1) General Reserve:
The Company transferred certain percentage of retained earnings to general reserve as per the provisions for dividend distribution under the Companies Act, 2013.
2) Security Premium Reserve:
Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.
Expenses incurred by the Company during the year ended 31 March 2018 aggregating to Rs, 8.91 Lakhs in connection with the Preferential equity shares allotment have been adjusted towards the securities premium reserve. Expenses includes (listing fees, Legal and professional charges, Depository service charges, fees & stamp, share registrar fees).
3) Retained Earning
This Reserve represents the cumulative profits of the Company and effects of measurement of defined benefit obligations. This Reserve can be utilized in accordance with the provisions of the Companies Act, 2013.
Notes:
1. Term Loan from banks comprises of :
(a) Rs, 121.52 Lakhs ( P.Y. Rs, 200.00 Lakhs) from Allahabad Bank for acquisition of an Office Premise and same is secured by exclusive charge on assets funded from this term loan. It is repayable in 20 equal quarterly installments of Rs, 20 Lakhs each beginning from 31st Dec.2014 and ending on 30th Sept. 2019 .
(b) Rs, 29.06 Lakhs (P.Y. Rs, 44.68 Lakhs) from Allahabad Bank for acquisition of Plant and Machinery at its Silvassa unit and same is secured by exclusive charge on assets funded from this term loan and collaterally secured by Pari Passu second charge on the immovable assets of the company located at Silvassa unit, both present and future with Axis bank limited. It is repayable in quarterly installment of Rs, 4 Lakhs beginning from 30th Sept.2016 and ending on 31st march 2020 .
(c) (i) Rs, 517.24 Lakhs (P.Y. Rs, 152.04 Lakhs) from Kotak Mahindra Bank Ltd. out of total sanctioned term loan of Rs, 800 Lakhs-for acquisition of Plant and Machinery at its Noida Unit and same is secured by exclusive charge on assets funded from this term loan and it is repayable in 20 equal quarterly installments.
(ii) Rs, 375.00 Lakhs ( P.Y. Rs, 475.00 Lakhs) from Kotak Mahindra Bank Ltd. for acquisition of an Office Premise and same is secured by exclusive charge on assets funded from this term loan. It is repayable in 20 equal quarterly installments of Rs, 25 Lakhs each beginning from 25th Jan. 2017 and ending on 25th Oct. 2021.
(iii) Both the above term loans from Kotak Mahindra Bank Limited are collaterally secured by registered mortgage of certain office premises and equitable mortgage of lease hold land and building of its Noida unit.
(d) Rs, 41.50 Lakhs (P.Y. Rs, 13.33 Lakhs) from ICICI bank andRs, Nil/-( P.Y. Rs, 4.96 Lakhs) from Kotak Mahindra Bank Ltd. for Vehicles and same are secured by hypothecation of Motor Vehicles and are repayable over a period of three Years.
2. The term loans aggregating to Rs, 1042.82 Lakhs ( P.Y. Rs, 871.72 Lakhs) obtained from Allahabad Bank and Kotak Mahindra Bank Ltd. are personally guaranteed by the Managing Director and Executive Director.
3. Interest free Sales Tax deferral is availed from the Government of Maharashtra in accordance with the 1988 Package Scheme of Incentives / The 1993 Package Scheme of Incentives. The said deferral is repayable in 15 annual instalments of unequal amounts ranging from Rs,1.67 Lakhs to Rs, 219 Lakhs starting from 30th June 2010 and ending on 1st April 2024.
4. Deposits from Shareholders carry interest @ 10% p.a./11%.p.a./12% p.a.- (P.Y.11%.p.a./12% p.a.) and are repayable after 2 to 3 years from the respective dates of deposit.
Total 3,503.20 3,579.62 3,773.45
1. Cash Credit and Packing Credit Facility from Banks comprises of :
(a) Rs, 2205.89 Lakhs (P.Y. Rs, 1821.90 Lakhs) from Axis bank secured by Pari passu first charge on current assets of the company both present and future and collaterally secured by (i) Pari passu first charge on the immoveable fixed assets of the Company located at of its Silvassa unit, both present & future, (ii) Pari passu second charge on the entire moveable fixed assets of the company, both present & future. Excluding those charged exclusively to other term lenders and (iii) Negative lien on immovable fixed assets other than those of its Silvassa unit and those charged exclusively to other term lenders, and also personally guaranteed by Managing Director and Executive Director.
