Moneycontrol Be a Pro
Get App
SENSEX NIFTY
Moneycontrol.com India | Notes to Account > Engineering - Heavy > Notes to Account from TRF - BSE: 505854, NSE: TRF
YOU ARE HERE > MONEYCONTROL > MARKETS > ENGINEERING - HEAVY > NOTES TO ACCOUNTS - TRF

TRF

BSE: 505854|NSE: TRF|ISIN: INE391D01019|SECTOR: Engineering - Heavy
SET ALERT
|
ADD TO PORTFOLIO
|
WATCHLIST
LIVE
BSE
Nov 18, 16:00
107.20
1.7 (1.61%)
VOLUME 5,473
LIVE
NSE
Nov 18, 15:57
107.10
1.45 (1.37%)
VOLUME 42,470
Mar 18
Notes to Accounts Year End : Mar '19

1. General corporate information

TRF Limited, (“the Company”) incorporated in 1962 has its Registered Office at 11 Station Road, Burma Mines, Jamshedpur 831007. The Company is listed on the National Stock Exchange of India Limited, BSE Limited and The Calcutta Stock Exchange Limited. The Company undertakes turnkey projects of material handling for the infrastructure sector such as power and ports and industrial sector such as steel plants, cement, fertilisers and mining. The Company is also engaged in production of such material handling equipments at its manufacturing plant at Jamshedpur.

The financial statements are presented in Indian Rupee (INR) which is also Functional Currency of the Company.

Note :

1. The cost of inventories recognised as an expense during the year in respect of write downs of inventory to its net realisable value was Rs 210.76 lakhs (for the year ended March 31, 2018 : Rs 116.13 lakhs).

2. The mode of valuation of inventories has been stated in note 2.13.

3. For details of carrying amount of inventories pledged as security for secured borrowings refer Note 19.

Rights, preferences and restrictions attached to shares Equity shares

The company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is entitled for one vote per share held. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing annual general meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to the number of equity shares held by the shareholders.

Preference Shares

The Company has one class of 12.5% Non-Convertible Redeemable Preference Shares (‘NCRPS’) having a par value of Rs.10 per share. Each preference shareholder is eligible for one vote per share as per terms of Section 47(2) of the Companies Act 2013 and dividend as and when declared by the Company. As per the terms of preference shares, NCRPS shall be redeemable at par upon maturity or redeemed early at the option of the Company in full or in part at 3 monthly intervals from the date of allotment. In the event of winding up of Company, NCRPS shall be non-participating in surplus assets and profits which may remain after the entire capital has been repaid, on winding up of the Company.

(b) Reserve for equity instrument through other comprehensive income (OCI) : This reserve represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through OCI, net of amounts reclassified to the retained earnings when those assets have been disposed off.

(c) Foreign exchange fluctuation reserve : Foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit and loss on repayment of the monetary items or disposal of investment.

(d) Foreign currency monetary item translation difference reserve : Exchange differences arising on settlement and remeasurement of long-term foreign currency monetary items are accumulated in “Foreign Currency Monetary Item Translation Difference Account” and amortised over the maturity period or upto the date of settlement of such monetary items, whichever is earlier, and charged to the Statement of profit and loss.

(e) Equity component of 12.5% Non Convertible Redeemable Preference Shares : This reserve represents Equity portion of 12.5% Non cummulative redeemable preference shares. (refer Note 44.04)

2. Segment information

2.01 Products and services from which reportable segment derives their revenues

Information reported to the Chief Operating Decision Maker (CODM) for the purpose of resource allocation and assessment of segment performance focuses based on products and services. Accordingly, directors of the Company have chosen to organise the segment based on its product and services as follows:

- Products&services

- Projects & services.

The Company’s Chief Operating Decision Maker is the Managing Director.

Revenue and expenses directly attributable to segment are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of associated revenue of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as Unallocable expenses.

Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as Unallocable.

The company’s financing and income taxes are managed on a company level and are not allocated to operating segment.

Segment profit represents the profit and loss before tax earned by each segment without allocation of corporate costs, other income, as well as interest costs. This is the measure reported to the executive management committee for the purposes of resource allocation and assessment of segment performance.

