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Notes to Accounts of Kingfa Science & Technology (India) Ltd.
Mar 31, 2025
xi. Provisions ana contingencies
Necessary provisions are made for the present obligations that arise out of past events entailing future outflow of economic
resources. Such provisions reflect best estimates based on available information.
However a disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may,
but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect
of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
xii. Government Grant
Grants and subsidies from the government are recognized if the following conditions are satisfied,
⢠There is reasonable assurance that the Company will comply with the conditions attached to it.
⢠Such benefits are earned and reasonable certainty exists of the collection.
However, company has opted for recording non monitory government grants at nominal value as per the Companies (India
Accounting Standards) second amendment rule 2018 notified as on 20th September 2018
xiii. Segment Reporting
The business of the Company falls under a single Reportable segment i.e. "Reinforced Polypropylene" for the purpose of Ind
AS 108.
B.5 Other accounting policies
i. Fair value measurement
The Company measures financial instruments such as Investments at fair value at each balance sheet date.
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, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair
value hierarchy, described as follows, based on the lowest level 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 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly
or indirectly observable.
⢠Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level
input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Companyâs management determines the policies and procedures for both recurring fair value measurement, such as
derivative instruments and unquoted financial assets measured at fair value.
When required, external valuation experts are involved for valuation of assets and liabilities as per requirement of standard.
Involvement of external valuation experts is decided upon annually by the management.
ii. Intangible Assets
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will
flow to the Company and the cost of the asset can be measured reliably.
Internally generated intangibles, excluding capitalized developments costs, are not capitalized and the related expenditure is
reflected in the statement of profit and loss for the period in which expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite. The amortization period and amortization
method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the
expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are
considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates.
Intangible assets with finite useful lives are amortized by using Written down value over the useful economic life and assessed
for impairment whenever there is an indication that the intangible asset maybe impaired. Amortization of Intangible assets is
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Intangible assets with indefinite useful lives, if any are not amortized, but are tested for impairment annually, either
individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether
the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective
basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is
derecognized.
Intangible assets are recorded at the consideration paid for acquisition. In case of internally generated intangible assets,
expenditure incurred in development phase, where it is reasonably certain that the outcome of development will be
commercially exploited to yield future economic benefits to the Company, is considered as an intangible asset. Such
developmental expenditure is capitalized at cost including a share of allocable expenses.
iii. Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. For the purpose of presentation in the statement of cash
flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the balance sheet.
iv. Trade Receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business.
Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant
financing components, when they are recognised at fair value. The company holds the trade receivables with the objective of
collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective
interest method, less loss allowance.
v. Trade and other payables
These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year
which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months
after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using
the effective interest method.
vi. Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in
profit or loss as other gains/(losses).
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan
arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the
reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before
the approval of the financial statements for issue, not to demand payment as a consequence of the breach.
vii. Borrowing Cost
Borrowing Costs directly attributable to the acquisition, construction or production of qualifying assets are capitalized till the
month in which the asset is ready to use, as part of the cost of that asset. Other borrowing costs are recognized as expenses
in the period in which these are incurred.
viii. Cash dividend
The Company recognizes a liability to make cash distributions to the equity holders of the Company when the distribution is
authorized and the distribution is no longer at the discretion of the Company. As per the provisions of Companies Act, 2013, a
distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity.
Non-cash distributions, if any, are measured at the fair value of the assets to be distributed with fair value re-measurement
recognized directly in equity.
Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of
the assets distributed is recognized in the statement of profit and loss.
ix. Earnings Per Share
Earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
x. Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of
a non cash nature and any deferral or accruals of past or future cash receipts or payments. The cash flows from regular
operating, investing and financing activities of the Company are segregated.
xi. Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the
requirement of Schedule III, unless otherwise stated.
Notes to the Financial Statements
(All amounts are in Rupees lakhs, unless stated otherwise)
Note 37: Financial instruments risk management objectives and policies
The Companyâs principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables and other
financial liabilities. The main purpose of these financial liabilities is to finance the Companyâs operations to support its
operations. The Companyâs principal financial assets include trade and other receivables, cash and short-term deposits and
other financial assets that derive directly from its operations.
The company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the
management of these risks. The Audit Committee and Board review financial risks and the appropriate risk governance
framework for the companyâs financial risks are identified, measured and managed in accordance with the Companyâs policies
and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised
below.
A) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price
risk and commodity risk. Financial instruments affected by market risk include borrowings, deposits, trade and other
receivables, trade and other payables and derivative financial instruments.
The sensitivity analyses in the following sections relate to the position as at 31 March 2025 and 31 March 2024.
The analyses exclude the impact of movements in market variables on: the carrying values of gratuity and leave encashment
provisions. The following assumption has been made in calculating the sensitivity analyses:
⢠The sensitivity of the relevant statement of profit and loss item is the effect of the assumed changes in respective market
risks. This is based on the financial assets and financial liabilities held at 31 March 2025 and 31 March 2024.
i) Interest rate risk
a.Exposure
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market interest rates.
iii) Commodity price risk
The Company is affected by the price volatility of certain commodities. Its operating activities require a continuous supply ol
polypropylene. However, the company being indirect user of these commodities and based on past trend to pass on those
volatility to customers, does not have direct impact on profitability over a period of time.
iv) Other Price Risk
The company does not hold investments in equity or mutual fund as on the date of Balance Sheet and hence it is not exposec
to any such risks.
v) Equity price risk
The Company has not made any investment in equity instruments and hence, the Company do not foresee any risk from this
unlisted equity shares.
