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Notes to Accounts of Cheviot Company Ltd.

Mar 31, 2019

1. CORPORATE AND GENERAL INFORMATION

Cheviot Company Limited (the “Company”) is a listed Public Limited Company incorporated in India. The Company has its registered office at 24, Park Street, Magma House, 9th Floor, Kolkata-700016.

The Company manufactures jute products with flexibility to cater to both domestic and international market. The Company is renowned for manufacturing superior quality Hessian fabrics and jute shopping bags for export market at the Export Oriented Unit situated at Falta Special Economic Zone in the state of West Bengal, India.

2. BASIS OF ACCOUNTING

2.1. Statement of Compliance

These financial statements have been prepared in accordance with the Indian Accounting Standards (“Ind AS”) as prescribed by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (“the Act”), read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended), other relevant provisions of the Act and other accounting principles generally accepted in India.

The financial statements of the Company for the year ended 31st March, 2019 have been approved and authorised for issue by the Board of Directors in their meeting held on 27th May, 2019.

2.2. Basis of Measurement

The financial statements have been prepared on historical cost convention, except for following:

- Financial assets and liabilities (including derivative instruments) that are measured at fair value/ amortised cost;

- Freehold land on revaluation model;

- Non-current assets held for sale are measured at the lower of the carrying amounts and fair value less cost to sell;

- Defined benefit plans are measured at fair value.

2.3. Functional and Presentation Currency

The financial statements have been presented in Indian Rupees (‘), which is also the Company’s functional currency. All financial information presented in (?) has been rounded off to the nearest lakhs as per the requirements of Schedule III, unless otherwise stated.

2.4. Use of Estimates and Judgements

The preparation of financial statements require judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities including contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period prospectively in which the results are known/ materialised.

2.5. Current Vs Non-Current classification

The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.

An asset is classified as current when it is:

- Expected to be realised or intended to be sold or consumed in normal operating cycle;

- Held primarily for the purpose of trading;

- Expected to be realised within twelve months after the reporting period; or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All the other assets are classified as non-current.

A liability is classified as current when:

- It is expected to be settled in normal operating cycle;

- It is held primarily for the purpose of trading;

- It is due to be settled within twelve months after the reporting period; or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities respectively.

2.6. Adoption of new accounting standards

The Company has applied the following accounting standards and its amendments for the first time for annual reporting period commencing 1st April, 2018:

- Ind AS 115 - Revenue from Contracts with Customers

- Amendment to Ind AS 12 - Income Taxes

- Amendment to Ind AS 21 - The Effects of Changes in Foreign Exchange Rates

- Amendment to Ind AS 28 - Investment in Associates and Joint Ventures

- Amendment to Ind AS 112 - Disclosure of Interests in Other Entities

- Amendment to Ind AS 40 - Investment property

- Amendment to Ind AS 20 - Accounting for Government Grant and Disclosure of Government assistance

The company had to change its accounting policies following the adoption of Ind AS - 115. Most of the above amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current and future periods.

3. Significant Judgements and Key sources of Estimation in applying Accounting Policies

Information about significant judgements and key sources of estimation made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements is included in the following notes:

a) Recognition of Deferred Tax Assets: The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Company’s future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits.

b) Useful lives of depreciable/ amortisable assets (property, plant and equipment and intangible assets): Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may change the utility of plant and equipment.

c) Classification of Leases: The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee’s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset’s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.

d) Defined Benefit Obligation (DBO): Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.

e) Provisions and Contingencies: The assessments undertaken in recognising provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, ‘Provisions, Contingent Liabilities and Contingent Assets’. The evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.

f) Impairment of Financial Assets: The Company reviews its carrying value of investments carried at amortised cost annually, or more frequently when there is indication of impairment. If recoverable amount is less than its carrying amount, the impairment loss is accounted for.

g) Allowances for Doubtful Debts: The Company makes allowances for doubtful debts through appropriate estimations of irrecoverable amount. The identification of doubtful debts requires use of judgment and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and doubtful debts expenses in the period in which such estimate has been changed.

h) Fair value measurement of financial Instruments: When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The input to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.

Notes :

1) Refer Note - 22 & 27 for information on property, plant and equipment pledged as security by the Company.

2) Refer Note - 43.2 for disclosure on contractual commitment for acquisition of property, plant and equipment.

3) Refer Note - 50.2 for disclosure of future minimum lease payments and their present value in respect of property, plant and equipment taken under finance lease.

4) Based on the valuation report by a Chartered Engineer, an external valuer, freehold land having original cost of Rs. 3.11 was revalued in the years ended 31st March, 1997, 31st March, 2003, 31st March, 2008, 31st March, 2016 and the resultant increase was Rs. 1,548.11, ‘1,630.64, Rs. 3,075.24 and Rs. 3,390.16 respectively. Freehold land has further been revalued at Rs. 16,990.92 on 31st March, 2019, resulting in increase in the net book value of the said asset by Rs. 7,343.66 with a corresponding credit to the revaluation surplus.

The above fair value has been arrived on the basis of valuation performed by an external independent valuer having appropriate professional qualification and recent experience in the valuation of properties in relevant location.

(iv) Estimation of fair value

The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available, the Company considers information from a variety of sources including current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences.

1) There are no amount receivable from directors and officers of the Company either severally or jointly with any other person. Further, no amount is receivable from firms or private companies respectively in which any director is a partner or a director or a member.

2) Refer Note - 22 & 27 for information on hypothecation of trade receivables.

3) Refer Note - 54.3(a)(i) for disclosure on credit risk.

* Under lien Rs. 771.64 (31st March, 2018 Rs. 17.94) towards margin money and/or security against borrowings.

Fixed deposit accounts with maturity of more than 12 months amounting to Rs. 266.66 (31st March, 2018 Rs. 200.29) being non-current has been shown under the head other financial assets (non-current ) (Refer Note 10).

*Amount paid “Under Protest” pursuant to the final order dated 16th March, 2010 of the Tribunal against which an appeal is pending before the Hon’ble Supreme Court.

There are no outstanding debts from directors or other officers of the Company either severally or jointly with any other person. Further, no amount is receivable from firms or private companies respectively in which any director is a partner or a director or a member.

b) Terms/ rights attached to ordinary shares :

The Company has only one class of ordinary shares having a par value of Rs. 10/- per share. Each holder of ordinary shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupee. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of ordinary shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of ordinary shares held by the shareholders.

