Note 1:General information about the Company:
AMJ Land Holdings Limited (formerly Pudumjee Pulp and Paper Mills 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 two stock exchanges in India. The registered office of the Company is located at Thergaon, Pune-411033, Maharashtra, India. The Company is primarily engaged in the business of real estate development, leasing and wind power.
The standalone financial Statements were authorised for issue in accordance with resolution passed by the Board of Directors of the Company on May 24, 2019.
(i) Terms/Rights attached to Equity Shares :
The Company has only one class of equity shares having a par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of Interim Dividend.
In the event of liquidation of the Company, the holder of equity shares will be entitled to receive any of the 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.
2(a) Nature and purpose of reserves
(i) Securities premium:
Securities premium reserve is used to record premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.
(ii) General reserve:
General reserve is a free reserve and it represents amount transferred from retained earnings.
(iii) Capital reserve:
Capital reserve comprises of :
i) Rs. 5.86 lakhs on reissue of forfeited shares
ii) Rs. 1441.53 on revaluation and conversion of land as stock in trade (Refer note 7)
iii) Rs. 32.4 lakhs on consolidation of joint operations with Pudumjee Gcorp Developers
(iv) Retained earnings:
Retained earnings comprises of the Company’s undistributed earnings after taxes.
(v) FVOCI equity instrument:
The fair value changes of the long term investments in securities have been recognised in reserves under FVOCI equity instruments as at the date of transition and subsequently in the other comprehensive income for the year.
a) Term loan - 1 carries interest at (Prime lending rate) PLR -1.75% p.a. Loan amount is repayable in quarterly instalments of Rs. 187.5 lakhs (excluding interest) starting from March 2018 till December 2019.The loan is secured by Corporate guarantee of partners and Land and building under construction in phase III in M/s.Pudumjee Gcorp Developers.
b) Term loan - 2 carries fixed interest at 10.7% p.a. Loan amount is repayable in monthly instalments starting from February 2016 till February 2019.The loan is secured by vehicle purchased therefrom.
(i) Leave obligations -
The leave obligation covers the Company’s liability for accumulated leaves that can be encashed or availed. The company does not have an unconditional right to defer settlement for any of these obligations. However, 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 and accordingly amounts have been classified as current and non current based on actuarial valuation report.
(ii) Defined benefit plans:
a Gratuity - The Company provides for gratuity for employees as per the terms of employment. Employees who are in continuous service at least for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is calculated at the last drawn monthly basic salary multiplied by 15 days salary for each completed years of service of the employee. The scheme is funded with Life Insurance Corporation of India (LIC).
In addition, employees who have completed 20 years of service are eligible to additional gratuity computed at last drawn monthly basic salary multiplied by 7 days salary for each completed years of service of the employee. The additional gratuity benefit is unfunded.
The net liability disclosed above relates to unfunded plan. The Company has no legal obligation to settle the deficit in the unfunded plans with an immediate contribution or additional contribution. The Company intends to contribute in line with the recommendations of the fund administrator and the actuary. ab As at March 31, 2019 and March 31, 2018, plan assets were invested in funds managed by insurer (LIC).
ac Through its defined benefit plans, the group is exposed to number of risks, the most significant of which are detailed below:
Asset Volatility: The Plan liabilities are calculated using a discount rate set with reference to government bond yields. If plan assets underperform, this yield will create a deficit. The plan asset investments are in funds managed by insurer. These are subject to interest rate risk.
Changes in bond yield: A decrease in government bond yields will increase plan liabilities, although this may be partially offset by an increase in the returns from plan asset.
Defined benefit liability and employer contributions:
ad The Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans. Within the framework, the Company’s ALM objective is to match assets to the gratuity obligations by investing in funds with LIC in the form of a qualifying insurance policy.
The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the process used to manage its risks from previous periods.
ae The Company expects to contribute Rs. 2 lakhs to the defined benefit plan during the next annual reporting period.
af The weighted average duration of the defined benefit obligation is 6.24 years (2018: 7.30 years). The expected maturity analysis of undiscounted pension and gratuity is as follows:
* Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.