B) Credit risk
Credit risk is the risk that counter party will not meet its obligations under a financial instrument or customer contract, leading
to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its
investing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Trade receivables
Receivables are reviewed, managed and controlled for each class of customers separately. Credit exposure risk is mainly
influenced by class / type of customers, depending upon their characteristics. Credit risk is managed through credit approva
process by establishing credit limits along with continuous monitoring of credit worthiness of customers to whom credit terms
are granted. Wherever required, credit risk of receivables is further covered through letter of credit, bank guarantee, business
deposits and such other forms of credit assurance schemes.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large
number of minor receivables are combined into homogenous category and assessed for impairment collectively. The
calculation is based on actual incurred historical data. The Company does not hold collateral as security. The Company
evaluates the concentration of risk with respect to trade receivables as low, as its customers are spread over vast spectrum.
C) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of
funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market
positions. Due to the dynamic nature of underlying businesses, companyâs treasury maintains flexibility in funding by
maintaining availability under committed credit lines.
Management monitors rolling forecast of the companyâs liquidity position and cash and cash equivalents on the basis of
expected cash flows. This is generally carried out at the local level in the operating companies of the group in accordance with
the practice and limits set by the company. These limits vary by location to take into account the liquidity of the market in
which the entity operates. In addition, the companyâs liquidity management policy involves projecting cash flows in major
currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against
internal and external regulatory requirements and maintaining debt financing plans.
(i) The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual
undiscounted payments:
* For the purpose of Net Debt reconciliation disclosed above Cash Credits are included in Cash and Cash equivalents and not
in Borrowings.
** Amount does not include Interest expense - others of Rs. 258.09 (PY - Rs. 205.68) and Other bank charges of Rs. 97.63 (PY -
Rs. 101.04) (Refer Note 27)
a Represent lease modification
Note 38 : Capital Management
For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves
attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to ensure
that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder
value.
The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the
requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend
payment to shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2025 and
31 March 2024.
The gearing ratios were as follows:
NOTE 41: Additional regulatory information required by Schedule III
i) Details of benami property:
No proceedings have been initiated on or are pending against the company for holding benami property under the Benami
Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made the reunder.
ii) Relationship with struck off companies:
The company has not entered into transactions with the companies struck off under Companies Act, 2013 or Companies Act,
1956.
iii) Borrowings obtained on the basis of security of current assets:
The Company has not obtained any borrowings from banks and financial institutions on the basis of security of current assets.
iv) Revaluation of property, plant and equipment and intangible assets:
The company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both
during the current or previous year.
v) Tittle deeds of immovable properties:
The title deeds of all the immovable properties (other than properties where the company is the lessee and the lease
agreements are duly executed in favor of the
lessee) are held in the name of the company.
vi) The company has not advanced or loaned or invested funds to any other person(s) or entity, including foreign entities
(Intermediaries) with the understanding 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 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:
vii) Undisclosed income:
There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the
Income Tax Act, 1961, that has not been
recorded in the books of account.
viii) Details of crypto currencies:
The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
ix) Willful defaulters:
The company has not been declared willful defaulter by any bank or financial institution or government or any government
authority.
x) Registration of charges or satisfaction with Registrar of Companies:
There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory
period.
xi) Compliance with approved scheme(s) of Arrangements:
The company has not entered into any scheme of arrangement which has an accounting impact on current or previous
financial year.
xii) Utilization of borrowings availed from banks and financial institutions
The borrowings obtained by the company from banks and financial institutions have been applied for the purposes for which
such loans were taken.
Note 42:
Previous yearâs figures have been re-grouped wherever considered necessary to make them comparable with those of the
current year.
Signatures to Note 1 to 42, forming part of the Financial Statements
As per our attached report of even date For and on behalf of the board of directors
For P G BHAGWAT LLP BO JINGEN Mr. Doraiswami Balaji
Chartered Accountants Managing Director Whole Time Director
Firm Registration Number : DIN : 06617986 DIN: 08256342
101118W/W100682
ABHIJIT SHETYE CHEN XIAOQIONG
Partner Chief Financial Officer
Membership Number : 151638
Pune:28 May 2025
Mar 31, 2024
xi. Provisions and Contingencies
Necessary provisions are made for the present obligations that arise out of past events entailing future outflow of economic resources. Such provisions reflect best estimates based on available information.
However a disclosure for a contingent liability is made when there is a possible obligation or a present obligation that
may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
xii. Government Grant
Grants and subsidies from the government are recognized if the following conditions are satisfied,
- There is reasonable assurance that the Company will comply with the conditions attached to it.
- Such benefits are earned and reasonable certainty exists of the collection.
However, company has opted for recording non monitory government grants at nominal value as per the Companies (India Accounting Standards) second amendment rule 2018 notified as on 20th September 2018
xiii. Segment Reporting
The business of the Company falls under a single Reportable segment i.e. âReinforced Polypropyleneâ for the purpose of Ind AS 108.
i. 5 Other accounting policies i. Fair value measurement
The Company measures financial instruments such as Investments at fair value at each balance sheet date.
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 participantâs 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, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level 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 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
¦ Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Companyâs management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value.
When required, external valuation experts are involved for valuation of assets and liabilities as per requirement of standard. Involvement of external valuation experts is decided upon annually by the management.
ii. Intangible Assets
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the asset can be measured reliably.
Internally generated intangibles, excluding capitalized developments costs, are not capitalized and the related expenditure is reflected in the statement of profit and loss for the period in which expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite. The amortization period and amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates.
Intangible assets with finite useful lives are amortized by using Written down value over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset maybe impaired. Amortization of Intangible assets is included in the depreciation and amortization in the statement of Profit and Loss.
Intangible assets with indefinite useful lives, if any are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
Intangible assets are recorded at the consideration paid for acquisition. In case of internally generated intangible assets, expenditure incurred in development phase, where it is reasonably certain that the outcome of development will be commercially exploited to yield future economic benefits to the Company, is considered as an intangible asset. Such developmental expenditure is capitalized at cost including a share of allocable expenses.
iii. Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
iv. Trade Receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance.
v. Trade and other payables
These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
vi. Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other gains/(losses).