As per records of the Company, including its register of shareholders / members as on 31st March, 2019, the above shareholding represents legal ownership of shares.

e) The Company has issued and allotted 21,55,625 bonus ordinary shares in the ratio of 1 (one) fully paid-up bonus ordinary share of the face value of Rs. 10/- each for every existing 2 (two) fully paid-up ordinary shares of the face value of Rs. 10/- each held by the members as on 30th August, 2018, the Record Date by capitalization of a sum of Rs. 215.56 from and out of General Reserve of the Company as approved by the members at the annual general meeting held on 10th August, 2018.

f) The Company has bought back 2,00,000 ordinary shares during the financial year 2017-18.

g) No ordinary shares have been reserved for issue under options and contracts/ commitments for the sale of shares/ disinvestment as at the Balance Sheet date.

h) No securities convertible into equity/ preference shares have been issued by the Company during the year.

i) No calls are unpaid by any director or officer of the Company during the year.

Nature and purpose of other reserves Capital reserve

Capital reserve represents capital profits appropriated as per erstwhile Companies Act, 1956 arising on sale of fixed assets during the year ended 30th November, 1985 and 31st March, 1992. This reserve can be utilized in accordance with the provisions of the Companies Act, 2013.

Securities premium

Securities premium represents the premium received on issue of shares. This reserve had been utilised in accordance with the provisions of the Companies Act, 2013 in the previous year.

General reserve

General Reserve represents the reserve created through annual transfer of net profit at a specified percentage in accordance with the provisions of the erstwhile Companies Act, 1956. Consequent to the introduction of the Companies Act, 2013, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn, though the Company may voluntarily transfer such percentage of its profits for the financial year, as it may consider appropriate. This reserve can be utilized in accordance with the provisions of the Companies Act, 2013.

Capital redemption reserve

Capital redemption reserve represents the reserve created during the year ended 30th November, 1981 as a result of redemption of cumulative preference share capital of the Company. Further, the Company has recognised capital redemption reserve on buyback of ordinary shares from the General reserve during financial year ended 31st March, 2018 with the nominal amount of the ordinary shares bought back as per the applicable provisions of the Companies Act, 2013. This reserve can be utilized in accordance with the provisions of the Companies Act, 2013.

Special economic zone re-investment reserve account

Special economic zone re-investment reserve account has been created out of the profit of SEZ unit in terms of the provisions of Section 10AA of the Income Tax Act, 1961. This reserve can be utilised by the Company as per the provisions of Section 10AA of the Income Tax Act, 1961.

Retained earnings

This reserve represents the cumulative profits of the Company after appropriation. This reserve can be utilized in accordance with the provisions of the Companies Act, 2013.

Other comprehensive income reserve

Equity instrument through other comprehensive income

This represents the cumulative gains and losses arising on the fair valuation of equity instruments measured at fair value through other comprehensive income net of tax and amounts reclassified to retained earnings.

Debt instrument through other comprehensive income

This represents the cumulative gains and losses arising on the fair valuation of debt instruments measured at fair value through other comprehensive income net of tax and amounts reclassified to statement of profit and loss.

Revaluation surplus

Revaluation surplus represents the revaluation gain, net of deferred tax, on upward valuation of freehold land. Remeasurement of defined benefit plans

Remeasurement of defined benefit plans comprises actuarial gains and losses and return on plan asset (excluding interest income) which are recognised in other comprehensive income and then immediately transferred to retained earnings.

a) Loan from Export Import Bank of India is secured by hypothecation of all movable fixed assets on first charge basis and all current assets on second charge basis and by mortgage of specific immovable properties both present and future by deposit of title deeds on first charge basis.

b) Outstanding amount including current maturities of loan taken from Export Import Bank of India is repayable in 17 equal quarterly installments of Rs. 3.70 each by April, 2023. Rate of interest is LTMLR plus 1% p.a, effective rate @ 10.30% p.a. (31st March, 2018 : 10.00% p.a.)

c) Loan from State Bank of India is against lien on fixed deposit.

d) Outstanding amount including current maturities of loan taken from State Bank of India is repayable in 18 equal monthly installments of Rs. 1.25 each by September, 2020. Rate of interest is 10.25% p.a. (31st March, 2018 : 10.25% p.a.)

e) No loans have been guaranteed by the directors of the Company.

f) There is no default as on the balance sheet date in the repayment of borrowings and interest thereon.

* Excludes Rs. 46.75 (F.Y. 2017-18 Rs. 66.27) being income tax on defined benefit obligation considered as current tax.

Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income tax levied by the same taxation authority.

Terms & conditions :

a) Cash credit are secured by hypothecation of stocks, book debts and certain other assets on first charge basis and all movable fixed assets on second charge basis and by mortgage of specific immovable properties both present and future by deposit of title deeds, subject to prior charge created in favour of Export Import Bank of India.

b) Cash credit are repayable on demand and carries interest @ MCLR plus 1.25% p.a., effective rate @ 9.40 % p.a. on the date of liquidation (31st March, 2018: 9.40 % p.a.)

c) No loans have been guaranteed by the directors and others.

d) There is no default as on the balance sheet date in the repayment of borrowings and interest thereon.

e) As on the balance sheet date, i.e. 31st March, 2019, the cash credit account carries favourable balance and is included under cash and cash equivalents (Refer Note - 16). The Company has requested for closure of cash credit facility by repayment of outstanding balance and necessary formalities for satisfaction of charge, etc. are in process as at the balance sheet date.

* No amounts are due and outstanding to be credited to Investor Education and Protection Fund.

# Includes outstanding dues of directors and officers of the Company of Rs. 551.50 (31st March, 2018 Rs. 587.80). @ Includes outstanding dues of officer of the Company of Rs. 1.62 (31st March, 2018 ‘ Nil).

Provision for contingency represents estimates made mainly for probable claim arising out of dispute in respect of indirect tax pending before the Hon’ble Supreme Court. The probability and timing of the outflow with regard to interest depends on the ultimate settlement / conclusion.

*includes jute manufacturing cess recovered ‘ Nil (F.Y. 2017-18 Rs. 53.07 till 30th June, 2017) since consequent to the introduction of Goods and Service Tax (GST) effective from 1st July, 2017, sales are recorded net of GST whereas earlier sales were recorded gross of jute manufacturing cess which formed part of other expenses. Hence, related figures for the year ended 31st March, 2019 are not comparable with corresponding figures of the previous year.

