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Navneet Education

BSE: 508989|NSE: NAVNETEDUL|ISIN: INE060A01024|SECTOR: Printing & Stationery
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Notes to Accounts Year End : Mar '18

1. Company overview, nature of entity’s operations and its principal activities

Navneet Education Limited (‘the Company’) is a public limited company incorporated and domiciled in India and has its registered office at Navneet Bhavan, Near Shardasharam Society, Bhavani Shankar Road, Dadar, Mumbai - 400028, Maharashtra, India. The company is listed on Bombay Stock Exchange and also National Stock Exchange.

The Company is a leading manufacturer of Maharashtra and Gujarat State Board Publication books and also Stationery Products. The Publishing segment consists of supplementary books such as workbooks, guides, and question banks which are based on the latest prescribed syllabus by state education boards under the brand name of ‘Vikas’ and ‘Gala’. The Stationery Business consists of Paper-based and non-paper based stationery under the brand names ‘Navneet’ and ‘Youva’.

The financial statements of the Company for the year ended March 31, 2018 were approved and adopted by the board of directors of the Company in their meeting dated May 10, 2018.

2. Significant Accounting Policies and Key Accounting Estimates and Judgments

2.1 Basis of preparation

a) Statement of Compliance

The financial statements (on standalone basis) of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of Companies Act, 2013 (‘the Act’) read with the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) Rules, 2016 and also the subsequent amendments which were notified during the year and applicable to the period. The Company has consistently applied the accounting policies used in the preparation of its financial statements.

b) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are prepared in INR which is the functional and presentation currency. All amounts are rounded to the nearest lakhs.

c) Basis of measurement

The financial statements have been prepared under historical cost convention on accrual basis except for the following:

i) Certain financial assets and financial liabilities measured at fair value (refer accounting policy regarding financial instruments - Note no. 3.10)

ii) Defined benefit plans measured at fair value

2.2 Use of significant accounting estimates, judgments and assumptions

The preparation of the financial statements requires management to make estimates, judgments and assumptions that affect the reported balances of assets and liabilities, disclosure of contingent liabilities as on the date of financial statements and reported amounts of income and expenses during the period. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

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

a) Estimated useful lives and scrap value (Property, plant & equipment, Investment properties and Intangible assets)

The Company has estimated the useful life, residual value and method of depreciation / amortisation of property, plant & equipment, investment properties and intangible assets based on its internal technical assessment. Property, plant & equipment, investment properties and intangible assets represent a significant proportion of the asset base of the Company. Further the Company has estimated that scrap value of property, plant & equipment would be able to cover the decommissioning costs of property, plant & equipment.

Therefore, the estimates and assumptions made to determine useful life, residual value, method of depreciation / amortisation and decommissioning costs are critical to the Company’s financial position and performance.

b) Impairment of financial assets (including trade receivable)

Allowance for doubtful receivables represent the estimate of losses that could arise due to inability of the customer to make payments when due. These estimates are based on the customer ageing, customer category, specific credit circumstances and the historical experience of the Company as forward looking estimates at the end of each reporting period.

c) Estimation of defined benefit obligations

The liabilities of the Company arising from employee benefit obligations and the related current service cost, are determined on an actuarial basis using various assumptions as disclosed in notes forming integral part of consolidated financial statements.

d) Estimation of provisions and contingencies

Provisions are liabilities of uncertain amount or timing recognised where a legal or constructive obligation exists at the balance sheet date, as a result of a past event, where the amount of the obligation can be reliably estimated and where the outflow of economic benefit is probable. Contingent liabilities are possible obligations that may arise from past event whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events which are not fully within the control of the Company. The Company exercises judgment and estimates in recognizing the provisions and assessing the exposure to contingent liabilities relating to pending litigations. Judgment is necessary in assessing the likelihood of the success of the pending claim and to quantify the possible range of financial settlement. Due to this inherent uncertainty in the evaluation process, actual losses may be different from originally estimated provision.

2.3 New standard issued but not effective and hence not adopted

The following standards issued / modified by MCA become effective w.e.f. 1st April 2018.