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach.
vii. Borrowing Cost
Borrowing Costs directly attributable to the acquisition, construction or production of qualifying assets are capitalized till the month in which the asset is ready to use, as part of the cost of that asset. Other borrowing costs are recognized as expenses in the period in which these are incurred.
viii. Cash dividend
The Company recognizes a liability to make cash distributions to the equity holders of the Company when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the provisions of Companies Act, 2013, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity.
Non-cash distributions, if any, are measured at the fair value of the assets to be distributed with fair value re-measurement recognized directly in equity.
Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of the assets distributed is recognized in the statement of profit and loss.
ix. Earnings Per Share
Earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
x. Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non cash nature and any deferral or accruals of past or future cash receipts or payments. The cash flows from regular operating, investing and financing activities of the Company are segregated.
xi. Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
Terms and conditions of transactions with related parties
1. Transactions entered into with related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended 31 March 2024, the Company has not recorded any write off of receivables relating to amounts owed by related parties (31 March 2023: âNil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
2. The amounts disclosed in the table are the amounts recognized as an expense during the reporting period related to key management personnel.
3. The above figures do not include provision for leave encashment and gratuity, as actuarial valuation of such provision for the Key Management Personnel is included in the total provision for Leave encashment & gratuity.
Note 36 : Financial instruments risk management objectives and policies
The Companyâs principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables and other financial liabilities. The main purpose of these financial liabilities is to finance the Companyâs operations to support its operations. The Companyâs principal financial assets include trade and other receivables, cash and short-term deposits and other financial assets that derive directly from its operations.
The company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Audit Committee and Board review financial risks and the appropriate risk governance framework for the companyâs financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include borrowings, deposits, trade and other receivables, trade and other payables and derivative financial instruments.
The sensitivity analyses in the following sections relate to the position as at 31 March 2024 and 31 March 2023.
The analyses exclude the impact of movements in market variables on: the carrying values of gratuity and leave encashment provisions.
The following assumption has been made in calculating the sensitivity analyses:
⢠The sensitivity of the relevant statement of profit and loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2024 and 31 March 2023.
i) Interest rate risk
a. Exposure
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
iii) Commodity price risk
The Company is affected by the price volatility of certain commodities. Its operating activities require a continuous supply of polypropylene. However, the company being indirect user of these commodities and based on past trend to pass on those volatility to customers, does not have direct impact on profitability over a period of time.
iv) Other Price Risk
The company does not hold investments in equity or mutual fund as on the date of Balance Sheet and hence it is not exposed to any such risks.
v) Equity price risk
The Company has not made any investment in equity instruments and hence, the Company do not foresee any risk from this unlisted equity shares.
b) Credit risk
Credit risk is the risk that counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Trade receivables
Receivables are reviewed, managed and controlled for each class of customers separately. Credit exposure risk is mainly influenced by class / type of customers, depending upon their characteristics. Credit risk is managed through credit approval process by establishing credit limits along with continuous monitoring of credit worthiness of customers to whom credit terms are granted. Wherever required, credit risk of receivables is further covered through letter of credit, bank guarantee, business deposits and such other forms of credit assurance schemes.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are combined into homogenous category and assessed for impairment collectively. The calculation is based on actual incurred historical data. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are spread over vast spectrum.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Company in accordance with the Companyâs policy. Investments of surplus funds are made as per the approved investment policy. Investment limits are set to minimise the concentration of risks and therefore mitigate financial loss if any.
c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of underlying businesses, companyâs treasury maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecast of the companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows. This is generally carried out at the local level in the operating companies of the group in accordance with the practice and limits set by the company. These limits vary by location to take into account the liquidity of the market in which the entity operates. In addition, the companyâs liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
Note 37 : Capital Management
For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.
The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2024 and 31 March 2023.
NOTE 40: Additional regulatory information required by Schedule III
i) Details of benami property:
No proceedings have been initiated on or are pending against the company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.
ii) Relationship with struck off companies:
The company has not entered into transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.
iii) Borrowings obtained on the basis of security of current assets:
The Company has not obtained any borrowings from banks and financial institutions on the basis of security of current assets.
iv) Revaluation of property, plant and equipment and intangible assets:
The company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
v) Tittle deeds of immovable properties:
The title deeds of all the immovable properties (other than properties where the company is the lessee and the lease agreements are duly executed in favor of the lessee) are held in the name of the company.
vi) The company has not advanced or loaned or invested funds to any other person(s) or entity, including foreign entities (Intermediaries) with the understanding 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
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) Undisclosed income:
There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
viii) Details of crypto currencies:
The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
ix) Willful defaulters:
The company has not been declared willful defaulter by any bank or financial institution or government or any government authority.
x) Registration of charges or satisfaction with Registrar of Companies:
There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.
xi) Compliance with approved scheme(s) of Arrangements:
The company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
xii) Utilization of borrowings availed from banks and financial institutions
The borrowings obtained by the company from banks and financial institutions have been applied for the purposes for which such loans were taken.
Note 41:
Previous yearâs figures have been re-grouped wherever considered necessary to make them comparable with those of the current year.
Signatures to Note 1 to 41, forming part of the Financial Statements
As per our attached report of even date For and on behalf of the board of directors
For P G BHAGWAT LLP BO JINGEN DORAISWAMI BALAJI
Chartered Accountants Managing Director Executive Director
Firm Registration Number : 101118W/W100682 DIN : 06617986 DIN : 08256342
ABHIJIT SHETYE CHEN XIAOQIONG NIRNOY SUR
Partner Chief Financial Officer Company Secretary
Membership Number : 151638 Pune : 28 May 2024
Mar 31, 2023
Provisions and Contingencies
Necessary provisions are made for the present obligations that arise out of past events entailing future outflow of economic
resources. Such provisions reflect best estimates based on available information.
However a disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but
probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of
which the likelihood of outflow of resources is remote, no provision or disclosure is made.
a. Revenue towards satisfaction of performance obligations 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. Consideration is generally due upon satisfaction of performance obligations and a receivable is
recognised when it becomes unconditional.
