1. NOTES TO FINANCIAL STATEMENTS BACKGROUND
Zenith Exports Limited is a Company limited by shares, incorporated and domiciled in India. The Company is engaged in the business of Exports of Leather Goods & Textile Fabrics. The Company has a weaving unit namely 'Zenith Textiles' located at Nanjangud, Mysore. Another unit namely 'Zenith Spinners' located at village-Dholka, Ahmedabad (being under discontinuation of operation since December 2015)
(c) Rights Preferences and Restrictions attached to shares
The Company has only one class of equity shares having a par value of Rs.10/- per share. Each shareholder of equity shares is entitled to one vote per share held. In the event of liquidation of the company the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion to their shareholding.
Notes on Financial Statements for the year ended 31st March, 2018
2. Discontinuing Operations:-
Due to unfavorable market conditions and steep competition from the modern units, one of the Company's unit Zenith Spinners at Dholka, Ahmedabad manufacture of yarns is no more viable to operate. Hence the management had decided to suspend operation since December'2015. The said undertaking is disclosed as " Discontinued Operations" as a separate business segment as per IN D AS-108 "Segment Reporting".
ADDITIONALNOTESTOFINANCIALSTATEMENTS
3. 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.
4. 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.
4.1 Ind AS optional exemptions
4.1.1 Prospective application of Ind AS 21 to business combinations
The Company has elected to apply this exemption.
4.1.2Deemed 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 Asset.
Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value. The Company does not have any de-commissioning liabilities as on the date of transition and accordingly no adjustment have been made for the same.
4.1.3Designation of previously recognised financial instruments
Ind AS 101 allows an entity to designate investments in Equity Instruments/Mutual Funds 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 mutual funds.
4.2 Ind AS Mandatory Exceptions Estimates
An entity's estimates in accordance with Ind AS 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 has made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:
i Investment in Mutual Fund carried at FVOCI;
ii Biological asset measured at expenses incurred for plantation.
4.2.1 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. The Company has no such debt instruments.
5. Other Notes to First time Adoption of Ind-AS
5.1 Depreciation on Biological Assets
Under the previous GAAP, there were no Biological Assets. Under Ind AS, since biological assets come within the ambit of Ind AS 16 "Property, Plant and Equipment" depreciation and loss on disposal is being provided on Biological plants. There was no biological asset as on 1st April, 2016 or 31st March, 2017 but as on 31st March 2018, there is a biological asset of Rs. 16.84 lakhs. Since the same is under cultivation, no depreciation has been.
5.2 Fair valuation of Investments
Under the previous GAAP, investments in Mutual Fund were classified as long-term investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Under Ind AS, these investments are required to be measured at fair value.
Fair value changes with respect to investments in Mutual Fund designated as at FVOCI have been recognized in FVOCI - Mutual Fund (net of tax) as at the date of transition and subsequently in the other comprehensive income for the year ended 31st March 2018.
5.3 Inventories
Inventories are valued as under:
a) Raw Materials: at cost which is arrived at on average cost basis.
b) Packing Materials : at average cost basis
c) Stores, Consumables & Spares : at average cost basis
d) Semi-finished Goods : at raw material cost and value added thereto upto the state of completion
e) Finished Goods : at cost or N RV, whichever is lower
f) Waste : at estimated realizable value
5.4 Borrowings
Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method. Under the previous GAAP, these transaction cost were charged to Profit/Loss as and when incurred. There is no effect of it.
5.5 Deferred Tax
Under previous GAAP, the deferred tax asset/ liability was recognized on revalued amount of Property, Plant and Equipment since this was considered as permanent difference. Under Ind AS, deferred tax liability has been recognized on such revalued amount, with tax base being ? NIL.36.6 Remeasurements of post-employment benefit obligations
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 profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As result of this change, there is no change in Profit & Loss for the year.
5.7 Retained Earnings
Retained earnings as at 1st April, 2016 has been adjusted consequent to the above Ind AS transition adjustments.
5.8 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 or loss but are shown in the statement of profit and loss as 'other comprehensive income' includes remeasurements of defined benefit plans and fair value gains or (losses) on FVOCI Mutual Funds. The concept of other comprehensive income did not exist under previous GAAP.
Note;-
(a) The employee's Gratuity Funded Scheme of Main Division Kolkata managed by Life Insurance Corporation of India is a defined Benefit Plan.
(b) The above Funded disclosures are based on Computer Generated Certificate issued by Life Insurance Corporation of India.
Segment Revenue and Result
The expenses which are not directly attributable to the business segment are shown as unallocated expenditure net off unallocable income.
Segment assets and liabilities
Segment assets include all operating assets used by the business segment and consist principally of fixed assets, debtors and inventories.
Segment liabilities
primarily include current liabilities & loan fund Assets and liabilities that can not be allocated between the segments are shown as a part of unallocated corporate assets and liabilities respectively.
6. Previous year's figures have been re-grouped/re-classified wherever necessary to correspond with the current year's classification/disclosure.
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