CORPORATE INFORMATION

GRP Limited (the ‘Company’) is a public limited Company domiciled and incorporated in India under the Indian Companies Act, 1956. The registered office of the Company is situated at Plot No.8, GIDC Estate, Ankleshwar - 393 002, Dist. Bharuch, Gujarat, India.

The Company is engaged mainly in manufacturing of Reclaim Rubber. Its other businesses include Power generation from Windmill, Manufacturing of Thermo Plastic Elastomers, Punch & Split products and Rubber Composite. The Company has manufacturing plants in India and sales in Domestic as well as International market. The Company is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

1 SIGNIFICANT ACCOUNTING POLICIES AND KEY ACCOUNTING ESTIMATES AND JUDGEMENTS SIGNIFICANT ACCOUNTING POLICIES:

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied for all the years presented, unless otherwise stated.

1.1 Basis of preparation and presentation of financial statements:

These financial statements are the separate financial statements of the Company (also called standalone financial statements) prepared in accordance with Indian Accounting Standards (‘Ind AS’) notified under Section 133 of the Companies Act, 2013, read together with the Companies (Indian Accounting Standards) Rules, as amended from time to time.

For all periods up to and including the year ended 31st March, 2017, the Company had prepared its financial statements in accordance with Indian Accounting Standards notified under the Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (‘Previous GAAP’). These financial statements are company’s first Ind AS standalone financial statements. Detailed explanation on how the transition from previous GAAP to Ind AS has affected the Company’s Balance Sheet and financial performance is given in Note 50.

These financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting except for certain financial assets and financial liabilities that are measured at fair values at the end of each reporting period, as stated in the accounting policies set out below. The accounting policies have been applied consistently over all the periods presented in these financial statements. These financial statements are presented in Indian Rupees, which is also its functional currency.

1.2 Current / Non-current classification:

For the purpose of current/non-current classification of assets and liabilities, the Company has ascertained its normal operating cycle as twelve months. This is based on the nature of services and the time between the acquisition of assets or inventories for processing and their realization in cash and cash equivalents.

1.3 Key accounting estimates and judgements

The preparation of the Company’s financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

a) Depreciation/amortisation and useful lives of property plant and equipment/intangible assets

Property, plant and equipment/intangible assets are depreciated/amortised over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/ amortisation to be recorded during any reporting period. The useful lives and residual values are based on the Company’s historical experience with similar assets and take into account anticipated technological changes. The depreciation/ amortisation for future periods is revised if there are significant changes from previous estimates.

b) Provisions

Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.

c) Defined benefit obligation

The costs of providing pensions and other post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS 19 ‘Employee benefits’ over the period during which benefit is derived from the employees’ services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note 38, ‘Employee benefits’.

d) Income Tax:

The Company’s tax jurisdiction is India. Significant judgements are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions (Refer Note 34).

e) Impairment of financial assets:

The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

1.4 Recent Indian Accounting Standards (Ind AS)

Ministry of Corporate Affairs (“MCA”) through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind AS which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2018:

(A) Issue of Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115 will supersede the current revenue recognition guidance including Ind AS 18 Revenue, Ind AS 11 Construction Contracts and the related interpretations. Ind AS 115 provides a single model of accounting for revenue arising from contracts with customers based on the identification and satisfaction of performance obligations.

(B) Amendment to Existing issued Ind AS

The MCA has also carried out amendments of the following accounting standards:

(i) Ind AS 21 - The Effects of Changes in Foreign Exchange Rates

(ii) Ind AS 40 - Investment Property

(iii) Ind AS 12 - Income Taxes

(iv) Ind AS 28 - Investments in Associates and Joint Ventures and

(v) Ind AS 112 - Disclosure of Interests in Other Entities

Application of above standards are not expected to have any significant impact on the Company’s Financial Statements.

As at 31 March 2018, 31 March 2017 and 1 April 2016, the fair values of the properties are based on valuations performed by an independent valuer.

The company has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements.

Rights, preferences and restrictions attached to shares

1. The Company has only one class of shares referred to as equity shares having a par value of Rs. 10/-. Each holder of equity shares is entitled to one vote per share.

2. In the event of liquidation of the Company, the holders of the equity shares of the Company will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts in proportion to their shareholding.

Description of nature and purpose of each reserve

General Reserve - General reserve is created from time to time by way of transfer profits from retained earnings for appropriation purposes. General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income.