(b) Rs, 961.20 Lakhs (P.Y. Rs, 915.47 Lakhs) from Allahabad Bank secured by Pari passu first charge on current asstets of the Company both present and future and collaterally secured by (i) Pari passu first charge on the immovable fixed assets of the company located at its Silvassa Unit, both present & future (ii) Pari passu second charge on the entire movable fixed assets of the company,both present & future except those charged exclusively to other term lenders and (iii) Negative lien on immovable fixed assets other than those of its Silvassa unit and those charged exclusively to other term lenders, and also personally guaranteed by Managing Director and Executive Director.
iv) Consequent to the introduction of Goods and Services Tax (GST) with effect from 1st July, 2017, Central Excise Value Added Tax (VAT) etc. have been replaced by GST. In accordance with Indian Accounting Standard - 18 on Revenue and Schedule III of the Companies Act, 2013, GST is excluded and Excse Duty is not excluded from Gross Revenue from sale of products and services for applicable periods. In view of the aforesaid restructuring of indirect taxes, Gross Revenue from sale of products and services and Excise duty for the year ended 31st March, 2018 is not comparable with the previous year.
Note: 5 Transition to Ind AS:
The financial statements have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS) prescribed under Section 133 of the Companies Act, 2013 and other recognized accounting practices and polices to the extent applicable. The Company has adopted Ind-AS on April 1, 2017 with the transition date as April 1, 2016, and adoption was carried out in accordance with Ind-AS 101 - First Time Adoption of Indian Accounting Standards. The previous period's figures have been regrouped or rearranged wherever necessary.
a) Exemptions and exception availed
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from Previous Indian GAAP to Ind AS.
(i) Ind AS optional exemptions
1) Deemed Cost
As per Ind AS 101, an entity may elect to use carrying values of all property, plant and equipment and other intangible assets as recognized in the financial statements as at the date of transition to Ind AS, measured as per the Previous Indian GAAP and use that as its deemed cost as at the date of transition.
Accordingly, the Company has elected to measure property, plant and equipment and other intangible assets at their Previous Indian GAAP carrying values. Refer to Note 4 and 5.
2) Determining whether an arrangement contains a lease
I nd AS 101 includes an optional exemption that permits an entity to apply the relevant requirements in Appendix C of Ind AS 17 for determining whether a contract or an arrangement existing at the date of transition contains a lease. If the entity elects the optional exemption, then it assesses whether the lease contracts / arrangements existing at the date of transition contain lease are based on the facts and circumstances existing at that date except where the effect is expected not to be material. The Company has elected to apply this exemption on the basis of facts and circumstances existing as at the transition date.
(i) Ind AS mandatory exceptions 1) Estimates
Under Ind AS 101, an entity's estimates in accordance with Ind AS at 'the date of transition to Ind AS' (i.e. 1 April 2016) or 'the end of the comparative period presented in the entity's first Ind AS financial statements’ (i.e. 31 March 2017), as the case may be, should be consistent with estimates made for the same date in accordance with the Previous Indian GAAP.
The Company's Ind AS estimates as at the transition date are consistent with the estimates made as at the same date made under Previous Indian GAAP. Key estimates considered in preparation of the financial statements that were not required under the Previous Indian GAAP are listed below:
- Fair valuation of financial instruments carried at FVTPL.
- Determination of the discounted value for financial instruments carried at amortized cost.
(ii) Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exists at the date of transition to Ind AS.
b) Notes to the reconciliation of equity as at 1 April 2015 and 31 March 2016 and profit and loss for the year ended 31 March 2016
1) Fair valuation of investments
Under Previous Indian GAAP, investments in equity instruments were classified as long-term investments and current investments, respectively, based on intended holding period and reliability. The long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. The current investments were carried at lower of cost or fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments amounting to Rs, 64.16 Lakhs have been recognized in other equity as at the date of transition (i.e. 1 April 2016). The profit and other equity for the year ended 31 March 2017 has increased by Rs, 8.29 Lakhs due to the fair value changes.
2) Deferred tax assets / liabilities (net)
Previous Indian GAAP requires accounting for deferred tax, using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. In addition, the various transitional adjustments lead to temporary differences. On the date of transition (i.e 1 April 2016), the net impact on deferred tax liabilities is of Rs, 60.31 Lakhs (31 March 2017: Rs, 42.67 Lakhs). The profit and other equity for the year ended 31 March 2016 have increased by Rs, 257.60 Lakhs due to differences in temporary differences.