In the Company’s operations within India there is no significant difference in the economic conditions prevailing in the various states of India. Revenue from sales to customers outside India is less than 10% in the current and previous year. Hence disclosures on geographical segment are not applicable.

2.02 Information about major customers

Included in revenue arising from direct sales of goods and services of Rs 23,705.82 lakhs (March 31, 2018: Rs 35,395.12 lakhs) are revenues of approximately Rs. 18,602.03 lakhs (March 31, 2018: Rs 22,402.61 lakhs) partaining to sales to the company’s top three (March 31, 2018 : three) customers. No other single customer contributed 10% or more of the Company’s revenue in year ended March 31, 2019 and March 31, 2018.

3. Employee Benefit plans

3.01 Defined contribution plans

The Company provide Provident Fund facility to all employees. The Company provides superannuation benefits to selected employees. The assets of the plans are held separately from those of the Company in funds under the control of the trustees in case of trust or of the employees provident fund organisation. The contributions are expensed as they are incurred in line with the treatment of wages and salaries. The Company’s Provident Fund is exempted under section 17 of Employees’ Provident Fund and Miscellaneous Provision Act, 1952. Conditions for exemption stipulate that the Company shall make good deficiency, if any, in the interest rate declared by the trust vis-a-vis interest rate declared by the Employees’ Provident Fund Organisation. The liability as on the balance sheet date is ascertained by an independent actuarial valuation.

The Company has recognised an amount of Rs. 423.93 lakhs as expenses for the year ended March 31, 2019 (For the year ended March 31, 2018: Rs. 463.93 lakhs) towards contribution to the following defined contribution plans.

3.02 Defined benefit plans

The Company provides Gratuity benefit to all employees. The Company provides post retirement pension for retired wholetime directors. The assets of the gratuity plans are held separately from those of the Company in funds under the control of the trustees of the independent trusts or with the life insurance companies. The board of trustees of the gratuity fund composed of an equal number of representatives from both employees and employers. The board of the Fund is required by law and by the trust deed to act in the interest of the Fund and of all relevant stakeholders in the scheme. The board of trustee of the fund and management of life insurance company is responsible for the investment policy with regard to the assets of the Fund. Post retirement pension plan is not funded.

Under the gratuity plan, the employees with minimum five years of continuous service are entitled to lumpsum payment at the time of separation calculated based on the last drawn salary and number of years of service rendered with the Company. Under the post retirement pension, the Company pays monthly pension to retired whole-time directors as decided by the board of directors.

These plans expose the Company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

The present value of the defined benefit plan liability (denominated in Indian Rupee) is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Currently, for the plan in India, it has relatively balanced mix of investments in government securities and other debt instruments.

Investment Risk

A decrease in the bond interest rate will increase the plan liability.

Interest risk

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

Salary risk

In respect of the plan in India, the most recent actuarial valuation of the plan assets and the present value of defined benefit obligation were carried out as at March 31, 2019 by an independent actuary, Fellow of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

During the year ended March 31, 2019 and March 31, 2018 there was no amendment, curtailments and settlements in the gratuity plan and post retirement pension plans.

The fair value of the above equity and securities issued by government are determined based on quoted market prices in active markets. The fair value of other debt instruments are also determined based on quoted price in active market. The fair value of balance in special deposit scheme is determined based on its carrying value. The fair value of balance with Life Insurance Corporation is determined based on the funds statement received from the company.

The actual return on plan assets was Rs. 41.98 lakhs (for the year ended March 31, 2018: Rs. 1.28 Lakhs).

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase, attrition and mortality. The sensitivity analysis given below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

- If the discount rate is 100 basis points higher (lower), the defined benefit obligation would decrease by Rs. 93.56 lakhs (increase by Rs. 108.27 lakhs) [as at March 31, 2018: decrease by Rs. 98.95 lakhs (increase by Rs. 114.16 lakhs)]

- If the expected salary increase growth increases (decreases) by 1%, the defined benefit obligation would increase by Rs. 106.74 lakhs (decrease by Rs. 94.03 lakhs) [as at March 31, 2018: increase by Rs. 112.83 lakhs (decrease by Rs. 99.66 lakhs)]

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

In presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is same as applied in calculating the defined benefit obligation liability recognised in the balance sheet. There was no change in the method and assumptions used in preparing the sensitivity analysis from prior years.