Capital Reserve - Capital reserve represents Special Capital subsidy received and profit on re-issue of forfeited shares

Securities Premium Reserve - Securities premium reserve is used to record the premium on issue of shares.

1 Borrowings are measured at amortised Cost

Nature of security and terms of repayment for borrowings:

2 Foreign currency loan from Citi Bank, N.A. of Rs. Nil (31-Mar-2017: Rs. Nil; 01-Apr-2016 : Rs. 597.99 Lakh) for Perundurai factory, in Tamil Nadu

First exclusive charge by way of hypothecation of entire movable & immovable property, plant and equipment of the Company located at Perundurai, Tamilnadu funded through Citi Bank term loan. Loan fully repaid on October 20, 2016 & charge satisfied on December 16, 2016.

3 Rupee loan from HDFC Bank Ltd of Rs. Nil (31-Mar-2017 : Rs. Nil; 01-Apr-2016 : Rs. 480.00 Lakh) for Factory (Phase II) at Chincholi, Solapur

First exclusive charge by way of hypothecation of entire movable property, plant and equipment of the Company located at Chincholi, Solapur, both present and future and by way of mortgage of land together with factory building and structures situated at Chincholi factory, Solapur. Loan fully repaid on August 3, 2016 & charge satisfied on September 26, 2016.

4 Rupee loan from HDFC Bank Ltd of Rs. 358.84 Lakh (31-Mar-2017: Rs. 717.68 Lakh; 01-Apr-2016: Rs. 1047.81 Lakh) for Capex

First exclusive charge by way of hypothecation of plant & machinery acquired finance from the term loans and by way of extension of equitable mortgage on office at 510, Kohinoor City, Kurla (West), Mumbai.

Repayable in 12 equal quarterly instalments beginning from May 13, 2016 along with interest @ 10.05% p.a. (31-Mar-2017: 10.45% p.a., 01-Apr-2016: 10.50% p.a.).

5 Rupee loan from Citi Bank, N.A. of Rs. 671.25 Lakh (31-Mar-2017: Rs. 784.00 Lakh; 01-Apr-2016: Rs. Nil) for Capex

First exclusive charge by way of hypothecation on Plant & Machinery at all plants of the Company funded through Citi Bank term loan.

Repayable in 16 equal quarterly instalments beginning from July 11, 2017 along with interest @ 10.20% p.a.

6 Deferred Payment Liability

(a) Vehicle loan of Rs. 18.28 Lakh (31-Mar-2017: Rs. 26.45 Lakh; 01-Apr-2016: Rs. Nil) is secured by vehicles under hypothecation with bank.

Loan is repayable in 36 monthly instalments beginning from April 2017 along with interest @ 8.51% p.a.

(b) Vehicle loan of Rs. 29.47 Lakh (31-Mar-2017: Rs. 38.05 Lakh; 01-Apr-2016: Rs. Nil) is secured by vehicles under hypothecation with NBFC.

Loan is repayable in 48 monthly instalments from March 2017 along with interest @ 8.27% p.a.

7 Deferred sales-tax payments

Deferred sales-tax payment is interest free loan and repayable from financial year 2006-07 to 2016-17. Fully repaid on April 18, 2016.

8 For explanation on the company’s Interest risk and foreign currency risk refer Note 46

Nature of security and terms of repayment for secured borrowings:

1 Working Capital Loan from HDFC Bank Ltd of Rs. 2,889.29 Lakh (31-Mar-2017: Rs. 3,358.76 Lakh; 01 Apr-2016: Rs. 2,828.94 Lakh)

First pari passu charge by way of hypothecation of entire current assets, both present and future. First pari passu charge on entire property, plant and equipment located at Ankleshwar & Panoli plant of the company.

2 Working Capital loan from Citi Bank N. A. of Rs. 1,637.34 Lakh (31-Mar-2017: Rs. 1,597.12 Lakh; 01-Apr 2016: Rs. 1,745.25 Lakh)

Secured by first pari passu charge in favour of Citi Bank N. A. by way of hypothecation of stock & book debts at par with other banks. First Pari Passu charge on property, plant and equipment situated at Ankleshwar & Panoli Plant, District Bharuch, Gujarat at par with other banks.

3 For explanation on the company’s Interest risk and foreign currency risk refer Note 46

Details of Micro and Small Enterprises as defined under Micro, Small and Medium Enterprises Development Act,2006 (“MSMED Act”).