4. CONTINGENT LIABILITIES & COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

4.1 Contingent Liabilities :

a) Claims against the Company not acknowledged as debts :

b) Customs, Excise & Service Tax Appellate Tribunal (“The Tribunal”) vide its order dated 11th January, 2019 has issued the order in favour of the Company and hence the demand (including penalty) in relation to excise duty stands vacated. Further, the department vide its order dated 23rd April, 2019 has issued a refund order of Rs. 185.62 towards refund of amount pre-deposited against such demand along with interest amounting to Rs. 36.31.

5. DETAILS OF DUES TO MICRO ENTERPRISES AND SMALL ENTERPRISES AS DEFINED UNDER THE MSMED ACT, 2006 INCLUDED IN TRADE PAYABLES

Disclosure as required under the Micro, Small and Medium Enterprises Development Act, 2006, to the extent ascertained and as per notification number GSR 679 (E) dated 4th September, 2015

This information has been determined to the extent such parties have been identified on the basis of information available with the Company.

A amount below Rs. 500

6. DIVIDEND

The Board of Directors at its meeting held on 27th May, 2019 have recommended a payment of dividend of Rs. 1/- per ordinary share of face value of Rs. 10/- each for the financial year ended 31st March, 2019 (31st March 2018 Rs. 1/- per ordinary share). The same amounts to Rs. 77.96 including dividend distribution tax of Rs. 13.29 (31st March 2018 Rs. 51.97 including dividend distribution tax of Rs. 8.86).

The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognized as a liability.

7. DISCLOSURE PURSUANT TO INDIAN ACCOUNTING STANDARD - 19 ‘EMPLOYEE BENEFITS’ AS NOTIFIED U/S 133 OF THE COMPANIES ACT, 2013

7.1 Defined Contribution Plans:

The Company has during the year recognised an expense of Rs. 583.26 (F.Y. 2017-18 Rs. 588.96) towards defined contribution plans.

Out of the total contribution, made for employees’ provident fund, a sum of Rs. 88.43 (F.Y. 2017-18 Rs. 87.76) has been made to Cheviot Company Limited Employees’ Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.

7.2 Defined Benefit Plans:

Gratuity Plan

This is a funded defined benefit plan for qualifying employees. The Company makes contributions to the Cheviot Company Limited Employees’ Gratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and on resignation/termination of employment in terms of the provisions of the Payment of Gratuity Act or as per the Company’s rule, whichever is more beneficial to the employee.

a) Risk Exposure

Defined benefit plans expose the Company to actuarial risks such as: Interest rate risk, Salary risk and

Demographic risk.

i) Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If the bond yield falls, the defined benefit obligation will tend to increase.

ii) Salary risk: Higher than expected increase in salary will increase the defined benefit obligation.

iii) Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefits obligations is not straight forward and depends on the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis, the retirement benefit of the short service employee typically costs less per year as compared to a long service employee.

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

j) At 31st March 2019, the weighted average duration of the defined benefit obligation was 5.19 years (31st March, 2018 6.18 years). The distribution of the timing of benefits payment i.e., the maturity analysis of the benefit payments is as follows:

k) The Company expects to contribute ‘ Nil to its gratuity fund in F.Y. 2019-20.

l) Sensitivity analysis

The sensitivity analysis below have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation to the amounts shown below:

8. SEGMENT REPORTING

8.1 Segment Information

Operating segments are reported in a manner consistent with the internal reporting to the chief operating decision maker (CODM). The Chief Executive Officer of the Company being the CODM, assesses the financial performance and position of the Company and makes strategic decisions. The CODM primarily uses earnings before interest, tax, depreciation and amortisation (EBITDA) as performance measure to assess the performance of the operating segments. However, the CODM also receives information about the segment revenues, segment assets and segment liabilities on regular basis.

8.2 Description of Segment

The Company is engaged in a single business segment i.e. manufacturing and sale of jute goods. Hence, disclosure requirements as required by Ind AS -108 are not applicable in respect of business segment.

8.3 The geographical segments considered for disclosure are as under :

*Non-current assets other than financial instruments include property, plant and equipment, capital work-in-progress, investment property, other intangible assets, non-current tax assets (net) and other non-current assets.

8.4 Extent of reliance on major customer

Revenue from government agencies amounting to Rs. 21,465.00 (56.03% of total revenue); F.Y. 2017-18 Rs. 18,676.14 (50.96% of total revenue) has arisen on sale of jute bags within India.

9. DISCLOSURES PURSUANT TO IND AS - 115

9.1 Nature of goods and services : The Company is engaged in the manufacturing and sale of jute products and the same is only reportable segment of the Company.

9.2 Disaggregation of revenue : In the following table, revenue is disaggregated by primary geographical market, major products lines and timing of revenue recognition, etc :

C. The company recognises revenue at a point in time. The contract with customers are of short term duration and all sales are direct to customers.

9.3 Contract balances : The following table provides information about receivables, contract assets and contract liabilities from contract with customers :

9.4 The Company has consistently applied the accounting policies to all periods presented in these financial statements. The Company has adopted Ind AS 115, “Revenue from Contracts with Customers’’ with a date of initial application of 1st April, 2018. As a result, the Company has changed its accounting policy for revenue recognition. The Company has adopted modified retrospective approach and had applied Ind AS 115 only retrospectively to the current period by recognizing the cumulative effect of initially applying Ind AS-115 as an adjustment to the opening balance of retained earnings at the date of initial application i.e. 1st April, 2018. Under the modified retrospective method, the comparative information in the financial statement is not restated and would be presented based on the requirements of the previous standards (e.g. Ind AS-18 / Ind AS-11). However there is no impact on financial statements with respect to change in accounting policy.

10. LEASES

10.1 Operating lease commitments - Company as lessee

The Company has entered into operating lease for factory land at Falta. The said lease is under renewal process as it has expired in July, 2017. Thus, the required disclosures under operating lease for lease rentals payable within one year, one year to five years and five years and above could not been made.

The Company has paid Rs. 38.21 during the year (F.Y. 2017-18 Rs. 33.88) towards minimum lease payments.

10.2 Finance lease obligation

The Company has entered into finance lease arrangements in respect of land for terms ranging up to 99 years. The legal title to such lands vests with the respective lessors. There are no restrictions imposed by lease arrangements.

The Company has finance lease contracts and the obligation under finance lease are secured by the lessor’s title to the leased assets.

