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Notes to Accounts of Cheviot Company Ltd.
Mar 31, 2025
3.12. Provisions, Contingent Liabilities and Contingent Assets
a) Provisions
Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event and
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation. Provisions are determined by discounting
the expected future cash flows (representing the best estimate of the expenditure required to settle the present
obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
b) Contingent Liabilities
Contingent liability is a possible obligation arising from past events and the existence of which will be confirmed
only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of
the Company or a present obligation that arises from past events but is not recognised because it is not possible
that an outflow of resources embodying economic benefit will be required to settle the obligations or reliable
estimate of the amount of the obligations cannot be made. The Company discloses the existence of contingent
liabilities in other notes to financial statements.
c) Contingent Assets
Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of
an inflow of economic benefits. Contingent assets are not recognised though are disclosed, where an inflow of
economic benefits is probable.
3.13. Intangible Assets
a) Recognition and Measurement
Intangible assets comprise of computer software, expected to provide future enduring economic benefits are
stated at cost less accumulated amortisation and impairment, if any. Cost comprises purchase price, non-refundable
taxes, duties, and incidental expenses after deducting trade discounts and rebates related to the acquisition and
installation of the assets.
b) Subsequent Expenditure
Subsequent costs are included in the asset''s carrying amount, only when it is probable that future economic benefits
associated with the cost incurred will flow to the Company and the cost of the item can be measured reliably. All
other expenditure is recognised in the statement of profit and loss.
c) Amortisation
⢠Intangible assets are amortised over a period of five years under straight line method.
⢠The amortisation period and the amortisation method are reviewed at least at the end of each financial year. If
the expected useful life of the assets is significantly different from previous estimates, the amortisation period is
changed accordingly.
d) Intangible Assets under Development
Intangible assets under development is stated at cost which includes expenses incurred in connection with development
of Intangible assets in so far as such expenses relate to the period prior to getting the assets ready for use.
3.14. Investment Properties
⢠Investment property is property (comprising land or building or both) held to earn rental income or for capital
appreciation or both, but not for sale in ordinary course of business, used in the production or supply of goods or
services or for administrative purposes.
⢠Upon initial recognition, an investment property is measured at cost. Subsequently they are stated in the balance
sheet at cost, less accumulated depreciation/amortisation and accumulated impairment losses, if any.
⢠Any gain or loss on disposal of investment property is determined as the difference between net disposal proceeds
and the carrying amount of the property and is recognised in the statement of profit and loss.
⢠The depreciable investment property i.e., buildings, are depreciated on a straight line method at a rate determined
based on the useful life as provided under Schedule II to the Act.
⢠Leasehold land is amortised on a straight line basis over the period of lease.
⢠Investment properties are derecognised either when they have been disposed off or when they are permanently
withdrawn from the use and no future economic benefit is expected from their disposal. The net difference between
the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of
derecognition.
3.15. Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to ordinary shareholders
by the weighted average number of ordinary shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to ordinary
shareholders and the weighted average number of ordinary shares outstanding during the period are adjusted for the
effects of all dilutive potential ordinary shares.
3.16. Cash Dividend Distribution to Equity Holders
The Company recognises a liability to make cash distributions to equity holders of the Company when the distribution
is authorised and the distribution is no longer at the discretion of the Company. Final dividends on shares are recorded
as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date
of declaration by the Company''s Board of Directors.
3.17. Measurement of Fair Values
A number of the accounting policies and disclosures of the Company require the measurement of fair values, for both
financial and non-financial assets and liabilities.
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. The fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a
liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest. A fair value measurement of a non-financial
asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest
and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within
the fair value hierarchy, described as follows, based on the input that is significant to the fair value measurement as a
whole:
⢠Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 â Inputs other than quoted prices included within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
⢠Level 3 â Inputs which are unobservable inputs for the asset or liability.
External valuers are involved for valuation of significant assets and liabilities. Involvement of external valuers is decided
by the management of the Company considering the requirements of Ind AS and Companies Act, 2013 and selection
criteria include market knowledge, reputation, independence and whether professional standards are maintained.
4. SIGNIFICANT JUDGEMENTS AND KEY SOURCES OF ESTIMATION IN APPLYING ACCOUNTING POLICIES
Information about significant judgements and key sources of estimation made in applying accounting policies that
have the most significant effects on the amounts recognised in the financial statements is included in the following
notes:
a) Recognition of Deferred Tax Assets:
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the
Company''s future taxable income against which the deferred tax assets can be utilised. In addition, significant
judgement is required in assessing the impact of any legal or economic limits.
b) Useful Lives of Depreciable/ Amortisable Assets (Property, Plant and Equipment and Intangible Assets):
Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based
on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may
change the utility of plant and equipment.
c) Extension and Termination Option in Leases:
Extension and termination options are included in many of the leases. In determining the lease term the management
considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise
a termination option.
This assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this
assessment and that is within the control of the Company.
d) Defined Benefit Obligation (DBO):
Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and
withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends,
anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to
measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on
the resulting calculations.
e) Provisions and Contingencies:
The assessments undertaken in recognising provisions and contingencies have been made in accordance with
Ind AS - 37,''Provisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent
events is applied best judgement by management regarding the probability of exposure to potential loss.
f) Impairment of Financial Assets:
The Company reviews its carrying value of investments carried at amortised cost annually, or more frequently when
there is indication of impairment. If recoverable amount is less than its carrying amount, the impairment loss is
accounted for.
g) Fair Value Measurement of Financial Instruments:
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured
based on quoted prices in active markets, their fair value is measured using valuation techniques including the
discounted cash flow model. The input to these models are taken from observable markets where possible, but where
this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations
of inputs such as liquidity risk, credit risk and volatility.
Nature and purpose of other equity
Capital reserve
Capital reserve represents capital profits appropriated as per erstwhile Companies Act, 1956 arising on sale of fixed assets during
the year ended 30th November, 1985 and 31st March, 1992. This reserve can be utilised in accordance with the provisions of the
Companies Act, 2013.
General reserve
General Reserve represents the reserve created through annual transfer of net profit at a specified percentage in accordance
with the provisions of the erstwhile Companies Act, 1956. Consequent to the introduction of the Companies Act, 2013, the
requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn, though the
Company may voluntarily transfer such percentage of its profits for the financial year, as it may consider appropriate. This
reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
Capital redemption reserve
Capital redemption reserve represents the reserve created in current and earlier years on account of redemption / Buy-back
of cumulative preference share capital and ordinary share capital under the provisions of the Companies Act, 1956/2013. This
reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
Retained earnings
Retained earnings represents the cumulative profits of the Company after appropriation. Retained earnings can be utilised in
accordance with the provisions of the Companies Act, 2013.
Other comprehensive income reserve
Equity instruments through other comprehensive income
This represents the cumulative gains and losses, net of tax, arising on the fair valuation of equity instruments measured at fair
value through other comprehensive income. The Company transfers amounts from this reserve to retained earnings when the
relevant equity instruments are derecognised.
Revaluation surplus
Revaluation surplus represents the gain/(loss), net of deferred tax, on revaluation of freehold land. The same is not available for
distribution to the shareholders.
Remeasurements of the defined benefit plans
Remeasurements of the defined benefit plans comprises actuarial gains and losses and remeasurements of return on plan
asset (excluding interest income) which are recognised in other comprehensive income and then immediately transferred
to retained earnings.
45. DIVIDEND
The Board of Directors at its meeting held on 26th May, 2025 have recommended dividend of ? 5/-
(F.Y. 2023-24 ? 5/-) per ordinary share on 58,41,875 ordinary shares of face value of ? 10/- each amounting to ? 292.09 for the
financial year ended 31st March, 2025.
The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognised as a liability.
46 DISCLOSURE PURSUANT TO INDIAN ACCOUNTING STANDARD - 19 ''EMPLOYEE BENEFITS''
46.1Defined Contribution Plans:
The Company has during the year recognised an expense of ? 644.12 (F.Y. 2023-24 ? 641.11) towards defined contribution plans.
Out of the total contribution, made for employees'' provident fund, a sum of ? 91.23 (F.Y. 2023-24 ? 101.09) has been made
to Cheviot Company Limited Employees'' Provident Fund while the remaining contribution has been made to the provident
fund plan operated by the Regional Provident Fund Commissioner. During the year, the Company has voluntarily surrendered
its exemption granted by the Central Provident Fund Commissioner under section 17(1)(a) of The Employees'' Provident Funds
and Miscellaneous Provisions Act, 1952 w.r.t. Cheviot Company Limited Employees'' Provident Fund and started complying
as an un-exempted establishment with effect from 1st January 2025. Accordingly, the entire past accumulations including
interest thereon up to 31st December 2024 was transferred to the Employees'' Provident Fund Organisation (EPFO) within the
stipulated time. The Company does not envisage any shortfall in its obligation towards the interest payable by the Trust at the
notified interest rate for the current and/or earlier periods.
46.2 Defined Benefit Plans:
Gratuity Plan
This is a funded defined benefit plans for qualifying employees. The Company makes contributions to the Cheviot Company
Limited Employees'' Gratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation,
death, permanent disablement and on resignation/termination of employment in terms of the provisions of the Payment of
Gratuity Act or as per the Company''s rule, whichever is more beneficial to the employee.
a) Risk Exposure
Defined benefit plans expose the Company to actuarial risks such as: Interest rate risk, Salary risk and Demographic risk.
i) Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If the
bond yield falls, the defined benefit obligation will tend to increase.
ii) Salary risk: Higher than expected increase in salary will increase the defined benefit obligation.
iii) Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that includes
mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefits obligations is not
straight forward and depends on the combination of salary increase, discount rate and vesting criteria. It is important not
to overstate withdrawals because in the financial analysis, the retirement benefit of the short service employee typically
costs less per year as compared to a long service employee.
* Revenue outside India includes USA ? 6,658.06 (F.Y. 2023-24 ? 4,404.80)
** Non-current assets other than financial instruments include property, plant and equipment, capital work-in-progress,
right of use assets, investment property, other intangible assets, intangible assets under development, non-current tax
assets (net) and other non-current assets.
47.4 Extent of reliance on major customer
Revenue from a government agency amounting to ? 18,343.00 (42.14% of total revenue); F.Y. 2023-24 ? 21,781.90
(47.40% of total revenue) has arisen on sale of jute bags within India.
48 DISCLOSURES PURSUANT TO IND AS - 115
48.1 Nature of goods and services : The Company is engaged in the manufacturing and sale of jute products and the same
is only reportable segment of the Company.
52 CAPITAL MANAGEMENT
For the purpose of the Company''s capital management, capital includes issued capital and all other equity reserves
attributable to the ordinary shareholders of the Company. The primary objective of the Company when managing
capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to
maximise shareholder value.
As at 31st March, 2025 and 31st March, 2024, the Company has only one class of ordinary shares and has low debt.
Consequent to such capital structure, there are no externally imposed capital requirements. In order to maintain or
achieve an optimal capital structure, the Company allocates its capital for distribution as dividend or re-investment
into business based on its long term financial plans.
53 DISCLOSURE ON FINANCIAL INSTRUMENTS
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 material 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 assets, financial liabilities and
derivative financial instruments are disclosed in Note 3.10 to the financial statements.
The management has assessed that the fair values of cash and cash equivalents, trade receivables, trade payables, short term
borrowings and other current financial assets and financial liabilities approximate their carrying amounts largely due to the
short-term maturities of these instruments. The management has assessed that the fair value of floating rate instruments
approximate their carrying value.
53.2 Fair value Hierarchy
Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:
Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities. The mutual fund / alternative
investment fund are valued using the quoted price/closing net asset value.
Level 2: Inputs other than quoted price 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). The fair value of financial instruments that are not traded
in an active market is determined using market approach and valuation techniques which maximise the use of
observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair
value an instrument are observable, the instrument is included in Level 2. The fair value of all debentures or bonds
which are not actively traded in the stock exchanges is valued using the closing price or dealer quotations as at
the reporting date. The valuation of unquoted equity share is valued using valuation techniques considering the
observable market inputs. Derivative financial instruments are valued based on quoted prices for similar assets and
liabilities in active markets or inputs that are directly or indirectly observable in the market place.
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). If
one or more of the significant inputs is not based on observable market data, the fair value is determined using
generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being
the discount rate that reflects the credit risk of counterparty. The fair value of short-term financial assets and liabilities
is considered to be approximately equal to its carrying value due to their short term nature. Costs of unquoted equity
instruments has been considered as an appropriate estimate of fair value where most recent information to measure
fair value is insufficient or if there is a wide range of possible fair value measurements.
53.3 Financial Risk Management
The Company has a risk management policy which covers risk associated with the financial assets and liabilities. The
risk management policy is approved by the Directors. The different types of risk impacting the fair value of financial
instruments are as below:
a) Credit Risk
The credit risk is the risk of financial loss arising from counter party failing to discharge an obligation. The credit risk is
controlled by analysing credit limits and credit worthiness of customers on continuous basis to whom the credit has
been granted, after obtaining necessary approvals for credit.
i) Trade Receivable
Customer credit risk is managed by the Company subject to Company''s established policy, procedures and control
relating to customer credit risk management. Outstanding customer receivables are regularly monitored and major
customers are generally from government agencies and in respect of export debtors, terms of shipment is either
cash against document or 100% advance against proof of shipments or backed by letter of credit / ECGC coverage.
Thus, based on past trends, the Company does not foresee any losses in expected credit loss (ECL). The maximum
exposure to credit risk at the reporting date is the carrying value of trade receivable disclosed in Note - 15.
ii) Financial instruments and cash deposit
Credit risk is limited as the Company generally invest in deposits with banks and in bonds of companies having
high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include
investments in debentures or bonds, preference shares, mutual fund units, and alternative investment funds.
Counterparty credit limits are reviewed by the Company periodically and the limits are set to minimise the
concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make
payments.
b) Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its financial obligations as they become due.
The Company monitors its risk by determining its liquidity requirement in the short, medium and long term. This is done
by drawing up cash forecast for short term and long term needs. The Company manages its liquidity risk in a manner
so as to meet its normal financial obligations without any significant delay or stress. Such risk is managed through
ensuring operational cash flow while at the same time maintaining adequate cash and cash equivalent position. The
management has arranged for diversified funding sources and adopted a policy of managing assets with liquidity
monitoring future cash flow and liquidity on a regular basis. Surplus funds not immediately required are invested in
certain mutual funds and fixed deposit which provide flexibility to liquidate. Besides, it generally has certain undrawn
credit facilities which can be used as and when required, such credit facilities are reviewed at regular basis.
c) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprises of following risk: interest rate risk, foreign currency risk, other price risk. Financial
instruments affected by market risk include investments, trade receivable, borrowings and trade payable.
i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Company''s financial instruments will
fluctuate because of changes in market interest rates.
The Company is exposed to risk due to interest rate fluctuation on its non-current and current borrowings with
floating interest rate. Interest rate risk is determined by current market interest rates, projected debt servicing
capability and view on future interest rate. Such interest rate risk is actively evaluated and is managed through
portfolio diversification and exercise of prepayment/refinancing options, where considered necessary.
ii) 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 has significant foreign currency exposure. To mitigate this risk,
foreign exchange exposure against exports are partly hedged by entering into forward contract.
a) Exposure to foreign currency risk
The Company''s exposure to foreign currency risk at the end of the reporting period are as follows:
(I) Unhedged foreign currency exposure
iii) Other price risk
The Company''s exposure to securities price risk arises from investments held by the Company and classified in the balance
sheet either at fair value through OCI or at fair value through profit and loss. Having regard to the nature of securities,
intrinsic worth, intent and long term nature of securities held by the Company, fluctuation in their prices are considered
acceptable and do not warrant any management.
55 OTHER REGULATORY INFORMATION
i) The Company does not have any Benami property. Further, there are no proceedings initiated or are pending against
the Company for holding any Benami property under the Prohibition of Benami Property Transactions Act, 1988 and
rules made thereunder.
ii) The Company has not granted any loans or advances in the nature of loans either repayable on demand or without
specifying any terms or period of repayment to promoters, directors, KMPs and the related parties.
iii) Details of struck off companies with whom the Company has transaction during the current / previous year or
iv) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.
v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign
entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Company (Ultimate Beneficiaries); or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party)
with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Funding Party (Ultimate Beneficiaries); or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
vii) The Company does not have any transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
viii) The Company has not been declared as a wilful defaulter by any bank or financial institution or other lender.
ix) The Company has complied with the number of layers prescribed under clause (87) of Section 2 of the Companies
Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017.
x) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory
period.
As per our report of even date For and on behalf of the Board of Directors
For Singhi & Co. Madhup Kumar Patni Harsh Vardhan Kanoria Chairman and Managing Director
Chartered Accountants Chief Financial Officer Chief Executive Officer
Firm Registration No. 302049E (DIN - °°060259)
Gopal Jain Aditya Banerjee Utkarsh Kanoria Wholetime Director
Partner Company Secretary (DIN - 06950837)
Membership No. 059147
Deo Kishan Mohta Independent Director
Place: Kolkata (DIN - 00060170)
Dated the 26th day of May, 2025
Mar 31, 2024
b) Terms/ rights attached to ordinary shares :
The Company has only one class of ordinary shares having a par value of ? 10/- per share. Each holder of ordinary shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupee. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of ordinary shares will be entitled to receive remaining assets of the Company . The distribution will be in proportion to the number of ordinary shares held by the shareholders.
There is no change in promoters'' shareholding during the year.
As per records of the Company, including its register of shareholders/members as on 31st March, 2024, the above
shareholding represents legal ownership of shares.
f) The Company had bought back 2,00,000 ordinary shares of face value of ? 10/- each during the financial year 2020-21 and 2,50,000 ordinary shares of face value of ? 10/- each during the financial year 2021-22.
g) The Board of Directors of the Company at their meeting held on Friday, 24th May, 2024 have approved to Buy-Back of up to 1,75,000 fully paid-up Ordinary Shares of the Company of face value of ? 10/- each, representing 2.91% of the present total number of fully paid-up Ordinary Share Capital of the Company, at a price of ? 1,800/- per Ordinary Share payable in cash for an aggregate maximum amount of ? 3,150.
h) The Company had issued and allotted 21,55,625 bonus ordinary shares of face value of ? 10/- each during the financial year 2018-19.
i) No ordinary shares have been reserved for issue under options and contracts/commitments for the sale of shares disinvestment as at the Balance Sheet date.
j) No securities convertible into equity/preference shares have been issued by the Company during the year.
k) No calls are unpaid by any director or officer of the Company during the year.
