(1) Contingent liabilities not provided for:
(a) Corporate Guarantee's given to Financial Institutions/ Banks on behalf of wholly owned subsidiaries: Rs. 3,133.92 Lakhs ( Rs. 3,519.64 Lakhs as at 31st March' 2017 and Rs. 3,447.71 Lakhs as at 31st March' 2016)
(b) Claims against the company not acknowledged as debts: Disputed demands of Entry - tax /Income -Tax matters pending before the Appellate Authorities: Rs. 90.79 Lakhs ( Rs.259.92 lakhs as at 31st March' 2017 and 31st March' 2016)
(c) Fixed Deposit Receipts pledged with the banks / others: Rs. 92.69 Lakhs (Rs. 64.70 Lakhs as at 31st March' 2017 and Rs. 7.73 Lakhs as at 31st March' 2016)
(38) There are no Micro, Small and Medium enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the company owes dues on account of principal amount together with interest and accordingly no additional disclosure have been made. The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of the information/ documents available with the company.
(2). Employee Defined Benefits: (i) Leave Obligations :
Under leave encashment scheme, the company allows its employees to en-cash accumulated leave over and above thirty days. So, accumulated leave encashment liability for up to 30 days period is classified as non -current liability and over the period of 30 days is covered under current liability. Non -current liability of leave encashment is discounted @ 9% and carried at current cost in the financial statements and resultant variation is accounted for in the finance cost / employee benefit expenses of the profit and loss statement.
(ii) Gratuity :
The company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to gratuity on terms not less than the provisions of the Payment of Gratuity Act, 1972.
(iii) Risk Exposure:
Through its defined benefit plans the Company is exposed to a number of risks, significant of which are as follows:
(a) Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the Government of India bonds. If the return on plan asset is below this rate, it will create a plan deficit.
(b) Interest Risk: A decrease in the interest rate on plan assets will increase the plan liability.
(c) Life Expectancy: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.
(d) 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 the plan liability.
(iv) The company has recognized expenses of Rs. 22.66 lakhs (Rs. 19.84 lakhs as at 31st March, 2017) towards the defined contribution plan.
(3) Capital management
(a) Risk Management : The company's objective when managing capital are to :
- Safeguard their ability to continue as a going concern of the company, so that they can provide returns for shareholders and benefits for other stakeholders
- Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the company may adjust the amount of dividend to shareholders, return capital to shareholders or issue new shares.
(b) Dividend: During the year, management of the company has decided not to declare any dividend and accumulated its profits for future projects and consolidates its operating efficiency.
(4) Related Party disclosures: Name of the related parties where control exists Nature of relationship
Meghalaya Minerals & Mines Ltd. Subsidiary Company
Badarpur Energy Pvt. Ltd. Subsidiary Company
Cement International Ltd. Subsidiary Company
Goombira Tea Co. Ltd. Subsidiary Company
Singlacherra Tea Co. Pvt. Ltd. Subsidiary Company
Chargola Tea Co. Pvt. Ltd. Subsidiary Company
Valley Strong Cements (Assam) Ltd. Subsidiary Company
Other related parties : Nature of relationship (I) Enterprises Influenced by KMP:
Valley Strong Cements Ltd. Enterprises influenced by Key Management personnel
Dony Polo Udyog Ltd. Enterprises influenced by Key Management personnel
Meghalaya Cements Ltd. Enterprises influenced by Key Management personnel
Om InfTacon Pvt. Ltd. Enterprises influenced by Key Management personnel
Nature of relationship (II) Key Management Personnel :
Sh. Kamakhya Chamaria Vice Chairman and Managing Director
Sh. Bijay Kumar Garodia Director
Sh. Santosh Kumar Bajaj Director
Sh. Mahendra Kumar Agarwal Vice Chairman
Sh. Prahlad Rai Chamaria Non- Executive Director
Sh. Tanuj Chamaria Son of Sh. Kamakhya Chamaria, Vice Chairman and
Managing Director
Sh. Mukesh Kumar Shovasaria Chief Executive Officer
Sh. Sushil Kumar Kothari Chief Financial Officer (Resigned w.e.f. 26.02.2018)
Ms. Saakshi Manchanda Company Secretary (joined w.e.f. 14.11.2016 and resigned
w.e.f. 05.07.2018)
(4) The company deals in only one Segment i.e. cement manufacturing and trading which is the only identified operating segment of the company. There is no separate reportable segment as required by Ind AS - 108 “Operating Segments”. The entire revenue of the company has been generated by way of domestic sales.
(5) Company has received/ recognized Rs. Nil (Rs. 258.84 lakhs as at 31st March' 2017, Rs. 89.54 Lakhs as at 01st April' 2016) being 50% of company's claim for refund of excise duty as revenue in the books of accounts. Presently matter regarding company's claim for refund of differential Excise Duty is pending before the Hon'ble Supreme Court of India.
(6) Financial risk management: The Company's activities are exposed to a variety of financial risks: credit risk, liquidity risk and interest rate risk.
