Note :
Building includes Prayer Hall and Gold plating theron of Rs. 109.14 Lakhs in Gross Carrying value, Rs. 7.32 Lakhs in Depreciation block and Rs.101.82 Lakhs in Net Block (Previous year Rs. 109.14 Lakhs in Gross Carrying value, Rs. 3.66 Lakhs in Depreciation and Rs.105.48 lakhs in Net Block )
Furniture & Fittings includes Prayer Hall of Rs. 4.53 Lakhs in Gross Carrying value, Rs. 3.79 Lakhs in Depreciation Block and Rs.0.74 Lakhs in Net Block (Previous year Rs. 4.53 Lakhs in Gross Carrying Value, Rs. 2.02 Lakhs in Depreciation and Rs.2.51 Lakhs in Net Block)
Office Equipment includes Prayer Hall of Rs. 0.47 Lakhs in Gross Carrying Value, Rs. 0.20 Lakhs in Depreciation Block and Rs.0.27 Lakhs in Net Block (Previous year Rs. 0.47 Lakhs in Gross Carrying Value, Rs. 0.10 Lakhs in Depreciation and Rs.0.37 lakhs in Net Block )
Terms and conditions of equity shares :
The company has only one class of equity shares having a par value of Rs.10 per share. Each share holder is eligible for one vote per share.
In the event of liquidation the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion of their shareholding. There are no shares allotted as fully paid without payments being received in cash, bonus shares or shares bought back._
Bank borrowings of Term Loan
Term Loans from Indian Bank (IB) and The South Indian Bank (SIB) are secured by first pari passu charge on (a) all immovable properties situated in (i) 102.1897 acres of land at Jadayampalayam, Alangombu and Karamadai villages in Mettupalayam Taluk, Coimbatore District, Tamil Nadu and (ii) 2155.62 sq. meters of land at Amdha Village, Dharampur Taluk, Valsad District, Gujarat through equitable mortgage created with Indian Bank and (b) all plant and machineries including machineries and other movable fixed assets (excluding vehicles charged to financiers, Peelamedu Property, Mumbai Property and Banglore Property) acquired for the Expansion cum Diversification Scheme (ECDS) and New Capex Plan through Deed of Hypothecation and second pari passu charge on current assets of the Company.
Term Loan for 10 MW Power Plant from Indian Bank Rs.2868 lakhs and The South Indian bank Ltd Rs.1470 laksh are secured by pari passu first charge on Fixed Assets relating to power plant project and pari passu second charge on current assets of the Company.
Indian Bank is holding the original title deeds on its own behalf and on behalf of other Banks. Term Loans are also guaranteed by Shri KG Baalakrishnan, Executive Chairman.
The Company has availed Seven Term loans and One Corporate Loan from Indian Bank and loan outstanding is - Term Loan III Rs. Nil and Term Loan IV Rs.596.74 lakhs and Term Loan V Rs. Nil, Term Loan VI Rs.827.68 lakhs, Term Loan VII Rs. Nil and Term Loan VIII Rs. 21.65 and Corporate Loan Rs.2020 lakhs (Previous year Rs.74.47 lakhs, Rs.865.14 lakhs, Rs.243.46 lakhs, Rs.1015.96 lakhs,Rs. Nil, Rs.Nil & Rs. Nil respectively). Term Loan III is repayable in 60 monthly installments commencing from 01.09.2013.Last installment is due on 01.08.2018.Rate of Interest 12.20% p.a.as at year end. (Previous year 12.40% p.a). Term Loan IV is repayable 72 monthly installments commencing from 03.10.2015. Last installment is due on 03.10.2021.Rate of Interest 11.70% p.a as at year end. (Previous year 12.25% p.a). Term Loan V is repayable 60 monthly installments commencing from 01.07.2014. Last installment is due on 01.06.2019. Rate of interest 12.25% p.a as at year end. (Previous year 12.25%). Term Loan VI is repayable 96 monthly installments commencing from 25.12.2015. Last installment is due on 25.12.2023. Rate of interest 11.75% p.a. as year end (Previous year 12.25%). Term Loan VII is repayable 84 monthly installments commencing from 15.05.2017. Last installment is due on 15.05.2024. Rate of interest 11.65%.Term Loan VIII is repayable 84 monthly installments commencing from 02.02.2018. Last installment is due on 02.02.2025. Rate of interest 11.65%. Corporate Loan is repayable in 48 monthly installments commencing from 01.04.2018. Last installment is due on 01.04.2022 Rate of interest 10.50% p.a as at year end.