The Company manufactures and sells thermoplastic compounds. Sales are recognized when control of the products
has been transferred, when the products are delivered to the customer and there is no unfulfilled obligation that could
affect the customerâs acceptance of the products. Delivery occurs when the products have been shipped, the risks of
obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in
accordance with the sales contract, the acceptance provisions have lapsed, or the company has objective evidence
that all criteria for acceptance have been satisfied.
A receivable is recognized when the goods are delivered as this is the point in time that the consideration is
unconditional because only the passage of time is required before the payment is due. Sales are stated net of
discounts, rebates and returns. It also excludes Goods and Service Tax.
b. Revenue from export incentives are accounted for on export of goods if the entitlements can be estimated with
reasonable assurance and conditions precedent to claim are fulfilled.
c. Interest income from - debt instruments is recognized 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 timely 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 assetâs net carrying
amount on initial recognition.
Grants and subsidies from the government are recognized if the following conditions are satisfied,
- There is reasonable assurance that the Company will comply with the conditions attached to it.
- Such benefits are earned and reasonable certainty exists of the collection.
However, company has opted for recording non monitory government grants at nominal value as per the Companies
(India Accounting Standards) second amendment rule 2018 notified as on 20th September 2018
The Company recognizes a liability to make cash distributions to the equity holders of the Company when the distribution is
authorized and the distribution is no longer at the discretion of the Company. As per the provisions of Companies Act, 2013, a
distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity.
Non-cash distributions, if any, are measured at the fair value of the assets to be distributed with fair value re-measurement
recognized directly in equity.
Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of
the assets distributed is recognized in the statement of profit and loss.
Earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a
non cash nature and any deferral or accruals of past or future cash receipts or payments. The cash flows from regular
operating, investing and financing activities of the Company are segregated.
The business of the Company falls under a single primary segment i.e. "Reinforced Polypropylene" for the purpose of Ind AS
108.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the
requirement of Schedule III, unless otherwise stated.
Mar 31, 2018
1. Corporate Information
The Company is a Public Limited Company domiciled in India and is incorporated under the provisions of the Companies Act 1956. The registered office of the Company is located at Dhun Building, III Floor, 827, Anna Salai, Chennai - 600002.
The equity shares of the Company are listed on two recognised stock exchanges in India i.e. BSE Limited and National Stock Exchange of India Limited.
The Company is a subsidiary company of M/s Kingfa Science & Technology Co. Ltd China.
The Company is engaged in the business of manufacturing and supplier of high quality reinforced polypropylene compounds, thermoplastics elastomers and fibre re-inforced composites.
The standalone financial statements were approved by the Board of Directors and authorized for issue on 28th May 2018.
2. Basis of preparation of Financial Statements
The standalone financial statements have been prepared in accordance with Indian Accounting Standards (âInd ASâ) as issued under the Companies (Indian Accounting Standards) Rules, 2015.
The standalone financial statements have been prepared to comply in all material respects with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the said Act. These standalone financial statements for the year ended 31 March 2018 are the first standalone financial statements that the Company has prepared in accordance with Ind AS. Refer to Note 4 for information on how the Company adopted Ind AS.
The standalone financial statements have been prepared on a historical cost basis, except defined benefit plan, wherein plan assets are measured at Fair value.
3. Significant accounting judgments, estimates and assumptions
The preparation of the Companyâs financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
3.1. Judgments
In the process of applying the Companyâs accounting policies, the management has made the following judgments, which have the most significant effect on the amounts recognised in the standalone financial statements:
Operating Lease
Lease arrangements under which all risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease rental under operating lease are recognised in the Statement of Profit and Loss on a straight-line basis over the lease term.
3.2. Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the standalone financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Defined benefit plans
The cost of the defined benefit plans and other post-employment benefits and the present value of the obligation are determined using actuarial valuation. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future post-retirement medical benefit increase.Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate, management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation and extrapolated as needed along the yield curve to correspond with the expected term of the defined benefit obligation.
The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at intervals in response to demographic changes. Future salary increases are based on expected future inflation rates for the country.
Further details about defined benefit obligations are provided in Note 35.6.6.
Deferred Tax
Deferred tax assets are recognised for all deductible temporary differences including the carry forward of unused tax credits and any unused tax losses. 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 utilized.
4. First-time adoption of Indian Accounting Standards (âInd ASâ)
The standalone financial statements have been prepared in accordance with Indian Accounting Standards (âInd ASâ) as issued under the Companies (Indian Accounting Standards) Rules, 2015. The Company has adopted Ind AS for the first time. Note 33 spells out details of various provisions for First time adoption.
The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligations as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
The followings are the expected future benefit payments for the defined benefit plan
5.1. In the absence of information from suppliers with regard to their registration with the specified authority, despite the company calling for such information through a circular letter, the additional disclosure as required under the Micro, Small and Medium Enterprises Development Act, 2006 is not furnished.
5.2. Related parties have been identified as defined under Clause 9 of Accounting Standard (Ind AS 24) âRelated Party Disclosuresâ
The above figures do not include provision for leave encashment and gratuity, as actuarial valuation of such provision for the
Key Management Personnel is included in the total provision for Leave encashment & gratuity.
Terms and conditions of transactions with related parties
Transactions entered into with related party are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2017: ''Nil and 1 April 2016: ''Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
The above figures do not include provision for leave encashment and gratuity, as actuarial valuation of such provision for the Key Management Personnel is included in the total provision for Leave encashment & gratuity.
Earnings per share are calculated in accordance with Accounting Standard (Ind AS 33) âEarnings Per Shareâ.
5.3. Fair value disclosures for financial assets and financial liabilities
The management believes that the fair values of non-current financial assets (e.g. loans and others),current financial assets (e.g., cash and cash equivalents, trade and other receivables, loans), non-current financial liabilities and current financial liabilities(e.g. Trade payables and other payables and others) approximate their carrying amounts.
