Moneycontrol Be a Pro
Get App
SENSEX NIFTY
Moneycontrol.com India | Notes to Account > Pharmaceuticals > Notes to Account from Abbott India - BSE: 500488, NSE: ABBOTINDIA
YOU ARE HERE > MONEYCONTROL > MARKETS > PHARMACEUTICALS > NOTES TO ACCOUNTS - Abbott India

Abbott India

BSE: 500488|NSE: ABBOTINDIA|ISIN: INE358A01014|SECTOR: Pharmaceuticals
SET ALERT
|
ADD TO PORTFOLIO
|
WATCHLIST
LIVE
BSE
Dec 09, 16:00
12753.75
-48.75 (-0.38%)
VOLUME 200
LIVE
NSE
Dec 09, 15:59
12763.05
-38.25 (-0.3%)
VOLUME 11,885
Mar 18
Notes to Accounts Year End : Mar '19

1 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company’s financial statements in conformity with Ind AS requires management to make judgments, 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. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances existing when the financial statements were prepared. The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates is recognized in the year in which the estimates are revised and in any future year affected.

ESTIMATES AND ASSUMPTIONS

The key assumptions concerning the future and other key sources of estimation at the reporting date, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Provision for sales return and date expiry

The Company as per trade practice accepts returns from market which are primarily in the nature of expired or near expiry products. Provisions for such returns are estimated on the basis of historical experience and market conditions and are provided for accordingly. Also refer Note 24.

Useful lives of property, plant and equipment

The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods. Refer Note 2(f) for management estimate of useful lives.

Defined benefit plans (Gratuity benefits)

The cost of the defined benefit gratuity plan and other post employment medical benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post employment benefit obligation.

The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increase and gratuity increase are based on expected future inflation rates in the country.

Further details about gratuity obligations are given in Note 37.

Share based compensation to employees

The fair value of restricted stock units plan is measured at the date of grant using the Black Scholes option pricing model. The estimate also requires determination of the most appropriate inputs to the valuation model, including the volatility, dividend yield, risk free interest rates, expected life of share option etc., which are disclosed in the Note 38.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using appropriate valuation techniques. The inputs for these valuations are taken from observable sources where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of various inputs including liquidity risk, credit risk, volatility etc. Changes in assumptions/judgments about these factors could affect the reported fair value of financial instruments. Also refer Note 43.

Provision for inventories

Provision is made in the financial statements for slow and non-moving items based on estimates regarding their usability. Further for finished goods and stock-in-trade, all inventories expiring within six months and not expected to be sold, have been fully provided for. Also refer Note 8.

Impairment of trade receivables

For the purpose of measuring lifetime expected credit loss allowance of trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information. The loss allowance for other financial assets are based on assumptions about risk of default. The Company uses judgments in making these assumptions based on its past history, existing market conditions and certainty of realization. Also refer Note 9.

Impairment of other financial assets

The loss allowance for other financial assets are based on assumptions about risk of default. The Company uses judgments in making these assumptions based on its past history, existing market conditions and certainty of realisation. Also refer Note 6 and 13.

2. EMPLOYEE BENEFITS

(a) Defined contribution plans

i) Provident Fund/Employees’ Pension Fund

ii) Employees’ State Insurance

iii) Superannuation Fund

iv) Employees’ Deposit Linked Insurance Scheme

v) Group Life Insurance Cover

(b) Defined Benefit Plans

i. Gratuity: (Included as part of contribution to provident and other funds in Note 30 - Employee benefits expense)

Gratuity is payable to all eligible employees of the Company on retirement, death, permanent disablement and resignation in terms of the provision of the Payment of Gratuity Act, 1972, or Company’s Scheme whichever is more beneficial. Benefits would be paid at the time of the separation based on employees’ salary and tenure of employment with the Company.

ii. Post Retirement Medical Benefits (PRMB): (Included as part of staff welfare expenses in Note 30 - Employee benefits expense)

Under this scheme, select group of senior employees and their spouse are covered for hospitalization benefits after the employee has retired from the Company. The cover is available to these beneficiaries until they are alive. The Company has procured a group hospitalization cover from an insurance company for providing these benefits to these beneficiaries.

iii. Long Service Benefits (LSB) :(Included as part of salaries and wages in Note 30 - Employee benefits expense)

Under this scheme, long service benefits accrues to the employee, while in service and is payable upon completion of stipulated service with the Company.

