Note - 1
General Information
Reliance Naval and Engineering Limited (“RNEL” or “the Company”) is a company limited by shares, incorporated and domiciled in India. The registered office of the company is located at Pipavav Port, Post Ucchaya, Via- Rajula, District Amreli (Gujarat) and the Company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The name of the Company got changed from Reliance Defence and Engineering Limited during the current year and fresh Certificate of Incorporation was issued by the Ministry of Corporate Affairs (MCA), Government of India on September 6, 2017. The Company is mainly engaged in the construction of vessels, repairs and refits of ships and rigs and heavy engineering. RNEL has a large shipbuilding/repair infrastructure in India including the largest Dry Dock in the world. The Company is the first private sector company in India to obtain the licence and contract to build Naval Offshore Patrol Vessels(NOPVs) for Indian Navy. The Shipyard has only modular shipbuilding facility in India with capacity to build fully fabricated and outfitted blocks. The fabrication facility spread over
2.1 million sq ft has annual capacity of 144,000 tons/year. The shipyard has pre-erection berth of 980 meter length and 40 meters width and two Goliath cranes with combined lifting capacity of 1200 tonnes, besides outfitting berth length of 780 meters.
2.2 During the year, the Company has capitalised borrowing cost aggregating to Rs.38,782.70 lacs (Previous year: Rs.33,618.79 lacs). The average rate used to determine the amount of borrowing cost is 10.95%. Additions during the year in the Computer Software include interest and financial charges of Rs.719.61 lacs (Previous Year: Rs. NIL).
2.3 In accordance with the Ind-AS 36 on “Impairment of Assets”, the Management has during the year carried out an exercise of identifying the assets that would have been impaired in respect of each cash generating unit. On the basis of this review carried out by the Management, there was no impairment loss on Fixed Assets during the year.
3.1 Equity Shares of E Complex Private Limited are pledged with Lenders for loan facilities availed by the Company
7.1 Reconciliation of tax expenses and the accounting profit multiplied by domestic tax rate:
Since the Company has incurred loss during the year ended March 31, 2018 and previous year, hence no tax is payable for these years as per provisions of Income Tax Act, 1961, the calculation of effective tax rate is not relevant and hence not given.
4.2 The Company has recognised deferred tax assets on carry forward business losses as sufficient future taxable income will be available against which deferred tax assets can be realised considering its present order book and anticipated orders and opportunities in the defence sector as convincing evidences.
5.1 The amount paid as MAT is allowed to be carried forward for being set off against the future tax liabilities computed in accordance with the provisions of the Income Tax Act, 1961 (“the Act”), other than section 115JB, in next fifteen years. Based on the future projection of the performances, the Company is expected to pay the Income Tax as per the applicable provisions, other than under section 115JB, of the Act. Accordingly, as advised in Guidance Note on “Accounting for credit available in respect of Minimum Alternate Tax under the Income Tax Act, 1961” issued by The Institute of Chartered Accountants of India (the ICAI),the excess of tax payable under section 115JB of the Act over tax payable as per the provisions other than section 115JB of the Act has been considered as MAT credit entitlement.
6.1 Refer Note No. 1(g)(VI) for basis of valuation.
4.2 All the Inventories of the Company are either mortagaged or hyphothecated against the secured borrowings of the Company as detailed in note no. 17 and 20 to the financial statements.
7.1 Trade receivables are non - interest bearing and receivable in normal operating cycle
All the above Loans are given for meeting working capital requirements of the Subsidiary Companies
b) Loans to employee and reimbursement of expenses are not considered for this clause.
c) None of the subsidiary Companies has invested in shares of the Company.
7.2 Terms and Rights attached to Equity Shares
The Company has only one class of Equity Share having par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation of the Company, the equity share holders will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amount. The distribution will be in proportionate to the number of equity shares held by the shareholders.
Capital Reserve: This Reserve was created at the time of forfeiture of amounts received against convertible share warrants in the financial year 2011 - 12. It shall be utilised in accordance with the provisions of the Companies Act, 2013 (the Act), however, not available for distribution of dividend.
