1. Corporate Information
Ausom Enterprise Limited (“the Company”) is a public limited Company incorporated in India with registered office at 11-B, New Ahmedabad Industrial Estate, Sarkhej Bavla Road, Moraiya, Ahmedabad - 382 213, Gujarat and principal place of business at 606, ‘Swagat1, Near Lai Bunglow, C. G. Road, Ahmedabad-380 006, Gujarat. The equity shares of the Company are listed on two recognised stock exchanges in India. The Company is principally engaged in the business of trading in Commodities, Bullions, Gold Jewellery, Diamonds, Derivatives, Shares and Securities.
2.1 The overdraft facilities from banks are secured against Fixed Deposits of the Company. They are repayable on demand and carry.
2.2 Unsecured loans from Others carry interest @12% p.a.
2.3 A: Details of shareholders holding more than 5% of the Preference Shares Capital:
2.3 B: Terms/rights attached to the preference shares:
The Company had issued only one class of preference shares, viz, 2,00,00,000/- 16.5% Cummulative Redeemable Participating Preference Shares (CRPPS ) of Rs. 10 each amounting to Rs. 20,00,00,000. A term of dividend of CRPPS had been modified with effect from 01-04-2014 form 16.5% Cummultive to 1.5% Non-Cummulative Redeemable Participating preference shares (NCRPPS).
The holder of each NCRPPS shall be entitle for a non-cumulative dividend of 1.5% p.a. (The holder of each CRPPS was entitle for cumulative dividend of 16.5% p.a. up to 31/03/2013) The dividend proposed if any by the Board of Directors is subject to the approval of the share holders in the ensuring Annual General Meeting, The preference shares shall, in addition have a right to participating dividend over and above the base dividend mentioned above.
At the time of redemption of the Preference Shares or in the event of winding-up of the Company, the arrears of dividend on the Preference Shares whether earned, declared or not shall also be paid tothe Subscribers.
The Subscribers shall have the same voting rights in respect of the Preference Shares as are available and applicable to preference shares under the Companies Act, 2013.
In the event of default in payment of base and / or participating dividend inspite of adequate profits and / or redemption of Preference Shares as per the terms of issue, the subscriber shall have the right to convert at its option 100% of the Preference Shares into fully paid-up Equity Shares of the Company, in the manner specified in wiriting subject to terms of issue to be given by the Subscribers and subject to necessary approvals, if required.
The said Preference Shares were issued on 09-12-1999 and were redeemable at par in three equal annual installments. The installments of such redemption were due on 9th Dec, 2006, 9th Dec 2007 and 9th Dec 2008. However, the Company received consent letters from the preference shareholder every year for postponing their right to receive payment towards the installments of redeemption of preference shares capital amounting to Rs. 20,00,00,000 by one yea r at a time.
The arrears of fixed cumulative dividend on said Preference Shares up to 31st March, 2013 was Rs. 37,34,00,000 and remain the same as at 31-03-2018.
Under Ind AS Non-Cumulative Redeemable Participating Preference shares are considered as compounding instruments. The debt component is measured by discounting the contractually determined stream of future cashflows (dividend and principal) to present value using an effective interest rate of 18.00% for a period of 9 years from the date of issue.
3.1 General Charges includes Travelling expenses, loading and unloading expenses, custodian charges, advertisements, membership fees, listing fees, office expenses etc.
4. The Company has not received any intimation from “Suppliers” regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure if any, relating to amount unpaid as at the year and together with interest paid, payable as required underthat act have not been given.
5. Contingenet liability not provided in accounts/not acknowledged as debt by the company:
- The Company’s assessments under Income Tax Act, 1961, have been completed upto ITAY 2012-13. In respect of additions to Total Income made vide the respective assessment orders, the company is in appeal before the appellate authorities. However due to the set off of brought forward losses and unabsorbed depreciation as per the provisions of Income Tax Act, 1961, there is no tax payable in any ofthe asessment years. As and when the appeals will be decided the brought forward lossess and unabsorbed depreciation, so set off will be restored depending upon appellate orders.
- Income tax demands of Rs. 4,44,82,010/- made by the authority under section 115JB ofthe Income Tax Act, 1961 in respect of which appeal has been filed.
6. Details of Expenditure incurred on ‘Corporate Social Responsibility Activities’ are as under:
(a) Gross amount required to be spent by the company during the year: Rs. 22,10,533/- (P.Y. - Rs. 27,25,193/-)
(b) Total amount unspent at the end of the year: Rs. 49,35,726/- (P.Y. - Rs. 27,25,193/-)
Disclosures as required by IND AS -19 “Employee benefits”
Defined Benefit Plan:
The company has a defined benefit gratuity plan in India. Gratuity plan is unfunded. The Company’s defined benefit gratuity plan is a final salary plan for employees. Gratuity is paid from company as and when it becomes due and is paid as per company scheme forgratuity.
The Company has recognised in the Statement of Profit and Loss for the current year, an amount of Rs. 49,860/- (previous year- Rs. 29,627/-) as expenses.
