1 Corporate Information

Lawreshwar Polymers Limited (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange in India. The company is engaged in manufacturing and selling of a reputed brand “LEHAR” footwears in domestic market.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

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.

*There had occurred a fire on 24.02.2008 at the registered office & factory premises of the company. The Insurance Company has passed the claim of the company and there was a shortfall of Rs. 186.75 lacs against the said claim. The company has not accepted the assessment of loss from insurances companies and has invoked the arbitration clause of the insurance contract. Out of this shortfall the company has received Rs. 75.00 Lacs from the insurance company, and no provision is made for the balance shortfall of Rs. 111.75 lacs as the company is of opinion that they will receive the balance amount of Rs. 111.75 lacs from the insurance companies.

**On 15th May 2016 a major fire has occurred at Kaladera Plant of the company, the said Plant as well as other Assets and Stock lying at the Kaladera factory are duly insured with the Insurance Company, the loss of Rs. 535.91 lacs w.r.t. Stock and Rs. 903.61 lacs w.r.t. Fixed Assets has been debited to Insurance Claim Receivable Account by crediting Inventory and Fixed Assets account respectively. The company has received on account payment of Rs. 350.00 Lacs from the insurance company. The company has submitted claim to insurance company and the same is under process.

Note 2.1 Terms/ Rights attached to Equity Shares

The company has only one class of Equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share.

In the event of liquidation of company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note 2.2 Details of Shareholders holding more than 5% equity shares in the Company

Note-3 Other Equity*

Description and nature of other equity:-

Security premium account : The security premium account is created on issue of share at premium.

General Reserve: The general reserve comprises of transfer of profits from retained earnings for appropriate purposes. The reserve can be distributed/ utilised by the company in accordance with the Companies Act,2013

Profit and Loss Account: It represents the surplus amount available in profit and loss as retained earnings. The reserve can be distributed/ utilised by the company in accordance with the Companies Act,2013

Other Comprehensive Income: it represent the acturial gain or loss arising from the measurement of defined benefit obligation and changes in revaluation surplus due to revaluation of land.

Term Loan I from Punjab National Bank is secured against mortgage of factory land & building situated at SP-41D, RIICO Industrial Area, Kaladera, Teh-Chomu, Distt.-Jaipur registered in the name of the company, and G-1-685, Road No. 9F2, VKI Area, Jaipur-302013 registered in the name of Lawreshwar Footwear (related party) and also personal guarantee of directors and other related parties.

Term Loan - I of Rs. 9,21,00,000 sanctioned from Punjab National Bank is repayable in 84 equal monthly installments of Rs. 10,96,429 started from April 2015.

Term Loan from SIDBI is sanctioned of Rs. 4,00,0000 and amount disbursed Rs. 2,00,00,000 is secured against residual charge on movable and current assets of the company and personal guarantee of directors and other related parties, and is repayable in 36 monthly installments of Rs. 5,50,000 and one installment of Rs. 2,00,000 started from october 2015.

Term Loan II from Punjab National Bank is secured against mortgage of factory land & building situated at SP-41D, RIICO Industrial Area -, Kaladera, Teh-Chomu, Distt.-Jaipur registered in the name of the company, and G-1-685, Road No. 9F2, VKI Area, Jaipur-302013 registered in the name of Lawreshwar Footwear (related party) and also personal guarantee of directors and other related parties.

Term Loan - II of Rs. 1,50,00,000 sanctioned from Punjab National Bank is repayable in 34 equal monthly installments of Rs. 4,29,000 and one installment of Rs. 4,14,000 started from April 2017.

Buyers credit for capital goods from Punjab National Bank is secured against hypothecation of respective machineries imported under buyers credit and all other securities available for FB limit and term loan, and is converted into term loan from 20 April 2018 and bifurcated in long term and current maturity as per the quarterly principal EMI amounting to Rs. 11.55 lakh

Term loand from Capital First Limited is unsecured loan and amount sanctioned Rs.50 lakhs repayable in 18 EMI of Rs..311924

Deferred Vehicle loans are secured against hypothication of respective vehicles.