Securities Premium Account: This Reserve was created when shares were issued at premium. It shall be utilised in accordance with the provisions of the Act.
Other Reserves: Other Reserve was created pursuant to first time adoption of Ind-AS as at April 01, 2015. It shall be utilised in accordance with the provisions of the Act, however, not available for distribution of dividend.
8.1 Compulsorily Redeemable Preference Shares
i) The Company has alloted 1,384,994 Equity Shares having face value of Rs.10 each per share at a premium of Rs.49.35 per share and 42,245,764 Compulsorily Redeemable Preference Shares (CRPS) having face value of Rs.10 each per share to one of its lenders against partial conversion of its outstanding debt. The CRPS are redeemable in 65 quarterly structured instalments commencing from March 2019 to March 2035. Annual dividend of 0.10% p.a. will be payable per CRPS on a cumulative basis.
ii) As at March 31, 2018 all the preference shares are held by HDFC Limited (March 31, 2017: NIL)
iii) Reconciliation of Preference Shares outstanding at the beginning and at the end of the year
8.2 Non Convertible Debentures (NCD)
In terms of MRA entered with certain lenders of the Company for Debt Restructuring, each of those lenders has a right of recompense as per extent guideline of CDR for reliefs and sacrifice extended by them. During the year the Company has paid one time cost towards right of recompense payable through issuance of Non Convertible Debentures. Accordingly Rs.16,239.65 lacs was charged to Statement of Profit or Loss and shown as “Exceptional Items” for the year and Rs.7,989.09 lacs has been capitalised as borrowing cost. Other terms and conditions are given below:
i These NCDs having coupon rate of 9.50% and Face value of Rs.100 each are repayable in 49 quarterly structured instalments commencing from March 2019 and ending on March 2031.
ii The NCDs are to be secured by way of first pari passu charge and mortgage on all the immovable properties; hypothecation of all movable properties of the Company and on all the intangible assets of the Company; both present and future, second pari-passu charge on all current assets and first pari passu charge by way of mortgage over leasehold rights on 124.1 199 hectares of land belonging to E Complex Private Limited.
iii The Company was required to provide Debenture Redemption Reserve (DRR) of Rs.363.85 lacs upto March 31, 2018 (Previous Year: NIL) in terms of the Trust Deed executed and the provisions of the Companies Act 2013. In the absence of profits available, no provision for DRR is made in the books of account as at March 31, 2018. The requisite provisions will be made out of the profits available in the future years.
8.3 The Company had availed various secured financial facilities from the banks and financial institutions (“The Lenders”). The Lenders led by IDBI Bank had, through Joint Lenders’ Forum (ILF), referred the Debt Restructuring Scheme (‘Restructuring Scheme’) of the Company to Corporate Debt Restructuring Cell (“CDR Cell”). The Company and the Lenders who are members of the CDR forum (‘CDR Lenders’) have executed Master Restructuring Agreement (‘MRA’) dated March 30, 2015, by virtue of which the credit facilities extended by the CDR Lenders stand restructured and these restructured facilities are governed by the provisions stipulated in the MRA.
8.4 Secured Term loans as referred to above and Rs.522,518.30 lacs being part of current maturities of long term debt in note no. 22 are secured as under:
i) first pari passu charge and mortgage on all the immovable properties; hypothecation of all movable properties of the Company and on all the intangible assets of the Company; both present and future.
ii) Corporate Guarantee of SKIL Infrastructure Limited and personal guarantee of some of the erstwhile directors of the Company.
8.5 During the year 1 1,64,05,500 equity shares of the Company held by SKIL Infrastructure Limited (SKIL); 2,23,49,494 equity shares of the Company held by Grevek Investments and Finance Pvt Ltd (Grevek) and 1 equity share of the Company held by SKIL Shipyard Holdings Private Limited (SSHPL), which were pledged as security to the CDR lenders have been invoked by the lenders. Pending adjustment of value of above shares by the lenders aganist the amount borrowed by the Company, no accounting effect has been given in the Financial Statements as at March 31, 2018.
