1. BASIS OF PREPARATION, MEASUREMENT AND SIGNIFICANT ACCOUNTING POLICIES
1.1 BASIS OF PREPARATION AND MEASUREMENT
(a) Basis of preparation
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the 'Ind AS') as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
These financial statements for the year ended 31st March, 2018 are the first the Company has prepared under Ind AS. For all periods up to and including the year ended 31st March, 2017, the Company prepared its financial statements in accordance with the accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as 'Previous GAAP') used for its statutory reporting requirement in India immediately before adopting Ind AS. The financial statements for the year ended 31st March, 2017 and the opening Balance Sheet as at 1st April, 2016 have been restated in accordance with Ind AS for comparative information. Reconciliations and explanations of the effect of the transition from Previous GAAP to Ind AS on the Company's Balance Sheet, Statement of Profit and Loss and Statement of Cash Flows are provided in note 3.
The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements, including the preparation of the opening Ind AS Balance Sheet as at 1st April, 2016 being the 'date of transition to Ind AS’. All assets and liabilities have been classified as current or non current as per the Company's normal operating cycle and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
Transactions and balances with values below the rounding off norm adopted by the Company have been reflected as "0" in the relevant notes in these financial statements.
The financial statements of the Company for the year ended 31st March, 2018 were approved for issue in accordance with the resolution of the Board of Directors on 23rd May, 2018.
(b) Basis of measurement
These financial statements are prepared under the historical cost convention unless otherwise indicated.
1.2 KEY ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires management to make judgments, estimates and assumptions in the application of accounting policies that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Continuous evaluation is done on the estimation and judgments based on historical experience and other factors, including expectations of future events that are believed to be reasonable. Revisions to accounting estimates are recognised prospectively.
Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year, are included in the following notes:
(a) Measurement of defined benefit obligations - Note-44
(b) Measurement and likelihood of occurrence of provisions and contingencies - Note-35.and
(c) Recognition of deferred tax assets - Note-37
Notes to the Reconciliations
a) Non Current Investment
Equity Instruments - Under Previous GAAP, the such instruments ware carried at cost and provission for dimunution was made to recognised a decline, other than temporary, in the value of long term investment. Under Ind AS, the Company has designated these investments at fair value through other comprehensive income ((FVTOCI) which are recognised in the Statement of Profit and Loss for the year ended 31st March, 2017. At the date of transition to Ind AS, no difference between the fair value of the instruments and the carrying value under Previous GAAP.
(b) Excise Duty
Under Previous GAAP, excise duty was netted off against sale of goods. However, under Ind AS, excise duty is included in sale of goods and is separately presented as expense on the face of Statement of Profit and Loss. Thus, sale of goods under Ind AS has increased with a corresponding increase in expenses
(c) Revenue from Sale of Goods
Under Previous GAAP, revenue was recognised net of, trade discounts, rebates, sales taxes and excise duties. Under Ind AS, revenue is recognised at the fair value of the consideration received or receivable, after deduction of any trade discounts, volume rebates in any form and any taxes or duties collected on behalf of the government such as sales tax and value added tax except excise duty. Discounts given include Warrentee Compensation given to customers, which have been reclassified from ‘Customer Warrentee Compensation ' within other expenses under Previous GAAP and netted from revenue under Ind AS.
(d) Defined Benefit Plans
i) Actuarial gain/(loss) - Under Previous GAAP, the actuarial gain/(loss) of defined benefit plans had been recognised in Statement of Profit and Loss as an employees benefit expense. Under Ind AS, the remeasurement gain/(loss) on net defined benefit plans is recognised in Other Comprehensive Income net of tax.
ii) Net interest cost on defined benefit plans - Under Previous GAAP, the interest cost on defined benefit liability and expected return on plan assets was recognised as employee benefit expenses in the Statement of Profit and Loss. Under Ind AS, the Company has recognised the net interest cost on defined benefit plans as finance cost.