Future minimum lease payments (MLP) under finance lease contracts together with the present value of the net minimum lease payments in respect of Residential Land at Falta are as under:

11. RELATED PARTY DISCLOSURES PURSUANT TO IND AS - 24

11.1 List of relationships:

a) Holding Company

Harsh Investments Private Limited (HIPL)

b) Key Management Personnel

Mr. Harsh Vardhan Kanoria, Chairman & Managing Director, Chief Executive Officer Mr. Utkarsh Kanoria, Wholetime Director (w.e.f. 24th May, 2017)

Mr. Nawal Kishore Kejriwal, Wholetime Director

Mrs. Malati Kanoria , Non-executive Director

Mr. Navin Nayar, Independent Director

Mr. Padam Kumar Khaitan, Independent Director

Mr. Parag Keshar Bhattacharjee, Independent Director

Mr. Sushil Kumar Dhandhania, Independent Director

c) Relatives of Key Management Personnel

Mr. Utkarsh Kanoria ( Son of Mr. Harsh Vardhan Kanoria)

Mrs. Bimla Kejriwal ( Wife of Mr. Nawal Kishore Kejriwal )

d) Entities over which Key Management Personnel and relatives of Key Management Personnel have significant influence

Cheviot International Limited (CIL)

Cheviot Agro Industries Private Limited (CAIPL)

Abhyadoot Finance and Investments Private Limited (AFIPL)

Bright & Shine Micro Products Private Limited (BSMPPL)

Jan Priya Trust

Shashvat Foundation

Cheviot Foundation

e) Post-employment benefit plan entities

Cheviot Company Limited Employees’ Provident Fund Cheviot Company Limited Employees’ Gratuity Trust Fund

12. CAPITAL MANAGEMENT

The Company’s objective is to maintain a strong capital base to ensure sustained growth in business. The capital management focuses to maintain an optimal structure that balances growth and maximizes shareholder value.

The Company is predominantly equity financed. Further, the Company has sufficient cash, cash equivalents, current investments and financial assets which are liquid to meet the debts.

13. DISCLOSURE ON FINANCIAL INSTRUMENT

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.

The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 3.11 to the financial statements.

The management has assessed that the fair values of cash and cash equivalents, trade receivables, trade payables, short term borrowings, and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The management has assessed that the fair value of floating rate instruments approximate their carrying value.

13.1 Fair value Hierarchy

Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:

Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities. The mutual fund / alternative investment fund are valued using the closing net asset value.

Level 2: Inputs other than quoted price included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The fair value of financial instruments that are not traded in an active market is determined using market approach and valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. The fair value of all bonds which are not actively traded in the stock exchanges is valued using the closing price or dealer quotations as at the reporting date. Derivatives are valued using valuation techniques with market observable inputs such as foreign exchange spot rates and forward rates at the end of the reporting period.

Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty. The fair value of short-term financial assets and liabilities is considered to be approximately equal to its carrying value due to their short term nature. Costs of unquoted equity instruments has been considered as an appropriate estimate of fair value where most recent information to measure fair value is insufficient or if there is a wide range of possible fair value measurements.

There were no transfers between Level 1 and Level 2 during the year.

* investment in preference shares is net of impairment.

13.2 Financial Risk Management

The Company has a risk management policy which covers risk associated with the financial assets and liabilities. The risk management policy is approved by the Directors. The different types of risk impacting the fair value of financial instruments are as below:

a) Credit risk

The credit risk is the risk of financial loss arising from counterparty failing to discharge an obligation. The credit risk is controlled by analysing credit limits and credit worthiness of customers on continuous basis to whom the credit has been granted, after obtaining necessary approvals for credit.

i) Trade receivable

Customer credit risk is managed by the Company subject to Company’s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored and major customers are generally from government agencies and in respect of export debtors, terms of shipment is either cash against document or 100% advance against proof of shipments or backed by letter of credit / ECGC coverage. Thus, based on past trends, the company does not foresee any losses in expected credit loss (ECL). The maximum exposure to credit risk at the reporting date is the carrying value of trade receivable disclosed in Note - 15.

ii) Financial instrument and cash deposit

Credit risk is limited as the Company generally invest in deposits with banks and in bonds of companies having high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investments in debentures, bonds, preference shares and mutual fund units. Counterparty credit limits are reviewed by the Company periodically and the limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

b) Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet its financial obligations as they become due.

The Company monitors its risk by determining its liquidity requirement in the short, medium and long term. This is done by drawing up cash forecast for short term and long term needs. The Company manages its liquidity risk in a manner so as to meet its normal financial obligations without any significant delay or stress. Such risk is managed through ensuring operational cash flow while at the same time maintaining adequate cash and cash equivalent position. The management has arranged for diversified funding sources and adopted a policy of managing assets with liquidity monitoring future cash flow and liquidity on a regular basis. Surplus funds not immediately required are invested in certain mutual funds and fixed deposit which provide flexibility to liquidate. Besides, it generally has certain undrawn credit facilities which can be used as and when required; such credit facilities are reviewed at regular basis.

i) Maturity analysis for financial liabilities

The following are the remaining contractual maturities of financial liabilities at the reporting date -

c) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of following risk: interest rate risk, foreign currency risk, other price risk . Financial instruments affected by market risk include borrowings, trade receivable and trade payable.

i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Company is exposed to risk due to interest rate fluctuation on its non-current and current borrowings with floating interest rate. Interest rate risk is determined by current market interest rates, projected debt servicing capability and view on future interest rate. Such interest rate risk is actively evaluated and is managed through portfolio diversification and exercise of prepayment/ refinancing options, where considered necessary.

Interest rate sensitivity has been calculated assuming the borrowings outstanding at the reporting date have been outstanding for the entire reporting period and all other variables remain constant.

ii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company has significant foreign currency exposure. To mitigate this risk, foreign exchange exposure against exports are partly hedged by entering into forward contract.

a) Exposure to foreign currency risk

The Company’s exposure to foreign currency risk at the end of the reporting period are as follows:

b) Sensitivity analysis

The analysis is based on assumption that the increase/decrease in foreign currency by 5% with all other variables held constant, on the unhedged foreign currency exposure would have following impact on profit before tax and other equity -

iii) Other price risk

The Company’s exposure to securities price risk arises from investments held by the Company and classified in the balance sheet either at fair value through OCI or at fair value through profit and loss. Having regard to the nature of securities, intrinsic worth, intent and long term nature of securities held by the Company, fluctuation in their prices are considered acceptable and do not warrant any management.

b) Sensitivity analysis

The analysis is based on assumption that the increase/decrease by 5% with all other variables held constant would have following impact on profit before tax, other comprehensive income and other equity -

14. Previous year’s figures have been reclassified/regrouped to conform the current year’s presentation.


Mar 31, 2018

1. CORPORATE AND GENERAL INFORMATION

Cheviot Company Limited (the “Company”) is a listed Public Limited Company incorporated in India. The Company has its registered office at 24, Park Street, Magma House, 9th Floor, Kolkata -700016.

