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BLB

BSE: 532290|NSE: BLBLIMITED|ISIN: INE791A01024|SECTOR: Finance - Investments
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Notes to Accounts Year End : Mar '18

1 First-Time Adoption of Ind AS

Ind AS 101 First-time adoption of Indian Accounting Standards allows first time adopters certain exemptions and exceptions from the retrospective application of certain requirements under Ind AS, effective for April 1, 2016 opening balance sheet, as explained below :

1.1 Exemptions Availed on First-Time Adoption of Ind AS 101

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has accordingly applied the following exemptions.

a. Deemed Cost - Property, Plant and Equipment (Including Capital Work in Progress)

Ind AS 101 allows a first-time adopter to elect measurement at fair value for all of its property, plant and equipment to be recognised in the financial statements as at the date of transition to Ind AS, and use that as its deemed cost as at the date of transition.

b. Deemed Cost - Investment in Subsidiary

Under previous GAAP, investment in subsidiaries were stated at cost. Under Ind AS, the company has considered their previous GAAP carrying amount as their deemed cost.

The Company has elected to apply this exemption for such contracts/arrangements.

1.2. Reconciliations Between Previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity and total comprehensive income for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.

Note 1: Property, Plant and Equipment (including Capital Work in Progress)

The Company has elected to measure items of its property, plant and equipment and intangible assets at fair value as deemed cost except for certain class of assets which are measured at its carrying value upon transition. The resulting fair value changes have been recognised in retained earnings as at the date of transition. This increased the retained earnings by INR 558.93 Lacs as at 1 April 2016.

Further, under previous GAAP the Company has followed written down value method of depreciation and upon transition the Company has applied straight line method of depreciation. Due to the election to measure major property, plant and equipment at fair value and change in depreciation method, it has consequently increased depreciation expense by INR 6.23 Lacs for the year ended 31 March 2017. This has decreased total comprehensive income by INR 6.23 Lacs.

Consequent to the above, the total equity as at 31 March 2017 increased by INR 552.70 Lacs.

Note 2: Intangible Assets

Under previous GAAP the Company has followed written down value method of depreciation and upon transition the Company has applied straight line method of depreciation. Due to the change in the depreciation method, it has consequently increased its residual value for the year ended 31 March 2017 by INR 0.34 Lacs. This has increased total comprehensive income by INR 0.34 Lacs for the year ended 31 March 2017.

Note 3: Fair valuation of Non- Current Investments

Under previous GAAP the Company carried the long-term investments at cost less provision for diminution in value other than temporary, if any in the value of such investments. and upon transition the Company has subsequently measured at fair value, with unrealised gains and losses arising from changes in the fair value being recognised in retained earnings or in other comprehensive income as the case may be. This has consequently decreased the retained earnings by INR 462.37 lacs as at the date of transition on 1 April 2016 .

Consequent to the above, the Other Comprehensive Income has increased by INR 0.27 lacs for the year ended 31 March 2017.

Note 4: Deferred Tax Assets (Net)

Deferred tax has been recognised on the adjustments made on transition to Ind AS. The impact of transition adjustments has resulted for recomputation of deferred taxes in the retained earnings, on the date of transition, with consequential impact to the Statement of Profit and Loss for the subsequent periods.

MAT entitlement credit being of the nature of deferred tax, on transition to Ind AS MAT credit entitlement of INR 1.32 lacs for March 31, 2017 has been regrouped under deferred tax liability from Current tax assets (net).

Note 5: Fair valuation of Financial Assets

Under previous GAAP, the Company has recognised membership fees paid to various stock exchanges and Pre-amalgamation expenses as deferred revenue expenditure and amortise over a period of five years whereas such cost are not recognised under Ind AS. And accordingly the same have been recognised in retained earnings as at the date of transition. This has consequently decreased the retained earnings by INR 5.59 lacs on the transition date.

Under previous GAAP, the Company carried Advances given to parties for purchase of properties at cost and under Ind AS, upon transition, the Company has considered the diminution in the market value of the said property. Accordingly, Advances for Capital goods have been reduced by INR 65 lacs with a corresponding adjustment to retained earnings on the date of transition. Consequent to the above, the Comprehensive Income has increased increased by INR 5.59 lacs for the year ended 31 March 2017.

Note 6: Retained Earnings

Retained earnings as at 1 April 2016 and 31 March 2017 has been adjusted consequent to the above Ind AS transition adjustment.