The average duration of the defined benefit plan obligation at the end of the reporting period for Gratuity is 6.76 years (March 31, 2018 : 5.65 years) and for PRMB is 7.58 years (March 31, 2018 : 8.12 years).

Notes:

(i) The actuarial valuation of plan assets and the present value of the defined benefit obligation were carried out as at March 31,2019. T he present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

(ii) Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.

(iii) The salary escalation rate is arrived after taking into consideration the seniority, the promotion and other relevant factors such as, demand and supply in employment market.

I 38 SHARE BASED COMPENSATION TO EMPLOYEES

a) International Stock Ownership Plan (Stocks of Abbott Laboratories, USA, being Ultimate Holding Company)

Abbott Laboratories, LISA has an Affiliate Employee Stock Purchase Plan’ (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of Abbott Laboratories, LISA. Every employee who opts for the scheme contributes, by way of payroll deductions, up to 10% of his cash remuneration (i.e. basic salary for officers and basic salary and dearness allowance for staff category) towards purchase of shares on a monthly basis over the purchase cycle of six months.

The maximum that an employee can contribute to the plan is LIS $ 12,500 per purchase cycle or LIS $ 25,000 per calendar year. At the end of the cycle, accumulated payroll deductions are used to purchase shares at a discounted price. The purchase price of the share is 85% of the lesser of fair market value either on the first or last day of the purchase cycle. The shares of Abbott Laboratories, LISA are listed with the New York Stock Exchange, LISA and are purchased on behalf of the employees at market price less discount, allocated to participants as of last day of the purchase cycle. The concession in the price of the shares is entirely borne by Abbott Laboratories, LISA.

During the year ended March 31,2019,15,088 shares (March 31,2018 :17,811 shares) were purchased by employees at weighted average fair value of US $ 53.98 (March 31, 2018 : LIS $ 38.71) per share.

b) Employees Stock Options Plan (Stocks of Abbott Laboratories, USA, being Ultimate Holding Company)

Abbott Laboratories, LISA has an ‘Incentive Stock Option Program’ whereby specified employees of its subsidiaries covered by the plan are granted an option to purchase shares of Abbott Laboratories, LISA at a fixed price (grant price), which shall be at least 100% of the fair market value of the common share for a fixed period of time. All the options under this scheme have vested before April 1, 2015, and hence, as per the exemption availed in Ind AS 101 ‘First-time adoption of Indian Accounting Standards’, no options compensation expenses are incurred by the Company during the year. The shares of Abbott Laboratories, LISA are listed with the New York Stock Exchange, LISA. The grants issued are vested in one third installments over a three year period and have a 10 years contractual life.

The weighted average share price at the date of exercise for stock options exercised during the year was US $ NIL (March 31, 2018 : LIS $ 76.57) and weighted average remaining contractual life is NIL year (March 31, 2018 : NIL year).

The average exercise price for options outstanding at the end of the year was US $ NIL (March 31,2018 : LIS $ NIL).

During the year, Rs, NIL Lakhs (March 31, 2018 : Rs, 83.03 Lakhs) withholding taxes has been deposited with tax authorities against excercised options.

c) Employees Restricted Stock Options Plan (Stocks of Abbott Laboratories, USA, being Ultimate Holding Company)

Abbott Laboratories, LISA as part of the ‘Long-Term Incentive Program’ has offered Restricted Stock LInits (RSLIs) to specified employees of its subsidiaries, whereby the employees covered by the plan are granted units. The units when vested, become shares of Abbott Laboratories, LISA at a NIL Cost. T he shares of Abbott Laboratories, LISA are listed with the New York Stock Exchange, LISA. The grants issued are vested in one third installments over a three year period. Pursuant to Ind AS 102 ‘Share-based Payment’, the fair value of the RSLIs have been recorded by the Company. The fair value of the RSLIs is estimated at the grant date using Black Scholes Option Pricing Model, taking into account the terms and conditions upon which such RSLIs were granted.

T he expected life of the RSLIs is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.

During the year, Rs, 4,32.79 Lakhs (March 31,2018 : Rs, 2,91.71 Lakhs) withholding taxes has been deposited with tax authorities against exercised options.

3. COMMITMENTS AND CONTINGENCIES

a. Leases

(i) Operating lease commitments - Company as lessee

The Company has obtained various residential/office premises (including furniture and fittings, therein as applicable) under operating lease or leave and licence agreements. These generally range between 11 months to 5 years under leave and licence, or longer for other leases and are renewable by mutual consent on mutually agreeable terms. Some of the lease agreements have price escalation clause. The Company has given refundable interest free security deposits in accordance with the agreed terms. There are no restrictions imposed by these arrangements.

