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Moneycontrol.com India | Notes to Account > Castings & Forgings > Notes to Account from Kalyani Forge - BSE: 513509, NSE: KALYANIFRG
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Kalyani Forge

BSE: 513509|NSE: KALYANIFRG|ISIN: INE314G01014|SECTOR: Castings & Forgings
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Notes to Accounts Year End : Mar '18

Terms/Rights attached to the equity shares

1 The Company has only one class of equity shares having par value of Rs. 10/- each. Each equity holder is entitled to one vote per share and have a right to receive dividend as recommended by Board of Directors subject to the necessary approval from the shareholders.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

2 Shares held by holding/ subsidiaries/associates: NIL

3 Number of Shares held by each shareholder holding more than 5% Shares in the company

4 Aggregate number of bonus shares issued, share issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date: NIL

Terms of Repayment

1. Term Loan of Rs. 2162.79 Lakhs (Sanctioned: Rs. 2500 lakhs) is availed from State Bank of India, IFB, Pune, out of the total sanction limit, at the rate of interest of 2.10% above MCLR-1Y. Balance outstanding as on 31 March 2018 is Rs.1851.36 lakhs (P.Y. Rs. 1477.65 Lakhs). Out of this, Rs. 495.00 Lakhs (P.Y. Rs. 360.00 Lakhs) is treated as current maturities of long term debts as on 31 March 2017 is . In addition to this, Interest accrued and due on borrowings amounted to Rs. 21.91 Lakhs (P.Y. Rs. 15.85 Lakhs ). This loan is to be repaid in 56 instalments comprising of 44 instalments of Rs. 45 Lakh, 11 instalments of Rs. 43 Lakhs and 1 instalment of Rs. 47 Lakh starting from August 2017.

2. Buyer’s Credit of Rs. 340.57 Lakhs (P.Y. Rs. 330.27 Lakhs) availed from ICICI Bank, Bundgarden Road, Pune out of the total sanction limit Rs. 500 Lakhs at the Fixed Margin over USD London inter bank offer rate i.e. LIBOR

3. Sales Tax Deferral Liability under package scheme of incentive 2001-02, 2002-03, 2003-04,2004-05,2005 06 as on 31st March 2018 amounted to Rs. 179.71 Lakhs (P.Y.Rs 311.18 Lakhs. Out of these, Rs. 105.44 Lakhs (P.Y. Rs. 131.47 Lakhs) is treated as current maturities of long term debts as on 31st March 2018. This liability is to be repaid within 5 years starting from 2012-13.

Nature of security for Item no. (i), (ii) and (iii)

For the above Rupee Term Loans, the company has created the first charge in favour of lending banks by way of hypothecation of assets to be acquired out of bank finance as primary security and second pari passu charge by way of hypothecation/ mortgage on the present and future fixed assets including land and building situated at Sanaswadi and Koregaon Bhima, Pune as a collateral security.

Notes :-

1. Company’s fund and non fund based working capital facilities of Rs. 874/- are secured by first charge by way of hypothecation on pari passu basis with existing working capital lenders (State Bank of India(Lead Bank), Bank of Maharashtra,IDBI Bank Ltd. and ICICI Bank Ltd.) over the company’s entire current assets including stocks, WIP, receivables and finished goods and also the second charge on the whole of the fixed assets of the Company on pari passu basis with consortium working capital lenders.

2. The FCNRB loan is availed from ICICI Bank Ltd.at the rate of Interest of Fixed Margin over USD London inter bank offer rate i.e. LIBOR

3. The packing credit foreign currency loan is availed from Bank of Maharashtra and State Bank of India at the rate of Interest of Fixed Margin over USD London inter bank offer rate i.e. LIBOR

Notes :-

The Company has sent balance confirmation letters to Sundry Creditors, the balances are under reconciliation in those cases where confirmations were received. Pending final reconciliation, the balances in respect of, Creditors are as per books of account only. Adjustments having an impact of revenue nature, if any, will be made in the year in which the same are confirmed/reconciled.

*Gurantees given by the company’s Banker’s on behalf of the Company, against sanctioned guarantee limits (BG LC-one way interchangeability from LC to BG limit) aggregating to Rs. 1300 lakhs (As at 31st March 2017 Rs. 1500 lakhs & As at 1st April 2016 Rs. 300 Lakhs) for contracts undertaken by the Company and other matters are secured by extension of charge by way of joint hypothecation of stock in trade, stores and spares etc., book debts subject to prior change in their faviour.Amount outstanding as on 31st March, 2018 is Rs.685.36 lakhs (31st March 2017 Rs . 592.66 Lakhs & 1st April 2016 Rs. 307.82 Lakhs)

Note: The information has been given in respect of such vendors to the extent they could be identified as “ Micro and Small” enterprises on the basis of information available with the Company.

5.1 (a) The company has single Product,viz:”Forgings” consequently there are no Reportable Segments of the company as per ‘Ind AS 108- Operating segments’ prescribed by Companies (Accounting Standards) Amendment Rules, 2016

(b) Disclosures of transactions with Related Parties as required by ‘Ind AS 24’ “Related Party Disclosures” is given below.

Related parties as defined under clause 3 of the Accounting Standard have been identified on the basis of representations made by the Key Managerial Personnel, information available with the company and taken on record by the Board.

5.2 EVENT OCCURING AFTER BALANCE SHEET DATE

The Board of Directors has recommended dividend for the current year of Rs. 3.50/- per equity share (Nominal value Rs.10/-per equity share)

Expenditure on Corporate Social Responsibility activities:

5.3 Previous Year’s figures have been regrouped wherever necessary to make them comparable with those of the current year.