Note : 1. Building include Rs.2.34 lacs being cost of co-ownership flats. (Previous Year Rs. 2.34 lacs)
2. Fixed Assets include assets taken on hire purchase system after 01.04.2012
Vehicles Gross Block Rs.102.26 lacs (Previous Year Rs.96.78 lacs) and Net Block Rs. 64.05 lacs (Previous Year Rs. 67.89 lacs).
3. Details of Minimum Hire Purchase Payments and their Present Value.
Note : 1. Building include Rs.2,34,277/- being cost of co-ownership flats. (Previous Year Rs.2,34,277/-)
2. Fixed Assets include assets taken on hire purchase system after 01.04.2012
Vehicles Gross Block Rs. 96,77,792/- ( Previous Year Rs. 80,93,078/-) and Net Block Rs. 67,89,223/- ( Previous Year Rs. 63,21,304/-).
3. Details of Minimum Hire Purchase Payments and their Present Value.
The Company has elected to measure all its Capital Working Process at the previous GAAP carrying amount i.e 31st March 2017 as its deemed cost (Gross Block Value) on the date of transition to Ind AS i.e 1st April 2017. The movement in carrying value of Capital Working Process as per IGAAP is mentioned below which has no diference in value under Ind AS.
The Company has elected to measure all its Intangible Assets at the previous GAAP carrying amount i.e 31st March 2017 as its deemed cost (Gross Block Value) on the date of transition to Ind AS i.e 1st April 2017. The movement in carrying value of Intangible Assets as per IGAAP is mentioned below which has no diference in value under Ind AS.
f) In terms of the Order dated 10th June,2010 of the erstwhile BIFR, 5,950,000 fully paid Equity Shares of Rs.2/- have been issued at par during 2013-14 to ARCIL towards conversion of part of the term loan due to them for Rs.119.00 lacs without payment being received in cash.
Further, pursuant to the said order of the erstwhile BIFR and teems of settlement with ARCIL, 5150000 Equity Shares of Rs. 2/ each at par have been issued to ARCIL towards conversion of outstanding accrued interest on term loan without payment being received in cash.
g) Rights, Preferences and Restrictions attached to shares :
i) Each Equity Share holder holding shares of Rs.2/- each is eligible for one vote per share held and are entitled to receive dividends as declared from time to time. In the event of liquidation the equity shares holders are eligible to receive the remaining assets of the Company after distribution of all preferential creditors in proportion to their Shareholdings.
ii) 8% Cumulative Redeemable Preference shares issued as per IDBI sanction dated 13th June 2006 by way of converting their overdue interest has been paid off in terms of One Time Settlement (OTS). (Refer Footnote no.(b)(ii) of the Note No- 17).
B. Nature and purpose of reserves
a) General Reserve: General Reserve was created in the past by way of appropriation of profits of the Company. This is a free reserve and can be utilised for any general purpose like for issue of bonus shares, payment of dividend, buy back of shares etc.
b) Retained Earnings: Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.
c) Equity Instruments through Other Comprehensive Income: The fair value change of the equity instruments measured at fair value through other comprehensive income is recognised in equity instruments through Other Comprehensive Income. Upon derecognition, the cumulative fair value changes on the said instruments are reclassified to the Statement of Profit and Loss.
C. Other Comprehensive Income accumulated in Other Equity, net of tax
The disaggregation of changes in other comprehensive income by each type of reserve in equity is shown below :
D. Capital Management
Equity share capital and other equity are considered for the purpose of Company's capital management.
The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure of the Company is based on management's judgment of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence.
The management and the Board of Directors monitor the return on capital as well as the level of dividends to shareholders. The Company may take appropriate steps in order to maintain, or if necessary adjust, its capital structure.
