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Company Information

Home » Market » Company Information

VST Industries Ltd.

Nov 29, 04:00
3135.00 -57.15 ( -1.79 %)
 
VOLUME : 412
Prev. Close 3192.15
Open Price 3192.25
TODAY'S LOW / HIGH
3130.00
 
 
 
3192.25
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 0.00 (0)
52 WK LOW / HIGH
3125.00
 
 
 
4048.30
Nov 29, 03:59
3136.20 -59.10 ( -1.85 %)
 
VOLUME : 5874
Prev. Close 3195.30
Open Price 3161.05
TODAY'S LOW / HIGH
3125.00
 
 
 
3211.25
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 3136.20 (4)
52 WK LOW / HIGH
3140.00
 
 
 
4538.20
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Market Cap. ( ₹ ) 4842.89 Cr. P/BV 5.15 Book Value ( ₹ ) 609.02
52 Week High/Low ( ₹ ) 4538/3140 FV/ML 10/1 P/E(X) 15.58
Bookclosure 27/07/2021 TTM EPS ( ₹ ) 192.24 Div Yield (%) 3.63
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. CONTINGENT LIABILITIES AND COMMITMENTS

(a) Contingent Liabilities

(i) Claims against the Company not acknowledged as debts Rs.336.92 Lakhs (2017- Rs.498.38 Lakhs; 2016 - Rs.234.22 Lakhs) These Comprise - Excise duty, service tax and customs duty matters Rs.332.67 Lakhs (2017 - Rs.494.13 Lakhs; 2016 - Rs.229.97 Lakhs) Other matters related to employees/ex-employees, etc.Rs.4.25 Lakhs (2017 - Rs.4.25 Lakhs; 2016 - Rs.4.25 Lakhs)

(ii) The Company’s pending litigations comprise of claims against the Company by employees and pertaining to proceedings pending with Income tax, Excise, Custom, Sales/VAT tax and other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contigent liabilities where applicable, in its financial statements.

It is not practicable for the Company to estimate the closure of these issues and the consequential timings of cash outflows and estimate of financial effect, if any, in respect of the above as its determinable only on occurance of uncertain future events/receipt of judgements pending at various forums.

(b) Commitments

Estimated amount of contracts remaining to be executed on Capital Account (not provided for) - Rs.2015.33 Lakhs (2017 - Rs.5198.96 Lakhs; 2016 - Rs.3248.41 Lakhs )

2. FUTURE LEASE OBLIGATIONS

The Company has entered into various operating lease agreements and the amounts paid under such agreements have been charged to revenue as Rent under Note 24. All these agreements are cancellable in nature.

3. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

A CAPITAL MANAGEMNET

The Company’s financial strategy aims to provide adequate capital to its business for growth on a going concern thereby creating sustainable stakeholder value. The Company funds its operations mainly through internal accurals.

B CATEGORIES OF FINANCIAL INSTRUMENTS - FAIR VALUE MEASUREMENT AND FAIR VALUE HIERARCHY

The fair values of the financial assets and liabilities are defined as 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. Methods and assumptions used to estimate the fair values are consistent with those used for the earlier periods.

Financial assets and liabilities are measured at fair value as at Balance Sheet date as under:

i) The fair values of investment in government securities, quoted investment in equity shares is based on the current bid price of respective investment as at the Balance Sheet date.

ii) The fair values of investments in mutual fund units is based on the net asset value (NAV) as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.

iii) The fair values of the derivative financial instruments has been determined using valuation techniques with market observable inputs such as foreign exchange spot rates and forward rates at end of reporting period, yield curves, volatility, etc., as applicable.

iv) Cash and cash equivalents (except for investments in mutual funds), trade receivables, trade payables and other current financial assets and liabilities (except derivative financial instruments), have fair values that approximate to their carrying amounts due to their short-term nature.

Fair value of the financial instruments have been classified into various fair value hierarchies based on the following three levels:

Level 1 - Quoted prices for identical assets or liabilities in an active market.

Level 2 - Directly or indirectly observable market inputs, other than Level 1 inputs; and

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty.

The following table shows the carrying amounts and fair value of financial assets and liabilities, including their levels in the fair value hierarchy:

C. FINANCIAL RISK MANAGEMENT OBJECTIVES

The Company’s risk management framework anchored in its policies and procedures and internal financial controls aims to ensure that the Company’s business activities that are exposed to a variety of financial risks namely liquidity risk, market risks, credit risk and foreign currency risk are identified at an early stage and managed within acceptable and approved risk parameters in a disciplined and consistent manner and in compliance with applicable regulations.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. Cash flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis. The Company’s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions. The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended 31st March, 2018 and 31st March, 2017.