* Does not include consequential modification to other existing Ind AS due to issue of new Ind AS.

The Company is assessing the detailed potential impact of above amendments on the financial statements. Management presently is of the view that it would not have a material impact on the financial statements.

3.1 Land includes a leasehold land whose gross block and accumulated depreciation as at year end is Rs.84 Lakh (Previous year Rs.84 Lakh).

3.2 Land also includes a leasehold land whose gross block of Rs.2 Lakh (Previous year: Rs.2 Lakh) and accumulated depreciation of Rs. Nil (Previous year: Rs. Nil) being the value of 1,250 shares (Previous year : 1,250 shares) of Rs.100 each in Gala Co-operative Industrial Estate Limited.

Also, refer note 38 (a) for disclosure related to lease of investment properties.

4.1 Building with a carrying amount of Rs.1,334 Lakh (Previous year: Rs.1,403 Lakh) is subject to first charge to secure bank loan (refer note 22.1).

4.2 As at year-end the fair values of investment properties are Rs.9,867 Lakh (Previous Year : Rs.10,035 Lakh). These valuations are based on fair valuation rate given in ready reckoner for stamp duty calculation of Building and for rest it is the Book Value.

5.1 Terms/Rights Attached to Equity Shares

The company has only one class of equity shares having a par face value of Rs.2/- per share. Each holder of equity shares is entitled to one vote per share and all rank pari passu. 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 amount. The distribution will be in proportion to the equity shares held by the shareholders.

61 All short term rupee loans are secured against hypothecation & first charge over stock of raw materials, work-in-progress, finished goods, stores & spares not relating to plant and machinery & book debts and also mortgage & first charge over office premises 1A, 1B, 2A & 2B at Benefice Business House located at Lower Parel, Mumbai.

6.2 Secured working capital loan includes interest accrued but not due Rs.4 Lakh (Previous year: Rs.2 Lakh). Interest rate for this loan is 8.15%. Subsequent to year end, working capital loan along-with interest repaid on 7th April, 2018.

6.3 Interest rate for unsecured rupee loan is 8.30%. Subsequent to year end, this loan repaid on 6th April, 2018.

7.1 Details of the dues to Micro, Small and Medium Enterprises (MSME), as defined in the Micro, Small and Medium Enterprises Development Act, 2006, as on 31st March, 2018 based on available information with the Company which are as under:

8.1 Provision for Sales Returns:

The above amount is net of provision made for expected sales return amounting to Rs.909 Lakh (Previous year Rs.267 Lakh) in accordance with Ind AS 18. Also refer Note 43 (a) and Note 26.

9. Contingent liabilities:

(a) Tax matters:

i) For disputed Income-tax matters Rs.42 Lakh (Previous Year Rs. Nil). (Refer below note)

ii) For disputed Sales tax-matters Rs.4,708 Lakh (Previous Year Rs.4,271 Lakh) against which amount paid Rs.282 Lakh (Previous year Rs.254 Lakh). (Refer below note)

Note: Future cash outflows in respect of matters considered disputed are determinable only on receipt of judgments / decisions pending at various forums / authorities. The management does not expect these claims to succeed and accordingly, no provision has been recognised in the financial statements.

(b) Against bond:

i) Duty liability amounting to Rs. Nil (Rs.363 Lakh) for the purchase of excisable inputs without payment of duty under the bonds executed if the export obligation is not fulfilled.

ii) Duty-free imports for which export obligation is pending as at year-end amounting to Rs.141 Lakh (Previous Year Rs.22 Lakh).

(c) Bank guarantee:

i) In respect of Bank Guarantee given for tender and electricity of Rs.63 Lakh (Previous Year Rs.100 Lakh).

ii) Financial Guarantee is issued in favour of banks against loans taken by subsidiaries. The amount of guarantee is Rs.4,650 Lakh (Previous Year Rs.3,650 Lakh). The Guarantee given is covered under section 186(4) of the Companies Act, 2013 and is for commercial purpose only. Accounting entry for fair value of financial guarantee as per Ind AS has been passed in the books of account, according to which liability recognised is Rs.142 Lakh (Previous Year Rs.80 Lakh) (Refer note 24).

