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Company Information

Home » Market » Company Information

Ester Industries Ltd.

Sep 24, 03:08
33.50 -0.50 ( -1.47 %)
 
VOLUME : 4270
Prev. Close 34.00
Open Price 34.90
TODAY'S LOW / HIGH
33.40
 
 
 
34.90
Bid PRICE (QTY.) 33.30 (100)
Offer PRICE (Qty.) 33.50 (25)
52 WK LOW / HIGH
22.65
 
 
 
49.20
Sep 24, 02:59
33.70 -0.50 ( -1.46 %)
 
VOLUME : 9004
Prev. Close 34.20
Open Price 34.20
TODAY'S LOW / HIGH
33.40
 
 
 
35.20
Bid PRICE (QTY.) 33.75 (400)
Offer PRICE (Qty.) 33.80 (50)
52 WK LOW / HIGH
22.50
 
 
 
52.00
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Market Cap. ( ₹ ) 281.04 Cr. P/BV 0.89 Book Value ( ₹ ) 37.70
52 Week High/Low ( ₹ ) 52/23 FV/ML 5/1 P/E(X) 9.03
Bookclosure 16/09/2019 TTM EPS ( ₹ ) 5.71 Div Yield (%) 1.48
NOTES TO ACCOUNTS
You can view the entire text of Notes to accounts of the company for the latest year
Year End :2018-03 

1. Nature of operations

Ester Industries Limited (‘the Company') is a manufacturer of polyester film and engineering plastics.The Company is domiciled in India and its registered office is situated at Pilibhit Road, Sohan Nagar, P.O. Charubeta, Khatima - 262308, District - Udhamsingh Nagar, Uttarakhand.

2. General information and compliance with Ind AS

These financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ‘Ind AS') as notified by Ministry of Corporate Affairs (‘MCA') under section 133 of the Companies Act, 2013 (‘Act') read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant provisions of the Act. The Company has uniformly applied the accounting policies for the periods presented.

The financial statements for the year ended March 31, 2018 are the first financial statements which the Company has prepared in accordance with Ind AS. For all periods up to and including the year ended March 31, 2017, the Company had prepared its financial statements in accordance with accounting standards notified under section 133 of the Act, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP), which have been adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS. For the purpose of comparatives, financial statements for the year ended March 31, 2017 and opening balance sheet as at April 1, 2016 are also prepared and presented as per Ind AS. Note 41 describe the disclosures required under Ind AS 101.

The financial statements for the year ended March 31, 2018 along with the comparative financial information were authorised and approved for issue by the Board of Directors on May 16, 2018.

3. Basis of preparation

The financial statements have been prepared on going concern basis in accordance with generally accepted accounting principles in India. Further, the financial statements have been prepared on a historical cost basis except for following items:

Items Measurement basis

Certain financial assets and liabilities Fair value

Net defined benefits (assets)/liability Fair value of plan assets less present value of defined

benefits obligations.

4. Recent accounting pronouncement

In March 2018, the Ministry of Corporate Affairs (‘MCA') issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying amendments to Ind AS 12, ‘Income taxes', Ind AS 21, ‘The effects of changes in foreign exchange rates and also introduced new revenue recognition standard Ind AS 115 ‘Revenue from contracts with customers'. These amendments rules are applicable to the Company from April 1, 2018.

Ind AS 115 ‘Revenue from Contracts with Customers’ (Ind AS 115)

MCA has notified new standard for revenue recognition which overhauls the existing revenue recognition standards including Ind AS 18 - Revenue and Ind AS 11 - Construction contracts. The new standard provides a control-based revenue recognition model and provides a five step application principle to be followed for revenue recognition:

1. Identification of the contracts with the customer

2. Identification of the performance obligations in the contract

3. Determination of the transaction price

4. Allocation of transaction price to the performance obligations in the contract (as identified in step ii)

5. Recognition of revenue when performance obligation is satisfied.

The management is yet to assess the impact of this new standard on the Company's financial statements.