The Company’s Current assets aggregate to Rs.80485.09 Lakhs (2017 - Rs.54788.31 Lakhs; 2016 - Rs.60342.85 Lakhs) including Current investments, Cash and cash equivalents and Other bank balances of Rs.3758.82 Lakhs (2017 - Rs.1994.16 Lakhs; 2016 - Rs.2123.40 Lakhs) against an aggregate Current liability of Rs.46789.11 Lakhs (2017 - Rs.24776.63 Lakhs; 2016 -Rs.31718.82 Lakhs); Non-current liabilities amounting to Rs.1415.15 Lakhs (2017 - Rs.1091.05 Lakhs; 2016 - Rs.927.56 Lakhs) on the reporting date. Further, the Company’s total equity stood at Rs.58209.07 Lakhs (2017 - Rs.53897.11 Lakhs; 2016 -Rs.51883.34 Lakhs). Accordingly, liquidity risk or the risk that the Company may not be able to settle its dues as they become due does not exist. This excludes the potential impact of extreme circumstances that cannot be reasonably predicted, such as natural disasters.

Market Risks

The Company does not trade in equity instruments; it continues to hold certain investments in equity for long term value accretion which are measured at fair value through Other Comprehensive Income. The value of investment in such equity instruments as at 31st March, 2018 is Rs.202.61 Lakhs (2017 - Rs.176.52 Lakhs; 2016 - Rs.139.99 Lakhs).

The Company’s investments are predominantly held in fixed deposits and debt schemes of mutual funds. The decision making is centralised and administered under a set of approved policies and procedures guided by the principles of safety, liquidity and returns. This ensures that investments are only made within acceptable risk parameters after due evaluation.

Fixed deposits are held with highly rated banks and companies and have a medium tenure and accordingly, are not subject to interest rate volatility. Investment in debt schemes of mutual funds are susceptible to market price risk that arise mainly from change in interest rate from time to time which may impact the return and value of such investments. However, given the relatively short tenure of underlying portfolio of such mutual fund schemes in which the Company has invested, such price risk is not significant.

As the Company is debt-free and its liabilities do not carry interest, the exposure to interest rate risk from the perspective of Financial Liabilities is negligible.

Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations. The Company’s customer base is large and diverse and credit is extended in business interest in accordance with well laid out guidelines issued centrally. Exceptions, if any, are approved by appropriate authority after due consideration of the customers credentials and financial capacity, trade practices and prevailing business and economic conditions. Our historic experience of collecting receivables is high and accordingly, the credit risk is low. Hence, trade receivables are considered to be a single class of financial assets.

The value of Trade Receivables as at 31st March, 2018 is Rs.2733.09 Lakhs (2017 - Rs.1204.13 Lakhs; 2016 - Rs.1237.54 Lakhs).

Further, the Company maintains exposure in cash and cash equivalents, term deposits with banks, government securities, money market liquid mutual funds and derivative instruments with financial institution. The Company has set counter-parties limits based on multiple factors including financial position, credit rating, etc.

The Company’s maximum exposure to credit risk as at 31st March, 2018, 2017 and 1st April, 2016 is the carrying value of each class of financial assets.

Foreign Currency Risks

The Company undertakes transactions denominated in foreign currency (mainly US Dollar, Euro and Pound Sterling) which are subject to the risk of exchange rate fluctuations. Financial assets and liabilities denominated in foreign currency, arising out of such transactions, are also subject to reinstatement risks

The Company has established risk management policies to hedge the volatility arising from exchange rate fluctuations in respect of firm commitments and highly probable forecast transactions, through foreign exchange forward contracts. The proportion of forecast transactions that are to be hedged is decided based on the size of the forecast transaction and market conditions. As the counterparty for such transactions are highly rated banks, the risk of their non-performance is considered to be insignificant.

The use of these foreign exchange forward contracts are intended to reduce the risk or cost to the Company and are not intended for trading or speculation purpose.

The information on such Derivative Instruments is as follows:

Forward exchange contracts designated under Hedge Accounting that were outstanding on respective reporting dates:

Hedges of foreign currency risk and derivative financial instrument

Foreign exchange forward contracts that are designated as cash flow hedges and qualify for hedge accounting are fair valued at each reporting date and the resultant gain or loss is recognised in Other Comprehensive Income under ‘Cash Flow Hedge Reserve Account’ to the extent considered highly effective and are reclassified into the Statement of Profit & Loss upon occurrence of the hedged transactions. Gain or loss on derivative instruments that are either not designated as cash flow hedges or designated as cash flow hedges to the extent considered ineffective is recognised in the Statement of Profit and Loss.

