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Dr Agrawals Eye Hospital

BSE: 526783|ISIN: INE934C01018|SECTOR: Hospitals & Medical Services
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Mar 17
Notes to Accounts Year End : Mar '18

1 CORPORATE INFORMATION

Dr. Agarwal''s Eye Hospital Limited (‘the Company'') was incorporated on April 22, 1994 and is primarily engaged in providing eye care and related services. As at 31 March 2018, the Company is operating in 22 locations in India. Dr. Agarwal''s Health Care Limited is the holding Company as at 31 March 2018.

2 APPLICATION OF NEW AND REVISED IND AS

All the Indian Accounting Standards issued and notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) till the financial statements are authorised have been considered in the preparing these financial statements. There is no other Indian Accounting Standard that has been issued as of that date but was not mandatorily effective.

Recent Standards notified but not effective:

Ind AS 115 - “Revenue from Contracts with Customers”:

On 28 March 2018, the Ministry of Corporate Affairs (MCA), notified Ind AS 115, Revenue from Contracts with Customers, as part of the Companies (Indian Accounting Standards) Amendment Rules, 2018. The new standard is based on IFRS 15, Revenue from Contracts with Customers. The standard is effective for the accounting periods commencing on or after 1 April 2018.

Ind AS 115 replaces Ind AS 11 Construction contracts and Ind AS 18 Revenue. The core principle of Ind AS 115 is that an entity recognises revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This core principle is delivered in a five-step model framework:

- Identify the contract(s) with a customer - assess whether the contract is within the scope of Ind AS 115. ‘Customer'' has now been defined.

- Identify the performance obligations in the contract - determine whether the goods and services in a contract are distinct.

- Determine the transaction price - transaction price will include fixed, variable and non cash considerations.

- Allocate the transaction price to the performance obligations in the contract - allocation based on a stand-alone selling price basis using acceptable methods.

- Recognise revenue when (or as) the entity satisfies a performance obligation - i.e. recognise revenue at a point in time or over a period of time based on performance obligations.

The Company is evaluating the requirements of the standards, and the transition effects on the financial statements.”

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:

On March 28, 2018, the Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company is evaluating the effect of this on the financial statements.

Standards yet to be notified:

Ind AS 116 - “Leases”:

On 18 July 2017, the Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) issued an Exposure Draft (ED) of Ind AS 116, Leases. Ind AS 116 is largely converged with IFRS 16. When notified, Ind AS 116 will replace Ind AS 17 Leases.

Ind AS 116 sets out a comprehensive model for identification of lease arrangements and their treatment in the financial statements of the lessor and lessee. Ind AS 116 applies a control model for the identification of leases, distinguishing between leases and service contracts on the basis of whether there is an identified asset controlled by the customer. The Company is evaluating the requirement of the standard and the effect on the financial statements upon notification is being evaluated.

3. Credit period and risk

Significant portion of the Company''s business is against receipt of advance. Credit is provided mainly to Insurance Companies, Corporate customers and Government Undertakings. The Insurance Companies are required to maintain minimum reserve levels and preapprove the insurance claim, Government undertakings and the Corporate Customers are enterprises with high credit ratings. Accordingly, the Company''s exposure to credit risk in relation to trade receivables is low.

Trade receivables are non-interest bearing and are generally on terms of upto 30 days. Of the Trade Receivable as at 31 March 2018, Rs. 725.60 lakhs (As at 31 March 2017: Rs.712.04 lakhs; As at 1 April 2016 : Rs.620.22 lakhs) are due from seven of the Company''s customers i.e having more than 5% of the total outstanding trade receivable balance. There are no other customers who represent more than 5% of the total balance of trade receivables.

No trade receivable are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade receivable are due from firms or private companies respectively in which any director is a partner, a director or a member.

4. Expected credit loss allowance

The Company has used a practical expedient by computing the expected loss allowance for trade receivables based on provision matrix. The provision matrix takes into account the historical credit loss experience and adjustments for forward looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix, considering the amounts due from the government undertakings and the other undertakings.

5. Terms / rights attached to Equity Shares :

The Company has only one class of equity shares having a par value of Rs.10. Each holder is entitled to one vote per equity share. Dividends are paid in Indian Rupees. Dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders at the Annual General Meeting except in case of interim dividend. Repayment of capital will be in accordance with the terms of the Articles of Association and in proportion to the number of equity shares held.

The Board of Directors, at their meeting held on 28 May 2018, have proposed a final dividend of Rs.1.20 per equity share, aggregating to Rs.56.40 lakhs, for the year ended 31 March 2018. The dividend proposed by the Board of Directors is subject to the approval of shareholders at the ensuing Annual General Meeting.

