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Batliboi Ltd. Notes to Accounts
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You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (Rs.) 410.13 Cr. P/BV 3.01 Book Value (Rs.) 46.91
52 Week High/Low (Rs.) 163/52 FV/ML 5/1 P/E(X) 38.84
Bookclosure 28/07/2023 EPS (Rs.) 3.64 Div Yield (%) 0.00
Year End :2018-03 

Note No. 1 Company Overview

Batliboi Ltd, was incorporated in 1941. The Registered Office of the Company is located at Bharat House, 5th Floor, 104, Bombay Samachar Marg, Fort, Mumbai - 400 001. Its shares are listed in Bombay Stock Exchange (BSE). The Company is engaged in manufacture and trading of machine tool and textile engineering machines.

Note No. 2 Basis for preparation:

i. Compliance with Ind AS:

The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (Act) read with Rule 4A of Companies (Accounts) Second Amendment Rules, 2015, Companies (Indian Accounting Standards) Rules, 2015 and the other relevant provisions of the Act and Rules thereunder. For all the periods upto 31st March 2017, the financial statements were prepared under historical cost convention in accordance with the accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. The financial statements for the year ended 31st March 2018 are the first financial statements of the Company under Ind AS. Refer to Note- 35 for explanation of how the transition from previously applicable Indian GAAP (herewith referred to as ‘IGAAP’) to Ind AS has affected the financial position, financial performance and cash flows of the Company.

ii. Basis of accounting :

The Company maintains its accounts on accrual basis following the historical cost convention basis, except for certain financial assets and financial liabilities which have been measured at fair value in accordance with Ind AS.

iii. Presentation of Financial Statements :

The Balance Sheet, Statement of Profit and Loss and Statement of Changes in equity are prepared and presented in the format prescribed in the Schedule III to the Companies Act, 2013 (“the Act”). The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in the Schedule III to the Act, are presented by way of notes forming part of the financial statements along with the other notes required to be disclosed under the notified Accounting Standards and the SEBI (Listing Obligations and Disclosure Requirements)Regulations, 2015.

iv. Functional and presentation Currency :

The Company’s presentation and functional currency is Indian Rupees (?) and all values are rounded off to the nearest lakhs (INR 00,000), except when otherwise indicated.

Note No. 3 Use of Judgement, Assumptions and Estimates

The preparation of the Company’s financial statements requires management to make informed judgements, reasonable assumptions and estimates that affect the amounts reported in the financial statements and notes thereto. Uncertainty about these could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in the future periods. These assumptions and estimates are reviewed periodically based on the most recently available information. Revisions to accounting estimates are recognized prospectively in the Statement of Profit & Loss in the period in which the estimates are revised and in any future periods affected.

In the assessment of the Company, the most significant effects of use of judgments and/or estimates on the amounts recognized in the financial statements relate to the following areas:

- Financial instruments;

- Useful lives of property, plant & equipment;

- Valuation of inventories;

- Measurement of recoverable amounts of assets / cash-generating units;

- Assets and obligations relating to employee benefits;

- Evaluation of recoverability of deferred tax assets; and

- Provisions and Contingencies.

Rights, preferences and restrictions

The Company has only one class of equity shares having a face value of Rs. 5/- per share. Each shareholder is eligible for one vote per share held. In the event of liquidation the equity shareholders are eligible to receive remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholdings.

Preference Shares

6,92,480, 5% Non Cumulative Preference Shares of Rs. 100 each ( 4,78,000 Reedemable on 27th March, 2021 and 2,14,480 redeemable on 19th June 2021.

The reconciliation of the number of shares outstanding at the begnning and at the end of year is as under :

Deferred tax Asset on unabsorbed depreciaition, unabsorbed business lossess and other temporary differnces available as per the Income Tax Act, 1961 had been recognised, since it is probable that taxable profit will be available to adjust them in future years. Unabsorbed depreciation can be carried forward and set off against the profits for infinite number of years under the Income Tax Act, 1961 and profitability projections based on current margins show sufficient profits for set off in future.

