1. Estimated amount of contracts pending execution on capital account net of advances of Rs, 24.87 million (Previous Years: 31st March, 2017: Rs,149.99 million, 1st April, 2016: Rs, 21.78 millions) and not provided for is Rs, 74.17 million (Previous Years: 31st March, 2017: Rs, 98.03 million, 1st April, 2016: Rs, 90.50 million).
2. As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the company. The disclosure in respect of CSR Expenditure during the year as aligned with the CSR Policy of the Company which is in line with the activities specified in Schedule VII of the Companies Act, 2013 is as under:
3. The information regarding amounts due to creditors registered under the Micro, Small and Medium Enterprises Development Act, 2006, has been given to the extent available with the Company. The required disclosures of outstanding dues of micro, small & medium enterprises are as under:
4. EMPLOYEE BENEFITS
Disclosure pursuant to Indian Accounting Standard (Ind AS) 19 - Employee Benefits are as under :
A. Defined Contribution Plan :
The amount recognised as an expenses for the Defined Contribution Plans are as under :
B. Defined Benefit Plan :
Post-employment and other long term employee benefits in the form of gratuity and leave encashment are considered as defined benefit obligation. The employees' gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. Under the PUC method a "projected accrued benefit" is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the Plan. The "projected accrued benefit" is based on the Plan's accrual formula and upon service as of the beginning or end of the year, but using a member's final compensation, projected to the age at which the employee is assumed to leave active service. The Plan liability is the actuarial present value of the "projected accrued benefits" as of the beginning of the year for active members.
Liability for leave payable at the time of retirement has been recognized on actuarial basis.
Risk Exposure:
Defined Benefit Plans expose the Company to actuarial risks such as: Interest Rate Risk, Salary Risk, Demographic and Regulatory Risk.
(a) Interest rate risk : The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase
(b) Salary risk : Higher than expected increases in salary will increase the defined benefit obligation.
(c) Demographic risk : This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.
(d) Regulatory Risk : Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (e.g. Increase in the maximum limit on gratuity from Rs, 1 million to Rs, 2 million). An upward revision of maximum gratuity limit will result in gratuity plan obligation.
# These Sensitivities have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analyses.
(xii) Salary Escalation Rate :
The estimates of rate of escalation in salary considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.
5. OPERATING LEASE
The Company has certain residential/commercial premises under cancelable operating leases, renewable with mutual consent on mutually agreeable terms. There are no restrictions imposed by lease agreements. The Company has taken certain land on operating lease for its manufacturing facilities. There is escalation clause in some of the lease agreement. There is a lock in clause ranging from 6 months to 36 months in certain lease agreement.
6 EVENT OCCURRING AFTER BALANCE SHEET
For the year ended 31st March, 2018, the Board of Directors of the Company has recommended dividend of Rs, 1.65 per share (Previous Year: Rs, 1.55 per share) to equity shareholders aggregating to Rs, 204.05 million (Previous year: Rs, 190.88 million) including Dividend Distribution Tax.
7 EMPLOYEE SHARE-BASED PAYMENT Employee Stock Options Plan 2015 ("ESOP 2015")
On 7th January, 2016, the Shareholders of the Company approved the Employee Stock Options Plan 2015 ("ESOP 2015") for issue of Option not exceeding 2000000 (Two million) options to its permanent employees (including a Director, whether whole time or not but excluding independent directors) of the Company, working in India. Each option when exercised would be converted into one Equity Share of Rs, 1/- (Rs, One) each fully paid-up. As per the plan, all the options granted on any date shall vest not earlier than 1(one) year and not later than a maximum of 6 (six) years from the date of grant of options. These options do not carry rights to dividends or voting rights till the date of exercise. The Shares issued upon exercise of Options shall be freely transferable and shall not be subject to any lock-in period restriction after such exercise, except as required by SEBI Regulations.