10. Capital Commitments and Other Commitments

An estimated amount of contracts remaining to be executed on capital account is Rs.803 Lakh (Previous year: Rs. Nil). The Company does not have any other commitments.

11. Operating Leases

(a) As lessor

The existing cancellable operating lease agreements permit the lessee to cancel the arrangement before the expiry of the normal tenure of the lease. Hence no disclosures are required to be made.

(b) As lessee

The Company has taken various commercial premises under cancellable operating leases. These are normally renewable on expiry. The Company has not taken any commercial premises under non-cancellable operating leases.

12. Derivative Financial Instruments

(a) The assets and liabilities position of various outstanding derivative financial instruments is given below:

Note: The Company has exchange rate movement risk for above mentioned foreign currency contracts.

(b) Outstanding position and fair value of various foreign exchange derivative financial instruments:

(c) Details of amount held in hedging reserve and the period over which these are going to be released

(d) Amount of loss recognised in hedging reserve and recycled:

i) During the financial year 2017-18:

ii) During the financial year 2016-17:

(e) The amount of gain / (loss) recognised in Statement of Profit and Loss on account of hedge ineffectiveness for cash flow hedges for the year ended 31st March 2018 is Rs. Nil (Previous year : Rs. Nil).

13. Disclosure pursuant to Indian Accounting Standard 19 ‘Employee benefits’:

(a) The Company has recognised the following amounts towards defined contribution plans as an expense and included in the Statement of Profit and Loss.

(b) Defined benefit plan and long-term employment benefits: Gratuity (Defined benefit plan):

In respect of Gratuity, the Company makes an annual contribution to the employee group gratuity scheme of the Life Insurance Corporation of India, funded defined benefits plan for qualified employees. The scheme provided for lump-sum payments to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service.

The Company has provided for gratuity based on the actuarial valuation done as per Project Unit Credit Method. The following table sets out for the status of gratuity plan:

(c) Defined benefit plan and long-term employment benefits: Leave encashment (unfunded)

In respect of leave encashment benefit, accrual is made on the basis of a year-end actuarial valuation in pursuance of the Company’s leave rules.

The Company has provided for leave benefits based on the actuarial valuation done as per Project Unit Credit Method. The following table sets out for the status of leave encashment plan:

14. As per Section 135 of the Companies Act 2013, a Corporate Social Responsibility (CSR) Committee has been formed by the Company. The areas for CSR activities are reducing inequalities faced by socially and economically backward groups, Promoting Education & Preventive Health care which are as per eligible activities specified in Schedule VII of the Companies Act, 2013.

(a) Gross amount required to be spent by the Company during the current year is Rs.418 Lakh (Previous year: Rs.359 Lakh).

(b) Details of amount spent during the year are as under:

15. Figures of Rs.50,000 or less have been denoted by #

16. Income tax

A. Income tax expense in the statement of profit and loss consists of:

B. The reconciliation between the provision of income tax of the Company and amounts computed by applying the Indian statutory income tax rate to profit before taxes is as follows

17. The Board of directors has recommended final dividend of INR 1.50 per share on face value of INR 2/- each for the Financial year 2017-18 on board meeting held on May 10, 2018, subject to approval of shareholders in ensuing Annual General Meeting.

18. Fair value of the financial assets and liabilities

The management assessed that the fair values of financial asset and financial liabilities approximate their carrying amounts.

The following methods and assumptions were used to estimate the fair values:

(a) Fair values of cash and cash equivalents, trade receivables, interest accrued on deposits with the bank, bank deposits, trade payables and other financial liabilities, approximate their carrying amounts largely due to the short-term maturities of these instruments.

(b) The management has considered fair value of security deposits,loan from bank, loan from related party, equal to their carrying value as fair values based on the current market interest rates and other risk factors approximate to carrying value.

Fair value hierarchy

The following table presents the financial assets and financial liabilities by level with the fair value measurement hierarchy :

* There has been no transfer between level 1 and level 2 during the year ended 31st March, 2018 and 31st March, 2017. Level is NA, since valued at amortised cost.