Nature and purpose of other equity Capital reserve
Capital reserve represents capital profits appropriated as per erstwhile Companies Act, 1956 arising on sale of fixed assets during the year ended 30th November, 1985 and 31st March, 1992. This reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
General reserve
General Reserve represents the reserve created through annual transfer of net profit at a specified percentage in accordance with the provisions of the erstwhile Companies Act, 1956. Consequent to the introduction of the Companies Act, 2013, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn, though the Company may voluntarily transfer such percentage of its profits for the financial year, as it may consider appropriate. This reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
Capital redemption reserve
Capital redemption reserve represents the reserve created during the year ended 30th November, 1981 as a result of redemption of cumulative preference share capital of the Company. Further, the Company has recognised capital redemption reserve on Buy-back of ordinary shares from the General reserve during financial year ended 31st March, 2018, 31st March, 2021 and 31st March, 2022 with the nominal amount of the ordinary shares bought back as per the applicable provisions of the Companies Act, 2013. This reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
Retained earnings
Retained earnings represents the cumulative profits of the Company after appropriation. Retained earnings can be utilised in accordance with the provisions of the Companies Act, 2013.
Other comprehensive income reserve Revaluation surplus
Revaluation surplus represents the gain/(loss), net of deferred tax, on revaluation of freehold land. The same is not available for distribution to the shareholders.
Remeasurements of the defined benefit plans
Remeasurements of the defined benefit plans comprises actuarial gains and losses and remeasurements of return on plan asset (excluding interest income) which are recognised in other comprehensive income and then immediately transferred to retained earnings.
Terms and conditions :
a) Cash Credit is secured by hypothecation of entire current assets of the Company on first charge basis and all movable fixed assets located at Budge Budge on second charge basis, both present and future. The loan is further secured by mortgage of immovable properties located at Budge Budge on second charge basis.
b) Cash credit is repayable on demand and carries interest @ 3 month MCLR plus 0.15 % p.a., present effective rate 9.35 % p.a. ( 31st March, 2023 : 8.95 % p.a)
c) No loans have been guaranteed by the directors of the Company.
d) There is no default as on the balance sheet date in the repayment of borrowings and interest thereon.
e) The quarterly returns or statements of current assets filed by the Company with bank are in agreement with the books of account.
45. DIVIDEND In Lakhs)
The Board of Directors at its meeting held on 24th May, 2024 have recommended a payment of dividend of ? 5/-(F.Y. 2022-23 ? 27/-) per ordinary share on 60,16,875 ordinary shares of face value of ? 10/- each amounting to ? 300.84 for the financial year ended 31st March, 2024.
The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognised as a liability.
46 DISCLOSURE PURSUANT TO INDIAN ACCOUNTING STANDARD - 19 ''EMPLOYEE BENEFITS'' AS NOTIFIED U/S 133 OF THE COMPANIES ACT, 2013
46.1 Defined Contribution Plans:
The Company has during the year recognised an expense of ? 641.11 (F.Y 2022-23 ? 639.02) towards defined contribution plans. Out of the total contribution, made for employees'' provident fund, a sum of ? 101.09 (F.Y. 2022-23 ? 98.01) has been made to Cheviot Company Limited Employees'' Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.
46.2 Defined Benefit Plans:
Gratuity Plan
This is a funded defined benefit plans for qualifying employees. The Company makes contributions to the Cheviot Company Limited Employees'' Gratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and on resignation/termination of employment in terms of the provisions of the Payment of Gratuity Act or as per the Company''s rule, whichever is more beneficial to the employee. a) Risk Exposure
Defined benefit plans expose the Company to actuarial risks such as: Interest rate risk, Salary risk and Demographic risk.
i) Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If the bond yield falls, the defined benefit obligation will tend to increase.
ii) Salary risk: Higher than expected increase in salary will increase the defined benefit obligation.
iii) Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefits obligations is not straight forward and depends on the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis, the retirement benefit of the short service employee typically costs less per year as compared to a long service employee.
i) The estimates of future salary increase considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
k) The Company expects to contribute ? 87.10 to its gratuity fund in F.Y. 2024-25.
l) Sensitivity Analysis
The sensitivity analysis below have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation to the amounts shown below:
47. SEGMENT REPORTING
47.1 Segment information
Operating segments are reported in a manner consistent with the internal reporting to the chief operating decision maker (CODM). The Chief Executive Officer of the Company being the CODM, assesses the financial performance and position of the Company and makes strategic decisions. The CODM primarily uses earnings before interest, tax, depreciation and amortisation (EBITDA) as performance measure to assess the performance of the operating segments. However, the CODM also receives information about the segment revenues, segment assets and segment liabilities on regular basis.
47.2 Description of Segment
The Company is engaged in a single business segment i.e. manufacturing and sale of jute goods. Hence, disclosure requirements as required by Ind AS -108 are not applicable in respect of business segment.
47.4 Extent of reliance on major customer
Revenue from government agencies amounting to ? 21,781.90 (47.40% of total revenue); F.Y. 2022-23 ? 31,570.69 (56.38% of total revenue) has arisen on sale of jute bags within India.
48 DISCLOSURES PURSUANT TO IND AS - 115
48.1 Nature of goods and services : The Company is engaged in the manufacturing and sale of jute products and the same is only reportable segment of the Company.
48.2 Disaggregation of revenue : In the following table, revenue is disaggregated by primary geographical market, major products lines and timing of revenue recognition, etc:
50 LEASES
I. The Company has factory land located at Falta SEZ on operating lease which was renewed for a period of five years commencing from August, 2019 on fixed rental basis with an option to further renew at the end of lease period. In addition to the above, the Company has another leasehold land under finance lease arrangements for term of 99 years which was reclassified from property, plant and equipment to right of use assets in earlier year.
Total cash outflow for leases of right of use (ROU) assets for the year ended 31st March, 2024 is ? 41.36 ( 31st March, 2023 ? 41.36 ) III. Contractual maturities of lease liabilities
As per the requirement of Ind AS-107, maturity analysis of lease liabilities have been shown under maturity analysis for financial liabilities under Liquidity risk (Refer Note 53.3(b)(i)). The below table provides details regarding the contractual maturities of lease liabilities on undiscounted basis:
52 CAPITAL MANAGEMENT
For the purpose of the Company''s capital management, capital includes issued capital and all other equity reserves attributable to the ordinary shareholders of the Company. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. As at 31st March, 2024 and 31st March, 2023, the Company has only one class of ordinary shares and has low debt. Consequent to such capital structure, there are no externally imposed capital requirements. In order to maintain or achieve an optimal capital structure, the Company allocates its capital for distribution as dividend or re-investment into business based on its long term financial plans.
53 DISCLOSURE ON FINANCIAL INSTRUMENTS
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 material 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 assets, financial liabilities and derivative financial instruments are disclosed in Note 3.10 to the financial statements.
The management has assessed that the fair values of cash and cash equivalents, trade receivables, trade payables, short term borrowings and other current financial assets and financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The management has assessed that the fair value of floating rate instruments approximate their carrying value.
53.2 Fair value Hierarchy
Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:
Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities. The mutual fund / alternative investment fund are valued using the quoted price/closing net asset value.
Level 2: Inputs other than quoted price 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). The fair value of financial instruments that are not traded in an active market is determined using market approach and valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an
instrument are observable, the instrument is included in Level 2. The fair value of all debentures or bonds which are not actively traded in the stock exchanges is valued using the closing price or dealer quotations as at the reporting date. Derivatives are valued using valuation techniques with market observable inputs such as foreign exchange spot rates and forward rates at the end of the reporting period.
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty. The fair value of short-term financial assets and liabilities is considered to be approximately equal to its carrying value due to their short term nature. Costs of unquoted equity instruments has been considered as an appropriate estimate of fair value where most recent information to measure fair value is insufficient or if there is a wide range of possible fair value measurements.
53.3 Financial Risk Management
The Company has a risk management policy which covers risk associated with the financial assets and liabilities. The risk management policy is approved by the Directors. The different types of risk impacting the fair value of financial instruments are as below:
a) Credit Risk
The credit risk is the risk of financial loss arising from counter party failing to discharge an obligation. The credit risk is controlled by analysing credit limits and credit worthiness of customers on continuous basis to whom the credit has been granted, after obtaining necessary approvals for credit.
i) Trade Receivable
Customer credit risk is managed by the Company subject to Company''s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored and major customers are generally from government agencies and in respect of export debtors, terms of shipment is either cash against document or 100% advance against proof of shipments or backed by letter of credit / ECGC coverage. Thus, based on past trends, the Company does not foresee any losses in expected credit loss (ECL). The maximum exposure to credit risk at the reporting date is the carrying value of trade receivable disclosed in Note - 15.
ii) Financial instruments and cash deposit
Credit risk is limited as the Company generally invest in deposits with banks and in bonds of companies having high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investments in debentures or bonds, preference shares, mutual fund units, real estate investment trust and alternative investment funds. Counterparty credit limits are reviewed by the Company periodically and the limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
b) Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its financial obligations as they become due. The Company monitors its risk by determining its liquidity requirement in the short, medium and long term. This is done by drawing up cash forecast for short term and long term needs. The Company manages its liquidity risk in a manner so as to meet its normal financial obligations without any significant delay or stress. Such risk is managed through ensuring operational cash flow while at the same time maintaining adequate cash and cash equivalent position. The management has arranged for diversified funding sources and adopted a policy of managing assets with liquidity monitoring future cash flow and liquidity on a regular basis. Surplus funds not immediately required are invested in certain mutual funds and fixed deposit which provide flexibility to liquidate. Besides, it generally has certain undrawn credit facilities which can be used as and when required, such credit facilities are reviewed at regular basis.
c) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of following risk: interest rate risk, foreign currency risk, other price risk. Financial instruments affected by market risk include investments, trade receivable, borrowings and trade payable. i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Company''s financial instruments will fluctuate because of changes in market interest rates.
The Company is exposed to risk due to interest rate fluctuation on its non-current and current borrowings with floating interest rate. Interest rate risk is determined by current market interest rates, projected debt servicing capability and view on future interest rate. Such interest rate risk is actively evaluated and is managed through portfolio diversification and exercise of prepayment/refinancing options, where considered necessary.
Interest rate sensitivity has been calculated assuming the borrowings outstanding at the reporting date have been outstanding for the entire reporting period and all other variables remain constant.
ii) 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 has significant foreign currency exposure. To mitigate this risk, foreign exchange exposure against exports are partly hedged by entering into forward contract. a) Exposure to foreign currency risk
The Company''s exposure to foreign currency risk at the end of the reporting period are as follows:
iii) Other price risk
The Company''s exposure to securities price risk arises from investments held by the Company and classified in the balance sheet either at fair value through OCI or at fair value through profit and loss. Having regard to the nature of securities, intrinsic worth, intent and long term nature of securities held by the Company, fluctuation in their prices are considered acceptable and do not warrant any management.
55 OTHER REGULATORY INFORMATION
i) The Company does not have any Benami property. Further, there are no proceedings initiated or are pending against the Company for holding any Benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
ii) The Company has not granted any loans or advances in the nature of loans either repayable on demand or without specifying any terms or period of repayment to promoters, directors, KMPs and the related parties.
iv) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.
v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries); or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries); or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
vii) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
viii) The Company has not been declared as a wilful defaulter by any bank or financial institution or other lender.
ix) The Company has complied with the number of layers prescribed under clause (87) of Section 2 of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017.
x) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period. 56 Previous year''s figures have been re-grouped/re-classified, wherever necessary, to make them comparable to the
current year''s presentation.
Mar 31, 2023
1. CORPORATE AND GENERAL INFORMATION
Cheviot Company Limited (the "Company") is a Public Limited Company incorporated in India. The Company has its registered office at 24, Park Street, Celica House, 9th Floor, Celica Park, Kolkata-700016. The Company is listed on the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE).
The Company manufactures jute products with flexibility to cater to both domestic and international market. The Company is renowned for manufacturing superior quality Hessian fabrics for export market at the Export Oriented Unit situated at Falta Special Economic Zone in the state of West Bengal, India.
2. BASIS OF ACCOUNTING2.1. Statement of Compliance
These financial statements have been prepared in accordance with the Indian Accounting Standards ("Ind AS") as prescribed by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 ("the Act"), read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended), other relevant provisions of the Act and other accounting principles generally accepted in India.
Accounting Policies have been consistently applied except where a newly issued Ind AS is initially adopted or a revision to an existing accounting standard required a change in the accounting policy hitherto in use.
The Board of Directors have approved the financial statements for the year ended 31st March, 2023 and authorised for issue on 25th May, 2023. These financial statements shall be placed before the ensuing annual general meeting of the Company for the approval of the shareholders.
The financial statements have been prepared on a historical cost basis except certain items that are measured at fair value as explained in accounting policies and Freehold land which have been measured on revaluation model.
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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability, if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 116 - Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 - Inventories or value in use in Ind AS 36 - Impairment of Assets.
2.3. Functional and Presentation Currency
The financial statements have been presented in Indian Rupees (?), which is also the Company''s functional currency. All financial information presented in (?) has been rounded off to the nearest lakhs as per the requirements of Schedule III, unless otherwise stated.
2.4. Use of Estimates and Judgements
The preparation of financial statements require judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities including contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period prospectively in which the results are known/ materialised.
2.5. Current Vs Non-Current classification
The Company presents assets and liabilities in the balance sheet based on current/non-current classification.
An asset is classified as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle;
⢠Held primarily for the purpose of trading;
⢠Expected to be realised within twelve months after the reporting period; or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All the other assets are classified as non-current.
A liability is classified as current when:
⢠It is expected to be settled in normal operating cycle;
⢠It is held primarily for the purpose of trading;
⢠It is due to be settled within twelve months after the reporting period; or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and
non-current liabilities respectively.
2.6. Recent Accounting Developments
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31st March, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from 1st April, 2023, as below:
a. Ind AS 1 - Material accounting policies - The amendments mainly related to shifting of disclosure of erstwhile "significant accounting policies" in the notes to the financial statements to material accounting policy information requiring companies to reframe their accounting policies to make them more "entity specific" This amendment aligns with the "material" concept already required under International Financial Reporting Standards (IFRS). The Company does not expect the amendment to have any significant impact in its financial statements.
b. Ind AS 8 - Definition of accounting estimates - The amendments specify definition of ''change in accounting estimate'' replaced with the definition of ''accounting estimates''. The Company does not expect the amendment to have any significant impact in its financial statements.
c. Ind AS 12 - Income taxes - Annual Improvements to Ind AS (2021) - The amendment clarifies that in cases of transactions where equal amounts of assets and liabilities are recognised on initial recognition, the initial recognition exemption does not apply. Also, If a company has not yet recognised deferred tax asset and deferred tax liability on right-of-use assets and lease liabilities or has recognised deferred tax asset or deferred tax liability on net basis, that company shall have to recognise deferred tax assets and deferred tax liabilities on gross basis based on the carrying amount of right-of-use assets and lease liabilities existing at the beginning of 1st April 2022. The Company does not expect the amendment to have any significant impact in its financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the financial statements are given below. These accounting policies have been applied consistently to all the periods presented in the financial statements except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
⢠Raw materials, stores and spares and loose tools are valued at lower of cost and net realisable value. However, items held for use in the production of inventories are not written down below cost, if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost includes cost of purchase, non-refundable taxes and other costs incurred in bringing the inventories to their present location and condition. Cost is computed on weighted average basis.
⢠Work-in-progress and finished goods are valued at lower of cost and net realisable value. Finished goods and work-in-progress include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is computed on weighted average basis.
⢠Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated cost necessary to make the sale. Net realisable value of work-in-progress is determined with reference to the selling prices of related finished goods.
⢠Adequate provision is made for obsolete and slow-moving stocks, wherever necessary.
3.2. Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and in hand, cheques in hand and short term deposits with an
original maturity of three months or less, which are subject to an insignificant risk of change in value.
Income tax comprises current and deferred tax. It is recognised in the statement of profit and loss except to the extent that it relates
to an item recognised directly in equity or in other comprehensive income.
Current tax liabilities (or assets) for the current and prior periods are measured at the amount expected to be paid to (recovered
from) the taxation authorities based on tax rates and tax laws that have been enacted during the period.
b) Deferred Tax
⢠Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
⢠Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes (i.e., tax base). Deferred tax is also recognised for carry forward of unused tax losses and unused tax credits.
⢠Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
⢠The carrying amount of deferred tax assets is reviewed at the end of each reporting period. The Company reduces the carrying
amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or that entire deferred tax asset to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profit will be available.
⢠Deferred tax relating to items recognised outside the statement of profit and loss is recognised either in other comprehensive income or in equity. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
⢠Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
3.4. Property, Plant and Equipment
a) Recognition and Measurement:
⢠Property, plant and equipment, except freehold land, held for use in the production or/and supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost, less any accumulated depreciation/amortisation and accumulated impairment losses (if any).
⢠Freehold land has been stated at revalued amount. The difference between carrying amount of such land and fair value less any impairment loss is shown as revaluation surplus net of deferred tax under the head other equity. The changes in fair value of land is recognised in other comprehensive income net of deferred tax and accumulated in other equity under the head revaluation surplus. The revaluation surplus shall be transferred to retained earnings when the asset is derecognised.
⢠Cost of an item of property, plant and equipment acquired comprises its purchase price, including non-refundable import duties and taxes, after deducting any trade discounts and rebates, borrowing cost, if capitalisation criteria is met and any directly attributable costs of bringing the assets to its working condition and location for its intended use and present value of any estimated cost of dismantling and removing the item and restoring the site on which it is located.
⢠In case of self-constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of directly attributable overheads, directly attributable borrowing costs incurred in bringing the item to working condition for its intended use, and present value of any estimated cost of dismantling and removing the item and restoring the site on which it is located. The costs of testing whether the asset is functioning properly, after deducting the net proceeds from selling items produced while bringing the asset to that location and condition are also added to the cost of self-constructed assets.
⢠If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
⢠Profit or loss arising on the disposal of property, plant and equipment are recognised in the statement of profit and loss.
⢠Subsequent costs are included in the asset''s carrying amount, only when it is probable that future economic benefits associated with the cost incurred will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced.
⢠Major inspection/ repairs/ overhauling expenses are recognised in the carrying amount of the item of property, plant and equipment as a replacement if the recognition criteria are satisfied. Any unamortised part of the previously recognised expenses of similar nature is derecognised.
c) Depreciation and Amortisation
⢠Depreciation on property, plant and equipment is provided on straight line method at the rates determined based on the useful lives of respective assets as prescribed in the Schedule II of the Act.
⢠Each part of items of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. Certain components of property, plant and equipment as identified by the Company have been depreciated at their respective useful lives ranging between 4 and 10 years.
⢠Depreciation on additions (disposals) during the year is provided on a pro-rata basis i.e., from (up to) the date on which asset is ready for use (disposed of).
⢠Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted, if appropriate.
d) Disposal of Assets
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognised in the statement of profit and loss.
e) Reclassification to Investment Property
When the use of a property changes from owner-occupied to investment property, the property is reclassified as investment property at its carrying amount on the date of reclassification.
