1. The Company held only one class of equity shares, having a par value of Rs 10 per share.Each shareholder is eligible for one vote per share. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion of their shareholding.
2. Share Capital Suspense Account (Scheme of Amalgamation)
In accordance with scheme of Amalgamation the company had to issue / allot 79,31,634 new equity shares having face value of Rs 10/- each to the equity shareholders of transferor companies and accordingly 28,28,924 equity shares held by transferor companies will be cancelled in terms of Scheme
Hence 51,02,710 equity shares (net of cancellation) of Rs 10/- were issued in the Previous Year
3. Disclosure as per Ind AS 12 ‘Income Tax’
Deferred Tax Asset (DTA) and Deferred Tax Liability (DTL) are recognised as per Ind AS 12. DTA/DTL is recognised and carried forward to the extent capable of reversal.
4. Disclosure as per Ind AS 16 ‘Property, Plants & Equipments’
The construction work is in progress in Administrative Block of the company coming up at Sitarganj and Rampur Plant. Hence, expenses pertaining to this project incurred during the year have been treated as part of Capital Work in Progress (including intangible assets under development) and the same are to be capitalised on commencement of commercial production.
5. Disclosure as per Ind AS 17 ‘Leases’
I Assets taken on Operating Lease
a) The Company has taken office space on operating lease. The lease payments are payable by the company on a monthly or quarterly basis.
b) Future minimum lease rentals payable under non- cancellable lease agreements are as under:-
c) Lease payment recognised in the Statement of Profit & Loss for the year 2017-18 is Rs 74.03 Lakhs & Rs 73.10 Lakhs in the year 2016-17
6. Disclosure as per Ind AS 19 ‘ Employee Benefit’
A) Defined Contribution Plan
During the year company has recongised the following amounts in the statement of profit and loss.
B) Defined Benefit Plan Gratuity
The company has a defined benefit gratuity plan. Every employee who has rendered continuous service of 5 years or more is entitled to gratuity at 15 day salary (15/26 * last drawn basis salary plus dearness allowances) for each completed year for five years or more subject to maximum of rupees 20 lakhs on superannuation, resignation, termination, disablement, or on death.
Leave encashment
The company has a policy to pay leave encashment. Every employee is entitled to claim leave encashment after his/her retirement/termination which is calculated based upon no. of leaves taken. The company pays leave encashment on normal retirement for a maximum of 54 days or actual accumulation whichever is less.
* The discount rate assumed is 7.73% which is determined by reference to market yield at the balance sheet date on government bonds.
** The expected rate of return on plan assets is determine considering several applicable factor mainly the composition of plan assets held, assessed risk of assets management and historical return from plan assets.
*** The estimates of future salary increase considered in actuarial valuation, taking account of inflation, seniority promotion business plan, HR policy and other relevent factors on long term basis.
II) Sensitivity analysis
Reasonable possible change at the reporting date to one of the relevant actuarial assumption, holding other assumption constant, would have effected the defined benefit obligation by the amount shown below.
IV) Risk exposure
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follow -
a) Salary Increases- Actual salary increases will increase the Plan’s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.
b) Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
c) Discount Rate : Reduction in discount rate in subsequent valuations can increase the plan’s liability.
d) Mortality & disability - Actual death & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
e) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan’s liability.
7. Disclosure as per Ind AS 21 ‘The Effects of Changes in Foreign Exchange Rates’
The amount of exchange differences (net) debited to the Statement of Profit & Loss is 5.09 Lakhs (31 March 2017: Rs 24.55 Lakhs).
8. Disclosure as per Ind AS 33 ‘Earning Per Share’
Earnings per share (EPS) - EPS is calculated by dividing the profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. Numbers used for calculating basic and diluted earnings per equity share are as stated below:
The carrying amount of short term borrowings, trade payables, trade receivables, cash & cash equivalents and other financial assets and liabilities are considered to be the same at their Fair values, due to their short term nature. There are no transfers between Level 1, Level 2 and Level 3 during the years ended 31st March 2018 and 31st March 2017 & 1st April 2016.
9. Disclosure as per Ind AS 107 ‘Financial instrument disclosure’
A) Capital Management Risk management
For the purpose of Company’s Capital Management , Capital includes issued equity share capital.
‘Net Debt’ (total borrowings net of cash and cash equivalents and other bank balances) divided by ‘Total Equity’ (as shown in the standalone Balance sheet, inluding non-controlling interest).
B) Financial Risk management Risk management framework
The Company’s board of directors has overall responsibility for the establishment and oversight of the company’s risk management framework.
The Company through three layers of defence namely policies and procedures, review mechanism and assurance aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The Audit committee of the Board with top management oversee the formulation and implementation of the risk management policies. The risk are identified at business unit level and mitigation plan are identified, deliberated and reviewed at appropriate forums.