The movement in the cash flow hedging reserve in respect of designated cash flow hedges is summarised below:

Foreign Currency Sensitivity

A 1% strengthening of the INR against key currencies to which the company is exposed (net of hedges) would have led to the profit before tax for the year ended 31st March, 2018 to be lower by Rs.23.10 Lakhs (2017 - Rs.6.99 Lakhs) and pre-tax total equity as at 31st March, 2018 would change by Rs.23.10 Lakhs [2017 - Rs.6.99 Lakhs; 2016 – Rs.(15.26) Lakhs]. A 1% weakening of the INR against these currencies would have led to an equal but opposite effect.

4. EMPLOYEE BENEFIT PLANS

Employee Retirement Benefit Plans of the Company include Providend Fund, Retirement Allowances, Gratuity, Pension and Leave Encashment. These plans expose the Company to a number of acturial risks such as investment risk, interest rate risk, longevity risk and inflation risk. The Company has developed policy guidelines within the applicable statutory framework, for allocation of assets to different classes with the objective of maintaining the right balance between risks and long-term returns. Further, investments are well diverisfied, such that the faliure of any single investment would not have a material impact on the overall level of assets.

Description of Plans

(i) Provident Fund

Eligible employees of the Company receive benefits under the Provident Fund which are defined contribution/benefit plans wherein both the Company and the employees make monthly contributions equal to a specified percentage of the covered employees’ salary. These contributions are made to the Funds administered and managed by the Govt. of India/Company’s own Trust. The Company’s own trust plan envisages guarantee of interest at the rate notified by the Provident Fund authority. The Company’s contributions along with interest shortfall, if any, are charged to revenue in the year they are incurred. Expenditure for the year amounted to Rs.252.24 Lakhs (2017 - Rs.262.83 Lakhs).

Major Category of Plan Assets as a % of the Total Plan Assets of the Company’s Own Provident Fund Trust :

(ii) Retirement Allowance

The Company has an unfunded defined benefit retirement allowance scheme for its employees in the workmen category. Liability with regard to such scheme is determined by actuarial valuation and charged to revenue in the period determined -Rs.435.17 Lakhs; (2017 - Rs.427.84 Lakhs). Consequently, liability recognised in the Balance Sheet as at 31st March, 2018 Rs.1372.97 Lakhs; (2017 - Rs.1026.58 Lakhs; 2016 - Rs.770.22 Lakhs).

(iii) Gratuity

In accordance with ‘the Payment of Gratuity Act, 1972’ of India, the Company provides for gratuity, a defined retirement benefit plan ( the ‘Gratuity Plan’) covering eligible employees. Liabilities with regard to such Gratuity Plan are determined by actuarial valuation and are charged to revenue in the period determined. The Gratuity Plan is a funded Plan administered by Company’s own Trust which has subscribed to “Group Gratuity Scheme” of Life Insurance Corporation of India.

(iv) Pension Fund

The Company has a defined contribution pension scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees’ salary to a notified pension scheme under National Pension Scheme of the Government of India. The Company’s contributions are charged to revenue in the period they are incurred - Rs.93.93 Lakhs (2017 - Rs.117.74 Lakhs).

In addition to the above, the Company has a funded defined benefit pension scheme for its employees in the workmen category. Liability with regard to such defined benefit plan are determined by actuarial valuation and are charged to revenue in the period determined. This plan is administered by the Company’s own Trust which has subscribed to “Group Pension Scheme” of Life Insurance Corporation of India.

(v) Leave Encashment

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at period-end. The value of such leave balance eligible for carry forward, is determined by actuarial valuation and charged to revenue in the period determined. The scheme is fully funded by way of subscription to the “Leave Encashment Scheme” of Life Insurance Corporation of India.

The estimates of future salary increases, considered in actuarial valuations take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

G Investment details of the Plan Assets

In the absence of detailed information regarding plan assets which are funded with Life Insurance Corporation of India, the composition of each major category of plan assets, the percentage or amount of each category to the fair value of plan assets is not disclosed.

H Basis used to determine the Expected Rate of Return on Plan Assets

The expected rate of return on plan assets is based on the current portfolio of assets, investment strategy and market scenario. In order to protect the capital and optimise returns within acceptable risk parameters, the plan assets are well diversified.