8.6 Secured Term loans of Rs.587,867.28 lacs are further secured as:
i) first pari passu charge by way of mortgage over leasehold rights on 124.1 199 hectares of land belonging to E Complex Private Limited and on sub-leasehold rights on 10.5 hectares of land belonging to Gujarat Maritime Board and second pari passu charge by way of hypothecation of all the current assets (including all receivables and inventories), both present and future.
ii) right to convert entire part of defaulted principal and interest into Equity Shares upon occurrence of events of default in the manner provided in the MRA.
iii) by way of Pledge of entire shareholding i.e. 2,17,09,327 Equity Shares of E Complex Private Limited held by the Company.
8.7 Repayment Terms
(i) Secured Rupee Term Loan of Rs.510,937.89 lacs are repayable in 28 quarterly structured instalments starting from September 30, 2017 to June 30, 2024, Rs.26,685.75 lacs are repayable in 24 quarterly structured instalments starting from June 30, 2019 to March 31, 2025, Rs.17,760.00 lacs in 28 quarterly structured instalments starting from September 30, 2017 to June 30, 2024, Rs.8,403 lacs in 40 quarterly structured instalments starting from August 31, 2005 to February 28, 2017, Rs.1 1,253.24 lacs in 61 quarterly structured instalments starting from March 31, 2019 to March 31, 2034 and Rs.530.19 lacs on May 25, 201 7 by way of bullet repayment.
(ii) Secured Foreign Currency Term Loan as referred above carry an interest rate of 2.78% and repayble in 41 quarterly structured instalments starting from March 31, 2019 to March 31, 2029.
8.8 Vehicle Loans referred to above including Rs.42.70 lacs being part of current maturities of long term debts in note no. 22 are secured by the Hypothecation of the specific vehicles financed. The loans are repayable in monthly equated instalments (including interest) as per repayment schedule starting from July 01, 2012 to March 15, 2021.
8.9 During the year the lenders have recalled all the loans and have invoked 14.51 Crores equity shares of the Company pledged with lenders and guarantees available with them. As at March 31, 2018, the Company has overdue of Rs.5,21,971.68 lacs included in current maturities of long term debts in note no 22 (Previous Year: Rs.8,403.00 lacs) and Rs.34,429.40 lacs included in interest accrued and due in note no 22(Previous Year: Rs.1 1,060.24 lacs) towards the principal and interest respectively as detailed below:
9.1 The above working capital loans from banks are secured by way of:
i) First pari passu charge by way of hypothecation of all the current assets (including all receivables and inventories); both present and future.
ii) Second pari passu charge by way of mortgage over leasehold rights on 1 24.1 1 99 hectares of land belonging to E Complex Private Limited and on sub-leasehold rights on 10.5 hectares of land belonging to Gujarat Maritime Board.
iii) Second pari passu charge and mortgage on all the immovable properties and hypothecation of all movable properties of the Company; both present and future.
9.2 The above working capital loans from banks are further secured by :
i) Corporate Guarantee of SKIL Infrastructure Limited and personal guarantee of some of the erstwhile directors of the Company.
ii) Pledge of entire shareholding i.e. 2,17,09,327 equity shares of E Complex Private Limited held by the Company.
10.1 Micro and Small Enterprises under the Micro and Small Enterprises Development Act, 2006 have been determined based on the information available with the Company and the required disclosures are given below:
10.2 All trade payables are non interest bearing and payable or settled with in normal operating cycle of the Company.
11.1 The Company has recognised liabilities based on substantial degree of estimation for provision for liquidated damages, warranty claims, estimated cost over contract revenue on shipbuilding contracts and costs estimated for revenue recognised as detailed below. Actual outflow is expected in the subsequent financial years.
Defined Benefit Plan
The Employees Gratuity Fund Scheme, which is a defined benefit plan, is managed by a trust maintained with Life Insurance Corporation of India (LIC). The Company has made contribution to the above mentioned trust upto the financial year ended March 31, 2009 and thereafter no contributions have been made. The Employees Leave Encashment Scheme which is a defined benefit plan is unfunded.
