1. Corporate Information

Shilp Gravures Limited is a public limited company, incorporated in the year 1993 under the provisions of the Companies Act, 1956 having its registered office at 778/6, Pramukh Industrial Estate, Sola-Santej Road, Rakanpur, Tal. Kalol, Gandhinagar - 382 722, Gujarat, India. The Company has set up, the first gravure roller manufacturing house in India. The Company is engaged in engraving of rollers using three different engraving technologies i.e. electronic, laser and chemical etching. The engraved rollers are used in printing and packaging industries.

2. Statement of compliance and basis of preparation and presentation

2.1 Statement of compliance

The financial statements have been prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015.

Upto the year ended March 31, 2017, the Company prepared its financial statements in accordance with the requirements of previous GAAP, which includes Standards notified under the Companies (Accounting Standards) Rules, 2006. These are the Company's first Ind AS financial statements. The date of transition to Ind AS is April 1, 2016. Refer note - 4 for details of first time adoption exemptions availed by the Company.

2.2 Basis of preparation and presentation

The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price 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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

- Level 3 inputs are unobservable inputs for the asset or liability.

1. Plant and Machinery includes softwares being an integral part of plant and machinery

2. For charges created on the aforesaid assets, refer note-18.

3. Gross Block and Accumulated Depreciation as on 1st April, 2016 under previous GAAP.

Note: The Company has used a practical expedient by computing the expected credit loss allowance for trade receivable based on a provision matrix. The Provision matrix takes into account historical credit loss experience and adjusted for forward -looking information. The expected credit loss allowance is based on the ageing of the days the receivable are due and the rates as given in the provision matrix. The provision matrix at the end of the reporting periods is as follow.

(ii) 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 share is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting. During the year ended 31st March 2018, the amount of per share dividend proposed for distribution to equity shareholders was Rs.1.50 (31st March 2017: Rs.1.50).

In the event of liquidation of the 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 -

1. The above capital reserve pertains to Capital subsidy received of Rs. 15.00 lacs from Government of Gujarat in 1993 towards incentive for setting up plant in backward area and such subsidy can be use for purchase of capital assets.

2. The general reserve is used from time to time to tranfer profits from retained earning for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of oher comprehensive income, items included in the general reserve will not be reclassified subsequently to profit or loss.

3. Retained Earning represent the amount that can be distributed by the Company as dividend, bonus etc. considering the requirements of the Companies Act, 2013. On 29th September, 2017, a dividend of Rs. 1.50 per share (total dividend of Rs. 92.25 Lacs) was paid to the holders of fully paid equity shares. In respect of year ended March 31, 2018, the directors propose that dividend of Rs. 1.50 per share be paid on fully paid equity shares. This dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liabilities in the financial statements. The total estimated equity dividend to be paid is Rs. 92.25 Lacs.

Secured

(i) Hire purchase finance from the Daimler Financial Services India Private Limited for 5 Motor Cars amounting to Rs. 106.41 Lacs (as at 31st March 2017: Rs. 138.36 Lacs and as at 1st April 2016: Rs. 166.92 Lacs), out of which Rs. 106.41 Lacs (as at 31st March 2017: Rs. 31.95 Lacs and as at 1st April 2016: Rs. 28.56 Lacs) are classified as current maturity of long term debt, are secured by hypothecation of the Cars. (Refer note - 5)

(ii) Loan from The HDFC Bank Limited amounting to Rs. 551.14 Lacs (as at 31st March 2017: Rs. NIL and as at 1st April 2016: Rs. NIL), out of which Rs. 102.41 Lacs (as at 31st March 2017: Rs. NIL and as at 1st April 2016: Rs. NIL) is classified as current maturity of long term. The loan is secured by exclusive charge over Immovable and Movable assets of the Company. Further, the loan was guaranteed by the personal guarantee of Mr. Amber Patel. (Refer note - 5)

Note : According to the requirements of Ind AS, revenue for the corresponding previous year ended 31st March 2017 were reported inclusive of excise duty. The Government of India has implemented Goods and Service Tax ("GST") from 1st July 2017 replacing Excise Duty, Service Tax and various other indirect taxes. As per Ind AS 18 "Revenue" from 1st July 2017 onward, is reported net of GST. Had the previously reported revenue shown net of excise duty, comparative revenue of the Company would been as follows:

The tax rate used for reconciliation above is the corporate tax rate of 33.063% payable by corporate entities in India on taxable profits under Indian tax law. However, deferred tax is calculated at rate which enacted/substantially enacted as at March 31, 2018 & applicable w.e.f. FY 2018-19 @ 27.82%.

Estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

These plans typically expose the Company to actuarial risks such as interest rate risk and salary risk.

a) Interest risk: a decrease in the bond interest rate will increase the plan liability.

b) Salary risk: the present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, a variation in the expected rate of salary increase of the plan participants will change the plan liability.

VI. Sensitivity Analysis

Significant actuarial assumptions for the determination of defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumption would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

VII. Asset Liability Matching Strategies

The Company has purchased insurance policy, which is basically a year-on year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The Insurance Company, as part of the policy rules, makes payment of all gratuity out goes happening during the year (subject to sufficiency of funds under the policy). The policy thus mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in a increase in liability without corresponding increase in the asset).

VIII. Effect of Plan on Entity's Future Cash Flows

(i) Funding arrangements and Funding Policy

The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

(ii) Expected contribution during the next annual reporting period

The Company's best estimate of Contribution during the next year is Rs. 21.89 Lacs.

3. FINANCIAL INSTRUMENTS

(i) Capital management

The Company manages its capital structure with a view to ensure that it will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The Company's management reviews the capital structure of the Company on an annual basis. As part of this review, the management considers the cost of Capital and the risks associated with each class of capital.

(iii) Financial risk management objective

The Company's financial liabilities comprise mainly of borrowing, trade payables and other payables. The Company's financial assets comprise mainly of investments in mutual funds, cash and cash equivelant, other balance with banks, loans, trade receivable and other receivable. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

(iv) 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 of three types of risks: interest rate risk, currency risk and other risk. Financial instruments affected by market risk includes borrowings, investments, trade payable, trade receivable, loans and advances.

a) Interest Rate Risk

Interest rate risk is the risk that the fair value of 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 long tem debt obligations with floating interest rates.

The sensitivity analysis has been carried out based on the exposure to interest rates on long term borrowings. The said analysis has been carried on the amount of floating rate long term liabilities outstanding at the end of the reporting period. A 50 basis point increase or decrease represents management's assessment of the reasonably possible change in interest rates.

b) Foreign Currency Risk

Foreign Currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company does not enter into any derivative instruments for trading or speculative purposes.

Foreign Currency sensitivity analysis

The Company is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to US Dollar, CHF and Euro.

The following table details the Company's sensitivity to a 10% increase and decrease in the Rupees against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes receivables and payable in currency other than the functional currency of the Company.

A 10% strengthening of the INR against key currencies to which the Company is exposed (net of hedge) would have led to additional gain in the Statement of Profit and Loss with a corresponding increase in total equity at the end of the reporting period. A 10% weakening of the INR against these currencies would have led to an equal but opposite effect.

c) Other Price Risk

Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. Other price risk arises from financial assets such as investments in equity instruments and mutual funds. The Company does not have investment in equity instruments as on 31st March 2018. The Company is exposed to price risk arising mainly from investment in equity and liquid based mutual fund. The carring value of such mutual funds recognised at FVTPL amount to Rs. 1617.79 Lacs as at 31st March, 2018 (Rs. 1229.20 Lacs as at 31st March, 2017 and Rs. 162.02 Lacs as at 1st April 2016). The details of such instruments are given in Note 11.

If the NAV has been higher/lower by 10% from the market NAV existing as at 31st March, 2018, the income from other source for the year ended 31st March 2018 would increase/decrease by Rs. 161.78 Lacs (for 2016-17 Rs. 122.74 Lacs, 2015-16 Rs. 16.02 Lacs) with a corresponding increase/decrease in total equity of the Company as at 31st March, 2018. 10% represents management's assessment of reasonably possible changes in NAV of mutual funds.

V Credit Risk

Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as trade receivables, investment in mutual funds, derivative financial instruments, other balances with banks, loans and other receivables.

(a) Trade receivables management

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivable based on a provision matrix. The Provision matrix takes into account historical credit loss experience and adjusted for forward -looking information. The expected credit loss allowance is based on the ageing of the days the receivable are due and the rates as given in the provision matrix.

b) Other financial assets

Credit risk arising from investment in mutual funds, derivative financial instruments and other balances with banks is limited and there is no collateral held against these because the counterparties are banks and recognized financial institutions with high credit ratings assigned by the various credit rating agencies and investment in mutual funds are equity and liquid fund.

4. SEGMENT REPORTING

The Chief Operating Decision maker monitors the operating results of its business segments seperately for the purpose of making decision about resource allocation and performance assessment. Segment performance is evaluated based on the profit or loss and its measured consistently with profit or loss in the financial statements. Operating segment have been identified on the basis of products / services and have been identified as per the quantative criteria specified in the Ind AS 108.

The Company has identified three reportable segments viz (i) manufacture of engraved copper rollers and (ii) energy generation through wind mill and (iii) Others

5. DISCLOSURES UNDER THE MSMED ACT, 2006

In the absence of any information from vendors regarding the status of their registration under the "Micro Small and Medium Enterprise Development Act 2006" the company is unable to comply with the disclosures required to be made under the said Act.