6. I n respect of the year ended 31 March 2018, the directors propose that a dividend of Rs.1.20 per share be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares.

(i) The details of Security provided against the Term Loans are as follows:

- Extension of first charge on the entire Property, Plant and Equipment of the Company and first charge on the assets to be created out of the Term Loan.

- Extension of equitable mortagage on a property owned by Orbit International.

- Extension of first charge on the entire Fixed assets of the company and first charge on the assets to be created out of the Term Loan.

- Pledge of 1,350,000 Shares of the Company held by Dr. Agarwal''s Health Care Limited.

- Corporate Guarantee provided by Dr. Agarwal''s Health Care Limited and Orbit International.

- Personal Guarantees of Dr. Amar Agarwal, Dr. Athiya Agarwal, Dr. Adil Agarwal, Dr. Anosh Agarwal, Dr. Ashar Agarwal, Dr. Ashwin Agarwal, being the promoter and relatives of the promoter.

(ii) The loans are secured by hypothecation of respective vehicles financed by the Banks.

(iii) The loans are secured by hypothecation of surgical equipments.

Whilst the provision as at 31 March 2018 is considered as short term in nature, the actual outflow with regard to said matters depends on the exhaustion of remedies available under the law based on various developments. No recoveries are expected against the provision.

(ii) The Cash credit facility availed by the Company as at 31 March 2018 is secured by the following:

- Hypothecation of all the current assets of the Company.

- Extension of equitable mortagage on a property owned by Orbit International.

- Pledge of 1,350,000 shares of the Company held by Dr. Agarwal''s Health Care Limited.

- Corporate Guarantee provided by Dr. Agarwal''s Health Care Limited and Orbit International.

- Personal Guarantees of Dr. Amar Agarwal, Dr. Athiya Agarwal, Dr. Adil Agarwal, Dr. Anosh Agarwal, Dr. Ashar Agarwal and Dr. Ashwin Agarwal being the promoter and relatives of the promoter.

(i) Based on Professional Advice / Management''s assessment of all the above claims, the Company expects a favourable decision in respect of the above claims and hence no specific provision has been considered for the above claims. Also refer Note 18.1.

(ii) The amounts shown above represent the best possible estimates arrived at on the basis of the available information. The uncertainties and possible reimbursement are dependent on the outcome of the various legal proceedings which have been initiated by the Company or the Claimants, as the case may be and, therefore, cannot be predicted accurately.

7. Employee Benefits

7.1 Defined Contribution plans

(a) The Company makes Provident and Pension Fund contributions, which is a defined contribution plan, for qualifying employees. Additionally, the Company also provides, for covered employees, health insurance through the Employes State Insurance scheme. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

7.2 Defined benefit plans

The Company operates a gratuity plan covering qualifying employees. The benefit payable is calculated as per the Payment of Gratuity Act, 1972 and 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.

In respect of the plan, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2018 by Mr. Srinivasan Naga Subramanian, Fellow of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and paid service cost, were measured using the projected unit cost credit method.

(i) The current service cost and interest expense for the year are included in Note 27 - “Employee Benefit Expenses” in the statement of profit & loss under the line item “Contribution to Provident and Other Funds”

(ii) The remeasurement of the net defined benefit liability is included in other comprehensive income.

(i) The plan assets comprise insurer managed funds. None of the assets carry a quoted market price in active market or represent the entity''s own transferable financial instruments or property occupied by the entity.

(f) The Actual return on plan asset for the year ended 31 March 2018 was Rs.9.70 lakhs (For the year ended - 31 March 2017: Rs.8.86 lakhs).

(g) Actuarial assumptions Investment Risk:

The present value of defined benefit plan liability is calculated using a discount rate which is determined by reference to the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

Interest Risk:

A decrease in the yield of Indian government securities will increase the plan liability.

Longevity Risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortaility of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary Risk:

The present value of the defined benefit plan liability is calculated by reference to the future salaries. In particular, there is a risk for the Company that any adverse salary growth can result in an increase in cost of providing these benefits to employees in future.

1. The discount rate is based on the prevailing market yields of Indian Government securities as at balance sheet date for the estimated term of the obligation.

2. The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

3. In order to protect the capital and optimize returns within acceptable risk parameters, the plan assets are maintained with an insurer managed fund (maintained by the Life Insurance Corporation (“LIC”) and is well diversed.

Sensitivity Analysis

The benefit obligation results of such a scheme are particularly sensitive to discount rate, longevity risk, salary growth and employee attrition, if the plan provision do provide for such increases on commencement of pension.