To comply with the requirement of The Micro, Small and Medium Enterprises Development Act, 2006, the Company requested its suppliers to confirm it whether they are covered as Micro, Small or Medium enterprise as is defined in the said Act. Based on the communication received from such suppliers confirming their coverage as such enterprise, the company has recognized them for the necessary treatment as provided under the Act, from the date of receipt of such confirmations and are disclosed in note below.

Consequent to introduction of Goods and Service Tax (GST) w.e.f. 1st July 2017, Revenue for the year ended 31-Mar-2018 is presented net of GST in compliance with Indian Accounting Standard (Ind AS) -18 Revenue. The Revenue from Operations for the year ended 31-Mar-2017 are inclusive of excise duty and accordingly those are not comparable with the Revenue from Operations for the year ended 31-Mar-2018 to that extent.

2 INCOME TAX:

A The note below details the major components of income tax expenses for the year ended 31-Mar-18 and 31-Mar-17. The note further describes the significant estimates made in relation to company’s income tax position and also explains how the income tax expense is impacted by non-assessable and non-deductible items.

B Reconciliation of tax expenses and the accounting profit multiplied by applicable tax rate as notified under Income Tax Act, 1961 enacted in India for the years ended 31-Mar-2018 and 31-Mar-2017.

3 EMPLOYEE BENEFITS :

As per Indian Accounting Standard 19 “Employee benefits”, the disclosures as defined are given below :

The Company has various schemes for long term benefits such as provident fund, superannuation, gratuity and leave encashment. The Company’s defined contribution plans are Employees’ Provident fund and Pension Scheme (under the provision of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952) since the company has no further obligation beyond making the contributions.

A Defined Contribution Plans

Contribution to Defined Contribution Plans, recognised as expense for the year is as under

B Defined Benefit Plans

Disclosure Statement as Per Indian Accounting Standard 19

Defined Benefit Gratuity Plan (Funded)

The Company has a defined benefit gratuity plan in India (funded). The company’s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. The fund is managed by a trust which is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy.

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. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

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.

Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.

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.

Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance company and a default will wipe out all the assets. Although probability of this is very less as insurance companies have to follow regulatory guidelines.

During the year, the company has changed the benefit scheme in line with Payment of Gratuity Act, 1972 by increasing monetary ceiling from 10 Lakh to 20 Lakh. Change in liability (if any) due to this scheme change is recognised as past service cost.

A separate trust fund is created to manage the Gratuity plan and the contributions towards the trust fund is done as guided by rule 103 of Income Tax Rules, 1962.

Defined Benefit Privilege Leave Plan (Unfunded)

The company operates a defined Privilege Leave plan for certain specified employees and is payable upon the employee satisfying certain conditions, as approved by the Management.

The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognised in the balance sheet.

Terms and conditions of transactions with related parties

Transaction entered into with related party are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured, interest free and will be settled in cash. There have been no guarantees received or provided for any related party receivables or payables.

4 SEGMENT REPORTING:

The Group has only one principal operating and reporting segment; viz. Reclaim Rubber.

The accounting policies adopted for segment reporting are in line with the accounting policy of the Company with following additional policies for segment reporting.

a) Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and Expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as “Unallocable”.

b) Segment Assets and Segment Liabilities represent Assets and Liabilities in respective segments. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as “Unallocable”.

5 DISCLOSURE REQUIRED UNDER Section 186(4) OF THE COMPANIES ACT, 2013:

The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are as follows:

(i) Details of investment made are given in Note 3

(ii) Details of loans given by the Company are as follows:

(ii) 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.

6 FINANCIAL RISK MANAGEMENT - OBJECTIVES AND POLICIES

The Company’s financial liabilities comprise mainly of borrowings, trade payables and other payables. The Company’s financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.

The Company is exposed to Market risk, Credit risk and Liquidity risk. The Board of Directors (‘Board’) oversee the management of these financial risks through its Risk Management Committee. The Risk Management Policy of the Company formulated by the Risk Management Committee and approved by the Board, states the Company’s approach to address uncertainties in its endeavour to achieve its stated and implicit objectives. It prescribes the roles and responsibilities of the Company’s management, the structure for managing risks and the framework for risk management. The framework seeks to identify, assess and mitigate financial risks in order to minimize potential adverse effects on the Company’s financial performance.

The following disclosures summarize the Company’s exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks. Quantitative sensitivity analysis have been provided to reflect the impact of reasonably possible changes in market rates on the financial results, cash flows and financial position of the Company.