Note No 4:

Working capital borrowings from consortium banks on cash credit overdraft/ short term loan and non-fund based facilities are secured by first pari passu charge on stock of raw materials, stock in process, semi-finished and finished goods, consumable stores and spares, bills receivable, books debts and other moveable current assets (both present and future) of the company and second pari passu charge on the fixed assets of the company (both present and future) at Udhana, Surat. Credit facilities including sub limits extended by consortium banks to Batliboi Environmental Engineering Limited (BEEL) are secured by 2nd pari passu charge on the fixed assets of the company (both present and future) at Udhana Surat.

i) The company does not expect any reimbursement in respect of the above contingent liabilities.

ii) It is not practicable to estimate the timing of cash outflows, if any, in respect of matters as specified above in note 22.a, above pending resolution of the appellate proceedings.

iii) In respect of guarantees as specified in note 22.c given by the Company to the bankers of BEEL, one of the related party, BEEL has given counter guarantees to the bank on behalf of the Company.

b) Commitments:

i) Estimated amount of Contracts remaining to be executed on Capital Account and not provided for is ‘7.84 lakhs (31st March 2017: Rs. 19.07 lakhs, 01st April 2016: Nil).

NOTE 5- RELATED PARTY DISCLOSURES AS PER IND AS 24: a. List of Related Parties *:

List of related parties where control exists and related parties with whom transactions have taken place and relationship:

i) Subsidiary Companies:

a) Queen Projects (Mauritius) Ltd - Mauritius.

b) Vanderma Holdings Ltd - Cyprus 1

c) Pilatus View Holdings AG- Switzerland 1

d) Quickmill Inc.- Canada 1

e) Aesa Air Engineering SA- France 1

f) Aesa Air Engineering PTE Ltd - Singapore 1

g) Aesa Air Engineering Ltd - China 1

h) Aesa Air Engineering Pvt Ltd India 1

i) 760 Rye Street Inc., Canada 1.

1 These are step down subsidiaries.

ii) Key Management Personnel and their relatives :

a) Mr. Nirmal Bhogilal, Chairman

b) Mr. Vivek Sharma, Managing Director

c) Mrs. Sheela Bhogilal, Director

d) Mrs Prema Chandrasekhar, Chief Financial Officer (up to 16/05/2017)

e) Mr Ketan Vyas, Chief Financial Officer ( w.e.f. 16/05/2017)

f) Ms Namita Thakur, Company Secretary (up to 31/08/2016)

g) Ms Sarika Singh, Company Secretary ( w.e.f 25/10/2016)

h) Mr Kabir Bhogilal, Chief X Officer

i) Mrs Maya Bhogilal

iii) Independent / Non Executive Directors

a) Mr. Ameet Hariani

b) Mr. E. A. Kshirsagar

c) Mr. George Verghese

d) Mr. Subodh Bhargava

e) Mr. Vijay Kirolskar

iv) Enterprises over which Key Management Personnel are able to exercise significant influence :

a) Batliboi Environmental Engineering Ltd

b) Batliboi International Limited

c) Batliboi Impex Ltd

d) Batliboi Enxco Pvt Ltd

e) Sustime Pharma Ltd

f) Spartan Electricals

g) Bhagmal Investments Pvt Ltd

h) Delish Gourment Pvt Ltd

i) Hitco Investments Pvt Ltd

j) Nirbhag Investment Pvt Ltd

k) Pramaya Shares and securities Pvt Ltd

l) Bhogilal Trustship Pvt Ltd

v) Entities in which management personnel are trustees :

a) Bhogilal Leherchand Foundation

b) Leherchand Uttamchand Trust Fund

c) Shekhama Family Trust

d) Bhogilal Family Trust

‘Related party relationships on the basis of the requirements of Indian Accounting Standard (Ind AS) - 24 disclosed above is as identified by the company and relied upon by the auditors.

NOTE 6 - FINANCIAL DERIVATIVE INSTRUMENTS:

a. Derivative contracts entered into by the Company and outstanding as on 31st March, 2018 for Hedging currency and interest related risks.

