Nature and purpose of reserves
1) Securities Premium Reserve: Securities premium reserve is credited when shares are issued at premium. It is utilized in accordance with the provisions of the Act, to issue bonus shares, to provide for premium on redemption of shares or debentures, write-off equity related expenses like underwriting costs, etc.
2) General Reserve: The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes.
Note 33 : Contingent Liabilities (Ind AS 37)
a. Claims against the Company not acknowledged as debts - Nil
The Company does not have any pending litigations and proceedings as at March 31, 2018
b. Guarantees :
The company has issued corporate guarantees as under:
(a) Guarantee of Rs, 12,504,296 {March 31 2017: Nil, April 1, 2016: Nil} in favour of Tricon Energy on behalf of its subsidiary, Prima union Plasticos S.A. for the purpose of procurement of raw material and other corporate purpose.
(b) Guarantee of Rs, 3,842,959 {March 31 2017: Nil, April 1. 2016: Nil} in favour of Muehlstein International on behalf of its subsidiary, Prima union Plasticos S.A. for the purpose of procurement of raw material and other corporate purpose.
Note 1: Capital and other commitments
Estimated amount of Contracts remaining to be executed on capital account, not provided for (net of advances) Rs, 2,173,421(March 31, 2017 - Rs, 5,479,825, April 1, 2016 - Rs, 6,979,438).
Note 2: Employee Benefits (Ind AS 19)
a. Defined Benefit Plan:
Gratuity:
The gratuity payable to employees is based on the employee's service and last drawn salary at the time of leaving the services of the Company and is in accordance with the rules of the Company for payment of gratuity.
Inherent Risk on above:
The plan is defined in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. In particular, this exposes the Company to actuarial risk such as adverse salary growth, change in demographic experience, inadequate return on underlying plan assets. This may result in an increase in cost of providing these benefits to the employees in future. Since the benefits are lump sum in nature, the plan is not subject to any longevity risk.
# The Balance as at beginning of March 31, 2018 for defined benefit obligation is based on independent actuarial report and is different compared to balance as at end of March 31, 2017 which was based on LIC report.
* The Sensitivity Analysis have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analysis.
Basis used to determine Expected Rate of Return on Plan Assets:
Expected rate of return on Plan Assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.
Salary Escalation Rate:
The estimates of future salary are considered taking into account inflation, seniority, promotion and other relevant factors.
Asset Liability matching strategy
The money contributed by the Company to the Gratuity fund to finance the liabilities of the plan has to be Invested.
The trustees of the plan have outsourced the investment management of the fund to an Insurance Company. The Insurance Company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it is not possible to explicitly follow an asset liability matching strategy.
There is no compulsion on the part of the Company to fully prefund the liability of the Plan. The Company's philosophy is to fund these benefits based on its own liquidity and the level of underfunding of the plan.
The Company's expected contribution during next year is Rs, 38,98,407 {March 31, 2017: Rs, 2,928,973}.
b. Defined Contribution Plans:
Amount recognized as an expense and included in Note 29 under the head “Contribution to Provident and other Funds” of Statement of Profit and Loss is Rs. 3,680,690 (Previous Year Rs. 3,161,517).
NOTES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS Note 36: Segment Reporting (Ind AS 108):
A. Basis for segmentation
The Company's Managing Director, the Chief Operating Decision Maker for the Company, periodically reviews the internal management reports and evaluates performance/allocates resources based on the analysis of various performance indicators relating to the segment.
B. Information about reportable segments
The Company's business activity falls within a single operating segment i.e. "Plastic Articles" and operates in one geography "within India" which in terms of Ind AS 108 constitutes a single reporting segment.
C. Information about major customers
The Company is not reliant on revenues from transaction with any single external customers and does not receive 10% or more of its revenues from transaction with any single external customers.
(B) Entities controlled by Directors/Relatives of Directors
1. Sanya Plastics
2. Classic Plastics
3. National Plastics and Allied Industries
(C) Other Related Parties with whom there were transactions during the year:
Name of Related Parties Nature of Relationship
Shri Bhaskar M. Parekh - Executive Chairman Key Management Personnel
Shri Dilip M. Parekh - Managing Director Key Management Personnel
Hina V. Mehta - Non Executive Director Key Management Personnel
Shri Mulchand S. Chheda - Independent Director Key Management Personnel
Shri Krishnakant V. Chitalia - Independent Director Key Management Personnel
Shri Rasiklal M. Doshi - Independent Director Key Management Personnel
Pratik B. Parekh Relative of KMP
Paras B. Parekh Relative of KMP
Shri Manoj O. Toshniwal - Chief Financial Officer Key Management Personnel
Shri Alok S. Desai (upto 12/08/17) (Company Secretary) Key Management Personnel
Ms. Niddhi Shah (w.e.f 14/12/17) (Company Secretary) Key Management Personnel
The remuneration paid to key managerial personnel excludes gratuity and compensated absences as the provision is computed for the Company as a whole and separate figures are not available.