Capital work-in-progress is stated at cost which includes expenses incurred during construction period, interest on amount borrowed for acquisition of qualifying assets and other expenses incurred in connection with project implementation in so far as such expenses relate to the period prior to the commencement of commercial production. Advances given towards acquisition or construction of property, plant and equipment outstanding at each reporting date are disclosed as Capital advances under "Other Non-Current Assets".
a) Company as a Lessor
Leases for which the Company is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as finance lease. All other leases are classified as operating leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
The Company assesses whether a contract is or contains a lease, at inception of the contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. Contingent and variable rentals are recognized as expense in the periods in which they are incurred.
(i) Right-of-Use Assets (ROU Assets)
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to the accounting policies in Note 3.12 Impairment of non-financial assets.
Extension and termination options are included in many of the leases. In determining the lease term the management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option.
(ii) Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. Lease payments included in the measurement of the lease liability comprise:
⢠Fixed lease payments (including in-substance fixed payments) payable during the lease term and under reasonably certain extension options, less any lease incentives;
⢠Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
⢠The amount expected to be payable by the lessee under residual value guarantees;
⢠The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
⢠Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
(iii) Short-Term Leases and Leases of Low-Value Assets
The Company applies the short-term lease recognition exemption to its short-term leases of Property, Plant & Equipment (i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Company''s activities as described below. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specific of each arrangement.
Revenue from sale of goods is recognised when control of the products being sold is transferred to the customer and when there are no longer any unfulfilled obligations. The Performance Obligations in sales contracts are fulfilled at the time of dispatch, delivery or upon formal customer acceptance depending on terms with customers.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract. This variable consideration is estimated based on the expected value of outflow. Revenue (net of variable consideration) is recognised only to the extent that it is highly probable that the amount will not be subject to significant reversal when uncertainty relating to its recognition is resolved.
Transaction price is the amount of consideration in the contract to which the Company expects to be entitled in exchange for transferring the promised goods or services.
The Company does not expect to have any contracts where the period between transfer of promised goods or services to the customer and payment by customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.
b) Benefits under Duty Drawback Scheme/Other Export Benefits
Revenue in respect of above benefits is recognized on post export basis and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
c) Insurance claims
Insurance claims are accounted for on the basis of acceptance of claims and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
d) Interest income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Dividends are recognised at the time the right to receive payment is established.
a) Short Term Employee Benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related services are provided. Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period.
b) Other Long Term Employee Benefits
The liabilities for earned leaves that are not expected to be settled wholly within twelve months are measured as the present value of the expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the rate of government securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of related obligation. Remeasurements as the result of experience adjustment and changes in actuarial assumptions are recognised in the statement of profit and loss.
The Company operates the following post-employment schemes:
The liability or asset recognised in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods. The defined benefit obligation is calculated annually by Actuaries using the projected unit credit method.
The liability recognised for defined benefit plans is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. The benefits are discounted using the rate of government securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of related obligation.
Remeasurements of the net defined benefit obligation which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling are recognised in other comprehensive income. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to the statement of profit and loss.
⢠Defined Contribution Plan
Defined contributions to Provident Fund, Pension Scheme and Employees'' State Insurance Scheme are defined contribution schemes and are charged to the statement of profit and loss of the year. The Company makes specified monthly contributions towards employees provident fund to a trust administered by the Company as well as to provident fund plan operated by the Regional Provident Fund Commissioner. The minimum rate of interest which is payable every year by the trust to the beneficiaries is notified by the Government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.
Expenditure incurred on Voluntary Retirement Scheme is charged to the statement of profit and loss immediately.
Government grants are recognised at their fair values when there is reasonable assurance that the grants will be received and the Company will comply with all the attached conditions. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed or netted off with related expenses. Grants related to purchase of property, plant and equipment are included in non-current liabilities as deferred revenue and are credited to profit or loss on a straight line basis over the expected useful life of the related asset and presented within other operating revenue.
3.9. Foreign Currency Transactions
⢠Foreign currency transactions are translated into the functional currency using the spot rates of exchanges at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchanges at the reporting date.
⢠Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities are generally recognised in profit or loss in the year in which they arise except for exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those qualifying assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings, the balance is presented in the statement of profit and loss within finance costs.
⢠Non-monetary items are not retranslated at period end and are measured at historical cost (translated using the exchange rate at the transaction date).
⢠Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowings of funds. Borrowing costs also includes exchange difference to the extent regarded as an adjustment to the borrowing costs.
⢠Borrowing costs directly attributable to the acquisition or construction of a qualifying asset are capitalised as a part of the cost of that asset that necessarily takes a substantial period of time to complete and prepare the asset for its intended use or sale. The Company considers a period of twelve months or more as a substantial period of time.
⢠Transaction costs in respect of long term borrowing are amortised over the tenure of respective loans using Effective Interest Rate (EIR) method. All other borrowing costs are recognised in the statement of profit and loss in the period in which they are incurred.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
⢠Initial Recognition and Measurement:
All financial assets are initially recognised when the Company becomes a party to the contractual provisions of the instruments. A financial asset is initially measured at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. However trade receivables that do not contain a significant financing component are measured at transaction price.
⢠Classification and Subsequent Measurement:
For purposes of subsequent measurement, financial assets are classified in four categories:
> Measured at amortised cost;
> Measured at fair value through other comprehensive income (FVTOCI);
> Measured at fair value through profit or loss (FVTPL); and
> Equity instruments measured at fair value through other comprehensive income (FVTOCI).
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
> Measured at amortised cost:
A financial asset is measured at the amortised cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is achieved by both collecting contractual cash flows; and
⢠The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
> Measured at FVTOCI:
A financial asset is measured at the FVTOCI if both the following conditions are met:
⢠The objective of the business model is achieved by both collecting contractual cash flows and selling the financial assets; and
⢠The asset''s contractual cash flows represent SPPI.
Financial assets meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at fair value with any gains or losses arising on remeasurement recognised in other comprehensive income, except for impairment gains or losses and foreign exchange gains or losses. Interest calculated using the effective interest method is recognised in the statement of profit and loss in interest income. Where the asset is disposed of, the cumulative gain or loss previously accumulated in other comprehensive income reserve is transferred in the statement of profit and loss.
> Measured at FVTPL:
FVTPL is a residual category for financial assets. Any financial assets, which does not meet the criteria for categorisation as at amortised cost or as FVTOCI, is classified as FVTPL. In addition, the Company may elect to designate a financial asset, which otherwise meets amortised cost or FVTOCI criteria, as at FVTPL. Financial asset included within the FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss.
Interest/dividend income on financial instruments measured at FVTPL are presented separately under other income.
> Equity instruments measured at FVTOCI:
All equity investments in scope of Ind AS - 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in other comprehensive income. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable. In case the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no reclassification of the amounts from OCI to the statement of profit and loss, even on sale of investment.
The Company derecognises a financial asset on trade date only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
⢠Impairment of Financial Assets
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS - 109 requires expected credit losses to be measured through a loss allowance. The Company recognises lifetime expected losses for all contract assets and/ or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
⢠Initial Recognition and Measurement:
Financial liabilities are classified, at initial recognition, as at fair value through profit or loss, as loans and borrowings, as payables or as derivatives, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Financial liabilities are measured subsequently at amortised cost or FVTPL. A financial liability is classified as FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
⢠Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the counterparty.
c) Derivative Financial Instruments:
The Company enters into derivative financial instruments viz. foreign exchange forward contracts, interest rate swaps and cross currency swaps to manage its exposure to interest rate and foreign exchange rate risks. The Company does not hold derivative financial instruments for speculative purposes.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the statement of profit and loss immediately.
3.12. Impairment of Non-Financial Assets
⢠The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful lives of the assets. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (Cash Generating Units - CGU).
⢠An impairment loss is recognised as an expense in the statement of profit and loss in the year in which an asset is identified as impaired. The impairment loss recognised in earlier accounting period is reversed if there has been an improvement in recoverable amount.
3.13. Provisions, Contingent Liabilities and Contingent Assets
a) Provisions
Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
Onerous Contracts:
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist when a contract under which the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received from it.
Contingent liability is a possible obligation arising from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events but is not recognised because it is not possible that an outflow of resources embodying economic benefit will be required to settle the obligations or reliable estimate of the amount of the obligations cannot be made. The Company discloses the existence of contingent liabilities in other notes to financial statements.
Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits. Contingent assets are not recognised though are disclosed, where an inflow of economic benefits is probable.
a) Recognition and Measurement
Intangible assets comprise of computer software, expected to provide future enduring economic benefits are stated at cost less accumulated amortisation and impairment, if any. Cost comprises purchase price, non-refundable taxes, duties, and incidental expenses after deducting trade discounts and rebates related to the acquisition and installation of the assets.
b) Subsequent Expenditure
Subsequent costs are included in the asset''s carrying amount, only when it is probable that future economic benefits associated with the cost incurred will flow to the Company and the cost of the item can be measured reliably. All other expenditure is recognised in the statement of profit and loss.
⢠Intangible assets are amortised over a period of five years under straight line method.
⢠The amortisation period and the amortisation method are reviewed at least at the end of each financial year. If the expected useful life of the assets is significantly different from previous estimates, the amortisation period is changed accordingly.
d) Intangible Assets under Development
Intangible assets under development is stated at cost which includes expenses incurred in connection with development of Intangible assets in so far as such expenses relate to the period prior to getting the assets ready for use.
⢠Investment property is property (comprising land or building or both) held to earn rental income or for capital appreciation or both, but not for sale in ordinary course of business, used in the production or supply of goods or services or for administrative purposes.
⢠Upon initial recognition, an investment property is measured at cost. Subsequently they are stated in the balance sheet at cost, less accumulated depreciation/amortisation and accumulated impairment losses, if any.
⢠Any gain or loss on disposal of investment property is determined as the difference between net disposal proceeds and the carrying amount of the property and is recognised in the statement of profit and loss.
⢠The depreciable investment property i.e., buildings, are depreciated on a straight line method at a rate determined based on the useful life as provided under Schedule II of the Act.
⢠Leasehold land is amortised on a straight line basis over the period of lease.
⢠Investment properties are derecognised either when they have been disposed off or when they are permanently withdrawn from the use and no future economic benefit is expected from their disposal. The net difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.
3.16. Non-Current Assets (or disposal groups) held for Sale and Discontinued Operations
⢠Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of the carrying amount and the fair value less cost to sell.
⢠An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of de-recognition.
⢠Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Non-current assets (or disposal group) classified as held for sale are presented separately in the balance sheet. Any profit or loss arising from the sale or remeasurement of discontinued operations is presented as part of a single line item in statement of profit and loss.
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding during the period are adjusted for the effects of all dilutive potential ordinary shares.
3.18. Cash Dividend Distribution to Equity Holders
The Company recognises a liability to make cash distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company''s Board of Directors.
3.19. Measurement of Fair Values
A number of the accounting policies and disclosures of the Company require the measurement of fair values, for both financial and non-financial assets and liabilities.
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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the input that is significant to the fair value measurement as a whole:
⢠Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 â Inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 â Inputs which are unobservable inputs for the asset or liability.
External valuers are involved for valuation of significant assets and liabilities. Involvement of external valuers is decided by the management of the Company considering the requirements of Ind AS and Companies Act, 2013 and selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.
4. SIGNIFICANT JUDGEMENTS AND KEY SOURCES OF ESTIMATION IN APPLYING ACCOUNTING POLICIES
Information about significant judgements and key sources of estimation made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements is included in the following notes:
a) Recognition of Deferred Tax Assets:
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits.
b) Useful Lives of Depreciable/ Amortisable Assets (Property, Plant and Equipment and Intangible Assets):
Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may change the utility of plant and equipment.
c) Extension and Termination Option in Leases:
Extension and termination options are included in many of the leases. In determining the lease term the management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option.
This assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the Company.
d) Defined Benefit Obligation (DBO):
Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.
e) Provisions and Contingencies:
The assessments undertaken in recognising provisions and contingencies have been made in accordance with Ind AS - 37, ''Provisions, Contingent Liabilities and Contingent Assets'' The evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.
f) Impairment of Financial Assets:
The Company reviews its carrying value of investments carried at amortised cost annually, or more frequently when there is indication of impairment. If recoverable amount is less than its carrying amount, the impairment loss is accounted for.
g) Fair Value Measurement of Financial Instruments:
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The input to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
Mar 31, 2019
1. CORPORATE AND GENERAL INFORMATION
Cheviot Company Limited (the âCompanyâ) is a listed Public Limited Company incorporated in India. The Company has its registered office at 24, Park Street, Magma House, 9th Floor, Kolkata-700016.
The Company manufactures jute products with flexibility to cater to both domestic and international market. The Company is renowned for manufacturing superior quality Hessian fabrics and jute shopping bags for export market at the Export Oriented Unit situated at Falta Special Economic Zone in the state of West Bengal, India.
2. BASIS OF ACCOUNTING
2.1. Statement of Compliance
These financial statements have been prepared in accordance with the Indian Accounting Standards (âInd ASâ) as prescribed by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (âthe Actâ), read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended), other relevant provisions of the Act and other accounting principles generally accepted in India.
The financial statements of the Company for the year ended 31st March, 2019 have been approved and authorised for issue by the Board of Directors in their meeting held on 27th May, 2019.
2.2. Basis of Measurement
The financial statements have been prepared on historical cost convention, except for following:
- Financial assets and liabilities (including derivative instruments) that are measured at fair value/ amortised cost;
- Freehold land on revaluation model;
- Non-current assets held for sale are measured at the lower of the carrying amounts and fair value less cost to sell;
- Defined benefit plans are measured at fair value.
2.3. Functional and Presentation Currency
The financial statements have been presented in Indian Rupees (â), which is also the Companyâs functional currency. All financial information presented in (?) has been rounded off to the nearest lakhs as per the requirements of Schedule III, unless otherwise stated.
2.4. Use of Estimates and Judgements
The preparation of financial statements require judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities including contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period prospectively in which the results are known/ materialised.
2.5. Current Vs Non-Current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is classified as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting period; or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All the other assets are classified as non-current.
A liability is classified as current when:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities respectively.
2.6. Adoption of new accounting standards
The Company has applied the following accounting standards and its amendments for the first time for annual reporting period commencing 1st April, 2018:
- Ind AS 115 - Revenue from Contracts with Customers
- Amendment to Ind AS 12 - Income Taxes
- Amendment to Ind AS 21 - The Effects of Changes in Foreign Exchange Rates
- Amendment to Ind AS 28 - Investment in Associates and Joint Ventures
- Amendment to Ind AS 112 - Disclosure of Interests in Other Entities
- Amendment to Ind AS 40 - Investment property
- Amendment to Ind AS 20 - Accounting for Government Grant and Disclosure of Government assistance
The company had to change its accounting policies following the adoption of Ind AS - 115. Most of the above amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current and future periods.
3. Significant Judgements and Key sources of Estimation in applying Accounting Policies
Information about significant judgements and key sources of estimation made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements is included in the following notes:
a) Recognition of Deferred Tax Assets: The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Companyâs future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits.
b) Useful lives of depreciable/ amortisable assets (property, plant and equipment and intangible assets): Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may change the utility of plant and equipment.
c) Classification of Leases: The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lesseeâs option to purchase and estimated certainty of exercise of such option, proportion of lease term to the assetâs economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
d) Defined Benefit Obligation (DBO): Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.
e) Provisions and Contingencies: The assessments undertaken in recognising provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, âProvisions, Contingent Liabilities and Contingent Assetsâ. The evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.
f) Impairment of Financial Assets: The Company reviews its carrying value of investments carried at amortised cost annually, or more frequently when there is indication of impairment. If recoverable amount is less than its carrying amount, the impairment loss is accounted for.
g) Allowances for Doubtful Debts: The Company makes allowances for doubtful debts through appropriate estimations of irrecoverable amount. The identification of doubtful debts requires use of judgment and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and doubtful debts expenses in the period in which such estimate has been changed.
h) Fair value measurement of financial Instruments: When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The input to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
Notes :
1) Refer Note - 22 & 27 for information on property, plant and equipment pledged as security by the Company.
2) Refer Note - 43.2 for disclosure on contractual commitment for acquisition of property, plant and equipment.
3) Refer Note - 50.2 for disclosure of future minimum lease payments and their present value in respect of property, plant and equipment taken under finance lease.
4) Based on the valuation report by a Chartered Engineer, an external valuer, freehold land having original cost of Rs. 3.11 was revalued in the years ended 31st March, 1997, 31st March, 2003, 31st March, 2008, 31st March, 2016 and the resultant increase was Rs. 1,548.11, â1,630.64, Rs. 3,075.24 and Rs. 3,390.16 respectively. Freehold land has further been revalued at Rs. 16,990.92 on 31st March, 2019, resulting in increase in the net book value of the said asset by Rs. 7,343.66 with a corresponding credit to the revaluation surplus.
The above fair value has been arrived on the basis of valuation performed by an external independent valuer having appropriate professional qualification and recent experience in the valuation of properties in relevant location.
(iv) Estimation of fair value
The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available, the Company considers information from a variety of sources including current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences.
1) There are no amount receivable from directors and officers of the Company either severally or jointly with any other person. Further, no amount is receivable from firms or private companies respectively in which any director is a partner or a director or a member.
2) Refer Note - 22 & 27 for information on hypothecation of trade receivables.
3) Refer Note - 54.3(a)(i) for disclosure on credit risk.
* Under lien Rs. 771.64 (31st March, 2018 Rs. 17.94) towards margin money and/or security against borrowings.
Fixed deposit accounts with maturity of more than 12 months amounting to Rs. 266.66 (31st March, 2018 Rs. 200.29) being non-current has been shown under the head other financial assets (non-current ) (Refer Note 10).
*Amount paid âUnder Protestâ pursuant to the final order dated 16th March, 2010 of the Tribunal against which an appeal is pending before the Honâble Supreme Court.
There are no outstanding debts from directors or other officers of the Company either severally or jointly with any other person. Further, no amount is receivable from firms or private companies respectively in which any director is a partner or a director or a member.
b) Terms/ rights attached to ordinary shares :
The Company has only one class of ordinary shares having a par value of Rs. 10/- per share. Each holder of ordinary shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupee. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of ordinary shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of ordinary shares held by the shareholders.
As per records of the Company, including its register of shareholders / members as on 31st March, 2019, the above shareholding represents legal ownership of shares.
e) The Company has issued and allotted 21,55,625 bonus ordinary shares in the ratio of 1 (one) fully paid-up bonus ordinary share of the face value of Rs. 10/- each for every existing 2 (two) fully paid-up ordinary shares of the face value of Rs. 10/- each held by the members as on 30th August, 2018, the Record Date by capitalization of a sum of Rs. 215.56 from and out of General Reserve of the Company as approved by the members at the annual general meeting held on 10th August, 2018.
f) The Company has bought back 2,00,000 ordinary shares during the financial year 2017-18.
g) No ordinary shares have been reserved for issue under options and contracts/ commitments for the sale of shares/ disinvestment as at the Balance Sheet date.
h) No securities convertible into equity/ preference shares have been issued by the Company during the year.
i) No calls are unpaid by any director or officer of the Company during the year.