The Company has availed a Term Loan from The South Indian Bank Ltd and loan outstanding is- Rs.734.27 lakhs (Previous year Rs.945.13 lakhs). Term Loan is repayable in 84 monthly installments commencing from 25.12.2015. Last Installment is due on 25.12.2022. Rate of Interest 12.05% p.a. as at year end (Previous year 12.25% p.a).
The Company has availed a Term Loan from ICICI Bank Ltd and loan outstanding is Rs.264.00 lakhs (Previous year Rs. Nil). Term Loan is repayable in 120 monthly installments commencing from 05.05.2017. Last Installment is due on 05.05.2027. Rate of Interest 8.50% p.a. as at year end. ICICI Bank is having an exclusive charge on the Bangalore office property.
The Company has availed a Term Loan from Repco Bank Ltd and loan outstanding is Rs.470.00 lakhs (Previous year Rs. Nil). Term Loan is repayable in 120 monthly installments commencing from 01.04.2018. Last Installment is due on 01.04.2028. Rate of Interest 11.00% p.a. Repco Bank is having an exclusive charge on 24.25 acres of land situated at Jadayampalayam.
Term Loan from others :
The Company has availed a Term Loan from HDFC and loan outstanding is Rs.72.25 lakhs (Previous year Rs.118.90 lakhs). Term Loan is repayable in 84 monthly installments commencing from 20.11.2014. Last Installment is due on 20.11.2021. Rate of Interest 13.50% p.a. as at year end (Previous year 13.50% p.a) HDFC is having an exclusive charge on the Mumbai office property.
Working Capital facilities from Indian Bank Consortium (Indian Bank, Andhra Bank, Allahabad Bank, State Bank of India and The South Indian Bank Limited) are secured by a first pari passu charge on the whole of the current assets through Deed of Hypothecation and second pari passu charge on (a) all the immovable properties situated in (i) 102.1897 acres of land at Jadayampalayam, Alangombu and Karamadai Villages in Mettupalayam Taluk, Coimbatore District, Tamil Nadu and (ii) 2155.62 sq. meters of land at Amdha Village, Dharampur Taluk, Valsad District, Gujarat through equitable mortgage created with Indian Bank and (b) all plant and machineries (excluding vehicles charged to financiers, Peelamedu property, Mumbai property and Banglore property) through Deed of Hypothecation. The entire working capital facilities are also guaranteed by Shri KG Baalakrishnan, Executive Chairman.
These are the Company’s first financial statements prepared in accordance with Ind AS.
The Company has adopted Indian Accounting Standards (Ind AS) notified by the Ministry of Corporate Affairs with effect from 1st April, 2017, with a transition date of 1st April, 2016. Ind AS 101-First-time Adoption of Indian Accounting Standards requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements which is for the year ended 31st March, 2018 for the company, be applied retrospectively and consistently for all financial years presented. Consequently, in preparing these Ind AS financial statements, the Company has availed certain exemptions and complied with the mandatory exceptions provided in Ind AS 101, as explained below. The resulting difference in the carrying values of the assets and liabilities as at the transition date between the Ind AS and Previous GAAP have been recognised directly in equity (retained earnings or another appropriate category of equity).
Set out below are the Ind AS 101 optional exemptions availed as applicable and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
A. Optional Exemptions availed
(a) Deemed Cost
The Company has opted paragraph D7 AA and accordingly considered the carrying value of property, plant and equipments and Intangible assets as deemed cost as at the transition date.