The investment of 200,000 shares in Midvalley Entertainment Ltd. was made by the company with an amount of INR 150 Lacs and as at 1 April 2016, a provision for impairment of INR 150.00 Lacs has been made and the net investment has been recognised at a carrying amount of INR 1/The Board of Directors of the Company and four subsidiaries namely BLB Commodities Ltd, BLB Global Business Ltd, Caprise Commodities Ltd and Sri Sharadamba Properties Ltd approved the Composite Scheme of Arrangement for amalgamation with the Company and subsequent demerger of ‘Commodities Trading Division’ and ‘ Financial Services Division’ of merged entity into two newly incorporated wholly owned subsidiaries i.e. Sakala Commodities Ltd and Samagra Capital Ltd. The Company subscribed 7 equity shares of Rs.10/- each aggregating to Rs.70/- in each of these two subsidiaries. Later on the Board of Directors of Company and four subsidiaries mentioned above decided to withdraw the Composite Scheme of Arrangement. Accordingly, the shareholders of Sakala Commodities Ltd. and Samagra Capital Ltd. in their respective meetings decided to get their names struck off in the records of Registrar of Companies, NCT of Delhi and Haryana (ROC). However the application made for the same is still pending with the ROC.

Since these two companies were formed and applied for striking off their names with ROC in the same financial year 201718 without undertaking any business, the investment of Rs.140/- in said subsidiaries was written off alongwith expenses of Rs.18,999/- incurred on incorpoaration of these companies.

During the year company has received 60,000 equity shares of Indian Oil Corporation Ltd. on stock-in-hand as bonus shares. The same has been retained by company as Short-term investment at nil value. Subsequently, the Company has measured the same at fair value, with unrealised gain arising from changes in the fair value and recognised in comprehensive income. ( Note No. 23)

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual funds that have quoted price and are valued using the closing NAV.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level3.

2.1 Valuation Technique used to determine Fair Value

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices

2.2 Fair value of Financial Assets and Liabilities measured at Amortised Cost

The carrying amounts of financial assets comprising trade receivables cash and cash equivalents, fixed deposits with banks, security and other deposits and carrying value of financial liabilities comprising borrowings and trade and other payables are considered to be the same as their fair values, due to their short-term nature and covered under level 3 category.

3 Financial Risk Management

The Company’s activities expose it to market risk, liquidity risk and credit risk. In order to minimise any adverse effects on the financial performance, derivative financial instruments, such as foreign exchange forward contracts are entered to hedge certain foreign currency risk exposures and price risk exposures.

This note explains the sources of risk which the Company is exposed to and how such risk were managed.

The Company’s risk management is carried out by a central treasury department under policies approved by the board of directors. The Company treasury identifies, evaluates and hedges financial risks in close co-operation with the Company’s operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, Securities price risk, credit risk, use of derivative financial instruments and nonderivative financial instruments, and investment of excess liquidity.

3.1 Credit Risk Management

The risk of financial loss due to counterparty’s failure to honour its obligations arises principally in relation to transactions where the Company provides goods on deferred terms.

The Company’s policies are aimed at minimising such losses, and require that deferred terms are granted only to customers who demonstrate an appropriate payment history and satisfy creditworthiness procedures. Individual exposures are monitored with customers subject to credit limits to ensure that the Company’s exposure to bad debts is not significant. The maximum exposure to credit risk regarding financial assets is the carrying amount as disclosed in the balance sheet. With respect to credit risk arising from all other financial assets of the Company, the Company’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the corresponding carrying amount of these instruments.

On account of the adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors such as historical experience for customers. The Company’s receivable are high quality with negligible credit risk and the counter-party has strong capacity to meet the obligations and where the risk of default is negligible or nil. Accordingly, no provision for expected credit loss is recognised.

The following table provides information about the exposure to credit risk for trade receivables from individual customers.

3.2 Liquidity Risk Management

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. In addition, the Company’s liquidity management policy involves monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

The Company had access to the following undrawn borrowing facilities at the end of the reporting period:

Maturities of Financial Liabilities

The table below analyse the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities for:

- all non-derivative financial liabilities, and

- net settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

3.3 Market Risk Management Interest Rate Risk

The Company’s main risk i.e. interest rate risk arises from borrowings with variable rates, which expose the Company to cash flow interest rate risk. During 31 March 2017 and 31 March 2016, the Company’s borrowings at variable rate were mainly denominated in INR.

The Company’s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

The long term variable interest rate borrowings are not significant and accordingly, no such sensitivity for interest rate cash flow has been disclosed.

Price Risk

The Company’s significant exposure for price risk is relating to forward contracts. However, no open forward contract is outstanding as on the reporting date and accordingly, doesn’t have related price risk.

4 Capital Management

4.1 Risk Management

The Company’s objectives when managing capital are to

- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company issue new shares. Consistent with others in the industry, the Company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents) divided by Total ‘equity’ (as shown in the balance sheet.

