1 Company Background

Assam Company India Limited (the 'Company') is a Company limited by shares, incorporated and domiciled in India. The equity shares of the Company are listed on the National Stock Exchange of India Limited and BSE Limited in India. The Registered Office of the Company is located at Greenwood Tea Estate, P.O. Dibrugarh, Assam - 786 001 and Corporate/Head Office is located at Assam Tea House, 52, Chowringhee Road, Kolkata - 700 071.

The Company is mainly engaged in the business of tea plantation and is also engaged in oil and gas exploration business. The Company owns Fourteen Tea Estates in the State of Assam.

The Standalone Financial Statements were approved and authorised for issue by the Company's Board of Directors on 30th May, 2018.

2. Property, plant and equipment pledged as security - Refer Note 44 for information on property, plant and equipment pledged as security by the Company.

3. Contractual obligations - Refer Note 37 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

4. The aggregate depreciation/amortisation has been included under Depreciation and Amortisation Expense in the Statement of Profit and Loss.

(b) The Company has one class of Equity Shares having a par value of Re. 1/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. 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 to their shareholding.

5. Segment Information

A. Description of segments and principal activities

The Company’s Executive Director examines the Company’s performance both from a product and geographic perspective and has identified two reportable segments of its business:

a) Plantation products.

b) Oil and Gas Activities

Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the Standalone Financial Statements. Also, the Company's borrowings (including finance costs and interest income), income taxes, investments and derivative instruments are managed at Head Office and are not allocated to operating segments.

The segment revenue is measured in the same way as in the Statement of Profit and Loss.

Segment Assets and Liabilities are measured in the same way as in the financial statements. These assets and liabilities are allocated based on the operations of the segment and the physical location of the assets.

(i) Fair Value Hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows below. Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing Net Asset Value.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.

The Company's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There are no transfers between levels 1 and 2 during the current year and previous year.

The management assessed that fair values of trade receivables, cash and cash equivalents, other bank balances, other Financial Assets (current), trade payables and other financial liabilities (current) approximate their carrying amounts largely due to the short-term maturities of these instruments.

For Financial Assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

(iii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include: the use of quoted market prices or dealer quotes for similar instruments

In respect of investments in mutual funds, the fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors. Accordingly, such net asset values are analogous to fair market value with respect to these investments, as transactions of these mutual funds are carried out at such prices between investors and the issuers of these units of mutual funds.

All of the resulting fair value estimates are included in level 2 except for unlisted equity securities, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.

The management consider that the carrying amounts of financial assets (other than those measured at fair value) and liabilities recognised in the financial statements approximate their fair value as on 31.03.2018,31.03.2017 and 01.04.2016.

(iv) Valuation processes

The finance department of the Company includes a team that performs the valuations of Financial Assets and liabilities required for financial reporting purposes, including level 3 fair values. This team reports directly to the chief financial officer (CFO) and the audit committee (AC).

The main level 3 inputs for unlisted equity securities used by the Company are derived and evaluated as follows:

- Discount rates are determined using a capital asset pricing model to calculate a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the asset.

- Risk adjustments specific to the counterparties (including assumptions about credit default rates) are derived from credit risk grading determined by the Company's internal credit risk management Team.

- Earnings growth factor for unlisted equity securities are estimated based on market information for similar types of companies.

Changes in level 2 and 3 fair values are analysed at the end of each reporting period during the quarterly valuation discussion between the CFO, AC and the valuation team. As part of this discussion the team presents a report that explains the reason for the fair value movements.

6. Financial Risk Management

The Company's activities expose it to market risk, liquidity risk and credit risk. In order to minimise any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts are entered to hedge certain foreign currency risk exposures and interest rate swaps to hedge variable interest rate exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

This Note explains the sources of risk which the entity is exposed to and how the entity manages the risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:

The Company's risk management is carried out by finance department under policies approved by the Board of Directors. Finance department identifies, evaluates and hedges financial risks in close co-operation with the Company's operating units. The Board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.