Lease payments are recognized in the Statement of Profit and Loss under ‘Rent’.

There are no sub-leases.

(ii) Operating lease commitments - Company as lessor

The Company has recognized rent income from leasing of a property amounting to Rs, 1,14.53 Lakhs (March 31,2018: Rs, 28.63 Lakhs) in the Statement of Profit and Loss under ‘Other income’ (Refer Note 26). The lease agreement is of cancellable nature.

c. Contingent liabilities

Claims against Company not acknowledged as debts

(i) In February 1996, the Government had made a tentative claim for a sum of Rs, 11,11.66 Lakhs to be paid into the Drugs Prices Equalization Account (DPEA) on account of unintended benefit allegedly enjoyed by the Company during the period May 1, 1981 to August 25, 1987. This was contested by the Company and subsequently during the year ended November 30, 2005, a final demand was received for Rs, 3,46.64 Lakhs (including interest of Rs, 1,90.39 Lakhs upto March 31, 2004). The Company, being aggrieved of the said demand and based on legal advice obtained in this regard, contested the above final demand of Rs, 3,46.64 Lakhs and filed a writ petition before the Bombay High Court to restrain the government from recovering the said amount. The Bombay High Court has admitted the writ petition and granted stay of the recovery of the amount subject to the Company famishing a bank guarantee in respect of the principal amount of Rs, 1,56.25 Lakhs. The said bank guarantee has been furnished. The Company however, out of abundant caution and based on its understanding of the facts and circumstances of the case provided for a sum of Rs, 1,15.68 Lakhs (March 31,2018 : Rs, 1,11.78 Lakhs) including interest liability till date.

It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgments/decisions pending with various forums/authorities.

(iii) There are various interpretative issues relating to the Supreme Court (SC) judgment dated February 28, 2019 on provident fund. Though the Company has made a provision on a prospective basis from the date of the SC order, it will update its provision on receiving farther clarity on the subject.

4. SEGMENT REPORTING

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assessing performance. The Company’s chief operating decision maker is the Managing Director and the Company has only one reportable business segment i.e. ‘Pharmaceuticals’.

5. RELATED PARTY DISCLOSURE

A) Parties where control exists :

Ultimate Holding Company: Abbott Laboratories, LISA Holding Company: Abbott Capital India Ltd., LI.K.

B) Other related parties with whom transactions have taken place during the year:

I) Fellow subsidiaries:

British Colloids Ltd., LI.K.

Abbott Healthcare Products Ltd., LI.K.

Abbott Healthcare Private Ltd., India

Abbott International LLC, LISA

Abbott Products Operations AG., Switzerland

Abbott Laboratories (Singapore) Pte Ltd., Singapore

Abbott Manufacturing Pte Ltd., Singapore

Abbott GmbH & Co. K.G., Germany

Alere Medical Private Limited, India

Abbott Laboratories S.A., Switzerland

Abbott Laboratories S.A., Dubai

II) Key management personnel:

Mr. Ambati Venu, Managing Director

Mr. Rajiv Sonalker, Whole-time Director (w.e.f. August 8, 2017)

Mr. Munir Shaikh, Chairman

Mr. Rajendra Shah, Independent Director (ceased to be the Director effective close of business hours on March 31,2019) Mr. Ranjan Kapur, Independent Director (ceased to be the Director effective January 27, 2018 due to demise)

Mr. Krishna Mohan Sahni, Independent Director

Ms. Anisha Motwani, Independent Director (w.e.f. April 25, 2018)

* During the year, as a part of the ‘Long-Term Incentive Program’, Restricted Stock LTnits of Abbott Laboratories, LISA carrying perquisite value of Rs, 2,69.88 Lakhs (March 31,2018 : Rs, 1,23.72 Lakhs) have been granted to the above employees. (Also refer Note 38(c)).

Also, provision for post employment benefits as contribution to gratuity fund, leave encashment on retirement and other defined benefits which are made based on actuarial valuation on an overall company basis are not included in remuneration to key management personnel.

* The above loan is guaranteed by Abbott Laboratories, LISA i.e. the Ultimate Holding Company.

Terms and conditions of transactions with related parties:

All transactions with related parties are made in the ordinary course of business and the same is at arm’s length. Outstanding balances at the year end are unsecured and settlement occurs in cash. The Company has not recorded any impairment for receivables. This assessment is undertaken each financial year through examining the financial position of the related parties and the market in which related parties operate.