The present value of the obligation is determined based on actuarial valuation using Projected Units Credit Method, which recognizes each period of service as giving rise to additional units of employees benefit entitlement and measures each unit separately to buildup the final obligation.
The estimates of rate of increase in salary are considered in actuarial valuation, taking into account, inflation, seniority, promotion, attrition and other relevant factors including supply and demand in the employment market. The above information is certified by Actuary.
In the absence of detailed information regarding plan assets which is funded with Life Insurance Corporation of India, the composition of each major category of plan assets, the percentage and amount for each category of the fair value of plan assets has not been disclosed.
The above sensitivity analysis is based on an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. In presenting the above sensitivity analysis, the present value of defined obligation has been calculated using the projected unit credit method at the end of reporting period, which is the same as that applied in calculating the defined obligation liability recognized in the Balance Sheet.
vii) Risk Exposure :
1 Investment Risk: The Present value of the defined benefit plan laibility is calculated using a discount rate which is determined by refrence to market yeilds at the end of reporting period on government bonds
2 Interest Risk: A decrease in the bond interest rate will increase the plan liability: however, this will be partially offset by an increase in th return on the plan debt investment.
3 Liquidity Risk: The present value of the defined plan liability is calculated by refrence to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability
4 Salary Risk: The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an incraese in the salary of the plan participants will increase the plan’s liability.
viii) Details of Asset-Liability Matching Strategy :- Gratuity benefits liabilities of the company are funded. There are no minimum funding requirements for a Gratuity benefits plan in India and there is no compulsion on the part of the Company to fully or partially pre-fund the liabilities under the Plan. The trustees of the plan have outsourced the investment management of the fund to an insurance company. The insurance company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it may not be possible to explicitly follow an asset-liability matching strategy to manage risk actively in a conventional fund.
The estimates of rate of increase in salary are considered in actuarial valuation, taking into account, inflation, seniority, promotion, attrition and other relevant factors including supply and demand in the employment market. The above information is certified by Actuary.
12.1 The Company had issued a corporate guarantee for loan availed by Reliance Marine and Offshore Limited (“RMOL”), a wholly owned subsidiary from IFCI Limited (“IFCI”). During the year, IFCI has issued a loan recall notice and subsequently applied for the insolvency petition under the Insolvency and Bankruptcy Code 2016 due to continued default in repayment of principal and interest against RMOL and the Company. In responce to the recall notice, the company and RMOL has requested to the lender to liquidate the securities available with them and has offered to settle the balance amount through promoters’ support. The petition filed by the lender is not yet admitted by the NCLT. Accordingly, no provision against the above corporate guarantee is considered necessary at this stage.
Note - 13
The Company has issued a Bond cum legal undertaking for Rs. 64,400 lacs (Previous Year: Rs. 64,400 lacs) in favour of President of India acting through Development Commissioner of Kandla Special Economic Zone for setting up a SEZ unit for availing exemption from payment of duties, taxes or cess or drawback and concession etc, a General Bond in favour of the President of India for a sum of Rs. 15,300 lacs (Previous Year : Rs. 15,300 lacs) as Security for compliance of applicable provisions of the Customs Act, 1962 and the Excise Act, 1944 for EOU unit, a bond cum legal undertaking for Rs. 1,350.00 lacs (Previous Year: 1,350.00 lacs) in favour of President of India acting through D.R.I. Ahmedabad, Zonal Unit as security of compliance under Central Excise Act, 1944.
Note - 14
The Company has received Twenty Three show cause notices in its 100% EOU unit from the Office of the Commissioner of Central Excise, Bhavnagar and Directorate of Revenue Intelligence which mainly relates alleged wrong availment of Cenvat/Customs Duty/Service Tax Credit on inputs/services used for Construction of Dry Dock and Goliath Cranes and non-submission of original evidences/documents and some procedural non-compliances. The Company does not foresee any losses on this account.