Note-4 Employee Benefit

(A) Defined Contribution Plan:-

The Company operates defined contribution retirement benefit plans for all qualifying employees. Contributions are made to registered provident fund and Employee state insurance administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation.

(B) Defined Benefit Plan:-Gratuity

In accordance with the provisions of Payment of Gratuity Act, 1972, the company has defined benefit plan which provides for gratuity payment. The plan provides a lump sum gratuity payment to eligible employees at retirement or termination of their employment. The amounts are based on the respective employee’s last drawn salary and the year of employment with the company. The gratuity plan is a unfunded plan.

These plans typically expose the Company to actuarial risks such as: Investment, Interest rate, longevity and salary risk:

Investment risk: The present value of the defined benefit obligation is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.

Interest risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments.

Longevity risk: The present value of the defined benefit obligation is calculated by reference to the best estimate of the mortality of plan participants during their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary escalation risk : The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

No other post-retirement benefits are provided to the employees.

The actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2018 by a certified actuary of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

Assumptions:

The principal assumptions used for the purposes of the actuarial valuations are given below:

Leave Encashment

Compensated absence liability recognised as expense for the year is Rs. 6.67Lakhs (Previous Year Rs. 4.53 Lakhs). The above is based on actuarial valuation report. The report considers assumptions with respect to discount rates, salary escalation, retirement age, mortality, rate of leaving service, leave availment pattern, disability and other relevant factors. the method used is Projected unit Credit Method.

Note-5 Capital Management

The capital structure of the Company consists of net debt and total equity of the Company. The Company manages its capital to ensure that the Company will be able to continue as going concern while maximising the return to stakeholders through an optimum mix of debt and equity within the overall capital structure. The Company’s risk management committee reviews the capital structure of the Company considering the cost o’: capital and the risks associated with each class of capital.

Note-6 Related Party Disclosures

The Company has made the following transactions with related parties as defined under the provisions of Indian Accounting Standard-24 issued by the Institute of Chartered Accountants of India.

List of related parties with whom transaction have takenplace during the year along with the nature and volume of transaction is given below from 01.04.2017 to 31.03.2018.

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. The following methods and assumptions were used to estimate the fair values:

1) Fair value of cash and deposits, trade receivables, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

2) Long-term variable-rate borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk factors, credit risk and other risk characteristics. Fair value of variable interest rate borrowings approximates their carrying values. Risk of other factors for the company is considered to be insignificant in valuation.

Note 7: Financial Risk Management

Financial risk management policy and objectives

The key objective of the Company’s financial risk management is to ensure that it maintains a stable capital structure with the focus on total equity to uphold investor, creditor, and customer confidence and to ensure future development of its business. The Company is focused on maintaining a strong equity base to ensure independence, security, as well as financial flexibility for potential future borrowings, if required without impacting the risk profile of the Company.

Company’s principal financial liabilities, comprise Borrowings from Banks, trade and other payables. The main purpose of these financial liabilities is to finance Company’s operations and plant expansion. Company’s principal financial assets include investments, trade and other receivables, deposits with banks and cash and cash equivalents, that derive directly from its operations.

Company is exposed to market risk, credit risk and liquidity risk.

The Company’s Board oversees the management of these risks. The Company’s Board is supported by senior management team that advises on financial risks and the appropriate financial risk governance framework for the Company. The senior management provides assurance to the Company’s Board that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

i) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk interest rate risk, currency risk and price risk. Financial instruments affected by market risk include investments in equity shares, security deposits, trade and other receivables, deposits with banks and financial liabilities.

The sensitivity analysis in the following sections relate to the position as at 31 March 2018 and 31 March 2017. The sensitivity of the relevant income statement item is the effect of the assumed changes in respective market risks.

a) Foreign currency risk

Foreign currency risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rate. The company is exposed to foreign exchange risk arising from foreign currency transactions primarily to USD. Company do not enter into any derivative instrument in order to hedge its foreign currency risks.

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change by 5% in USD exchange rates, with all other variables held constant.

b) Interest rate risk

Interest rate risk is the risk that changes in market interest rates will lead to change in interest income and expense for the Company. In order to optimize the Company’s position with regards to interest income & expense and to manage the interest risk, the Company performs comprehensive interest risk management by balancing the proportion of fix & variable rate financial instruments.