1) 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. Market risk comprises of interest rate risk and currency risk. Financial instruments affected by market risk includes borrowings, investments, trade payables, trade receivables, loans and derivative financial instruments.

a) Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimize the Company’s position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

b) Foreign Currency Risk

The company’s business objective includes safe-guarding its earnings against foreign exchange. The company has adopted a structured risk management policy to hedge all these risks within an acceptable risk limit and an approved hedge accounting framework which allows for Fair Value and Cash Flow hedges. Hedging instruments include forward instruments to achieve this objective.

(i) Exposure in foreign currency - Hedged

The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading or speculative purposes.

The forward exchange contracts used for hedging foreign currency exposure and outstanding as at reporting date are as under :

(iii) Sensitivity

The Company is mainly exposed to changes in EUR & USD. The below table demonstrates the sensitivity to a 5% increase or decrease in the EUR / USD against INR, with all other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the reporting date. 5% represents management’s assessment of reasonably possible change in foreign exchange rate.

c) Other Price Risks:

Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. Other price risk arises from financial assets such as investments in equity instruments. Company has invested in unquoted Equity Instruments and hence its exposure to change in market value is minimal.

2) Credit Risk:

Credit risk refers to a risk that a counterparty will default on its contractual obligation resulting in a financial loss to the Company. Credit risk primarily arises from financial asset such as trade receivables and Derivative financial instruments and other balances with banks, loans and other receivables. The Company exposure to credit risk in disclosed in note 8, 9, 10, 11 and 12. The Company has adopted a policy of only dealing with counterparties that have sufficient credit rating. The Company’s exposure and credit ratings of its counterparties are continuously monitored and the aggregate value of transaction is reasonably spread amongst the counterparties.

Credit risk arising from investment in derivative financial instrument and other balances with bank is limited and there is no collateral held against these because the counterparties are banks and recognised financial institution with high credit ratings assigned by international credit rating agencies.

The average credit period on sale of products and services is maximum of 60-90 days. Credit risk arising from trade receivables in managed in accordance with Company’s established policy, procedures, and controls relating to customer credit risk management. Credit quality of Customer is assessed and accordingly individual credit limit is defined. The concentration of credit risk is limited due to the fact that customer base is large.

3) Liquidity Risk:

Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.

The Company has an established liquidity risk management framework for managing its short term, medium term and long term funding and liquidity management requirements. The Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Company manages the liquidity risk by maintaining adequate funds in cash and cash equivalents. The Company also has adequate credit facilities agreed with banks to ensure that there is sufficient cash to meet all its normal operating commitments in a timely and cost-effective manner.

The table below analysis non-derivative financial liabilities of the Company into relevant maturity groupings based on the remaining period from the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

4) Hedge Accounting:

The company’s business objective includes safe-guarding its foreign currency earnings against movements in foreign exchange and interest rates. Company has adopted a structured risk management policy to hedge all these risks within an acceptable risk limit and an approved hedge accounting framework which allows for Fair Value and Cash Flow hedges. Hedging instruments consists of forwards to achieve this objective. The table below shows the position of hedging instruments and hedged items as of the balance sheet date.

Disclosure of effects of hedge accounting

A Fair Value Hedge

Hedging Instrument

7 CAPITAL MANAGEMENT

For the purpose of the Company’s capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value.

The gearing ratio at end of the reporting period was as follows.

8 APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved for issue by the board of directors on 26th May, 2018.

9 EVENTS AFTER THE REPORTING PERIOD

The Board of Directors have recommended dividend of Rs. 1.25 per fully paid up equity share of Rs. 10/- each, aggregating Rs. 20.09 Lakh, including Rs. 3.43 Lakh dividend distribution tax for the financial year 2017-18, which is based on relevant share capital as on March 31, 2018. The actual dividend amount will be dependent on the relevant share capital outstanding as on the record date / book closure.

10 FIRST TIME ADOPTION OF IND AS

For all periods up to and including the year ended 31st March, 2017, the Company had prepared its financial statements in accordance with the accounting standards notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (‘Previous GAAP’). This note explains the principal adjustments made by the Company in restating its financial statements prepared under Previous GAAP for the following

a) Balance Sheet as at 1st April, 2016 (Transition date);

b) Balance Sheet as at 31st March, 2017;

c) Statement of Profit and Loss for the year ended 31st March, 2017; and

d) Statement of Cash flows for the year ended 31st March, 2017.