Nature and purpose of other reserves Capital reserve
Capital reserve represents capital profits appropriated as per erstwhile Companies Act, 1956 arising on sale of fixed assets during the year ended 30th November, 1985 and 31st March, 1992. This reserve can be utilized in accordance with the provisions of the Companies Act, 2013.
Securities premium
Securities premium represents the premium received on issue of shares. This reserve had been utilised in accordance with the provisions of the Companies Act, 2013 in the previous year.
General reserve
General Reserve represents the reserve created through annual transfer of net profit at a specified percentage in accordance with the provisions of the erstwhile Companies Act, 1956. Consequent to the introduction of the Companies Act, 2013, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn, though the Company may voluntarily transfer such percentage of its profits for the financial year, as it may consider appropriate. This reserve can be utilized in accordance with the provisions of the Companies Act, 2013.
Capital redemption reserve
Capital redemption reserve represents the reserve created during the year ended 30th November, 1981 as a result of redemption of cumulative preference share capital of the Company. Further, the Company has recognised capital redemption reserve on buyback of ordinary shares from the General reserve during financial year ended 31st March, 2018 with the nominal amount of the ordinary shares bought back as per the applicable provisions of the Companies Act, 2013. This reserve can be utilized in accordance with the provisions of the Companies Act, 2013.
Special economic zone re-investment reserve account
Special economic zone re-investment reserve account has been created out of the profit of SEZ unit in terms of the provisions of Section 10AA of the Income Tax Act, 1961. This reserve can be utilised by the Company as per the provisions of Section 10AA of the Income Tax Act, 1961.
Retained earnings
This reserve represents the cumulative profits of the Company after appropriation. This reserve can be utilized in accordance with the provisions of the Companies Act, 2013.
Other comprehensive income reserve
Equity instrument through other comprehensive income
This represents the cumulative gains and losses arising on the fair valuation of equity instruments measured at fair value through other comprehensive income net of tax and amounts reclassified to retained earnings.
Debt instrument through other comprehensive income
This represents the cumulative gains and losses arising on the fair valuation of debt instruments measured at fair value through other comprehensive income net of tax and amounts reclassified to statement of profit and loss.
Revaluation surplus
Revaluation surplus represents the revaluation gain, net of deferred tax, on upward valuation of freehold land. Remeasurement of defined benefit plans
Remeasurement of defined benefit plans comprises actuarial gains and losses and return on plan asset (excluding interest income) which are recognised in other comprehensive income and then immediately transferred to retained earnings.
a) Loan from Export Import Bank of India is secured by hypothecation of all movable fixed assets on first charge basis and all current assets on second charge basis and by mortgage of specific immovable properties both present and future by deposit of title deeds on first charge basis.
b) Outstanding amount including current maturities of loan taken from Export Import Bank of India is repayable in 17 equal quarterly installments of Rs. 3.70 each by April, 2023. Rate of interest is LTMLR plus 1% p.a, effective rate @ 10.30% p.a. (31st March, 2018 : 10.00% p.a.)
c) Loan from State Bank of India is against lien on fixed deposit.
d) Outstanding amount including current maturities of loan taken from State Bank of India is repayable in 18 equal monthly installments of Rs. 1.25 each by September, 2020. Rate of interest is 10.25% p.a. (31st March, 2018 : 10.25% p.a.)
e) No loans have been guaranteed by the directors of the Company.
f) There is no default as on the balance sheet date in the repayment of borrowings and interest thereon.
* Excludes Rs. 46.75 (F.Y. 2017-18 Rs. 66.27) being income tax on defined benefit obligation considered as current tax.
Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income tax levied by the same taxation authority.
Terms & conditions :
a) Cash credit are secured by hypothecation of stocks, book debts and certain other assets on first charge basis and all movable fixed assets on second charge basis and by mortgage of specific immovable properties both present and future by deposit of title deeds, subject to prior charge created in favour of Export Import Bank of India.
b) Cash credit are repayable on demand and carries interest @ MCLR plus 1.25% p.a., effective rate @ 9.40 % p.a. on the date of liquidation (31st March, 2018: 9.40 % p.a.)
c) No loans have been guaranteed by the directors and others.
d) There is no default as on the balance sheet date in the repayment of borrowings and interest thereon.
e) As on the balance sheet date, i.e. 31st March, 2019, the cash credit account carries favourable balance and is included under cash and cash equivalents (Refer Note - 16). The Company has requested for closure of cash credit facility by repayment of outstanding balance and necessary formalities for satisfaction of charge, etc. are in process as at the balance sheet date.
* No amounts are due and outstanding to be credited to Investor Education and Protection Fund.
# Includes outstanding dues of directors and officers of the Company of Rs. 551.50 (31st March, 2018 Rs. 587.80). @ Includes outstanding dues of officer of the Company of Rs. 1.62 (31st March, 2018 â Nil).
Provision for contingency represents estimates made mainly for probable claim arising out of dispute in respect of indirect tax pending before the Honâble Supreme Court. The probability and timing of the outflow with regard to interest depends on the ultimate settlement / conclusion.
*includes jute manufacturing cess recovered â Nil (F.Y. 2017-18 Rs. 53.07 till 30th June, 2017) since consequent to the introduction of Goods and Service Tax (GST) effective from 1st July, 2017, sales are recorded net of GST whereas earlier sales were recorded gross of jute manufacturing cess which formed part of other expenses. Hence, related figures for the year ended 31st March, 2019 are not comparable with corresponding figures of the previous year.
4. CONTINGENT LIABILITIES & COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)
4.1 Contingent Liabilities :
a) Claims against the Company not acknowledged as debts :
b) Customs, Excise & Service Tax Appellate Tribunal (âThe Tribunalâ) vide its order dated 11th January, 2019 has issued the order in favour of the Company and hence the demand (including penalty) in relation to excise duty stands vacated. Further, the department vide its order dated 23rd April, 2019 has issued a refund order of Rs. 185.62 towards refund of amount pre-deposited against such demand along with interest amounting to Rs. 36.31.
5. DETAILS OF DUES TO MICRO ENTERPRISES AND SMALL ENTERPRISES AS DEFINED UNDER THE MSMED ACT, 2006 INCLUDED IN TRADE PAYABLES
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
This information has been determined to the extent such parties have been identified on the basis of information available with the Company.
A amount below Rs. 500
6. DIVIDEND
The Board of Directors at its meeting held on 27th May, 2019 have recommended a payment of dividend of Rs. 1/- per ordinary share of face value of Rs. 10/- each for the financial year ended 31st March, 2019 (31st March 2018 Rs. 1/- per ordinary share). The same amounts to Rs. 77.96 including dividend distribution tax of Rs. 13.29 (31st March 2018 Rs. 51.97 including dividend distribution tax of Rs. 8.86).
The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognized as a liability.
7. DISCLOSURE PURSUANT TO INDIAN ACCOUNTING STANDARD - 19 âEMPLOYEE BENEFITSâ AS NOTIFIED U/S 133 OF THE COMPANIES ACT, 2013
7.1 Defined Contribution Plans:
The Company has during the year recognised an expense of Rs. 583.26 (F.Y. 2017-18 Rs. 588.96) towards defined contribution plans.
Out of the total contribution, made for employeesâ provident fund, a sum of Rs. 88.43 (F.Y. 2017-18 Rs. 87.76) has been made to Cheviot Company Limited Employeesâ Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.
7.2 Defined Benefit Plans:
Gratuity Plan
This is a funded defined benefit plan for qualifying employees. The Company makes contributions to the Cheviot Company Limited Employeesâ Gratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and on resignation/termination of employment in terms of the provisions of the Payment of Gratuity Act or as per the Companyâs rule, whichever is more beneficial to the employee.
a) Risk Exposure
Defined benefit plans expose the Company to actuarial risks such as: Interest rate risk, Salary risk and
Demographic risk.
i) Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If the bond yield falls, the defined benefit obligation will tend to increase.
ii) Salary risk: Higher than expected increase in salary will increase the defined benefit obligation.
iii) Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefits obligations is not straight forward and depends on the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis, the retirement benefit of the short service employee typically costs less per year as compared to a long service employee.
i) The estimates of future salary increase considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
j) At 31st March 2019, the weighted average duration of the defined benefit obligation was 5.19 years (31st March, 2018 6.18 years). The distribution of the timing of benefits payment i.e., the maturity analysis of the benefit payments is as follows:
k) The Company expects to contribute â Nil to its gratuity fund in F.Y. 2019-20.
l) Sensitivity analysis
The sensitivity analysis below have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation to the amounts shown below:
8. SEGMENT REPORTING
8.1 Segment Information
Operating segments are reported in a manner consistent with the internal reporting to the chief operating decision maker (CODM). The Chief Executive Officer of the Company being the CODM, assesses the financial performance and position of the Company and makes strategic decisions. The CODM primarily uses earnings before interest, tax, depreciation and amortisation (EBITDA) as performance measure to assess the performance of the operating segments. However, the CODM also receives information about the segment revenues, segment assets and segment liabilities on regular basis.
8.2 Description of Segment
The Company is engaged in a single business segment i.e. manufacturing and sale of jute goods. Hence, disclosure requirements as required by Ind AS -108 are not applicable in respect of business segment.
8.3 The geographical segments considered for disclosure are as under :
*Non-current assets other than financial instruments include property, plant and equipment, capital work-in-progress, investment property, other intangible assets, non-current tax assets (net) and other non-current assets.
8.4 Extent of reliance on major customer
Revenue from government agencies amounting to Rs. 21,465.00 (56.03% of total revenue); F.Y. 2017-18 Rs. 18,676.14 (50.96% of total revenue) has arisen on sale of jute bags within India.
9. DISCLOSURES PURSUANT TO IND AS - 115
9.1 Nature of goods and services : The Company is engaged in the manufacturing and sale of jute products and the same is only reportable segment of the Company.
9.2 Disaggregation of revenue : In the following table, revenue is disaggregated by primary geographical market, major products lines and timing of revenue recognition, etc :
C. The company recognises revenue at a point in time. The contract with customers are of short term duration and all sales are direct to customers.
9.3 Contract balances : The following table provides information about receivables, contract assets and contract liabilities from contract with customers :
9.4 The Company has consistently applied the accounting policies to all periods presented in these financial statements. The Company has adopted Ind AS 115, âRevenue from Contracts with Customersââ with a date of initial application of 1st April, 2018. As a result, the Company has changed its accounting policy for revenue recognition. The Company has adopted modified retrospective approach and had applied Ind AS 115 only retrospectively to the current period by recognizing the cumulative effect of initially applying Ind AS-115 as an adjustment to the opening balance of retained earnings at the date of initial application i.e. 1st April, 2018. Under the modified retrospective method, the comparative information in the financial statement is not restated and would be presented based on the requirements of the previous standards (e.g. Ind AS-18 / Ind AS-11). However there is no impact on financial statements with respect to change in accounting policy.
10. LEASES
10.1 Operating lease commitments - Company as lessee
The Company has entered into operating lease for factory land at Falta. The said lease is under renewal process as it has expired in July, 2017. Thus, the required disclosures under operating lease for lease rentals payable within one year, one year to five years and five years and above could not been made.
The Company has paid Rs. 38.21 during the year (F.Y. 2017-18 Rs. 33.88) towards minimum lease payments.
10.2 Finance lease obligation
The Company has entered into finance lease arrangements in respect of land for terms ranging up to 99 years. The legal title to such lands vests with the respective lessors. There are no restrictions imposed by lease arrangements.
The Company has finance lease contracts and the obligation under finance lease are secured by the lessorâs title to the leased assets.
Future minimum lease payments (MLP) under finance lease contracts together with the present value of the net minimum lease payments in respect of Residential Land at Falta are as under:
11. RELATED PARTY DISCLOSURES PURSUANT TO IND AS - 24
11.1 List of relationships:
a) Holding Company
Harsh Investments Private Limited (HIPL)
b) Key Management Personnel
Mr. Harsh Vardhan Kanoria, Chairman & Managing Director, Chief Executive Officer Mr. Utkarsh Kanoria, Wholetime Director (w.e.f. 24th May, 2017)
Mr. Nawal Kishore Kejriwal, Wholetime Director
Mrs. Malati Kanoria , Non-executive Director
Mr. Navin Nayar, Independent Director
Mr. Padam Kumar Khaitan, Independent Director
Mr. Parag Keshar Bhattacharjee, Independent Director
Mr. Sushil Kumar Dhandhania, Independent Director
c) Relatives of Key Management Personnel
Mr. Utkarsh Kanoria ( Son of Mr. Harsh Vardhan Kanoria)
Mrs. Bimla Kejriwal ( Wife of Mr. Nawal Kishore Kejriwal )
d) Entities over which Key Management Personnel and relatives of Key Management Personnel have significant influence
Cheviot International Limited (CIL)
Cheviot Agro Industries Private Limited (CAIPL)
Abhyadoot Finance and Investments Private Limited (AFIPL)
Bright & Shine Micro Products Private Limited (BSMPPL)
Jan Priya Trust
Shashvat Foundation
Cheviot Foundation
e) Post-employment benefit plan entities
Cheviot Company Limited Employeesâ Provident Fund Cheviot Company Limited Employeesâ Gratuity Trust Fund
12. CAPITAL MANAGEMENT
The Companyâs objective is to maintain a strong capital base to ensure sustained growth in business. The capital management focuses to maintain an optimal structure that balances growth and maximizes shareholder value.
The Company is predominantly equity financed. Further, the Company has sufficient cash, cash equivalents, current investments and financial assets which are liquid to meet the debts.
13. DISCLOSURE ON FINANCIAL INSTRUMENT
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 recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 3.11 to the financial statements.
The management has assessed that the fair values of cash and cash equivalents, trade receivables, trade payables, short term borrowings, and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The management has assessed that the fair value of floating rate instruments approximate their carrying value.
13.1 Fair value Hierarchy
Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:
Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities. The mutual fund / alternative investment fund are valued using the closing net asset value.
Level 2: Inputs other than quoted price 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). The fair value of financial instruments that are not traded in an active market is determined using market approach and valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. The fair value of all bonds which are not actively traded in the stock exchanges is valued using the closing price or dealer quotations as at the reporting date. Derivatives are valued using valuation techniques with market observable inputs such as foreign exchange spot rates and forward rates at the end of the reporting period.
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty. The fair value of short-term financial assets and liabilities is considered to be approximately equal to its carrying value due to their short term nature. Costs of unquoted equity instruments has been considered as an appropriate estimate of fair value where most recent information to measure fair value is insufficient or if there is a wide range of possible fair value measurements.
There were no transfers between Level 1 and Level 2 during the year.
* investment in preference shares is net of impairment.
13.2 Financial Risk Management
The Company has a risk management policy which covers risk associated with the financial assets and liabilities. The risk management policy is approved by the Directors. The different types of risk impacting the fair value of financial instruments are as below:
a) Credit risk
The credit risk is the risk of financial loss arising from counterparty failing to discharge an obligation. The credit risk is controlled by analysing credit limits and credit worthiness of customers on continuous basis to whom the credit has been granted, after obtaining necessary approvals for credit.
i) Trade receivable
Customer credit risk is managed by the Company subject to Companyâs established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored and major customers are generally from government agencies and in respect of export debtors, terms of shipment is either cash against document or 100% advance against proof of shipments or backed by letter of credit / ECGC coverage. Thus, based on past trends, the company does not foresee any losses in expected credit loss (ECL). The maximum exposure to credit risk at the reporting date is the carrying value of trade receivable disclosed in Note - 15.
ii) Financial instrument and cash deposit
Credit risk is limited as the Company generally invest in deposits with banks and in bonds of companies having high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investments in debentures, bonds, preference shares and mutual fund units. Counterparty credit limits are reviewed by the Company periodically and the limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments.
b) Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its financial obligations as they become due.
The Company monitors its risk by determining its liquidity requirement in the short, medium and long term. This is done by drawing up cash forecast for short term and long term needs. The Company manages its liquidity risk in a manner so as to meet its normal financial obligations without any significant delay or stress. Such risk is managed through ensuring operational cash flow while at the same time maintaining adequate cash and cash equivalent position. The management has arranged for diversified funding sources and adopted a policy of managing assets with liquidity monitoring future cash flow and liquidity on a regular basis. Surplus funds not immediately required are invested in certain mutual funds and fixed deposit which provide flexibility to liquidate. Besides, it generally has certain undrawn credit facilities which can be used as and when required; such credit facilities are reviewed at regular basis.
i) Maturity analysis for financial liabilities
The following are the remaining contractual maturities of financial liabilities at the reporting date -
c) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of following risk: interest rate risk, foreign currency risk, other price risk . Financial instruments affected by market risk include borrowings, trade receivable and trade payable.
i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Companyâs financial instruments will fluctuate because of changes in market interest rates.
The Company is exposed to risk due to interest rate fluctuation on its non-current and current borrowings with floating interest rate. Interest rate risk is determined by current market interest rates, projected debt servicing capability and view on future interest rate. Such interest rate risk is actively evaluated and is managed through portfolio diversification and exercise of prepayment/ refinancing options, where considered necessary.
Interest rate sensitivity has been calculated assuming the borrowings outstanding at the reporting date have been outstanding for the entire reporting period and all other variables remain constant.
ii) 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 has significant foreign currency exposure. To mitigate this risk, foreign exchange exposure against exports are partly hedged by entering into forward contract.
a) Exposure to foreign currency risk
The Companyâs exposure to foreign currency risk at the end of the reporting period are as follows:
b) Sensitivity analysis
The analysis is based on assumption that the increase/decrease in foreign currency by 5% with all other variables held constant, on the unhedged foreign currency exposure would have following impact on profit before tax and other equity -
iii) Other price risk
The Companyâs exposure to securities price risk arises from investments held by the Company and classified in the balance sheet either at fair value through OCI or at fair value through profit and loss. Having regard to the nature of securities, intrinsic worth, intent and long term nature of securities held by the Company, fluctuation in their prices are considered acceptable and do not warrant any management.
b) Sensitivity analysis
The analysis is based on assumption that the increase/decrease by 5% with all other variables held constant would have following impact on profit before tax, other comprehensive income and other equity -
14. Previous yearâs figures have been reclassified/regrouped to conform the current yearâs presentation.
Mar 31, 2018
1. CORPORATE AND GENERAL INFORMATION
Cheviot Company Limited (the âCompanyâ) is a listed Public Limited Company incorporated in India. The Company has its registered office at 24, Park Street, Magma House, 9th Floor, Kolkata -700016.
The Company manufactures jute products with flexibility to cater to both domestic and international market. The Company is renowned for manufacturing superior quality Hessian fabrics and jute shopping bags for export market at the Export Oriented Unit situated at Falta Special Economic Zone in the state of West Bengal, India.
