A. CORPORATE AND GENERAL INFORMATION
‘PG Foils Limited (“the Company”) is domiciled and incorporated in India and its equity shares are listed at Bombay Stock Exchange(BSE). The registered office of Company is Situated at 6, Neptune Tower, Ashram Road, Ahmedaaad-380 009 (Gujarat).The Company is a leading manufacturer/producer of Aluminium For in the various form. The financial statements of the company for the year ended 31st March 2018 were approved and authorized for Issue by board of directors in their meeting held on 30.05.2018”.
B. STATEMENT OF COMPLIANCE
The financial statements are c general purpose financial statement which have been prepared in accordance with the Companies Act 2013, Indian Accounting Standards and complies with other requirements of the law. Indian Accounting Standards (IND AS) include equivalent to International Financial Reporting Standards (IFR5). Compliance with the IND AS ensures that the financial statements and notes of the entity comply with International Financial Resorting Standards(IFRS).
(I) Statutory Dues Payable includes:
(a) demand raised under CST Act for FY 2014-15 towards non submission of declaration form for Rs. 45276815/-
(b) demand raised under VAT Act. Tor FY 2014-15 towards disallowances of input tax credit availed on DEPB licence for Rs. 39225961/-, the company had filed an appeal before CIT Appeal against order
(c) demand raised under Income Tax Act for AY 2015-16 for Rs. 25432270/-, the company had filed on appeal before CIT Appeal against order
1 CONTINGENT LIABILITIES AND COMMITMENTS NOT PROVIDED FOR CONTINGENT LIABILITIES:
(a) Guarantees given by bank in favour of buyers/suppliers, & Central Excise for Rs. 69.55 Lac (previous Year Rs. 69.55 Lac)
(b) Letter of Credit of Rs. 1614.97 Lac (previous Year Rs. 1930.07 Lac) opened in favour of Raw Material Suppliers
(c) Personal Guarantee by the Managing Director and Whole Time Director have been given to Banks and Financial institutions against credit facilities sanctioned to company.
(d) Uncompleted/reopened assessments of Direct tax and Indirect tax.
(e) Stultified by NECLO for Sum of Rs. 227085/- against which a sum of Rs.25,000/- has been deposited in the city Civil Court Ahmadabad.
*Matter pending since more then 17 years and company does not expect any liability
(f) Bonus Liability for the year 2014-15 as per new amendment issued by Ministry of Labour on which stay granted by Hon’ble High Court in company favour.
(g) Total Demand of Rs. 1,03,51,283/’- for safeguard duty, redemption fine and penalty in 2009-10 is raised by custom department and the same has been pending at Hon’ble Supreme Court, Delhi. Company has paid Rs. 38,00.000/- against this demand.
(h) Total penalty of Rs. 25 00,000/- is raised on Shri Pankaj P Shah (Managing Director) and Shri Ashok P Snah (Ex. Director) of the company by custom department and company has paid Rs. 6,00,000/-as per direction of Custom Excise & Gold (control) Appellate., New Delhi Through order dated 03.02.2003 and company has filed appeal before Hon’ble High Court.
(i) Total Demand af Rs. 1,25.76,869/ for safeguard duty is raised by custom department ard the same has been pending Hon’ble High Court, Mumbai. Stay granted by Hon’ble High Court. Company has paid Rs. 97,44,034/-against this demand.
(j) Total Demand of Rs. 12284587/- towards Vat, interest & penalty due to disallowances of input availed on DEPB purchase for year 2015-16 raised by Commercial Tax Deportment, Poli, Company is going to file appeal against this order to appropriate authority.
(k) Total Demand of Rs. 115646606/- toward non submission of C Forms, CST & Interest for year 2015-16 raised by Commercial Tax Department, Foil.
(Assessment order related to demand mentioned in clause no. (j) end (k) received after date of balance sheet hence liability not booked)
COMMITMENTS
(l) estimated amount of contracts on Capital Accounts remaining to be executed and not provided for (net of advances) Rs. 56.40 Lacs (Previous Year Rs. 99.20 Lacs (USD 1.53 Lacs)
(m) The Company has entered into derivative contracts during the year in the nature of Forward Contracts for hedging currency risk for export made. The forward Contracts outstanding as on 31st March 2018 amount to Rs. 1803.23 Lacs (USD 27.00 Lacs) Previous Year Rs. 1331.92 Lacs (USD 19.00 Lccs)
(n) The Company has entered into derivative contracts during the year in the nature of forward Contracts tor hedging currency risk for import. The Forward Contracts outstanding as on 31st March 2018 amount to NIL Previous year Rs. 1205.78 Lacs (USD 16.42 Lacs & EURO 0.30 Lacs)
(o) The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:
2 AS PER IND AS-19” EMPLOYEE BENEFITS
The disclosure of employees benefit as defined in the Indian Accounting Standard-19 “Employee Benefits” are as follows:
a) The Actuarial valuation of Gratuity has not been carried out during the year ended 31.03.18; Accordingly disclosures as per IN D AS 19 are not given for the year ended 31.03.18. During the year ended 31.03 18, no provision for Gratuity has been calculated. The company has taken Group Gratuity cash accumulation plan from Life Insurance Corporation of India and makes contribution to the fund. The fund value as on 31.03.2018 amounted to Rs 32943509/-
b) The Leave Encashment liability of Rs. 261.92 Iacs form port of long tern provision Rs. 245.27 Iacs ( PY Rs. 177.13 Iacs ) and short term provision Rs. 16.66 lacs (PY Rs. 20.10 lacs) and is unfunded and does not require disclosures as mentioned in para 158 of Ind AS 19.