6 FINANCIAL RISK MANAGEMENT

6.1 Market risk

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument.

6.2 Interest rate risk :

The company has investment in fixed deposits. However interest income from fixed deposits is a residuary income and not going to affect the significant cash flow of the company.

6.3 Foreign currency risk:

Company is exposed to foreign exchange risk through its sales and services to foreign contries, and purchases from overseas suppliers in various foreign currencies.

The following table analyzes foreign currency risk from financial instruments:

6.4 Credit risk

Credit risk arises from the possibility that the counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses financial reliability of customers and other counter parties, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets. Individual risk limits are set and periodically reviewed on the basis of such information.

Financial assests are written off when there is no reasonable expectations of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized as income in the statement of profit and loss.

The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates.Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.”

Financial Assets are considered to be of good quality and there is no significant increase in credit risk. Movement in provisions of doubtful debts

6.5 Liquidity risk :

Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset.

Maturity patterns of Financial Liabilities

6.6 The ageing analysis of account receivables has been considered from the date of invoice falls due

7. Standards issued but not yet effective:

In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying Ind AS 115 - ‘Revenue from Contracts with Customers’ and consequential amendments to various Ind AS standards. The amended Rules also notified amendments to Ind AS 12 - ‘Income Taxes’, Ind AS 21 - ‘The Effect of Changes in Foreign Exchange Rates’, Ind AS 28 -’Investments in Associates and Joint Ventures’ and Ind AS 40 - ‘Investment Property’. These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB). The amendments are effective from accounting periods beginning from 1st April, 2018.

a) Ind AS 115 - ‘Revenue from Contracts with Customers’:

On March 28, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised 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. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers.

The standard permits two possible methods of transition:

- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors

- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach) The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018.

The Company is currently assessing the impact of application of Ind AS 115 on Company’s financial statements.

b) Amendment to Ind AS 12 - ‘Income Taxes’:

The amendments clarify the requirement for recognising deferred tax assets on unrealised losses on debt instruments that are measured at fair value. The amendments also clarify certain other aspects of accounting for deferred tax assets. The changes will not have any material impact on the financial statements of the Company.

8 Note on First-time adoption of IND-AS

These are the Company’s first financial statements prepared in accordance with Ind AS.

The Company has adopted Indian Accounting Standards (Ind AS) notified by the Ministry of Corporate Affairs with effect from 1st April, 2017, with a transition date of 1st April, 2016. Ind AS 101-First-time Adoption of Indian Accounting Standards requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements which is for the year ended 31st March, 2018 for the company, be applied retrospectively and consistently for all financial years presented. Consequently, in preparing these Ind AS financial statements, the Company has availed certain exemptions and complied with the mandatory exceptions provided in Ind AS 101, as explained below. The resulting difference in the carrying values of the assets and liabilities as at the transition date between the Ind AS and Previous GAAP have been recognized directly in equity (retained earnings or another appropriate category of equity).

Set out below are the Ind AS 101 optional exemptions availed as applicable and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

8.1 Optional Exemptions availed

(a) Deemed Cost

The Company has opted paragraph D7 AA and accordingly considered the carrying value of property, plant and equipment and Intangible assets as deemed cost as at the transition date.

8.2 Applicable Mandatory Exceptions

(a) Estimates

An entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies). Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP.

The company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Deferred payment liabilities carried at FVTPL

- Re-measurement of the defined benefit liabilities/ (assets)

(b) Classification and measurement of financial assets

As required under paragraph 4.1.2 of Ind AS 109, the company has assessed the classification and measurement of financial assets (investment in equity shares of Shamrao Vitthal Co-operative Bank Ltd) at Amortised Cost.

8.3 Transition to Ind AS - Reconciliations

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to Ind AS as required under Ind AS 101:

I. Reconciliation of Balance sheet as at April 1, 2016 (transition date)

II. Reconciliation of Balance sheet as at March 31, 2017

III. Reconciliation of Statement of Profit and Loss for the year ended March 31, 2017

V. Reconciliation of Income Statement for the year ended March 31, 2017

IV. Reconciliation of Equity as at April 1, 2016 and as at March 31, 2017

VI. Reconcilation of Income tax expenses

8.4 A) Remeasurements of post-employment benefit obligation

In the financial statements prepared under Previous GAAP, re-measurement benefit of defined plans (gratuity), arising primarily due to change in actuarial assumptions was recognised as employee benefits expense in the Statement of Profit and Loss. Under Ind AS, such re-measurement benefits relating to defined benefit plans is recognised in OCI as per the requirements of Ind AS 19- Employee benefits. Consequently, the related tax effect of the same has also been recognised in OCI.

As a result of this change, the profit for the year ended March 31, 2017 decreased by Rs. 130.92 Lakhs and recognised in Other Comprehensive Income instead of profit and loss. There is no impact on the total equity as at 31st March, 2017. Consequently, tax effect of the same amounting to Rs. 43.28 Lakhs is also recognised separately in OCI.

B) Retained Earnings

Retained earnings as at April 1, 2016 have been adjusted consequent to the above Ind AS transition adjustments.

C) Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as ‘other comprehensive income’ include re-measurements of defined benefit plans. The concept of other comprehensive income did not exist under previous I-GAAP.

D) The Ind AS adjustments are either non cash adjustments or are regrouping among the cash flows from operating, investing and financing activities. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended 31st March, 2017 as compared with the previous I-GAAP.

9 ”The Financial Statements are approved by the Company’s Board of Directors on 12th May 2018”.

10 Previous Year’s figures have been regrouped wherever necessary to make them comparable with those of the current year.

Source : Dion Global Solutions Limited
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