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Steelcast

BSE: 513517|ISIN: INE124E01020|SECTOR: Castings & Forgings
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Mar 17
Notes to Accounts Year End : Mar '18

NOTE: 1 CORPORATE INFORMATION

The financial statements are of Steelcast Limited (‘the Company’) for the year ended March 31, 2018. The Company was incorporated on 11.02.1972. The Company is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. The Company is engaged in casting manufacturing business.

The registered office of the Company is located at Ruvapari Road, Bhavnagar, Gujarat - 364005.

The financial statements were authorised for issue in accordance with a resolution of the directors on May 30, 2018.

NOTE: 2 BASIS OF PREPARATiON

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time). For all periods up to and including the year ended March 31, 2017, the Company has prepared these financial statements in accordance with the recognition and measurement principles laid down in the Accounting Standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and other accounting principles generally accepted in India (Indian GAAP). These financial statements for the year ended March 31, 2018 are the first financial statements which the Company has prepared in accordance with Ind AS. Refer Note no. 48 on how the Company adopted Ind AS.

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

- Derivative financial instruments

- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)

- Defined benefit plans - plan assets measured at fair value.

A Terms/ rights attached to equity shares

The Company has one class of shares referred to as equity shares having a par value of Rs. 5 each. Each shareholder is entitled to one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

B Of the total share capital 1,31,16,000 Equity shares were issued as fully paid up bonus shares.

C Equity shares issued as fully paid up bonus shares or otherwise than by cash during the period of five years immediately preceding March 31, 2018: 396,000

D During the year ended March 31, 2018, the Company paid the final dividend of Rs. 1.21 crores (f 0.60 per equity share) and dividend distribution tax of f 0.25 crores for the year ended March 31, 2017.

E On May 30, 2018, the Board of Directors has recommended the final dividend of Rs. 1.35 per equity share on the share capital for the year ended March 31, 2018 subject to approval from shareholders. On approval, the total dividend payment based on number of shares outstanding as on March 31, 2018 is expected to be Rs. 2.73 crore and the payment of dividend distribution tax is expected to be f 0.56 crores.

Securities premium account - Where the Company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the premium received on those shares shall be transferred to “Securities Premium Reserve’. The Company may issue fully paid-up bonus shares to its members out of the securities premium reserve and the Company can use this reserve for buy-back of shares.

Capital Reserve - It represents gain of capital nature which mainly includes gain on reissue of forfeited shares.

General Reserve - General Reserve is created out of the profits earned by the Company by way of transfer from surplus in the statement of profit and loss. The Company can use this reserve for payment of dividend and issue of fully paid-up and not paid-up bonus shares.

Retained earnings - Retained earnings are the profits that the Company has earned till date, less any transfers to General reserve and payment of dividend.

3 deferred tax liabilities (net)

The major components of income tax expense for the years ended March 31, 2018 and March 31, 2017 are:

The Company has tax losses which arose in India of f Nil (March 31, 2017: Rs. 73,604,268, April 1, 2016: Rs. 112,258,418) that are available for offsetting for eight years against future taxable profits of the Company. These losses expired in March, 2018. The Company also has unabsorbed depreciation of Rs. 133,145,659 (March 31, 2017: Rs. 285,551,182, April 1, 2016: Rs. 285,551,182).

Notes:

(1) Working capital finance (in foreign currency accounts) is secured against first pari passu charge on inventory and book debts and second charge on gross block of fixed assets of the Company and further guaranteed by one of the director. These loans are repayable on demand. This carries interest rate of LIBOR 3%.

(2) Working capital finance (in rupee accounts) is secured against first pari passu charge on inventory and book debts and second charge on gross block of fixed assets of the Company and further guaranteed by one of the director. These loans are repayable on demand. This carries interest rate ranging from 7.25% to 13.10%.

Revenue from operations includes excise duty collected from customers of Rs. 215.14 Lacs (previous year: Rs. 749.95 Lacs). Revenue from operations net of excise duty is Rs. 23,124.32 Lacs (previous year: Rs. 13,395.15 Lacs). Revenue from operations for periods up to 30 June 2017 includes excise duty. From 1 July 2017 onwards the excise duty and most indirect taxes in India have been replaced by Goods and Servicc Tax (GST). The Company collects GST on behalf of the Government. Hence, GST is not included in Revenue from operations. In view of the aforesaid change in indirect taxes, Revenue from operations for the year ended March 31, 2018 is not comparable with March 31, 2017.