Sensitivity analysis:

A change in 50 basis point in interest rate at the reporting date would have increase/(decrease) Profit or Loss by the amount shown below. This analysis assumes that all other variables, remain constant.

c) Commodity Risk

Commodity risk is defined as the possibility of financial loss as a result of fluctuation in price of Raw Material/Finished Goods and change in demand of the product and market in which the company operates. The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company has in place policies to manage exposure to fluctuations in the prices of the key raw materials used in operations. The company forecast annual business plan and execute on monthly business plan. Raw material procurement is aligned to its monthly/annual business plan and inventory position is monitored in accordance with future price trend.

ii) Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The Company is exposed to credit risk mainly from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks.

Credit risk on trade receivables is managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company has no concentration of risk as customer base in widely distributed both economically and geographically.

An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on exchange losses historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral as security. The Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors such as financial condition, ageing of outstanding and the Company’s historical experience for customers.

b) Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Company monitors rating, credit spreads and financial strength of its counter parties. Company monitors ratings, credit spread and financial strength of its counter parties. Based on ongoing assessment Company adjust it’s exposure to various counterparties. Company’s maximum exposure to credit risk for the components of balance sheet is the carrying amount as disclosed in Note 35.

Credit risk exposure

The following table shows the maximum exposure to the credit risk at the reporting date :

iii) Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash flow obligations without incurring unacceptable losses. Company’s objective is to, at all time maintain optimum levels of liquidity to meet its cash requirements. Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including overdraft, debt from banks at optimised cost and cash flow from operations.

The table summarises the maturity profile of Company’s financial liabilities based on contractual undiscounted payments .

Note-8 Pending Litigation

There are no pending litigation against the company which impact the financial position of the company.

Note -9 First Time Adoption of Ind AS

These are company’s first standalone financial statements prepared in accordance with Ind AS. For the purposes of transition to Ind AS, the Company has followed the guidance prescribed in Ind AS 101 “First Time adoption of Indian Accounting Standard”, with April 01, 2016 as the transition date and IGAAP as the previous GAAP.

The transition to Ind AS has resulted in changes in the presentation of the financial statements, disclosures in the notes thereto and accounting policies. The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended March 31, 2018 anc the comparative information. An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s Balance Sheet and Statement of Profit and Loss, is set out in Note 37.2 and 37.3 Exemptions on first time adoption of Ind AS availed in accordance with Ind AS 101 have been set out in Note 37.1.

Note-10.1 Exemptions availed on first time adoption of Ind-AS 101

The Company has opted to consider the carrying value of all items of Property, plant & equipment recognised in the financial statement prepared under previous GAPP and use the same as deemed cost in the opening Ind AS balance sheet.

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 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for Impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP.

Explanations for reconciliation of Balance Sheet as previously reported under IGAAP to INDAS:-

1) The company has opted to revalue it’s investments at fair market value as per Ind AS-109. The company has also opted to consider all investments at fair value through other comprehensive income.

2) Certain assets and liabilities are regrouped / reclassified/ remeaured as financial/non financial assets or liabilities as per Ind AS requirements.

3) The impact of all Ind AS adjustements have been reflected in other equity.

4) Deferred tax impact on revaluation of land has been created as per Ind AS-12.

Note1 The company has revalued the land during the year and routed the revaluation surplus through other comprehensive income. The company has also created deferred tax liability on the said revaluation surplus. The company has reversed the revaluation done in earlier year on the building. 38

STANDARDS ISSUED BUT NOT YET EFFECTIVE

On March 28, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 for following standards to be effective from 1 April 2018:

Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115 will supersede the current revenue recognition guidance including Ind AS 18 Revenue, Ind AS 11 Construction Contracts and the related interpretations. Ind AS 115 provides a single model of accounting for revenue arising from contracts with customers based on the identification and satisfaction of performance obligations.

Ind AS 21, Foreign currency transactions and advance consideration:

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.

Application of above standards are not expected to have any significant impact on the Company’s Financial Statements.

11. The previous year’s figures have been regrouped, rearranged and reclassified to conform to current year Ind-AS presentation requirements.