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Lactose (India)

BSE: 524202|ISIN: INE058I01013|SECTOR: Pharmaceuticals
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Lactose (India) is not listed on NSE
Mar 17
Notes to Accounts Year End : Mar '18

Note 1 Corporate Information

Lactose (India) Limited (“the Company”) is a listed public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. The Company is a Pharmaceutical Company and engaged in the Business of Manufacturing, trading and carrying out job work and manufacturing of Pharmaceutical Products. The equity of the Company is listed on the Bombay Stock Exchange.

The financial statements of the Company for the year ended 31 March 2018 were authorised for issue in accordance with resolution of the Board of Directors on 29th May, 2018.

NOTE 2.1 : FIRST TIME ADOPTION OF IND AS

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

The accounting policies set out in Note 2.1 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS balance sheet as at April 1, 2016 (The Company’s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with accounting standards notified under Companies(Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP).An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes :

A) Exemptions and exceptions availed

1) Ind-AS optional exemptions :

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

a) Deemed cost

Ind AS 101 permits a first time adopter to elect to fair value of its property, plant and equipment as recognised in financial statements as at the date of transition to Ind AS, measured as per previous GAAP and use that as its deemed cost as at the date of transition or apply principles of Ind AS retrospectively. Ind AS 101 also permits the first time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS.

The company has elected to measure items of property plant & equipment at its carrying value at the transition date except for certain class of assets which are measured at Fair value as deemed cost.

b) For financial instruments, wherein fair market values are not available (viz. interest free and below market rate security deposits or loans) the Company has elected to adopt fair value recognition prospectively to transactions entered after the date of transition.

2) Ind AS mandatory exceptions :

a) Estimates

An entity 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), unless there is objective evidence that those estimates were in error. Ind AS estimates at April 1, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP.

i) Impairment of financial assets based on expected credit loss model.

b) Derecognition of financial assets and financial liabilities

Ind AS 101 requires a first time adopter to apply the derecognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. Accordingly,the Company has applied the derecognition requirement for financial assets and financial liabilities in Ind AS 109 prospectively for transactions occurring on or after date of transition to Ind AS.

c) Classification of financial assets and liabilities

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of facts and circumstances that exist on the date of transition to Ind AS. Accordingly, the Company has applied the above requirement prospectively.Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

d) Impairment of financial assets

Ind AS 101 requires an entity to assess and determine the impairment allowance on financial assets as per Ind AS 109 using the reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments which were initially recognised and compare that to the credit risk at the date of transition to Ind AS. The Company has applied this exception prospectively.

B) 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 in accordance with Ind AS 101:

I. Reconciliation of Balance sheet as at April 1, 2016 and March 31, 2017

II. Reconciliation of Total Comprehensive Income for the year ended March 31, 2017

III. Reconciliation of Equity as at April 1, 2016 and March 31, 2017 between previous GAAP and IND AS

The presentation requirements under Previous GAAP differs from Ind AS and hence Previous GAAP information has been regrouped for ease of reconciliation with Ind AS. The Regrouped Previous GAAP information is derived from the Financial Statements of the Company prepared in accordance with Previous GAAP.

Footnotes to the reconciliation of equity as at April 1, 2016 & March 31, 2017 and Statement of profit and loss for the year ended March 31, 2017

1) Trade Receivables

Under Indian GAAP, the Company has created provision for impairment of receivables which consists only in respect of specific amount for probable losses. Under Ind AS, impairment allowance has been determined based on Expected Credit Loss (ECL) model.

2) Defined benefit liabilities

Both under Indian GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to the statement of profit and loss. Under Ind AS, remeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognised immediately in the balance sheet with a corresponding debit or credit to other equity through OCI.

3) Security Deposit

Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be initially recognised at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposits has been recognised as prepaid rent.

4) Investment Properties

Under previous GAAP,investment properties were presented as a part of non-current investments/Plant, Property and Equipment. Under Ind AS,investment properties are required to be separately presented on the face of the balance sheet. There is no impact on the total equity or profit as a result of this adjustment.

5) Deferred Tax (Including MAT Credit)

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. This has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.

In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences.Deferred tax adjustments are recognised in correlation to the underlying transaction either in other equity or a separate component of equity.

Under Previous GAAP, MAT credit was disclosed under non-current assets. In accordance with Ind AS 12, deferred tax shall include any carry forward unused tax credits. Hence, MAT credit entitlement has been included in deferred tax liability (net).

Leasehold land is a non-depreciable asset, Management is expecting that its carrying value will be recovered through sale and the indexation benefit at the time of disposal will be available, accordingly deferred tax asset on the difference between carrying value and indexed value has been created.

