A. Corporate Information:
EPC Industrie Limited is a Public Limited Company listed on the Bombay Stock Exchange Limited. It was incorporated on November 28, 1981 under the Companies Act, 1956. It is engaged in the business of Micro Irrigation Systems such as Drip and Sprinklers, Agricultural Pumps, Greenhouses and Landscape Products. The Company is a subsidiary of Mahindra and Mahindra Limited.
Rights, preferences and restrictions attached to equity shares
The Company is having only one class of equity shares having par value of Rs. 10 each. Each holder of equity share is entitled to one vote per share. In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.
Note:
Loans repayable on demand is secured by way of first charge on entire stock and debtors of the Company both present and future. The above loan is also secured by way of second charge on fixed assets.
The Interest rate is 9.85%
Warranty Claims:
Provision for warranty represents present value of management’s best estimate of the future outflow of economic benefits that will be required in respect of sale of certain products, the estimated cost of which is accrued at the time of sale. Management estimates the related provision for future warranty claims based on historical warranty claim information and is adjusted regularly to reflect new information. The products are generally covered under a free warranty period ranging from 6 months to 5 years. It is expected that most of these costs will be incurred in the next two financial years and all will have been incurred within five years after the reporting date.
Pursuant to the “Employees Stock Option Scheme - 2014” (ESOS) approved by the Shareholders in the Annual General Meeting held on July 31, 2014, the Company had granted 80,424, 3,228, 1,33,432 and 11,129 stock options to the eligible employees on October 28, 2014, October 31,2015 , November 22,2016 and November 22,2017 respectively as per the recommendations of the Nomination and Remuneration Committee, at an exercise price of Rs 10/- each. In respect of the options granted in 2014, 2016 and 2017 the equity settled options vest in 5 tranches of 20% each upon the expiry of 12 months, 24 months, 36 months, 48 months and 60 months respectively from the date of grant. Each tranche is exercisable within one year from the respective date of vesting. The number of options exercisable in each tranche is minimum 20% of the options vested, except in case of the last date of the exercise, where the employee can exercise all options vested but not exercised till that date. In respect of options granted in 2015, the equity settled options vest in 4 tranches of 25% each upon the expiry of 12 months, 24 months, 36 months and 48 months respectively from the date of grant. Each tranche is exercisable within one year from the respective date of vesting. The number of options exercisable in each tranche is minimum 25% of the options vested, except in case of the last date of the exercise, where the employee can exercise all options vested but not exercised till that date.
Expected volatility has been based on an evaluation of the historical volatility of the Company’s share price, particularly over the historical period commensurate with the expected term. The expected term of the instruments has been based on historical experience and general option holder behaviour.
The Holding Company has recovered Rs. 0.23 lakhs (March 31, 2017 Rs. 1.55 lakhs ) as ESOP cost from the Company in respect of employees deputed to the Company.
Note No. 1 - Financial Instruments I Capital management
The company’s capital management objectives are:
- to ensure the company’s ability to continue as a going concern.
- to provide an adequate return to shareholders by pricing products and services commensurate with the level of risk.
The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of the statement of financial position.
The Company sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
Financial Risk Management Framework
The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk. In order to manage the aforementioned risks, the Company operates a risk management policy and a program that performs close monitoring of and responding to each risk factors.
CREDIT RISK
Credit risk management
Credit risk arises when a counterparty defaults on its contractual obligations to pay, resulting in financial loss to the Company. The company has dealings with government organisation for subsidy related transaction and with private parties. For private non government parties credit limits are set quarterly. The Company has adopted a policy of only dealing with creditworthy non government parties and obtaining security cheques, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company’s exposure and credit worthiness of such parties are continuously monitored and controlled by counterparty limits that are reviewed by Credit Control function based on the approved process.
No interest is charged on overdue balance.
Trade receivables consist of a large number of customers, spread across geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable. There are no non government customers who represent more than 5% of the total balance of trade receivable.