Under ESOP 2015, so far the Company has granted 1670000 options (Previous Year: 1185000 options) to its eligible employees, out of which 70000 options (Previous Year: 40000 options) has been cancelled.
The weighted average share price during the year of exercise was Rs, 243.01 per share (Previous Year: Rs, Nil per share) and weighted average remaining contractual life of the options for the share options outstanding as at 31st March, 2018 was 8.10 years (Previous Year: 8.5 years).
Fair Valuation:
The fair value at grant date of stock option granted during the year ended 31st March, 2018 was Rs, 147.51 (Previous Year: Rs, 79.85 ). The fair value has been carried out by an independent valuer by applying Black-Scholes Model. The key assumptions used in the Black Scholes model for calculating the fair value as on the date of grant are as given below:
The expected dividend is based on last year data and is not necessarily indicative. The expected volatility was determined based on the historical share price volatility over the past period depending on the life of the options granted which is indicative of future period and which may not necessarily be the actual price.
Effect of employee share-based payment transactions on profit or loss for the year and on financial position:
For the year ended 31st March, 2018 the Company recognises total expenses of Rs, 40.83 million (Previous Year: Rs, 26.98 million ) related to equity settled share based transactions. During the year, the Company allotted 266500 fully paid-up equity shares of Rs, 1/- each of the Company (Previous Year: Nil ) on exercise of equity settled options for which the Company has realised Rs, 26.65 million (Previous Year: Rs, Nil ) as exercise price.
@ Non-current assets exclude financial instruments, deferred tax assets and employee benefit assets.
(C) Information about major customers
Total amount of revenues from customers (each exceeding 10% of total revenues of the Company) is Rs, 6,513.37 million (Previous Year: Rs, 5,272.36 million ) reported under engineering & infrastructure segment.
(D) Other disclosures
(i) The Operating Segments have been reported in a manner consistent with the internal reporting and evaluation by Chief Operating Decision Maker (CODM).
(ii) The business segment comprise the following :
The Engineering Products segment which includes Towers, Tower Accessories, Fasteners, Angles, Channels, Highmast Poles, Swaged Poles, Scaffoldings, Solar Power Systems etc.
The Infrastructure Projects segment which includes Horizontal Direct Drilling services and Engineering, Procurement & Construction services.
The Polymer Product segment which includes PVC, CPVC, UPVC, SWR pipes & fittings and other related products.
(iii) The geographical information considered for disclosure are : Sales within India and Sales outside India.
(iv) There are no inter-segment revenues.
8. RELATED PARTY DISCLOSURES
A. List of the related parties and relatives with whom transactions have taken place.
(1) Key Management Personnels.
(a) Mr. Sajan Kumar Bansal -Managing Director
(b) Mr. Sharan Bansal -Whole Time Director
(c) Mr. Devesh Bansal -Whole Time Director
(d) Mr. Siddharth Bansal -Whole Time Director
(e) Mr. Amit Kiran Deb -Independent Director
(f) Mr. Manindra Nath Banerjee -Independent Director
(g) Mr. Joginder Pal Dua -Independent Director
(h) Mrs. Mamta Binani -Independent Director
(i) Mr. Ashok Bhandari -Independent Director w.e.f. 06.09.2017 (j) Mr. Yash Pall Jain -Executive Director w.e.f. 06.09.2017
(2) Parties where key managerial personnel along with their relatives have significant influence.
(a) Skipper Realties Limited
(b) Skipper Telelink Limited
(c) Ventex Trade Private Limited
(d) Skipper Plastics Limited
(e) Suviksit Investments Limited
(f) Skipper Polypipes Private Limited
(g) Vaibhav Metals Private Limited
(h) Aakriti Alloys Private Limited
(i) Samriddhi Ferrous Private Limited (j) Utsav Ispat Private Limited
(k) Skipper Pipes Limited
(l) Sheo Bai Bansal Charitable Trust
(m) Skipper Foundation
(3) Relatives of key managerial personnel
(a) Mrs. Meera Bansal -Wife of Mr. Sajan Kumar Bansal
(b) Mrs. Sumedha Bansal -Wife of Mr. Sharan Bansal
(c) Mrs. Rashmi Bansal -Wife of Mr. Devesh Bansal
(d) Mrs. Shruti M Bansal -Wife of Mr. Siddharth Bansal
9. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company's principal financial liabilities other than derivatives comprise long-term and short-term borrowings, capital creditors and trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets other than derivatives include trade and other receivables, cash and cash equivalents and deposits that derive directly from its operation.