The Company manufactures jute products with flexibility to cater to both domestic and international market. The Company is renowned for manufacturing superior quality Hessian fabrics and jute shopping bags for export market at the Export Oriented Unit situated at Falta Special Economic Zone in the state of West Bengal, India.

2. BASIS OF ACCOUNTING

2.1. Statement of Compliance

These financial statements have been prepared in accordance with the Indian Accounting Standards (“Ind AS”) as prescribed by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (“the Act”), read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended), other relevant provisions of the Act and other accounting principles generally accepted in India.

The financial statements for all the periods up to and including the year ended 31st March, 2017, were prepared in accordance with Generally Accepted Accounting Principles (GAAP) in India, which includes the accounting standards prescribed under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014 and other provisions of the Act (collectively referred to as “Indian GAAP”). These financial statements for the year ended 31st March, 2018 are the first Ind AS compliant Financial Statements with comparatives, prepared under Ind AS. The Company has consistently applied the accounting policies used in the preparation of its opening Ind AS Balance Sheet as at 1st April, 2016 throughout all periods presented, as if these policies had always been in effect and are covered by Ind AS 101 “First Time Adoption of Indian Accounting Standards”.

An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in Note No. 55. Company’s certain Ind-AS accounting policies used in the opening Balance Sheet differed from its Indian GAAP policies applied as at 31st March, 2016 and accordingly the adjustments were made to restate the opening balances as per Ind-AS. The resulting adjustment arising from events and transactions before the date of transition to Ind-AS were recognised directly through retained earnings / other equity as at 1st April, 2016 as required by Ind- AS 101.

The financial statements of the Company for the year ended 31st March, 2018 have been approved and authorized for issue by the Board of Directors in their meeting held on 23rd May, 2018.

2.2. Basis of Measurement

The financial statements have been prepared on historical cost convention, except for following:

- Financial assets and liabilities (including derivative instruments) that are measured at fair value/ amortised cost;

- Freehold land on revaluation model;

- Non-current assets held for sale are measured at the lower of the carrying amounts and fair value less cost to sell;

- Defined benefit plans are measured at fair value.

2.3. Functional and Presentation Currency

The financial statements have been presented in Indian Rupees (Rs.), which is also the Company’s functional currency. All financial information presented in (Rs.) has been rounded off to the nearest lakhs as per the requirements of Schedule III, unless otherwise stated.

2.4. Use of Estimates and Judgements

The preparation of financial statements require judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities including contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period prospectively in which the results are known/ materialised.

2.5. Current Vs Non-Current classification

The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.

An asset is classified as current when it is:

- Expected to be realised or intended to be sold or consumed in normal operating cycle;

- Held primarily for the purpose of trading;

- Expected to be realised within twelve months after the reporting period; or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All the other assets are classified as non-current.

A liability is classified as current when:

- It is expected to be settled in normal operating cycle;

- It is held primarily for the purpose of trading;

- It is due to be settled within twelve months after the reporting period; or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities respectively.

3. Rounding of Amounts

All amounts disclosed in financial statements and notes have been rounded off to nearest lakhs as per the requirements of Schedule III, unless otherwise stated.

4. Significant Judgements and Key sources of Estimation in applying Accounting Policies

Information about significant judgements and key sources of estimation made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements is included in the following notes:

a) Recognition of Deferred Tax Assets

The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Company’s future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits.

b) Useful lives of depreciable/ amortisable assets (property, plant and equipment and intangible assets)

Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may change the utility of plant and equipment.

c) Classification of Leases

The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee’s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset’s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialised nature of the leased asset.

d) Defined Benefit Obligation (DBO)

Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.

e) Provisions and Contingencies

The assessments undertaken in recognising provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, ‘Provisions, Contingent Liabilities and Contingent Assets’. The evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.

f) Impairment of Financial Assets

The Company reviews its carrying value of investments carried at amortised cost annually, or more frequently when there is indication of impairment. If recoverable amount is less than its carrying amount, the impairment loss is accounted for.

g) Allowances for Doubtful Debts

The Company makes allowances for doubtful debts through appropriate estimations of irrecoverable amount. The identification of doubtful debts requires use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and doubtful debts expenses in the period in which such estimate has been changed.

h) Fair value measurement of financial Instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The input to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.

Notes :

1) Refer Note - 23 & 27 for information on property, plant and equipment pledged as security by the Company.

2) Refer Note - 43 for disclosure on contractual commitment for acquisition of property, plant and equipment.

3) Based on the valuation report by a Chartered Engineer, an external valuer, freehold land having original cost of Rs. 3.11 was revalued in the years ended 31st March, 1997, 31st March, 2003, 31st March, 2008 and 31st March, 2016 and the resultant increase was Rs. 1,548.11, Rs. 1,630.64, Rs. 3,075.24 and Rs. 3,390.16 respectively with last revalued amount at Rs. 9,647.26.

4) Property, plant and equipment has been carried in accordance with Previous GAAP carrying values with suitable changes as per Ind AS requirement at the date of transition except freehold land where revaluation model as adopted in Previous GAAP has been continued on the date of transition.

The above fair value has been arrived on the basis of valuation performed by an external independent valuer having appropriate professional qualification and recent experience in the valuation of properties in relevant location.

(iv) Estimation of fair value

The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available, the Company considers information from a variety of sources including current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences.

* Under lien Rs. 17.94 (31st March, 2017 Rs. 101.28; 1st April, 2016 Rs. 2.09) towards margin money and / or security against borrowings.

Fixed deposit accounts with maturity of more than 12 months amounting to Rs. 200.29 (31st March, 2017 Rs. 200.36; 1st April, 2016 Rs. 299.55) being non-current has been shown under the head other financial assets (non-current) (Refer Note 11).

*Amount paid “Under Protest” pursuant to the final order dated 16th March, 2010 of the Tribunal against which an appeal is pending before the Hon’ble Supreme Court.

There are no outstanding debts from directors or other officers of the Company.

b) Terms/ rights attached to ordinary shares :

The Company has only one class of ordinary shares having a par value of Rs. 10/- per share. Each holder of ordinary shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupee. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of ordinary shares will be entitled to receive remaining assets of the Company . The distribution will be in proportion to the number of ordinary shares held by the shareholders.