6) Revenue

Under Indian GAAP, revenue from sale of products was presented excluding excise duty.Under Ind AS, revenue from sale of products is presented inclusive of excise duty. Excise duty paid is presented on the face of the statement of profit and loss as part of expenses.There is no impact on total equity and profits.

7) Financial Assets (Investments)

Under Indian GAAP, the Company accounted for long term investments in unquoted and quoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments.Under Ind AS, the Company classified these investments in equity shares as FVTPL investments. Ind AS requires such investments to be measured at fair value. At the date of transition to Ind AS, difference between the instruments at fair value and cost as at the date of transition has been recognised in other equity, net of related deferred taxes.

8) Property, Plant & Equipment

The Company have considered fair value of land in accordance with stipulations of Ind AS 101 with the resultant impact being accounted for in the reserves.

9) Financial Liabilities

Under Previous GAAP, non-current liabilities were recognised on undiscounted basis. Ind AS requires such financial liabilities to be recognised at present value (discounted value) where the effect of time value of money is material. This led to a decrease in the value of non-current financial liabilities on the date of transition which was adjusted against retained earnings. Ind AS also provides that where discounting is used, the carrying amount of the liability increases in each period to reflect the passage of time. This increase is recognised as finance cost. The interest cost on unwinding of discount and impact of change in discount rate are recognised in the Statement of Profit and Loss under ‘Finance costs’.

10) Other Comprehensive Income

Under Indian GAAP, the Group has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to profit or profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.

11) Statement of Cash Flows

The Ind AS adjustments are either non cash adjustments or are regrouping among the cash flow 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 GAAP.

Note:

i) For Investment Property exisiting as on the date of transition to Ind AS the company has used IGAAP carrying value as Deemed cost

The Company has availed the deemed cost exemption in relation to the investment property on the date of transition and hence the net block carrying amount has been considered as the gross block carrying amount on that date. Refer note below for the gross block value and the accumulated depreciation on 1 April 2016 under the previous GAAP.

Estimation of Fair value :

The above valuation of the investment properties are in accordance with the Ready Reckoner rates prescribed by the Government of Maharashtra for the purpose of levying stamp duty. Since the valuation is based on the published Ready Reckoner rates. Since the valuation is based on the published Ready Reckoner rates, the company has classified the same under Level 2 of Fair value hierarchy.

b. Terms/rights attached to equity shares:

(i) The company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. Any fresh equity shares shall rank pari-passu with the existing shares.

(ii) 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, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

Note: 3,60,000 Equity Shares (of Rs 10 each fully paid up) have been issued on conversion of the Share warrant issued at a Rs 158.18 in the ratio of one share per warrant in the current year

Note:

I) Secured borrowings Term Loan From Financial Institution

a) Term loan from Piramal Finance Ltd. Amounting to Rs. 3707.87 lakhs (31.03.2017 : Rs. Nil 01.04.2016 : Rs Nil) is secured by

i) Exclusive charges over current and future Fixed assets of the borrower

ii) Joint, Several Irrevocable unconditional personal guarantee of Shri Atul Maheshwari and Smt. Sangeeta Maheshwari

iii) It carries an interest rate of 13.50% p.a.. The loan is repayable in 72 monthly installment starting from 5th September, 2017.

iv) A First charge by way of hypothecation by the Borrower of its current asset ranking on a pari paru basis with the charge created/to be created for securing non fund based working capital facility availed/to be availed by the Borrower agrregrating to the extent of Rs.300 lakhs

Term Loan From Banks :

a) Term loan from Oriental Bank of Commerce amounting to Rs.Nil (31.03.2017: Rs.1019.73 lakhs 01.04.2016 : Rs 1379.73 lakhs) was secured against hypothecation of Land and Building, Plant and Machinery, Furniture and Fixtures, Vehicles and other assets created out of the said Term loan. It carries an interest rate 4.00% Base Rate. The loan was repayable in 60 equal monthly installments of Rs. 30 lakhs each, starting from February, 2015. The same is fully repaid during the year.

b) Term loan from Oriental Bank of Commerce amounting to Rs. Nil (31.03.2017 : Rs. 343.70 lakhs 01.04.2016 : Rs : Nil) was secured against Hypothecation of all the Plant & Machineries, furnitures & fixtures, Vehicles and all other assets of the company created out of term loan. The asset shall be charged exclusively to our bank. It carries an interest rate 9.70% (Bank Rate) 4.25% (Bank’s Spread) - 0.25% (Concession). The loan was repayable in 60 equal monthly installments of Rs. 6.25 lakhs each starting from 07th October,2016. The Term Loan was sanctioned for Rs. 375 lakhs. The same is fully repaid during the year.