NOTES :
Terms of Redemption / Repayment :
a) Debentures
i) In respect of Note-17(a)(i) above, the Overdue Debentures privately placed with IDBI have been assigned to ARCIL during the year which, in turn, has been settled by the Company through One Time Settlement (OTS) - Refer Footnote (b)(ii).
ii) In respect of Note-17(a) (ii) to (iv) above, the repayment will be made after all the secured creditors agreeing the restructuring scheme pursuant to the Order dated 10th June, 2010 of the erstwhile BIFR have been fully paid off. Negotiations with the Debenture holders for One Time Settlements are under process.
iii) In respect of Note-17(a)(v) to (vii) above, were repayable at par on the expiry of 7th,8th and 9th years from the date of allotment i.e. 4th February,1992. The Company could not repay debentures on due dates in view if the Orders of the erstwhile BIFR. On dissolution of the erstwhile BIFR, the Company has been making payments to debenture holders as and when demanded and also taken up the matters with Debentures holders for One Time Settlements with them.
iv) In respect of Note-17(a)(v) above, payment has been made during the year for Rs. 0.07 laces.
b) Term Loans :
i) ARCIL : During the year, 2015-16 ARCIL has restructured the schedule of repayments of their outstanding Term Loan by segregating total outstanding as under effective from April, 2015 and ending on March, 2020 :
Principal Rs.34.00 Crore
Interest Rs.12.62 Crore
In terms of the One Time Settlement (OTS - 1) dated 29 September, 2017, the Company has settled its long outstanding debt with ARCIL by making prepayment of Rs.980 laces during 2017-18 towards full and final settlement of the dues of ARCIL. Subsequent to the settlement of the total dues, the Company converted the outstanding accrued interest of ARCIL amounting to Rs.165, 87 .00 lacs into Equity Shares of the Company by issuing 51,50,000 Equity Shares of Rs.2/- each at par in accordance with Para 8(d) of the Sanctioned Scheme(SS-10) and the terms of settlement of the OTS stated above..The company has executed the Share Subscription and Shareholders Agreement with ARCIL in March 2018.
In the earlier years, all the dues of the Company to other Banks and Financial Institutions viz, State Bank of India, Allahabad Bank, Bank Of India, Canara Bank, Indian Overseas Bank, National Insurance Co. Ltd., and Industrial Investment Bank of India were taken over by ARCIL and included in the total dues to ARCIL. By virtue of this OTS with ARCIL the Company settled all its previous dues to Banks and Financial Institutions stated above.
ii) The Company has also restructured its outstanding dues of IDBI during the year by paying Rs.1000 lacs towards settlement of their outstanding debentures, term loan and lease rental through One Time Settlement(OTS) and IDBI in turn, settled the Cumulative Redeemable Preference Shares which were issued against the outstanding interest dues of IDBI in 2006. The balance Principal & interest of IDBI (including debenture) Rs. 36,25.00 lacs was assigned to ARCIL during the year which in turn, has been settled by the Company through another One Time Settlement dated 27 March, 2018 (OTS - 2) by paying Rs.18,20.00 lacs to ARCIL
iii) During the financial year 2017-18 Kotak Mahindra Bank Ltd., sanctioned a term loan of Rs.2000 lacs (with a sublimit of Rs. 500 lacs towards cash credit facilities) and non-fund facility towards Letter of Credit of Rs.1200 lacs to the company. The term loan is repayable in 60 monthly installments with a moratorium of one year as to the principal amount.
During the year ended March 31, 2018 the company availed Rs. 1800 lacs out of the sanctioned term loan.
The Letter of Credit limit of Rs. 12 crore is divided into three LCs of Rs. 400 lacs each having a tenure of 12 months, 24 months and 36 months. The company is required to maintain a 10% margin upfront with additional build-up of Rs.1.75 lacs per month for every Rs.100 lacs of Letter of Credit. At the end of the tenure the balance in the Letter of Credit after adjusting the aforesaid upfront and monthly margin will be converted into term loan so as to be repayable in 40 months, 28 months and 16 months respectively. The Letters of Credit are proposed to be utilised for import of machineries for the proposed expansion project.
iv) Unsecured loans from promoters Rs. 16.75 laces and certain bodies corporate Rs.11.25 lacs are repayable after the repayment of all settled dues of secured creditors are made pursuant to the Rehabilitation Scheme sanctioned by its Order dated 10th June'2 010 of the erstwhile BIFR. As per the said sanctioned scheme of erstwhile BIFR, no interest is payable on above loans. Also refer to (i) above.
v) Loans from SICOM & Sale Tax Loan (Under Sales Tax Deferral Scheme) are repayable over a period of five years after cutoff date (31.03.2009) in equal annual installments pursuant to the Rehabilitation Scheme sanctioned by vides its Order dated 10th June,2010 of the erstwhile BIFR. As per the above Order no interest is payable on these loan and hence no provision is required to be made for the same.