6. DISCLOSURE PURSUANT TO SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) AND SECTION 186 (4) OF THE COMPANIES ACT, 2013 :

During the year ended March 31, 2019, the Company had rolled over the loan of Rs, 200,00.00 Lakhs which was granted to Alere Medical Private Limited, India, a fellow subsidiary on December 26, 2017, for a farther period of six months effective June 27, 2018, at an interest rate of 10% per annum in accordance with the provisions of Section 186 of the Companies Act, 2013 and Rules made there under, for the purpose of working capital funding requirement. The same was guaranteed by Abbott Laboratories, LISA i.e. the Ultimate Holding Company. The said loan was repaid by Alere Medical Private Limited, India, on November 15, 2018 with outstanding interest up to that date.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2 : Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly

Level 3 : Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data

The fair values of the foreign exchange forward contract has been determined using valuation techniques with adequate observable inputs. This model incorporate various inputs including the credit quality of counter parties and foreign exchange forward rates.

Description of significant unobservable inputs to valuation (Level 3):

The following table shows the valuation techniques and inputs used for financial instruments that are not carried at fair value:

A one percentage point change in the unobservable inputs used in fair valuation of level 3 assets or liabilities does not have significant impact in its value.

7. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s activities expose it to variety of financial risks namely market risk, credit risk and liquidity risk. The Company has various financial assets such as deposits, trade and other receivables and cash and bank balances directly related to their business operations. The Company’s principal financial liabilities comprise of trade and other payables.

The Company’s senior management’s focus is to foresee the unpredictability and minimize potential adverse effects on the Company’s financial performance. The Company’s overall risk management procedures to minimise the potential adverse effects of financial market on the Company’s performance are as follows :

a) 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 three types of risks namely interest rate risk, currency risk and other price risk such as commodity risk. The Company is not exposed to other price risk whereas the exposure to currency risk and interest risk is given below:

(i) 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 rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s deposit accounts with banks.

Fair value sensitivity analysis for fixed rate instruments:

The Company’s investments are primarily in fixed rate interest bearing investments. Hence, the Company is not significantly exposed to interest rate risk.

(ii) 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 and arises where transactions are done in foreign currency. It arises mainly where receivables and payables exist due to transactions entered in foreign currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies including use of derivatives like foreign exchange forward contracts to hedge foreign currency risk. The Company does not enter into financial instrument transactions for trading or speculative purposes. Unhedged exposure at any point of time during the year is not material.

Foreign currency sensitivity

The following table demonstrate the sensitivity to a reasonably possible change in foreign exchange rates, being the most transacted currencies with all other variables held constant. The exchange rate between Rupee and other foreign currencies have changed substantially in the recent years and may fluctuate substantially in the future. Consequently the results of the Company’s operations could be affected as the Rupee appreciates/depreciates against these currencies.

b) 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. Concentration of credit risk arises when counter parties are engaged in similar business activities or have similar economic features that would cause the ability to meet contractual obligations to be similarly affected by changes in economical, political or other conditions. Concentration of credit risk indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry.

Credit risk of company arises principally from the trade debts, loans and advances, trade deposits, other recievables and balance with banks. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was Rs, 2093,80.87 Lakhs as at March 31,2019 (March 31,2018: Rs, 1578,21.18 Lakhs). Customer credit risk is managed for each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Further, significant sales of the Company are against advance payment/collection on delivery terms. Outstanding customer receivables are regularly monitored and any shipments to new overseas customers are generally covered by letters of credit or other forms of credit insurance. The management continuously monitors the credit exposure towards the customers and makes provision against those balances considered doubtful of recovery.

The management believes that no farther provision is necessary in respect of trade receivables based on historical trends of these customers. Further, the Company’s exposure to customers is diversified and no single customer has significant contribution to trade receivables balances.

The credit risk on liquid funds such as balances with banks in current and deposit accounts is limited because the counter parties are banks with reasonably high credit ratings.

Financial assets other than trade receivables and bank balances are not exposed to any material credit risk,

c) Liquidity risk

Liquidity risk is the risk that company will not be able to meet its financial obligations as they fall due. Liquidity risk arises because of the possibility that the company could be required to pay its liabilities earlier than expected or encounters difficulty in raising funds to meet commitments associated with financial liabilities as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. T he Company manages liquidity risk by maintaining sufficient cash and bank balance and availability of funding through adequate amount of committed credit facilities.