c) Term loan from ICICI Bank amounting to USD Nil (Equivalent to INR .Nil) (31.03.2017 : USD 15,09,603.66 equivalent to Rs 978.83 lakhs 01.04.2016 : USD 18,64,804 equivalent to Rs 1,236.98 lakhs) was secured by Pari pasu Charge with Oriental Bank of Commerce on present & future movable fixed assets ,Factory land & building and current assets of the company. It carries an interest rate of MCLR - 1Y - 9.15% Spread is 3.70% .The loan was repayable in quarterly installment of USD 88,800.20 , starting from July,2015. Equitable mortgage on residential premises of directors of the Company is also offered as a collateral security.The loan is further secured by personal guarantees by the directors and relative of directors of the company. The same is fully repaid during the year.

Vehicle loans From Bank

a) Vehicle loan from HDFC Bank amounting to Rs. 6.71 lakhs (31.03.2017 : Rs.Nil, 01.04.2016 : Rs.Nil) is secured against respective vehicle. It carries interest rate of 8.50% p.a. and is repayable in 60 equal monthly installment amounting to Rs. 0.14 lakhs each, starting from 7th February 2018.

b) Vehicle loan from HDFC Bank amounting to Rs. 4.87 lakhs (31.03.2017 : Rs.Nil, 01.04.2016 : Rs.Nil) is secured against respective vehicle. It carries interest rate of 8.50% p.a. and is repayable in 60 equal monthly installment amounting to Rs. 0.1 lakhs each, starting from 7th February 2018.

c) Vehicle loan from HDFC Bank amounting to Rs. 6.42 lakhs (31.03.2017 : Rs.Nil, 01.04.2016 : Rs.Nil) is secured against respective vehicle. It carries interest rate of 8.46% p.a. and is repayable in 48 equal monthly installment amounting to Rs. 0.17 lakhs each, starting from 5th November 2017.

d) Vehicle loan from HDFC Bank amounting to Rs. 5.26 lakhs (31.03.2017 : Rs.Nil, 01.04.2016 : Rs.Nil) is secured against respective vehicle. It carries interest rate of 8.46% p.a. and is repayable in 48 equal monthly installment amounting to Rs. 0.14 lakhs each, starting from 5th November 2017.

e) Vehicle loan from ICICI Bank amounting to Rs. Nil (31.03.2017 : Rs.Nil, 01.04.2016 : Rs.4.35 lakhs ) is secured against respective vehicle. It carries interest rate of 10.60% p.a. and was repayable in 60 equal monthly installment amounting to Rs. 0.75 lakhs each. The same has been fully repaid during the year 31st March 2017

f) Vehicle loan from ICICI Bank amounting to Rs.Nil (31.03.2017 : Rs.Nil, 01.04.2016 : Rs. 4.35 lakhs) is secured against respective vehicle. It carries interest rate of 10.60% p.a. and was repayable in 60 equal monthly installment amounting to Rs. 0.75 lakhs each. The same has been fully repaid during the year 31st March 2017.

g) Vehicle loan from Kotak Mahindra Bank amounting to Rs.Nil (31.03.2017 : Rs.Nil, 01.04.2016 : Rs.1.88 lakhs) is secured against respective vehicle. It carries interest rate of 12.20% p.a. and was repayable in 47 equal monthly installment amounting to Rs. 0.32 lakhs each.The same has been fully repaid during the year 31st March 2017.

h) Vehicle loan from Kotak Mahindra Bank amounting to Rs.Nil (31.03.2017 : Rs.Nil, 01.04.2016 : Rs.2.50 lakhs) is secured against respective vehicle. It carries interest rate of 11.40% p.a. and was repayable in 47 equal monthly installment amounting to Rs. 0.26 lakhs each. The same has been fully repaid during the year 31st March 2017.

Vehicle loans From Others

Vehicle loan from Tata Capital Limited amounting to Rs.Nil (31.03.2017 : Rs.Nil, 01.04.2016 : Rs.1.34 lakhs) is secured against respective vehicle. It carries interest rate of 12.99% p.a. and was repayable in 60 equal monthly installment amounting to Rs. 0.2 lakhs each. The same has been fully repaid during the year.