EXEMPTIONS AVAILED:

Ind AS 101- First-time adoption of Indian Accounting Standards, allows first-time adopters, exemptions from the retrospective application and exemption from application of certain requirements of other Ind AS. The Company has availed the following exemptions as per Ind AS 101:

A The Company has elected to consider the carrying value of all its items of property, plant and equipment and intangible assets recognised in the financial statements prepared under Previous GAAP and use the same as deemed cost in the opening Ind AS Balance Sheet.

B The carrying amounts of the Company’s investments in its subsidiary and associate companies as per the financial statements of the Company prepared under Previous GAAP, are considered as deemed cost for measuring such investments in the opening Ind AS Balance Sheet.

C The requirements of Ind AS 20 - Accounting for Government Grants and Disclosure of Government Assistance and Ind AS 109 - Financial Instruments, in respect of recognition and measurement of interest free loans from government authorities is opted to be applied prospectively to all grants received after the date of transition to Ind AS. Consequently, the carrying amount of such interest free loans as per the financial statements of the Company prepared under Previous GAAP is considered for recognition in the opening Ind AS Balance Sheet.

Notes to the reconciliation of Balance Sheet as at 1st April, 2016 and 31st March, 2017 and Statement of Profit and Loss for the year ended 31st March, 2017

1 Investment Property

Under Indian GAAP, investment property were presented as a part of fixed assets. Under Ind AS, investment property is accounted separately, hence investment property is reclassified as at 31-Mar-2017 at Rs. 116.53 Lakh and 1-Apr-2016 at Rs. 114.21 Lakh .

2 Leasehold land reclassified to Non current Assets

Under previous GAAP, Leasehold land was included in the property, plant and equipment. Under IND AS, lease not classified as finance lease are regrouped under non current assets, as at 31-March-2017 and 1-Apr-2016. Depreciation to the extent of Rs. 0.45 Lakh and Rs. 0.45 Lakh respectively pertaining to the leasehold land has been reversed and same is expensed under the head ‘Rent, lease rent and other charges’. This has no impact on the statement of profit or loss or equity.

3 Short term provision - Reversal of equity dividend

Under previous GAAP, dividend on equity shares which was recommended by the board of directors after the end of the reporting period but before financial statement were approved for issue, were recognised in financial statement as liability. Under IND AS such dividend is recognised in the reporting period in which the same is approved by the members in a general meeting. The effect of these change has resulted in increase in total equity by Rs. 160.48 Lakh as at 1-Apr-2016, but does not have any impact for profit before tax and total profit for the year ended 31-Mar-2016.

4 Hedge Accounting

Under previous GAAP, premium or discount arising at the inception of the forward contract entered into to hedge an existing asset/ liability, is amortised as expenses or income over life of contract. Exchange difference on such contract are recognised in the statement of profit and loss. Under IND AS 109, derivatives with underline are accounted as fair value hedge and mark to market through profit and loss, derivatives without underline are accounted as cash flow hedge and mark to market under OCI.

5 Deferred Tax

In the financial statements prepared under Previous GAAP, deferred tax was accounted as per the income statement approach which required creation of deferred tax asset/liability on temporary differences between taxable profit and accounting profit. Under Ind AS, deferred tax is accounted as per the Balance Sheet approach which requires creation of deferred tax asset/liability on temporary differences between the carrying amount of an asset/liability in the Balance Sheet and its corresponding tax base.

The application of Ind AS 12 has resulted in recognition of deferred tax on new temporary differences which was not required to be recognised under Previous GAAP.

6 Excise duty

Under previous GAAP, revenue from sale of product was presented net of excise duty as revenue from operation, whereas under IND AS, revenue from sale of product includes excise duty. The corresponding excise duty was presented separately on the face of the statement of profit and loss. The change does not have any impact on total equity as at 1-Apr-2016 and profit before tax for the year ended 31-Mar-2017.

7 Remeasurement gain/(loss) of defined benefit plans

Under previous GAAP, actuarial gain or losses were recognised in profit and loss account. Under IND AS, the actuarial gain or losses forming part of remeasurement of net defined benefit liability /asset, are recognised in Other Comprehensive Income instead of profit and loss. The actuarial gain or losses for the year ended 31 March 2017 is Rs. 0.66 Lakh with tax effect of Rs. 0.22 Lakh. This change does not have any impact on total equity, but there is increase in Profit before tax of Rs. 0.66 Lakh and in total profit of Rs. 0.44 Lakh for year ended 31-Mar-2017.

8 Other Comprehensive Income

Under previous GAAP, there was no concept of other comprehensive income. Under IND AS specified items of income, expenses, gains and losses are presented as other comprehensive income.