vesting of the said undertaking in favour of AMTL with effect from Ist April 2011 ( Appointed Date) on going concern basis. The scheme become effective on 8th April 2012 ( Effective Date) on filling of the Certified True Copy of the said Order of the Hon’ble High Court with the Registrar of Companies, NCT of Delhi & Haryana.
These Financial statements are Standalone financial statements of the Company.
The financial statement were authorised for issue by the board of directors on 29 May 2018.
General Reserve
This represents appropriation of profit by the company.
Retained Earnings
This comprise company’s undistributed profit after taxes.
Capital Reserve
The capital reserve is created due to demerger of Metereing Division and proposed power generation business/ undertaking of EON electric Limited as a going concern to Advance Meter Technology Limited from EON.
2.1.1 Summary of borrowing arrangements
(i) Term Loan of Rs 277.44 lacs (31st March,2017: Rs. 278.39 lacs and 1 April,2016:Nil) from kotak bank are secured by land and repayable in 100 monthly instalments of Rs 4.17 lacs each upto June 2026. The interest rate of this loan is 10.25% p.a. Rs. 23.50 lacs of term loan payable in FY 2019-20, hence shown under current maturities of long term borrowings
(ii) Term Loan of Rs 301.44 lacs (31st March,2017: Rs. Nil and 1 April,2016:Nil) from kotak bank are secured by land and repayable in 120 monthly instalments of Rs 3.84 lacs each upto Feb 2028. The interest rate of this loan is 9% p.a. Rs. 19.73 lacs of term loan payable in FY 2018-19, hence shown under current maturities of long term borrowings
(iii) Vehicle loan of Rs 73.85 lacs ( 31st March,2017:Rs 114.89 lacs and 1 April, 2016: Rs 132.42 lacs) from ICICI bank and Rs 82.44 lacs ( 31st March,2017: Nil and 1 April, 2016: Nil ) from HDFC Bank are secured against vehicles respectively under vehicle hire purchase agreement. These obligations are repayable in monthly instalments up to Dec’22. The interest rate for these obligations ranges from 9.25% to 12.49% p.a. Rs. 59.52 lacs of vehicle loan payable in FY 2018-19, hence shown under current maturities of long term borrowings.
(iv) Equipment loans of Rs Nil (31st March,2017 : Rs 1.99 lacs and 1 April,2016 : Rs 13.42 lacs) from ICICI bank are secured against machinery respectively. These obligations are repayable in monthly instalments up to May’2017. The interest rate for these obligations is 10.75% p.a.
(v) The rate of interest on the working capital loans from banks ranges between 9% p.a. to 10.5% p.a. depending upon the prime lending rate of the banks wherever applicable and the interest rate spread agreed with the banks. Details of security given for short-term borrowings are as under:
- Overdraft facility from ICICI bank of Rs. 387.23 lacs and RBL bank of Rs 5153.70 lacs are secured against mutual funds.
- Working capital facility of Rs.157.56 lacs from SBI bank are secured against Immovable property (Land) at Jhalandhar, current assets and movable fixed assets.
- Overdraft facility of Rs.518.89 lacs from SBI bank are secured against fixed deposits.
3. Other Notes
(i) In the opinion of the Board, the current assets, loans and advances are approximately of the value stated, if realised, in the ordinary course of business. The provision of depreciation and all known liabilities are adequate and not in excess of the amount reasonably necessary.
(ii) The balances of debtors, advances and creditors are subject to confirmation in some cases.
(iii) The Company has paid annual listing fees to BSE Limited where its equity shares are listed.
4. Employee Benefits
A Defined Contribution plans
The Company has recognised Rs. 19.32 lakhs in statement of profit and loss as Company’s contribution to provident fund, Rs13.75 lakhs and Rs 7.52 lakhs as Company’s contribution to Employees State Insurance scheme.
B.1. Defined Benefit plans-Gratuity
i. The principal assumptions used for the purpose of the actuarial valuation were as follows:
Sensitivities due to mortality and withdrawals are not material & hence impact of change not calculated.
Sensitivities as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable being a lump sum benefit on retirement.
xi. The estimates of future salary increase considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors. The above information is certified by the actuary and relied upon by the auditors.
