1. Company Information
Kohinoor Foods Limited was incorporated in 1989. It is a Public Limited company listed on the stock exchanges, BSE and NSE. The Company is a leading Basmati Rice player and has a Rice mill situated at Murthal, Sonepat. It also owns a Food Factory situated at Bahalgarh, Sonepat. The products of the company are known for superior quality and sell in more than 60 countries.
The company has two 100% wholly owned subsidiaries -Indo European Foods Limited, in UK and Kohinoor Foods USA Inc in USA.
On transition to INDAS as at April 1,2016 the company has elected to measure all its property, plant and equipment at the previous GAAP carrying value except for the "Land and Building1' for which it has opted revaluation model. The company has revalued its land and building as on 01-04-2016 and has transferred the difference between the revalued amount and the carrying value as per previous GAAP amounting to Rs. 15,885.19 Lacs to revaluation surplus under other Equity.
b) Investment in subsidiaries, associates and joint venture are carried at cost. other investments are carried at fair value through Other comprehensive income.
c) The investment in wholly owned subsidiary, Kohinoor Foods USA Inc., amounts to Rs 3,978.45 Lacs. This subsidiary company has been incurring continuous losses and its net worth is fully eroded. However, based on factors regarding future business plan and growth prospects of subsidiary, Management believes that the realizable value is higher than the carrying value of the investment due to which Investments are recognised at carrying value
d) The investment in wholly owned subsidiary, Sachdeva Brothers Private Limited amounted to Rs 71.34 Lacs as on 31 March 2017. This company is not having any operations and its net worth is fully eroded. The company has recognised an impairment loss of Rs. 71.34 Lacs during current year and consequently the value of investment is reduced to NIL as on 31 March2018.
a) Investment in subsidiaries, associates and joint venture are carried at cost. other investments are carried at fair value through Other comprehensive income.
b) In terms of Settlement Agreement dated 13th April 2017, Kohinoor Foods Limited has transferred its 15% shareholding of Kohinoor Speciality Foods India Pvt. Ltd for a consideration of Rs. 10 crores. The value of this Investment has accordingly been restated at its fair value of Rs. 10crores as on 31 March 2017.
c) Terms/Rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share and has equal dividend right. The Company declares and pays dividend in Indian Rupees. The Dividend if proposed by the Board of Directors is subject to shareholders approval in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the equity shareholders will be entitled to receive the remaining assets of the Company in proportion to the number of equity shares held by the shareholders.
Nature and Purpose of Reserve
i. Capital Reserve
Capital Reserve had been created consequent to forfeiture of Application Money on Share Warrants.
ii. Securities Premium Account
Securities Premium Account had been created consequent to issue of shares at premium. These reserves can be utilised in accordance with Section 52 of Companies Act, 2013.
iii Revaluation Surplus
Revaluation surplus was created on revaluation of Land & Building as on 01-04-2016.
b) Loan repayable on Demand from Banks are secured by hypothecation of Inventory, book debts and other current assets of the company, both present and future and the first charge on fixed assets of the company (excluding of specific assets charged to Termlending Banks).
c) Buyer credit has been availed from Banks under non fund based limit, secured as described in Para(b) above.
2. DisclosuresunderINDAS-19"EmployeesBenefits":
a) Defined Contribution Plans:
Amount of Rs.78.57 Lacs (previous year Rs.88.14 Lacs) pertaining to employers' contribution to Provident Fund and Employees State Insurance is recognized as an expense and included in "Employees cost " in Note No. 30.
b) Defined Benefit Plan:
General description of Defined Benefit Plan (Gratuity):
The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days basic salary last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vest after five years of continuous service. The Company has set a limit of Rs. 20.00 Lacs (previous year Rs. 10.00 Lacs) per employee.
A. Economic Assumptions
The principal assumptions are the discount rate and salary growth rate. The discount rate is generally based upon the market yield available on the Government bonds at the accounting date with a term that matches that of the liabilities and the salary growth rate takes account of inflation, seniority, promotion and other relevant factors on long term basis.
3. Disclosures under INDAS-108 on "Segment Reporting":
As per the threshold limits prescribed under Indian Accounting Standard (IndAS-108) on "Segment Reporting" prescribed under section 133 of the Companies Act, 2013 read with relevant rules thereunder and the other accounting principles generally accepted in India, the Company's reportable activity falls within a single business segment and hence the disclosure requirements are not applicable.
The company had entered into operating lease agreement that was renewable on a periodic basis and cancelable at company's option. During the year the company has cancelled the lease agreement. There is no operating lease and no future lease payment commitments as on 31 March 2018.
The company has not entered into sublease agreements in respect of these leases.