4 significant accounting judgements, estimates and assumptions

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. 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.

Judgements

In the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

Assessment of control / joint control

The Company had entered into a partnership agreement in October 2010 in order to form a partnership firm ‘Steelcast LLC However, the operations of that entity were closed on 1 June 2015. Since the closure of the operations of that entity, the Company is not able to exercise any of the agreed rights under the agreement and it is not expecting to receive any significant benefit from the exercise of its rights over the entity. Hence, the Company determined that it does not have control / joint control over the entity

Estimates and assumptions

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 standalone 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.

Employee benefit plans

The cost of defined benefit gratuity plan and other long-term employment benefit plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The mortality rate is based on publicly available mortality tables for India. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity obligations are given in Note 39.

Taxes

Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. Details on current taxes are disclosed in Note 21. Impairment of financial assets

The impairment provision for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Estimated impairment allowance on trade receivables is based on the aging of the receivable balances and historical experiences. Individual trade receivables are written off when management deems them not to be collectible.

5 EMpLOYEE BENEFiT Defined Benefit plans

The Company has defined benefits gratuity plan. Every employee who has completed five years or more of service gets gratuity on death or resignation or retirement at 15 days salary (last drawn salary) for each completed years of service. The Company’s Gratuity Fund is managed by Life Insurance Corporation of India.

The following tables summaries the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet.

6 coMMitMeNts AND CONTiNGENCiES

a. Leases

Finance lease - Company as lessee

The Company has taken land for its Bhavnagar factory on lease for 30 years and the said lease has been classified as finance lease. Upon expiry, the Company also has an option to renew the said lease for another period oRs. 30 years.

b. Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for:

At March 31, 2018, the Company had commitments of f Nil (March 31, 2017: Rs. 21.00 Lacs, April 1, 2016: f Nil).

c. Contingent liabilities

Note:

Some retrenched employees of the Company have preferred an appeal for their reinstatement, liability of which is unascertainable pending decision of the higher court. the Company, however, does not expect any liability to arise on this account as the said retrenchment was lawfully made as per the order of the Dy. Commissioner of Labour, Government of Gujarat and Gujarat Industrial Tribunal.

Terms and conditions of transactions with related parties

The transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables.

$ This do not include the provisions made for gratuity as it is determined on an actuarial basis for the Company as a whole. Similarly, provision for leave encashment are not included in the above table as the same is also determined on an actuarial basis for the Company as a whole.

7 sEGMENT INFoRMATIoN:

A. Basis for segmentation

The Company’s senior management consisting of the chief executive, the chief financial officer and the directors, examines the company’s performance on the basis of single segment namely Castings Manufacturing business. Hence, the Company has only one operating segment under Ind AS 108 ‘Operating Segments’ i.e. Castings Manufacturing business.

B. Geographical information

The geographical information have been identified based on revenue within India (sales to customers with in India) and revenue outside India (sales to customers located outside India). The following table presents geographical information regarding the

C Major customer

Following is the details of customers which individually contribute more than 10% of Company’s revenue.

8 FAiR vALuES

The fair value of the financial assets and liabilities is 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 management assessed that the carrying amounts of its financial instruments are reasonable approximations of fair values.

9 FiNANCiAL RiSk MANAGEMENT OBJECTivES AND pOLICIES

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. The Company’s financial risk activities are governed by appropriate policies and procedures and financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. The Company’s financial risk management policies are set by the Board of Directors. All derivative activities for risk management purposes are carried out by teams that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised 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 mainly comprises interest rate risk and currency risk.

The sensitivity analysis in the following sections relate to the position as at March 31, 2018 and March 31, 2017

The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2018 and March 31, 2017.

interest rate risk

The Company’s exposure to changes in interest rates relates primarily to the Company’s outstanding floating rate debt. All the borrowing of the Company are at floating rate of interest.

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 before tax is affected through the impact on floating rate borrowings, as follows:

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.

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 the Company’s operating activities (when revenue or expense is denominated in a foreign currency). To mitigate the foreign currency risk, the Company enters into foreign exchange forward contracts. These foreign exchange forward contracts, carried at fair value, may have varying maturities varying depending upon the primary host contract requirements and risk management strategy of the Company

The most significant foreign currencies the Company is exposed to is the USD, EURO and AUD. The following tables sets forth information relating to foreign currency forward contracts and unhedged foreign currency exposures at March 31, 2018, March 31, 2017 and April 1, 2016.