Nominal amount of derivative contracts entered by the company and outstanding is given below:

b. Foreign Currency payables and receivables that are not hedged by derivative instruments as on 31st March, 2018 and 31st March 2017:

c. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

NOTE 7- DISCLOSURE PURSUANT TO INDIAN ACCOUNTING STANDARD-19 “EMPLOYEE BENEFITS”:

The Company has classified the various benefits provided to employees as under:

a. Defined Contribution Plans:

The Company has recognized the following amounts in the Statement of Profit and Loss which are included under contribution to Provident Fund and Other Funds:

Provident Fund:

The Fair value of the assets of the provident fund trust as of the balance sheet date is greater than the obligation, including interest and also the returns on these plan assets including the amount already provided are sufficient to take care of provident fund interest obligations, over and above the fixed contributions.

NOTE 8 - FAIR VALUE MEASUREMENTS:

The following disclosures are made as required by Ind AS -113 pertaining to Fair value measurement:

a. Accounting classification and fair values

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 table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

b. Measurement of fair values:

The following tables shows the valuation techniques used in measuring Level 2 fair values.

c. Financial risk management

The Company has exposure to the Credit risk, Liquidity risk and Market risk arising from financial instruments.

Risk Management Framework: The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board of Directors has established the Risk Management Committee (RMC), which is responsible for developing and monitoring the Company’s risk management policies.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits to control / monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.

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 approved by the Board of Directors.

d. Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables.

Trade receivables: 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 throughout each reporting period.

The following table provides information about the exposure to credit risk and measurement of loss allowance using Life time expected credit loss for trade receivables:

Cash and cash equivalents:

The Company held cash and cash equivalents of Rs. 18.79 lakhs as at 31st March 2018 (31st March 2017: Rs. 63.93 lakhs). The cash and cash equivalents are held with reputed banks.

e. 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 a reasonable price. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

f. Market Risk

Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and commodity prices, will affect the Company’s income or the value of its financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables, long term debt and commodity prices. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and commodity price risk.

g. Interest rate risk:

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates, in cases where the borrowings are measured at fair value through the Statement of profit and loss. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.

h. Currency risk:

The Company is exposed to currency risk on account of its operating and financing activities. The functional currency of the Company is Indian Rupee.

To the extent the exposures on purchases and borrowings are not economically hedged by the foreign currency denominated receivables, the Company uses derivative instruments, like, foreign exchange forward contracts to mitigate the risk of changes in foreign currency exchange and principal only swap rates. Company does not use derivative financial instruments for trading or speculative purposes.

The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies including the use of derivatives like foreign exchange forward contracts to hedge exposure.

Note No. 9:

Capital Management

For the purpose of the Company’s capital management, capital includes issued equity capital , share premium and all other equity reserves. The primary objective of the Company’s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.

Note No 10:

Disclosure for provisions in terms of IND AS 37

The aforesaid provision are made for warranty cover related to goods sold and jobs executed (Refer Note 13) :

Note No 11: ESOP related Disclosure

Pursuant to the resolution passed in the extra ordinary general meetig in the year 2011-12, the Company has reversed 28,65,255 options to the eligible employees of the Company and its subsidiaries under the Employees Stock Option Scheme. The exercise price of all the options is Rs. 15.75 per option. Summary of stock options as on 31.03.2018 is as follows:

Note No 12: Segment Reporting

The Company has considered business segments as the primary segments for disclosure.

Segments have been identified in line with the Accounting Standards on Segment Reporting (Ind As 108), taking into account the nature of business, products and services, the Company’s organization structure as well as the differential risks and returns of these segments. Segments Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments. Those not identifiable to the individual segments are included under unallocated.

The Company has classified its business into the following segments:

a) Machine Tool Business Group, which handles manufacturing and marketing (including trading and agency business) of machine tool and components e.g. CNC and GPM machines, machine castings, machine carcasses, cranes etc.

b) Textile Engineering Group, which deals in manufacturing and marketing of textile air-engineering systems range i.e. Humidification, waste recovery, and auto control systems, besides marketing (including trading and agency business) of textile machinery e.g. circular knitting, spinning, and flat-knitting machines etc.

c) Others, which covers remaining business i.e., air conditioning equipments, agro-industrial products (e.g. pumps/motors) etc

Note No13 :

Balances of receivables and payables are subject to confirmation.