2. BASIS OF ACCOUNTING
2.1. Statement of Compliance
These financial statements have been prepared in accordance with the Indian Accounting Standards (âInd ASâ) as prescribed by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (âthe Actâ), read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended), other relevant provisions of the Act and other accounting principles generally accepted in India.
The financial statements for all the periods up to and including the year ended 31st March, 2017, were prepared in accordance with Generally Accepted Accounting Principles (GAAP) in India, which includes the accounting standards prescribed under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014 and other provisions of the Act (collectively referred to as âIndian GAAPâ). These financial statements for the year ended 31st March, 2018 are the first Ind AS compliant Financial Statements with comparatives, prepared under Ind AS. The Company has consistently applied the accounting policies used in the preparation of its opening Ind AS Balance Sheet as at 1st April, 2016 throughout all periods presented, as if these policies had always been in effect and are covered by Ind AS 101 âFirst Time Adoption of Indian Accounting Standardsâ.
An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in Note No. 55. Companyâs certain Ind-AS accounting policies used in the opening Balance Sheet differed from its Indian GAAP policies applied as at 31st March, 2016 and accordingly the adjustments were made to restate the opening balances as per Ind-AS. The resulting adjustment arising from events and transactions before the date of transition to Ind-AS were recognised directly through retained earnings / other equity as at 1st April, 2016 as required by Ind- AS 101.
The financial statements of the Company for the year ended 31st March, 2018 have been approved and authorized for issue by the Board of Directors in their meeting held on 23rd May, 2018.
2.2. Basis of Measurement
The financial statements have been prepared on historical cost convention, except for following:
- Financial assets and liabilities (including derivative instruments) that are measured at fair value/ amortised cost;
- Freehold land on revaluation model;
- Non-current assets held for sale are measured at the lower of the carrying amounts and fair value less cost to sell;
- Defined benefit plans are measured at fair value.
2.3. Functional and Presentation Currency
The financial statements have been presented in Indian Rupees (Rs.), which is also the Companyâs functional currency. All financial information presented in (Rs.) has been rounded off to the nearest lakhs as per the requirements of Schedule III, unless otherwise stated.
2.4. Use of Estimates and Judgements
The preparation of financial statements require judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities including contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period prospectively in which the results are known/ materialised.
2.5. Current Vs Non-Current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is classified as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting period; or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All the other assets are classified as non-current.
A liability is classified as current when:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities respectively.
3. Rounding of Amounts
All amounts disclosed in financial statements and notes have been rounded off to nearest lakhs as per the requirements of Schedule III, unless otherwise stated.
4. Significant Judgements and Key sources of Estimation in applying Accounting Policies
Information about significant judgements and key sources of estimation made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements is included in the following notes:
a) Recognition of Deferred Tax Assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Companyâs future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits.
b) Useful lives of depreciable/ amortisable assets (property, plant and equipment and intangible assets)
Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may change the utility of plant and equipment.
c) Classification of Leases
The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lesseeâs option to purchase and estimated certainty of exercise of such option, proportion of lease term to the assetâs economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialised nature of the leased asset.
d) Defined Benefit Obligation (DBO)
Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.
e) Provisions and Contingencies
The assessments undertaken in recognising provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, âProvisions, Contingent Liabilities and Contingent Assetsâ. The evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.
f) Impairment of Financial Assets
The Company reviews its carrying value of investments carried at amortised cost annually, or more frequently when there is indication of impairment. If recoverable amount is less than its carrying amount, the impairment loss is accounted for.
g) Allowances for Doubtful Debts
The Company makes allowances for doubtful debts through appropriate estimations of irrecoverable amount. The identification of doubtful debts requires use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and doubtful debts expenses in the period in which such estimate has been changed.
h) Fair value measurement of financial Instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The input to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
Notes :
1) Refer Note - 23 & 27 for information on property, plant and equipment pledged as security by the Company.
2) Refer Note - 43 for disclosure on contractual commitment for acquisition of property, plant and equipment.
3) Based on the valuation report by a Chartered Engineer, an external valuer, freehold land having original cost of Rs. 3.11 was revalued in the years ended 31st March, 1997, 31st March, 2003, 31st March, 2008 and 31st March, 2016 and the resultant increase was Rs. 1,548.11, Rs. 1,630.64, Rs. 3,075.24 and Rs. 3,390.16 respectively with last revalued amount at Rs. 9,647.26.
4) Property, plant and equipment has been carried in accordance with Previous GAAP carrying values with suitable changes as per Ind AS requirement at the date of transition except freehold land where revaluation model as adopted in Previous GAAP has been continued on the date of transition.
The above fair value has been arrived on the basis of valuation performed by an external independent valuer having appropriate professional qualification and recent experience in the valuation of properties in relevant location.
(iv) Estimation of fair value
The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available, the Company considers information from a variety of sources including current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences.
* Under lien Rs. 17.94 (31st March, 2017 Rs. 101.28; 1st April, 2016 Rs. 2.09) towards margin money and / or security against borrowings.
Fixed deposit accounts with maturity of more than 12 months amounting to Rs. 200.29 (31st March, 2017 Rs. 200.36; 1st April, 2016 Rs. 299.55) being non-current has been shown under the head other financial assets (non-current) (Refer Note 11).
*Amount paid âUnder Protestâ pursuant to the final order dated 16th March, 2010 of the Tribunal against which an appeal is pending before the Honâble Supreme Court.
There are no outstanding debts from directors or other officers of the Company.
b) Terms/ rights attached to ordinary shares :
The Company has only one class of ordinary shares having a par value of Rs. 10/- per share. Each holder of ordinary shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupee. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of ordinary shares will be entitled to receive remaining assets of the Company . The distribution will be in proportion to the number of ordinary shares held by the shareholders.
As per records of the Company, including its register of shareholders / members as on 31st March, 2018, the above shareholding represents legal ownership of shares.
e) The Company has neither allotted any ordinary shares against consideration other than cash nor has issued any bonus shares during the period of five years preceding the date at which the Balance Sheet is prepared.
f) During the year ended 31st March, 2018, the Company has concluded the buyback of 2,00,000 ordinary shares as approved by the Board of Directors at its meeting held on 24th May, 2017. This has resulted in a total cash outflow of Rs. 3,000.00.
The Company has funded the buyback from its securities premium account and general reserve amounting to Rs. 1,242.50 and Rs. 1,737.50 respectively. In accordance with Section 69 of the Companies Act, 2013, the Company has created capital redemption reserve of Rs. 20.00 equal to nominal value of shares bought back as an appropriation from general reserve.
Consequent to such buyback, share capital has been reduced by Rs. 20.00.
g) No ordinary shares have been reserved for issue under options and contracts/ commitments for the sale of shares/ disinvestment as at the Balance Sheet date.
h) No securities convertible into equity/ preference shares have been issued by the Company during the year.
i) No calls are unpaid by any director or officer of the Company during the year.
Nature and purpose of other reserves Capital reserve
Capital reserve represents capital profits appropriated as per erstwhile Companies Act, 1956 arising on sale of fixed assets during the year ended 30th November, 1985 and 31st March, 1992. This reserve can be utilized in accordance with the provisions of the Companies Act, 2013.
Securities premium account
Securities premium account represents the premium received on issue of shares. This reserve had been utilised in accordance with the provisions of the Companies Act, 2013 in the current year.
General reserve
General reserve represents the reserve created through annual transfer of net profit at a specified percentage in accordance with the provisions of the erstwhile Companies Act, 1956. Consequent to the introduction of the Companies Act, 2013, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn, though the Company may voluntarily transfer such percentage of its profits for the financial year, as it may consider appropriate. This reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
Capital redemption reserve
Capital redemption reserve represents the reserve created during the year ended 30th November, 1981 as a result of redemption of cumulative preference share capital of the Company. Further, the Company has recognised capital redemption reserve on buyback of ordinary shares from the general reserve during financial year ended as on 31st March, 2018 with the nominal amount of the ordinary shares bought back as per the applicable provisions of the Companies Act, 2013. This reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
Special economic zone re-investment reserve account
Special economic zone re-investment reserve account has been created out of the profit of SEZ unit in terms of the provisions of Section 10AA of the Income Tax Act, 1961. This reserve can be utilised by the Company towards outflows as prescribed under the Section 10AA of the Income Tax Act, 1961.
Retained earnings
This reserve represents the cumulative profits of the Company. This reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
Other comprehensive income reserve
Equity instrument through other comprehensive income
This represents the cumulative gains and losses arising on the fair valuation of equity instruments measured at fair value through other comprehensive income net of amounts reclassified to retained earnings.
Debt instrument through other comprehensive income
This represents the cumulative gains and losses arising on the fair valuation of debt instruments measured at fair value through other comprehensive income net of amounts reclassified to statement of profit and loss.
Revaluation surplus
Revaluation surplus represents the revaluation gain, net of deferred tax, on upward valuation of freehold land. Remeasurement of defined benefit plans
Remeasurement of defined benefit plans comprises actuarial gains and losses and return on plan asset (excluding interest income) which are recognised in other comprehensive income and then immediately transferred to retained earnings.
a) Loan from Export Import Bank of India is secured by hypothecation of all movable fixed assets on first charge basis and all current assets on second charge basis and by mortgage of specific immovable properties both present and future by deposit of title deeds on first charge basis.
b) Outstanding amount including current maturities of loan taken from Export Import Bank of India is repayable in 21 equal quarterly installments of Rs. 3.70 each by April, 2023. Rate of interest is LTMLR plus 1% p.a, effective rate @ 10.00% p.a. (31st March, 2017 : 10.45% p.a.)
c) Loan from State Bank of India is against lien on fixed deposit.
d) Outstanding amount including current maturities of loan taken from State Bank of India is repayable in 30 equal monthly installments of Rs. 1.25 each by September, 2020. Rate of interest is 10.25% p.a.
e) No loans have been guaranteed by the directors of the Company.
f) There is no default as on the balance sheet date in the repayment of borrowings and interest thereon.
* Excludes Rs. 66.27 (F.Y. 2016-17 Rs. 82.38) being income tax on defined benefit obligation considered as current tax.
Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income tax levied by the same taxation authority.
Terms & conditions :
a) Cash credit including preshipment credit in foreign currency are secured by hypothecation of stocks, book debts and certain other assets on first charge basis and all movable fixed assets on second charge basis and by mortgage of specific immovable properties both present and future by deposit of title deeds, subject to prior charge created in favour of Export Import Bank of India.
b) Cash credit are repayable on demand and carries interest @ MCLR plus 1.25% p.a., effective rate @ 9.40 % p.a. (31st March, 2017: 10.40 % p.a.; 1st April, 2016: 10.55 % p.a.)
c) Preshipment credit are repayable on demand and carries interest @ LIBOR plus 1.30% p.a. as on 1st April, 2016, effective rate @ 2.1461% p.a.
d) No loans have been guaranteed by the directors and others.
e) There is no default as on the balance sheet date in the repayment of borrowings and interest thereon.
* No amounts are due and outstanding to be credited to Investor Education and Protection Fund.
- Includes outstanding dues of directors and officers of the Company of Rs. 587.80 (31st March, 2017 Rs. 220.31; 1st April 2016 Rs. 229.07).
Provision for contingency represents estimates made mainly for probable claim arising out of dispute in respect of indirect tax pending before the Honâble Supreme Court. The probability and timing of the outflow with regard to interest depends on the ultimate settlement / conclusion.
* Weighted average number of ordinary shares takes into account the weighted average effect of change in number of ordinary shares due to buyback of shares during the year ended 31st March, 2018.
5. DETAILS OF DUES TO MICRO ENTERPRISES AND SMALL ENTERPRISES AS DEFINED UNDER THE MSMED ACT, 2006 INCLUDED IN TRADE PAYABLES
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.
This information has been determined to the extent such parties have been identified on the basis of information available with the Company.
6. CHANGE IN METHOD OF DEPRECIATION ON PROPERTY, PLANT AND EQUIPMENT
The Company has been charging depreciation on certain property, plant and equipment on written down value method. However, w.e.f. 1st April, 2017, the Company has changed the method of depreciation from written down value method to straight line method. The management believes that this change will result in more appropriate presentation and will give a systematic basis of depreciation charge, representative of time pattern in which the economic benefits will be derived from the use of these assets. This change has resulted in decrease in depreciation by Rs. 342.85 during the financial year 2017-18 and accordingly profit before tax has increased by Rs. 342.85.
7. DIVIDEND
The Board of Directors at its meeting held on 23rd May, 2018 have recommended a payment of dividend of Rs. 1/- per ordinary share of face value of Rs. 10/- each for the financial year ended 31st March, 2018. The same amounts to Rs. 51.97 (including dividend distribution tax of Rs. 8.86).
The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognized as a liability.
8. DISCLOSURE PURSUANT TO INDIAN ACCOUNTING STANDARD - 19 âEMPLOYEE BENEFITSâ AS NOTIFIED U/S 133 OF THE COMPANIES ACT, 2013
8.1 Defined Contribution Plans
The Company has during the year recognised an expense of Rs. 588.96 (F.Y. 2016-17 Rs. 602.72) towards defined contribution plans.
Out of the total contribution, made for employeesâ provident fund, a sum of Rs. 87.76 (Previous year Rs. 83.03) has been made to Cheviot Company Limited Employeesâ Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.
8.2 Defined Benefit Plans Gratuity Plan
This is a funded defined benefit plan for qualifying employees. The Company makes contributions to the Cheviot Company Limited Employeesâ Gratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and on resignation/termination of employment in terms of the provisions of the Payment of Gratuity Act or as per the Companyâs rule, whichever is more beneficial to the employee.
a) Risk Exposure
Defined benefit plans expose the Company to actuarial risks such as: interest rate risk, salary risk and demographic risk.
i) Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If the bond yield falls, the defined benefit obligation will tend to increase.
ii) Salary risk: Higher than expected increase in salary will increase the defined benefit obligation.
iii) Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefits obligations is not straight forward and depends on the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis, the retirement benefit of the short service employee typically costs less per year as compared to a long service employee.
i) The estimates of future salary increase considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
j) At 31st March 2018, the weighted average duration of the defined benefit obligation was 6.18 years (31st March, 2017 6.82 years). The distribution of the timing of benefits payment i.e., the maturity analysis of the benefit payments is as follows:
k) The Company expects to contribute â Nil to its gratuity fund in F.Y. 2018-19.
l) Sensitivity analysis
The sensitivity analysis below have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation to the amounts shown below:
9. SEGMENT REPORTING
9.1 Segment Information
Operating segments are reported in a manner consistent with the internal reporting to the chief operating decision maker (CODM). The Chief Executive Officer of the Company being the CODM, assesses the financial performance and position of the Company and makes strategic decisions. The CODM primarily uses earnings before interest, tax, depreciation and amortisation (EBITDA) as performance measure to assess the performance of the operating segments. However, the CODM also receives information about the segment revenues, segment assets and segment liabilities on regular basis.
9.2 Description of Segment
The Company is engaged in a single business segment i.e. manufacturing and sale of jute goods. Hence, disclosure requirements as required by Ind AS -108 are not applicable in respect of business segment.
9.3 The geographical segments considered for disclosure are as under :
* Non-current assets other than financial instruments include property, plant and equipment, capital work-in-progress, investment property, other intangible assets, intangible assets under development, non-current tax assets (net) and other non-current assets.
9.4 Extent of reliance on major customer
Revenue from Government agencies amounting to Rs. 18,676.14 ( 50.96% of total revenue); F.Y. 2016-17 Rs. 21,905.71 (56.85% of total revenue) has arisen on sale of jute bags within India.
10 LEASES
10.1 Operating lease commitments - Company as lessee
The Company has entered into operating lease for factory land at Falta. The said lease is under renewal process as it has expired in July, 2017. Thus, the required disclosures under operating lease for lease rentals payable within one year, one year to five years and five years and above could not been made.
The Company has paid Rs. 33.88 during the year towards minimum lease payments.
10.2 Finance lease obligation
The Company has entered into finance lease arrangements in respect of land for terms ranging up to 99 years. The legal title to such lands vests with the respective lessors. There are no restrictions imposed by lease arrangements.
The Company has finance lease contracts and the obligation under finance lease are secured by the lessorâs title to the leased assets. Future minimum lease payments under finance lease contracts together with the present value of the net minimum lease payments (MLP) in respect of residential land at Falta are as under :
11 RELATED PARTY DISCLOSURES PURSUANT TO IND AS - 24
11.1 List of relationships:
a) Holding Company
Harsh Investments Private Limited (HIPL)
b) Key Management Personnel
Mr. Harsh Vardhan Kanoria, Chairman & Managing Director, Chief Executive Officer Mr. Utkarsh Kanoria, Wholetime Director (w.e.f. 24th May, 2017)
Mr. Nawal Kishore Kejriwal, Wholetime Director Mrs. Malati Kanoria , Non-executive Director Mr. Navin Nayar, Independent Director Mr. Padam Kumar Khaitan, Independent Director Mr. Parag Keshar Bhattacharjee, Independent Director Mr. Sushil Kumar Dhandhania, Independent Director
c) Relatives of Key Management Personnel
Mr. Utkarsh Kanoria ( Son of Mr. Harsh Vardhan Kanoria)
Mrs. Bimla Kejriwal ( Wife of Mr. Nawal Kishore Kejriwal)
d) Entities over which Key Management Personnel and relatives of Key Management Personnel have significant influence
Cheviot International Limited (CIL)
Cheviot Agro Industries Private Limited (CAIPL)
Abhyadoot Finance and Investments Private Limited (AFIPL)
Bright & Shine Micro Products Private Limited (BSMPPL)
Jan Priya Trust Cheviot Foundation
e) Post-employment benefit plan entities
Cheviot Company Limited Employeesâ Provident Fund Cheviot Company Limited Employeesâ Gratuity Trust Fund
12 CAPITAL MANAGEMENT
The Companyâs objective is to maintain a strong capital base to ensure sustained growth in business. The capital management focuses to maintain an optimal structure that balances growth and maximizes shareholder value.
The Company is predominantly equity financed. Further, the Company has sufficient cash, cash equivalents, current investments and financial assets which are liquid to meet the debts.
13 DISCLOSURE ON FINANCIAL INSTRUMENT
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 recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 3.11 to the financial statements.
The management has assessed that the fair values of cash and cash equivalents, trade receivables, trade payables, short term borrowings, and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The management has assessed that the fair value of floating rate instruments approximate their carrying value.
13.1 Fair value Hierarchy
Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:
Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities. The mutual fund / alternative investment fund are valued using the closing net asset value.
Level 2: Inputs other than quoted price 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). The fair value of financial instruments that are not traded in an active market is determined using market approach and valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. The fair value of all bonds which are not actively traded in the stock exchanges is valued using the closing price or dealer quotations as at the reporting date. Derivatives are valued using valuation techniques with market observable inputs such as foreign exchange spot rates and forward rates at the end of the reporting period.