As per records of the Company, including its register of shareholders / members as on 31st March, 2018, the above shareholding represents legal ownership of shares.

e) The Company has neither allotted any ordinary shares against consideration other than cash nor has issued any bonus shares during the period of five years preceding the date at which the Balance Sheet is prepared.

f) During the year ended 31st March, 2018, the Company has concluded the buyback of 2,00,000 ordinary shares as approved by the Board of Directors at its meeting held on 24th May, 2017. This has resulted in a total cash outflow of Rs. 3,000.00.

The Company has funded the buyback from its securities premium account and general reserve amounting to Rs. 1,242.50 and Rs. 1,737.50 respectively. In accordance with Section 69 of the Companies Act, 2013, the Company has created capital redemption reserve of Rs. 20.00 equal to nominal value of shares bought back as an appropriation from general reserve.

Consequent to such buyback, share capital has been reduced by Rs. 20.00.

g) No ordinary shares have been reserved for issue under options and contracts/ commitments for the sale of shares/ disinvestment as at the Balance Sheet date.

h) No securities convertible into equity/ preference shares have been issued by the Company during the year.

i) No calls are unpaid by any director or officer of the Company during the year.

Nature and purpose of other reserves Capital reserve

Capital reserve represents capital profits appropriated as per erstwhile Companies Act, 1956 arising on sale of fixed assets during the year ended 30th November, 1985 and 31st March, 1992. This reserve can be utilized in accordance with the provisions of the Companies Act, 2013.

Securities premium account

Securities premium account represents the premium received on issue of shares. This reserve had been utilised in accordance with the provisions of the Companies Act, 2013 in the current year.

General reserve

General reserve represents the reserve created through annual transfer of net profit at a specified percentage in accordance with the provisions of the erstwhile Companies Act, 1956. Consequent to the introduction of the Companies Act, 2013, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn, though the Company may voluntarily transfer such percentage of its profits for the financial year, as it may consider appropriate. This reserve can be utilised in accordance with the provisions of the Companies Act, 2013.

Capital redemption reserve

Capital redemption reserve represents the reserve created during the year ended 30th November, 1981 as a result of redemption of cumulative preference share capital of the Company. Further, the Company has recognised capital redemption reserve on buyback of ordinary shares from the general reserve during financial year ended as on 31st March, 2018 with the nominal amount of the ordinary shares bought back as per the applicable provisions of the Companies Act, 2013. This reserve can be utilised in accordance with the provisions of the Companies Act, 2013.

Special economic zone re-investment reserve account

Special economic zone re-investment reserve account has been created out of the profit of SEZ unit in terms of the provisions of Section 10AA of the Income Tax Act, 1961. This reserve can be utilised by the Company towards outflows as prescribed under the Section 10AA of the Income Tax Act, 1961.

Retained earnings

This reserve represents the cumulative profits of the Company. This reserve can be utilised in accordance with the provisions of the Companies Act, 2013.

Other comprehensive income reserve

Equity instrument through other comprehensive income

This represents the cumulative gains and losses arising on the fair valuation of equity instruments measured at fair value through other comprehensive income net of amounts reclassified to retained earnings.

Debt instrument through other comprehensive income

This represents the cumulative gains and losses arising on the fair valuation of debt instruments measured at fair value through other comprehensive income net of amounts reclassified to statement of profit and loss.

Revaluation surplus

Revaluation surplus represents the revaluation gain, net of deferred tax, on upward valuation of freehold land. Remeasurement of defined benefit plans

Remeasurement of defined benefit plans comprises actuarial gains and losses and return on plan asset (excluding interest income) which are recognised in other comprehensive income and then immediately transferred to retained earnings.

a) Loan from Export Import Bank of India is secured by hypothecation of all movable fixed assets on first charge basis and all current assets on second charge basis and by mortgage of specific immovable properties both present and future by deposit of title deeds on first charge basis.

b) Outstanding amount including current maturities of loan taken from Export Import Bank of India is repayable in 21 equal quarterly installments of Rs. 3.70 each by April, 2023. Rate of interest is LTMLR plus 1% p.a, effective rate @ 10.00% p.a. (31st March, 2017 : 10.45% p.a.)

c) Loan from State Bank of India is against lien on fixed deposit.

d) Outstanding amount including current maturities of loan taken from State Bank of India is repayable in 30 equal monthly installments of Rs. 1.25 each by September, 2020. Rate of interest is 10.25% p.a.

e) No loans have been guaranteed by the directors of the Company.

f) There is no default as on the balance sheet date in the repayment of borrowings and interest thereon.

* Excludes Rs. 66.27 (F.Y. 2016-17 Rs. 82.38) being income tax on defined benefit obligation considered as current tax.

Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income tax levied by the same taxation authority.

Terms & conditions :

a) Cash credit including preshipment credit in foreign currency are secured by hypothecation of stocks, book debts and certain other assets on first charge basis and all movable fixed assets on second charge basis and by mortgage of specific immovable properties both present and future by deposit of title deeds, subject to prior charge created in favour of Export Import Bank of India.

b) Cash credit are repayable on demand and carries interest @ MCLR plus 1.25% p.a., effective rate @ 9.40 % p.a. (31st March, 2017: 10.40 % p.a.; 1st April, 2016: 10.55 % p.a.)

c) Preshipment credit are repayable on demand and carries interest @ LIBOR plus 1.30% p.a. as on 1st April, 2016, effective rate @ 2.1461% p.a.

d) No loans have been guaranteed by the directors and others.

e) There is no default as on the balance sheet date in the repayment of borrowings and interest thereon.

* No amounts are due and outstanding to be credited to Investor Education and Protection Fund.

- Includes outstanding dues of directors and officers of the Company of Rs. 587.80 (31st March, 2017 Rs. 220.31; 1st April 2016 Rs. 229.07).

Provision for contingency represents estimates made mainly for probable claim arising out of dispute in respect of indirect tax pending before the Hon’ble Supreme Court. The probability and timing of the outflow with regard to interest depends on the ultimate settlement / conclusion.

* Weighted average number of ordinary shares takes into account the weighted average effect of change in number of ordinary shares due to buyback of shares during the year ended 31st March, 2018.

5. DETAILS OF DUES TO MICRO ENTERPRISES AND SMALL ENTERPRISES AS DEFINED UNDER THE MSMED ACT, 2006 INCLUDED IN TRADE PAYABLES

Disclosure as required under the Micro, Small and Medium Enterprises Development Act, 2006, to the extent ascertained and as per notification number GSR 679 (E) dated 4th September, 2015.