The Company is exposed to market, credit, liquidity and regulatory risks. The Company's senior management oversees the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below :
(A) 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 Three types of risk: commodity risk, interest rate risk and foreign currency risk.
(a) Commodity Price Risk
Company is affected by the price volatility of certain commodities, primarily, Steel, Zinc and PVC Resin. Its operating activities require the on-going purchase of these materials. The company has arrangement to pass through the increase/decrease in steel and Zinc price through price variance clause in majority of the contract. PVC resin being not a material item, hence price sensitivity is not disclosed.
(b) 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 rate relates primarily to the Company's operating activities (when revenue or expense is denominated in a foreign currency). Further, the Company has foreign currency risk on import of input materials, capital commitment and also borrow funds in foreign currency for its business. The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. Certain transactions of the Company act as a natural hedge as a portion of both assets and liabilities are denominated in similar foreign currencies, for the remaining exposers to foreign exchange risks, the Company adopts a policy of selective hedging based on risk perception of management using derivative, whenever required, to mitigate or eliminate the risks.
(c) Interest Rate risk
The Company is exposed to interest rate risk on financial liabilities such as borrowings, both short-term and long-term. It maintains a balance of fixed and floating interest rate borrowings and the proportion is determined by current market interest rates, projected debt servicing capability and view on future interest rates.
For details of the Company's short-term and long-term borrowings, including interest rate profiles, refer to note no. 15.9, 19.2 & 19.3 of this Ind AS financial statements.
Impact of increase/decrease in benchmark interest rates on the Company's equity and statement of Profit and Loss for the year are as given below:
(B) Liquidity Risks
The Company determines its liquidity requirement in the short, medium and long term. Its objective is to maintain optimum levels of liquidity to meet its cash and collateral requirements at all times. The Company relies on a mix of borrowings and excess operating cash flows to meet its needs for funds. The current committed lines of credit are sufficient to meet its short to medium/ long term expansion needs. The Company monitors rolling forecasts of its liquidity requirements to ensure it has sufficient cash to meet operational needs.
(a) Financing Arrangement
The Company had access to the following available liquidity:
Undrawn limit has been calculated based on the available drawing power and sanctioned amount at each reporting date.
(C) Credit Risks
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers.
Trade Receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables 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 receivables are due and the rates as given in the provision matrix. The provision matrix at the end of the reporting period is as follows:
(D) Regulatory Risks
The Company performance may be impacted due to change in Regulatory Environment. The Company is closely monitoring the regulatory developments and risks thereof and proactively implementing course correction for proper compliance commensurate with new regulatory requirements.
10. CAPITAL MANAGEMENT
The Company's objective to manage its capital is to ensure continuity of business while at the same time provide reasonable returns to its various stakeholders but keep associated costs under control. In order to achieve this, requirement of capital is reviewed periodically with reference to operating and business plans that take into account capital expenditure and strategic investments. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. Apart from internal accrual, sourcing of capital is done through judicious combination of equity and borrowing, both short term and long term. The Company is not subject to any externally imposed capital requirements. The Company monitors capital using a debt equity ratio.
For the purpose of calculation:
Debt = Noncurrent borrowings Current Borrowings Current maturities of long term borrowings- Cash and Cash equivalent -Other Bank balances (excluding Unpaid Dividend Balance)
In order to achieve this overall objective, the Company's capital management, amongst other things including working capital management, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest bearing loans and borrowings in the current period.
