Moneycontrol Be a Pro
Get App
SENSEX NIFTY
Moneycontrol.com India | Notes to Account > Power - Transmission & Equipment > Notes to Account from Transformers and Rectifiers India - BSE: 532928, NSE: TRIL
YOU ARE HERE > MONEYCONTROL > MARKETS > POWER - TRANSMISSION & EQUIPMENT > NOTES TO ACCOUNTS - Transformers and Rectifiers India

Transformers and Rectifiers India

BSE: 532928|NSE: TRIL|ISIN: INE763I01026|SECTOR: Power - Transmission & Equipment
SET ALERT
|
ADD TO PORTFOLIO
|
WATCHLIST
LIVE
BSE
Dec 12, 16:00
6.50
0.01 (0.15%)
VOLUME 1,750
LIVE
NSE
Dec 12, 15:43
6.50
0
VOLUME 23,869
Mar 16
Notes to Accounts Year End : Mar '18

1 Corporate Information

Transformers and Rectifiers (India) Ltd. (‘TRIL’ or ‘the Company’) is a public limited company domiciled and incorporated in India having its registered office at Survey No. 427 P/3-4 and 431 P/1-2 Sarkhej-Bavla Highway, Village: Moraiya, Taluka: Sanand. The Company’s shares are listed and traded on the National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange of India Ltd. (BSE). The company is a manufacturer of Power, Furnace and Rectifier Transformers.

2 Application of New Indian Accounting Standards

All the Indian Accounting Standards issued and notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) till the financial statements are authorized have been considered in preparing these financial statements.

Recent accounting pronouncements

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On 28th March 2018, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21 , Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from 1st April 2018. This amendment has no effect on the financial statements of the Company.

Ind AS 115 - Revenue from Contract with Customers: On 28th March 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 effect on the Financial statements on adoption of Ind AS 115 is being evaluated by the Company.

3 Basis of Preparation

(a) Statement of Compliance

In accordance with the notification dated 16th February 2015, issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (referred to as “Ind AS”) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) with effect from 1st April 201 7.

The Financial Statements have been prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 201 5 (as amended). These are the Company’s first Ind AS Standalone Financial Statements. The date of transition to Ind AS is 1st April 2016. The mandatory exceptions and optional exemptions availed by the Company on First time adoption have been detailed in the Note 6.

Previous period figures in the Financial Statements have been restated in compliance to Ind AS.

Up to the year ended 31st March 2017, the Company had prepared the Standalone Financial Statements under the historical cost convention on accrual basis in accordance with the Generally Accepted Accounting Principles (‘Previous GAAP’) applicable in India and the applicable Accounting Standards as prescribed under the provisions of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014.

In accordance with Ind AS 101- “First Time adoption of Indian Accounting Standards” (Ind AS 101 ), the Company has presented a reconciliation of Shareholders’ equity under Previous GAAP and Ind AS as at 31st March 2017 and 1st April 2016 and of the Profit after tax as per Previous GAAP and Total Comprehensive Income under Ind AS for the year ended 31st March 2017.

(b) Basis of Measurement

The Financial Statements have been prepared on the historical cost convention on accrual basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below: Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle. Accordingly, all assets and liabilities have been classified as current or non-current as per the Company’s operating cycle and other criteria set out in Ind AS 1 — ‘Presentation of Financial Statements’ and Schedule III to the Companies Act, 201 3.

The Standalone Financial Statements have been presented in Indian Rupees (INR), which is also the functional currency. All values are rounded off to the nearest two decimal lakhs, unless otherwise indicated.

Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.

The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed in their measurement which are described as follows:

(i) Level 1: Quoted Prices (unadjusted) in active markets for identical assets or liabilities

(ii) Level 2: inputs are inputs that are observable, either directly or indirectly, other than quoted prices included within level 1 for the asset or liability.

(iii) Level 3 inputs are unobservable inputs for the asset or liability reflecting significant modifications to observable related market data or Company’s assumptions about pricing by market participants.

Investments in Subsidiaries and Joint ventures

The Company records the investments in subsidiaries and joint ventures at cost less impairment loss, if any.