The Company has exposure to the following risks arising from financial instruments:
- credit risk (see(i);
- liquidity risk (see(ii); and
- market risk (see(iii).
i) Credit risk
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 and investments.
a) The carrying amount of financial assets represents the maximum credit risk as on reporting date Trade receivables and other financial assets
The Company has established a credit policy under which new customer is analysed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings, if they are available, financial statements, credit agency information, industry information and business intelligence. Sale limits are established for each customer and reviewed annually. Any sales exceeding those limits require approval from the appropriate authority as per policy.
In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, whether thay are institutional, dealers or end-user customer, their geographic location, industry, trade history with the Company and existence of previous financial difficulties.
b) Provision for Expected credit loss:
(i) Financial assets for which loss allowance is measured using 12 month expected credit losses.
With regard to all financial assets with contractual cash flows, other than trade receivables, management belives these to be high quality assets with negligible credit risk. The management believes that the parties from which these financial assets are recoverable, have strong capacity to meet the obligations and where the risk of default is negligible and accordingly no provision for excepted loss has been provided on these financial assets.
(ii) Financial assets for which loss allowance is measured using life time expected credit losses
The Company provides loss allowance on trade receivables using life time expected credit loss and as per simplified approach.
Based on internal assessment which is driven by the historical experience/ current facts available in relation to default and delays in collection thereof, the credit risk for trade receivables is considered low. The Company estimates its allowance for trade receivable using lifetime expected credit loss.
ii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risk damage to the Company’s reputation.
The Company’s treasury department is responsible for managing the short-term and long-term liquidity requirements. Short term liquidity situation is reviewed daily by the treasury deparment. Longer term liquidity position is reviewed on a regular basis by the Company’s Board of Directors and appropriate decisions are taken according to the situation.
iii) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Company’s income or the value of its holding of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
a) Currency risk
The company operates internationally and portion of the business is transacted in several currencies and consequently the company is exposed to foreign exchange risk through its Sale and Purchase from overseas suppliers in various foreign currencies.
The company evaluate exchange rate exposure arising from foreign currency transaction and the company follow established risk management policies.
Sensitivity analysis
A reasonable possible strengthening/ weakening of the USD or INR against all other currencies at year end would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.
b) 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 rate. In order to optimize the Company’s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.
Exposure to interest rate risk
The Company doesn’t have any borrowings. Hence the the Company is not exposed to Interest rate risk.
10. Disclosure as per Ind AS 108 ‘Operating Segment’
There is no separate reportable segment as the company is predominantly engaged in only one segment i.e. Toners’ therefore, Indian Accounting standard-108 to Operating Segment issued by the Institute of Chartered Accountants of India, is not applicable to it.
11. First time adoption of Ind AS
The company has adopted Ind AS notified by Ministry of Corporate Affairs for the year ended 31/03/2018. For the purpose of transition to Ind AS, the company has followed the Ind AS - 101 “ First Time Adoption of Ind AS “ from 01/04/2016 as the transition date.
Exemptions availed and mandatory exceptions
Ind AS 101 First-time Adoption of Indian Accounting Standards allows first-time adopters certain exemptions from retrospective application of certain requirements under Ind AS. Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
A) Ind AS optional exemptions
A.1 Fair valuation as deemed cost for certain items of Property, plant and equipment Ind AS 101 permits an entity to elect to measure an item of property, plant and equipment at the date of transition to Ind AS at its fair value and use that fair value as its deemed cost at that date.
Accordingly, the company has elected to use the fair value of certain items of property, plant and equipment designate the same as deemed cost on the date of transition except Land at Sitarganj & Rampur which was revalued at the time of transition . Fair value has been determined, by obtaining an external third party valuation, with reference to the depreciated replacement cost of similar assets, a level 3 valuation technique. For the remaining assets, the company has applied Ind AS retrospectively, from the date of their acquisition.
A.2 Designation of previously recognised financial instruments
Ind AS 101 allows an entity to designate investments in equity instruments at FVTPL on the basis of the facts and circumstances at the date of transition to Ind AS. The company has elected to apply this exemption for its equity investment.
B) Ind AS mandatory exceptions
B.1 Accounting estimates
An entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates as at April 1, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:
i) Investment in equity instruments carried at FVTOCI;
ii) Investment in debt instruments and compound instruments carried at FVTPL/FVTOCI;
iii) Impairment of financial assets based on expected credit loss model
B.2 De-recognition of financial assets and liabilities
Ind AS 101 requires a first-time adopter to apply the de- recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively ,provided that the information needed to apply Ind As 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.
The company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.
B.3 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 amortised 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 amortised cost has been done retrospectively except where the same is impracticable
The transition to Ind AS has resulted in changes in the presentation of the financial statements disclosure in the notes to accounts & accounting policies. The transition from previous GAAP to Ind AS has affected the financials.
12. Reconciliation of cash flows for the year ended March 31,2017
The transition from estwhile Indian GAAP to Ind AS has not made any material impact on the statement of cash flows.