(A) Credit Risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs.157,629,889, Rs. 7,080,323 and Rs. 15,574,412 as at 31st March 2018, 31st March, 2017 and 1st April, 2016 respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. Outstanding customer receivables are regularly monitored. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors such as credit ratings and the Company's historical experience for customers.

Financial instruments and cash deposits

Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks with good credit ratings. Investments primarily include investment in liquid mutual fund units. The Company does not expect any losses from non-performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.

Financial assets that are neither past due nor impaired

None of the Company's cash equivalents with banks and current investments were past due or impaired as at 31st March 2018. The Company's credit period for customers generally ranges from 0 - 180 days. Of the total trade receivables, Rs. 24,088,011 as at 31st March, 2018, Rs. 7,001,346 as at 31st March, 2017 and Rs. 13,717,201 as at 1st April, 2016 consisted of customer balances that were neither past due nor impaired.

Receivables are deemed to be past due or impaired with reference to the Company's normal terms and conditions of business. These terms and conditions are determined on a case to case basis with reference to the customer's credit quality and prevailing market conditions. Receivables that are classified as 'past due' in the above tables are those that have not been settled within the terms and conditions that have been agreed with that customer.

Other than trade and other receivables, the Company has no significant class of Financial Assets that is past due but not impaired.

During the period, the Company made no write-offs of trade receivables. It does not expect to receive future cash flows or recoveries from collection of cash flows previously written off.

The impairment provisions for Financial Assets disclosed above are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company's past history, existing market condition as well as forward looking estimates at the end of each reporting period.

(B) 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's 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. This is generally carried out by the central treasury department (company treasury)in close co-ordination with operating units and in accordance with practice and limits set by the Company. These limits vary by location to take into account the liquidity of the market in which the unit operates. In addition, the Company's liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring Balance Sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

As at 31st March 2018, the Company had working capital of Rs.2,036,447,123 and cash and cash equivalents of Rs. 69,749,329 and current investments of Rs. Nil.

As at 31st March 2017, the Company had working capital of Rs. 2,503,263,266 and cash and cash equivalents of Rs. 9,469,110 and current investments of Rs. 500,000.

As at 1st April 2016, the Company had working capital of Rs. 2,362,135,146 and cash and cash equivalents of Rs. 26,811,922 and current investments of Rs. 1,343,938._

The bank overdraft and other facilities may be drawn at any time and may be terminated by the bank without notice.

(ii) Maturities of Financial Liabilities

The tables below analyse the Company's financial liabilities into relevant maturity groupings based on their contractual maturities.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

(C) Market risk

(i) Foreign currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US$, EUR and GBP. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company's functional currency (INR).

Exposures on foreign currency loans are managed through the Company's hedging policy, which is reviewed periodically to ensure that the results from fluctuating currency exchange rates are appropriately managed. The Company strives to achieve asset liability offset of foreign currency exposures and only the net position is hedged.

The Company uses forward exchange contracts to hedge the effects of movements in exchange rates on foreign currency denominated assets and liabilities. The sources of foreign exchange risk are outstanding amounts payable as financing transactions and loans denominated in foreign currencies. The Company is also exposed to foreign exchange risk on its exports and foreign exchange risk on its net investment in foreign operations. Most of these transactions are denominated in US$, GBP and Euro. The policy of the Company is to determine on a regular basis what portion of the foreign exchange risk on financing transactions and loans are to be hedged through forward exchange contracts and other instruments.

(b) Sensitivity 10% appreciation/depreciation of the respective foreign currencies with respect to functional currency (holding all other variables constant) of the Company would result in increase/decrease in the Company's profit by INR 20.82 crores for Financial Assets and decrease/increase in the Company's profit before tax by approximately INR 14.70 crores.

(ii) Cash flow and fair value interest rate risk

The Company's main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During the years under review, the Company's borrowings at variable rate were mainly denominated in INR and USD.

The Company manages its cash flow interest rate risk by using interest rate swap

An analysis by maturities is provided in Note 42(B)(ii) above. The percentage of total loans shows the proportion of loans that are currently at variable rates in relation to the total amount of borrowings.