Sensitivities due to mortality and withdrawals are not material & hence impact of change not calculated.
Sensitivities as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable being a lump sum benefit on retirement.
viii. The estimates of future salary increase considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors. The above information is certified by the actuary and relied upon by the auditors.
5. Segment Reporting Identification of Segments
The Board of Directors of the Company has been identified as Chief Operation Decision Maker who monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Accounting policy in respect of segments is in conformity with accounting policy of the company as a whole.
The Company’s operations have been categorized into the following business segment:-
Meter & Others includes manufacturing of Energy Meter and Technical Consultancy on energy savings.
Power Generation includes generation of electricity from Wind.
There are no geographical segments as the operations of the Company’s existing business segments take place in India only.
Segment Revenue & Results
The Revenue and Expenditures in relation to the respective segments have been identified and allocated to the extent possible. Other revenue and expenditures non allocable to specific segments are disclosed separately as unallocated and adjusted directly against total income of the Company.
Segment Assets & Liabilities
Segment Assets includes all operating assets used by the operating segment and mainly consisting property, plant & equipment, trade receivables, cash and cash equivalents and inventory etc. Segment Liabilities primarily include trade payables and other liabilities. Common assets & liabilities which can not be allocated to specific segments are shown as a part of unallocable assets/liabilities.
6. Capital Management
The Company manages its capital to ensure that the entities in the Company will be able to continue as going concern while maximizing the return to shareholders and also complying with the ratios stipulated in the loan agreements through the optimization of the debt and equity balance.
The capital structure of the Company consists of net debt (borrowings as detailed in note 14 offset by cash and bank balances as detailed in note 10 and 11) and total equity of the Company.
The Company is not subject to any externally imposed capital requirements.
The Company monitors capital on the basis of following gearing ratio, which is net debt divided by total equity
Loan Covenants
In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to call loans and borrowings or charge some penal interest. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.
No changes were made in the objectives, policies or processes for managing capital during the current years and previous years.
7.1 Gearing ratio
The gearing ratio at the end of the reporting period was as follows:
Note:
i. Debt is defined as long and short-term borrowings (excluding derivative, financial guarantee contracts), as described in note 14.
7.2 Dividends
The company has not declared dividend on equity share for the year ended March 31, 2018. (PY Nil)
8. Fair Value Measurement
(i) Fair Value Hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (A) recognised and measured at fair value and (B) measured at amortised cost and for which fair values are disclosed in financial statements. To provide an indication about the reliability of inputs used in determining fair values, the group has classified its financial instruments into three levels prescribed under the accounting standards.
The following table provides the fair value measurement hierarchy of Company’s asset and liabilities, grouped into Level 1 to Level 3 as described below :-
Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
(ii) Valuation techniques used to determine Fair value
The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Specific valuation technique used to value financial instrument includes:
- the use of quoted market prices or dealer quotes for similar financial instruments.
- the fair value of financial assets and liabilities at amortised cost is determined using discounted cash flow analysis The following method and assumptions are used to estimate fair values:
The Carrying amounts of trade receivables, trade payables, capital creditors, cash and cash equivalents, short term deposits etc. are considered to be their fair value , due to their short term nature
Long-term fixed-rate and variable-rate receivables / borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk factors, credit risk and other risk characteristics. For borrowing fair value is determined by using the discounted cash flow (DCF) method using discount rate that reflects the issuer’s borrowings rate. Risk of non-performance for the company is considered to be insignificant in valuation.
Financial assets and liabilities measured at fair value and the carrying amount is the fair value.
9. Financial risk management
The Company’s activities expose it to a variety of financial risks which includes market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
The Company’s focus is to ensure liquidity which is sufficient to meet the Company’s operational requirements. The Company monitors and manages key financial risks so as to minimise potential adverse effects on its financial performance. The Company has a risk management policy which covers the risks associated with the financial assets and liabilities. The details for managing each of these risks are summarised ahead.
9.1 Market risk
Market risk is the risk that the expected cash flows or fair value of a financial instrument could change owing to changes in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments.
9.2 Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company does not operates internationally but has foreign currency trade payables and receivables and is therefore, exposed to foreign exchange risk. Exposure is very limited as compared to the size of the company, thus there is very nominal risk due to foreign currency risk.