Nature of contingent liabilities and other particulars are as given below:-
i Following appeals are lying pending for hearing before the CIT(A), New Delhi/ Income Tax Appellate Tribunal, New Delhi / Hon'ble Delhi High Court against the tax demand raised in impugned Income Tax Assessment Orders as per details given below :-
* The company has also filed a rectification application before DRP to reconsider its findings.
i As per the advice received from legal experts and on the basis of merit of the case, there is a high probability that the aforesaid impugned orders will be set aside and the demand will be deleted. Accordingly, management is of the view that no provision in respect of the above demands is required to be made in the books of accounts.
ii An appeal before the Sales Tax Commissioner - Appeals, New Delhi is lying pending in respect of Sales Tax demand of Rs.122.00 Lacs on sale of REP Licenses made in earlier years.
iii Following appeals are also lying pending before the Appellate Authorities/Tribunal, Haryana as mentioned in coloumn.4 against the impugned VAT Assessment Orders/Revision Order passed by the assessing authorities as mentioned in column. 3 of the table given below :-
iv An appeal is lying pending before the Dy. Excise & Taxation Commissioner-Appeal, Punjab against the Order received from Excise and Taxation Department, Punjab in respect of Year 2009-10 and 2010-11 demanding a sum of Rs.450.41 Lacs towards the cess imposed by the State Govt. on exports. The company has challenged the validity of imposition of cess on export in its appeal as the same is not permissible under article 286 of the Constitution of India. Further demand has been raised for Rs. 5.41 Lacs after completing the SalesTaxassessmentforAY2011-12 against which appeal has been filed.
v An appeal before the Customs, Excise & Service Tax Appellate Tribunal, New Delhi is lying pending against the order of Commissioner of Central Excise (Appeals), Delhi -III in respect of additional excise duty of Rs. 42.91 Lacs demanded by the Excise department in connection of dispute over classification of goods - food product produced at Bahalgarh Factory- as per the Central Tariff Act. As the matter is still pending before the Tribunal, no provision in the books of accounts have been made.
vi During the financial year 2016-17, the company has received a order from Hon.'ble Central Excise and Service Tax Appellate Tribunal, New Delhi (CETSTAT) against the order passed by Commissioner of Service Tax (Adjudication), New Delhi demanding a service tax of Rs.259.25 Lacs. The Hon'ble CETSTAT vide its order dated 16/02/2017 has granted major relief of Rs.250.13 Lacs against the aforesaid demand.
vii Legal Cases against the Company
a. The Board of Trustee of the port of Mumbai has filed a money suit for recovery of Rs. 9.64 Cr. towards alleged outstanding demurrage charges against which the company has filed its counterclaim of Rs. 10.88 Cr. towards the financial losses, interest on the investment, refund of the license fees, refund of the demurrage charges, compensation and damages etc. The matter is still pending.
b. In terms of the settlement Agreement dated 13thApril, 2017, Kohinoor Foods Ltd. (KFL) and Promoters have settled all disputes with Kohinoor Speciality Foods India Pvt. Ltd. (KSF) and McCormick Switzerland GMBH. Accordingly all proceeding in London Court of International Arbitration (LCIA) and in National Company Law Board Tribunal (NCLT), have been withdrawn and both KFL and KSF, are now free from Non-Complete Obligations.
4. Details of loans given, investment made and guarantee given covered u/s 186 (4) of the CompaniesAct-2013.
i Details of Loans given and investment made are given under the respective heads.
ii Corporate guarantees are given by the company for subsidiaries as follows:-
5. The company has not paid interest to banks and its outstanding balance in loan accounts has exceeded its drawing power since February, 2018.
6. Financial Risk Management
The company has exposure to the following risks arising from Financial Instruments:
- Credit Risk
- Liquidity Risk
- Market Risk
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) and from its financing
CREDIT RISK MANAGEMENT
Trade receivable related credit risk
All trade receivable are reviewed and assessed for default on routine basis. Our historical experience of collecting receivables is of low credit risk.
Other financial assets
The company maintains low exposure in cash and cash equivalents. The Company's maximum exposure to credit risk is the carrying value of each class of financial assets.
LIQUIDITY RISK:
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company’s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring
Maturities of financial liabilities
The table below analyses the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company is exposed to the following market risks that arise from its use of financial instruments:
- Currency Risk
- Price Risk
- Interest Rate Risk Currency Risk
'The Company operates internationally and consequently the Company is exposed to foreign exchange risk through its sales in overseas market. The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows
b) The company has an outstanding Forward contract as on 31st March 2018 and there is Marked to Market (MTM) unrealized loss on forward contracts of Rs. 23.36 Lacs (March 31 2017, Rs. 3.20 Lacs), which has been accounted for accordingly in the books of accounts.
Price Risk
The price risk is the risk arising from investments held by the Company and classified in the balance sheet either at fair value through Other Comprehensive Income or at fair value through profit or loss.
The Company’s equity investments are mainly strategic in nature and are generally held on a long-term basis.
Interest 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. As at March 31,2018, the Company has short term borrowings of 68,239.53 Lacs which is exposed in financial risk.
Commodity Risk
The Company is exposed to the fluctuations in commodity prices. Mismatch in demand and supply, adverse weather conditions, market expectations etc., can lead to price fluctuations. The Company manages these price fluctuations by actively managing the
7. The company was not required to spend any amount in respect of corporate social responsibility (CSR) for current year and for previous year as per section 135 of Companies Act - 2013
8. The company has not made any contribution to any political party during current year and previous year.
9. During the year no amount of Dividend has been remitted in foreign currency to Non Resident out side India.
10. Some of the balances of Debtors and Creditors are subject to confirmation.
11. Corresponding figures for the previous year have been regrouped/rearranged, wherever necessary to confirm to current year classification.
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