When the Company issues financial guarantees on behalf of subsidiaries, initially it measures the financial guarantees at their fair values and subsequently measures at the higher of:

(i) the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109 ‘Financial Instruments’; and

(ii) the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 1 8 ‘Revenue’.

The Company records the initial fair value of financial guarantee as deemed investment with a corresponding liability recorded as deferred revenue under financial guarantee obligation. Such deemed investment is added to the carrying amount of investment in subsidiaries. Deferred revenue is recognized in the Statement of Profit and Loss over the remaining period of financial guarantee issued as other income.

On disposal of investment in subsidiary and joint venture, the difference between net disposal proceeds and the carrying amounts (including corresponding value of dilution in deemed investment) are recognized in the Statement of Profit and Loss.

8(a) The Company has elected to continue with the carrying value of its investments in subsidiaries and joint ventures, measured as per the Previous GAAP and used that carrying value on the transition date 1st April 2016 in terms of Para D15 (b) (ii) of Ind AS 101 ‘First - time Adoption of Indian Accounting Standards’.

8(b) The Net Worth of Savas Engineering Pvt. Ltd. is Rs. 400.45 Lakhs as per the audited financial statements as at 31st March 2018. In the opinion of the management the investments in subsidiary is long term and strategic in nature. The subsidiary has obtained the valuation report from independent Government Approved Valuer as at 31st March 2018 for it’s immoveable properties, the value of which is in excess of the investment in Subsidiary and therefore no impairment has been considered. 8(c) Vortech Pvt. Ltd.

The Company has entered into a Joint Venture Agreement dated 9th August 2016 with Mr. Gopal Sanasy, technocrat based in Canada for the purpose of manufacturing and supply of Transformer oil regeneration and purification plants and providing services related to regeneration/ maintenance of transformers and other oils. As per the Agreement the Company acquired 76% shares in the special purpose entity incorporated named Vortech Pvt. Ltd. Subsequently by virtue of MOU dated 22nd March 2018 the Joint Venture was terminated and the Company will acquire the remaining 24% shares of Vortech Pvt. Ltd. making it 100% Subsidiary of the Company.

8(d) T&R Jingke Electrical Equipments Pvt. Ltd.

The Company has entered into a Joint Venture Agreement on 5th October 2016 with Jiangsu Jingke Smart Electric Company Ltd. (A company incorporated under the laws of People’s Republic of China). As per agreement, the company has acquired 60% shares in the special purpose entity incorporated named T&R Jingke Electrical Equipments Pvt. Ltd. The venture has been made for the purpose of marketing and manufacturing of GIS/ HGIS/ TGIS systems and products of 220kv and below and distribution products of 40.5kv and below in India.

8(e) The amount of Rs. 14.70 Lakhs (Previous Years: 31st March 2017 - Rs. 9.07 Lakhs and 1st April 2016 - Rs. 3.45 Lakhs) shown as deemed equity investments denotes the fair value of fees towards financial guarantee given for Transpares Ltd. without any consideration.

8(f) The amount of Rs. 8.89 Lakhs (Previous Years: 31st March 2017 - Rs. 6.26 Lakhs and 1st April 2016 - Rs. 3.64 Lakhs) shown as deemed equity investments denotes the fair value of fees towards financial guarantee given for TARIL Infrastructure Ltd. without any consideration.

8(g) The amount of Rs. 16.96 Lakhs (Previous Years: 31st March 2017 - Rs. 11.33 Lakhs and 1st April 2016 - Rs. 5.71 Lakhs) shown as deemed equity investments denotes the fair value of fees towards financial guarantee given for Savas Engineering Company Pvt. Ltd. without any consideration.

12(a) Write down of inventories to net realizable value amounted to Rs. 8.10 lakhs (31st March 2017 - Rs. 3.57). These were recognized as an expense during the year and included in consumption of stores and spare parts in Statement of Profit and Loss.

Note:

The shareholders in the 23rd Annual General Meeting held on 30th August 2017 approved the subdivision of equity shares from Face Value of Rs. 10 to Rs. 1 each without altering the aggregate amount of such capital and shall rank pari passu in all respects with the existing fully paid up equity share and accordingly company has made allotment of shares on 30th September 201 7.