19. Financial Risk Management

The Company is exposed to market risk, credit risk and liquidity risk. The management reviews and agrees policies for managing each of these risks which are summarized below:

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: foreign currency risk, interest rate risk and other price risks. Financial instruments affected by market risk primarily include trade receivables, trade payables, cash and cash equivalents.

The sensitivity analysis in the following sections relates to the position for the periods presented. The sensitivity analysis has been prepared on the basis that the amount of net debt and the proportion of financial instruments in foreign currencies are all constant. The analysis excludes the impact of movements in market variables on the carrying values of gratuity obligation and provisions.

The sensitivity of the relevant profit and loss item is the effect of the assumed changes in respective market risks based on the financial assets and financial liabilities held at the periods presented.

Interest rate risk

The following tables demonstrate the sensitivity to a reasonably possible change in interest rate, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to trade payables, trade receivables.

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in USD, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities.

Price risk

The Company is not exposed to any significant price risk.

Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities, primarily for trade receivables and deposits with banks and other financial assets.

Trade receivables

Customer credit risk is managed based on the Company’s established policy, procedures and control relating to customer credit risk management. The Company evaluates the concentration of risk with respect to trade receivables as low. Out of total trade receivables balance as at 31st March, 2018 Rs.2,703 Lakh (Previous year: Rs.702 Lakh) is due from a single US-based customer being the Company’s largest customer for which the Company has discounted bills with no recourse terms. There are no other customers who represent more than 10% of the balance of trade receivables. Outstanding customer receivables are regularly monitored by the management.

An impairment analysis is performed at each reporting date on an individual basis for major customers. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral as security.

Deposits with banks and other financial assets

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy.

Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company’s objective is to, at all times maintain an optimum level of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system.

The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments.

20. 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 shareholders. The primary objective of the Company’s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes suitable adjustments in light of changes in economic conditions.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, Loan obligation, trade and other payables and less cash and cash equivalents.

21. “Revenue from operations for the periods up to 30th June, 2017 includes excise duty, which is discontinued effective 01st July, 2017 upon implementation of Goods and Service Tax (GST) in India. GST is not included in revenue from operations w.e.f. 01st July, 2017. In view of the aforesaid restructuring of indirect taxes, revenue from operations for the year ended 31st March, 2018 are not comparable with previous periods.

For the purpose of comparability, revenue from operations including excise duty and excluding excise duty are given below:

22. SEGMENT REPORTING

The Company’s operations relate to publication of knowledge-based information in educational and general books form and manufacturing of paper and other stationery items. It caters to the educational need of Indian as well as Global market. Accordingly “Publication” and “ Stationery “ comprise of the primary segments.

Secondary segmental reporting is performed on the basis of the geographical location of customers.

The accounting principles and policies used in the preparation of the Financial Statements, as set out in the note on significant accounting policies, are also consistently applied to record revenue and expenditure, in individual segments.

Notes :

1. Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the respective segment, however, revenue and expenses which can not be identified or allocated reasonably to a segment being related to the enterprise as a whole have been grouped as unallocable.

2. Segment assets and segment liabilities represent assets and liabilities of respective segments , however, the assets and liabilities not identifiable or allocable on reasonable basis being related to the enterprise as a whole have been grouped as unallocable.

3. The businesses which have been grouped under “Others” segment comprises of revenue from the generation of power by windmill, Pre School, trading items etc.

4. In publication segment, concentration of revenues from one customers of the Company were 15.32% and 15.38% of total revenue for the year ended 31st March, 2018 and 31st March, 2017 respectively and in stationery segment, concentration of revenues from one customers of the Company were 28.78% and 31.62% of total revenue for the year ended 31st March, 2018 and 31st March, 2017 respectively .

23. Additional Information as required by para 7 of General Instructions for preparation of Statement of Profit and Loss (other than already disclosed above) are either Nil or Not Applicable.

24. Previous Year Figures have been regrouped/rearranged wherever necessary.

Source : Dion Global Solutions Limited
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