Amendment to Ind AS 12

The amendment to Ind AS 12 requires the entities to consider restriction in tax laws in sources of taxable profit against which entity may make deductions on reversal of deductible temporary difference (may or may not have arisen from same source) and also consider probable future taxable profit. The Company is evaluating the requirements of the amendment and its impact on the financial statements.

Amendment to Ind AS 21

The amendment to Ind AS 21 requires the entities to consider exchange rate on the date of initial recognition of advance consideration (asset/ liability), for recognising related expense/income on the settlement of said asset/liability. The Company is evaluating the requirements of the amendment and its impact on the financial statements.

(ii) The Company has elected to measure all its property, plant and equipment at the previous

GAAP carrying amount at the date of transition to Ind AS.

(iii) Refer note 37B for disclosure of contractual commitments for the acquisition of property,plant and equipment.

(iv) Refer note 18 for information on property, plant and equipment pledged as security by the Company.

(v) Borrowing cost capitalised during the year Nil (March 31, 2017: Rs. 67.67 lacs; April 1, 2016: Rs. 148.26 lacs) as part of plant and machinery.

*Since Ester International (USA) Limited (EIUL), a wholly owned subsidiary of the Company in USA did not have any operation for last many years, the Board of Directors of the Company decided to dissolve EIUL. Accordingly EIUL was voluntarily dissolved on September 09, 2016 vide dissolution certificate issued by Department of Treasury, State of New Jersey, USA. The total financial impact of liquidation of EIUL is 18.63 Lacs which was charged off to the statement of profit and loss in year ended 31 March 2017.

# The Company has made 100% impairment on the said investment.

(i) The Company has created provision for obsolete inventories amounting to Rs. 101.92 lacs (31 March 2017: Rs. 3.92 lacs)

(ii) The cost of inventories recognised as expense during the year is Rs. 53,926.03 lacs (31 March 2017: Rs. 46,680.90 lacs)

iv) Rights, preferences and restrictions attached to equity share

The Company has only one class of equity share having a par value of Rs. 5 per share. Each equity shareholder is entitled for one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting.

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

i) Nature and purpose of other reserves Capital reserve

Capital reserve was created under the previous GAAP out of the profit earned from a specific transaction of capital nature. Capital reserve is not available for the distribution to the shareholders.

Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve will utilised in accordance with provisions of the Companies Act 2013.

Capital redemption reserve

The same has been created in accordance with provision of Companies Act 2013 against the buy back of equity shares from the market. General reserve

The Company is required to create a general reserve out of the profits when the Company declares dividend to shareholders.

Retained earnings

All the profits made by the Company are transferred to retained earnings from statement of profit and loss.

I. Term loans

a) From Bank of India of Rs. 575.04 lacs (March 31, 2017: Rs. 475.24 lacs, April 01, 2016: Rs 378.00 lacs) for Engineering Plastics Extruder, Twin Screw Extruder for Film Plant 1 and UPS. The term loan bears floating interest at the MCLR plus 3.60% per annum. The term loan is repayable in 20 equal quarterly installments starting from June 2014.#

b) From Bank of India of Rs. 696.28 lacs (March 31, 2017: Rs. 1,091.24 lacs, April 01, 2016: Rs 1,584.07 lacs) as Corporate loan for augmentation of Working Capital Corporate Loan bears floating interest at the rate MCLR plus 3.60% per annum. The Corporate loan is repayable in 20 equal quarterly installments starting from March 2015.#

c) From Bank of Baroda of Rs. 348.52 lacs (March 31, 2017: Rs.546.52 lacs, April 01, 2016: Rs 743.67 lacs) as Corporate loan for augmentation of Working Capital Corporate Loan bears floating interest at the MCLR plus 4.65% per annum. The Corporate loan is repayable in 20 equal quarterly installments starting from April 2015.#