The Sales Tax Department vide their letter dated 26.06.2014 had restructured principal outstanding to be paid in 5 installments of Rs,58.34 lacs from the year 2014-15 to 2018-19 and the company has paid Rs.20.00 lacs against the same. However, later on, the department vide their letter dated 19.09.2015 has claimed interest of Rs,213.51 lacs which the company has protested; hence no provision for this has been made. However, The Company is in the process of negotiation with the Sales Tax Department for One Time Settlement with them.
vi) Loan from Magma Housing Finance is repayable in 84 equated monthly installments (EMI) commencing from 31. 08. 2016.
c) Finance Lease :
In respect of Note-17(d) above, repayable in monthly installments from June 2014 to March,2023 for respective cars covered under above lease.
Nature of Security :
a) Debentures
i) The aforesaid debentures have been secured by a First mortgage and charge, ranking pari passu, by execution of Debenture Trust Deed on certain immovable and movable properties of the Company. They are also secured by a second mortgage and charge on the immovable and movable assets of the Company at Uttarpara and Nasik (save and except book debts) both present and future but excluding assets purchased / to be purchased under Deferred Payment Scheme and equipments purchased/to be purchased against Rupee and Foreign Currency Loans granted / to be granted by Financial Institution subject, however, to prior charges created /to be created in favour of the Company's bankers on stocks and receivables for securing borrowings for working capital requirements.
b) Term Loans :
i) Term Loan from Kotak Mahindra Bank, is secured by first and exclusive charge on all the present and future assets of the company.
ii) Term Loan from Magma Housing Finance of Rs.761.98 laces (Previous Year Rs.848.87 lacs) is secured by personal property of promoter director and personal guarantee of promoter director and his family.
c) Finance Lease :
In respect of Note-17(d) above the aforesaid leases are secured by the hypothecation of the cars.
Note :
i) Amount dues to suppliers are subject to confirmation of the parties.
ii) The Company has amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) as at 31st March, 2018 as under :
Note : The Government of India has implemented Goods Service Tax (GST) from 1st July, 2017 replacing of Excise Duty, Service Tax and various other indirect taxes. In accordance with the requirement of Ind As 18, revenue for the year ended 31st March, 2018 is reported net of GST and as such the revenue for the year ended 31st March, 2018 is not comparable with the revenues reported in the previous year ended 31st March, 2017.
Note :
1) The above Contingent Liabilities for Sale Tax Demands includes demands made by Sale Tax Authorities from time to time, under Appeals.
As against above demands the Company has deposited Rs.30.76 lacs under protest.
2) The above Contingent Liabilities for Excise Demands includes demands made by Central Excise Authorities from time to time, under Appeals.
As against above demands the Company has deposited Rs.2.50 lacs under protest.
3) The Company has deposited Rs. 9.29 lacs under protest against the demands for Municipal Tax.
4) As against the demands for non-fulfillment of Export Obligation under DEEC Scheme, Rs.242.14 lacs has been deposited under protest and disclosed under Export Entitlements as Other Non-Current Assets.
5) The Contingent Liabilities representing dues to various Government Authorities as stated in (c) above, have been arrived at after considering the reliefs granted by vides its Order dated 10.06.2010 of the erstwhile BIFR.
2 Current Tax is determined on the basis of the amount of tax payable under the Income Tax Act, 1961, if any. Deferred Tax Liabilities /Assets subject to consideration of prudence are recognized and carried forward only when there is reasonable certainty that sufficient taxable income will be available against which such Deferred Tax Liabilities/Assets can be adjusted.
3 Amounts due in respect of Trade Receivable Rs.3282.14 lacs, and Other Non Current and Current Assets Rs.746.86 lacs, are subject to confirmations but are considered good.