5.4. Financial instruments risk management objectives and policies
The Companyâs principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables and other financial liabilities. The main purpose of these financial liabilities is to finance the Companyâs operations to support its operations. The Companyâs principal financial assets include trade and other receivables, cash and short-term deposits and other financial assets that derive directly from its operations.
The company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Audit Committee and Board review financial risks and the appropriate risk governance framework for the companyâs financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include borrowings, deposits, trade and other receivables, trade and other payables and derivative financial instruments.
The sensitivity analyses in the following sections relate to the position as at 31 March 2018, 31 March 2017 and 1 April 2016.
The analyses exclude the impact of movements in market variables on: the carrying values of gratuity provisions.
The following assumption has been made in calculating the sensitivity analyses:
- The sensitivity of the relevant statement of profit and loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2018, 31 March 2017 and 1 April 2016.
i ) Interest rate risk
a. Exposure
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
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 Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities (when revenue or expense is denominated in a foreign currency).
The Company is in the process of managing its foreign currency risk by hedging transactions related to sales & purchases. Foreign currency sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in USD, CNY & JPY exchange rates, with all other variables held constant. The impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities. The impact on the Companyâs pre-tax equity is due to changes in the fair value of forward exchange contracts designated as cash flow hedges and net investment hedges. The Companyâs exposure to foreign currency changes for all other currencies is not material.
iii) Commodity price risk
The Company is affected by the price volatility of certain commodities. Its operating activities require the on-going manufacture of and therefore require a continuous supply of polypropylene. However the company being indirect user of these commodities and based on past trend to pass on these volatility to customers, does not have direct impact on profitability over a period of time.
iv) Other Price Risk
The company does not hold investments in equity or mutual fund as on the date of Balance Sheet and hence it is not exposed to any such risks.
v) Equity price risk
The Company has not made any investment in equity instruments and hence, the Company do not foresee any risk from this unlisted equity shares.
b) Credit risk
Credit risk is the risk that counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Trade receivables
Receivables are reviewed, managed and controlled for each class of customers separately. Credit exposure risk is mainly influenced by class /type of customers, depending upon their characteristics. Credit risk is managed through credit approval process by establishing credit limits along with continuous monitoring of credit worthiness of customers to whom credit terms are granted. Wherever required, credit risk of receivables is further covered through letter of credit, bank guarantee, business deposits and such other forms of credit assurance schemes.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are combined into homogenous category and assessed for impairment collectively. The calculation is based on actual incurred historical data. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are spread over vast spectrum.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Company in accordance with the Companyâs policy. Investments of surplus funds are made as per the approved investment policy. Investment limits are set to minimise the concentration of risks and therefore mitigate financial loss if any.
c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of underlying businesses, companyâs treasury maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecast of the companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows. This is generally carried out at the local level in the operating companies in accordance with the practice and limits set by the company. These limits vary by location to take into account the liquidity of the market in which the entity operates. In addition, the companyâs liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
(i) The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments:
5.5. Capital management
For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Companyâs capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.
The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2018, 31 March 2017 and 1 April 2016.
NOTE 6 : First-time adoption of Indian Accounting Standards (âInd ASâ)
These financial statements, for the year ended 31 March 2018, are the first financial statements, the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with Indian GAAP.
Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending 31 March 2018, together with the comparative period data as at and for the year ended 31 March 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening Balance Sheet was prepared as at 1 April 2016, the Companyâs date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the Balance Sheet as at 1 April 2016 and the financial statements as at and for the year ended 31 March 2017.
Exemptions applied
Ind AS 101 âFirst-time Adoption of Indian Accounting Standardsâ allows a first-time adopter certain exemption from the retrospective application of certain requirements under Ind AS.
The Company has applied the following exemptions:
1. The Company has elected to continue with the carrying value for all of its Property, plant and equipment as recognised in its Indian GAAP financial statements as at April 01, 2016 as deemed cost at the date of transition.
2. The Company has elected to disclose the following amounts prospectively from the date of transition (Ind AS ordinarily requires the amounts for the current and previous four annual periods to be disclosed):
(i) the present value of the defined benefit obligation, the fair value of the plan assets and the surplus or deficit in the plan; and
(ii) the experience adjustments arising on the plan liabilities and the plan assets.
3. Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used the exemption in Ind AS 101 and assessed all such arrangements for embedded leases based on conditions existing as at the date of transition to Ind-AS.
Exceptions
The Company has elected to apply the derecognition requirement for financial assets under Ind AS 109 âFinancial Instrumentsâ, prospectively for transactions occurring on or after 1 April 2016.
Estimates
The estimates made under Ind AS as at 1 April 2016 and at 31 March 2017 are consistent with the estimates made for the same dates in accordance with Indian GAAP except the following item where application of Indian GAAP did not require estimation:
4. Notes to the reconciliation of the equity as at 1 April 2016 and 31 March 2017 and total comprehensive income for the year ended 31 March 2017.
a. Defined benefit obligation
Both under Indian GAAP and Ind AS, the Company recognises costs related to its post-employment defined benefit plan on an actuarial basis. However, under Indian GAAP, the entire cost, including actuarial gains and losses, are recognised in the statement of profit and loss. Under Ind AS, re-measurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income net of taxes.
b. Deferred taxes
Indian GAAP requires deferred taxes to be accounted using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12-Income Taxes 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 has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.