d) From Union Bank of India of Rs. 46.70 lacs (March 31, 2017: Rs.233.05 lacs, April 01, 2016: Rs 418.67 lacs) for metalizer project. The term loan bears floating interest at the MCLR plus 3.75% per annum. The term loan is repayable in 20 equal quarterly installments starting from September 2013.#

e) From Union Bank of India of Rs. 274.79 lacs (March 31, 2017: Rs. 494.79 lacs, April 01, 2016: Rs 714.79 lacs) for bio mass (Husk) fuelled thermic fluid heater bears floating interest at the MCLR plus 3.75% per annum. The term loan is repayable in 20 equal quarterly installments starting from September 2014.#

f) From State Bank of India of Rs.695.48 lacs (March 31, 2017: Rs. 893.60 lacs, April 01, 2016: Nil) for augmentation of working capital. The term loan bears floating interest at the MCLR plus 4.35% per annum. The term loan is repayable in 20 equal quarterly installments starting from December 2016.#

g) From consortium member banks namely Bank of India, Bank of Baroda, Union Bank of India, Canara Bank and State Bank of India of Rs. 2,108.03 lacs (March 31, 2017: Rs.4,243.40 lacs, April 01, 2016: Rs 6,376.57 lacs) for expansion of Film Plant capacity. The term loans bear floating interest rate ranging from MCLR plus 3.60% per annum to 4.50% per annum. These term loans are repayable in 28 equal quarterly installments starting from April 2012.#

# Above term loans are secured by first pari passu charge on fixed assets of the Company (both present & future) including factory land and building at Pilibhit Road, Sohan Nagar, P.O. Charubeta, Khatima-262308, Distt Udham Singh Nagar, Uttarakhand with other lenders, except fixed assets that are exclusively charged to Tata Capital Financial Services Limited and second Pari passu charge on current assets and further secured by irrevocable guarantee of its holding company and personal guarantee of Mr. Arvind Singhania.

h) From State Bank of India of Nil (March 31, 2017: Nil, April 01, 2016: Rs 250.26 lacs) for Oil fired heater, Reclaim Co-extruder and In-Line Coat-er is secured by first exclusive charge by way of hypothecation of Oil Fired Heater, Reclaim Co-extruder and In-Line Coater and further secured by irrevocable guarantee of its holding company. The term loan bears floating interest at the base rate plus 2.75% per annum.

i) From Tata Capital Financial Services Limited of Rs.1,788.28 lacs (March 31, 2017: Rs. 2,098.27 lacs, April 01, 2016: Rs 1,656.03 lacs) has been sanctioned for repayment of outstanding dues of Karnataka Bank and augmentation of Working Capital. The term loan is secured by equitable mortgage by way of deposit of title deeds of land and Corporate Office building constructed thereupon in Gurgaon and first and exclusive charge over the hypothecation of certain plant and machinaries installed at factory premises at Uttrakhand and further secured by personal guarantee of Mr. Arvind Singhania. The term loan bears floating interest at the LTLR minus 6.50% per annum. Out of Rs. 1,788.28 lacs, Rs. 36.89 lacs is repayable in 29 months starting from April 2016 with terminal date of repayment being August 2020, and balance Rs. 1,751.39 lacs is repayable in 36 months starting from October 2016 with terminal date of repayment being March 2021.

II. Vehicle loans are secured by hypothecation of specific vehicles acquired out of proceeds of the loans. Vehicle loans bears interest rates ranging from 8.25% per annum to 13.25% per annum. These loans are repayable in monthly installments till March 2023.

III. Buyers’ credit for capital goods

a) Buyers' credit amounting to Rs. Nil (March 31, 2017: Rs.676.57 lacs : April 01, 2016: Rs 979.83 lacs) are against LOUs / LOCs issued by Bank of India (BOI). LOUs / LOCs facility from BOI is secured by first exclusive charge by way of hypothecation of Engineering Plastics Extruder, Twin Screw Extruder and UPS and further secured by irrevocable guarantee of its holding company. Company has availed LOUs / LOCs facilities from the banks to avail the Buyers' Credit of Rs. Nil (previous year - Rs. 676.57 Lacs). These LOU / LOC facilities are sanctioned to the Company as a sub limit to the term loans.