3) Other Comprehensive Income
Under Previous Indian GAAP, there was no requirement to disclose any item of profit or loss in Other Comprehensive income. However, Ind AS requires certain items of profit or loss to be reclassified to other comprehensive income. Consequent to this, the Company has reclassified measurement of defined benefit plans from Statement of Profit and Loss to other comprehensive income
4) Retained earnings
Retained earnings as at 1 April 2016 has been adjusted consequent to the above Ind AS transition adjustments.
Note: The above other financial liabilities includes Foreign Currency Forward and Options Contracts. Fair value measurement is done considering the Level -1 of Fair Value Hierarchy as per the Ind-AS 113.
Note: 38(d) Financial Risk Management Objectives and Policies :
The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company's operations and to provide guarantees to support its operations directly or indirectly. The Company's principal financial assets include investments, loans, trade and other receivables, cash and cash equivalents that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The below note explains the sources of risk which the entity is exposed to and how the entity manages the risk :
Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.
Trade receivables
Customer credit risk is managed by the Company's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed by the management on regular basis with market information and individual credit limits are defined accordingly. Outstanding customer receivables are regularly monitored and any further services to major customers are approved by the senior management. Based on the business environment in which the company operates, Management considers that Trade receivable for both local customers, foreign customers and Government parties are default if the(credit impaired) if receivables are outstanding for more than 3 years.
On account of adoption of Ind-AS 109, 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 and the Company's historical experience for customer. The company manages its credit risk through credit approvals, establishing credit limits & monitoring credit worthiness of customer.
Financial instruments and cash deposits
Credit risk from balances/investments with banks and financial institutions is managed in accordance with the Company's treasury risk management policy. Investments of surplus funds are made only with approved counterparties and within limits assigned to each counterparty. The limits are assigned based on corpus of investable surplus and corpus of the investment avenue. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty's potential failure to make payments.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as and when required.
The Treasury Risk Management Policy includes an appropriate liquidity risk management framework for the management of the short-term, medium-term and long term funding and cash management requirements. The Company manages the liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The Company invests its surplus funds in bank fixed deposit and liquid schemes of mutual funds, which carry no/negligible mark to market risks.
The table below provides details regarding the maturities of significant financial liabilities as of March 31, 2018, March 31, 2017 and March 31, 2016:
Market Risk
Market risk comprises two types of risk: price risk, interest rate risk and currency risk. The risks may affect income and expenses, or the value of its financial instruments of the Company. The objective of the Management of the Company for market risk is to maintain this risk within acceptable parameters, while optimizing returns. The Company exposure to, and the Management of, these risks is explained below:
Price risk
Equity price risk is related to the change in market price of the investments in quoted equity securities. The value of the financial instruments is not material and accordingly any change in the value of these investments will not affect materially the profit or loss of the Company.
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. Since, the Company has insignificant interest bearing borrowings, the exposure to risk of changes in market interest rates is very low. The Company has not used any interest rate derivatives.
Interest rate sensitivity
No sensitivity analysis is prepared as the Company does not expect any material effect on the Company's results arising from the effects of reasonably possible changes to interest rates on interest bearing financial instruments at the end of the reporting period.
Foreing Exchange Risk
Foreign exchange risk arises on future commercial transactions and on all recognized monetary assets and liabilities, which are denominated in a currency other than the functional currency of the Company. The Company's management has set policy wherein exposure is identified, benchmark is set and monitored closely, and accordingly suitable hedges are undertaken. Policy also includes mandatory initial hedging requirements for exposure above a threshold.
The Company's foreign currency exposure arises mainly from foreign exchange imports, exports and foreign currency borrowings, primarily with respect to USD, EURO & GBP.
As at the end of the reporting period, the carrying amounts of the company's foreign currency denominated monetary assets and liabilities in respect of the primary foreign currency i.e. USD , EURO, GBP and derivative to hedge the exposure, are as follows:
Note: 38(e) Capital Management :
For the purpose of the Company's capital management, capital includes issued equity share capital, securities premium and all other reserves attributable to the equity holders of the Company. The primary objective of the Company's capital management is to maximize the value of the share and to reduce the cost of capital.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company can adjust the dividend payment to shareholders, issue new shares, etc. The Company monitors capital using a gearing ratio, which is net debt divided by total equity. The Company includes within net debt, interest bearing loans and borrowings, less cash and cash equivalents.