Note No. 14

Disclosures as required by Indian Accounting Standard (Ind AS) 101 First Time Adoption of Indian Accounting Standards First Time Adoption of Ind AS

The financial statements for the year ended 31st March 2018, are the Company’s first financial statement prepared in accordance with Indian Accounting Standrad (Ind AS) as notified under Companies (Indian Accounting Standards) Rules, 2015. For periods up to and including the year ended 31st March 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 (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for year ended on 31st March 2018, together with the comparative period data as at end for the year ended 31st March 2017. In preparing these financial statements, the Company’s opening balance sheet was prepared as at 1st April 2016, the Company’s date of transition to Ind AS. This note explains the mandatory exceptions and optional exemptions availed by the Company in restating its Indian GAAP financial statements, including the Balance Sheet as at 1st April 2016 and the financial statements as at end for the year ended 31st March 2017.

(i) Mandatory exceptions:

a) Estimates:

The estimates as at 1st April 2016 and 31st March 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items:

- Fair Value through Profit and Loss - quoted and unquoted equity (other than investments in Subsidiaries).

- Impairment of financial assets based on expected credit loss model.

- Provision for inventory obsolescence.

- Provision for warranty.

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions as at 1st April 2016, the date of transition to Ind AS and as at 31st March 2017.

b) Derecognition of financial assets & financial liabilities

The Company has applied the de-recognition requirements in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

c) Classification and measurement of financial assets and financial liabilities :

The Company has classified the financial assets and financial liabilities in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS.

d) Impairment of financial assets :

The Company has applied the impairment requirements of Ind AS 109 retrospectively, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, as permitted by Ind AS 101, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind AS, whether there have been significant increases in credit risk since initial recognition.

(ii) Optional exemptions (allowed as per Ind AS 101):

a) Business Combination :

The company has applied the exemption as provided in Ind AS 101 on non-application of Ind AS 103, “Business Combinations” to business combinations consummated prior to April 1, 2016 (the Transition Date).

b) Share based payment transactions :

Ind AS 101 encourages but does not require first time adopters to apply Ind AS 102 “Share Based Payment” to equity instruments that were vested before the date of transition to Ind AS. Accordingly the company has elected not to apply Ind AS 102 to options that vested prior to April 1, 2016.

c) Cumulative Translation differences :

The company has elected to apply Ind AS 21 “The Effects of Changes in Foreign Currency” prospectively in respect of cumulative translation differences that existed at the date of transition to Ind AS relating to long term foreign currency monetary item being net investment in foreign subsidiary.

d) Use of Fair value as Deemed cost :

The Company has elected to measure items of Property, Plant and Equipment at its carrying value at the transition date except for Land, Building and Plant and Machinery and for investments held in subsidiaries which are measured at fair value as deemed cost as at the date of transition to Ind AS.

e) Designation of previously recognised financial asset :

The company has elected to designate financial asset i.e investment in equity shares other than investments in subsidiaries at Fair Value through Profit and Loss as per Ind AS 109 based on the facts and circumstances as on transition date.

A. Defined Employee Benefit Liabilities :

Both under Indian GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to Statement of Profit and Loss. Under Ind AS, remeasurement [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 in Other Comprehensive Income (OCI). Due to this, for the year ended 31st March 2017, the employee benefit cost is reduced and remeasurement gains/ losses on defined benefit plans has been recognized in the OCI.

B. Deferred Tax :

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 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.

Under Indian GAAP, deferred tax assets are recognized in case of unabsorbed depreciation or carry forward losses only to the extent that there is timing difference the reversal of which is virtual certain. Under Ind AS 12, deferred tax assets on such items are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.

The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences.

Minimum Alternate tax has been merged with deferred tax assets as required under Ind AS 12 deferred tax assets are amounts of income taxes recoverable in future periods in respect of deductible temporary differences, the carry forward of unused tax losses and the carry forward of unused tax credits.

