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Vindhya Telelink

BSE: 517015|NSE: VINDHYATEL|ISIN: INE707A01012|SECTOR: Cables - Telephone
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Mar 17
Notes to Accounts Year End : Mar '18

1. (a) In accordance with Ind AS 18 on Revenue” and Schedule III to the Companies Act, 2013, sales up to period ended 30th June, 2017 were reported gross of excise duty and net of value added tax (VAT)/central Sales tax (CST) and service tax. Excise duty was reported as separate expense. Consequent to the introduction of Goods & Services Tax (GST) with effect from 1st July, 2017 excise duty, VAT, sales tax, service Tax, etc. have been subsumed into GST and the same are not recognized as a part of sales as per the requirement of Ind AS 18. Accordingly Revenue from operations in the current year is not comparable with that of the previous year.

(b) The Company had certain pending/unexecuted turnkey contracts on the date of implementation of Goods and Services Tax (GST) as of 1st July, 2017, wherein contract prices were arrived at based on taxes and duty structure prevailing before implementation of GST. Pending revision/reset of contract prices in accordance with GST regime, the Revenue from Operations pertaining to such turnkey contracts has been recognized based on fair assessment and evaluation of impact of GST on the contract prices. In the opinion of the Management, this is not likely to have any material impact upon revision/resetting of the contract prices by the customers.

(c) The Trade Receivables as at 31st March, 2018 include an amount of Rs, 174.68 lakhs receivable from a customer against whom the insolvency proceedings have been initiated as per Insolvency and Bankruptcy Code, 2016. Considering the terms and conditions of optical fibre cable network provided by the Company on Indefeasible Right of Usage basis and the consequential operations and maintenance contract(s), the Management believes that the said Trade Receivables are good and the carrying amount of the same is appropriate.

2. Contingent Liabilities and Commitments (to the extent not provided for) -

(a) Contingent liabilities:

(i) Pending cases with income tax appellate authorities where income tax department has preferred appeals - Liability not ascertainable.

(ii) Sales tax & Service tax matters under litigation Rs, NIL (Rs, 114.61 lakhs ; 31st March, 2017) (Rs,149.54 lakhs; 1st April, 2016).

(iii) The Company has an ongoing process for collection and submission of the relevant declaration forms under the VAT Act to the concerned authorities and the Company does not foresee any material liability in this regard.

(b) Commitments:

Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Rs, 3966.01 lakhs (Rs, 462.50 lakhs; 31st March, 2017) (Rs, 205.19 lakhs; 1st April, 2016).

(c) The financial statements of the Company for the year ended 31st March, 2018 has been approved by the Board of Directors in its meeting held on 23rd May, 2018. For the year ended 31st March, 2018, dividend of Rs, 10 per share (Total dividend of Rs,1428.68 lakhs including dividend distribution tax of Rs, 243.60 lakhs) has been proposed by Board of Directors at its meeting held on 23rd May, 2018. The same is subject to the approval of shareholders in the ensuing Annual General Meeting of the Company and therefore proposed dividend (including dividend distribution tax) has not been recognized as liability as at the Balance Sheet date in line with Ind AS-10 Events after the Reporting Period”.

(b) Provident Fund :

The Company contributes its share in an approved provident fund trust viz. Universal Cable Limited Employee Provident Fund. The Company is liable for shortfall, if any, in the fund asset based on the government specified minimum rate of return. Based on the valuation made by an independent Actuary, there is no shortfall as at 31st March, 2018. The Company’s aggregate Contribution to the said fund of Rs,199.84 lakhs (? 175.01 lakhs) is charged to the Statement of Profit and Loss.

(c) Defined Contribution Plan:

Company’s contribution to an approved Superannuation Fund as per the scheme formulated by the Company and Contribution to Employee’s Regional Provident Fund are charged to the Statement of Profit and Loss in the year in which an eligible employee renders the service. The Company has recognized the following contributions as expense in the Statement of Profit and Loss.

