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Moneycontrol.com India | Notes to Account > Finance - Investments > Notes to Account from Welspun Investments and Commercials - BSE: 533252, NSE: WELINV
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Welspun Investments and Commercials

BSE: 533252|NSE: WELINV|ISIN: INE389K01018|SECTOR: Finance - Investments
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Notes to Accounts Year End : Mar '18

1 GENERAL INFORMATION

Welspun Investments and Commercials Limited (“the Company”) was incorporated on 07 October 2008 under the Companies Act, 1956 (the ''Act'') and has its registered office at Welspun City, Village: Versamedi, Taluka: Anjar, Dist. -Kutch, Gujarat 370110. The Company is engaged in business of Investment and dealing in shares and securities and trading of textile products and commodities.

Note:

i The Company has one associate i.e. MEP Cotton Limited for which no financial statements are available after the year ended 31 March 2012. The Company has made provision for diminution in value of investment in MEP Cotton Limited to the extent of investment value.

ii 25 shares of Welspun Steel Limited were received in lieu of 250,000 equity shares of Rs. 10 each of WS Alloy Holding Pvt. Ltd. as per scheme of merger between Welspun Energy Pvt. Ltd., WS Alloy Holding Pvt. Ltd. and Welspun Steel Limited having appointed date 01 April, 2016.

iii As per scheme of amalgamation approved by court, WS Trading and Holding Private Limited (WTHPL) was merged with MGN Agro Properties Private Limited w.e.f. 31 March 2016 (the appointed date). Under the scheme, 52 fully paid up 6% Optionally Convertible Preference Shares (OCPS) of Rs.1 each were issued and alloted for every 100 fully paid up equity shares of Rs.10 each held by the Company in WTHPL. As a result the Company received 130,000 6% OCPS of Rs.1 each of MGN Agro Properties Private Limited.

a. Terms / rights attached to equity shares

The Company has only one class of equity shares having a face value of ''10 per share. Each holder of equity share is entitled to one vote per share. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting.

In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by shareholders.

d. There has been no movement in number of issued, subscribed and paid up equity shares as at 01 April 2016, as at 31 March 2017 and as at 31 March 2018.

e. The Company has neither issued any shares for consideration other than cash or as bonus shares nor any shares issued had been brought back by the Company during the last five years.

f. On 30 March 2017, 2,655,528 equity shares of the Company held by MGN Agro Properties Private Limited has been transferred to Athelred Multiventure Private Limited and as such Athelred Multiventure Private Limited has become holding company w.e.f. 30 March 2017.

2. SEGMENT REPORTING:

The Company has two business segments viz. Investment and dealing in shares and securities (Finance) and Trading of textile products and related accessories (Trading), which is being considered as the primary segment in accordance with Inddian Accounting Standard (Ind AS)-108 “Operating Segment”.

3. COMMITMENTS AND CONTINGENT LIABILITIES NOT PROVIDED FOR

i Guarantee given by the Company to Punjab National Bank for repayment of liabilities of MEP Cotton Limited of Rs.107,023,661 (as at 31 March 2017: Rs.107,023,661, as at 31 March 2016: Rs.107,023,661).

ii Disputed Income Tax Liability of Rs.462,250 for A.Y 2013-2014. (Rs 69,500 i.e. approximately 15% of outstanding demand of Rs 462,250 paid during the year has been shown under Taxes paid.)

4. Based on information received by the Company from its suppliers, amounts due to Micro and Small Enterprises as at 31 March 2018 is Rs.Nil (as at 31 March 2017 Rs.Nil).

5. In the opinion of management, current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet. The provision for all known liabilities is adequate and not in excess of the amount reasonably stated.

6. Financial Instrument By Category & Hierarchy

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.

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

Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: Techniques which uses inputs that have a significant effect on the recorded fair value that are not based on observable market data.

7. Financial risk management objectives and policies

The risk management policies of the Company are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities.

The Management has overall responsibility for the establishment and oversight of the Company''s risk management framework.

In performing its operating, investing and financing activities, the Company is exposed to the Credit risk, Liquidity risk and Market risk.