In addition, certain transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments have been recognised in correlation to the underlying transaction either in retained earnings or as a separate component of equity.
c. Sale of goods
Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is separately presented on the face of statement of profit and loss. Thus, sale of goods under Ind AS has increased with a corresponding increase in expenses.
d. Other comprehensive income
Under Indian GAAP, there were no requirements to separately disclose Other Comprehensive Income (âOCIâ) and hence, the Company had not presented other comprehensive income (OCI) separately. As such, items falling under OCI and effect of Income tax thereon are disclosed. Hence, the Company has reconciled the profit under Indian GAAP to the profit as per Ind AS. Further, the profit under Ind AS is reconciled to total comprehensive income as per Ind-AS.
e. Government grant
The company had taken a leasehold land during FY 2016-17 for which the government has provided an exemption from payment of stamp duty as per the relevant pronouncements. The amount of exemption has been added as a cost of the land and is treated as deferred income in the financial statements. This deferred amount is charged to income as and when the obligations prescribed for availing the exemption gets fulfilled.
f. Rights issue expenses
The company had incurred expenses for the purpose of right issue. These expenses were charged to Profit & Loss Account under I-GAAP. However as per the extant guidelines of IND AS, the same have been charged off to equity.
g. Standalone Statement of cash flow
The transition from Indian GAAP to Ind AS has no material impact on the standalone statement of cash flows.
NOTE 7 : Standards issued but not yet effective
The Ministry of Corporate Affairs (MCA) notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 on March 28, 2018. The Rules shall be effective from reporting period beginning on or after April 1, 2018 and cannot be early adopted.
a. Ind AS 115 - Revenue from contracts with customers
Ind AS 115, Revenue from contracts with customers deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entityâs contracts with customers. Revenue is recognised when a customer obtains control of a promised good or service and thus has the ability to direct the use and obtain the benefits from the good or service in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard replaces Ind AS 18 Revenue and Ind AS 11 Construction contracts and related appendices.
A new five-step process must be applied before revenue can be recognised:
(i) identify contracts with customers
(ii) identify the separate performance obligation
(iii) determine the transaction price of the contract
(iv) allocate the transaction price to each of the separate performance obligations, and
(v) recognise the revenue as each performance obligation is satisfied.
The new standard is mandatory for financial years commencing on or after April 1, 2018 and early application is not permitted. The standard permits either a full retrospective or a modified retrospective approach for the adoption.
There are consequential amendments to other Ind AS due to notification of Ind AS 115. The Company is in the process of evaluating the impact on the financial statements in terms of the amount and timing of revenue recognition under the new standard.
b. Ind AS 21 - The Effects of changes in foreign exchange rates
The MCA has notified Appendix B to Ind AS 21, Foreign currency transactions and advance consideration. The appendix clarifies how to determine the date of transaction for the exchange rate to be used on initial recognition of a related asset, expense or income where an entity pays or receives consideration in advance for foreign currency-denominated contracts.
For a single payment or receipt, the date of the transaction should be the date on which the entity initially recognises the non-monetary asset or liability arising from the advance consideration (the prepayment or deferred income/contract liability). If there are multiple payments or receipts for one item, date of transaction should be determined as above for each payment or receipt.
The appendix can be applied :
(i) retrospectively for each period presented applying Ind AS 8;
(ii) prospectively to items in scope of the appendix that are initially recognized
- on or after the beginning of the reporting period in which the appendix is first applied (i.e. 1 April 2018); or
- from the beginning of a prior reporting period presented as comparative information (i.e. 1 April 2017 ).
The Company is in the process of evaluating the impact on the financial statements in terms of the amount and timing of revenue recognition under the new standard.
c. Ind AS 40 - Investment property
The amendments clarify that transfers to, or from, investment property can only be made if there has been a change in use that is supported by evidence. A change in use occurs when the property meets, or ceases to meet, the definition of investment property. A change in intention alone is not sufficient to support a transfer. The list of evidence for a change of use in the standard was re-characterized as a non-exhaustive list of examples and scope of these examples have been expanded to include assets under construction / development and not only transfer of completed properties.
The amendment provides two transition options. Entities can choose to apply the amendment:
(i) Retrospectively without the use of hindsight; or
(ii) Prospectively to changes in use that occur on or after the date of initial application (i.e. April 1, 2018). At that date, an entity shall reassess the classification of properties held at that date and, if applicable, reclassify properties to reflect the conditions that exist as at that date.
There is no impact of this amendment to the Company.
d. Ind AS 12 - Income taxes
The amendments clarify the accounting for deferred taxes where an asset is measured at fair value and that fair value is below the assetâs tax base. They also clarify certain other aspects of accounting for deferred tax assets set out below:
A temporary difference exists whenever the carrying amount of an asset is less than its tax base at the end of the reporting period.
The estimate of future taxable profit may include the recovery of some of an entityâs assets for more than its carrying amount if it is probable that the entity will achieve this. For example, when a fixed-rate debt instrument is measured at fair value, however, the entity expects to hold and collect the contractual cash flows and it is probable that the asset will be recovered for more than its carrying amount.
Where the tax law restricts the source of taxable profits against which particular types of deferred tax assets can be recovered, the recoverability of the deferred tax assets can only be assessed in combination with other deferred tax assets of the same type.
Tax deductions resulting from the reversal of deferred tax assets are excluded from the estimated future taxable profit that is used to evaluate the recoverability of those assets. This is to avoid double counting the deductible temporary differences in such assessment.
An entity shall apply the amendments to Ind AS 12 retrospectively in accordance with Ind AS 8. However, on initial application of the amendment, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity.
There is no impact of this amendment to the Company.
NOTE 8 : Previous yearâs figures have been re-grouped wherever considered necessary to make them comparable with those of the current year.
Signatures to Note 1 to 35, forming part of the Financial Statements.
Mar 31, 2017
i) The company is authorised to issue Equity and 16% Cumulative Redeemable Preference shares. However the company has One class of equity shares having a par value of Rs.10 each . Each share holder is eligible for one vote per share. The dividend proposed by the Board of directors is subject to approval of share holders, except in case of interim dividend. In the event of liquidation, the equity share holders are eligible to receive remaining assets of the company after distribution of all preferential amounts, in proportion of their share holding.
ii) 7,582,340 equity shares are held by the holding company, M/s. Kingfa Sci. & Tech. Co. Ltd., China in the paid up share capital of the company.
iii) Details of shares held by shareholders holding more than 5% of the shares in the company :
iv) The company had issued 3,703,364 Equity Shares of Rs.10 each at a Premium of Rs.260 each through Right Issue during the financial year 2015-16.