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in USD, EURO and AUD exchange rates, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of unhedged foreign currency monetary assets and liabilities. The Company’s exposure to foreign currency changes for all other currencies is not material.

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 trade receivables) and from its financing activities, including deposits with banks and financial institutions and foreign exchange transactions.

The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.

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.

I) Trade receivables

Customer credit risk is managed on the basis of the Company’s established policy, procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally on 30 days to 145 days credit term. Credit limits are established for all customers based on internal rating criteria. Outstanding customer receivables are regularly monitored.

For trade receivables, expected credit loss (ECL) is provided as per simplified approach. The Company has applied the practical expedient as per Ind AS 109 ‘Financial Instruments’ to measure the loss allowance at lifetime ECL. The Company determines the ECL on trade receivables by using a provision matrix, estimated based on historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. Below table represents the reconciliation of provision made for expected credit loss for trade receivables:

II) Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s finance department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties who meets the minimum threshold requirements under the counterparty risk assessment process. Based on its on-going assessment of counterparty risk, the Company adjusts its exposure to various counterparties.

Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligation on time or at a reasonable price. Processes and policies related to such risks are overseen by senior management. The Company regularly monitors the rolling forecasts and actual cashflows, to ensure it has sufficient funds to meet the operational needs.

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

10 CApITAL management

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Company’s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions or its business requirements. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. 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, interest bearing borrowings (including current maturities), trade payables, less cash and cash equivalents and other bank balances.

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2018 and March 31, 2017.

11 RESEARCH & DEvELopMENT ExpENDITuRE

The total amount of Research & Development Expenditure charged to profit and loss during the year is Rs. 219.05 Lacs (previous year: Rs. 152.13 Lacs).

12 details of expenditure incurred on corporate social responsibility (csr) activities:

Total CSR expenditure incurred during the year by way of donation to various trusts is Rs. 1.81 Lacs (previous year: f 0.77 Lacs).

13 FIRST-TIME ADOpTION OF IND AS

These financial statements, for the year ended March 31, 2018, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and other accounting principles generally accepted in India (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at April 1, 2016, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2016 and the financial statements as at and for the year ended March 31, 2017 Exemptions applied Ind AS 101 “First-time adoption of Indian Accounting Standards” allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

- The Company has elected to continue with the carrying value for all of its property, plant and equipment and intangible assets as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and used that as its deemed cost as at the date of transition.

- The Company has elected to continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP.

Estimates

The estimates at April 1, 2016 and at March 31, 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the estimates for following where application of Indian GAAP did not require estimation.

i. Investment in equity instruments carried at FVTOCI

ii. Impairment of financial assets based on expected credit loss model

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2016, the date of transition to Ind AS and as of March 31, 2017

Reconciliation between previously reported Indian GAAp and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliation from erstwhile Indian GAAP to Ind AS.

Footnotes to the reconciliation of equity as at april 1, 2016 and march 31, 2017 and profit or loss for the year ended march 31, 2017

1. Fair valuation of derivatives not designated as hedge

Under Ind AS, all derivative contracts are measured at fair value through profit and loss at each reporting date. Under Indian GAAP, the premium or discount arising at the inception of forward exchange contracts (other than for firm commitments and highly probable forecast transactions) was amortised as expense or income over the life of the contracts.

Under Indian GAAP, the long-term investments were measured at cost less permanent diminution in value, if any. Ind AS requires all investments to be measured at fair value at the reporting date and all changes in the fair value subsequent to the transition date to be recognised either in the Statement of profit and loss or Other Comprehensive Income (based on the category in which they are classified).

2. impairment allowance on trade receivables

Under Ind AS, impairment allowance on trade receivables has been determined based on ECL model. This model considers the delay risk (i.e. delayed receipts of payments) and the default risk (i.e. non receipt of payments) for calculating the impairment loss on financial assets.

3. prior period items

Under Ind AS, prior period error identified during the any financial year is recorded by restating the comparative amounts of the prior period(s) presented in which the error was occurred or if the error occurred before the earliest period presented, by restating the opening Balance Sheet. Under Indian GAAP, prior period error was recorded in the financial year in which such error was discovered.