(b) Sensitivity

Increase/decrease of 50 basis point (holding all other variables constant) in interest rates at the balance sheet date would result in an impact (decrease/increase) of INR 2.66 crs, INR 2.74 crs and INR 2.77 crs on profit before tax for the year ended 31st March, 2018, 31st March, 2017 and 1st April, 2016 respectively.

(iii) Securities Price risk

(a) Exposure

The Company's exposure to equity securities price risk arises from investments held by the Company and classified in the Balance Sheet as fair value through profit or loss (Note 43).

To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.

The majority of the Company's equity investments are publicly traded.

(b) Sensitivity

Increase/decrease of 1000 basis point of index would result in an impact (increase/decrease) by INR 0.50 lakhs and INR 1.34 lakhs on other comprehensive income for the year ended 31st March, 2017 and 1st April, 2016 respectively.

7. Capital Management (a) Risk Management

The Company's objectives when managing capital are to

- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Company monitors capital on the basis of the net debt to equity ratio. The Company is not subject to any externally imposed capital requirements.

Net debt are long term and short term debts as reduced by cash and cash equivalents and current investments. Equity comprises all components excluding other components of equity (representing other comprehensive income).

No changes were made to the objectives, policies or processes for managing capital during the years ended 31st March, 2018 and 31st March, 2017.

Loan covenants

Under the terms of a specific borrowing facility, the Company is required to comply with the following financial covenants:

- the ratio of net borrowing to tangible networth must be not more than 3.50:1, and

- the ratio of EBITDA less current tax to net interest expense and scheduled repayment of long term loan must be not be less than 1.20:1.

The Company has not complied with these covenants throughout the reporting period.

8 (a) The Company has two Oil and Gas Fields/Blocks in Assam Arakan Basin - Amguri (Discovered Field) and AA-ON/7 (Exploration Block) having Participating Interest (PI) of 100% and 35% respectively.

(b) Amguri Oil Field and AA-ON/7 Exploration Block were operated earlier under a consortium with Canoro Resources Limited (CRL), a Canadian based E&P Company where PI of ACIL were 40% and 35% respectively. PI of CRL was 60% in Amguri Oil Field and 65% in AA-ON/7 Exploration Block.

(c) Government of India (GOI) terminated 60% PI and operatorship of Canoro Resources Limited (CRL) with effect from 29th August, 2010 for breach of Production Sharing Contract (PSC). CRL closed the operation of Amguri in December, 2010 and GOI considering its vesting right on 60% PI handed over the Amguri Field to ONGC on 16th March, 2011, to continue the operations till the ownership of 60% PI and operatorship were finalized. The Company had staked its claim on 60% PI in accordance with the provisions of PSC being the sole non-defaulting contractor. After a prolonged delay, GOI had finally appointed the Company as the operator of Amguri Field vide its letter dated 2nd January, 2013._

(d) Pursuant to the appointment as an operator, the Company has entered into a Bilateral Agreement (BA) on 23rd December, 2014, with ONGC for their investment in the Amguri Field for & on behalf of GOI and to take over the field and to commence operation. The said BA was approved by GOI on 31st March, 2016.

(e) The Company's rightful claim on 60% PI earlier held by CRL was contested by the Company before an Arbitral Tribunal Board, where GOI was a party. The Arbitral Tribunal Board has on 25.02.2017 pronounced the Award on the Arbitral proceedings of ACIL with GOI in respect of Amguri Field. ACIL is declared the owner of 60% of the PI currently held by GOI and thereby has now become the owner of 100% of PI of the Amguri Field. The contract period of the PSC of the Amguri Field shall stand extended by five years beyond its original term. A sum of US$ 3.54 Million was granted to ACIL as compensation alongwith interest at 6% per annum from March, 2011, till the date of payment. The cost of Arbitral proceedings amounting to INR 1.25 Crore shall also accrue to ACIL.

(f) Pursuant to the Arbitral Tribunal's Award dated 25th February, 2017, ACIL has proposed GOI for an amicable settlement and submitted an unconditional undertaking to withdraw all its existing claim. GOI vide its letter dated 25th May, 2017, has approved ACIL's ownership of 100% PI in the Amguri Field. Pursuant to such approval an amendment to PSC was executed on 7th June, 2017 where ACIL and the Ministry of Petroleun & Natural Gas, GOI are the parties.