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty. The fair value of short-term financial assets and liabilities is considered to be approximately equal to its carrying value due to their short term nature. Costs of unquoted equity instruments has been considered as an appropriate estimate of fair value where most recent information to measure fair value is insufficient or if there is a wide range of possible fair value measurements.
13.2 Financial Risk Management
The Company has a risk management policy which covers risk associated with the financial assets and liabilities. The risk management policy is approved by the Directors. The different types of risk impacting the fair value of financial instruments are as below:
a) Credit risk
The credit risk is the risk of financial loss arising from counter party failing to discharge an obligation. The credit risk is controlled by analysing credit limits and credit worthiness of customers on continuous basis to whom the credit has been granted, after obtaining necessary approvals for credit .
i) Trade receivable
Customer credit risk is managed by the Company subject to Companyâs established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored and major customers are generally from Government agencies and in respect of export debtors, terms of shipment is either cash against document or 100% advance against proof of shipments or backed by letter of credit / ECGC coverage. Thus, based on past trends, the Company does not foresee any losses in expected credit loss (ECL). The maximum exposure to credit risk at the reporting date is the carrying value of trade receivable disclosed in Note - 16.
ii) Financial instrument and cash deposit
Credit risk is limited as the Company generally invest in deposits with banks and in bonds of companies having high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investments in debentures, bonds, preference shares and mutual fund units. Counterparty credit limits are reviewed by the Company periodically and the limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterpartyâs potential failure to make payments.
b) Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its financial obligations as they become due. The Company monitors its risk by determining its liquidity requirement in the short, medium and long term. This is done by drawing up cash forecast for short term and long term needs. The Company manages its liquidity risk in a manner so as to meet its normal financial obligations without any significant delay or stress. Such risk is managed through ensuring operational cash flow while at the same time maintaining adequate cash and cash equivalent position. The management has arranged for diversified funding sources and adopted a policy of managing assets with liquidity monitoring future cash flow and liquidity on a regular basis. Surplus funds not immediately required are invested in certain mutual funds and fixed deposit which provide flexibility to liquidate. Besides, it generally has certain undrawn credit facilities which can be used as and when required; such credit facilities are reviewed at regular basis.
i) Maturity analysis for financial liabilities
The following are the remaining contractual maturities of financial liabilities at the reporting date -
c) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of following risk: interest rate risk, foreign currency risk, other price risk. Financial instruments affected by market risk include borrowings, trade receivable and trade payable.
i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Companyâs financial instruments will fluctuate because of changes in market interest rates.
The Company is exposed to risk due to interest rate fluctuation on its non-current and current borrowings with floating interest rate. Interest rate risk is determined by current market interest rates, projected debt servicing capability and view on future interest rate. Such interest rate risk is actively evaluated and is managed through portfolio diversification and exercise of prepayment/refinancing options where considered necessary.
Interest rate sensitivity has been calculated assuming the borrowings outstanding at the reporting date have been outstanding for the entire reporting period and all other variables remain constant.
ii) 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 has significant foreign currency exposure. To mitigate this risk, foreign exchange exposure against exports are partly hedged by entering into forward contract.
b) Sensitivity analysis
The analysis is based on assumption that the increase/decrease in foreign currency by 5% with all other variables held constant, on the unhedged foreign currency exposure would have following impact on profit before tax and other equity -
iii) Other price risk
The Companyâs exposure to securities price risk arises from investments held by the Company and classified in the balance Sheet either at fair value through OCI or at fair value through profit and loss. Having regard to the nature of securities, intrinsic worth, intent and long term nature of securities held by the Company, fluctuation in their prices are considered acceptable and do not warrant any management.
14 FIRST TIME ADOPTION- TRANSITION TO IND AS
Basis for preparation
For all period up to and including the year ended 31st March, 2017, the Company has prepared its financial statements in accordance with generally accepted accounting principles in India (Indian GAAP). These financial statements for the year ended 31st March, 2018 are the Companyâs first annual IND AS financial statements and have been prepared in accordance with Ind AS.
The accounting policies set out in Note 3 have been applied in preparing the financial statements for the year ended 31st March, 2018, the comparative information presented in these financial statements for the year ended 31st March, 2017 and in the preparation of an opening Ind AS balance sheet as at 1st April, 2016 (the date of transition). This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows.
14.1 Exceptions and Exemptions Applied
Ind AS 101 âFirst-time adoption of Indian Accounting Standardsâ (hereinafter referred to as Ind AS 101) allows first time adopters certain mandatory exceptions and optional exemptions from the retrospective application of certain Ind AS, effective for 1st April, 2016 opening balance sheet. In preparing these financial statements, the Company has applied the below mentioned mandatory exceptions and optional exemptions.
A Mandatory exceptions to retrospective application
The Company has applied the following exceptions to the retrospective application of Ind AS as mandatorily required under Ind AS 101 âFirst Time Adoption of Indian Accounting Standardsâ:
i) Estimates
As per para 14 of Ind AS 101, an entityâs estimates in accordance with Ind AS at the date of transition to Ind AS or at the end of the comparative period presented in the entityâs first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the previous GAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any differences in accounting policies.
As per para 16 of the standard, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP, those estimates should be made to reflect conditions that existed at the date of transition or at the end of the comparative period. The Companyâs estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statement that were not required under the previous GAAP are listed below:
- Fair valuation of financial instruments carried at FVTPL and/or FVTOCI.
- Impairment of financial assets based on the expected credit loss model.
- Determination of the discounted value for financial instruments carried at amortised cost.
ii) De-recognition of financial assets and liabilities
As per para B2 of Ind AS 101, an entity should apply the derecognition requirements in Ind AS 109, âFinancial Instrumentsâ, prospectively for transactions occurring on or after the date of transition to Ind AS. However, para B3 gives an option to the entity to apply the derecognition requirements from a date of its choice if the information required to apply Ind AS 109 to financial assets and financial liabilities derecognized as a result of past transactions was obtained at the initially accounting for those transactions. The company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.
iii) Classification and measurement of financial assets
Para B8 - B8C of Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortized cost has been done retrospectively.
B Optional exemptions from retrospective application
Ind AS 101 âFirst time Adoption of Indian Accounting Standardsâ permits Companies adopting Ind AS for the first time to take certain exemptions from the full retrospective application of Ind AS during the transition. The Company has accordingly on transition to Ind AS availed the following key exemptions:
i) Property, plant and equipment, intangible assets and investment property
As per Ind AS 101, property, plant and equipment has been carried in accordance with previous GAAP carrying values with suitable changes as per Ind AS requirement at the date of transition except freehold land where revaluation model as adopted in previous GAAP has been continued on the date of transition. Previous GAAP revaluation surplus (other than on freehold land) has been transferred to retained earnings. In case of intangible assets and investment property, previous GAAP carrying value at the date of transition has been considered as deemed cost as per Ind AS 101.
ii) Determining whether an arrangement contains a Lease
Para D9-D9AA of Ind AS 101 includes an optional exemption that permits an entity to apply the relevant requirements in Appendix C of Ind AS 17 âLeasesâ for determining whether an arrangement existing at the date of transition contains a lease by considering the facts and circumstances existing at the date of transition (rather than at the inception of the arrangement). The Company has applied the above transitional provision and has assessed all the arrangements at the date of transition.
iii) Designation of previously recognised financial instruments
Para D19B of Ind AS 101 permits an entity to designate particular investments in equity instruments as at fair value through other comprehensive income (FVTOCI) based on facts and circumstances at the date of transition to Ind AS (rather at initial recognition). The Company has opted to avail this exemption to designate its investments in equity instruments as FVTOCI on the date of transition.
14.2 Transition to Ind AS - Reconciliations
The following reconciliations provide the explanation and qualification of the differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101 âFirst Time Adoption of Indian Accounting Standardsâ.
a) Reconciliation of Balance sheet as at 1st April, 2016 (Transition Date) and as at 31st March, 2017
b) Reconciliation of Statement of Profit and Loss for the year ended 31st March, 2017
c) Reconciliation of Statement of Cash Flows for the year ended 31st March, 2017
d) Reconciliation of Total Equity as at 1st April, 2016 and 31st March, 2017
Footnotes:
a) Fair valuation of Financial Instruments
1) Under the Indian GAAP, investments in equity instruments and mutual funds 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. The resulting fair value changes of these investments (other than equity instruments designated/ certain debt instruments measured as FVTOCI) have been recognised in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended 31st March 2017.
Fair value changes with respect to investments in equity instruments designated as FVTOCI have been recognised in FVTOCI - Equity investments reserve as at the date of transition and subsequently in the other comprehensive income for the year ended 31st March 2017.
Fair value changes with respect to certain investments in debt instruments measured as FVTOCI have been recognised in FVTOCI - Debt investments reserve as at the date of transition and subsequently in the other comprehensive income for the year ended 31st March 2017.
2) Derivative Financial Instrument : Under Ind AS, mark to market gain/loss on restatement of forward contract as at the reporting date has been recognized in the statement of profit and loss.
3) Under the Indian GAAP, interest free security deposits (that are refundable in cash on completion of the lease term) were recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognised as prepaid rent which has been amortised over itâs lease term as rent expense. The discounted value of the security deposits is increased over the period of lease term by recognising the notional interest income.
b) Deferred Tax
Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.
In addition, the various transitional adjustments lead to temporary differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of other equity as at the date of transition and subsequently in the profit and loss or other comprehensive income for the year ended 31st March, 2017.
c) Deferred Revenue / Government Grant
Under Indian GAAP, grants received from government agencies against specific property, plant and equipment are adjusted to the cost of the assets. Under Ind AS, the same has been presented as deferred revenue being amortised in the statement of profit and loss over the periods and in proportion to depreciation on related assets.
d) Property, Plant and Equipment
Considering the impact of Note No. 55.1 - B(i) the carrying value of property, plant and equipment has been increased by Rs. 424.62. Accordingly, charge on depreciation has increased by Rs. 17.41 and profit on sale of property, plant and equipment is lower by Rs. 2.46.
e) Lease
As per Ind AS 17, âLeasesâ, the Company has assessed certain long term arrangements, fulfilment of which is dependant on use of specified assets and where the Company has the right to control the use of such assets for being in the nature of a lease.
This resulted in certain arrangements being treated as a lease and classified as finance lease. The impact on total equity and profit and loss is on account of timing difference in recognition of expenses under the lease accounting model as compared to those recognised under the Previous GAAP.
f) Remeasurement benefit of defined benefit plans
Under the Indian GAAP, remeasurement benefit of defined plans (gratuity) was recognised as employee benefits expense in the statement of profit and loss. Under Ind AS, such remeasurement benefits relating to defined benefit plans is recognised in other comprehensive income as per the requirements of Ind AS 19. Consequently, the related tax effect of the same has also been recognised in other comprehensive income.
g) Reclassification
The Company has done the following reclassifications as per the requirements of Ind-AS:
1) Assets / liabilities which do not meet the definition of financial asset / financial liability have been reclassified to other asset / liability.
2) Under Indian GAAP, investment properties were presented as part of Property, Plant and Equipment. Under Ind AS, investment properties have been separately presented on the face of the balance sheet.
3) Jute manufacturing cess on sales was earlier netted off with Revenue from Operations, now the Revenue from Operations is representing gross figure with a corresponding increase in expenses.
15. Previous GAAP figures have been reclassified/regrouped to conform the presentation requirements under Ind AS and the requirements laid down in Division II of the Schedule III of the Companies Act, 2013.
Mar 31, 2017
1. Based on the valuation report by a Chartered Engineer, an external value, freehold land having original cost of Rs, 3.11 was revalued in the years ended 31st March, 1997, 31st March, 2003, 31st March, 2008 and 31st March, 2016 and the resultant increase was Rs, 1,548.11, Rs, 1,630.64 , Rs, 3,075.24 and Rs, 3,390.16 respectively with last revalued amount at Rs, 9,647.26.
2. In accordance with Accounting Standard 10 on property plant and equipment, effective from 1st April, 2016, of Companies (Accounting Standards) Rules, 2006, the Company has adopted the cost model as its accounting policy on all the assets, except freehold land which continues to appear at revalued figures. Till 31st March, 2016, the Company has been charging depreciation on historical cost convention on all its assets with the exception of certain tangible assets (buildings, plant & equipment and electrical installations & equipments) which were revalued and depreciated on replacement values as prevalent during those years.
As a result, the amount appearing in the revaluation reserve amounting to Rs, 424.62 as on 1st April, 2016, in respect of buildings revalued in the years ended 31st March, 1997 and 31st March, 2003 as well as of plant & equipment and electrical installations & equipments revalued in the years ended 31st March, 1998 and 31st March, 2003, have been adjusted against the carrying amount of the respective item of assets.
On account of the change in the accounting policy, the charge of depreciation for the year is lower by Rs, 17.41 and the profit on sale of fixed assets is higher by Rs, 2.46 with profits for the year correspondingly higher to that extent. Further, on account of such change, charge of depreciation for the year is not comparable with that of previous year.
3. Certain components identified by the Company under the head plant and machinery having a variable useful life have been depreciated at their respective useful lives ranging between 4 and 10 years.
4. Capital commitments not provided for at the date of this balance sheet are estimated at Rs, 52.87 (Previous year Rs, 893.86) in respect of tangible assets, Rs, 4.70 (Previous year Rs, 6.36) in respect of intangible assets and Rs, 300.00 (Previous year Rs, Nil) in respect of investments after netting of advances paid / amount invested.
5. Computer software comprising of Oracle ERP Software, considered material, has a carrying amount of Rs, 62.97 (previous year Rs, 72.08), as on 31st March, 2017, to be amortized over the remaining period of six years and eleven months.
6. Based on the information available with the Company, the principal amount due to Micro and Small Enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is Rs, 0.02 (Previous year Rs, Nil). Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.
7. Total stores and spare parts consumed during the year are Rs, 2,441.22 (Previous year Rs, 2,332.95) and include Rs, 354.93 (Previous year Rs, 463.26) debited to relevant expense heads.
8. Expenditure towards corporate social responsibility (CSR) :
a) As per Section 135 of the Companies Act, 2013, gross amount required to be spent by the Company for expenditure towards CSR during the year is Rs, 80.34 (previous year Rs, 72.78).
c) Amount spent during the year includes an amount of Rs, 40.00 (previous year Rs, 40.00) contributed to Jan Priya Trust, a registered trust over which a key management person and his relatives have a significant influence.
9. Jute manufacturing cess, debited under other expenses in Note 28, includes (decrease) / increase in cess, on account of difference between the closing and opening stock of finished goods amounting to ( Rs, 2.15) (previous year Rs, 4.89).
* Includes shares held by custodians of enemy property.
10. ACCOUNTING OF GOVERNMENT GRANTS IN ACCORDANCE WITH AS - 12
Government grants received by the Company comprise of capital incentive of Rs, 91.46 (Previous year Rs, 46.15), export incentives of Rs, 702.45 (Previous year Rs, 604.57) and other revenue grants of Rs, 28.67 (Previous year '' 21.44).
11. EMPLOYEE BENEFITS DISCLOSURES IN ACCORDANCE WITH AS-15 (REVISED)
i. Defined Contribution Plans
The Company has during the year recognized an expense of Rs, 602.72 (Previous year Rs, 573.65) towards defined contribution plans.
Out of the total contribution, made for employees'' provident fund, a sum of Rs, 83.03 (Previous year Rs, 78.01) has been made to Cheviot Company Limited Employees'' Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.
There is no amount included in the fair value of plan assets for :
i. Company''s own financial instrument;
ii. Any property occupied by, or other assets used by, the Company.
Expected rate of return on plan assets is based on the average long-term rate of return expected on investments of the funds during the estimated term of the obligations.
The Company is expected to contribute '' Nil to the gratuity fund during the year ending 31st March, 2018.
The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment.
h. General description of the defined plans :
i Gratuity Plan
This is a funded defined benefit plan for qualifying employees. The Company makes contributions to the Cheviot Company Limited Employees'' Gratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and on resignation/termination of employment in terms of the Provisions of the Payment of Gratuity Act or as per the Company''s rule, whichever is more beneficial to the employee.
ii Leave Plan
Eligible employees can carry forward and encash leave on superannuation, death, permanent disablement and on resignation/termination of employment in accordance with the Company''s scheme subject to a maximum of 45 days depending on the grade/category of employee.
12. RELATED PARTY DISCLOSURE IN ACCORDANCE WITH AS - 18
A. Relationships
1. Controlling Group
i. Holding Company :
Harsh Investments Private Limited (HIPL)
ii. Others :
a. Abhyadoot Finance and Investments Private Limited (AFIPL)
b. Cheviot Agro Industries Private Limited (CAIPL)
c. Cheviot International Limited (CIL)
d. Mr. Harsh Vardhan Kanoria (Mr. H. V. Kanoria)
e. Mrs. Malati Kanoria (Wife of Mr. H. V. Kanoria)
f. Mr. Utkarsh Kanoria (Son of Mr. H. V. Kanoria)
2. Key Management Personnel
i. Mr. H. V. Kanoria
ii. Mr. N. K. Kejriwal
3. Relatives of Key Management Personnel
i. Mrs. Malati Kanoria (Wife of Mr. H. V. Kanoria)
ii. Mr. Utkarsh Kanoria (Son of Mr. H. V. Kanoria)
iii. Mrs. Bimla Kejriwal (Wife of Mr. N. K. Kejriwal)
13. Enterprises over which Key Mnagement Personnel [specified in Para 2(i) above] and relatives of Key Management Personnel [specified in Para 3(i) & (ii) above] have significant influence
i. Jan Priya Trust
ii. Cheviot Foundation
iii. Bright and Shine Micro Products Private Limited (BSMPPL)
There being no doubtful debts, no provision has been made and no amount has been written off or written back during the year in respect of related party transactions.
Provision for contingency represents estimates made mainly for probable claim arising out of dispute in respect of indirect tax pending before the Hon''ble Supreme Court. The probability and timing of the outflow with regard to interest depends on the ultimate settlement / conclusion.
b. Contingent liabilities not provided for :
i. Sales Tax in dispute - Rs, 0.22 (Previous year Rs, 82.88) under appeal and not acknowledged as debt, against which a sum aggregating to Rs, Nil (Previous year Rs, 46.06) has been deposited.
ii. Income Tax in dispute - Rs, 69.98 (Previous year Rs, 162.68) under appeal and not acknowledged as debt.
iii. Wealth Tax in dispute - Rs, Nil (Previous year Rs, 222.75 under appeal and not acknowledged as debt).
iv. Excise Duty including penalty in dispute - Rs, 4,949.99 (Previous year Rs, 4,949.99) and interest thereon (amount not yet quantified) under appeal before CESTAT, being barred by limitation as per legal opinion was not acknowledged as debt and against which Rs, 185.62 had been deposited in the year ended 31st March, 2016.
v. Service Tax in dispute - Rs, 2.80 (Previous year Rs, 1.44) against show cause notice not acknowledged as debt, for which appropriate reply has been furnished and matter not yet adjudicated.