The carrying amounts of the company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows.
Foreign currency sensitivity analysis
The following table details the company’s sensitivity to a 10% increase and decrease in the INR against the relevant outstanding foreign currency denominated monetary items. 10% sensitivity indicates management’s assessment of the reasonable possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit or equity where Rupee appreciates 10% against the relevant currency. A negative number below indicates a decrease in profit or equity where the Rupee depreciates 10% against the relevant currency.
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.
9.3 Interest rate risk
Interest rate risk is the risk that the 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 regard to 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 the fixed rate and floating rate financial instruments in its total portfolio.
(iii) Sensitivity
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease represents management’s assessment of the reasonably possible change in interest rates.
9.4 Other price risks
The company’s exposure to price risk arises from the investment held by the company . To manage its price risk arising from investments in marketable securities, the company diversifies its portfolio and is done in accordance with the company policy. The company’s major investments are actively traded in markets and are held for short period of time. Therefore no sensitivity is provided for the same.
9.5 Credit risk management
Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial loss to the company. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current economic trends, and analysis of historical bad debts and ageing of accounts receivable.
The Company considers the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risk on an on going basis through each reporting period. To assess whether there is significant increase in credit risk, it considers reasonable and supportive forward 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 meet its obligation
(iv) Significant increase in credit risk an other financial instruments of the same counterparty
(v) Significant changes in the value of collateral supporting the obligation or in the quality of third party guarantees or credit enhancements
The company major exposure is from trade receivables, which are unsecured and derived from external customers. Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units, quoted securities and certificates of deposit which are funds deposited at a bank for a specified time period.
Expected credit loss for trade receivable on simplified approach:
The Company uses a provision matrix to determine impairment loss on portfolio of its trade receivable. The provision matrix is based on its historically observed default data over the expected life of the trade receivable and is adjusted for forward- looking estimates. At every reporting date, the historical observed default rates are updated and changes in forward-looking estimates are analysed. In case of probability of non collection, default rate is 100%.
9.6 Liquidity Risk
Liquidity risk is defined as the risk that company will not be able to settle or meet its obligation on time or at a reasonable price. The Company’s objective is to at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company’s management is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risk are overseen by senior management. Management monitors the company’s net liquidity position through rolling, forecast on the basis of expected cash flows.
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments:
10. Transition to Ind AS
These financial statements for the year ended March 31,2018 are the first Ind AS financials prepared in accoradnce with Ind AS notified under Companies (Indian Accounting Standards) Rules, 2015. The adoption of Ind AS was carried out in accordance with Ind AS 101, using April 1, 2016 as the transition date. Ind AS 101 requires that all Ind AS standards and interpretations that are effective for the Ind AS financial statements for year ended March 31, 2018, be applied consistently and retrospectively for all fiscal years presented. All applicable Ind AS have been applied consistently and retrospectively wherever required.
For the periods upto and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with the accounting standards notified under section 133 of the Companies Act 2013, read together with Paragraph 7 of the Companies(Accounts) Rules,2014(Indian GAAP).
Accordingly, the Company has prepared its financial statement to comply with the Ind AS for the year ending March 31, 2018, together with the comparative date as at and for the year ended March 31, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, Company’s opening balance sheet was prepared as at April 01, 2016, the date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 01, 2016 and the financial statements as at and for the year ended March 31, 2017.
10.1 Exemptions and Exceptions opted by the Company on the date of transition:-
Ind AS 101 allows first-time adopters certain exemptions and exceptions from the retrospective application of certain requirements under Ind AS. The Compnay has applied the following exemptions and exceptions:
a) Exemptions and Exceptions from retrospective application
1. The Company has elected not to apply Ind AS 103- Business Combinations, retrospectively to past business combinations that occurred before April 01, 2016. Consequent to use of this exemption from retrospective application:
i) The carrying amount of assets and liabilities acquired pursuant to past business combinations and recognised in the financial statements prepared under Previous GAAP, are considered to be the deemed cost under Ind AS, on the date of acquisition. After the date of acquisition, measurement of such assets and liabilities is in accordance with respective Ind AS. Also, there is no change in classification of such assets and liabilities;
ii) The Company had not recognised assets and liabilities that neither were recognised in the financial statements prepared under Previous GAAP nor qualify for recognition under Ind AS in the Balance Sheet of the acquiree;
iii) The Company had excluded from its opening Balance Sheet (As at April 1, 2016), those assets and liabilities which were recognised in accordance with Previous GAAP but do not qualify for recognition as an asset or liability under Ind AS.