20(c) Details of Shares allotted as fully paid up by way of Bonus Shares, shares issued for consideration other than Cash (During Last 5 Years immediately Preceding Reporting date)

During the year 2013-14 Company has allotted 332,800 Equity Shares of Rs. 10/- each fully paid up to equity share holders in the ratio of 1:9.

20(d) Right, Preferences and restrictions attached to Equity Shares

The company has only one class of equity shares having a par value of Rs. 1 (31st March 2017 and 1st April 2016 - Rs. 10/-) per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to approval of the shareholders in ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the equity share holders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

21(b) Securities Premium Reserve is used to record the premium on issue of equity shares. The reserve is utilized in accordance with the provision of the Companies Act, 201 3.

21(c) The General Reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the General Reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve is not reclassified subsequently to the Statement of Profit and Loss.

25(a) Secured Loans comprise of cash credit & short term loans from banks which are secured by hypothecation of current assets of the Company on pari passu basis and collaterally secured by residual value of net fixed assets of the Company excluding fixed assets of Moraiya plant and also collateral legal mortgage on pari passu basis on immovable properties situated at Changodar, Dhank and Ahmedabad. It is further secured by pledge of 21,100,000 equity shares of Rs. 1 each held by a director and personal guarantee of some of the directors.

27(a) This represents the Fair Value of fee towards financial guarantee issued on behalf of Subsidiaries, recognized as a financial guarantee obligation with corresponding debit to Investment in Subsidiaries.

The Company’s pending litigations comprise of claims against the Company and Proceedings pending with Tax/ Statutory/ Government Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. Future Cash Outflows in respect of the above are determined only on receipt of judgements/ decisions pending with various forums/ authorities.

(b) Commitments

(b) (i) Capital Commitments

Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Rs. 1,633.94 Lakhs (Previous years 31st March 2017 - Rs. 322.71 Lakhs, 1st April 2016 - Rs. 130.45 Lakhs).

4. Employee Benefit Plans

In accordance with the stipulations of the Indian Accounting Standard 19 “Employee Benefits”, the disclosures of employee benefits as defined in the Indian Accounting Standard are given below:

(a) Defined Contribution Plan

The Company has recognized an amount of Rs. 113.05 Lakhs (Previous years Rs. 101.77 Lakhs) as expenses under the defined contribution plan in the Statement of Profit and Loss.

(b) Defined Benefit Plan Gratuity

General description and benefits of the plan

15 days salary for each completed year of service. Vesting period is 5 years and the payment is at actual on superannuation, resignation, termination, disablement or on death. The liability for gratuity as above is recognized on the basis of actuarial valuation.

The Company makes contribution to Life Insurance Corporation (LIC) for gratuity benefits according to the Payment of Gratuity Act, 1972.

The Company recognizes the liability towards the gratuity at each Balance Sheet date.

The most recent actuarial valuation of the defined benefit obligation for gratuity was carried out at 31st March 2018 by an actuary. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Scheme is funded through LIC.

Major Risks to the Plan

(i) Actuarial Risk

It is the risk that benefits will come more than expected. This can arise due to one of the following reasons:

Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected.

If actual Mortality rates are higher than assumed mortality rate assumption than the Gratuity benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of Cashflow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

If the actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.

(ii) Investment Risk

For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. this can result in wide fluctuations in the net liability or funded status if there are significant changes in the discount rate during the inter-valuation period.

(iii) Liquidity Risk

Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cashflow.

(iv) Legislative Risk

It is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the regulation. The government may amend the payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

(v) Market Risk

It is a collective term for risks that are related to changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in defined benefit obligation of the plan benefits & vice versa. this assumption depends on the yields on the corporate bonds and hence the valuation of liability is exposed to fluctuations in the yields at the valuation date.

The following table sets out the status of the gratuity and the amounts recognized in the Company’s financial statements as at 31st March 2018.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

5. Leases Operating Leases

The Company has obtained certain premises for its business operations (including furniture and fittings, therein as applicable) under operating leases or leaves and license agreements. These are generally not non-cancellable and range between 11 months to 5 years under leave and licenses or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms.