6. CORPORATE SOCIAL RESPONSIBILITY (CSR) EXPENDITURE

As per section 135 of Companies Act, 2013, a Company, meeting the applicability threshold, need to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. These all CSR activities are eradication on hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the Company as per the Act. The fund were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013.

a) Current Investment

In the financial statements prepared under previous GAAP, current investments of the Company were measured at lower of cost and fair value. Under Ind AS, these investments have been classified as FVTPL. The fair value changes are recognized in the Statement of Profit and Loss.

On the date of transition to Ind AS as at 1st April 2016, the difference between the fair value of current investments as per Ind AS and their corresponding carrying amount as per financial statements prepared under previous GAAP, has resulted in an increase in the carrying amount of these investments by Rs 7.57 Lacs with corresponding increased in the retained earnings.

As on 31st March, 2017, the fair value of current investment has been increased by 26.40 Lacs.

During the year ended 31st March 2017, net gain amounting to Rs.18.83 Lacs on such fair valuation is recognized in the Statement of Profit and Loss as other income.

b) Expected Credit Loss

Under previous GAAP, the Company used to create provision for receivables only in respect of specific amount for doubtful receivables. Under Ind AS, impairment allowance has been determined based on Expected Credit Loss model (ECL).

Consequent to this change, on the date of transition to Ind AS, allowance for ECL of Rs. 20.27 Lacs is recognized with corresponding reduction in the retained earnings by Rs. 13.57 Lacs and deferred tax liabilities by Rs. 6.70 Lacs.

The amount of allowances for ECL recognized as at 31st March 2017 is Rs. 7.88 Lacs.

c) Short Term Provisions

As per IND AS 10 "Events After Reporting Period", the proposed dividend is required to be recognized in the period in which it is declared. However, as per Indian GAAP, the same was required to be recognized in the period in which it was related. So the Company has reversed the proposed dividend of Rs. 73.80 Lacs and tax thereon of Rs. 15.02 Lacs for the Financial Year 2015-16 since the same was approved by the shareholders on 23rd September, 2016, and the same was paid on 29th September, 2016.

d) Remeasurement of defined benefit plan

In the financial statements prepared under previous GAAP, remeasurement of defined benefit plans and assets (gratuity), arising due to change in actuarial assumptions was recognized as employee benefits expense in the Statement of Profit and Loss, Under Ind AS, such remeasurement benefits relating to defined benefit plans and assets is recognized in OCI as per the requirements of Ind AS 19 -Employees benefits. Consequently, the related tax effect of the same has also been recognized in OCI.

For the year ended 31st March 2017, remeasurement of gratuity liability resulted in net benefit of Rs. 14.69 Lacs which has now been removed from employee benefits expense in the Statement of Profit and Loss and recognized separately in OCI. And recognised deferred tax assets theron by Rs. 4.86 Lacs

e ) Deferred tax

In the financial statements prepared under previous GAAP, deferred tax was accounted as per the income statement approach which required creation of deferred tax asset/ liability on timing differences between taxable profit and accounting profit. Under Ind AS, deferred tax is accounted as per the Balance Sheet approach which requires creation of deferred tax asset/ liability on temporary differences between the carrying amount of an asset / liability in the Balance Sheet and its corresponding tax base.

The transitional adjustments as described in the preceding paragraphs have led to temporary differences and creation of deferred tax thereon. This has resulted in creation of net deferred tax asset of Rs. 6.70 Lacs as at date of transition to Ind AS with a corresponding decrease in retained earnings and reduction in the amount of deferred tax asset in the Balance Sheet.

For the year ended 31st March 2017, it has resulted in decrease in deferred tax expense by Rs. 2.61 Lacs in the Statement of Profit and Loss and increase in deferred tax expense of Rs. 2.61 Lacs.

NOTE 7 - STANDARDS ISSUED BUT NOT EFFECTIVE

The Ministry of Corporate Affairs("MCA") has issued certain amendments to Ind AS through (Indian Accounting Standards) Amendment Rules, 2018. These amendments maintain convergence with IFRS by incorporating amendments issued by International Accounting Standards Board(IASB) into Ind AS and has amended the following standards:

1. Ind AS 115-Revenue from contract with customers

2. Ind AS 21-The effect of changes in foreign exchanges rates

3. Ind AS 12-Income taxes

These amendments are effective for annual periods beginning on or after April 01, 2018.

The company is identifying and evaluating the key impact of the aforesaid amendments.

NOTE 8 - APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved for issue by the board of directors on April 28, 2018.