This information has been determined to the extent such parties have been identified on the basis of information available with the Company.

6. CHANGE IN METHOD OF DEPRECIATION ON PROPERTY, PLANT AND EQUIPMENT

The Company has been charging depreciation on certain property, plant and equipment on written down value method. However, w.e.f. 1st April, 2017, the Company has changed the method of depreciation from written down value method to straight line method. The management believes that this change will result in more appropriate presentation and will give a systematic basis of depreciation charge, representative of time pattern in which the economic benefits will be derived from the use of these assets. This change has resulted in decrease in depreciation by Rs. 342.85 during the financial year 2017-18 and accordingly profit before tax has increased by Rs. 342.85.

7. DIVIDEND

The Board of Directors at its meeting held on 23rd May, 2018 have recommended a payment of dividend of Rs. 1/- per ordinary share of face value of Rs. 10/- each for the financial year ended 31st March, 2018. The same amounts to Rs. 51.97 (including dividend distribution tax of Rs. 8.86).

The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognized as a liability.

8. DISCLOSURE PURSUANT TO INDIAN ACCOUNTING STANDARD - 19 ‘EMPLOYEE BENEFITS’ AS NOTIFIED U/S 133 OF THE COMPANIES ACT, 2013

8.1 Defined Contribution Plans

The Company has during the year recognised an expense of Rs. 588.96 (F.Y. 2016-17 Rs. 602.72) towards defined contribution plans.

Out of the total contribution, made for employees’ provident fund, a sum of Rs. 87.76 (Previous year Rs. 83.03) has been made to Cheviot Company Limited Employees’ Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.

8.2 Defined Benefit Plans Gratuity Plan

This is a funded defined benefit plan for qualifying employees. The Company makes contributions to the Cheviot Company Limited Employees’ Gratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and on resignation/termination of employment in terms of the provisions of the Payment of Gratuity Act or as per the Company’s rule, whichever is more beneficial to the employee.

a) Risk Exposure

Defined benefit plans expose the Company to actuarial risks such as: interest rate risk, salary risk and demographic risk.

i) Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If the bond yield falls, the defined benefit obligation will tend to increase.

ii) Salary risk: Higher than expected increase in salary will increase the defined benefit obligation.

iii) Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that includes mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefits obligations is not straight forward and depends on the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis, the retirement benefit of the short service employee typically costs less per year as compared to a long service employee.

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

j) At 31st March 2018, the weighted average duration of the defined benefit obligation was 6.18 years (31st March, 2017 6.82 years). The distribution of the timing of benefits payment i.e., the maturity analysis of the benefit payments is as follows:

k) The Company expects to contribute ‘ Nil to its gratuity fund in F.Y. 2018-19.

l) Sensitivity analysis

The sensitivity analysis below have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation to the amounts shown below:

9. SEGMENT REPORTING

9.1 Segment Information

Operating segments are reported in a manner consistent with the internal reporting to the chief operating decision maker (CODM). The Chief Executive Officer of the Company being the CODM, assesses the financial performance and position of the Company and makes strategic decisions. The CODM primarily uses earnings before interest, tax, depreciation and amortisation (EBITDA) as performance measure to assess the performance of the operating segments. However, the CODM also receives information about the segment revenues, segment assets and segment liabilities on regular basis.

9.2 Description of Segment

The Company is engaged in a single business segment i.e. manufacturing and sale of jute goods. Hence, disclosure requirements as required by Ind AS -108 are not applicable in respect of business segment.

9.3 The geographical segments considered for disclosure are as under :

* Non-current assets other than financial instruments include property, plant and equipment, capital work-in-progress, investment property, other intangible assets, intangible assets under development, non-current tax assets (net) and other non-current assets.

9.4 Extent of reliance on major customer

Revenue from Government agencies amounting to Rs. 18,676.14 ( 50.96% of total revenue); F.Y. 2016-17 Rs. 21,905.71 (56.85% of total revenue) has arisen on sale of jute bags within India.

10 LEASES

10.1 Operating lease commitments - Company as lessee

The Company has entered into operating lease for factory land at Falta. The said lease is under renewal process as it has expired in July, 2017. Thus, the required disclosures under operating lease for lease rentals payable within one year, one year to five years and five years and above could not been made.

The Company has paid Rs. 33.88 during the year towards minimum lease payments.

10.2 Finance lease obligation

The Company has entered into finance lease arrangements in respect of land for terms ranging up to 99 years. The legal title to such lands vests with the respective lessors. There are no restrictions imposed by lease arrangements.

The Company has finance lease contracts and the obligation under finance lease are secured by the lessor’s title to the leased assets. Future minimum lease payments under finance lease contracts together with the present value of the net minimum lease payments (MLP) in respect of residential land at Falta are as under :

11 RELATED PARTY DISCLOSURES PURSUANT TO IND AS - 24

11.1 List of relationships:

a) Holding Company

Harsh Investments Private Limited (HIPL)

b) Key Management Personnel

Mr. Harsh Vardhan Kanoria, Chairman & Managing Director, Chief Executive Officer Mr. Utkarsh Kanoria, Wholetime Director (w.e.f. 24th May, 2017)

Mr. Nawal Kishore Kejriwal, Wholetime Director Mrs. Malati Kanoria , Non-executive Director Mr. Navin Nayar, Independent Director Mr. Padam Kumar Khaitan, Independent Director Mr. Parag Keshar Bhattacharjee, Independent Director Mr. Sushil Kumar Dhandhania, Independent Director

c) Relatives of Key Management Personnel

Mr. Utkarsh Kanoria ( Son of Mr. Harsh Vardhan Kanoria)

Mrs. Bimla Kejriwal ( Wife of Mr. Nawal Kishore Kejriwal)

d) Entities over which Key Management Personnel and relatives of Key Management Personnel have significant influence

Cheviot International Limited (CIL)

Cheviot Agro Industries Private Limited (CAIPL)

Abhyadoot Finance and Investments Private Limited (AFIPL)

Bright & Shine Micro Products Private Limited (BSMPPL)

Jan Priya Trust Cheviot Foundation

e) Post-employment benefit plan entities

Cheviot Company Limited Employees’ Provident Fund Cheviot Company Limited Employees’ Gratuity Trust Fund

12 CAPITAL MANAGEMENT

The Company’s objective is to maintain a strong capital base to ensure sustained growth in business. The capital management focuses to maintain an optimal structure that balances growth and maximizes shareholder value.

