NOTES to financial statements for the year ended 31st March, 2018

Note 27. Earnings Per Share (EPS)

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.

The following reflects the income and share data used in the basic and diluted EPS computations:

Note 28. Significant accounting judgements, estimates and assumptions

The preparation of the Company's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the Financial Statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur. In the process of applying the Company's accounting policies, management has made the following judgements, estimates and assumptions, which have the most significant effect on the amounts recognised in the Financial Statements:

Defined Benefit plans

The cost and the present value of the defined benefit gratuity plan and other post-employment leave encashment benefit are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in future. These include the determination of appropriate discount rate, estimating future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. For further details refer Note 30.

Fair value measurement of financial instruments and guarantees

When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See Note 35 for further disclosures.

Depreciation on Property, Plant and Equipment

Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset's expected useful life and the expected residual value at the end of its life. The useful lives and residual values of company's assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.

Provisions and contingencies

The assessments undertaken in recognising provisions and contingencies have been made in accordance with the Ind AS 37. A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Where the effect of time value of money is material, provisions are determined by discounting the expected future cash flows. In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. There are certain obligations which management has concluded, based on all available facts and circumstances, are not probable of payment or are very difficult to quantify reliably, and such obligations are treated as contingent liabilities and disclosed in the notes but are not reflected as liabilities in the financial statements. Although there can be no assurance regarding the final outcome of the legal proceedings in which the Company involved, it is not expected that such contingencies will have a material effect on its financial position or profitability (Refer Note 32).

Note 29. Scheme of Arrangement

Pursuant to a Scheme of Arrangement ("the scheme") between the Company and Majhaulia Sugar Industries Private Limited (MSIPL) and Jayantika Investment & Finance Limited (JIFL) sanctioned by the Hon'ble High Court at Calcutta on 8th August 2016 under the provisions of the Companies Act 2013, Sugar Division and Jay Shree Beneficiary Trust Unit of the Company was demerged into MSIPL and JIFL respectively.

As per the scheme, the appointed date by the Hon'ble High Court at Calcutta was 1st April, 2016 and the effective date is 26th September, 2016. Following the scheme the balances had been transferred as per the Court Scheme without applying Ind AS adjustment therein.

The salient features of the Scheme were as under:

A. Demerger of Sugar Division:

i. All the assets and liabilities pertaining to the Sugar Division of the Company as on 1st April, 2016 got demerged to MSIPL (a Subsidiary).

ii. MSIPL issued and allotted 31,25,000 equity shares of Rs. 10/- each at a premium of Rs 111l/- per share to the Company in consideration of transfer of the Company's Sugar Division.

iii. The value of the net assets of the Sugar Division as reduced by the shares as issued by MSIPL of Rs. 4,539.31 lakhs and Storage Reserve for Molasses amounting to Rs. 188.10 lakhs had been adjusted from the Capital Reserve of the Company.

B. Demerger of Jay Shree Beneficiary Trust Unit:

i. All the assets and liabilities pertaining to Jay Shree Beneficiary Trust Unit of the Company as on 1st April, 2016 got demerged to JIFL (a Subsidiary).

ii. JIFL shall issue and allot 20,00,000 equity shares of Rs. 10/- each at a premium of Rs. 256.53 per share to the Company in consideration of transfer of the Company's Jay Shree Beneficiary Trust Unit.

iii. The value of the net assets of Jay Shree Beneficiary Trust Unit as reduced by the shares as issued by JIFL of Rs. 4,306.80 lakhs had been adjusted from the Capital Reserve of the Company.

C. The details of assets and liabilities transferred to the Resulting Company are as under:

Majhaulia Sugar Industries Private Limited (MSIPL)

* The Jayshree Sugar division of the Company is holding 1070.57 acre of land which is in dispute under "Bihar Land Reforms (Fixation of Ceiling Area and Acquisition of Surplus Land) Act, 1961 & Rules 1963. Vide order dated 29/12/2012, the Additional collector, Bettiah had declared 970.57 acre of land as surplus and ordered for surrender of such land. The company has filed an appeal against the order of the collector and matter is subjudice. Further compensation of 146.92 acres of land which was surrendered under the above Act in earlier years is yet to be determined and shall be accounted for in the year of receipt.