Also amounts due to parties under Non-Current Liabilities, Other Current Liabilities and Trade Payable Rs.5622.86 lacs are subject to confirmation from the respective parties.
4 In view of non-availability of profit, Debenture Redemption Reserve has not been created by the Company.
5 Provision for taxation is not considered necessary in view of continuation of relevant provisions of the Income tax Act, 1961, read with certain Judicial pronouncements.
Note : a) No amount has been written back during the year in respect of due to related parties.
b) Written off during the year in respect of due from related parties.
c) No provision for doubtful debts in respect of dues from related parties has been made.
6 Segment Reporting
Based on the guiding principles given in Indian Accounting Standard (Ind As)108 ‘Segment Reporting' ,the Company's primary business segments are (a) Paper Mill Product and (b) EDM Wire.
Note :
a) The Company has disclosed business segment as the primary segment.
b) Transactions between segments are for materials which are transferred at cost.
c) Segment revenue and expense include items directly attributable to the segment and common costs, apportioned on a reasonable basis.
They do not include investment income, interest income from Inter-corporate deposits and loans given and dividend income.
d) All Segment assets and liabilities are directly attributable to the segment. Segment assets include all operating assets used by the segment and consists principally of net fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include, share capital, reserves and surplus.
e) Fixed Assets used in Company's business or liabilities contracted have not been identified to any of the reportable geographical segments, as the fixed assets and services are used interchangeably between segments. Accordingly, no disclosure relating to total segment assets and liabilities are made.
7 Disclosure in terms of Indian Accounting Standard (Ind As) -37
(a) Movement for Provision for Liabilities :
(b) The Contingent Liabilities & Liabilities are dependent upon Court decision/out of Court Settlement/Disposal of appeals, etc.
(c) No reimbursement is expected in the case of Contingent Liabilities & Liabilities.
8 Employees Benefits under Indian Accounting Standard (Ind As) -19 :
As per Indian Accounting Standard (Ind As) - 19 “ Employee Benefits" , the disclosure of Employee Benefits as defined in the Indian Accounting Standard (Ind As) 19 are as follows :
a) Defined Contribution Plan :
i) Employee benefits in the form of Provident Fund, Superannuation Fund, Employee State Insurance Scheme and Labour Welfare Fund are considered as defined contribution plan except that Provident Fund in respect of certain employees is contributed to a fund set up by the Company which is treated as a Defined Benefit Plan since the Company has to meet the interest shortfall.
ii) The contributions to the funds are made in accordance with the relevant statute and are recognized as an expense when employees have rendered service entitling them to the contributions. The contribution to Defined Contribution Plan, recognized as expense for the year are as under :
b) Defined Benefit Plan :
i) Post employment and other long-term employee benefits in the form of gratuity and leave encashment are considered as Defined Benefit Obligation. The present value of obligation is determined based on actuarial valuation using projected unit credit method as at the Balance Sheet date. The amount of defined benefits recognized in the Balance Sheet represent the present value of the obligation as adjusted for unrecognized past service cost and as reduced by the fair value of plan assets.
ii) Provident Fund in respect of certain employees is contributed to a fund set up by the Company which is treated as a Defined Benefit Plan since the Company has to meet the interest shortfall. There is no interest shortfall as at the year end. As advised by an independent actuary, it is not practical or feasible to actuarially value the liability considering that the rate of interest is notified by the Government . Accordingly other related disclosures in respect of Provident Fund have not been made.
iii) Any asset resulting from this calculation is limited to the discounted value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. The amount recognized in the Profit and Loss Account for the year in respect of Employees Benefit Schemes based on actuarial reports is as follows :
E. Actuarial Assumptions :
The principal financial assumptions used for valuation as at the valuation date. The assumptions as at the valuation date used to determine the Present Value of Defined Benefit Obligation at the date.
9. The previous year's figures have been re-worked, regrouped, rearranged and reclassified wherever necessary and practicable . Amounts and other disclosures for the preceding year are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.
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