6. Operating Segment

The Company’s operations fall under single segment namely “Transformers”, taking into account the risks and returns, the organization structure and the internal reporting systems.

All assets are located in the company’s country of domicile.

Segment revenue from “Transformers” represents revenue generated from external customers which is attributable to the company’s country of domicile i.e. India and external customers outside India as under:

Company’s significant revenues (more than 60%) are derived from major 8 entities. The total revenue from such entities amounted to Rs. 41,826 Lakhs in 2017-18 and Rs. 56,876 lakhs in 2016-17.

No single customer contributed 10% or more to the company’s revenue for 2017-18 and 2016-17.

7. In accordance with the Indian Accounting Standard (Ind AS-36) on “Impairment of Assets” the Company during the year carried out an exercise of identifying the assets that may have been impaired in respect of cash generating unit in accordance with the said Indian Accounting Standard. Based on the exercise, no impairment loss is required as at 31st March 2018.

8. Eligibility of Corporate Social Responsibility

Based on the average net profits of the Company after computation of Net Profit as per Section 198 of the Companies Act, 2013 for the preceding three financial years, the Company is not required to spend any amount on CSR activities during the financial year 2017-18 (Previous Year: Nil).

9. The value of realization of Current Assets, Loans and Advances in the ordinary course of business will not be less than the value at which they are stated in the Balance Sheet.

10. Balances of trade receivables and trade payables are subject to confirmation, reconciliation and consequential adjustment, if any.

11. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

12. Financial Instruments Disclosure (a) Capital Management

The company’s objective when managing capital is to:

- Safeguard its ability to continue as a going concern so that the Company is able to provide maximum return to stakeholders and benefits for other stakeholders.

- Maintain an optimal capital structure to reduce the cost of capital.

The Company’s Board of Directors reviews the capital structure on a regular basis. As part of this review, the Board considers the cost of capital, risk associated with each class of capital requirements and maintenance of adequate liquidity.

Disclosures

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.

The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 4(l), (m), (n) and (o).

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

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

(iii) Financial Risk Management Objectives

While ensuring liquidity is sufficient to meet Company’s operational requirements, the Company’s Board of Directors also monitors and manages key financial risks relating to the operations of the Company by analyzing exposures by degree and magnitude of risks. These risks include market risk (including currency risk and price risk), credit risk and liquidity risk.

Market Risk

Market risk is the risk of uncertainty arising from possible market price movements and their impact on the future performance of a business. The major components of market risk are commodity price risk, foreign currency risk and interest rate risk.

The primary commodity price risk that the company is exposed to include the price variations in the price of Copper and Cold Rolled Grain Oriented Steel (CRGO). The mentioned components form a major part of manufacturing of Transformers. The prices of these commodities lead to increase/ decrease in the cost of Transformers.

Foreign Currency Risk Management

The Company undertakes transactions denominated in different foreign currencies and consequently exposed to exchange rate fluctuations. Exchange rate exposures are managed within approved policy parameters.

Sensitivity to risk

A 5% strengthening of the INR against key currencies to which the Company is exposed would have led to approximately an additional '' 40.37 lakhs gain in the Statement of Profit and Loss. A 5% weakening of the INR against these currencies would have led to an equal but opposite effect of Rs. 40.37 Lakhs Interest Rate Risk

The Company’s interest rate risk arises from the Borrowings with fixed rates. The Company’s fixed rates borrowings are carried at amortized cost.

Liquidity Risk

The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and availability of funding through an adequate amount of committed credit facilities to meet the obligations when due. Management monitors rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity management also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios.

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The information included in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.

Credit Risk

The Company’s customer profile include Government Companies and Industries. Accordingly, the Company’s customer credit risk is moderate. The Company has a detailed review mechanism of overdue customer receivables at various levels within organization to ensure proper attention and focus for realization.

The following are the contractual maturities of financial assets, based on contractual cash flows:

13. The Standalone Financial Statements were approved by the Board of Directors on 29th May, 201 8.

Source : Dion Global Solutions Limited
Quick Links for transformersrectifiersindia
Explore Moneycontrol
Stocks     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | Others
Mutual Funds     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.