IV. Redeemable financial instrument

During the year, the Company has obtained interest free unsecured foreign currency loan of Rs. 504 lacs from its Holding Company. This foreign currency loan is repayable in not more than five unequal installments between April 2023 to June 2023.

Working capital loans, bills discounting and acceptances: These loans are secured by first charge by way of hypothecation of raw materials, finished goods, semi finished goods, stores and spares, book debts and other receivables (both present and future) and further secured by irrevocable guarantees of its holding Company and personal guarantee of Mr. Arvind Singhania. Working capital and bill discounting facilities are further secured by way of second charge in respect of immovable properties and movable fixed assets except fixed assets that are exclusively charged to Tata Capital Financial Services Limited. The working capital loans from banks bear floating interest rate at MCLR plus ranging from 1.15% per annum to 4.05% per annum. The bill discounting from banks bear floating interest rate ranging from 7.85% per annum to 10.40% per annum.

Buyers’ credit for raw material are against LOUs / LOCs issued by consortium of banks. The LOUs / LOCs facilities is sanctioned to the Company as a sub limit of Non Fund (LCs) based facility. The facility is secured by first charge by way of hypothecation of stocks of raw materials, finished goods, semi finished goods, stores and spares, book debts and other receivables (both present and future) and further secured by irrevocable guarantees of its holding Company and personal guarantee of Mr. Arvind Singhania. Buyers' credit for raw material taken in USD, Euro and JPY bears interest rate ranging from 0.23% per annum to 3.56% per annum.

i) Corporate social responsibility expenses

Gross amount required to be spent by the Company during the year is Rs. Nil (31 March 2017: Rs. 17.29 lacs). Amount spent during the year on corporate social responsibility: Rs. 2.80 lacs (31 March 2017: Rs. 23.06 lacs).

5. Fair value disclosures

(i) Fair value hierarchy

Financial assets measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: quoted prices (unadjusted) in active markets for financial instruments.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: unobservable inputs for the asset or liability.

(ii) Valuation technique used to determine fair value

A. Specific valuation techniques used to value mutual funds include - the use of net asset value for mutual funds on the basis of the statement received from investee party.

B. Derviative asset/liability is measured using forward contract exchange rates at the balance sheet rate as confirmed from banks/financial institutions.

The above disclosures are presented for non-current financial assets and non-current financial liabilities. Carrying value of current financial assets and current financial liabilities (trade receivables, cash and cash equivalents, other bank balances, loans, other current financial assets, trade payables, current borrowings and other current financial liabilities) represents the best estimate of fair value.

*Borrowings taken by the Company are as per the Company's credit and liquidity risk assessment and there is no comparable instrument having the similar terms and conditions with related security being pledged and hence the carrying value of the borrowings represents the best estimate of fair value.

(i) Risk management

The Company's activities expose it to market risk, liquidity risk and credit risk. The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.

(A) Credit risk

Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Company's exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and other financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.

a) Credit risk management

i) Credit risk rating

The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.

A: Low credit risk

B: Moderate credit risk

C: High credit risk

Based on business environment in which the Company operates, a default on a financial asset is considered when the counter party fails to make payments within the agreed time period (including extension). Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions.

Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognised in statement of profit and loss.

(B) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due. Management monitors rolling forecasts of the Company's liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates.

(ii) Foreign exchange risk

The Company has international transactions and is exposed to foreign exchange risk arising from foreign currency transactions (imports and exports). Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the company's functional currency.

6. Segment reporting

The Company operates in two segments manufacturing and sale of polyester film and engineering plastics. The Company has chosen business segments as its primary segments considering the dominant source of nature of risks and returns, internal organisation, management structure and the manner chief operating decision maker (CODM) review the financial performance of the business for allocating the econcomic resources. A brief description of the reportable segment is as follows:

Polyester film: Polyester films that are used in primarily flexible packaging and other industrial application. Polyester film is known for high tensile strength, chemical and dimensional stability, transparency, reflective, gas and aroma barrier properties and electrical insulation. PET chips is the main raw material used to manufacture the film.