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected pension increase and mortality. The sensitivity analysis given below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

- If the discount rate is 100 basis points higher (lower), the defined benefit obligation would decrease by Rs. 66.12 lakhs (increase by Rs. 75.88 lakhs) [as at March 31, 2018: decrease by Rs. 71.54 lakhs (increase by Rs. 81.75 lakhs)]

- If the expected pension increase growth increases (decreases) by 1%, the defined benefit obligation would increase by Rs. 78.63 lakhs (decrease by Rs. 69.44 lakhs) [as at March 31, 2018: increase by Rs. 84.92 lakhs (decrease by Rs. 75.30 lakhs)]

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

In presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is same as applied in calculating the defined benefit obligation liability recognised in the balance sheet. There was no change in the method and assumptions used in preparing the sensitivity analysis from prior years.

4. Financial instruments

4.01 Capital management

The Company manages its capital to ensure that entities will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Capital structure of the Company consists of net debt (borrowings as detailed in notes 17 and 24 offset by cash and bank balances) and the total equity of the Company.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. 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, long-term borrowings, short-term borrowings, less cash and short-term deposits.

4.02 Financial risk management objectives and policies

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings and trade and other payables. The Company’s principal financial assets include trade and other receivables, cash and short-term deposits that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions. The Company is exposed to market risk( including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Company seeks to minimise the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company’s policies approved by the board of directors, which provide written principles on foreign exchange risks, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments. The Company does not enter into or trade financial instruments including derivative financial instruments, for speculative purposes.

The corporate treasury management reports on quarterly basis to the board of directors that monitors risks and policies implemented to mitigate risk exposures.

4.03 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. The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company enters into derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk.

4.04 Foreign currency risk management

The Company enter into sale and purchase transactions and borrowings denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Foreign currency sensitivity analysis

The following table details the Company’s sensitivity to a 10% increase and decrease in exchange rate between the pairs of currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for 10% change in foreign currency rates. The sensitivity analysis includes trade payables, receivables, external loans as well as loans to foreign operations within the Group where the denomination of the monetary item is in a currency other than the functional currency of the lender or the borrower. The sensitivity analysis has been undertaken on net unhedged exposure in foreign currency.

4.05 Interest rate risk management

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of change in market interest rates. The company’s exposure to the risk of changes in market interest rates relates primarily to the company’s long -term debt obligations with floating interest rates.

4.06 Credit risk management

Credit risks refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks. The Company’s Board approved financial risk policies comprise liquidity, currency, interest rate and counterparty risk. Financial instruments that are subject to concentrations of credit risk, principally consist of trade receivables, finance receivables, loans and advances and derivative financial instruments. None of the financial instruments of the Company result in material concentrations of credit risks. The Company does not engage in speculative treasury activity but seeks to manage risk and optimise interest and commodity pricing through proven financial instruments.

The credit risk on bank balances and derivative financial instruments is limited because the counterparties are banks with high credit ratings.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

4.07 Liquidity risk management

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.

The Company has obtained fund and non-fund based working capital lines from various banks. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecasts and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Liquidity and interest risk tables

The following tables detail the maturity profile of Company’s non-derivative financial liabilities with agreed repayment period. 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.

4.08 Fair value measurements

The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2.15 to 2.17.

Financial assets and liabilities

The following table summarises financial assets and liabilities measured at fair value on a recurring basis and financial assets and financial liabilities that are not measured at fair value on a recurring basis (but fair value disclosure are required):

Fair value hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

- Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2 — Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3 — Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

The investments included in Level 2 of fair value hierarchy have been valued using quotes available for similar assets and liabilities in the active market. The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximate the fair value because there is a wide range of possible fair value measurements and the cost represents estimate of fair value within that range.

5.01 The Company has incurred loss after tax of Rs 10,556.90 lakhs during the year ended March 31, 2019 (March 31, 2018 Rs 14,597.65 lakhs) and accumulated losses as on that date amounting to Rs 45,428.99 lakhs (March 31, 2018 Rs 35,043.77 lakhs), has eroded the net worth of the company. The company expects to generate cash flow from improvements in operations, increased business from the promoter entity, increased efficiencies from the project activities (refer Note 44.03), proceeds from restructuring of its subsidiaries, renewal of the facilities from banks as and when they fall due etc., which will be sufficient to meet future obligation of the company. Accordingly, these financial statements have been prepared on a going concern basis.