(g) Based on the internal assessment of the valuation of Amguri Oil Field the management has decided to impair the Capital Investment amounting INR 221.96 Cr. included under the head "Propetry, Plant & Equipment" in line with IND-AS 36.

(h) As per the Award of the Arbitral Tribunal against CRL dated 21st November, 2011, the Company has got a damage claim of US$ 39.12 Million (Rs. 253.64 Crores) against CRL. The Tribunal had assigned a value of US$ 4.16 Million (Rs. 26.97 Crores) for 60% PI in Amguri and US$ 2.2071 Million (Rs. 14.31 Crores) for 52.9% shares of CRL, thereby awarding a net damage claim of US$ 32.75 Million (Rs. 212.34 Crores) against CRL.

(i) For enforcement of the Arbitral Tribunal Award before Canadian Court, the Company had initiated legal steps by filing execution petition on 9th November, 2012, before the Supreme Court of British Columbia. The Hon'ble Court has recognised the Arbitral Award vide its order dated 07.03.2014 as legally enforceable in British Columbia. The Company has taken legal steps for execution and realisation of the damaged claim as recognised by the Hon'ble Court.

(j) In view of the prolonged uncertainty in execution of new PSC and steps taken by the Nagaland Government towards formulating their own exploration policy, the management has decided to impair the entire capital investment of INR 36.47 Crore in AA-ON/7 Block included under the head "Property, Plant & Equipment" in line with IND-AS 36.

(k) Cost Record Order is applicable for Oil and Gas. There was no production of oil & gas during the year.

9. The Company had issued Zero Per Cent Foreign Currency Convertible Bonds (“FCCB”) in 2006 aggregating to USD 48 Million (INR 2,109,120,000/-) to finance capital expenditure for modernisation, expansion and acquisitions. The Bond holders have an option of converting these Bonds into Equity Shares at a conversion price of Rs. 28.75 per share, at any time on or after 28th November, 2006, subject to compliance with certain conditions stated in the offer circular dated 23rd November, 2006. The Bonds were redeemable on 30th November, 2011 at 150.019 per cent of their principal amount, unless previously converted or redeemed.

Unutilised FCCB proceeds amounting to Rs.692,467/- (31.03.2017 - Rs. 692,467/-) have been invested in securities and the balance Rs. Nil (31.03.2017 - Rs. 233,850/-) is lying with banks at the year end.

As at the year end the total outstanding of FCCBs. Including redemption premium is USD 5.70 Million.

10. The Company is under Corporate Insolvency Resolution Process (CIRP) where the entire management is vested with the Resolution Professional (RP). A Resolution Plan is needed to be approved by the Committee of Creditors (COC) and the Insolvency Bankruptcy Board (IBB) to keep the Company as a going Concern. As the Resolution Plan of the Company is under process and the normal operations are continuing, its Financial Statements are prepared on a Going Concern basis.

11. National Company Law Tribunal (NCLT), Guwahati Branch, has by its Order dated 26.10.2017, initiated Corporate Insolvencty Resolution Proceedings (CIRP) against the Company and has appointed Mr. Vinod Kothari Interim Resolution Professional (IRP). Subsequently, vide its Order dated 12.01.2018, the NCLT has appointed Mr. Kannan Tiruvengadam as the Resolution Professional (RP) of the Company.

These are the Company's first Standalone Financial Statements prepared in accordance with Ind AS.

The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended 31st March 2018, the comparative information presented in these financial statements for the year ended 31st March, 2017 and in the preparation of an opening Ind AS balance sheet at 1st April, 2016 (the Company's date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company's financial position, financial performance and cash flows is set out in the following tables and notes.

A Exemptions and exceptions availed

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.1 Ind AS optional exemptions A.1.1 Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.

The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.

A.1.2 Prospective application of Ind AS 21 to business combinations

Ind AS 101 allows a first-time adopter not to apply Ind AS 21 Effects of changes in Foreign Exchange Rates retrospectively for business combinations that occurred before the date of transition to Ind AS. In such cases, where the entity does not apply Ind AS 21 retrospectively to fair value adjustments and goodwill, the entity treats them as assets and liabilities of the acquirer entity and not as the acquiree.