14. The Company is maintaining separate books of account for its different undertakings viz, DTA at Budge Budge and EOU at Falta, SEZ.
15. Details of specified bank notes held and transacted during the period from 8th November, 2016 to 30th December, 2016 :
16. The Board of Directors of the Company has recommended a dividend of Rs, 1/- per ordinary share for approval by shareholders at the ensuing annual general meeting. If approved, the total liability would be Rs, 54.29 including dividend tax of Rs, 9.18.
17. The previous year''s figures have been re-grouped/re-classified to conformto the current year''s classification
Mar 31, 2016
1. Based on the valuation report by a Chartered Engineer, an external valuer, certain fixed assets of the Company''s DTA unit were revalued, on appraisal method as follows :
a) Freehold land was revalued in the years ended 31st March, 1997, 31st March, 2003 and 31st March, 2008 with last revalued amount at Rs. 6,257.10. Freehold land has further been revalued at Rs. 9,647.26 on 31st March, 2016, resulting in increase in the net book value of the said asset by Rs. 3,390.16 with a corresponding credit to the revaluation reserve account;
b) Buildings were revalued in the years ended 31st March, 1997 and 31st March, 2003 with last revalued amount at Rs. 4,165.09;
c) Plant & equipment and electrical installations were revalued in the years ended 31st March, 1998 and 31st March, 2003 with last revalued amount at Rs. 7,083.95 and Rs. 415.93 respectively.
2. Capital commitments not provided for at the date of this balance sheet are estimated at Rs. 893.86 (Previous year Rs. 1.27) in respect of tangible assets and Rs. 6.36 (Previous year Rs. 9.03) in respect of intangible assets after netting of advances paid.
3. Computer software comprising of Oracle ERP Software, considered material, has a carrying amount of Rs. 72.08 (Previous year Rs. 81.19), as on 31st March, 2016, to be amortized over the remaining period of seven years and eleven months.
4. Based on the information available with the Company, the principal amount due to Micro and Small Enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is Rs. Nil (Previous year Rs. Nil). Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.
5. Due to insolvency of a party, appearing under trade receivable, claim had been lodged with the Official Administrator, appointed by the Court, for outstanding amount of Euro 100612.56 and for related expenses incurred. The Company has received claim against said receivable to the extent of 80% of the original Invoice amount from ECGC Ltd. under its buyer exposure policy, credited under trade payable, with a contingency that out of the amount received from the party, 80% thereof is reimbursable to ECGC Ltd. Accordingly, provision for doubtful receivables, has been made in respect of outstanding amount as on 31st March, 2016, net of amount recovered from ECGC Ltd.
6. Total stores and spare parts consumed during the year are Rs. 2,310.43 (Previous year Rs. 1,869.21) and include Rs. 463.26 (Previous year Rs. 296.81) debited to relevant expense heads.
7. Expenditure towards corporate social responsibility (CSR) :
a) As per Section 135 of the Companies Act, 2013, gross amount required to be spent by the Company for expenditure towards CSR during the year is Rs. 72.78 (Previous year Rs. 74.64).
c) Amount spent during the year includes an amount of Rs. 40.00 (Previous year Rs. 65.00) contributed to Jan Priya Trust, a registered trust over which a key management person and his relatives have a significant influence.
8. Jute manufacturing cess, debited under other expenses in Note 27, includes increase / (decrease) in cess, on account of difference between the closing and opening stock of finished goods amounting to Rs. 4.89 [Previous year (Rs. 3.24)].
9. Derivative instruments and unhinged foreign currency exposure :
a) The Company uses forward exchange contracts to hedge its exposures in foreign currency. Forward exchange contracts for trade receivables outstanding as at balance sheet date is Rs. 540.84 (Previous year Rs. 72.97).
b) Forward cover for firm commitment in respect of future sales against export order as at balance sheet date is Rs. 1,369.96 (Previous year Rs. 148.39). The mark to market gain thereon amounting to Rs. 24.95 (Previous year Rs. 26.08) has not been accounted for due to prudent accounting policy.
c) Foreign currency exposure (net) at year end that are not hedged by derivative instruments or otherwise is Rs. 619.23 (Previous year Rs. 1,215.24).
10. ACCOUNTING OF GOVERNMENT GRANTS IN ACCORDANCE WITH AS-12
Government grants received by the Company comprise of capital incentive of Rs. 46.15 (Previous year Rs. 10.31), export incentives of Rs. 604.57 (Previous year Rs. 303.03) and other revenue grants of Rs. 8.36 (Previous year Rs. 2.88).
11. EMPLOYEE BENEFITS DISCLOSURES IN ACCORDANCE WITH AS-15 (REVISED)
i. Defined Contribution Plans
The Company has during the year recognized an expense of Rs. 573.65 (Previous year Rs. 513.62) towards defined contribution plans.
Out of the total contribution, made for employees'' provident fund, a sum of Rs. 78.01 (Previous year Rs. 74.60) has been made to Cheviot Company Limited Employees'' Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.
12. SEGMENT REPORTING IN ACCORDANCE WITH AS - 17
The Company is engaged in a single business segment i.e. manufacturing and sale of Jute goods. Hence, disclosure requirements as required by Accounting Standard - 17 are not applicable in respect of business segment. However, the geographical segments considered for disclosure are as under :
13. RELATED PARTY DISCLOSURE IN ACCORDANCE WITH AS - 18
A. Relationships
1. Controlling Group
i. Holding Company :
Harsh Investments Private Limited (HIPL)
ii. Others :
a. Abhyadoot Finance and Investments Private Limited (AFIPL)
b. Cheviot Agro Industries Private Limited (CAIPL)
c. Cheviot International Limited (CIL)
d. Mr. Harsh Vardhan Kanoria (Mr. H.V. Kanoria)
e. Mrs. Malati Kanoria (Wife of Mr. H.V. Kanoria)
f. Mr. Utkarsh Kanoria (Son of Mr. H.V. Kanoria)
2. Key Management Personnel
i. Mr. H. V. Kanoria
ii. Mr. N. K. Kejriwal
3. Relatives of Key Management Personnel
i. Mrs. Malati Kanoria (Wife of Mr. H.V. Kanoria)
ii. Mr. Utkarsh Kanoria (Son of Mr. H. V. Kanoria)
iii. Mrs. Bimla Kejriwal (Wife of Mr. N.K. Kejriwal)
4. Enterprises over which Key Management Personnel [specified in Para 2 (i) above] and relatives of Key Management Personnel [specified in Para 3 (i) & (ii) above] have significant influence.
i. Jan Priya Turst
ii. Bright & Shine Micro Products Pvt. Ltd. (BSMPPL)
14. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS IN ACCORDANCE WITH AS - 29
a. In accordance with AS - 29 - "Provisions, Contingent Liabilities and Contingent Assets", the Company as a prudent measure, has made following provisions in the books :
Provision for contingencies represents estimates made mainly for probable claims arising out of disputes pending with the authorities under various statutes. The probability and timing of the outflow with regard to these matters depend on the ultimate settlement / conclusion with the relevant authorities.
b. Contingent liabilities not provided for :
i. Sales Tax in dispute - Rs. 82.88 (Previous year Rs. 16.49) under appeal and not acknowledged as debt, against which a sum aggregating to Rs. 46.06 has been deposited till date (Previous year Rs. Nil).
ii. Income Tax in dispute - Rs. 162.68 (Previous year Rs. 236.27) under appeal and not acknowledged as debt.
iii. Wealth Tax in dispute - Rs. 222.75 (Previous year Rs. 222.75) under appeal and not acknowledged as debt.
iv. Excise Duty including penalty in dispute - Rs. 4,949.99 and interest thereon (amount not yet quantified) (Previous year Rs. 2,475.00 against show cause cum demand notice) under appeal before CESTAT, being barred by limitation as per legal opinion was not acknowledged as debt and against which Rs. 185.62 has been deposited (Previous year Rs. Nil).
v. Service Tax in dispute - Rs. 1.44 (Previous year Rs. 1.44) against show cause notice not acknowledged as debt, for which appropriate reply has been furnished and matter not yet adjudicated.
vi. Additional bonus liability for the previous year ended 31st March, 2015 amounting to Rs. 127.94 (Previous year Rs. Nil) not acknowledged by the Company on account of judicial pronouncements including interim stay granted against retrospective amendment of The Payment of Bonus Act, 1965, pending adjudication.
15. The Company is maintaining separate books of account for its different undertakings viz, DTA at Budge and EOU at Falta, SEZ. Effective from 1st April 2015, operations of the Company''s Captive Power Plant [CPP] unit have been combined with DTA unit since the CPP unit is not required to function as an independent unit due to completion of exemption period available under Section 80-IA of the Income Tax Act, 1961.
16. The Company had paid interim dividend of Rs. 17/- per ordinary share of the face value of Rs. 10/- each amounting to Rs. 766.91 during the year ended 31st March, 2016. No further final dividend was recommended by the Board of directors for the year ended 31st March, 2016 (Previous year - dividend of Rs. 17/- per ordinary share amounting to Rs. 766.91 was recommended).
17. The previous year''s figures have been re-grouped/re-classified to conform to the current year''s classification.
Mar 31, 2013
1. Based on the valuation report by a Chartered Engineer, an external
valuer, the Company''s freehold land had been revalued on appraisal
method at Rs. 6,257.10 on 31st March, 2008 resulting in increase in the
net book value of the assets of Rs. 3,075.24 by a corresponding credit to
revaluation reserve account.
2. Certain assets transferred from DTA unit to Falta SEZ unit, during
the year, of gross block of Rs. 187.36 and accumulated depreciation of Rs.
177.32 have been shown as capital work in progress at Falta SEZ unit,
as yet to be installed there.
3. Capital commitments not provided for at the date of this Balance
Sheet are estimated at Rs. 751.61 (Previous year Rs. 116.32) after netting
of advances paid.
4. Based on the information available with the Company, the principal
amount due to Micro and Small Enterprises, as defined under the Micro,
Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is
Rs. Nil (Previous year Rs. Nil). Further, no interest during the year has
been paid or payable under the terms of the MSMED Act, 2006.
5. Total stores and spare parts consumed during the year are Rs.
2,108.47 (Previous year Rs. 2,150.21) and include Rs. 216.74 (Previous year
Rs. 251.22) debited to relevant expense heads.
6. Consignment sales expenses, disclosed in Note 28, comprise of
cess, rent, rates and taxes, insurance, delivery charges, brokerage and
commission and miscellaneous expenses, the amount of rent being Rs. Nil
(Previous year Rs. 0.52), rates and taxes being Rs. Nil (Previous year Rs.
0.30) and insurance being Rs. Nil (Previous year Rs. 0.29).
7. Foreign currency exposure (net) at year end that are not hedged by
derivative instruments or otherwise is Rs. 1,254.43 (Previous yearRs.
1,628.78).
8. EXCHANGE DIFFERENCE ON FOREIGN CURRENCY IN ACCORDANCE WITH AS - 11
Exchange difference (net), other than finance cost, amounting to Rs.
184.19 (Previous year Rs. 340.45) have been credited to respective
revenue heads in the Statement of Profit and Loss.
9. ACCOUNTING OF GOVERNMENT GRANTS IN ACCORDANCE WITH AS - 12
Government grants received by the Company comprise of capital subsidy
of Rs. 100.42 (Previous year Rs. 55.52), export incentives of Rs. 142.46
(Previous year Rs. 209.51) and other revenue grants of Rs. 69.36 (Previous
year Rs. 72.79).
10. EMPLOYEE BENEFITS DISCLOSURES IN ACCORDANCE WITH AS - 15 (REVISED)
i. Defined Contribution Plans
The Company has during the year recognised an expense of Rs. 481.13
(Previous year Rs. 436.94) towards defined contribution plans.
Out of the total contribution, made for employees'' provident fund, a
sum of Rs. 71.72 (Previous year Rs. 60.48) has been made to Cheviot Company
Limited Employees'' Provident Fund while the remaining contribution has
been made to the provident fund plan operated by the Regional Provident
Fund Commissioner. Further, considering the past track and fair value
of the plan assets of the Trust, the Company does not envisage any
shortfall in liability towards the interest payable by the Trust at the
notified interest rate.
11. SEGMENT REPORTING IN ACCORDANCE WITH AS - 17
The Company operates through two business segments namely, a) Jute
goods and b) Captive power generation. However, Captive power
generation is not a reportable segment in terms of the criteria laid
down in paragraph 27 of the Accounting Standard -17, as the
revenue/results/assets of this segment are not more than the threshold
limit of 10% of the total segment revenue/results/assets and as such
the disclosure requirements as required by Accounting Standard -17 are
not applicable in respect of business segment. However, the
geographical segments considered for disclosure are as under:
12. RELATED PARTY DISCLOSURE IN ACCORDANCE WITH AS - 18
A. Relationships
1. Controlling Group
i. Holding Company:
Harsh Investments Private Limited (HIPL) ii. Others:
a. Abhyadoot Finance and Investments Private Limited (AFIPL)
b. Cheviot Agro Industries Private Limited (CAIPL)
c. Cheviot International Limited (CIL)
d. Mr. Harsh Vardhan Kanoria (Mr. H. V. Kanoria)
e. Mrs. Malati Kanoria (Wife of Mr. H. V. Kanoria)
f. Mr. Utkarsh Kanoria (Son of Mr. H. V. Kanoria)
2. Associates
i. Jan Priya Trust ii. Shashvat Foundation
3. Key Management Personnel
i. Mr. H.V. Kanoria ii. Mr. N. K. Kejriwal
iii. Mr. D. Mazumdar iv. Mr. D. K. Mohta
v. Mr.M.K.Patni
4. Relative of Key Management Personnel
Mrs. Bimla Kejriwal (Wife of Mr. N. K. Kejriwal)
13. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS IN
ACCORDANCE WITH AS - 29
a. In accordance with Accounting Standard 29 - "Provisions, Contingent
Liabilities and Contingent Assets", the Company as a prudent measure,
has made following provisions in the books :
Provision for contingencies represents estimates made mainly for
probable claims arising out of disputes pending with the authorities
under various statutes (i.e. Excise and Sales Tax). The probability and
timing of the outflow with regard to these matters depend on the
ultimate settlement / conclusion with the relevant authorities.
b. Contingent liabilities not provided for:
i. Sales Tax in dispute - Rs. 0.62 (Previous year Rs. 5.06) under appeal
and not acknowledged as debt.
ii. Income Tax in dispute - Rs. 188.76 (Previous year Rs. 145.82) under
appeal and not acknowledged as debt.
14. The Company is maintaining separate books of account for its
different undertakings viz, DTA, Captive Power Plant at Budge Budge and
EOU at Falta, SEZ.
15. The Board of Directors recommend payment of dividend of Rs. 15/-
(Previous year Rs. 13/-) per Ordinary share of the face value of Rs. 10/-
each for the year ended 31st March, 2013.
16. The previous year''s figures have been re-grouped / re-classified
to conform to the current year''s classification.
Mar 31, 2012
1. Based on the valuation report by a Chartered Engineer, an external
valuer, the Company's freehold land had been revalued on appraisal
method at Rs 6,257.10 on 31st March, 2008 resulting in increase in the
net book value of the assets of Rs 3,075.24 by a corresponding credit to
revaluation reserve account.
2. Capital commitments not provided for at the date of this balance
sheet are estimated at Rs 116.32 (Previous year Rs 521.12) after netting
of advances paid.
3. Based on the information available with the Company, the principal
amount due to Micro and Small Enterprises, as defined under the Micro,
Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is
Rs Nil (Previous year Rs Nil). Further, no interest during the year has
been paid or payable under the terms of the MSMED Act, 2006.
4. Total stores and spare parts consumed during the year are Rs
2,150.21(Previous year Rs 1,943.04) and include Rs 251.22 (Previous year
Rs 198.63) debited to relevant expense heads.
5. Consignment sales expenses, disclosed in Note 28, comprise of
cess, rent, rates and taxes, insurance, delivery charges, brokerage and
commission and miscellaneous expenses, the amount of rent being Rs 0.52
(Previous year Rs 0.12), rates and taxes being Rs 0.30 (Previous year Rs
3.67 ) and insurance being Rs 0.29 (Previous year Rs 0.29).
6. Forward cover for foreign currency receivables outstanding at year
end is Rs Nil (Previous year Rs 94.88). Foreign currency exposure (net)
at year end that are not hedged by derivative instruments or otherwise
is Rs 1,628.78 (Previous year Rs 777.82).
7. EXCHANGE DIFFERENCE ON FOREIGN CURRENCY IN ACCORDANCE WITH AS - 11
Exchange difference (net), other than finance cost, amounting to Rs
340.45 (Previous year Rs 196.17) have been credited to respective
revenue heads in the Statement of Profit and Loss. Such difference
includes premium received amounting to Rs Nil (Previous year Rs 0.43) and
exchange loss amounting to Rs Nil (Previous year Rs 0.16) in respect of
outstanding forward contracts. Premium on outstanding forward exchange
rate contracts to be recognised in the subsequent year amounts to Rs Nil
(Previous year Rs 0.82).
8. ACCOUNTING OF GOVERNMENT GRANTS IN ACCORDANCE WITH AS - 12
Government grants received by the company comprise of capital subsidy
of Rs 55.52 (Previous year Rs 27.21), export incentives of Rs 209.51
(Previous year Rs 499.77) and other revenue grants of Rs 72.79 (Previous
year Rs 32.30).
9. EMPLOYEE BENEFITS DISCLOSURES IN ACCORDANCE WITH AS - 15 (REVISED)
i. Defined Contribution Plans
The Company has during the year recognised an expense of Rs 436.94
(Previous year Rs 399.55) towards defined contribution plans.
Out of the total contribution, made for employees' provident fund, a sum
ofRs 60.48 (Previous year Rs 53.24) has been made to Cheviot Company
Limited Employees' Provident Fund while the remaining contribution has
been made to the provident fund plan operated by the Regional Provident
Fund Commissioner. Further, considering the past track and fair value
of the plan assets of the Trust, the Company does not envisage any
shortfall in liability towards the interest payable by the Trust at the
notified interest rate.
Expected rate of return on plan assets is based on the average
long-term rate of return expected on investments of the funds during
the estimated term of the obligations.
The estimates of future salary increases considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment.
a. General description of the defined plans :
i. Gratuity Plan
This is a funded defined benefit plan for qualifying employees. The
Company makes contributions to the Cheviot Company Limited Employees'
Gratuity Trust Fund. Gratuity is payable to all eligible employees of
the Company on superannuation, death, permanent disablement and on
resignation/termination of employment in terms of the Provisions of the
Payment of Gratuity Act or as per the Company's rule, whichever is more
beneficial to the employee.
ii. Leave Plan
Eligible employees can carry forward and encash leave on
superannuation, death, permanent disablement and on
resignation/termination of employment in accordance with the Company's
scheme subject to a maximum of 45 days depending on the grade/category
of employee.