Note - 15 Going Concern
The Company primarily is in the business of Ship Building and Ship Construction having state of the art infrastructure facilities including Dry Dock complex, Goliath Cranes, Fabrication facilities, Blasting and Painting Cell, etc, and is capable of undertaking complex and large size/volume of fabrication for varied industries.
The overall infrastructure facility required currently available with the company are nearly new and have long useful life. For last few years there is a downtrend in the shipbuilding industry globally. In defence sector also the process of awarding contract has been deferred in respect of many large orders for variety of reasons.
All these have resulted in temporary financial constraints on the Company, losses in the operations, erosion of net worth and calling back of loans by the secured lenders. Therefore Company has approached its lenders for an appropriate Resolution Plan with the objective to make the operations of the Company viable and sustainable. The Company is engaged with the Lenders for Resolution Plan.
Considering the strength of the Company’s world class infrastructure, business plans and future outlook as assessed, the management is quite confident to reach at some workable solution to resolve financial position of the Company and to continue as a going concern. The company is participating in several business opportunities both in & outside India, and hopeful to get business in the coming years. Further, the promoters of the Company have supported the Company since management take over by them in January 2016 and will continue to do so in future in their capacity as promoters.
Pending such resolution and on considering the facts given in above paras:
a. Accounts have been prepared on going concern basis;
b. The company continued to account for deferred tax assets on losses, which will be available for set off against future profits in view of the anticipated orders and opportunities in the defence and non-defence sector and expected resolution with the secured Lenders and improved availability of working capital; and
c. No provision for impairment of Non-current assets have been considered necessary.
Note - 16
Fair Value Measurements
The fair value of the financial assets and liabilities are included at the amount that would be received on sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
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 the financial statements. To provide and indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescrible under the accounting standard. An explanation of each level follows underneath the table.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments that have quoted price and financial instruments like Mutual Funds for which NAV is published by the Mutual Fund Operator. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period and Mutual Fund are valued using the Closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value and instruments are observable, the instrument is included in level 2. Instruments in the level 2 category for the company include forward exchange contract derivatives
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in this level. Instruments in level 3 category for the Company include unquoted equity shares and FCCDs, unquoted units of mutual funds and unquoted units of venture capital funds.
The carrying amount of all other Financial Assets is reasonably approximate to its fair value.
Financial Liabilities
The Preference shares are classified as a financial Libility. The Liability in case of Preference Shares and Non Convertible Debentures are initially recognised on fair value and the difference between fair value and transaction price is considered as Other Income. Subsequently the liability is measured at amortised cost using the effective interest rate. The impact on this account has been recognsied as other income on the transaction date and subsequent impact are recognised as finance cost in the Statement of Profit and Loss.
The carrying amount of all other Financial Liabilities is reasonably approximate to its fair value. The fair values disclosed above are based on discounted cash flows using current borrowing rate. These are classified at level 2 fair values in the fair value hierarchy due to the use of observable inputs.
During the years mentioned above, there have been no transfers amongst the levels of the hierarchy.
Valuation process
The Company evaluates the fair value of the financial assets and financial liabilties on periodic basis using the best and most relevant data available. Also the Company internally evaluates the valuation process periodically.
Note - 17 Segment Reporting
Segment information as per Ind AS - 108 on Operating Segment :
Information provided in respect of revenue items for the year ended March 31, 2018 and in respect of assets/liabilities as at March 31, 2018.
I The risk - return profile of the Company’s business is determined predominantly by the nature of its products. The Company is engaged in the business of Shipbuilding, Repair and Fabrication. Further based on the organisational structure, internal management reporting system, nature of production process and infrastructure facilities used, there are no separate reportable segments.
III Revenue from Major Customers :
Revenue from operations include Rs.27,441.79 lacs (Previous Year: Rs.49,545.55 lacs) from one customer (Previous Year: three customers) having more than 10% of the total revenue
Note - 18
Related Party Disclosures
a) List of Related parties
1 Subsidiary Companies
E Complex Private Limited
Reliance Marine and Offshore Limited
Reliance Lighter Than Air Systems Private Limited
Reliance Technologies and Systems Private Limited
Reliance Engineering and Defence Services Limited
PDOC Pte. Ltd.