The estimates of rate of escalation in salary considered in the actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.
Sensitivity Analysis
The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occuring at the end of the reporting period, while holding all other assumptions constant. The result of sensitivity analysis is given below:
Gratuity is a defined benefit plan and company is exposed to the Following risks:
Interest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision.
Salary risk : The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan’s liability.
Asset Liability Matching Risk : The plan faces the ALM risk as to the matching cash flow. Company has to manage payout based on pay as you go basis from own funds.
Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.
d) Financial Instrument measured at Amortised Cost
The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.
7 Financial risk management
The Company has exposure to the foil owing risks arising from financial instruments:
- Credit risk
- Liquidity risk
- Interest rate risk
Risk management framework
The Company’s Board of Directors has overall responsibility forthe establishment and oversight ofthe Company’s risk management framework. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate controls and to monitor risks and adherence to controls. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.
The Company’s audit committee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the adequacy ofthe risk management framework in relation to the risks faced by the Company.
i) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to afinancial instruments fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers, dealing in derivatives, loans and current assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors. The carrying amount of financial asset represent the maximum credit exposure.
Trade and other receivables
The Company’s exposure to credit risk is influenced mainly by its customers. However, the management also considers the factors that may influence the credit risk of its customer base.
The Company limits its exposure to credit risk with counter-parties that have a good credit rating. The Company does not expect any losses from non-performance by these counter-parties and hence no loss allowance is recognised.
ii) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. 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.
Management monitors the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company’s objective is to maintain a balance between cash outflow and inflow. Usually, the excess of funds is invested in fixed deposits. This is generally carried out in accordance with practice and limits set by the Company.
iii) 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 debt obligations with floating interest rates and investments.
8 Capital Management
The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Company monitors the return. The Company’s objective when managing capital is to maintain an optimal structure so as to maximize shareholder value.
9 Segment reporting
As the Company’s business activities fall within a single primary business segment viz “trading in Commodities, Bullions, Gold Jewellery, Diamonds, Derivatives, Shares and Securities” the disclosure requirements of Ind-AS 108 “Operating Segment” prescribed under Section 133 of Companies Act, 2013 read with relevant rules issued thereunder are not applicable.
10 First time adoption
In preparing its standalone Ind AS Balance sheet as at 01 April 2016 and in presenting the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in standalone financial statements prepared in accordance with previous GAAP. This note explains the principle adjustments made by the Company in restating its standalone financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cashflows.
A. Exceptions from full retrospective application:
(i) Estimates:
Upon as assessment of the estimates made under Indian GAAP, the company has concluded that there was no necessity to revise such estimates under Ind AS, except where estimates were required by Ind AS and not required by Indian GAAP.
B. Exemptions from full retrospective application:
(i) Property, Plant and Equipment:
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 01 April 2016 measured as per the previous GAAP and use that carrying value asthe deemed cost of the property, plantand equipment.
(ii) Investments in subsidiaries, associates and joint ventures:
The Company has chosen to value its investment in joint venture at deemed cost being the previous GAAP carrying value as at the transition date i.e. 01 April 2016.
(iii) Investments in Shares and debentures (unquoted):
The Company has measured the investment in unquoted equity instruments at previous GAAP carrying value asthe deemed cost on the date of transition.
(iv) Fair value measurement of financial assets or liabilities:
The Company has applied provision of Ind AS 109 for financial assets or liabilities measured at fair value prospectively to transactions occurring on or after date of transition to Ind AS.
C. Explanatory Notes to the transition from previous GAAP to Ind AS:
(i) Re-measurement cost of net defined liability:
Both under Indian GAAP and Ind AS, the Company recognised 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 the Statement of Profit and Loss. Under Ind AS, re-measurements comprising of actuarial gains and losses, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets are recognised immediately in the balance sheet with a corresponding debit or credit to retained earningsthrough OtherComprehensive Income.
(ii) Classification and fair valuation impact of financial assets and liabilities
The Company has assessed the classification and fair valuation impact of financial assets and liabilities under Ind AS 32 / Ind AS 109 on the basis of the facts and circumstances at the transition date. Impact of fair value changes as on date of transition, is recognised in opening reserves and changes thereafter are recognised in Statement of Profit and Loss Account.
(iii) Classification of Preference Shares as Compound Instrument:
Under previous GAAP the Company recognised amount received towards preference shares under share capital. Under Ind AS such preference shares are considered as compound financial instruments. The liability component is measured by discounting the contractually determined stream of future cashflows (dividend and principal) to present value using an effective interest rate of 18.00% for a period of 9 years from the date of issue.
(iv) Other comprehensive income:
Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP Statement of Profit and Loss to Statement of Profit and Loss as per Ind AS. Further, Indian GAAP Statement of Profit and Loss is reconciled to total comprehensive income as per Ind AS.
(v) Statement of cash flows:
The transition from Indian GAAP to Ind AS does not have material impact on the statement of cash flows.
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