5.02 Revenue from construction contracts are recognized on percentage completion method. The estimated cost to complete the contracts is arrived at based on technical data, forecast, assumptions and contingencies and are based on the current market price or firm commitments, as applicable. Such estimates are subject to variations. Variations in the current year are mainly due to new purchase orders raised by the Company on the vendors because they did not agree to perform the work at the originally agreed rate both for materials and labour and in some of the cases old vendors were replaced with new vendors with different commercial terms and condition to expedite the completion of the project.

5.03 During the year the company has issued 12.5% Non convertible redeemable preference shares (‘NCRPS’) of Rs 25,000 lakhs, divided in to 25,00,00,000 preference shares of Rs 10 each to Tata Steel Limited, on private placement basis. NCRPS are in nature of compound financial instrument, accordingly the liability portion amounting to Rs. 2,370.77 Lakhs has been disclosed under long term borrowings (refer Note 17) and residual portion of Rs. 22,629.23 lakhs has been disclosed under other equity (refer Note 16).

5.04 During the financial year 2019 the company has sold York Transport Equipment Pte Limited, a step down subsidiary along with its subsidiaries, at total consideration of Rs 29,087.69 lakhs. Consequent to such sale TRF Singapore Pte Limited has exercised a scheme of capital reduction to the tune of Rs 12,185.28 lakhs on August 31, 2018 and Rs 1,380.40 lakhs on February 28, 2019 which has resulted in reduction in value of investment by Rs 9,790.46 lakhs and foreign currency exchange gain of Rs 3,775.22 lakhs which has been disclosed as exceptional item in those results.

5.05 During the year Interest on loans and Corporate guarantee fees receivable from subsidiary has been converted in to Investment in TRF Singapore Pte Limited which has resulted in increase in value of Investment to Subsidiaries by Rs 978.21 lakhs (refer Note 5).

5.06 The Company has submitted application to RBI in 2013 for capitalisation of corporate guarantee fee (SGD 1,51,230) and interest on loan (USD 7,19,461 and SGD 7,36,637) receivable from TRF Singapore Pte Limited. The same has been approved by RBI vide letter dated 11th September, 2018 subject to compounding for non-compliance with Regulation 15(ii) for Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Amendment) Regulations, 2004. The Company has filed a compounding application on 12th October, 2018 however RBI has advised to resubmit the application after winding up of one of its step down subsidiary.

5.07 During the year, the company has sold Dutch Lanka Trailers LLC, Oman, a step down subsidiary at book value resulting in a loss of Rs 63.09 Lakhs. This does not have any impact on the standalone financial results.

5.08 In the current year, based on assessment management has considered provision for impairment of Rs 133.18 Lakhs on investment in TRF Singapore PTE Ltd.

5.09 Remuneration to Managing Director amounting to Rs 65.63 lakhs (refer Note 41.01) has been approved by the Board of Directors and is subject to approval from shareholders.

5.10 The Company is in the process of evaluating the impact of the recent Supreme Court Judgment in case of “Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal” and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employees’ Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of “basic wages” of the relevant employees for the purposes of determining contribution to provident fund under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952. Based on the initial assessment of the management which is supported by legal advice, the aforesaid matter is not likely to have significant impact and accordingly, no provision has been made in these Financial Statements at this stage.

6. Operating lease

The Company’s significant leasing arrangements are in respect of operating leases for premises (residential, office, warehouse etc). The leasing arrangements which normally have a tenure of eleven months to three years are cancellable with a reasonable notice, and are renewable by mutual consent at agreed terms. Lease rentals aggregating to Rs 230.18 lakhs are charged as rent to the statement of profit and loss (for the year March 31, 2018 Rs 303.23 lakhs) (refer Note 35).

7. Previous year’s figures have been regrouped / reclassified where necessary to correspond with the current year’s classification / disclosure.

8. Approval of financial statements

The financial statements were approved for issue by the board of directors on April 15, 2019.

Source : Dion Global Solutions Limited
Quick Links for trf
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.