1. RELATED PARTIES DISCLOSURES
(i) Relationships :
a) Holding Company
1 Kashipur Holdings Limited
b) Key Management Personnel (KMP):
2 Mr. R.K.Gupta
c) Other Related Parties with which Company has transactions:
(Enterprises over which the holding Company or the promoters of the holding company are able to exercise
significant influence)
1 India Glycols Limited (IGL)
2 IGL Infrastructures Pvt Ltd (IGL IPL)
3 Kashipur Infrastructures & Freight Terminal Pvt Ltd (KIFTL)
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 mainly three types of risk: interest rate risk, currency risk and other price risk such as commodity price risk.
(a) Foreign Currency Risk: Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The company is not having foreign currency trade payables and receivables and is therefore, not exposed to foreign exchange risk.
(b) Interest Rate Risk: Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Any changes in the interest rates environment may impact future rates of borrowing. The company mitigates this risk by regularly assessing the market scenario, interest rate negotiations with the lenders for ensuring the cost effective method of financing.
(c) Commodity Price Risk: The company is affected by the price volatility of certain commodities. its operating activities require the purchase of liquid industrial Gases. For commodity price risk, the company has an approved supplier base to get best competitive prices for the commodities and to assess the market to manage the cost without any compromise on quality.
2 Credit Risk: Credit risk is the risk that counterparty might not honor its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risk. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables.
Trade Receivables: Customer credit risk is managed based on company's established policy, procedures and controls. The company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.
For trade receivables Company applies 'simplified approach' which requires expected lifetime losses to be recognized from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analyzed.
Credit risk is reduced by receiving pre-payments and letter of credit to the extent possible. The company has a well-defined sales policy to minimize its risk of credit defaults. Outstanding customer receivables are regularly monitored and assessed. impairment analysis is performed based on historical data at each reporting date on an individual basis.
3 Liquidity Risk: Liquidity risk is the risk, where the company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The company's approach is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due.
4. CAPITAL MANAGEMENT
The company's policy is to maintain an adequate capital base so as to maintain creditor and market confidence and to sustain future development. capital includes issued capital, share premium and all other equity reserves attributable to equity holders. The primary objective of the Company's capital management is to maintain an optimal structure so as to maximize the shareholder's value. In order to strengthen the capital base, the company may use appropriate means to enhance or reduce capital, as the case may be.
The company is not subject to any external imposed capital requirement. The company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Net Debt is calculated as borrowings less cash and cash equivalents.
5. OPERATING SEGMENTS
As the Company's business activity primarily falls within a single business and geographical segment i.e. Gas Business , thus there are no additional disclosures to be provided under Ind AS 108 - "Operating Segment". The management considers that the various goods and services provided by the Company
constitutes single business segment since the risk and rewards are not different from one another.
6. FAIR VALUES
Set out below, is a comparison by class of the carrying amounts and fair value of the financial instruments of the company:
The following methods and assumptions were used to estimate the fair values:
1. Cash and short-term deposits, trade receivables, loans, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
2. Other non-current receivables are evaluated by the company, based on parameters such as interest rates, individual credit worthiness of the counterparty etc. Based on this evaluation, allowances are considered to account for the expected losses of these receivables. As at end of each reporting year, the carrying amounts of such receivables, net of allowances (if any), are not materially different from their calculated fair values.
3. Fair value of investments in quoted mutual funds and equity shares are based on quoted market price at the reporting date.
4. Fair value of borrowings from banks and other non-current financial liabilities, are estimated by discounting future cash flows using rates currently available for debt on similar terms and remaining maturities.
5. The fair values of derivatives are calculated using the RBI reference rate as on the reporting date as well as other variable parameters.
Fair Value Hierarchy
All financial assets and liabilities for which fair value is measured in the financial statements are categorized within the fair value hierarchy, described as follows:
Level 1 - Quoted prices in active markets.
Level 2 - inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly. Level 3 – inputs that are not based on observable market data.
During the year ended March 31st, 2018 and March 31st, 2017, there were no transfers between Level 1 and Level 2 fair value measurements and no transfer into and out of Level 3 fair value measurements.
7. Public Sector Oil Companies i.e. IOCL,HPCL, BPCL, and IBP had reduced in the earlier years, the price of LPG cylinders with retrospective effect i.e. from 01.07.1999. The oil companies after reduction in prices had withheld in aggregate Rs. 3,24,56,427/- from the supply bills of the Company. The company is contesting this reduction in price of Cylinders before the appropriate authorities. However since the matter had become very old and after considering the principles of financial prudence the entire amount was written off in the books of accounts in earlier years. As the matter of prudence, the entire amount is provided for and written off without prejudice to the right of recovery through legal process.