Based on the recommendation of the Nomination, Remuneration and Compensation Committee, all decisions relating to the remuneration of the Directors are taken by the Board of Directors of the Company, in accordance with shareholder's approval, wherever necessary.
Terms and Conditions of transactions with Related Parties:
The transactions with the related parties are made in the normal course of business and on the terms equivalent to those that prevails in arm's length transactions. Outstanding balances at the year-end are unsecured .
NOTES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS
For the year ended March 31, 2018, the Company has not recorded any impairment of receivables relating to amounts owned by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related paties operate.
Note 3: Fair Value measurement (Ind AS 113):
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 Company has established the following fair value hierarchy that categorizes the values into 3 levels. The inputs to valuation techniques used to measure fair value of financial instruments are:
Level 1: This hierarchy uses quoted (unadjusted) prices in active markets for identical assets or liabilities. The company does not have any such asset or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on company specific estimates. The investment in mutual funds are valued using the closing Net Asset Value based on the mutual fund statements received by the company. 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.
The management assessed that cash and bank balances, trade payables, and other financial asset and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The following methods and assumptions were used to estimate the fair values:
The fair values of the quoted investments/units of mutual fund schemes are based on market price/net asset value at the reporting date.
Note 4: Financial Risk Management Objectives and Policies (Ind AS 107):
The Company's principal financial liabilities comprises of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance and support the Company's operations. The Company's principal financial assets include Investments, Loans and Other receivables, Cash and Cash Equivalents, Other Bank Balances that directly derive from its operations.
The Company is exposed to Market Risk, Credit Risk and Liquidity Risk. The Company's senior management oversees the management of these risks. The Company's senior management ensures that the Company's financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives.
NOTES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS Market Risk
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 borrowings.
Foreign Currency Risk
Foreign currency risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency borrowings, receivable against exports of finished goods, loan to foreign subsidiary, interest receivable on loan to subsidiary and the Company's net investments in foreign subsidiaries.
The Company evaluates exchange rate exposure arising from foreign currency transactions. The Company follows established risk management policies and standard operating procedures where management enters into forward contract, if required for the purpose of being hedge.
Note: If the rate is decreased by 100 bps profit will decrease by an equal amount.
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 rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's short term borrowing with floating interest rates. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost.
Note: If the rate is decreased by 100 bps profit will increase by an equal amount.
Credit Risk :
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily Trade Receivables), investing and financing activities including Mutual Fund Investments, Deposits with Bank, Security Deposits, Loans to Employees and other financial instruments.
Trade Receivables :
Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and based on the evaluation credit limit of each customer is defined.
Total Trade receivable as on March 31, 2018 ' 210,293,279{March 31, 2017 ' 139,231,498, April 1, 2016 ' 148,102,426}.
As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
As per policy, Receivables are classified into different buckets based on the overdue period ranging from 3 months to more than 2 years. There are different provisioning rates for each bucket which are ranging from 2% to 100%.
Investments, Cash and cash Equivalent and Bank Deposit :
Credit Risk on cash and cash equivalent, deposits with the banks/financial institutions is generally low as the said deposits have been made with the banks/financial institutions who have been assigned high credit rating by international and domestic rating agencies. Investments of surplus funds are made only based on Investment Policy of the Company. Investments primarily include investment in units of mutual funds. These Mutual Funds have low credit risk.
Liquidity Risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through
NOTES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS
an adequate amount of credit facilities to meet obligations when due. Senior management of the Company is responsible for liquidity, funding as well as settlement management. Management monitors the Company's liquidity position through rolling forecasts on the basis of expected cash flows.
The table below provides details regarding the remaining contractual maturities of financial liabilities and investments at the reporting date based on contractual undiscounted payments.
Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognized as a liability (including Divided Distribution Tax thereon) as at March 31 of respective year.
Note 5: Capital Management (Ind AS 1):
The Company's objectives when managing capital are to :
(a) maximise shareholder value and provide benefits to other stakeholders and
(b) maintain an optimal capital structure to reduce the cost of capital.
For the purposes of the Company's capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders.
In addition the Company has financial covenants relating to the borrowing facilities that it has taken from the lenders like interest coverage service ratio, Debt to EBITDA, etc. which is maintained by the Company.
Note 6: Operating Leases (Ind AS 17):
a. Operating lease payment recognized in the Statement of Profit and Loss amounting to ' 16,527,185 (March 31, 2017 ' 17,103,330)
b. General Description of Leasing Agreements:
- Leased assets: God owns & Machinery.
- Future lease rental income are determined on basis of agreed terms
- At the expiry of lease terms, the Company has an option to return the assets or extend the term by giving notice in writing.
- Lease agreements are generally cancellable and are renewable by mutual consent on mutually agreed terms.
Note 7: Micro, Small and Medium Enterprises
Under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) which came into force from 2 October 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises.