2 The Company has elected to continue with carrying value of all Property, plant and equipment under the previous GAAP as deemed cost as at the transition date i.e. April 01, 2016. Under the previous GAAP, Property, plant and equipment were stated at their original cost (net of accumulated depreciation, amortization and impairment), if any, adjusted by revaluation of certain assets.
The Company has elected to continue with the carrying value of Capital work in progress as recognized under the previous GAAP as deemed cost as at the transition date.
The Company has elected to continue with the carrying value for intangible assets (computer softwares) as recognized under the previous GAAP as deemed cost as at the transition date. Under the previous GAAP, Computer Software was stated at its original cost, net of accumulated amortization.
3. The Company has elected to continue with carrying value of all investments in its subsidiaries under the previous GAAP as deemed cost as at the transition date i.e. April 01, 2016.
4. 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. However, the Company has used Ind AS 101 exemption and assessed all arrangements for embedded leases based on conditions in place as at the date of transition.
b) Estimates
The estimates as at April 01, 2016 and as at March 31, 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies).
11. Reconciliation between balance sheet, statement of profit and loss and cash flow statement prepared under previous IGAAP and those presented under Ind AS
(a) Effect of Ind AS adoption on the Balance Sheet as at March 31, 2017
12. Notes to the first time adoption of Ind AS
1) Fair Value of Investments
Under the previous GAAP, Long term investments were carried at cost less provision for permanent diminution in the value of such investment. Current investment were carried at cost . Under IND As they are required to be measured at fair value
a) Under Ind AS, financial assets and financial liabilities designated at fair value through profit and loss (FVTPL) are fair valued at each reporting date with changes in fair value recognized in the statement of profit and loss. Mutual fund investments have been classified as FVTPL.
2) Fair valuation as deemed cost for Property, Plant and Equipment
The Company has elected to measure certain items of its Property, Plant and Equipment and its related intangible assets at its fair value and use that fair value as its deemed cost at the date of transition to Ind AS
3) Leasehold land
As per IND AS 17 Leasehold land are amortised over the primary period of lease
4) Defined benefit liabilities
Under previous GAAP, actuarial gains and losses were recognised in the statement of profit and loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of the net defined benefit liability/ asset which is recognised in other comprehensive income. Consequently, the tax effect of the same has also been recognised in other comprehensive income under Ind AS instead of the statement of profit and loss.
5) Provision for expected credit losses
Under Previous GAAP, such estimates were determined based on experience of historic losses on such contracts.
Impairment for trade receivable is measured in Ind AS based on life time expected credit losses. Expected credit loss allowance is measured based on historical credit loss experience, defaults, bankruptcy and forward looking information where relevant adjusted for probability of recovery. Under Previous GAAP, provision for trade receivable is measured based on factors such as age of receivables, defaults etc. adjusted for probability of recovery.
6) Security Deposits
Under previous GAAP, security deposits were recognised based on historical cost. However under Ind AS, the same has been accounted for as per amortised cost using effective interest rate. Accordingly interest income on such deposits has been recognised as part of other income and unwinding of security deposits has been amortised as a part of expenses.
7) Sale of goods
Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is presented as a part of other expenses in statement of profit and loss.
13. Recent Accounting Pronouncements
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.The amendment will come into force from April 1, 2018. The Company is evaluating the effect of this on the financial statements.
Ind AS 115- Revenue from Contract with Customers: On March 28, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Ind AS 115, Revenue from Contract with Customer The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers.
The standard permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)
The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018.
The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The Company is evaluating the effect on adoption of Ind AS 115.
14. The previous year’s including figures as on the date of transition have been reworked, regrouped, rearranged and reclassified wherever necessary. Amounts and other disclosures for the preceding year including figures as at the date of transition are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.
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