11. FIRST TIME ADOPTION OF INDIAN ACCOUNTING STANDARD (Ind AS)
These financial statements, for the year ended 31 March 2018, are the first financial statements the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2017, the Company had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2006 (as amended) notified under Section 133 of the Companies Act 2013 read with Rule 7 of Companies (Accounts) Rule, 2014 (hereinafter referred to as 'Previous GAAP').
Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for the year ended 31 March, 2018 and other accounting principles generally accepted in India, together with the comparative period data as at and for the year ended 31 March 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company's opening balance sheet was prepared as at 1 April, 2016, the Company's date of transition to Ind AS.
This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company's financial position, financial performance and cash flows.
(A) Ind-AS 101 Exemptions (Optional and Mandatory) applied
Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. Exemptions applied by Company are detailed here under:
(i) Business Combinations
The Company has elected not to apply IND AS 103 Business combination retrospectively to past business combinations that occurred before the transition date of April 1, 2016. Consequently, the company has kept the same classification for the past business combinations as in its previous GAAP financial statements
(ii) Property Plant and Equipment and Intangible Assets
With regard to property, plant and equipment has been calculated at IndAS cost at the transition date i.e. 1st April, 2016 except for land measured at fair value as deemed cost.
(iii) Determining whether an arrangement contains a Lease
Ind AS 101 includes an optional exemption that permits an entity to apply the relevant requirements in Appendix C of Ind AS 17 "Leases" for determining whether an arrangement existing at the date of transition contains a lease by considering the facts and circumstances existing at the date of transition (rather than at the inception of the arrangement). The Company has applied the above transitional provision and has assessed all the arrangements at the date of transition.
(iv) Estimates
As per Ind AS 101, an entity's estimates in accordance with Ind AS at the date of transition to Ind AS at the end of the comparative period presented in the entity's first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the previous GAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any differences in accounting policies.
As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP, those estimates should be made to reflect conditions that existed at the date of transition or at the end of the comparative period. The Company's estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statement that were not required under the previous GAAP are listed below :
- Fair Valuation of financial instruments carried at FVTPL.
- Impairment of financial assets based on the expected credit loss model.
- Determination of the discounted value for financial instruments carried at amortized cost.
- Discounted value of liability for decommissioning costs.
(v) Designation of previously recognized financial instruments
At the date of transition to Ind AS i.e., 1 April 2016, a financial liability can be designated as at fair value through profit and loss provided it meets the criteria mentioned in Ind AS 109 and financial asset can be designated at fair value through profit and loss if requirements of Ind AS 109 are met. As permitted by Ind AS 101, Company has elected to avail the option. This has resulted in assessment of classification for all categories based on facts and circumstances that exist on the date of transition. Resulting classifications have been applied retrospectively.
(vi) Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.
Accordingly, the company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortized cost has been done retrospectively.
(vii) Decommissioning liabilities included in the cost of property, plant and equipment:
The Company has measured the liability as at the date of transition to Ind AS i.e. 1st April, 2016, estimated the amount that would have been included in the cost of the related asset when the liability first arose, by discounting the liability to that date using its best estimate of the historical risk-adjusted discount rate that would have applied for that liability over the intervening period and calculated the accumulated depreciation on that amount, as at the date of transition to Ind AS, on the basis of the current estimate of the useful life of the asset, using the depreciation policy adopted by the entity in accordance with Ind AS.
(d) Notes to the reconciliation of Balance Sheet & Equity as at 1st, April 2016 and 31st March, 2017 and Profit or Loss for the year ended 31st March, 2017.
(i) Long term borrowings
Under Indian GAAP, transaction cost incurred in connection with borrowings are charged to profit and loss in the same financial year. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using effective interest rate method.
(ii) Fair valuation as deemed cost for Property, Plant and Equipment:
The Company have considered fair value for property, viz land situated in India, in accordance with stipulations of Ind AS 101 with the resultant impact being accounted for in the reserves.