(b) No provision for disputed income tax demands of Rs, 105.01 Lakhs (P.Y. Rs, 105.01 Lakhs) has been made since the same are contested at appropriate forum and the company do not expect any liability. Payment of Rs, 105.01 Lakhs (P.Y. Rs, 105.01 Lakhs) against said disputed demands has been shown under the head "Non-Current Assets-Income Tax Assets (net) ".
Note: 38(h) Segment Information:
Information about Primary Business Segment
The company has identified Business Segment as the Primary Segment. Segments have been identified taking into account the nature of the products, differing risks and returns, organisational structure and internal reporting system. The Company is engaged in all kind of Printing and Packaging of Material & Paper Board Carton, consequently the Company have separate reportable business segment for the year ended March 31, 2018.
Note: 38 (j) Related Party Disclosure : i) Relationship
Description of relationship Names of Related Parties
Key Management Personnel : Mr. R.V. Maheshwari - Chairman & Managing Director
Mr. R.R. Maheshwari - Executive Director Mr. Prakash Maheshwari - Whole time Director Mr. Sanjay Maheshwari - Whole time Director
Relatives of Key Management Personnel / Mr. Naveenkr Maheshwari - Relative of Chairman & Managing Director
Individuals having control or significant influence Mr. Rahul Maheshwari -Relative of Executive Director
Enterprises owned/controlled by Key Management Orient Fincorp Limited Personnel/ individuals having control or significant Orient Printers influence or their relatives
N.L. Packaging Private Limited
Salasar Investment & Leasing Private Limited
Vedant Stones Private Limited
Enterprise of which the Company is an Associate Fortune Couriers Limited
Notes:
1) The list of related parties above has been limited to entities with which transactions have taken place.
2) Related party transactions have been disclosed till the time the relationship existed.
(iv) Related parties identified by the Management and relied upon by the Auditors.
(v) No balances in respect of related parties have been written off.
Note: 8(k) Operating lease arrangements :
The Company has taken/given various premises under cancellable operating leases. These lease arrangements are normally renewable on expiry. The rental expenses in respect of premises taken on operating leases was Rs, 61.86 Lakhs (P.Y. Rs, 53.30 lakhs) and rental income in respect of premises given on operating leases was Rs, 55.42 Lakhs (P.Y. Rs, 41.75 Lakhs).
Note: 38(l) Expenditure on Corporate Social Responsibility :
Section 135 of the Companies Act provides the threshold limit for applicability of the CSR to a Company i.e. (a) net worth of the company to be Rs, 500 crore or more; (b) turnover of the company to be Rs, 1000 crore or more; (c) net profit of the company to be Rs, 5 crore or more. Further as per the CSR Rules, the provisions of CSR are not only applicable to Indian companies, but also applicable to branch and project offices of a foreign company in India CSR Committee and Policy:
Every qualifying company requires spending of at least 2% of its average net profit for the immediately preceding 3 financial years on CSR activities. Further, the qualifying company will be required to constitute a committee (CSR Committee) of the Board of Directors (Board) consisting of 3 or more directors. The CSR Committee shall formulate and recommend to the Board, a policy which shall indicate the activities to be undertaken (CSR Policy); recommend the amount of expenditure to be incurred on the activities referred and monitor the CSR Policy of the company. The Board shall take into account the recommendations made by the CSR Committee and approve the CSR Policy of the company. The company is not meeting the Thrashold limit specified under companies Act. so CSR provision is not applicable for the current year.
Note: 7 (m) Revenue recognition under Ind AS 115 :
Under Ind AS 115, an entity recognises revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer. A good or service is considered to be transferred when the customer obtains control. Control of the good or service refers to the ability to direct its use and to obtain substantially all of its remaining benefits (i.e., right to cash inflows or reduction of cash outflows generated by the good or service). Control also means the ability to prevent other entities from directing the use of and receiving the benefit from, a good or service.
Ind AS 115 would be applicable for accounting periods beginning on or after 1 April 2018. The application of this standard is not expected to have any significant mpact on the companies financial statements.
Note: 8(n)
In the opinion of Board of Directors, the assets other than fixed assets and non-current investments have value on realisation in ordinary course of business at least equal to the amount at which they are stated except as otherwise stated. Provision for all known and determined liabilities is adequate and not in excess of the amount reasonably required.
Note: 9 o) Previous year regrouping:
Previous year's figures have been regrouped / reclassed, where necessary, to confirm to current year's classification. This does not impact recognition and measurement principles followed for preparation of standalone financial statements.
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