c) Provident Fund : An amount of Rs 20.21 Lacs (2016-17 Rs 15.45 Lacs) as contribution towards defined contribution plans is recognized as expenses in statement of Profit & Loss.
The carrying amount of bank balances, Trade Receivable.. Trade Payable, other financial assets / liabilities, loans, cash and cash equivalents, borrowings are considered to Other same as their fair value due to their short term nature.
The levels have been classified based on the followings:
Level I: It hierarchy includes financial instruments measured using quoted prices in active markets. Quotes would include rates/values/valuation references published periodically by BSE, NSE etc. basis which trades take place in a linked or unlinked active market. This includes traced bands and mutual funds, as the case may be, that have quoted price/rate/value.
Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques which maximise the use of observable marker date (either directly as prices or indirectly derived from prices) and rely as little as possible on entity-specific estimates. 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 s included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.
3 FINANCIAL RISK MANAGEMENT
The Companies Activities Exposé It to credit risk, liquidity risk and market risk. This note explains the source of risk which the company is exposed to and how the manages the risk and its impact in the financial statement.
The board of directors provides guiding principle for overall risk management, as well as policies covering specific area I.e.. Foreign exchange risk, credit risk & Investment of Surplus liquidity.
The companies risk management is carried out by finance department, accordingly, this department identifies, evaluation and hedges financial risk
A) Credit Risk
Credit risk arises from cash and cash equivalents, financial assets measured at amortised cost and fair value through profit or loss and trade receivables Credit Risk Management
The main source of credit risk at the reporting date’s from trade receivables as these are typically unsecured. This credit risk has always been managed through credit Approvals, establishing credit limits and continuously monitoring the creditworthiness of customer to whom credit is extended in normal course of business. The company estimates the expected credit loss on the basis of past Data and experience. Expected credit losses of financial assets receivable in next 12 months are estimated on the basis at historical data provided the company has reasonable and supportable data On such an assessment the expected losses are nil or negligible
Review of outstanding trade receivables and financial assets is carried out by management each quarter. The company do not have any doubtful debts hence, no provision for bed and doubtful debts have yet been made in accounts.
B) Liquidity Risk
The companies principle source of liquidity are cash and cash equivalent and cash flows that are generated from operation. The company be leves that its working capita is sufficient to meet its current requirement.
C) Market Risk Foreign Currency Risk
The company operates significantly in international markets through imports and exports and therefore exposed to foreign exchange risk arising from foreign currency transaction primarily with respect to USD/Euro. The risk is measured through sensitivity analysis. In order to minimize any adverse effect on the financial performance of the company, derivative financial instrument such as foreign exchange forward contracts are used exclusively to mitigate currency risk and not as trading or speculative instrument.
4 RELATED PARTY DISCLOSURES
Related party disclosures as required by Indian Accounting Standard (Ind AS) -24 is as under:-
A List of related parties and relationships
a) List of related parties
i) Key Management Personnel
Shri Pankaj P Shah Managing Director
Shri Abhay P Shah Whole Time Director
Shri Sahil P Shah Whole Tine Director
Smt. Sakshi S Shah Director
ii) Enterprises where Key Management Personnel or relatives of Key Management Personnel have significant influence.
1. Prem Cables Pvt. Ltd
2. Miracle Carriers & Trading Company
3. Prem Nagar Industrial Estate Pvt.Ltd
4. Pipalla Cables & Wires Pvt. Ltd.
5. Miracle Toils Pvt.Ltd.
6. Foils India Laminates Pvt. Ltd
7. Pipalia Engineering Work Pvt. Ltd
8. Tyagi Cement Pvt. Ltd.
B Transactions with related parties
Disclosure of Transactions with Related Parties, as recurred by Ind AS 24 ‘Realted Party Disclosure’ is given below:
5 a) The lease deed regarding land at Jaisalmer where Enercon Make wind mill is installed has not been executed.
b) The lease deed regarding land at Pipalia Kalan where Bunglow in the name of company is in work in progress has not been executed.
6 Balances of Trade Receivables, Trade Payables, Loans, Amount Received against FDR’s & Advances and Unsecured Loans as on 31.3.2018 are subject to reconciliation & confirmation by the parties.