Note 30. Employee Benefits Obligation

(I) Defined benefit plans (a) Gratuity

The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employement, of an amount equivalent to 15 days salary for each completed year of service. Vesting occurs upon completion of 5 years of continuous service. The Company makes contribution to JSTI Gratuity Fund, which is funded defined benefit plan for qualifying employees.

(i) The principal assumptions used in determining gratuity obligations for the Company's plans are as follows:

JSTI Gratuity Fund contributes funds in Birla Sun Life Insurance, HDFC Life Insurance, Bajaj Allianz, India First Life Insurance, Life Insurance Corporation.

The Company expects to contribute Rs. 800 Lakhs to the funded defined benefit plans in fiscal year 2018-19.

Sensitivity Analysis

Below is the sensitivity analysis determined for significant actuarial assumptions for the determination of defined benefit obligations and based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period while holding all other assumptions constant.

Risk analysis

Company is exposed to a number of risks in the defined benefit plans. Most significant risks pertaining to defined benefits plans, and management's estimation of the impact of these risks are as follows:

Interest risk

A decrease in the interest rate on plan assets will increase the plan liability. Salary growth risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase.

Investment risk

The Gratuity plan is funded with Birla Sun Life Insurance, HDFC Life Insurance, Bajaj Allianz, India First Life Insurance, Life Insurance Corporation. Company does not have any liberty to manage the fund provided to the Insurance Companies. The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to Government of India bonds. If the return on plan asset is below this rate, it will create a plan deficit.

(b) Provident fund for certain employees - In view of year-end position of the employer established provident fund and confirmation from the Trustees's of such fund, there is no shortfall as at the year end.

(II) Defined contribution plans

Note 31. Leases

Operating lease — Company as lessee (Other than land lease)

The Company's leasing arrangement are in the nature of cancellable operating leases. The Company has taken warehouse, machineries on Operating Leases. These leases have a life of between 1 year to 15 years which is renewable by mutual consent of concerned parties. No contingent rent is payable by the Company in respect of the above leases. Some of the lease agreements have price escalation clauses. Related lease rentals have been disclosed under the head "Rent" in Note 26 of Statement of Profit and Loss. There are no restrictions placed upon the Company by such leases.

The Company manages the above financial risks in the following manner:

• Sufficient inventory levels of chemicals, fertilisers and other inputs are maintained so that timely corrective action can be taken in case of adverse weather conditions.

• Slightly higher level of consumable stores viz. packing materials, coal and HSD are maintained in order to mitigate financial risk arising from logistics problems.

• Forward contracts are made with overseas customers as well as domestic customers, in order to mitigate the financial risk in fluctuation in selling price of tea.

• Sufficient working-capital-facility is obtained from banks in such a way that cultivation, manufacture and sale of tea is not adversely affected even in times of adverse conditions.

Note 36. Capital management________________________________________________________________

For the purpose of the Company's capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Company's capital management is to maximise the shareholder value.

The Company's objectives when managing capital is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth and maximise the shareholders value. The Company's overall strategy remains unchanged from previous year.The Company sets the amount of capital required on the basis of annual business and long-term operating plans which include capital and other strategic investments. The funding requirements are met through a mixture of borrowed funds and internal fund generation. The Company's policy is to use short term and longterm borrowings to meet anticipated funding requirements. The Company monitors capital on the basis of the net debt to equity ratio. Net debt are long term and short term debts as reduced by cash and cash equivalents. Equity comprises share capital and free reserves (total reserves excluding OCI). The following table summarizes the capital of the Company:

Note 37. First-time adoption of Ind AS

These financial statements, for the year ended 31 March 2018, are the first the Company has prepared in accordance with Ind AS.