(iii) Deferred tax
Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 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. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP In addition, the various transitional adjustments lead to temporary differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.
(iv) Dividends
Under Indian GAAP, proposed dividends including Dividend Distribution Taxes (DDT) are recognised as a liability in the period to which they relate, irrespective of when they are declared. Under IND AS, a proposed dividend is recognised as a liability in the period in which it is declared by the company (usually when approved by shareholders). In case of the Company, the declaration of dividend occurs after the year end. Therefore, the liability recorded for dividend has been derecognised against retained earnings on 01st April, 2016.
(v) Restoration
Under IND AS Decommissioning costs are provided for in the accounting period when the obligation arises based on the net present value of the estimated future costs of restoration to be incurred. Under Indian GAAP, the above obligation is not required to be discounted to its present value.
(vi) Re-classifications
The Company has made following reclassification as per the requirements of IND AS:
- Assets / liabilities which do not meet the definition of financial asset / financial liability have been reclassified to other asset / liability.
- Re-Measurement gain/loss on long term employee defined benefit plans are re-classified from profit and loss to Other Comprehensive Income.
- Excise duty collected on sales was earlier netted off with Revenue from operations under previous GAAP, now presented as an expense in accordance with IND AS 18
- Under Indian GAAP, the government grant received was accounted as Reserve and Surplus. Under IND AS the same has been accounted as "Other Financial Liabilities" in accordance with IND AS 20.
- The Company has re-classified unpaid dividend balance form cash and cash equivalents to other bank balances.
(vii) Derivative Instruments
The fair value of forward foreign exchange contracts is recognised under IND AS. The company was accounting for derivative contracts under the Indian GAAP using AS-11-'Effects of Changes in foreign Exchange rates'. The difference between the fair value and the Indian GAAP carrying amount has been recognised in retained earnings on the date of transition to IND AS and to statement of profit and loss as on 31st March, 2017.
(viii) Leases
Under Ind AS, where the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessor's expected inflationary cost increases, straight lining of lease is not required. The same was required under AS-19. The Company has initially recognised security deposit paid to the lessor at fair value and subsequently at amortised cost as per Ind AS 109.
(ix) Expected Credit Loss Model
Ind-AS 109 requires to recognize loss allowances on trade receivable and other financial assets of the Company, at an amount equal to the lifetime expected credit loss or the 12 month expected credit loss based on the increase in the credit risk.
(x) Deferred Revenue
Under India GAAP, grants received from government agencies against specific fixed assets (Property, Plant and Equipment) are adjusted to the cost of the assets. Under IND AS the same has been presented as deferred revenue being amortised in the statement of profit & loss on a systematic basis.
(xi) Employee Share Based Payment
Under the Previous GAAP, the Company had recognised the cost of equity-settled employee share-based payment using the intrinsic value method. Under Ind AS, the cost of equity settled share-based plan is recognised based on the fair value of the options as at the grant date. Adjustment has been done to take additional charge arising due to change from intrinsic value to fair value of ESOPs outstanding.
(xii) Other Comprehensive Income
Under Indian GAAP, the company has not presented other comprehensive income (OCI) separately. Hence it has reconciled Indian GAAP profit or loss to profit or loss as per IND AS. Further, Indian GAAP profit or loss is reconciled to Total Comprehensive Income as per IND AS.
12. During the current year, the Company has executed a Limited Liability Partnership Agreement with Metzerplas Cooperative Agricultural Organization Ltd ("Metzerplas") dated 14th February 2018, to jointly carry out business activities in the field of micro-irrigation. The Company will hold 50% Partnership Interest in the LLP The Company holds rights as customary in such transactions, including on veto matters.
13. Previous GAAP figures have been reclassified/regrouped to conform to the presentation requirements under Ind AS and the requirements laid down in Division-II to the Schedule-III of the Companies Act 2013.
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