8. Events Occurring after the Balance Sheet
The company after the Balance Sheet data (31.03.2018) has entered into an agreement to sell its Land and Building situated at Faridabad Unit. However the Company will continue to operate its current line of business from nearby location to be taken on rent.
9. RECONCILIATIONS Overall principle
These are the Company's first financial statement prepared in accordance with Ind AS, accordingly the Company has prepared the opening Balance Sheet as per Ind AS at of April 1, 2016 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities.
The following reconciliations provide a quantification of the effect of significant differences arising as a result of transition from Previous GAAP to ind AS in accordance with ind AS 101:
- Reconciliation of Equity as at April 01, 2016 (date of transition to Ind-AS)
- Reconciliation of Equity as at March 31, 2017
- Reconciliation of Statement of Profit and Loss for the year ended 31st March, 2017
- Notes to Reconciliation of Equity as at April 01,2016 & March 31,2017 and Statement of Profit and Loss for the year ended 31st March, 2017
Notes to Reconciliation of Equity as at April 01,2016 & March 31,2017 and Statement of Profit and Loss for the year ended 31st March, 2017
A. Property, Plant and Equipment (PPE)- Fair Value as Deemed cost in Ind AS
Ind AS 101 permits first time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in financial statement as at date on transition to Ind AS , measured as the previous GAAP and use that as its deemed cost as at date of transition. Accordingly Company has elected to measure all of its Property, Plant and Equipment at their previous GAAP carrying value .
B. Investments other than investment in Subsidiary and joint venture
Under Indian GAAP non-current investments other than investment in subsidiary, joint venture are measured at cost less any permanent diminution in value of investment. Difference between the cost and market price is recognized in profit and loss. Under Ind AS, investments are designated as fair value through profit and loss (FVTPL)
On the transition date the Investments in Quoted Shares have been measured at their fair value which is less than the cost as per previous GAAP, resulting in increase in carrying amount by Rs.2.70 Lakhs as at transition date with resulting gain adjusted in retained earnings.
C. Fair valuation of financial assets and liabilities
Under Indian GAAP, receivables and payables were measured at transaction cost less allowances for impairment, if any. Under Ind AS, these financial assets and liabilities are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less allowance for impairment, if any. The resulting finance charge or income is included in finance expense or finance income in the Statement of Profit and Loss for financial liabilities and financial assets respectively.
D. Redeemable Cumulative/Non-Cumulative Preference Shares
The Company had issued Redeemable Cumulative/Non-Cumulative Preference Shares. The Preference shares carry fixed dividend which is at the discretion of the Company. Under Indian GAAP, the Preference shares were classified as equity and dividend payable thereon, if any, was treated as distribution of Profit.
Under Ind-AS , these Preference Shares are separated into liability and equity based on the terms of the contract. Interest on liability component is recognized using effective interest rate method. Thus the preference share capital is reduced by Rs. 237.90 Lakhs as at March 31,2017 and Rs. 237.90/- Lakhs as at April 1,2016 with a corresponding increase in Borrowings as liability and tax component.
E. Deferred Tax
Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base.
The various transitional adjustments lead to temporary differences. Accordingly the Company has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction in Retained Earnings. The net impact on deferred tax assets is Rs.133.57 Lakhs as on the date of transition and net impact on deferred tax assets is Rs.106.80 Lakhs for the year ended March 31,2017.
F. Defined benefit obligations
The impact of change in actuarial assumption and experience adjustments for defined benefit obligation towards gratuity liability is accounted in the Statement of Other Comprehensive Income and corresponding tax impact on the same. Due to this, Rs.0.70 lakhs (Net of deferred tax) for the period ended March 31, 2017, tax credit thereon is shown in OCI and reversal in Statement of Profit and loss.
G. MAT Credit Entitlement
Mat credit entitlement has been reclassified to Deferred Tax Assets as per Ind AS. Therefore Rs. 23.35 lakhs and Rs. 65.73 lakhs have been reclassified from MAT credit to Deferred Tax Assets on the date of transition on April 1,2016 and March 31,2017 Respectively.
10. The impact of transition from Indian GAAP to Ind AS on the Statement of Cash Flows is due to various reclassification adjustments recorded under Ind AS in Balance Sheet and Statement of Profit & Loss.
11. (i) Figures Relating to April 1, 2016 (date of transition) and previous year have been restated / regrouped / reclassified wherever necessary to make them comparable with the current year figures.
(ii) Previous year figures were audited by another firm of Chartered Accountants.
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