7 During the year the company has paid a sum of Rs. 2,34,330/- to LIC Of India towards premium of key man insurance policy. This policy has been taken on 28th January 1995 for 25 years. Regarding this the company has taken the undertaking from Shri Pankaj P Shah, And Shri Abhay P Shah the director who are covered up under this policy, for non-claiming of end benefits of the policy on maturity.
8 During the year the company has paid a sum of Rs. 5,00,00,000/- to HDFC Life insurance company Ltd towards single premium of policy taken under employee employer plan. This policy has been taken for related parties in March 2018 for 10 years. Regarding this the company has taken the undertaking form Life Assured persons who are covered up under this policy for non claiming of end benefits of the policy on maturity.
9 The company has capitalized cost of flat purchased in. World One lower, Mumbai including interest capitalized by Rs. 122/.21 Lacs and no Depreciation has been claimed due to not put to use.
10 a) Company has installed one Wind Mill of 0.6 MW capacities at Sada Bandan District Jaisalmer with agreement with Rajastahn Rajya Vidhut Vitron Nigam Limited & other and Enerccn Wind Form for wheeling of Energy for captive consumption. During the year 468475 units (Previous year 138077 units) Generated amounting to Rs.38,23,412/- (Previous Year Rs. 11,17,225/-). Profit otter depreciation earned from above wind mill’s RS. 33,04,354/-.
b) Company has installed one Wind Mill of 1.5MW capacities at Aakal, Jaisalmer with agreement with Jodhpur Vidhut Vitran Nigam Limited & Sudan Suzlon Infrastructure Service Limited for generation power. During the year 1746103 units (Previous Year 1982497 units) generated and sale to Jodhpur Vidhut Vitran Nigam Limited amounting to Rs. 71,59,023/- (Previous Year Rs. 81,28,237/-). Profit after depreciation earned from above wind mill is Rs. 9,22,309/-.
11 a) A Misappropriation / Fraud of FDR Deposit Comes to the knowledge of the Management during Financial Year 2014-15. Company had filed a complaint with Economic Offence Wing, Mumbai and FIR with Police station Nariman Point on 14.07.2014 against various parties including Dhanlaxmi Bank, Mumbai & their officials for Misappropriation of FDR’s of Rs. 69 Crores given to Dhanlaxmi Bunk Ltd., Guregcon Branch. Company has also filed a legal case with National Consumer Court at Delhi for early justice in the matter due to delay in decision against FOW complaint. Company recovered amount Rs. 68.93Cr. From accused through account of various parties against repayment of FDR’s which shown under head Cash & Cash Equivalent against FDR amount.
b) Company has not booked interest on these FDR’s for Financial Year 2017-18 due to disputed matter and uncertainty and also not made provision of interest on amount recovered from various parties against maturity value of FDR’s The matter is pending with competent court for trial.
12 Lease rent in respect of leasehold land for factory building and Township are accounted for on accrual basis. The unexpired portion of said lease holes lands are 47 and 48 years respectively.
13 a) Bank balances are subject to bank reconciliations.
b) Balances of Fixed Deposits are Subject to verification & reconciliation.
14 There is no agriculture produce from the Agriculture land.
15 SEGMENT REPORTING
Description of segment and principal activity.
The company is primarily in the business of manufacture and sale of Aluminium Foil in the various form. Operating segments are reported in the manner consistent with internal reporting to Managing director of the company. The company has regular reviews procedures in place and Managing director reviews the operations of the company as a whole, Hence there are no reportable segments as per Ind AS 108 Operating segment.
16 As per the provisions of Sec. 135 of the Companies Act 2013, the Company is required to spend Rs. 30.77 lacs (Previous year Rs. 19.60 lacs) towards CSR activities. The Company has spent Rs 31.00 lacs during the current financial year in line with the CSR Policy of the Company.
17 STANDARDS ISSUED BUT NOT EFFECTIVE
On 28th March, 20’8, the Ministry of Corporate Affairs (MCA) has notified Ind AS 115 and certain amendments to existing Ind AS. These amendments shall be applicable to the company from 01st April, 2018.
a Issue of Ind AS-11 b Revenue from Contracts with Customers
Ind AS will supersede the current revenue recognition guidance. Ind AS provides a single model of accounting tor revenue arising from contracts with customers based on identification and satisfaction of performance obligations,
b Amendments to existing issued Ind AS
i) lnd AS 21 -The effects of changes in foreign exchange rates
ii) Ind AS 40—Investment properties
iii) Ind AS 12 -Income Tax
iv) Ind AS 28-Investmert in Associates and joint ventures, and
v) Ind AS 1 12-Disclosure of Interest in Other Entities
Application of above standards are not expected to have any significant impact on the company’s financial statements.
18 Previous year figures have been re-grouped and re-arranged wherever necessary to confirm to current year classification.
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