The Company has elected to apply this exemption.

A.1.3 Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities, if applicable. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets.

Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

A.1.4 Investments in subsidiaries

Ind AS 101 permits a first-time adopter to elect to measure its investments in subsidiaries at fair value of such investments at the Company's date of transition to Ind AS or previous GAAP carrying amount at that date and use that as its deemed cost as at the date of transition.

Accordingly, the Company has elected to measure all of its investments in subsidiaries at their previous GAAP carrying value.

A.1.5|Exchange differences on long-term foreign currency monetary items

Under previous GAAP, an alternative accounting treatment was provided to companies with respect to exchange differences arising on restatement of long-term foreign currency monetary items. Exchange differences on account of depreciable assets could be added/deducted from the cost of the depreciable asset, which would then be depreciated over the balance life of the asset. In other cases, the exchange difference could be accumulated in a foreign currency monetary item translation difference account, and amortised over the balance period of such long term asset/ liability. Ind AS 101 includes an optional exemption that allows a first-time adopter to continue the above accounting treatment in respect of the long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period.

The Company has elected to apply this exemption for such items recognised in the financial statements up to 31st March, 2017.

A.1.6 Designation of previously recognised financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI 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 investment in equity investments.

A.2 Ind AS mandatory exceptions A.2.1 Estimates

An entity's estimates in accordance with Ind ASs 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 1st 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;

- Impairment of Financial Assets based on expected credit loss model.

A.2.2 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 from a date of the entity's choosing, 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.

A.2.3 Classification and measurement of Financial Assets

Ind AS 101 requires an entity to assess classification and measurement of Financial Assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

B. Notes to First-time Adoption

1 Fair valuation of investments

Under the previous GAAP, investments in equity instruments and mutual funds 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 (other than investments in subsidiaries) are required to be measured at fair value. The resulting fair value changes of these investments (other than equity instruments designated as at FVOCI) have been recognised in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended 31st March 2017.

2 Inventories

a) Under previous GAAP, no valuation was done for period end harvested tea leaf. Under Ind AS, harvested leaf is measured at its fair value less cost to sell and is classified as Agricultural produce under work in progress. The impact of the same is reflected in Statement of Profit and Loss.

b) Under previous GAAP, biological assets (unharvested leaf on tea bushes) neither valued nor recognised in the accounts Under Ind AS, Unharvested leaf is measured at its fair value less cost to sell and is classified as Biological assets under work in progress. The impact of the same is reflected in Statement of Profit and Loss.

c) Under previous GAAP, stock of tea is valued at cost comprising of the cost of production (including costs for plucked green leaf) for the full year. Under Ind AS, cost is comprises of fair value of green leaf plucked from the company's estates less cost to sell at the point of harvest and cost of production for the full year. The impact of the same is reflected in Statement of Profit and Loss.

3 Depreciation on Bearer Plants

Under Ind AS tea bushes representing bearer plants have been recognised as depreciable item of PPE, fair valued on the date of transition in accordance with exemption available in Ind AS 101and recognised as deemed cost. The cosequent impact on depreciation is reflected in Statement of Profit and Loss.

4 Borrowings

Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method.

Under previous GAAP, these transaction costs were charged to profit or loss as and when incurred. Accordingly, borrowings as at 31st March, 2017 have been reduced by Rs.9,954,042/- (1st April, 2016 - Rs.12,444,587/-) with a corresponding adjustment to retained earnings. The total equity increased by an equivalent amount. The loss for the year ended 31st March, 2017 increased by Rs. 2,490,545/-. as a result of the additional interest expense.

5 Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements 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 remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended 31st March, 2017 decreased by Rs. 33,520,949/-. There is no impact on the total equity as at 31st March, 2017.

6 Retained earnings

Retained earnings as at 1st April, 2016, has been adjusted consequent to the above Ind AS transition adjustments.

7 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.

12. Figure for the previous years have been regrouped /rearranged wherever necessary.