Cash Credit

a) Cash Credit Facility from Oriental Bank of Commerce amounting to Rs Nil (31.03.2017 : Rs.5.97 lakhs, 01.04.2016 : Rs.311.65 lakhs) was secured against hypothecation of stocks of raw materials, stock in process, finished goods, stores & spares and trade receivables of the Company. It carries interest rate of 4.50% Base Rate. Outstanding balance of cash credit facility had been fully repaid during the year.

b) Cash Credit Facility from ICICI Bank amounting to Rs Nil (31.03.2017 : Rs.132.67 lakhs , 01.04.1016 : Rs.187.51 lakhs) was secured against hypothecation of stocks of raw materials, stock in process, finished goods, stores & spares and trade receivables of the Company ranking pari pasu with Oriental Bank of Commerce and second pari pasu charge on future and present movable fixed assets of the Company. Equitable mortgage of the residential premises of directors of the Company was also given as a collateral security.The loan was further secured by personal guarantees from directors and relative of directors.It carries interest rate of McLR - 1Y - 9.15% Spread is 3.70%. Outstanding balance of cash credit facility had been fully repaid during the year.

c) Packing Cash Credit Facility from Oriental Bank of Commerce amounting to Rs.Nil (31.03.2017 : Nil, 01.04.1016 : Rs.66.7 lakhs) was secured against hypothecation of paid stocks meant for export.

II) Unsecured borrowings

Unsecured borrowings from Financial Institution

Long Term Loan From Bajaj Finserv amounting to Rs. 26.96 lakhs (31.03.2017 : Rs.Nil, 01.04.2016 : Rs.Nil) which are unsecured and carry interest rate of 16.75%p.a and is repayable in 36 installments of Rs. 1.24 lakhs each starting from 2nd June 2017.

Unsecured borrowings from Directors

Long term loans from Directors and Inter Corporate Loans which were unsecured and carry interest @ 12.5% p.a. are repaid during the current year.

Corporate Loan

The Company has taken inter corporate loan which carries interest 16.50% and are repayble before 31st March, 2018.

Note

a) During the FY 2013-14, the Company had commenced production of its upgraded manufacturing facility to manufacture up to 10000 metric tons 200 Mesh Lactose per year exclusively for Kerry Indegrients India Private Limited (KIIPL) and accordingly as per the manufacturing agreement with KIIPL , has recognised during the year income of Rs.57.77 lakhs (31.03.2017 :Rs.57.77 lakhs, 01.04.2016 : Rs57.77 lakhs) on proportionate basis out of total Advance Manufacturing Consideration amounting to Rs. 577.72 lakhs and the balance of Rs.57.77 lakhs (31.03.2017 Rs. 57.77 lakhs is disclosed under the head “Other Current liability” and Rs. 312.93 lakhs (31.03.2017 Rs.370.70 lakhs, 01.04.2016 Rs 428.48 lakhs) is disclosed under the head “Other Long term liability”.

*Interest paid or payable by the Company on the aforesaid principal amount has been waived by the concerned suppliers.

Note: This information, as required to be disclosed under the MSMED Act, has been determined to the extent such parties have been identified on the basis of information available with the Company.

Trade payables are normally non-interest bearing and settled as per the payment terms stated in the contract.

Added Tax (VAT),etc. have been replaced by GST. In accordance with Indian Accounting Standard - 18 on “Revenue” and Schedule III of Companies Act 2013, GST is not Included in Revenue from operations from 1st July 2017 onwards. However, for the period April 2017 to June 2017 and Earlier Comparative Periods, excise duty is included in the revenue form operations hence not comparable.

Note 3 : Earnings per share (EPS)

The amount considered in ascertaining the Company’s earnings per share constitutes the net loss after tax. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share and also the weighted average number of shares which could have been issued on conversion of all dilutive potential shares.

Note (a): The Company has obtained Advance Licence for purchase of raw material and license under Export Promotion Capital Goods Scheme (EPCG) for purchase of capital goods on zero percent custom duty. Under the both licence the Company needs to fulfill certain export obligations, failing which, it is liable for payment of custom duty. Export Obligations amounting to Rs.810.32 lakhs (31.03.2017 Rs 2637.04 lakhs, 01.04.2016 Rs 3712.80 lakhs ) needs to be completed under both the licence. This export obligatition to be completed within 6 years from the date of purchase of respective EPCG license In case of advance licence, export obligation to be completed within 18 months from the date of purchase of advance licence

(b) Commitments

Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs.306.12 lakhs (31.03.2017 : Rs.247.50 lakhs, 01.04.2016 : Rs Nil ).

Note 4 : Disclosure relating to employee benefits as per Ind AS 19 ‘Employee Benefits

A Defined benefit obligations - Gratuity (unfunded)

The gratuity plan is governed by the Payment of Gratuity Act, 1972 under which an employee who has completed five years of service is entitled to specific benefits. The level of benefits provided depends on the member’s length of service and salary at retirement age.