(b) Investments in subsidiaries
The Company has opted para D14 and D15 and accordingly considered the Previous GAAP carrying amount of Investments as deemed cost as at the transition date.
(c) Designation of previously recognised financial instruments
The company has opted to apply the exemption under para 19B to designate investments in equity instruments at FVOCI on the basis of facts and circumstances at the date of transition to INDAS.
B. Applicable Mandatory Exceptions
(a) 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).
Ind AS estimates as at 1 April 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:
- Investment in equity instruments carried at FVPL or FVOCI;
- Impairment of financial assets based on expected credit loss model.
(b) Classification and measurement of financial assets
As required under Ind AS 101 the company has assessed the classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
C. Transition to Ind AS - Reconciliations
The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to Ind AS as required under Ind AS 101:
I. Reconciliation of Balance sheet as at April 1, 2016 (Transition Date)
II. A. Reconciliation of Balance sheet as at March 31, 2017
B. Reconciliation of Total Comprehensive Income for the year ended March 31, 2017
III. Reconciliation of Equity as at April 1, 2016 and as at March 31, 2017
IV. Adjustments to Statement of Cash Flows
The presentation requirements under Previous GAAP differs from Ind AS, and hence, Previous GAAP information has been regrouped for ease of reconciliation with Ind AS. The Regrouped Previous GAAP information is derived from the Financial Statements of the Company prepared in accordance with Previous GAAP.
The following explains the material adjustments made while transition from previous accounting standards to IND AS
Note - : FIRST TIME ADOPTION OF Ind AS
The presentation requirements under previous GAAP differs from Ind AS, and hence, previous GAAP information has been regrouped for ease of reconciliation with Ind AS. The Regrouped previous GAAP information is derived from the financial statements of the company prepared in accordance with previous GAAP
A Proposed dividend
Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events and 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. Accordingly, the liability for proposed dividend along with income tax there on Rs.231.57 Lakh as at 1st April, 2016 included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity has been increased by an equivalent amount.
B Fair valuation of investments:
Under the previous GAAP, investments in equity 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 provisions for other than temporary decline in the value of such investments. Current investment 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 of these investment have been recognised in retained earnings Rs.0.83lakh as at 31st March 2017 (Rs.-1.28 lakh as at 1st April 2016)
C Government Grant
Apportionment of Government Grant recognised under Export Promotion Capital Goods (EPCG) scheme and corresponding charge of depreciation on account of grossing-up of Property, Plant & Equipment are now recognised in accounts.
D Retained earnings
Retained earnings as at April 1, 2016 has been adjusted consequent to the above Ind AS transition adjustments.
E 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 investments. The concept of other comprehensive income did not exist under previous GAAP.
F Deferred Tax
Deferred Tax on aforesaid IND AS adjustments
G Current Tax
Tax component on Actuarial Gains and losses is transferred to Other Comprehensive Income under IND AS .As required under the IndAS, the same has been debited to Profit and Loss.
H The Ind AS adjustments are either non cash adjustments or are regrouping among the cash flows from operating, investing and financing activities. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended 31st March, 2016 as compared with the previous GAAP.
Note : 1: FAIR VALUE MEASUREMENT
Financial Instrument by category and hierarchy
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying amounts largely due to short term maturities of these instruments.
2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments is not materially different from their carrying amounts.
The fair values for loans and security deposits were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.
The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
Credit risk
Credit risk is the risk that a counterpary will not meet its obligation under a financial instrument or customer contract, leading to a fiancical loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, foreign exchange transactions and other financial instruments.
The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of default occurring on asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as:
i) Actual or expected significant adverse changes in business,
ii) Actual or expected significant changes in the operating results of the counterparty,
iii) Financial or economic conditions that are expected to cause a significant change to the counterparty’s ability to meet its obligations,
iv) Significant increase in credit risk on other financial instruments of the same counterparty,
Financial assets are written off when there is no reasonable expectations of recovery, such as a debtor failing to engage in a repayment plan with the Company.