C. Financial Assets/ Liabilities measured at amortised cost :

Under Ind AS financial assets and liabilities are measured at fair value at the inception and subsequently at amortised cost or at fair value based on their classification. Under I-GAAP the financial assets and liabilities were measured at cost. Loans from Director and Preference Share Capital are recognized at amortized cost using effective interest rate method. On initial recognition the fair value of loans and Redeemable Preference shares to Related Parties has been estimated by discounting the future loan repayments using the rate the borrower may pay to an unrelated lender for a loan. Accordingly corresponding effect of interest income/expense from financials instruments measured at amortised cost has been recognized in Statement of Profit and Loss.

D. Fair Valuation of Property, Plant and Equipment :

The Company has elected the option of fair value as deemed cost for Property, Plant and Equipment and Capital Work in Progress as on the date of transition date to Ind-AS. This has resulted in increase of Rs. 17,999.65 Lakhs in the value of Property, Plant and Equipment and reduction in the value of Capital Work in Progress with corresponding net increase in retained earnings of Rs. 17,718.32 Lakhs. Fair value as Deemed cost as on transition date for respective category of Plant, Property and Equipment and Capital Work in Progress is as under:

Since fair value of Property Plant and Equipment as on 1st April 2016 has been adopted as deemed cost, the profit on sale of SPM property which was recognized on the profit and loss account during the financial year 2016-17 under Indian GAAP has been reversed.

E. Changes in rates of Foreign currency monetary items :

Ind AS 21 requires that exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operations shall be recognized in the profit and loss in the separate financial statements of the reporting entity. Accordingly the exchange difference on such item which was recognized in the Foreign Currency translation reserve under Indian GAAP is recognized in the profit and loss account.

F. Provision for Warranty:

The Company has on adoption of Ind AS changed the basis of estimation of provision for warranty considering the past trend.

G. Fair value as deemed cost for investments in subsidiaries and Fair value of investments in quoted and unquoted equity (other than investments in Subsidiaries):

On transition, Ind AS 101 allows an entity to treat fair value as deemed cost for investments held in subsidiaries. Accordingly, the Company has elected to treat fair value as deemed cost for its investments held in a subsidiary.

Under Indian GAAP, the Company has recorded long term investment in quoted and unquoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated such investments as FVTPL investments.

The amount which was recognized in Foreign Currency Translation Reserve during 2016-17 under Indian GAAP has been reversed consequent to adoption of fair value as deemed cost for investments in subsidiaries as on 1st April 2016.

H. Provision for obsolescence of Inventory:

The Company has on adoption of Ind AS elected to measure the provision for obsolescence of inventory based on the age of the inventory instead of making provision on the basis of identification which was followed in Indian GAAP.

I. Trade receivables:

As per Ind AS 109, the Company is required to apply expected credit loss model for recognizing the allowance for doubtful debts.

J. Preference shares Capital:

The company has treated 5%preference shares as borrowings on transition date as the same are redeemable and non-cumulative with a predefined period for redemption. This had resulted in decrease in Equity as on transition date with a corresponding increase in long term borrowings.

K. Foreign Currency Translation Reserve :

The Company has elected to reset the balance appearing in the foreign currency translation reserve to zero as at 1st April 2016. Accordingly, the translation reserve balance under previous GAAP has been transferred to retained earnings. There is no impact on the total equity as a result of this adjustment.

L. Revaluation surplus under Indian GAAP :

The Company has elected fair value as deemed cost for its Property, Plant and Equipments and thus, the revaluation surplus existing as on the transition date under Indian GAAP has been derecognized in the retained earnings on the date of transition.

M. Excise Duty

Excise duty on account of sale of goods have been included in revenue as it is on own account because it is a liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not.

Note No. 15 :

The audit report of financial year 2016-17 and 2015-16 contained qualified opinion on account of remuneration to Managing Director in excess of the ceiling under Schedule V of the Companies Act, 2013 from 1st February 2016 to 12th September 2016. The Company has received approval from Central Government on 21st June 2017 for remuneration paid to Managing Director.

Note No. 16 :

Previous years figures have been reclassified and re grouped to confirm to current years classification and grouping. Figures in bracket represent previous years figure.


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