3. Segment Information:

Details of the each operating segment are as under:

Cable - The Company manufactures and markets telecommunication cables, other

types of wires & cables and FRP rods/glass rovings, etc.

EPC(Engineering, Procurement and Construction) - The Company undertakes and executes contracts and/or provide

infrastructure related services with or without materials, as the case may be.

Notes:

(i) The remuneration to Key Managerial Personnel(s) other than Non-Executive Directors does not include provision/ payment towards incremental liability on account of gratuity and compensated absences since actuarial valuation is done for the Company as a whole.

(ii) No amount has been provided as doubtful debt or advance written off or written back in the year in respect of debts due from/ to above Related Parties.

(iii) Transactions and balances relating to reimbursement of expenses to/ from the above Related Parties have not been considered.

(iv) Inter corporate loans/advances have been given for business purposes.

4. Disclosure as required under the Micro Small and Medium Enterprises Development Act 2006 to the extent ascertained and as per notification number GSR 679 (E) dated 4th September, 2015

5. Leases:

(a) Operating Lease :

The Company has taken certain offices and residential premises/ facilities under operating lease/ sub-lease agreements. The lease agreements generally have an escalation clause and are not non-cancellable and are renewable by mutual consent on mutually agreed terms. There are no restrictions imposed by lease/ sub-lease agreements. The aggregate lease rental of Rs, 173.46 lakhs (? 168.36 lakhs) have been charged to the Statement of Profit and Loss.

(b) Finance Lease:

The Company has entered into Indefeasible Right of Usage (IRU) Agreements with certain customers for providing telecommunication cable network connectivity. The required disclosure is given herein:

Note :

The Company has also accepted Cross Corporate Guarantee from BCL of Rs, 218361.00 lakhs (Rs, 184561.00 lakhs) against total credit facilities and term loan(s) availed from the consortium of banks.

The fair value of financial assets and liabilities is included at the amount at which instruments could be exchanged in a current

transaction between the willing parties. The following methods and assumptions were used to estimate the fair value:

(A) The Company has opted to fair value its quoted equity instruments at its market quoted price through Other Comprehensive Income(OCI).

(B) The Company has opted to fair value its unquoted equity instruments at its Net Asset Value/Adjusted Net Asset Value through OCI.

(C) The fair values of cash and cash equivalents, other bank balances, trade receivables, other current financial assets, short term borrowings, trade payables and other current financial liabilities approximates their carrying amounts largely due to the short-term maturities of these instruments. The Company has adopted Effective Interest Rate Method (EIR) for fair valuation of long term borrowings, and non-current financial assets and non-currentfinancial liabilities.

(D) The fair value of forward exchange and swap contracts is based on valuation certificate given by respective banks.

Fair Value Hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs 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 for the assets or liabilities that are not based on observable market data (unobservable inputs).

6. Financial Risk Management Objectives and Policies:

The Company’s activities are exposed to a variety of Financial Risks from its Operations. The key financial risks include Market Risk,

Credit Risk and Liquidity Risk.

(i) Market Risk: Market Risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market Risk comprises mainly three types of Risk: Foreign currency Risk, Interest rate Risk and Other Price Risk such as Equity Price Risk and Commodity Price risk.

(a) Foreign Currency Risk:

Foreign Currency Risk has underlying risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company is exposed to foreign exchange risk arising from foreign currency transactions of imports, exports and borrowing primarily with respect to USD and Euro. The Company’s exports are denominated generally in USD, providing a natural hedge to some extent against foreign currency payments on account of imports of raw materials and/or the payment of borrowings. The foreign currency transaction risk are managed through selective hedging programmes by way of forward contracts currency swaps and interest rate swaps including for underlying transactions having firm commitments or highly probable forecast of crystallization.