Note 5 : Segment Reporting as required under Indian Accounting Standard 108, “Operating Segments” :

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (“CODM”) of the Company. The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director of the Company. The Company operates only in one Business Segment i.e. manufacture and trading of Pharmaceutical Products, hence does not have any reportable Segments as per Ind AS 108 “Operating Segments”.

Note 6 : Operating leases

Leases as lessor

The Company has given its property on lease/ Leave and licence. The cancellable leases are renewable by mutual consent on mutually agreeable terms.

The future minimum lease payments for non-cancellable operating lease are as follows:

Leases as lessee

The future minimum lease payments for non-cancellable operating lease are as follows:

Note 7: Fair Value Measurement

A) Accounting classification and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities if the carrying amount is a reasonable approximation of fair value.

B) Measurement of fair values

Valuation techniques and significant unobservable inputs

The following table shows the valuation techniques used in measuring Level 2 and Level 3 fair values for financial instruments measured at fair value in the balance sheet, as well as the significant unobservable inputs used. Related valuation processes are described in Note 4.

i) Financial instruments measured at amortised cost

Note 8 : Financial risk management objectives and policies

The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.

i. 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 risk: interest rate risk, currency risk and other price risk. Major financial instruments affected by market risk includes loans and borrowings.

a) 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 does not have any exposure to the risk of changes in market interest rates relates primarily to the Company’s total debt obligations with fixed interest rates.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company’s profit/(loss) before tax is affected through the impact on floating rate borrowings, as follows:

Fair value sensitivity analysis for fixed-rate instruments :

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 flow will fluctuate because of a change in market interest rates.

b) Foreign currency risk

The Company is exposed to currency risk on account of its operating and financing activities. The functional currency of the Company is Indian Rupee. Our exposure are mainly denominated in U.S. dollars. The USD exchange rate has changed substantially in recent periods and may continue to fluctuate substantially in the future. The Company’s business model incorporates assumptions on currency risks and ensures any exposure is covered through the normal business operations. This intent has been achieved in all years presented. The Company has put in place a Financial Risk Management Policy to Identify the most effective and efficient ways of managing the currency risks.

c) Commodity and other price risk

The Company is not exposed to the commodity and other price risk.

ii. 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, and arises principally from the Company’s receivables from customers and investment securities. The carrying amounts of financial assets represent the maximum credit exposure.

Trade receivables

The Company extends credit to customers in normal course of business. The Company considers factors such as credit track record in the market and past dealings for extension of credit to customers. To manage credit risk, the Company periodically assesses the financial reliability of the customer, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivables. Outstanding customer receivables are regularly monitored to make an assessment of recoverability. Receivables are provided as doubtful / written off, when there is no reasonable expectation of recovery. Where receivables have been provided / written off, the Company continues regular follow up,engage with the customers, legal options / any other remedies available with the objective of recovering these outstandings.The Company is not exposed to concentration of credit risk to any one single customer since services are provided to vast specturm. The Company also takes security deposits, advances , post dated cheques etc from its customers, which mitigate the credit risk to an extent.

Cash and cash equivalents

The Company held cash and cash equivalents with credit worthy banks of Rs 267.89 lakhs; Rs 5.75 and Rs 14.12 lakhs as at 31 March 2018 ; 31 March 2017 and 1 April 2016 respectively. The credit worthiness of such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be good.

iii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Exposure to liquidity risk

The table below summarises the maturity profile of the Company’s financial liabilities at the balance sheet date based on contractual undiscounted repayment obligations.

Note 9 : 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 Company strives to safeguard its ability to continue as a going concern so that they can maximise returns for the shareholders and benefits for other stake holders. The aim to maintain an optimal capital structure and minimise cost of capital.

To maintain or adjust the capital structure, the Company usually turns to reputed banks and other financial institutions for funds. Consistent with others in the industry, the Company monitors its capital using the gearing ratio which is total debt divided by total capital plus total debts.

Note 10 : Disclosure of Specified Bank Notes (SBNs)

During the year, the Company had specified bank notes or other denomination note as defined in the MCA notification G.S.R. 308(E) dated 30 March 2017 on the details of Specified Bank Notes (SBNs) Disclosure related to Specified Bank Notes (SBNs) held and transacted during the period from 8 November 2016 to 30 December 2016, the denomination wise SBNs and other notes as per the notification is given below:

* For the purpose of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8 November 2016.

Note 11 : Prior year comparatives

Previous year’s figures have been regrouped or reclassified, to conform to the current year’s presentation wherever considered necessary.

Notes 1 to 38 form an integral part of the financial statements

Source : Dion Global Solutions Limited
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