** The overall expected rate of return on assets is based on the expectation of the average long term rate of return expected on investments of the Fund during the estimated term of the obligations.
*** The estimates of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors, such as demand and supply in the employment market.
(iii) Defined contribution plans:
The Company also has certain defined contribution plans. Contributions are made to recognised funds for employees at the prescribed rate of basic salary as per regulations. The contributions are made to registered funds administered/approved by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. In respect of these plans, contributions paid and recognised in the Statement of Profit and Loss are as follows:
* Other advances is deposit against prospective joint venture for real estate project.
**During the year ended March 31, 2019, the company recognised revenue of Rs. 586.90 lakhs arising from opening unearned revenue as of April 1, 2018.
# As permitted under the transitional provisions in Ind AS 115, the transaction price allocated to (partially) unsatisfied performance obligations as of 31st March, 2018 is not disclosed.
ii) Management expects that the transaction price allocated to the partially unsatisfied contracts as of 31st March 2019, as shown above will be recognised as revenue during the next year.
b) Fair Value Hierarchy:-
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised and measured at fair value. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Financial assets and liabilities measured at fair value - recurring fair value measurements At 31-Mar-2019
Level 1: This hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual funds that have quoted price. The fair value of all equity instruments which are traded in the stock exchange is valued using the closing price as at the reporting period. The fair value of all mutual funds are arrived at by using closing Net Asset Value published by the respective mutual fund houses.
Level 2: Fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument as observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable data, the instrument is included in level 3. This is the case for unlisted equity securities.
d) As per Ind AS 107 “Financial Instrument:Disclosure”, fair value disclosures are not required when the carrying amounts reasonably approximate the fair value. Accordingly fair value disclosures have not been made for the following financial instruments:-
1. Trade receivables
2. Cash and cash equivalent
3. Other bank balances
4. Security deposits
5. Interest accrued on deposits
6. Other payables
7. Borrowings
8. Trade payables
9. Capital creditors
10. Unpaid dividends
11. Employee dues
Note 3:-FINANCIAL RISK MANAGEMENT
The Company’s business activities are exposed to a variety of financial risks, namely liquidity risk, market risks and credit risk. The Company’s senior management has the overall responsibility for establishing and governing the Company’s risk management framework. The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.
a. MANAGEMENT OF CREDIT RISK
Credit risk is the risk that a counter party will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities and from its investing activities, including loans, deposits with banks and other financial instruments.
i) Trade Receivables
Trade receivables are generally unsecured. For real estate projects customer credit risk is managed by requiring customers to pay advances through progress billings before transfer of ownership, eliminating the credit risk in this respect.
Customer credit risk has always been managed by the company through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. An impairment analysis is performed at each reporting date on an individual basis. The assessment is based on historical information of defaults.
The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers operate in largely independent markets. For real estate project the Company’s average execution cycle ranges from 12 to 36 months based on the nature of project. The company’s credit period generally ranges from 15-60 days.
The Company has a detailed review mechanism of overdue customer receivables at various levels within organisation to ensure proper attention and focus for realisation and based on assessment performed management has concluded that impact of expected credit loss is not material and current provision made against trade receivable is adequate to cover the provision on account of expected credit loss.
During the period, the Company made no write-offs of trade receivables. It does not expect to receive future cash flows or recoveries from receivables previously written off.
ii) Other financial assets:-
The Company maintains exposure in cash and cash equivalents, term deposits with banks, investments in money market liquid mutual funds. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company on an annual basis, and may be updated throughout the year. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.
Other financial assets that are potentially subject to credit risk consists of inter corporate loans. The company assesses the recoverability from these financial assets on regular basis. Factors such as business and financial performance of counterparty, their ability to repay, regulatory changes and overall economic conditions are considered to assess future recoverability. The company charges interest on such loans at arms length rate considering counter party’s credit rating. Based on the assessment performed, the company considers all the outstanding balances of such financial assets to be recoverable as on balance sheet date and no provision for impairment is considered necessary.
b. MANAGEMENT OF LIQUIDITY RISK
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company’s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses or risking damage to company’s reputation. In doing this, management considers both normal and stressed conditions.