Engineering plastics: Engineering plastics are group of plastic materials that exhibit superior mechanical and thermal properties over the more commonly used commodity plastics. Engineering plastics are equipped with certain electrical properties which enable it to be used in specific industries such as automotive, telecommunication, electrical, electronics and lighting, consumer durable etc.

Information about major customer

During the year ended March 31, 2018 revenue of approximately 10% (March 31, 2017: 8%) was derived from a single external customer in the polyester film business and approximately 9% in March 31, 2018 (March 31, 2017: 7%) was derived from a single external customer in the engineering plastics.

Non-current assets

Non-current assets of the Company (property, plant and equipment, capital work-in-progress, intangible assets) are held in India.

7. Capital management

The Company's objectives when managing capital are to:

- To ensure Company's ability to continue as a going concern, and

- To provide adequate return to shareholders

The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

* The amounts indicated as contingent liability or claims against the Company only reflect the basic value. Interest, penalty if any or legal costs, being indeterminable are not considered.

A These claims represents various civil case filed against the Company. The Company has deposited Rs. 41.71 lacs with “Registrar General, Delhi High Court” in compliance with the orders of High Court of Delhi under the two civil appeal filed by the Company against the orders of Tis Hazari Court, Delhi.

# In view of the amendment in The Payment of Bonus Act, 1965 notified on January 1, 2016, the Company has made a provision for incremental bonus for the financial year i.e. for 2015-16. Though the amendment was effective retrospectively from April 1, 2014, the Company on the legal advice has decided not to consider it on account of interim order of various Hon'ble High Courts allowing stay on the amendment with retrospective effect till the time its constitutional validity is established.

8. Leases disclosure as lessee Operating leases

The Company has taken various residential, office and warehouse premises under operating lease agreements. These are generally not non-cancellable and are renewable by mutual consent on mutually agreed terms. There are no restrictions imposed under the lease agreement and there are no subleases.

9. Employee benefits - gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of continuous service gets a gratuity on departure at fifteen day salary (last drawn salary) for each completed year of service. The Company provides for liability in its books of accounts based on actuarial valuation.

The following table summarise the components of net benefit expense recognised in statement of profit and loss and the amount recognised in the balance sheet for gratuity benefit:

Employee benefits - provident fund

Provident fund for certain eligible employees is managed by the company through trust “Ester Industries Limited Employee's Provident Trust” in line with the Provident Fund and Miscellaneous Provision Act, 1952. The plan guarantees interest at the rate as notified by the Provident Fund authority. The contribution by the employer and employee together with the interest thereon are payable to the employee at the time of separation from the company or retirement, whichever is earlier. The benefits vests immediately on rendering of the services by the employee. In this regard, actuarial valuation as at March 31, 2018 was carried out by actuary to find out value of projected defined benefit obligation arising due to interest rate guarantee by the Company towards provident fund.

10. First time adoption of Ind AS

A. Explanation of transition to Ind AS

These are the Company's first financial statements prepared in accordance with Ind AS.

The accounting policies have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS balance sheet at April 1, 2016 (the Company's date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (‘previous GAAP' or ‘Indian GAAP'). An explanation of how the transition from previous GaAp to Ind AS has affected the Company's financial position, financial performance and cash flows is set out in the following tables and notes.

B Ind AS optional exemptions

1 Deemed cost for property, plant and equipment and intangible assets

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment, capital work-in-progress and intangible assets as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. Consequential changes arising on the application of other Ind AS is adjusted from the deemed cost of property, plant and equipment and intangible assets.

2 Investment in subsidiary

Ind AS 101 permits a first-time adopter to continue previous GAAP carrying value for investment in equity instrument of subsidiary. Accordingly, the Company has elected to apply the said exemption.