These sensitivities have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligations 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 defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.

There is no change in the methods and assumptions used in preparing the sensitivity analysis from the prior years.

(h) Asset Liability Matching Strategies

The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity liability occurring during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in a increase in liability without corresponding increase in the asset).

(i) Effect of Plan on Entity’s Future Cash Flows

A) Funding Arrangements and Funding Policy

The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance Company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

B) The Company expects to make a contribution of '' 45 lakhs during the next financial year.

C) The weighted average duration of the benefit obligation at March 31, 2018 is 3.05 years (as at March 31, 2017 is 3.05 years).

(i) The Company accounts for costs incurred by / on behalf of the Related Parties based on the actual invoices / debit notes raised and accruals as confirmed by such related parties. The Related Parties have confirmed to the Management that as at 31 March 2018 and 31 March 2017, there are no further amounts payable to / receivable from them, other than as disclosed above. The Company incurs certain costs on behalf of other companies in the group. These costs have been allocated/recovered from the group companies on a basis mutually agreed to with the group companies.

(ii) Dr. Agarwal''s Health Care Limited has provided Corporate Guarantees amounting to Rs.2,714 lakhs to SBI for the loans taken by the Company. Further, 1,350,000 Equity Shares held by Dr. Agarwal''s Health Care Limited in the Company has been pledged as one of the collateral securities with SBI, for the loans taken by the Company to the extent of Rs.2,714 lakhs.

(iii) The Company has provided comfort letter to HDFC Bank in respect of the Equipment Loans and Cash Credit facility availed by the Dr. Agarwal''s Health Care Limited, the Holding Company.

(v) Represents transactions carried out with Senses Pharmaceuticals Limited through its dealer.

Notes:

(i) Excludes gratuity and compensated absences which cannot be separately identifiable from the composite amount advised by the actuary.

(ii) Also Refer Note 17(i) and Note20(ii).

(iii) The remuneration payable to key management personnel is determined by the nomination and remuneration committee having regard to the performance of individuals and market trends.

(iv) There were no balances outstanding to be paid / recevied as at the year end.

(i) The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. There have been no instances of amounts due to or due from related parties that have been written back or written off or otherwise provided for during the year.

8. Segment Reporting

The Company is engaged in providing eye care and related services provided from its hospitals which are located in India. Based on the “management approach” as defined in Ind-AS 108 - Operating Segments, the Chief Operating Decision Marker (CODM) evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by the overall business segment, i.e. Eye care related sales and services.

As the allocation of resources and profitability of the business is evaluated by the CODM on an overall basis, with evaluation into individual categories to understand the reasons for variations, no separate segments have been identified. Accordingly no additional disclosure has been made for the segmental revenue, segmental results and the segmental assets & liabilities.”

9. Operating Lease

The Company has entered into operating lease agreements primarily for Hospital premises. An amount of Rs.1,717.98 lakhs (Previous Year - Rs.1,644.09 lakhs) has been debited to the Statement of Profit and Loss towards lease rentals and other charges for the current year. The leases are non - cancellable for periods of 3 to 12 years and may be renewed based on mutual agreement of the parties.

10. Financial Instruments

10.1 Capital Management

The Company manages capital risk in order to maximize shareholders'' profit by maintaining sound/optimal capital structure. For the purpose of the Company''s capital management, capital includes equity share Capital and Other Equity and Debt includes Borrowings and Other Financial Liabilities net of Cash and bank balances. The Company monitors capital on the basis of the following gearing ratio. There is no change in the overall capital risk management strategy of the Company compared to last year.

The management assessed that fair value of cash and cash equivalents, trade receivables, loans, borrowings, trade payables and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair value/amortized cost

1) Long-term fixed-rate receivables/borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual losses and creditworthiness of the receivables

2) The fair value of unquoted instruments, loans from banks and other financial liabilities, as well as other non-current financial liabilities are estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. In addition to being sensitive to a reasonably possible change in the forecast cash flows or discount rate, the fair value of the unquoted instruments is also sensitive to a reasonably possible change in the growth rates. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in the tables below. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.

3) Fair values of the Company''s interest-bearing borrowings and loans are determined by using DCF method using discount rate that reflects the issuer''s borrowing rate as at the end of the reporting period. The own non-performance risk as at March 31, 2018 was assessed to be insignificant.

Fair Value Hierarchy

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

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

There were no items of financial assets or financial liabilities which were valued at fair value as of 31 March 2018, 31 March 2017 and 1 April 2016.

10.2 Financial Risk Management Framework

The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The Company manages financial risk relating to the operations through internal risk reports which analyse exposure by degree and magnitude of risk.