There is no principal amount and interest overdue to Micro and Small Enterprises. During the year no interest has been paid to such parties. This information has been determined to the extent such parties have been identified on the basis of information available with the Company and the same has been relied upon by the auditors.
Note 8: Corporate Social Responsibility
Expenditure incurred on Corporate Social Responsibility activities, included in different heads of expenses in the Statement of Profit and Loss is Rs, 13.00 lacs (March 31, 2017 Rs, 10.50 lacs).
The amount required to be spent under Section 135 of the Companies Act, 2013 for the year ended March 31, 2018 is Rs, 12.96 lacs (March 31, 2017 Rs, 10.28 lacs) i.e. 2% of average net profits for last three financials years, calculated as per section 198 of the Companies Act, 2013.
Note 9: Disclosure for Specified Bank Notes
Pursuant to the gazette notification G.S.R 308(E) dated 30th March 2017, issued by the Ministry of Corporate Affairs, details of Specified Bank Notes (SBN) held and transacted during the period 08/11/2016 to 30/12/2016 is provided in the table below. Disclosure is not applicable for FY 2017-18.
Note 10:
In March 2018, the Ministry of Corporate Affairs issues the Companies (indian Accounting Standards) Amendment Rules, 2018, notifying Ind AS 115 'Revenue from Contract with Customers' which replaces IndAS 11 'Construction Contracts' and IndAS 18 'Revenue'. Expect for disclosure requirement, the new standard will not materially impact the Company's financial statements. The amendment will come into force from April 01, 2018.
Note 11: First Time Adoption of Ind AS (Ind AS 101):
As stated in Note 1, these financial statements, for the year ended March 31, 2018, are the first the Company has prepared in accordance with IndAS. For periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (IGAAP).
Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company's opening balance sheet was prepared as at April 01, 2016, the Company's date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its IGAAP financial statements, including the balance sheet as at April 01, 2016 and the financial statements as at and for the year ended March 31, 2017 and how the transition from IGAAP to Ind AS has affected the Company's financial position, financial performance and cash flows.
Exemption Availed:
Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has availed the following exemptions:
a. Deemed cost for PPE and Intangible Assets:
The Company has elected to continue with the carrying value of all of its plant and equipment and intangible assets as recognized as of April 01, 2016 (transition date) measured as per the IGAAP and use that carrying value as its deemed cost as of the transition date.
b. Investment in Subsidiary and Joint Venture:
The Company has elected to carry its investment in subsidiary and joint venture at deemed cost which is its IGAAP carrying amount at the date of transition to Ind AS.
c. Fair Value of Financials Assets and Liabilities:
As per Ind AS exemption the Company has not fair valued the financial assets and liabilities retrospectively and has measured the same prospectively.
Notes to the Reconciliation of equity as at April 1, 2016 and March 31, 2017 and Total Comprehensive Income for the year ended March 31, 2017:
A. Fair valuation of Security Deposits
Interest free deposits have been fair vlaued and are discounted using an appropriate current market rate. The difference between the nominal value and the fair value of the deposit under the lease is considered as Prepaid Rent, Which is unwanted on a straight line basis over the period of the lease. The company also recognizes interest expenses using the discounting rate, over the life of the deposit. These adjustments are reflected in reatined earnings as at the date of transition and subsequently in the statement of profit and loss.
B. Allowances for Credit losses
For Provision of Credit losses on Trade Receivables, the company has adopted Simplified Approach where by provision of expected credit losses is made using a provision matrix to mitigate the risk of default payments.
C. Deferred Tax
IGAAP 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 IGAAP 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 recognized in correlation to the underlying transaction either in retained earnings or profit and loss respectively.
D. Revenue from Operations
Under IGAAP cash discounts and other discounts directly attributable to sales was recognized as part of other expenses which has been adjusted against the revenue under Ind AS during the year ended March 31, 2017.
Under IGAAP revenue was presented net of excise duty. However, as per Schedule III to the Companies Act, 2013, revenue from operations is to be shown inclusive of excise duty. Accordingly, excise duty has been included in revenue from operations and shown separately as an expense
E. Defined Benefit Liabilities
Both under IGAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under IGAAP the entire cost, including actuarial gains and losses, are charged to Statement of Profit and Loss. Under Ind AS, remeasurements (comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability) are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.
Note 12 :
Effective July 01, 2017, sales are recorded net of GST whereas earlier sales were recorded gross of excise duty which formed part of expenses. Hence revenue from operations for the year ended March 31, 2018 is not comparable with the previous year corresponding figures.
Note 13 :
The Company has a process whereby periodically all the long term contracts (including derivatives contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law / accounting standards for material foreseeable losses on such long term contracts has been made in the books of accounts. There are no derivatives contract outstanding as at year end.
Note 14 :
Previous year figures have been regrouped / reclassified wherever necessary to correspond with current year classification / disclosure.
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