4.2 Loan Covenants

The Company has complied with all loan covenants required under borrowing facilities.

5 Interest in Other Entities - Subsidiaries

The details of Company’s subsidiaries at 31 March 2018 are set out below. They have share capital consisting solely of equity shares that are held directly by the Company, and the proportion of ownership interests held equals the voting rights held by the Company. The country of incorporation is also their principal place of business.

6 Related Party Transactions

6.1 Controlling Shareholders

The Company is controlled by Sh.Brij Rattan Bagri owning 61.12% of Equity Share Capital as on 31 March 2018 (61.12% - 31 March 2017, 61.12% - 1 April 2016)

Subsidiaries

Interests in subsidiaries are set out in Note No. 33.

Key Management Personnel and Their Relatives

Name of key management personnel, their relatives and entities over which they have control or significant influence with whom transaction were entered during the year or balance was outstanding at the balance sheet date are as follows: Key Management Personnel and Relatives:

Sh. Brij Rattan Bagri (Chairman), Relatives: Smt. Malati Bagri (Wife),

Ms. Nanditaa Bagri (Daughter), Sh. Siddharth Bagri (Son)

Sh. Vikram Rathi (Executive Director)

Sh. Vikash Rawal (Chief Financial Officer)

Ms. Abha Garg (Company Secretary) (w.e.f 17/08/2016)

Ms. Swati Sharma (Company Secretary) (upto 13/08/2016)

Enterprises where Key Managerial Personnel along with their relatives exercise Significant Influence:

1) Manu Properties Pvt. Limited

2) BLB Limited Employees Group Gratuity Trust

6.3 Transaction with Related Parties

The details of the related-party transactions entered into by the Company for the years ended 31st March 2018 and 31st March 2017 are as follows:

6.4 Collateral and Personal Guarantee by Related Parties

The Key Management Personnel along with their relatives and entities over which they have significant influence has also given collateral security and personal guarantee for the borrowings obtained by Company are as follows:

7 During the year under review, the Board of Directors of the Company in their meeting held on 25.10.2017 have decided to withdraw Composite Scheme of Arrangement involving Amalgamation of four wholly owned subsidiaries namely, BLB Commodities Limited, BLB Global Business Limited, Caprise Commodities Limited and Sri Sharadamba Properties Limited with the Company and subsequent Demerger of ‘Commodities Trading Division’ and ‘Financial Service Division’ of BLB Limited i.e. to Sakala Commodities Limited and Samagra Capital Limited respectively.

7.1 The Board of Directors in their meeting held on 14th December, 2017 had adopted the Scheme of Arrangement involving Amalgamation of its four wholly owned subsidiaries namely, BLB Commodities Limited, BLB Global Business Limited, Caprise Commodities Limited and Sri Sharadamba Properties Limited with the Company.

The State Government of Delhi has levied stamp duty through Indian Stamp (Delhi Amendment) Act, 2010 w.e.f 01/06/2010 on securities business carried by the company on proprietary basis. The constitutional validity of the said levy is under challenge in Delhi High Court through a writ petition filled by an association of brokers wherein the company is a member and the matter is subjudice. The liability on account of levy of stamp duty for the period 01/06/2010 to 30/09/2013 works out to Rs.104.80 Lacs (without interest) for which no provision has been made.

7.2 Non-cancellable Operating Leases

The operating leases entered by the Company are cancellable on serving a notice of one to three months and accordingly, there are no non-cancellable operating leases required commitments for operating lease payments.

8 Legal and Professional charges include Rs.0.08 Lacs paid as professional fees for income tax matters to a Director of the Company. (Previous year : Rs.1.25 Lacs)

9 The Company has not received any intimation from ‘Suppliers’ regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid / payable as required under the said Act have not been given.

10 Loans and advances in the nature of Loans (As required by Clause 34(1) of the Listing Regulation with the stock exchanges):

a. Loans and Advances in the nature of Loans to Subsidiaries for business activities

11 Earnings Per Share

The calculations of profit attributable to equity shareholders and weighted average number of equity shares outstanding for the purposes of calculation of basic earnings per share as well as diluted earnings per share are as follows:

12 Segment Reporting

The Company is primarily engaged in a single business segment of dealing in shares, securities and derivatives. All the activities of the Company revolve around the main business. As such thee are no separate reportable segments as per Ind AS-109 “Operating Segment” notified by the Central Government under the Companies (Accounting Standard) Rules 2016.

13 Events Occurring after the Reporting Period

There have been no material events other than disclosed in the financial statements after reporting date which would require disclosure or adjustments to the financial statements as of and for the year ended 31st March 2018.

Source : Dion Global Solutions Limited
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