Note : 1. Trade payables
In the absence of information from the suppliers with regard to their registration with the specified authority, despite the company calling for such information through a circular letter, the additional disclosure as required under the Micro, Small and Medium Enterprises Development Act, 2006 is not furnished.
a) General description of Employee Benefits :
(i) Short term Employee Benefits
The employee benefits payable wholly within 12 months of rendering the service are classified as short term benefits. Benefits such as salaries, wages, short term compensated absences and the expected cost of bonus and ex-gratia are recognised at the undiscounted amount in the year in which the employee renders the related service.
(ii) Post Employment Benefits
(a) Provident fund is a defined contribution plan and contributions made to the fund in accordance with the applicable rules/statutes are expensed.
(b) The Employees Group Gratuity Scheme is a defined benefit plan which is funded with the Life Insurance Corporation of India and the annual contribution to the fund actuarially assessed by them is expensed.
(c) Superannuation is a defined contribution plan. The contributions in accordance with the companyâs scheme made to the fund administered by the Life Insurance Corporation of India are expensed.
(d) The Employee Group Gratuity Fund and the Employee Superannuation Fund respectively have been constituted through Kingfa Science and Technology (India) Limited Employees Group Gratuity Trust and Kingfa Science and Technology (India) Limited Employee Superannuation Trust in which one of the Companyâs director is a Trustee.
(e) Leave encashment is provided as per the Companyâs policies and is expensed as under :
1. The leave accumulation upto 60 days is funded through a policy with LIC of India.
2. The encashment of leave accumulated beyond 60 days is borne by the company.
3. Any difference arising out of actuarial valuation is expensed.
Note: 2. Share application money represents the application money received in advance from promoter M/s. Kingfa Science and Technology Limited, China towards its rights entitlement.
Note: 3. Miscellaneous expenses includes Rs.38,590/- spent towards Corporate Social Resposibility (CSR) for the year.
Note: 4. Disclosure in respect of specified bank notes held and transacted
Specified Bank Notes is defined as Bank Notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees. The disclosures with respects to âPermitted Receiptsâ, âPermitted Paymentsâ, âAmount Deposited in Banksâ and âClosing Cash in Hand as on 30.12.2016â is understood to be applicable in case of SBNs only.
Note: 5. There being no indication of impairment of fixed assets determined by the Company, no loss has been recognized on impairment of assets.
Note:6. Previous yearâs figures (including those given within brackets) have been regrouped/ reclassified wherever necessary to correspond to the current yearâs classification/ disclosure:
Figures in the financial statements have been shown as Rs. in lacs except per share data.
Mar 31, 2016
(ii) Post Employment Benefits .
(a) Provident fund is a defined contribution plan and contributions made to the fund in accordance with the applicable rules/statutes are expensed.
(b) The Employees Group Gratuity Scheme is a defined benefit plan which is funded with the Life Insurance Corporation of India and the annual contribution to the fund actuarially assessed by them is expensed.
(c) Superannuation is a defined contribution plan. The contributions in accordance with the company''s scheme made to the fund administered by the Life insurance Corporation of India are expensed.
(d) The Employee Group Gratuity Fund and the Employee Superannuation Fund respectively have been constituted through Hydro S & S Employees Group Gratuity Trust and Hydro S & S Employee Superannuation Trust in which one of the Company''s directors is a T trustee.
Mar 31, 2015
Note: 1.Effective from 01.04.2014, depreciation on tangible assets has
been provided as per "useful life" specified in part C in Schedule II
of the Companies Act, 2013. The carrying amount as on 01.04.2014 is
accordingly depreciated over "useful life". Due to these changes, the
impact on depreciation for the year ended 31.03.2015 is higher by Rs.
6.48 lakhs. The Carrying value of Rs. 18.57 lakhs relating to assets
whose "useful life" is Nil as on 01.04.2014 has been adjusted in the
opening balance of retained earnings in terms of Schedule II of the
Act.
Note: 2.There being no indication of impairment of fixed assets
determined by the Company, no loss has been recognized on impairment of
assets.
Note: 3.Previous year's figures (including those given within bracket)
have been regrouped/ reclassified wherever necessary to correspond to
the current period's classification/ disclosure. Figures in the
financial statements have been shown Rs.in lacs except per share data.
Mar 31, 2013
Note: 1. Contingent Liabilities not provided for
a) Letters of credit 457.07 452.19
b) Letters of guarantee 6.62 6.62
c) Commitment on capital accounts 1.54 4.61
d) Customs duty on materials-in-bond 15.72 2.11
e) Custom duty disputed in appeals 26.78 26.78
f) Income Tax disputed in appeals 61.54 16.94
g) Sales Tax disputed in appeals 12.75
h) Excise duty & Service Tax disputed in appeals 14.96 12.58
Note: 2. Previous year''s figures (including those given within
brackets) have been regrouped / reclassified wherever necessary to
correspond to the current year''s classification / disclosure. Figures
in the financial statements have been shown Rs. in lacs except per share
data.
Mar 31, 2012
Details of Security
The above Rupee Term loans from Banks are secured by a mortgage of the
Company's immovable properties and hypothecation of applicable
movable assets, present and future, at Pudukkottai, Puducherry, Jejuri
and Tirunelveli on a pari passu basis and collaterally secured by way
of second charge on the current assets of the company.