I Net Asset/(Liability) recognised in Balance Sheet

J Sensitivity Analysis

The Sensitivity Analysis below has been determined based on reasonably possible change of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. These sensitivities show the hypothetical impact of a change in each of the listed assumptions in isolation. While each of these sensitivities holds all other assumptions constant, in practice such assumptions rarely change in isolation and the asset value changes may offset the impact to some extent. For presenting the sensitivities, the present value of the Defined Benefit Obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the Defined Benefit Obligation presented above. There was no change in the methods and assumptions used in the preparation of the Sensitivity Analysis from previous year.

5. With implementation of Goods & Service tax (GST) with effect from 1st July, 2017, the Company’s main product is now subjected to GST and Compensation Cess in addition to Central Excise (currently only National Calamity Contingent Fund). Due to such restructuring of indirect taxes, the figures for ‘‘Revenue from operations’’ (net of GST and Compensation Cess collected on behalf of govenrment) and ‘‘Excise duty’’ for the year ended 31st March, 2018 are not comparable with the previous period.

6. FIRST TIME ADOPTION OF Ind AS

i The Company has adopted Indian Accounting Standards (Ind AS) with effect from 1st April, 2017, with a transition date of 1st April, 2016. These financial statements for the year ended 31st March, 2018 are the first financial statements, the Company has prepared under Ind AS. For all periods upto and including the year ended 31st March, 2017, the Company prepared its financial statements in accordance with the accounting standards notified under the section 133 of the Companies Act, 2013, read together with the Companies (Accounts) Rules, 2014 (‘Previous GAAP’).

Ind AS 101 (First-time Adoption of Indian Accounting Standards) requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements be applied retrospectively and consistently for all financial years presented. Accordingly, the Company has prepared financial statements which comply with Ind AS for year ended 31st March, 2018, together with the comparative information as at and for the year ended 31st March, 2017 and the opening Ind AS Balance Sheet as at 1st April, 2016.

ii Ind AS 101 permits first-time adopters certain exemptions from retrospective application of certain requirements under Ind AS. The Company has elected to apply the following exemptions/adjustments from retrospective application :

(a) Property, plant and equipment and intangible assets were carried in the Balance Sheet prepared in accordance with previous GAAP as at 31st March, 2016. Under Ind AS, the Company has elected to regard such carrying values as deemed cost on the date of transition. Further, the Company had revalued certain freehold land and buildings based on professional valuation as at 31st March, 1989 and had a balance of Rs.265 Lakhs in revaluation reserve on the date of transition. On transition, such revaluation reserve has been adjusted in retained earnings.

(b) Classification and measurement of financial assets: The classification of financial assets to be measured at amortised cost or fair value through other comprehensive income (FVOCI) is made on the basis of the facts and circumstances that existed on the date of transition to Ind AS.

(c) Under previous GAAP, non-current investments were stated at cost. Where applicable, provision was made to recognise a decline, other than temporary, in valuation of such investments. Under Ind AS, equity instruments have been classified as FVOCI through an irrevocable election on the date of transition.

(d) Under previous GAAP, current investments like investments in mutual fund schemes were stated at lower of cost and fair value. Under Ind AS, these financial assets have been classified as Fair Value through Profit or Loss (FVTPL) on the date of transition and fair value changes after the date of transition has been recognised in profit or loss.

(e) Under the previous GAAP, acturial gains and losses related to the defined benefit schemes for gratuity and pension plans and liabilities towards employee leave encashment were recognised in profit or loss. Under Ind AS, the acturial gains and losses form part of remeasurement of the net defined benefit liability/asset which is recognised in Other Comprehensive Income (OCI). Consequently, the tax effect of the same has also been recognised in OCI instead of profit or loss.

(f) Under previous GAAP, dividend payable on equity shares (including tax thereon) was recognised as a liability in the period to which it relates. Under Ind AS, dividends (including the tax thereon) to shareholders are recognised when declared by the members in a general meeting.

(g) Estimates: On assessment of the estimates made under the previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under previous GAAP are made by the Company for the relevant reporting dates reflecting conditions existing as at that date.

iii The following reconciliations provide the explanations and quantification of the differences arising from the transition from previous GAAP to Ind AS in accordance with Ind AS 101:

7. COMPARATIVE FIGURES

The Comparative figures for the previous year have been re-arranged to conform with the current year presentation of the accounts.