(c) Commodity Price Risk:

The Company is affected by the price volatility of certain commodities. Its operating activities require the purchase of raw materials and bought out components for manufacturing of Cables and Turnkey Contract & Services respectively. It requires a continuous supply of certain raw materials & brought out components such as optical fibre, copper, aluminum, plastic and polymers, telecom ducts, power cables, conductors, transformers, fabricated steel, poles etc. To mitigate the commodity price risk, the Company has an approved supplier base to get the best competitive prices for the commodities and also to manage the cost without any compromise on quality.

(d) Equity Price Risk:

The Company’s exposure to equity securities price risk arises from Quoted Investments held by the Company and classified in the balance sheet at fair value through OCI. Having regard to the nature of securities, intrinsic worth, intent and long term nature of securities, fluctuation in their prices are considered acceptable and do not warrant any management estimation.

(ii) Credit Risk:

Credit risk is the risk that counterparty might not honour its obligations under a financial instrument or customer contract leading to financial loss. The Company is exposed to credit risk from its operating activities (primarily Trade Receivables).

Customer credit risk is managed by each business unit and is subject to the Company’s established policy, procedures and control relating to customer credit risk management. The Company assesses the credit quality of the counterparties taking into account their financial position, past experience and other factors. The Company’s Turnkey Contract business customers profile include Government owned utilities/ entities/ and both public and private telecom sector operators and service provides, and accordingly its credit risk is low. Credit risk is reduced to a significant extent if the projects(s) are funded by the Central and State Government and also by receiving pre-payments (including mobilization advances) and achieving project completion milestone within the contracted delivery schedule. Outstanding customer receivables are regularly monitored and assessed. The Company follows the simplified approach for recognition of impairment loss. Impairment allowance for trade receivables if any, is provided on the basis of respective credit risk of individual customer as on the reporting date.

Deposits with Bank:

The deposits with banks constitute mostly the investment made by the Company against bank guarantees and are generally not exposed to credit risk.

(iii) Liquidity Risk:

Liquidity risk is the risk where the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach is to ensure as far as possible that it will have sufficient liquidity to meet its liabilities when due.

7. Capital Management:

The Company’s policy is to maintain an adequate capital base so as to maintain creditors and market confidence and to sustain future development. Capital includes issued capital, securities premium and all other equity reserves attributable to equity holders.

The Company monitors capital using a gearing ratio which is net debt divided by total capital plus net debt. Net Debt is calculated as borrowings less cash and cash equivalents.

8. Exceptions and Exemptions applied for Transition to Ind AS

Ind AS 101 “First-time adoption of Indian Accounting Standards” (hereinafter referred to as Ind AS 101) allows first time adopters few mandatory and optional exemptions from the retrospective application of certain Ind AS. In preparing these financial statements, the Company has applied the below mentioned exemptions-

(a) Optional Exemptions Availed:

(i) Property Plant and Equipment, Intangible Assets and Investment Properties

As permitted by para D5-D8B of Ind AS 101, the Company has elected to continue with the carrying values under previous GAAP for all the items of Property, Plant and Equipment. The same election has been made in respect of investment property and Intangible Assets also.

(ii) Designation of Investments in Equity Instrument

Investment in Subsidiaries, Joint Ventures and Associates are recognized at deemed cost, i.e. carrying cost of the previous GAAP, as at the date of transition. All other equity instruments are designated at fair value through OCI on the date of transition.

(b) Mandatory Exceptions:

(i) Estimates

Upon an assessment of the estimates made under Previous GAAP, the Company has concluded that there was no necessity to revise such estimates under Ind AS except where revision in estimates was necessitated by Ind AS. The estimates used by the Company to present the amounts in accordance with Ind AS reflect conditions existing as at 1st April, 2016 the date of transition to Ind AS and as at 31st March, 2017.

(ii) Derecognition of financial assets and financial liabilities

The Company has elected to apply the Derecognition requirements for financial assets and financial liabilities in accordance with Ind AS 109, prospectively for transactions occurring on or after the date of transition to Ind AS.