Management monitors the rolling forecast of the company’s liquidity position on the basis of expected cash flows. This monitoring includes financial ratios and takes into account the accessibility of cash and cash equivalents. The company has access to funds from debt markets through loan from banks .The company invests its surplus funds in bank deposits and debt based mutual funds.
The following table shows the maturity analysis of the Company’s financial liabilities based on contractually agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.
c. MANAGEMENT OF MARKET RISK:
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of fluctuation in market prices. These comprise three types of risk i.e. currency rate, interest rate and other price related risks. Financial instruments affected by market risk include loans and borrowings, deposits and investments.
i.) Currency Risk and sensitivity:-
The Company does not have any currency risk as all operations are within India.
ii.) Interest Rate Risk and Sensitivity:-
Interest rate risk is the risk that the fair value or future cash flows on a financial instrument will fluctuate because of changes in market interest rates. The management is responsible for the monitoring of the company’s interest rate position. Various variables are considered by the management in structuring the company’s investment to achieve a reasonable, competitive, cost of funding.
The company does not have any additional impact on equity other than impact on retained earnings.
iii) Price Risk and Sensitivity:
The Company is mainly exposed to the price risk due to its investment in debt mutual funds and invesment Equity instruments carries at FVOCI. The price risk arises due to uncertainties about the future market values of these investments.At 31st March 2019, the investments in debt mutual funds amounts to INR 149.29 lacs (31-Mar-2018: INR 937.82 lacs).These are exposed to price risk.
The Company has laid policies and guidelines which it adheres to in order to minimise price risk arising from investments in debt mutual funds.
A 1% increase in prices would have led to approximately an additional INR 1.49 lacs gain in the Statement of Profit and Loss (2017-18: INR 9.37 lacs gain). A 1% decrease in prices would have led to an equal but opposite effect.The company also have investment in equities of other companies. The company treats the investment as strategic and thus fair value the investment through OCI. Thus the changes in the market price of the securities are reflected under OCI and hence not having impact on profit and loss. The profit or loss on sale will be considered at the time of final disposal or transfer of the investment. Also investment in associates, subsidiaries and joint venture are carried at cost.
Note 4:- Capital Risk Management
(a) Risk management
The Company’s policy is to maintain an adequate capital base so as to maintain creditor and market confidence and to sustain future development. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using gearing ratio, which is net debt divided by total capital plus net debt. Net debt comprises of long term and short term borrowings less cash and bank balances. Equity includes equity share capital and reserves that are managed as capital.
Proposed dividend on equity shares is subject to approval at the ensuing annual general meeting and is not recognised as a liability (including DDT thereon) as at year end.
Note 5:-
Land admeasuring about 3000 Sq.Meters has been acquired by Municipal Corporation for road widening purpose in the earlier years. The Company is entitled to TDR with an out side chance of cash compensation, which is yet to be determined and as such this will be included in accounts when finally decided since the relevant documentation is yet to be finalised and executed.
Note 6: (a)Operating lease as Leaser
The company leases various offices, land and buildings under non-cancellable operating leases expiring within two to five years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
(b) Operating lease as Leasee :-
The Company has taken on lease certain land and facilities under operating lease arrangements that expire over the years as shown in the table below. Rental expense incurred by the Company under operating lease agreements totalled approximately ‘38.34 lakhs (31-Mar-2018 : Rs. 110.93 lakhs)
Note 7: Impact of change in accounting policy:
The Company has adopted Ind AS 115 Revenue from contract with Customers, from April 1, 2018. However, this has not resulted in any impact on the revenue recognised for current year or previous year.
Advances form customers as at March 31, 2018 of Rs. 560.26 lakhs, has been reclassified and presented as unbilled revenues of Rs. 26.64 lakhs and unearned revenue of Rs. 586.90 lakhs, as required per Ind AS 115.
Additional disclosures as required under Ind AS 115 have been made in the financial statement presented. Comparative amounts presented have been re-grouped to align with current year’s presentation and disclosures.
Note 8: Reclassification
Previous year figure’s have been reclassified to confirm to this year’s classification.
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