The Company''s activities expose it to a variety of financial risks: liquidity risk, credit risk and market risk (including interest rate risk and other price risk). The Company''s primary risk management focus is to minimize potential adverse effects of market risk on its financial performance. The Company''s risk management assessment and policies and processes are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Board of Directors and the Audit Committee is responsible for overseeing the Company''s risk assessment and management policies and processes.

(a) Liquidity Risk Management :

Liquidity risk refers to the risk that the Company cannot meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company''s reputation. The Company maintains adequate reserves and banking facilities, and continuously monitors the forecast and actual cash flows by matching maturing profiles of financial assets and financial liabilities in accordance with the approved risk management policy of the Company periodically. The Company believes that the working capital (including banking limits not utilised) and its cash and cash equivalent are sufficient to meet its short and medium term requirements.

Liquidity and Interest Risk Tables :

The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. 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.

(b) Credit Risk:

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, cash and cash equivalents, bank deposits and other financial assets. None of the other financial instruments of the Company result in material concentration of credit risk. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit.

The carrying amount of the financial assets recorded in these financial statements, grossed up for any allowance for losses, represents the maximum exposures to credit risk.

Trade receivables: The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and credit history, also has an influence on credit risk assessment. Refer Note 12 and Note 23 for the details in respect of revenue and receivable from top customers.

Credit risk on current investments, cash & cash equivalent and derivatives is limited as the Company generally transacts with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in fixed deposits.

(c) Market Risk :

Market risk is the risk of loss of any future earnings, in realizable fair values or in future cash flows that may result from adverse changes in market rates and prices (such as interest rates and foreign currency exchange rates) or in the price of market risk sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short-term and long-term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk and interest rate risk and the market value of its investments. Thus, the Company''s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.

(c.1) 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 debt obligations with floating interest rates.

The Company’s management monitors the interest fluctuations, if any, and accordingly, take necessary steps to mitigate any interest rate risk.

(c.2) Foreign Currency Risk Management :

The Company undertakes transactions denominated in foreign currencies and consequently, exposures to exchange rate fluctuations arises. The Company has not entered into any derivate contracts during the year ended 31 March 2018 and there are no outstanding contracts as at 31 March 2017.

Foreign Currency sensitivity analysis:

The following table details the Company''s sensitivity to a 5% increase and decrease in INR against the relevant foreign currencies. 5% is the rate used in order to determine the sensitivity analysis considering the past trends and expectation of the management for changes in the foreign currency exchange rate. The sensitivity analysis includes the outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. A positive number below indicates an increase in profit/decrease in loss and increase in equity where the INR strengthens 5% against the relevant currency. For a 5% weakening of the INR against the relevant currency, there would be a comparable impact on the profit or loss and equity and balance below would be negative.

This is mainly attributable to the exposure of receivable and payable outstanding in the above mentioned currencies to the Company at the end of the reporting period.

10.3 Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required)

The Management considers that the carrying amount of financial assets and financial liabilities recognized in the financial statements approximate their fair values.

10.4 Offsetting of financial assets and financial liabilities

The Company has not offset financial assets and financial liabilities.

11. First-time adoption - mandatory exceptions, optional exemptions and reconciliations

These financial statements, as at and for the year ended 31 March 2018, have been prepared in accordance with Ind AS. For the purpose of transition to Ind AS, the Company has followed the guidance prescribed in Ind AS 101 - First Time adoption of Indian Accounting Standard, with 1 April 2016 as the transition date and IGAAP as the previous GAAP.

The transition to Ind AS has resulted in changes in the presentation of the financial statements, disclosures in the notes there to and accounting policies and principles. The accounting policies set out in Note 3 have been applied in preparing the financial statements for the year ended 31 March 2018 and the comparative information. An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s Balance Sheet, Statement of Profit and Loss and cash flow, Optional exemptions and certain exceptions on first time adoption of Ind AS availed in accordance with Ind AS 101 have been set out below:

11.1 Mandatory Exceptions and Optional Exemptions

(a) Deemed Cost for Property, plant and equipment and intangible assets

The Company has elected to continue with the carrying value of all of its property, plant and equipment and intangible assets recognized as at 1 April 2016 (transition date) measured as per the previous Indian GAAP (‘I GAAAP'') and use that carrying value as its deemed cost as of the transition date.

(b) Classification and measurement of financial assets

The company has opted not to apply EIR principles retrospectively and thus opted to consider the carrying cost of financial asset as its amortised cost as at transition date.