2 Associates
Reliance Defence Systems Private Limited
Reliance Defence Limited
Reliance Infrastructure Limited
SKIL Infrastructure Limited (up to March 16, 2018)
Conceptia Software Technologies Private Limited
3 Key Managerial Personnel
Cmde. K. Subramaniam, NM (Retd.) (upto 31.03.2018)
Mr. Madan Pendse (upto 01.08.2017)
Mr. Nikhil Jain (w.e.f.: 02.08.201 7)
Mr. Ajit Dabholakar (upto 31.03.2018)
b) Terms and Conditions of transactions with related parties
The Transactions with related parties are at arm’s length price and in the ordinary course of business. Outstanding balances at the year-end are unsecured and interest have been accounted on market rate except the advances, which is merely reimbursement of expenses. This assessment is undertaken at each financial year through examining the financial position of the related party and the market in which the related party operates.
3 During the year SKIL Infrastructure Limited ceased to be a related party of the Company. The Loan outstanding on April 1, 2017 was Rs.254.02 Lacs. Interest expenses of Rs.29.22 lacs (Previous Year: Rs.30.48 lacs) has been provided on Loan taken for the period of relationship exist.
Figures in brackets represents previous year’s amounts.
d) Details of Loans given, investment made and Guarantee given, covered u/s 186(4) of the Companies Act, 2013
i Loan given and investment made are given under the respective head
ii Corporate Guarantee have been issued on behalf of subsidiary Companies, details of which are given in related party transactions above
Note - 19 Operating Lease
The Company has entered in to a non cancellable leasing agreements for Land and Infrastructure Facilities for a period between 30 to 60 years which are renewable by mutual consent on mutually agreeable terms. There is an escalation clause in the lease agreement during the lease period in line with expected general inflation. There are no restrictions imposed by lease arrangements and there are no sub leases. There are no contingent rents. Disclosures as required under Ind-AS 17 on “Lease” are given below: Future minimum Lease payments under non-cancellable operating lease:
Note - 20
Financial Risk Management Objective and Policies
The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables and advances from Customers. The main purpose of these financial liabilities is to finance the Company’s operations, projects under implementation and to provide guarantees to support its operations. The Company’s principal financial assets include Investment, loans and advances, trade and other receivables and cash and bank balances that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors, reviews and agrees policies for managing each of these risks, which are summarised below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial assets will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial Assets affected by market risk include loans and borrowings, deposits and derivative financial instruments.
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. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with floating interest rates.
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’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a foreign currency).
Commodity price risk
The Company is affected by the price volatility of certain commodities. Its operating activities require the on-going purchase or continuous supply of steel plates. Therefore the Company monitors its purchases closely to optimise the price.
Credit risk
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables and advances to suppliers) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
Trade receivables
Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. An impairment analysis is performed at each reporting date on an individual basis for major clients.
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 the Company’s policy. Investments of surplus funds are made only with approved authorities. Credit limits of all authorities are reviewed by the Management on regular basis.
Liquidity risk
Liquidity risk is the risk that the Company will face in meeting its obligation asscoiated with its financial liabilities. The Company monitors its risk of a shortage of funds using a liquidity planning tool.
The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of Bank Overdrafts, Letter of Credit and Working Capital Limits.
Note - 21
Capital Management
For the purpose of the Company’s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The funding requirement is met through a mixture of equity, internal accruals, long term borrowings and short term borrowings.
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.
Note - 22
Post Reporting Events
No adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation
Note - 23
Authorisation of Financial Statements
The financial statements for the year ended March 31, 2018 were approved by the Board of Directors on April 23, 2018. The Management and authorities have the power to amend the Financial Statements in accordance with section 130 and 131 of The Companies Act, 2013.
Note - 24
Previous year figures have been regrouped and rearranged, wherever necessary to make them comparable with those of the current year.
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