(iii) Classification and measurement of financial assets

The company has classified the financial assets in accordance with Ind AS 109, on the basis of facts and circumstances that exist at the date of transition to Ind AS.

9. Reconciliations of Transition to Ind AS:

The following reconciliation provides a quantification of the effect of significant differences arising as a result of transition from Previous GAAP to Ind AS in accordance with Ind AS 101:

(a) Effect of Ind AS adoption on the Balance Sheet as at 31st March, 2017 and 1st April, 2016:

Reference Notes to point no. (a), (b), (c) & (d) of Note No. 52 above :

(i) Property Plant and Equipment: The Company has elected the option to continue with the carrying value for all its Property, Plant & Equipment as recognized in the financial statements as at the date of transition to Ind AS measured as per previous GAAP and used it as the deemed cost on the date of transition.

(ii) Investment in Equity Instruments: Under previous GAAP, Non-Current Investment in Equity Instruments were carried at cost less provision for other than temporary diminution in the value of such investment. Under Ind AS, Investments (except investment in subsidiaries, associates and joint venture) have been measured at Fair Value through OCI.

(iii) Government Grants: Under previous GAAP, Government Grant in relation to Plant & Equipments was recognized as a part of Capital Reserve. Under Ind AS such Grant have been treated as a deferred income under liability and recognized in the Statement of Profit and Loss on a systematic basis over the useful life of such assets.

(iv) Borrowings: Under previous GAAP, Borrowings were measured at transaction value, with transaction cost recognized in the Statement of Profit and Loss immediately, Under Ind AS borrowings have been recognized at amortized cost using Effective Interest Rate (EIR) method.

(v) Re-measurement of Defined Benefit Plan: Under Previous GAAP, re-measurement of retirement defined benefit plans i.e. actuarial gains/ (losses) arising due to experience, adjustments and change in assumptions were recognized in the Statement of Profit and Loss. Under Ind AS re-measurement of retirement defined benefit plans (net of tax) is recognized in the “Other Comprehensive Income”.

(vi) Forward Contracts: Under Previous GAAP the premium paid on forward contracts was recognized as expense or income over the life of the contract. Further in case of Forward Contract for firm Commitments, mark to market losses were recognized in the Statement of Profit and Loss and gain, if any were ignored. Under Ind AS mark to market Gain/ Loss on forward contract have been recognized in the Statement of Profit and Loss.

(vii) Security Deposit : The Company has given certain interest free security deposit under long term lease agreement. Under IND AS, these security deposit needs to be fair valued. The difference between fair value and previous GAAP carrying value has been recognized as advance rent under Current Asset. The same has been charged as rent expense to the Statement of Profit and Loss over the period of lease. Interest Income has been recognized yearly on interest free security deposit.

(viii) Deferred Taxes: Under Previous GAAP, deferred taxes were accounted for based on the income statement approach which requires creation of deferred tax asset/ liability on temporary differences between the taxable income and accounting income. Under Ind AS, deferred taxes are accounted for based on the balance sheet approach, which requires creation of deferred tax asset/ liability on temporary differences between the carrying amount of an asset/ liability in the Balance Sheet and its corresponding tax base. Application of Ind AS has also resulted in recognition of deferred taxes on new temporary differences arising due to adjustments made on transition to Ind AS.

(ix) Dividend: Under previous GAAP (up to 31st March 2016), proposed dividend was recognized as liability in the period to which it was related (if subsequently approved by Board of Directors). Under Ind AS, proposed dividend is recognized as liability in the period in which it is approved by shareholders.

(x) Revaluation Reserve: The Company had revalued few fixed assets as per the previous GAAP and a balance ofRs, 1.85 lakhs was outstanding in revaluation reserve as on 31.03.2016. The revaluation reserve had been set off from the net block of the respective assets as on 01.04.2016 on consequential change in the governing Accounting Standards (AS).

10. Previous year figures have been regrouped/ rearranged, wherever considered necessary to conform to current year classification.

Source : Dion Global Solutions Limited
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