Note 1: Fair Valuation of Investments
Under the previous GAAP, investments in equity instruments and other instruments were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes with respect to investments in equity instruments have been recognised in FVTPL as at the date of transition and subsequently in the statement of profit and loss for the year ended 31 March 2017. On account of this an amount of Rs 673.77 Lakhs has been adjusted for the year 2017.
Note 2: Deferred Taxes
Previous 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. According to the accounting policies, the company has to account for such differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity. On account of this the adjustment of Rs283.16 Lakhs has been adjusted for the Year 2017 & Rs 59.83 Lakhs as on 01.04.2016
Note 3: Proposed Dividend
Under the previous GAAP, dividend proposed by the Board of Directors after the Balance Sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting.
Note 4: Re-measurements of post employment benefit obligations
Under Ind AS, re-measurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these re-measurements were forming part of the profit or loss for the year. On account of this Rs 11.16 Lakhs has been adjusted net of tax for the year 2017.
Note 5: Other Equity
Retained Earnings has been adjusted to consider Fair Value of Mutual Funds, Revaluation of Land at Fair Value, Lease Rent Equalization Reserve & Deferred Expense on Security Deposit has been adjusted net of Tax as Ind AS transition adjustments. The effect of above transition let to increase in Other Equity by Rs 889.19 Lakhs in the year 2017 & Rs 438.19 Lakhs as on 01.04.2016
Note 6: Other Comprehensive Income
Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP
Note 7: Trade discount and Volume rebate
Under Previous GAAP, Trade discounts and volume rebates received are not encompassed within the definition of revenue, since they represent a reduction of cost. Under Ind AS, Trade discount and volume rebate cover in definition of Revenue so it is deducted from sales.
Note 8: Excise duty
Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty of Rs 55.54 Lakhs. There is no impact on the total equity and profit
Note 9: Fair Valuation as deemed cost for certain items of Property, Plant and Equipment
Ind AS 101 permits an entity to elect to measure an item of property, plant and equipment at the date of transition to Ind AS at its fair value and use that fair value as its deemed cost at that date. Accordingly, the Company has elected to use the fair value of certain items of property, plant and equipment on the date of transition and designate the same as deemed cost on the date of transition except Land of Sitarganj & Rampur, which was revalued at the time of transition to Ind AS. Fair value has been determined, by obtaining an external third party valuation,with reference to the depreciated replacement cost of similar assets, a level 3 valuation technique. The Land has been increased by Rs 530.72 Lakhs as on 01.04.2016.
Note 10: Financial Assets & Financial Liabilities measured at amortised cost
Under Ind AS 109- financial instruments, security deposits are required to be valued at fair value and difference between cost and fair value is to be amortised over the period of security as rental expenses and consequently interest income to be booked effective interest method in statement of Profit & loss.
Note 11: Regrouping of MAT under Deferred Tax
MAT entitlement credit being of the nature of Deferred Tax Asset, on transition to Ind AS. MAT credit entitlement of Rs 664.91 Lakhs for the year ended 2017 respectively has been regrouped under Deferred Tax Liability(net).
Note 12: Leases
Lease payments under an operating lease is recognised as an expense on a straight-line basis over the lease term. The shortage of lease rentals paid over the amount accrued in respect thereof amounting to Rs 25.45 Lakhs is considered as lease rental Liability.
13 Note no. 13 Disclosure of Corporate social responsibility (CSR)
As per section 135 of Companies Act the company is required to spend in every financial year , at least 2% of the average net profits of the company made during the three immediately preceding financial year in accordance with its CSR policy. A. Gross amount required to be spent by the Company during the year 2017-18 - Rs. 33.22 Lakhs (Year 2016-17 - Rs. 42.36 Lakhs)
14. The Board of Directors have recommended a dividend of Rs 1.50/- per share of face value of Rs 10/- each subject to the approval of the members of the company at its Annual General Meeting.
15. Disclosure as per Ind AS 103 ‘Business Combination’
The effect of the merger has been taken during the year 2016-17.
Honorable NCLT passed the order and apporved the scheme of amalgamation of ITDL and its subsidaries namely ITDL Imagetec Limited and other four groups companies. The scheme became effective on 25th August 2017 as (The said date) order of hon’ble National company Law Tribunal (NCLT) at Allhabad and Delhi dated 09th May, 2017 and 26th July, 2017 respectively were filed with registrar of company on the said dates the scheme has been given effect from 1st April, 2016 being the appointed date as per the scheme of amalgamations and accordingly all assets and liablities of transferors companies become the assets and liablites of Indian Toners and Developers Limited (Transferee Company).
In accordance with Ind AS 103-Business combination, The Financial Statements of the company for the previous financial year 2016-17 have been restated with effect from 1st April, 2016 (being the earliest period presented)
16. (i) Previous year figures have been re-grouped/re-classified wherever necessary to correspond with the current years classification disclosure.
(ii) Previous year figures were audited by another firm of Chartered Accountant & which have been relied upon by the current auditors.
17. The financials statements has been approved by the Board on 17th May, 2018.
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