The Company's financial statements for the year ended 31 March 2018 have been prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 as described in the summary of significant accounting policies. The adoption of Ind AS has been carried out in accordance with Ind AS 101, with April 1, 2016 as the transition date. In accordance with Ind AS 101, the resulting difference between the carrying amounts of the assets and liabilities in the financial statements under both Ind AS and Previous GAAP as at the transition date have been recognized directly in equity at the transition date. An explanation of how the transition from previous GAAP to Ind AS has affected the financial position, financial performance and cash flows is set out in the following notes:

Exemptions and exceptions applied

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.I 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 assets on the date of transition and designate the same as deemed cost on the date of transition. Fair value has been determined, by obtaining an external third party valuation, a level 3 valuation technique. For the remaining assets, the Company has applied Ind AS retrospectively, from the date of their acquisition.

A.2 Investments in subsidiaries, joint ventures and associates

Ind AS 101 permits a first-time adopter to measure its investments in subsidiaries, joint ventures and associates at deemed cost. The deemed cost of such an investment could be either (a) its fair value at the date of transition; or (b) previous GAAP carrying amount at that date. The option may be exercised individually and separately for each item of investment.

Accordingly, the Company has opted to measure its investments in subsidiaries and joint ventures at deemed cost, i.e. previous GAAP carrying amount, except for its investment in North Tukvar Tea Company Ltd. and Jayantika Investment & Finance Ltd. which has been measured at fair value at the date of transition.

B. Ind AS Mandatory Exemptions B.I 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:

- Investment in equity instruments carried at FVTOCI.

- Investment in debt instruments carried at amortised cost.

- Other investments carried at FVTPL.

B.2 Classification and measurement of financial assets

Ind AS 101 allows an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS. The classification of financial assets is thus based on the facts and circumstances that exist as at 1 April 2016.

Note 38. Notes to first-time Adoption

1. Inventories

(a) Work in Progress : 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 Work in Progress. Consequent to this change, work in progress has increased by Rs. 56.61 lakhs and Rs. 35.15 lakhs as at 1 April 2016 and 31 March 2017 respectively with corresponding increase in equity.

(b) Finished Goods : Under previous GAAP, tea stock has been valued at the lower of cost and net realizable value. Cost of inventories comprise all costs of purchase/production of green leaf, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Under Ind AS, cost of inventories comprise cost of purchase of green leaf, fair value of green leaf at the time of harvest less cost to sell, conversion cost and other costs incurred in bringing the inventories to their present location and condition. Consequent to this change, inventory of finished goods has decreased by Rs. 147.27 lakhs and Rs. 41.27 as on 1 April 2016 and 31 March 2017 with corresponding decrease in equity.

2. Biological Assets (i.e. unplucked leaf on tea bushes)

Under previous GAAP, biological assets i.e. unplucked leaf on tea bushes has neither been valued nor recognised in the accounts. Under Ind AS, unplucked leaf on tea bushes has been measured at its fair value less cost to sell.

Consequent to this change, inventory of biological assets as on 1 April 2016 has increased by Rs. 93.37 lakhs with correponding increase in equity. However, inventory of biological assets as on 31 March, 2017 has increased by Rs. 62.19 lakhs with corresponding increase in equity.

3. Fair valuation of Investments

A. Mutual Funds, Alternative Investment Fund and Bonds: Under the previous GAAP, investments were classifed as long-term investments or current investments based on the intended holding period and readability. 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 of these investments have been recognised in retained earnings as at the date of transition and subsequently in the proft or loss for the year ended 31st March, 2017. This has resulted in increase in investments by Rs. 1855.22 Lakhs as at 31st March, 2017 (1st April, 2016 - Rs.1297.31 Lakhs) with corresponding increase in equity.