C Ind AS mandatory exceptions

1 Estimates

An entity's estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at April 1, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

a) Investment in financial instruments carried at fair value through profit and loss (‘FVTPL').

b) Impairment of financial assets based on expected credit loss model.

2 Classification and measurement of financial assets and liabilities

Classification of financial asset is required to be made on the basis of the facts and circumstances that exist at the date of transition to Ind AS. Further, if it is impracticable for the Company to apply retrospectively the effective interest method in Ind AS 109, the fair value of the financial asset or the financial liability at the date of transition to Ind AS shall be the new gross carrying amount of that financial asset or the new amortised cost of that financial liability at the date of transition to Ind AS.

D Other reconciliations between previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.

Note - 11

Effective interest rate adjustment on borrowings

As per Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the statement of profit and loss over the tenure of the borrowing as part of the finance cost by applying the effective interest method. Under previous GAAP, these transaction costs were charged to statement of profit and loss on straight-line basis over the period of loan.

Note - 12

Deferred payment terms on intangible assets

Under the previous GAAP, intangible assets purchased on deferred payment terms were to be recorded at the transaction value. As per Ind AS 109, such intangible assets are recorded at the present value of the deferred payment and related interest cost is charged to statement of profit and loss over the agreed period of contract for payment.

Note - 13

Mark to market on derivative instruments

Under the previous GAAP, the premium or discount arising at the inception of forward contracts are amortised as an expense in statement of profit and loss. As per Ind AS 109, such derivative contracts are marked to market at reporting date and resultant gain/(loss) is recognised in statement of profit and loss.

Note - 14

Expected credit loss on trade receivables

Under the previous GAAP, impairment for trade receivables is recognised on specific identification method based on management assessment of recoverability of trade receivables. As per Ind AS 109, the Company is required to apply expected credit loss model (provision matrix approach) for recognising the allowance for doubtful receivables.

Note - 15

Fair value through profit and loss

Under previous GAAP, investments in long-term equity instrument are shown at cost and tested for provision other than temporary diminution. As per Ind AS 109, such investments are measured at fair value through profit and loss (FVTPL) and resultant gain/(loss) is recognised in statement of profit and loss.

Note - 16

Reversal of depreciation on stores and spares

The Company has capitalised stores and spares starting 1 April 2016 (as per the provisions of revised AS 10 of previous GAAP) and provided depreciation prospectively. However, under Ind AS, these have been capitalised from the transition date leading to reversal in subsequent years.

Note - 17

Reversal of revaluation reserve and related depreciation impact

The Company has netted off revaluation reserve with net block of respective property, plant and equipment as per the transition provision of revised AS 10 of previous gAaP. In previous GAAP, the Company has taken the related impact on 1 April 2016 and presented the related numbers in previous GAAP financial statements of 31 March 2017. Considering, the transition date under Ind AS is also 1 April 2016 and hence, the related impact also netted off under Ind AS on transition date.

Note - 18

Tax impact on adjustments

Retained earnings and statement of profit and loss has been adjusted consequent to the Ind AS transition adjustments with corresponding impact to deferred tax, wherever applicable.

Note - 19 Others

Other adjustments include adjustments on various matters which have not been disclosed separately considering the materiality of the amounts involved.

Note - 20

Other comprehensive income

Items of income and expense that are not recognised in profit and loss but are shown in ‘other comprehensive income' includes re-measurements gain/(loss) of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP. As a consequence, re-measurement gain/(loss) of defined benefit plans has been regrouped from employee benefit expense to other comprehensive income.

Note - 21

Government grants

Under previous GAAP, government grant/assistance relating to the purchase of property plant and equipment was recognised net of acquisition cost of property, plant and equipment. Under Ind AS, government grant/assistance is recognised on gross basis as deferred income. The said deferred income is released to statement of profit and loss over the same period and in same proportion over which additional depreciation is recognised on underlying property, plant and equipment.