4. amortisation of processing charges

Under Ind AS, transaction costs attributable to the issue of a financial liability is reduced from the carrying amount of the financial liability. These costs are recognised in the profit or loss over the tenure of the financial liability as part of the interest expense by applying the effective interest method. Under Indian GAAP, these transaction costs were charged to profit or loss as and when incurred.

5. impact on the employee benefit expenses

Net liability towards defined benefit plan has been restated as per actuarial valuation in accordance with Ind AS 19 ‘Employee Benefits’

6. Remeasurement gains / (loss) on defined benefit plan

Under Ind AS, remeasurement i.e. actuarial gain loss and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the Indian GAAP, these remeasurements were forming part of the profit or loss for the year.

7. tax impacts on ind As adjustments

Tax adjustments include deferred tax impact on account of Ind AS adjustments done on transition to Ind AS.

8. 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 fair value gain / loss on FVTOCI equity instruments and remeasurement of defined benefit plans. The concept of other comprehensive income did not exist under Indian GAAP

9. other adjustments

Other adjustments mainly includes adjustments due to the GAAP differences related to recognition and measurement of export incentives.

10. classification and presentation

The previous year Indian GAAP numbers have been reclassified/regrouped to make them comparable with Ind AS presentation.

11. statement of cash flows

The impact of transition from Indian GAAP to Ind AS on the statement of cash flows is due to various reclassification adjustments recorded under Ind AS in Balance Sheet and Statement of profit and loss.

14 STANDARDS ISSuED BuT NoT YET EFFECTivE

The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these standards, when they become effective.

The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and Companies (Indian Accounting Standards) Amendment Rules, 2018 amending the following standard:

ind AS 115 “Revenue from Contract with Customers”

Ind AS 115 “Revenue from Contract with Customers” was notified on March 28, 2018 and will come into force from accounting periods commencing on or after April 1, 2018. The standard establishes a five-step model to account for revenue arising from contract with customers. Under Ind AS 115 revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to the customers. The new revenue standard will supersede all current revenue recognition requirements under Ind AS. Ind AS 115 provides two transition options: (i) retrospectively to each prior reporting period presented in accordance with Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors, with the option to elect certain practical expedients as defined within Ind AS 115 (the full retrospective method); or (ii) retrospectively with the cumulative effect of initially applying Ind AS 115 recognised at the date of initial application (April 1, 2018) and providing certain additional disclosures as defined in Ind AS 115 (the modified retrospective method).

The Company has commenced its impact assessment, which involves carrying out a systematic review of all existing major contracts to ensure that the impact and effect of the new revenue standard is fully understood and changes to the current accounting procedures are highlighted and acted upon. The results of this assessment will drive the Company’s choice of transition option. Currently, it is expected that changes in total revenue to be recognised from a customer contract will be very limited. Based on the analysis performed, the Company expects that for the vast majority of contracts, revenue recognition would occur at a point in time when control of the asset is transferred to the customer, generally on delivery of the goods.

Some revenue contracts provide a right of return and / or cash discounts to customers. The new revenue standard requires such type of variable considerations to be constrained to prevent over-recognition of revenue. The Company continues to assess individual contracts to determine the estimated variable consideration and related constraint. The Company expects that application of the constraint may result in more revenue being deferred than under current Ind AS.

Further, the presentation and disclosure requirements in Ind AS 115 are more detailed than under current Ind AS. The presentation requirements represent a significant change from current practice and significantly increases the volume of disclosures required in the Company’s financial statements. Examples include information about nature of goods and services, significant payment terms, methods, inputs and assumptions related to transaction price and other quantitative and qualitative disclosures.

Appendix B to ind AS 21 Foreign Currency Transactions and Advance Consideration

The Appendix clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment or receipt of advance consideration.

Entities may apply the Appendix requirements on a fully retrospective basis. Alternatively, an entity may apply these requirements prospectively to all assets, expenses and income in its scope that are initially recognised on or after:

(i) The beginning of the reporting period in which the entity first applies the Appendix, or

(ii) The beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies the Appendix.

The Appendix is effective for annual periods beginning on or after April 1, 2018. The Company will apply the amendment prospectively to all assets, expenses and income in its scope that are initially recognised on or after April 1, 2018. The effect of this amendment on the financial statements of the Company is being evaluated.

Source : Dion Global Solutions Limited
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