B. Equity shares(other than investments in subsidiaries, associates and joint venture): Under the previous GAAP, investments in equity instruments were carried at cost less provision for other than temporary decline in the value of such investments. Under Ind AS, such investments (in companies other than subsidiaries, joint ventures and associates) are required to be measured at fair value. The resulting fair value changes of these investments have been recognised in retained earnings as at the date of transition and subsequently in other comprehensive income for the year ended 31st March, 2017. This has resulted in increase in investments by Rs. 707.12 Lakhs as at 31st March, 2017 (1st April, 2016 - Rs 874.32 Lakhs) with corresponding increase in equity.

4. Investments in subsidiaries, joint ventures and associates

The Carrying value of investments in subsidiaries, associates and joint venture as on transition date have been considered as deemed cost. The company has designated investments in preference share of subsidiary (Jayantika Investment & Finance Ltd.) and debenture of subsidiary (North Tukvar Tea Company Ltd. ) as FVTPL investments. At the date of transition to Ind AS, difference between the instruments fair value and Indian GAAP carrying amount has been recognised as equity contribution in Investment. Consequent to this change, equity has been increased by Rs. 209.04 lakhs and Rs. 309.16 lakhs as on 1 April 2016 and 31 March 2017.

5. 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 31 March 2017 have been reduced by Rs 41.70 lakhs with a corresponding increase in profit for the year.

6. Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. acturial gains and losses and the return on plan assets, 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 result of this change and also due to revaluation of the gratuity liability, the equity for the year ended 1 April, 2016 decreased by Rs. 2073.83 lakhs. The profit for the year ended 31 March, 2017 for the same matter decreased by Rs. 386.42 lakhs.

7. Effect of fair valuation of land

The Company has elected to fair value land on the date of transition and designate the same as deemed cost. Consequent to this change, property plant and equipment has increased by Rs. 2,466.42 lakhs as at 1 April 2016 with corresponding increase in equity.

8. Proposed Dividend and Tax on 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 including dividend distribution tax thereon was recognised as a provision. Under Ind AS, such dividend is recognised when the same is approved by the shareholders in the general meeting. Accordingly, the provision for proposed dividend including dividend distribution tax thereon of Rs. 305.73 Lakhs as at 1st April, 2016 included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

9. Treasury shares

Under Ind AS, if an entity re-acquires its own equity instruments, those instruments ('treasury shares') shall be deducted from equity. No gain or loss shall be recognised in profit or loss on the purchase,sale,issue or cancellation of an entity's own equity instruments. Consideration paid or received shall be recognised directly in equity. Consequent to this, equity has been decresed by Rs. 9969.70 lakhs and Rs. 332.30 lakhs as on 1 April 2016 and 31 March 2017.

10. Deferred Tax

Under the previous GAAP, deferred tax was accounted using the income statement approach, on timing differences between the taxable profit and accounting profit for the year. Under Ind AS, deferred tax is recognised following balance sheet approach on the temporary differences between the carrying amount of asset or liability in the balance sheet and its tax base. In addition, various transitional adjustments have also led to recognition of deferred taxes on new temporary differences. Accordingly, deferred tax liabilities (net) as at 1 April 2016 have been increased by Rs. 126.70 Lakhs with a corresponding adjustment to retained earnings, and deferred tax asset (net) as at 31 March 2017 have increased by Rs. 49.94 Lakhs with a corresponding adjustment to Profit and Loss/ Other Comprehensive Income.

11. Retained Earnings

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

12. 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 and fair value gains or (losses) on FVOCI equity instruments. The concept of other comprehensive income did not exist under previous GAAP.

38.1. Effect of the Transition to Ind AS

Reconciliations of Equity as per erstwhile Indian GAAP as previously reported and Ind AS is as follows:

Reconciliations of net profit as per erstwhile Indian GAAP as previously reported and Ind AS is as follows:

38.2. Reconciliation of cash flows for the year ended March 31, 2017

The transition from erstwhile Indian GAAP to Ind AS has not made a material impact on the statement of cash flows.