Trade Receivables
Customer credit risk is managed subject to the Company’s established policy, procedures and control relating to customer credit risk management. Trade receivables are non-intererst bearing and generally on 7 days to 180 days credit term. Credit limits are established for all customers based on internal rating criteria. Outstanding customer receivables are regularly monitored. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in serveral jurisdictions and industries and operate in largely independent markets.
Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows.
(i) Financing arrangements
The Company had access to the following undrawn borrowing facilities at the end of the reporting period:
Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn within one year.
Financial risk management objectives and policies
The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by the Managing Board.
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loans and borrowings.
The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommend risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures like foreign exchange forward contracts, borrowing strategies and ensuring compliance with market risk limits and policies.
Market Risk- Interest rate risk
The Company’s borrowings are of fixed rate nature only. Hence interest rate risk is not applicable and hence no sensitivity analysis.
Market Risk- Foreign currency risk.
The company manages foreign currency risk primarily through forward contracts Derivative instruments and unhedged foreign currency exposure
(a) Exposure
The Company’s exposure to equity securities traded in stock exchange held by the Company as long term and classified in the balance sheet at fair value through OCI. The risk is marginal on account of investment being minimal.
(b) Sensitivity
The table below summarizes the impact of increases/decreases of the BSE index on the Company’s equity and Gain/ Loss for the period. The analysis is based on the assumption that the index has increased by 5 % or decreased by 5 % with all other variables held constant, and that all the Company’s equity instruments moved in line with the index.
Above referred sensitivity pertains to quoted equity investment. Profit for the year would increase / (decrease) as a result of gains/lossess on equity securities as at fair value through profit or loss.
(c) Foreign currency Risk Sensitivity
Note :- 2 - CAPITAL RISK MANAGEMENT
(a) Risk Management
The Company aim to manages its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to our shareholders. The capital structure of the Company is based on management’s judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The Company’s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure.
Note :- 3 - EXPORT PROMOTION CAPITAL GOODS (EPCG)
Export Promotion Capital Goods (EPCG) scheme allows import of certain capital goods including spares at concessional duty subject to an export obligation for the duty saved on capital goods imported under EPCG scheme. The duty saved on capital goods imported under EPCG scheme being Government Grant, is accounted as stated in the Accounting policy on Government Grant.
Note:4 - GST
The Company is liable to pay tax under Goods and Service Tax Act with effect from 1st July 2017.
Revenue / Expenses for the year 2017-18 are net of GST and hence not comparable with that of earlier years.
Note 5 :
The company has an investment of Rs 450 lakhs in the shares of Trigger Apparels Limited a wholly owned subsidiary of the company. The net worth of TAL has eroded due to business losses; However the management has not considered revaluation of its investment during the current year due to the fact that TAL has taken effective steps to improve its performance by reorienting product mix with value added products in line with latest fashion trends. Considering the higher recall for the Trigger Brand and the move over to direct Retail Marketing in the backdrop of Retail Revaluation happening in India, the business has bright prospects in the ensuing years. Management therefore considers that the business will have better value and that there is no need for provision for the losses as of now.
Note 6 : Segment Reporting:
In accordance with IND AS Segment information has been given in the consolidated financial statements of the company and therefore no separate disclosure on segment information in these financial statements.
Note 7 : Trade payable
Trade payable referred under current liability to Small Scale Industrial units is complied on the information made available to the company includes due of Rs.52.02 lakh of more than 30 days and exceeding Rs.1 lakh to the following parties : Sri Abirami Tubes - Rs.17.76 lakh, Nava Bharath Packaging - Rs.9.59 lakh, Acme Textiles-Rs.3.68 lakh, Asmaco Packaging IND-Rs.15.3 lakh and Harini Packs-Rs.5.69 lakh.
In the absence of necessary information with company, relating to the registration status of suppliers under the Micro. Small and Medium Enterprises Development Act 2006 the information required under the said Act. Could not be complied and disclosed.
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