Key Sources of estimation uncertainty

The estimates at 1 April 2016 and at 31 March 2017 are consistent with those made for the same dates in accordance with previous GAAP (after adjustments to reflect any differences in accounting policies). The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1 April 2016, the date of transition to Ind AS and as of 31 March 2017.

(a) Under previous GAAP, there was no concept of other comprehensive income. Under Ind AS, specified items of income, expense, gains or losses are required to be presented in other comprehensive income.

(b) Under previous GAAP, dividends on equity shares recommended by the board of directors after the end of reporting period but before the financial statements were approved for issue were recognised in the financial statements as a liability. Under Ind AS, such dividends are recognised when declared by the members in annual general meeting. Effect of this change is increase in total equity by Rs.45.25 lakhs as at 1 April 2016 (Rs. NIL as at 31 March 2017), decrease in Provisions - Current by Rs.45.25 lakhs as at 1 April 2016 (Rs. NIL as at 31 March 2017).

(c) Under previous GAAP, actuarial gains and losses were recognised in profit and loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of net defined liability/asset which is recognised in other comprehensive income. Consequently, the tax effect of the same has also been recognised in other comprehensive income. The actuarial loss for the year ended 31 March 2017 was Rs.40.75 lakhs and tax effect was Rs.14.10 lakhs and deferred tax liabilities reduced by Rs.14.10 lakhs as at 31 March 2017.

(d) Under previous GAAP, security deposits are carried at cost. Under Ind AS, these are carried at amortized cost. The effect of this change is decrease in financial assets by Rs.257.75 lakhs as at 31 March 2017 (decrease by Rs.310.06 lakhs as at 1 April 2016) and increase in other current assets by Rs.216.94 lakhs as at 31 March 2017 (increase by Rs.267.67 lakhs as at 1 April 2016) and decrease in total equity by Rs.42.39 lakhs as at 31 March 2016. There had been increase in other income by Rs.52.30 lakhs and other expenses by Rs.50.73 lakhs for the year ended 31 March 2017 and consequently decrease in deferred tax liabilities by Rs.214.20 lakhs as at 31 March 2017 (Rs. NIL as at 1 April 2016).

(e) Under previous GAAP, Borrowing cost and processing fees related to loans and financial liabilities were charged off to the statement of profit and loss. Under Ind AS, the Company needs to measure the borrowings at fair value using Effective interest rate (EIR) also considering the Upfront fees and Processing fees paid and any interest free loan at the time of obtaining the borrowings. The net effect of change is decrease in borrowings under non current liabilities by Rs.17.55 lakhs as at 31 March 2017 (decrease by Rs.24.11 lakhs as at 1 April 2016) and increase in total equity by Rs.17.55 lakhs as at 31 March 2017 (Rs. 24.11 lakhs as at 1 April 2016). There had been increase in finance cost by Rs.6.56 lakhs and decrease in deferred tax liabilities by Rs.6.11 lakhs as at 31 March 2017 (increase by Rs.8.39 lakhs as at 1 April 2016).

(f) Under previous GAAP, the Company made provision for doubtful debts for Trade Receivables based on the ageing analysis and individual debtor assessment of recoverability. Under IND AS the impairment model of financial asset is based on Expected Credit Loss model. Accordingly, the Company has provided loss allowance based on Expected credit loss and as a result trade receivables has decreased by Rs.66.97 lakhs as at 31 March 2017 (decreased by Rs.148.37 lakhs as at 1 April 2016). Retained earnings under other Equity decreased by Rs.148.37 lakhs as at 1 April 2016. Consequently, allowance for expected credit losses under other expenses decreased by Rs.81.40 lakhs for the year ended 31 March 2017.

(g) Under previous GAAP the deferred tax was accounted based on timing differences impacting the Statement of Profit and Loss for the period. Deferred tax under Ind AS has been recognised for temporary differences between tax base and the book base of the relevant assets and liabilities. As a result thereof, the deferred tax asset has increased by Rs.31.22 lakhs as at 31 March 2017 (increased by Rs.57.67 lakhs as at 1 April 2016).

(h) The previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purposes of this note.

12. Previous Year’s Figures

As stated in Note 3.1, the Company has adopted Indian Accounting Standards with effect from 1 April 2017 with date of transition to Ind AS being 1 April 2016. Accordingly, previous year figures in the financial statements have been restated to Ind AS. Further, previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

13. Approval of Financial Statements

The Board of Directors of the Company has reviewed the realisable value of all the current assets and has confirmed that the value of such assets in the ordinary course of business will not be less that the value at which these are recognized in the financial statements. In addition, the Board has also confirmed the carrying value of the non-current assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these financial statements in its meeting held on 28 May 2018.

Source : Dion Global Solutions Limited
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