A. Hire purchase finance is used to fund vehicles purchased for the
company. The vehicles are secured by hypothecation to the financiers
Note: 1. Contingent liabilities not provided for
a) Letters of credit 452.19 533.87
b) Letters of guarantee 6.62 2.00
c) Commitment on capital accounts 4.61 18.40
d) Customs duty on materials-in-bond 2.11 3.38
e) Custom duty disputed in appeals 26.78 26.78
f) Income tax disputed in appeals 16.94 16.94
g) Excise duty & Service tax disputed
in appeals 12.58 5.56
f) General description of Employee Benefits :
(i) Short term Employee Benefits
The employee benefits payable wholly within 12 months of rendering the
service are classified as short term benefits. Benefits such as
salaries, wages, short term compensated absences and the expected cost
of bonus and ex-gratia are recognized at the undiscounted amount in the
year in which the employee renders the related service.
(ii) Post Employment Benefits
(a) Provident fund is a defined contribution plan and contributions
made to the fund in accordance with the applicable rules/statutes are
expensed.
(b) The employees group Gratuity scheme is a defined benefit plan which
is funded with the Life Insurance Corporation of India and the annual
contribution to the fund actuarially assessed by them is expensed.
(c) Superannuation is a defined contribution plan. The contributions in
accordance with the company's scheme made to the fund administered by
the Life Insurance Corporation of India are expensed.
(d) Leave encashment is provided as per the Company's policies and is
expensed as under :
1. The leave accumulation up to 60 days is funded through a policy with
LIC of India.
2. The encashment of leave accumulated beyond 60 days is borne by the
company.
3. Any difference arising out of actuarial valuation is expensed.
Note: 2. The Revised Schedule VI has become effective from 1 April,
2011 for the preparation of financial statements. This has
significantly impacted the disclosure and presentation made in the
financial statements. Previous year's figures (including those given
within brackets) have been regrouped / reclassified wherever necessary
to correspond to the current year's classification / disclosure.
Figures in the financial statements have been shown Rs. in lacs except
per share data.
Mar 31, 2010
1. Secured Loans
a) Cash credit and other working capital facilities from banks are
secured against hypothecation of stock-in-trade, book debts,
documentary bills and supply bills and collaterally secured by way of
second charge on the present and future fixed assets of the company at
Pudukkottai, Puducherry, Jejuri & Tirunelveli.
b) Term loans from Banks are secured by a mortgage of the Companys
immovable property and hypothecation of applicable movable assets,
present and future, at Pudukkottai, Puducherry, Jejuri and Tirunelveli
on a pari passu basis and collaterally secured by way of second charge
on the current assets of the Company.
2. Letters seeking confirmation of balances in respect of debtors and
creditors have been sent during the year. Confirmation remains to be
received in some cases.
3. Unclaimed dividends are transferred to the Investor Education and
Protection Fund at the appropriate time.
(Rs. in 000s)
As at 31-03-2010 As at 31-03-2009
4. Contingent Liabilities
not provided for :
a) Letters of credit 35,957 74,140
b) Letters of guarantee 10 10
c) Commitment on capital accounts 1,918 3,944
d) Customs duty on materials-in-bond 1,052 1,986
e) Custom duty disputed 2,678 2,678
f) Income Tax disputed in appeal 605 1,334
g) Excise duty & Service Tax
disputed in appeal 633 679
5. Pursuant to the decision of the Board on 16.09.2008 to Buy back
Equity Shares of Rs.10/- each of the company upto a limit of 10% of the
Equity Capital and Free Reserves, the Company as on 15.09.2009 has
bought back 118425 of the Equity Shares of Rs.10/- each. Consequently,
the sum of Rs.1,184 (000Ãs) being the nominal value of the Equity
Shares bought back and extinguished, has been transferred to Capital
Redemption Reserve Account.
6. Fringe Benefit Tax included under Current Tax
7. Power, Fuel & Water charges under other costs is net of 4,412
(8,145) being income generated by our Wind Energy Generators located at
Tirunelveli.
8. Disclosure relating to Micro, Small and Medium Enterprises
In the absence of information from the suppliers with regard to their
registration with the specified authority, despite the company calling
for such information through a circular letter, the additional
disclosure as required under the Micro, Small and Medium Enterprises
Development Act, 2006 is not furnished.
f) General description of Employee Benefits :
(i) Short term Employee Benefits
The employee benefits payable wholly within 12 months of rendering the
service are classified as short term benefits. Benefits such as
salaries, wages, short term compensated absences and the expected cost
of bonus and ex-gratia are recognised at the undiscounted amount in the
year in which the employee renders the related service.
(ii) Post Employment Benefits
(a) Provident fund is a defined contribution plan and contributions
made to the fund in accordance with the applicable rules/statutes are
expensed.
(b) The employees group Gratuity scheme is a defined benefit plan which
is funded with the Life Insurance Corporation of India and the annual
contribution to the fund actuarially assessed by them is expensed.
(c) Superannuation is a defined contribution plan. The contributions in
accordance with the companys scheme made to the fund administered by
the Life Insurance Corporation of India are expensed.
(d) Leave encashment is provided as per the CompanyÃs policies and is
expensed as under :
1. The leave accumulation upto 60 days is funded through a policy with
LIC of India.
2. The encashment of leave accumulated beyond 60 days is borne by the
company.
3. Any difference arising out of actuarial valuation is expensed.
9. The Related Party Disclosures:
(i) Related parties - Names & Descriptions
Key Management Personnel
Mr. Narayan Sethuramon (upto 29-07-2009)
Mr. S.K. Subramanyan
Relative of Key Management Personnel
Mr. V. Srinivasan
Mr. Murali Venkatraman
Mrs. Suchitra Murali Balakrishnan
Associates
W.S. Industries (India) Ltd.
W.S. Industries (India) Ltd. Unit II
Other related parties
W S International Pvt Ltd.
Vensunar Holdings Pvt Ltd.
10. Previous years figures (shown separately and within brackets
wherever given) have been regrouped wherever necessary to conform to
this years classification.
11. Schedules "1" to "15" form an integral part of the Balance Sheet
and the Profit and Loss Account and have been duly authenticated.
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