(a) 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 from trade receivables including deposits with banks and financial institutions and other financial instruments.
(ii) Financial instruments and deposits: Credit risk from balance with banks and financial institutions is managed by the finance department of the company. Investments of surplus funds are made only with approved counterparties in accordance with the company's policy. Loans are given to body corporate are as per the company policy and the receipt of repayment are reviewed on regular basis. Other financial assets are considered to be of good quality and there is no significant risk.
(a) Liquidity Risk : Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or other financial asset. Due to the nature of the underlying business, the company maintains sufficient cash and liquid investments available to meet its obligation. Management of the company regularly monitors rolling forecast of the company's liquidity position and cash and cash equivalents on the basis of expected cash flows.
The company had access to the working capital facilities from the bank amounting Rs. 2,500.00 lakhs (Outstanding balance Rs. 2,476.03 lakhs as at 31st March'2018) which are expiring in one year, subject to the renewal of the same by the banking authorities. A part from the working capital facility, company has also following outstanding borrowings from banks and financial institutions:
(a) 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 rate. As the company's borrowings except borrowing from market are fixed rate borrowings; they are carried out at Amortized cost and are not subject to interest rate risk as defined in Ind AS 107.
(7) First time adoption of Ind AS :
These are the company's first financial statements prepared in accordance with Ind AS. The accounting policies set out in Note 2, have been applied in preparing the financial statements for the year ended 31st March, 2018, the comparative financial statements for the year ended 31st March 2017 and in the preparation of opening Ind AS Balance Sheet at 1st April, 2016.
In preparing its opening Ind AS Balance Sheet, the company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 and other relevant provisions of the Act (Indian GAAP).
An explanation of how the transition from previous GAAP to Ind AS has affected the Company's financial position, financial performance and cash flows is set out in the following tables and notes.
A. Exemptions and exceptions availed
Following are the applicable Ind AS optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
A.1 Ind AS optional exemptions A.1.1 Deemed cost
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP except Land and building that measure as Fair value and use that as its deemed cost as at the date of transition. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets.
Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value except Land and building that measure as Fair value.
A.1.3 Investments in subsidiaries
In financial statements, a first-time adopter that subsequently measures an investment in a subsidiary at cost, may measure such investment at cost (determined in accordance with Ind AS 27) or deemed cost (fair value or previous GAAP carrying amount) in its opening Ind AS balance sheet. Selection of fair value or previous GAAP carrying amount for determining deemed cost can be done for each subsidiary.
Accordingly, the Company has elected to measure all of its investment in subsidiary at their previous GAAP carrying value.
A.2 Ind AS mandatory exceptions A.2.1 Estimates
The Company estimates in accordance with Ind ASs at the date of transition 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 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP.
A.2.2 Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the fact and circumstances that exits at the date of transition to Ind AS.
A.2.4 Cash flow Statements
The transition from Indian GAAP to Ind AS has no material impact on the Cash flow Statement.
Notes to first-time adoption:
Note 1: Property, plant and equipment
Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value except Land and building that measure as Fair value and the difference of the same are recognized in retained earnings.
Note 2 : Government grant
As per Ind AS 20, government grants related to assets, shall be presented in the Balance Sheet by setting up the grant as deferred income. Hence the Company has accounted the government grant received towards assets as per the requirement of Ind AS 20 by creating a deferred government grant. In subsequent year this deferred government grant has been Amortized over the useful life of the assets
Note 3 : Impairment of financial assets
The company has impaired its investment in and Loan given to one of its subsidiary company according to the accounting policies related to impairment of financial assets in Note 2. Hence the company has written off its investment and Loan given to its subsidiary company and recognized in retained earnings.
Note 4 : Financial Corporate Guarantee Contract
The Company has given guarantee on behalf of its subsidiary. As per Ind AS 109, the Company has recognized a guarantee fee income for giving guarantee on behalf of subsidiary for loans taken by subsidiaries
Note 5 : Employee benefit obligation
In accordance with Ind AS “Employee Benefits” re-measurement gains and losses on post-employment defined benefit plans are recognized in profit or loss.
Note 6: Investments in equity shares
The Company holds investment in equity shares of entities other than in subsidiaries, associate and joint venture. Under previous GAAP such investments were measured at cost.
As per Ind AS 109, these investments have been measured at fair value. The Company has categorized these investments as fair value through other comprehensive income (FVTOCI) and any changes in fair value of those investment has been recognized in other comprehensive income.
Note 7: Deferred tax
The various transitional adjustments lead to different temporary differences. According to the accounting policies in Note 2, the Company has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.
Note 8 : Retained earnings
Retained earnings as at 1 April, 2016 has been adjusted consequent to the above Ind AS transition adjustments.
Note 9 : Statement of cash flows
The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.
(48) Previous year's figures have been regrouped and/ or re-arranged wherever necessary, to confirm to current year's classification.
(49) The financial statements are approved by the Audit Committee at its meeting held on 01st June, 2018 and by the Board of Directors on the same date.
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