10. SEGMENT REPORTING IN ACCORDANCE WITH AS - 17
The Company operates through two business segments namely, a) Jute
goods and b) Captive power generation. However, Captive power
generation is not a reportable segment in terms of the criteria laid
down in paragraph 27 of the Accounting Standard -17, as the
revenue/results/assets of this segment are not more than the threshold
limit of 10% of the total segment revenue/results/assets and as such
the disclosure requirements as required by Accounting Standard -17 are
not applicable in respect of business segment. However, the
geographical segments considered for disclosure are as under:
11. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS IN
ACCORDANCE WITH AS - 29
a. In accordance with Accounting Standard 29 - "Provisions, Contingent
Liabilities and Contingent Assets", the Company as a prudent measure,
has made following provisions in the books :
Year ended Year ended
31st March, 2012 31stMarch,2011
PROVISIONFORCONTINGENCIES Indirect taxes Indirect taxes
Balance at the beginning of the year 396.94 163.48
Additional provision during the year 93.55 233.46
Provision used during the year 5.94 -
Provision reversed during the year 213.13 -
Balance at the end of the year 271.42 396.94
Provision for contingencies represents estimates made mainly for
probable claims arising out of disputes pending with the authorities
under various statutes (i.e. Excise and Sales Tax). The probability and
timing of the outflow with regard to these matters depend on the
ultimate settlement / conclusion with the relevant authorities.
b. Contingent liabilities not provided for:
i. Sales Tax in dispute - Rs 5.06 (Previous year Rs 6.58) under appeal
and not acknowledged as debt.
ii. Income Tax in dispute - Rs 145.82 (Previous year Rs 236.65) pending
revision and not acknowledged as debt.
iii. Employees' state insurance in dispute Rs Nil (Previous year Rs
14.38) being contested in view of liability foreseen of Rs Nil (Previous
year Rs 5.26). Provision has thus been made of Rs Nil (Previous year Rs
5.26), and against which a sum of Rs Nil (Previous year Rs 5.20) has been
deposited.
12. The Company is maintaining separate books of account for its
different undertakings viz, DTA, Captive Power Plant at Budge Budge and
EOU at Falta, SEZ.
13. The Board of Directors recommend payment of dividend of Rs 13/-
(Previous year Rs 12/-) per Ordinary share of the face value of Rs 10/-
each for the year ended 31st March, 2012.
14. In view of the revision to the Schedule VI as per notification
issued by the Central Government, the financial statements for the year
ended 31st March, 2012 have been prepared as per the requirements of
the revised Schedule VI to the Companies Act, 1956. The previous year's
figures have been accordingly re-grouped / re-classified to conform to
the current year's classification.
Mar 31, 2011
1. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognised when there is present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the
notes. Contingent assets are neither recognised nor disclosed in the
financial statements.
2. Based on the valuation report by a Chartered Engineer, an external
valuer, the Companys freehold land had been revalued on appraisal
method at Rs. 6,257.10 on 31 st March, 2008 resulting in increase in the
net book value of the assets ofRs. 3,075.24 by a corresponding credit to
revaluation reserve account.
3. Certain assets transferred from DTA unit to Falta SEZ unit, in the
previous year, of gross block ofRs. 187.07 and accumulated depreciation
ofRs. 168.99 had been shown as capital work in progress at Falta SEZ unit
but have been installed and put to use by such unit in the current
year.
4. Capital commitments not provided for at the date of this Balance
Sheet are estimated at Rs. 521.12 (Previous yearRs. 3.45) after netting of
advances paid.
5. Based on the information available with the Company, the principal
amount due to Micro and Small Enterprises, as defined under the Micro,
Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is
Rs. Nil (Previous yearRs. Nil).
Further, no interest during the year has been paid or payable under the
terms of the MSMED Act, 2006.
6. Consignment sales expenses, disclosed in Schedule -17, comprise of
cess, rent, rates and taxes, insurance, delivery charges, brokerage &
commission and miscellaneous expenses, the amount of brokerage and
commission being Rs. 9.25 (Previous yearRs. 3.91).
7. Total stores and spare parts consumed during the year are Rs.
1,943.04 (Previous year Rs. 1,317.37) and include Rs. 198.63 (Previous year
Rs. 167.48) debited to relevant expense heads.
8. Government grants received by the Company comprise of capital
subsidy of Rs. 27.21 (Previous year Rs. 43.62), export incentives of Rs.
499.77 (Previous year Rs. 188.27) and other revenue grants of Rs. 32.30
(Previous yearRs. Nil).
9. Fixed assets amounting to Rs. Nil (Previous year Rs. 1.47) has been
written off during the year as no longer usable.
10. Exchange difference (net) amounting to Rs. 196.17 (Previous year Rs.
11.86) have been credited to respective revenue heads in the Profit &
Loss account. Such difference includes premium received amounting to Rs.
0.43 (Previous year Rs. Nil) and exchange loss amounting to Rs. 0.16
(Previous year Rs. Nil) in respect of outstanding forward contracts.
Premium on outstanding forward exchange rate contracts to be recognised
in the subsequent year amounts to Rs. 0.82 (Previous year Rs.Nil).
11. Disclosure pursuant to Accounting Standard -15 (Revised
2005)Employee Benefits:
i. Effective 1 st April, 2007, the Company has adopted Accounting
Standard -15 (revised 2005) on "Employee Benefits".
ii. Defined Contribution Plans
The Company has during the year recognised an expense of Rs. 399.55
(Previous year Rs. 286.34) towards defined contribution plans.
Out of the total contribution, made for employees provident fund, a
sum of Rs. 53.24 (Previous year Rs. 47.15) has been made to Cheviot Company
Limited EmployeesProvident Fund while the remaining contribution has
been made to the provident fund plan operated by the Regional Provident
Fund Commissioner. Further, considering the past track and fair value
of the plan assets of the Trust, the Company does not envisage any
shortfall in liability towards the interest payable by the Trust at the
notified interest rate.
Expected rate of return on plan assets is based on the average long
term rate of return expected on investments of the funds during the
estimated term of the obligations.
The estimates of future salary increases considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment.
g. General description of the defined plans : i. Gratuity plan
This is a funded defined benefit plan for qualifying employees. The
Company makes contributions to the Cheviot Company Limited
EmployeesGratuity Trust Fund. Gratuity is payable to all eligible
employees of the Company on superannuation, death, permanent
disablement and on resignation/termination of employment in terms of
the Provisions of the Payment of Gratuity Act or as per the Companys
rule, whichever is more beneficial to the employee.
ii. Leave plan
Eligible employees can carryforward and encash leave on superannuation,
death, permanent disablement and on resignation/termination of
employment in accordance with the Companys scheme subject to a maximum
of 45 days depending on the grade/category of employee.
20. Segment reporting as per Accounting Standard -17 for the year
ended 31 st March, 2011
The Company operates through two business segments namely Jute Goods
and Captive Power Generation. However, Captive Power Generation is not
a reportable segment in terms of the criteria laid down in paragraph 27
of the aforesaid Accounting Standard -17, as the revenue/results/assets
of this segment are not more than the threshold limit of 10% of the
total segment revenue/results/assets and as such the disclosure
requirements as required by Accounting Standard -17 are not applicable
in respect of business segment. However, the geographical segments
considered for disclosure are as under:
21. Related Party Disclosures
Related party disclosures, as required by Accounting Standard -18 for
the year ended 31st March, 2011 are as follows :
A. Relationships
1. Controlling Group
i. Holding Company
Harsh Investments Private Limited (HIPL)
ii. Others
a. Abhyadoot Finance & Investments Private Limited (AFIPL)
b. Cheviot Agro Industries Limited (CAIL)
c. Cheviot International Limited (CIL)
d. Mr. H. V. Kanoria
e. Mrs. Malati Kanoria (Wife of Mr. H. V. Kanoria)
f. Mr. Utkarsh Kanoria (Son of Mr. H. V. Kanoria)
2. Associates
i. Jan Priya Trust ii. Shashvat Foundation
3. Key Management Personnel
i. Mr. H.V. Kanoria ii. Mr. N. K. Kejriwal
iii. Mr. D. Mazumdar iv. Mr. D. K. Mohta
v. Mr. M. K. Patni
4. Relative of Key Management Personnel Mrs. Bimla Kejriwal (Wife of
Mr. N. K. Kejriwal)
22. Derivative instruments outstanding :
a) Forward cover for foreign currency receivables outstanding at year
end is Rs. 94.88 (Previous year Rs. Nil).
b) Foreign currency exposure (net) at year end that are not hedged by
derivative instruments or otherwise is Rs. 1,214.09 (Previous year Rs.
783.21).
Provision for Contingencies represents estimates made mainly for
probable claims arising out of disputes pending with the authorities
under various statutes (i.e. Excise and Sales Tax). The probability and
timing of the outflow with regard to these matters depend on the
ultimate settlement/conclusion with the relevant authorities.
b. Contingent Liabilities not provided for -
i. Sales tax in dispute Rs. 6.58 (Previous year Rs. 6.58) under appeal and
not acknowledged as debt.
ii. Income tax in dispute Rs. 236.65 (Previous year Rs. 90.83) under
appeal and not acknowledged as debt.
iii. Employees state insurance in dispute Rs. 14.38 (Previous year Rs.
49.37) and interest thereon (amount not yet quantified) being contested
in view of liability foreseen of Rs. 5.26 (Previous yearRs. 2.66) only with
interest thereon of Rs. Nil (Previous year Rs. 0.16). Provision has thus
been made of Rs. 5.26 (Previous year Rs. 2.82), and against which a sum of
Rs. 5.20 (Previous year Rs. 1.50) has been deposited.
iv. Counter guarantees for bonds executed by State Bank of India - Rs.
306.16 (Previous year Rs. 216.86).
26. The Company is maintaining separate books of account for its
different undertakings viz, DTA, Captive Power Plant at Budge Budge and
EOU at Falta, SEZ.
27. Previous years figures have been re-grouped/re-arranged wherever
necessary to make them comparable.
Mar 31, 2010
1. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of piist
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the
notes. Contingent assets are neither recognised nor disclosed in the
financial statements.
2. CONTINGENT LIABILITIES NOT PROVIDED FOR
i. Sales tax in dispute - Rs. 6.58 (Previous year Rs. 14.90) under
appeal and not acknowledged as debt.
ii. Excise duty including penalty in dispute - Rs. Nil (Previous year
Rs. 1,078.35) and interest thereon Rs. Nil (Previous year amount not
quantified) under appeal before CESTAT, of which Rs. Nil (Previous year
Rs. 847.12) being barred by limitation as per legal opinion was not
acknowledged as debt. (Refer note no.3 of this Schedule).
iii. Income tax in dispute - Rs. 90.83 (Previous year Rs. Nil) under
appeal and not acknowledged as debt.
iv. Employeesstate insurance in dispute Rs. 49.37 (Previous year Rs.
Nil) and interest thereon (amount not yet quantified) being contested
in view of liability foreseen of Rs. 2.66 only with interest thereon of
Rs. 0.16. Provision has thus been made of Rs. 2.82, against which a
sum of Rs. 1.50 has been deposited.
v. Counter guarantees for bonds executed by State Bank of India - Rs.
216.86 (Previous year Rs. 226.39).
3. Provision in respect of excise duty including penalty in dispute of
Rs. 231.23 along with interest thereon of Rs. 50.04 was made in the
year ended 31.03.2008 against which an appeal was preferred before
CESTAT. Such appeal has since been disposed off vide Honble CESTAT
order dated 16.03.2010 and as per terms of the Order, provision of
penalty on excise duty amounting to Rs. 115.61 and interest thereon of
Rs. 25.02, being no longer payable has been written back in the
accounts and included under the head related income for the current
year and demand of Rs. 847.12, considered as contingent liability,
being barred by limitation has been set aside. As a result, balance
provision of Rs. 110.73 [net of cenvat credit allowed as per CESTAT
order amounting to Rs. 4.88] and interest thereon of Rs. 52.75
[including Rs. 27.73 provided in the current year] upto 31.03.2010,
remains fully provided in these accounts, representing the amount
payable in terms of said CESTAT Order, against which an appeal is being
filed before the Honble Supreme Court.
4. Based on the valuation report by a Chartered Engineer, an external
valuer, the Companys Freehold land had been revalued on appraisal
method at Rs. 6,257.10 on 31st March, 2008 resulting in increase in the
net book value of the assets of Rs. 3,075.24 by a corresponding credit
to revaluation reserve account.
5. i. Consequent to debonding of Export Oriented Unit (EOU), Budge
Budge, all its assets have been transferred
to Domestic Tariff Area (DTA) unit effective 1st April, 2009.
Depreciation on fixed assets of such EOU was being provided on written
down value method at applicable rates specified in Schedule XIV to the
Companies Act, 1956. In view of depreciation on fixed assets of
corresponding period at DTA unit being provided on straight line
method, the basis of charging depreciation on the assets of EOU has
been changed in the current year, with retrospective effect, from
written down value method to straight line method in respect of assets
added upto 31st March, 1999, at applicable rates, to be in conformity
with the policy followed in DTA unit;
ii. In view of the change mentioned in (i) above, the quantum of
depreciation provided in the books in respect of such assets pertaining
to EOU upto 31 st March, 2009 is found to be provided in excess by Rs.
59.02 which has been written back in these accounts;
iii. Had the previous practice been followed, the depreciation charge
in respect of such assets would have amounted to Rs. 6.50 as against
actual charge of Rs. 6.97 in these accounts, and consequently the
profits for the year would have been higher by Rs. 0.47.
6. Certain assets transferred from DTA unit to Falta SEZ unit, during
the year, of gross block of Rs. 187.07 and accumulated depreciation of
Rs. 168.99 have been shown as capital work in progress at Falta SEZ
unit, as yet to be installed there.
7. Capital commitments not provided for at the date of this Balance
Sheet are estimated at Rs. 3.45 (Previous year Rs. 1,873.85) after
netting of advances paid.
8. Based on the information available with the company, the principal
amount due to Micro and Small Enterprises, as defined under the Micro,
Small, and Medium Enterprises Development Act, 2006 (MSMED Act, 2006)
is Rs. Nil (Previous year Rs. Nil).
Further, no interest during the year has been paid or payable under the
terms of the MSMED Act, 2006.
9. Consignment sales expenses, disclosed in Schedule-17, comprise of
cess, rent, rates and taxes, insurance, delivery charges, brokerage &
commission and miscellaneous expenses, the amount of brokerage and
commission being Rs. 3.91 (Previous year Rs. 15.43).
10. Total stores and spare parts consumed during the year are Rs.
1,317.37 (Previous year Rs. 1,596.61) and include Rs. 167.48 (Previous
year Rs. 208.51) debited to relevant expense heads.
11. Government grants received by the company comprise of capital
subsidy of Rs. 43.62 (Previous year Rs. 19.50) and export incentives of
Rs. 188.27 (Previous year Rs. 218.14).
12. Fixed Assets amounting to Rs. 1.47 (Previous year Rs. 6.49) has
been written off during the year as no longer usable.
13. Remaining amortisation period of specialised software comprising
of Oracle ERP software, considered material, is Nil (Previous year one
year) of which the carrying amount is Rs. Nil (Previous year Rs. 2.38)
as on 31.03.2010.
14. Exchange difference (net) amounting to Rs. 11.86 (Previous year
Rs. 168.96) have been credited to respective revenue heads in the
profit and loss account.
15. Disclosure pursuant to Accounting Standard (AS) - 15 (Revised
2005) "Employee Benefits"
i. Effective 1 st April, 2007, the company has adopted Accounting
Standard 15 (revised 2005) on "Employee Benefits" issued by Institute
of Chartered Accountants of India (ICAI).
ii. Defined Contribution Plans
The Company has durirtg the year recognised an expense of Rs. 286.34
(Previous year Rs. 317.60) towards defined contribution plans.
Out of the total contribution, made for employees provident fund, a
sum of Rs. 47.15 (Previous year Rs. 59.73) has been made to Cheviot
Company Limited Employees Provident Fund while the remaining
contribution has been made to the provident fund plan operated by the
Regional Provident Fund Commissioner. Further, considering the past
track and fair value of the plan assets of the Trust, the Company does
not envisage any shortfall in liability towards the interest payable by
the Trust at the notified interest rate.
iii. Defined Benefit Plans
g. General description of the defined plans :
a. Gratuity plan
This is a funded defined benefit plan for qualifying employees. The
Company makes contributions to the Cheviot Company Limited
EmployeesGratuity Trust Fund. Gratuity is payable to all eligible
employees of the Company on superannuation, death, permanent
disablement and on resignation/termination of employment in terms of
the Provisions of the Payment of Gratuity Act or as per the Companys
rule, whichever is more beneficial to the employee.
b. Leave plan
Eligible employees can carry forward and encash leave on
superannuation, death, permanent disablement and on
resignation/termination of employment in accordance with the Companys
scheme subject to a maximum of 45 days depending on the grade/category
of employee.
16. Segment reporting as per Accounting Standard (AS) -17 issued by
the ICAI for the year ended 31 st March, 2010
The Company operates through two business segments namely Jute Goods
and Captive Power Generation. However, Capitve Power Generation is not
a reportable segment in terms of the criteria laid down in paragraph 27
of the aforesaid AS-17, as the revenue / results / assets of this
segment are not more than the threshold limit of 10% of the total
segment revenue / results / assets and as such the disclosure
requirements as required by AS-17 are not applicable in respect of
business segment. However, the geographical segments considered for
disclosure are as under:
17. Related Party Disclosures
Related party disclosures, as required by AS -18 as issued by the ICAI
for the year ended 31 st March, 2010 are as follows: A. Relationships
1. Controlling Group
i. Holding Company
Harsh Investments Private Limited ii. Others
a. Abhyadoot Finance & Investments Private Limited
b. Cheviot Agro Industries Limited
c. Cheviot International Limited
d. Powertone Trading Co, Private Limited
e. Mr. H. V. Kanoria
f. Mrs. Malati Kanoria (Wife of Mr. H. V. Kanoria)
g. Master Utkarsh Kanoria (Son of Mr. H. V. Kanoria)
2. Associates
a. Jan Priya Trust
b. Shashvat Fondation
3. Key Management Personnel
a. Mr. H. V. Kanoria b. Mr. N. K. Kejriwal
c. Mr. D. Majumdar d. Mr. D. K. Mohta
e. Mr. P. K. Chatterjee f. Mr. P. C Kothari
g. Mr. M. K. Patni h. Mr. S. Datta
i. Mr. A. K. Das j. Mr. D. K. Bera
4. Relative of Key Management Personnel
Mrs. Bimla Kejriwal {Wife of Mr. N. K. Kejriwal)
18. The Company is maintaining separate books of account for its
different undertakings viz., DTA, Captive Power Plant at Budge Budge
and EOU at Falta SEZ.
19. Previous years figures have been re-grouped/re-arranged wherever
necessary to make them comparable.
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