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits and derivative financial instruments.

Credit risk on financial assets

Financial assets that are potentially subject to concentrations of credit risk and failures by counterparties to discharge their obligations in full or in a timely manner consist principally of cash balances with banks, cash equivalents and receivables, and other financial assets. The maximum exposure to credit risk is: the total of the fair value of the financial instruments and the full amount of any loan payable commitment at the end of the reporting year. Credit risk on cash balances with banks is limited because the counterparties are entities with acceptable credit ratings. Credit risk on other financial assets is limited because the other parties are entities with acceptable credit ratings.

Exposure to credit risk

Financial asset for which loss allowance is measured using expected credit loss model

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The interest rate is disclosed in the respective notes to the financial statements of the Company. The following table analyse the breakdown of the financial assets and liabilities by type of interest rate:

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 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 net debt and total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.

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 31 March 2018 and 31 March 2017.

8. First-time adoption of Ind AS

A First Ind AS financial statements

These are the Company''s first financial statements prepared in accordance with Ind AS applicable as at 31 March 2018. The accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet as at 1 April 2016 (the date of transition). In preparing its opening Ind AS balance sheet, the Company has restated the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2014 and other relevant provisions of the Act (previous GAAP or Indian GAAP) so as to comply in all material respects with Ind AS.

An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is as follows:

Ind AS Mandatory exceptions applied

i Estimates

An entity''s estimates in accordance with Ind AS''s at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP except where Ind AS required a different basis for estimates as compared to the previous GAAP

ii Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS. Accordingly, the Company has assessed classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

iii Impairment of financial assets

Ind AS 101 requires an entity to use reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised and compare that to the credit risk at the date of transition to Ind As.

B Reconciliations between previous GAAP and Ind AS

Ind AS 101 requires reconciliations of its equity reported in accordance with previous GAAP to its equity in accordance with Ind AS and a reconciliation to its total comprehensive income in accordance with Ind AS for the latest period in the entity''s most recent annual financial statements.

Welspun Investments and Commercials Limited has chosen to provide reconciliation of amount reported in accordance with previous GAAP to amount reported under Ind AS for each line item of statement of profit and loss as an additional disclosure.

C Notes to first time adoption:

i Fair valuation of investments

Under the previous GAAP, investments were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value at initial and subsequent recognition at fair value. The resulting fair value changes of these investments (other than equity instruments designated as at FVOCI) have been recognised in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended 31 March 2017.

Fair value changes with respect to investments in equity instruments designated as at FVOCI have been recognised in FVOCI - Equity investments reserve as at the date of transition and subsequently in the other comprehensive income for the year ended 31 March 2017.

ii Investment in preference shares (valued at amortised cost)

Under the previous GAAP, investment in preference shares is recorded at the transaction price. Under Ind AS, investment in preference shares is treated as financial asset. Such assets is recorded at fair value at initial recognition and subsequently measured at amortised cost using effective interest rate method (except those subsequently measured at fair value). The difference between fair value and transaction price on initial recognition is recognised through other equity in minus -FVOCI.

iii Deferred tax

Deferred taxes impact of the above adjustments, wherever applicable have been recognised on transition to Ind AS.

iv Retained earnings

Retained earnings as at April 1, 2016 has been adjusted consequent to the above Ind AS transition adjustments, if any.

v Other comprehensive income

Under Ind AS, all items of income and expense recognised in a year should be included in profit or loss for the year, 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'' includes FVOCI equity instruments. The concept of other comprehensive income did not exist under previous GAAP.

9. The Company has one associate i.e. MEP Cotton Limited for which no financial statements are available after the year ended 31 March 2012. The Company has made provision for diminution in value of investment in MEP Cotton Limited to the extent of investment value.

In view of the above, the Company has not prepared and presented consolidated financial statements as required under section 129(3) of the Companies Act, 2013.

10. Previous year''s figures have been re-grouped / re-classified, wherever necessary to confirm to the current year''s presentation.

Source : Dion Global Solutions Limited
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