The Company applies the simplified approach to provide expected credit losses prescribed by Ind AS 109, which permits the use of the lifetime expected loss provision for all trade receivables. The Company has computed expected credit losses based on a provision matrix which uses historical credit loss experience of the Company and individual receivable specific provision where applicable. Forward-looking information (including macroeconomic information) has been incorporated into the determination of expected credit losses. The Company has taken dealer deposit of Rs. 428.75 lakhs (March 31, 2017 Rs. 396.82 lakhs) and bank guarantees of Rs. 50.25 lakhs (March 31,2017 Rs. 91 lakhs) which is considered as collateral and these are considered in determination of expected credit losses, where applicable.
LIQUIDITY RISK
(i) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Company’s short - medium- and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
(ii) Maturities of financial liabilities
The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows.
To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.
(iv) Maturities of financial assets
The following table details the Company’s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company’s liquidity risk management as the liquidity is managed on a net asset and liability basis.
MARKET RISK
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk such as equity price risk and commodity price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
There has been no significant changes to the company’s exposure to market risk or the methods in which they are managed or measured.
Currency Risk
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. As at the year end, there were no material foreign currency exposure.
NOTE NO. 2 - FAIR VALUE MEASUREMENT
a) The directors consider that the carrying amounts of financial assets and financial liabilities that are not measured at fair value, recognised in the financial statement approximate their fair values.
NOTE NO. 3 - SEGMENT INFORMATION
The Company is engaged in the business of Precision Farming Products and Services and in a single geography viz, India. The Information reported to the chief operating decision maker (CODM) [Viz, The Managing Director] for assessment of performance of business and allocation of resources is under this segment.
Accordingly, The Company has identified a single segment under Ind AS 108 -’’Operating Segments”.
There is no single customer who accounts for 10% more of the company revenues.
Refer Note 19 for the analysis of revenue from it major products and services.
NOTE NO. 4 - EMPLOYEE BENEFITS
(a) Defined Contribution Plan
The Company’s contribution to Provident Fund Rs. 75.65 lakhs (year ended March 31, 2017 : Rs.75.47 lakhs) and Superannuation Fund Rs. 28.28 lakhs (year ended March 31, 2017 : Rs.18.74 lakhs) has been recognised in the Statement of Profit or Loss under the head Employee Benefits Expense.
(b) Defined Benefit Plans:
The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company makes annual contribution to the group gratuity scheme administered by the Life Insurance Corporation of India.
Through its defined plans the Company is exposed to a number of risks, the most significant of which are detailed below:
Asset Volatility
The plan liabilities are calculated using a discount rate set with reference to government bond yields; if plan assets under perform compared to the government bond discount rate, this will create or increase a deficit. The defined benefit plans hold on investment with LIC, which are expected to perform in line with government bonds in the long-term.
The company believes that due to the long-term nature of the plan liabilities, investments of funds with LIC is an appropriate element of the Company’s long term strategy to manage the plans efficiently.
Changes in bond yields
A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the plan assets.
Life expectancy
The plan’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plan’s liabilities.
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the Balance sheet.
NOTE NO. 5 -
The Director Horticulture, Pune, Maharashtra has vide letter dated September 26, 2017, registered the Company for five years from 2017-18 under the MIS schemes thereby making the Company eligible to participate in subsidy related business in the State.
NOTE NO. 6 -
The Board has recommended a dividend of Rs.0.50 per equity share, subject to the approval of shareholders of the Company at the forthcoming Annual General Meeting scheduled to be held on 31st July, 2018.
NOTE NO. 7 - NATURE OF RESERVES
Securities Premium Account- The Securities Premium is created on issue of shares at a premium.
General Reserve - The general reserve comprises of transfer of profits from retained earnings for appropriation purposes. The reserve can be distributed/utilised by the Company in accordance with the Companies Act, 2013.
Note No. 8 - Event occuring after the Reporting Period
No material events have occured between the Balance sheet date and before the approvals of financials statements by Board of Directors.
Note No. 9 - Previous year’s figures
Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure. Note No. 40 - Approval of financial statements
The financial statements of the Company were approved by the Board of Directors and authorised for issue on May 03, 2018.
|