8. CAPITAL MANAGEMENT

For the purpose of the Company’s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital managements to safeguard the Company’s ability to remain as a going concern and maximize the shareholders value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions, annual operating plans and long-term and other strategic investment plans. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The current capital structure of the Company is equity based with no financing through borrowings. The Company is not subject to any externally imposed capital requirements.

No changes were made in the objectives, policies or processes for managing capital during the year ended March 31,2019 and March 31, 2018.

9. RECENT ACCOUNTING PRONOUCEMENTS

The standards issued, but not yet effective up to the date of issuance of the Company’s financial statements is disclosed below. The Company shall adopt this standard when it becomes effective.

Ind AS 116 Leases :

Ind AS 116 Leases was notified by Ministry of Corporate Affairs (“MCA”) on March 30, 2019 and it replaces Ind AS 17 Leases, including appendices thereto. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-Balance Sheet model similar to the accounting for finance leases under Ind AS 17. The standard requires a lessee to recognize assets and liabilities for all leases with a term of more than twelve months, unless the underlying lease is of low value. Currently, operating lease expenses are charged to Statement of Profit and Loss. The standard also contains enhanced disclosure requirements for lessees. Less or accounting under Ind AS 116 is substantially unchanged from today’s accounting under Ind AS 17. Lessors will continue to classify all leases using the same classification principle as in Ind AS 17 and distinguish between two types of leases : operating and finance leases.

Ind AS 116 is effective for annual periods beginning on or after April 1,2019. The standard permits two possible methods of transition:

- Full retrospective - Retrospectively to each prior period presented applying Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors.

- Modified retrospective - Retrospectively, with the cumulative effect of initially applying the standard recognized at the date of initial application.

Linder modified retrospective approach, the lessee records the lease liability as the present value of the remaining lease payments, discounted at the incremental borrowing rate and right of use asset either as :

- Its carrying amount as if standard had been applied since the commencement date, but discounted at lessee’s incremental borrowing rate of initial application or

- An amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments related to that lease recognized under Ind AS 17 immediately before the date of initial application.

Certain practical expedients are available under both the methods.

The Company is proposing to use the “Modified retrospective Approach” for transitioning to Ind AS 116, and take the cumulative adjustment to retained earnings, on the date of application of Standard. Accordingly, comparatives for the year ended March 31, 2019 will not be retrospectively adjusted. The Company has elected certain available practical expedients on transition. Based on the preliminary evaluation, the adoption of this standard is not likely to have a material impact in the financial statements.

Appendix C to Ind AS 12 Uncertainty over income tax treatments :

On March 30,2019, Ministry of Corporate Affairs (“MCA”) has notified Ind AS 12 Appendix C, L Uncertainty over income tax treatments which is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. According to the appendix, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.

The standard permits two possible methods of transition:

i) Full retrospective approach - Under this approach, Appendix C will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, without using hindsight and

ii) Retrospectively with cumulative effect of initially applying Appendix C recognized by adjusting equity on initial application, without adjusting comparatives.

The effective date for adoption of Ind AS 12 Appendix C is annual periods beginning on or after April 1, 2019. The Company will adopt the standard on April 1, 2019.

The Company believes there would be no impact on its financial statements on adoption of Ind AS 12 Appendix C.

Amendment to Ind AS 12 Income taxes:

On March 30, 2019, Ministry of Corporate Affairs (“MCA”) issued amendments to the guidance in Ind AS 12 ‘Income Taxes’, in connection with accounting for dividend distribution taxes.

The amendment clarifies that an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events. Effective date for application of this amendment is annual period beginning on or after April 1, 2019.

Amendment to Ind AS 19 plan amendment, curtailment or settlement:

On March 30,2019, Ministry of Corporate Affairs (“MCA”) issued amendments to Ind AS 19 ‘Employee Benefits’, in connection with accounting for plan amendments, curtailments and settlements.

The amendments require an entity:

- to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement; and

- to recognize in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognized because of the impact of the asset ceiling.

Effective date for application of this amendment is annual period beginning on or after April 1, 2019.

10. The Company has bank overdraft arrangement secured by hypothecation of all stocks and book debts, against which there are no borrowings.

11.Previous year’s figures have been regrouped/reclassified to conform to the current year’s classification.

Source : Dion Global Solutions Limited
Quick Links for abbottindia
Explore Moneycontrol
Stocks     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | Others
Mutual Funds     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.