The Company is predominantly equity financed. Further, the Company has sufficient cash, cash equivalents, current investments and financial assets which are liquid to meet the debts.

13 DISCLOSURE ON FINANCIAL INSTRUMENT

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.

The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 3.11 to the financial statements.

The management has assessed that the fair values of cash and cash equivalents, trade receivables, trade payables, short term borrowings, and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The management has assessed that the fair value of floating rate instruments approximate their carrying value.

13.1 Fair value Hierarchy

Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:

Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities. The mutual fund / alternative investment fund are valued using the closing net asset value.

Level 2: Inputs other than quoted price included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The fair value of financial instruments that are not traded in an active market is determined using market approach and valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. The fair value of all bonds which are not actively traded in the stock exchanges is valued using the closing price or dealer quotations as at the reporting date. Derivatives are valued using valuation techniques with market observable inputs such as foreign exchange spot rates and forward rates at the end of the reporting period.

Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty. The fair value of short-term financial assets and liabilities is considered to be approximately equal to its carrying value due to their short term nature. Costs of unquoted equity instruments has been considered as an appropriate estimate of fair value where most recent information to measure fair value is insufficient or if there is a wide range of possible fair value measurements.

13.2 Financial Risk Management

The Company has a risk management policy which covers risk associated with the financial assets and liabilities. The risk management policy is approved by the Directors. The different types of risk impacting the fair value of financial instruments are as below:

a) Credit risk

The credit risk is the risk of financial loss arising from counter party failing to discharge an obligation. The credit risk is controlled by analysing credit limits and credit worthiness of customers on continuous basis to whom the credit has been granted, after obtaining necessary approvals for credit .

i) Trade receivable

Customer credit risk is managed by the Company subject to Company’s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored and major customers are generally from Government agencies and in respect of export debtors, terms of shipment is either cash against document or 100% advance against proof of shipments or backed by letter of credit / ECGC coverage. Thus, based on past trends, the Company does not foresee any losses in expected credit loss (ECL). The maximum exposure to credit risk at the reporting date is the carrying value of trade receivable disclosed in Note - 16.

ii) Financial instrument and cash deposit

Credit risk is limited as the Company generally invest in deposits with banks and in bonds of companies having high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investments in debentures, bonds, preference shares and mutual fund units. Counterparty credit limits are reviewed by the Company periodically and the limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

b) Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet its financial obligations as they become due. The Company monitors its risk by determining its liquidity requirement in the short, medium and long term. This is done by drawing up cash forecast for short term and long term needs. The Company manages its liquidity risk in a manner so as to meet its normal financial obligations without any significant delay or stress. Such risk is managed through ensuring operational cash flow while at the same time maintaining adequate cash and cash equivalent position. The management has arranged for diversified funding sources and adopted a policy of managing assets with liquidity monitoring future cash flow and liquidity on a regular basis. Surplus funds not immediately required are invested in certain mutual funds and fixed deposit which provide flexibility to liquidate. Besides, it generally has certain undrawn credit facilities which can be used as and when required; such credit facilities are reviewed at regular basis.

i) Maturity analysis for financial liabilities

The following are the remaining contractual maturities of financial liabilities at the reporting date -

c) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of following risk: interest rate risk, foreign currency risk, other price risk. Financial instruments affected by market risk include borrowings, trade receivable and trade payable.

i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Company is exposed to risk due to interest rate fluctuation on its non-current and current borrowings with floating interest rate. Interest rate risk is determined by current market interest rates, projected debt servicing capability and view on future interest rate. Such interest rate risk is actively evaluated and is managed through portfolio diversification and exercise of prepayment/refinancing options where considered necessary.

Interest rate sensitivity has been calculated assuming the borrowings outstanding at the reporting date have been outstanding for the entire reporting period and all other variables remain constant.

ii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates.The Company has significant foreign currency exposure. To mitigate this risk, foreign exchange exposure against exports are partly hedged by entering into forward contract.

b) Sensitivity analysis

The analysis is based on assumption that the increase/decrease in foreign currency by 5% with all other variables held constant, on the unhedged foreign currency exposure would have following impact on profit before tax and other equity -

iii) Other price risk

The Company’s exposure to securities price risk arises from investments held by the Company and classified in the balance Sheet either at fair value through OCI or at fair value through profit and loss. Having regard to the nature of securities, intrinsic worth, intent and long term nature of securities held by the Company, fluctuation in their prices are considered acceptable and do not warrant any management.

14 FIRST TIME ADOPTION- TRANSITION TO IND AS

Basis for preparation

For all period up to and including the year ended 31st March, 2017, the Company has prepared its financial statements in accordance with generally accepted accounting principles in India (Indian GAAP). These financial statements for the year ended 31st March, 2018 are the Company’s first annual IND AS financial statements and have been prepared in accordance with Ind AS.

The accounting policies set out in Note 3 have been applied in preparing the financial statements for the year ended 31st March, 2018, the comparative information presented in these financial statements for the year ended 31st March, 2017 and in the preparation of an opening Ind AS balance sheet as at 1st April, 2016 (the date of transition). This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows.

14.1 Exceptions and Exemptions Applied

Ind AS 101 “First-time adoption of Indian Accounting Standards” (hereinafter referred to as Ind AS 101) allows first time adopters certain mandatory exceptions and optional exemptions from the retrospective application of certain Ind AS, effective for 1st April, 2016 opening balance sheet. In preparing these financial statements, the Company has applied the below mentioned mandatory exceptions and optional exemptions.

A Mandatory exceptions to retrospective application

The Company has applied the following exceptions to the retrospective application of Ind AS as mandatorily required under Ind AS 101 “First Time Adoption of Indian Accounting Standards”:

i) Estimates

As per para 14 of Ind AS 101, an entity’s estimates in accordance with Ind AS at the date of transition to Ind AS or at the end of the comparative period presented in the entity’s first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the previous GAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any differences in accounting policies.

As per para 16 of the standard, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP, those estimates should be made to reflect conditions that existed at the date of transition or at the end of the comparative period. The Company’s estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statement that were not required under the previous GAAP are listed below:

- Fair valuation of financial instruments carried at FVTPL and/or FVTOCI.

- Impairment of financial assets based on the expected credit loss model.

- Determination of the discounted value for financial instruments carried at amortised cost.

ii) De-recognition of financial assets and liabilities

As per para B2 of Ind AS 101, an entity should apply the derecognition requirements in Ind AS 109, “Financial Instruments”, prospectively for transactions occurring on or after the date of transition to Ind AS. However, para B3 gives an option to the entity to apply the derecognition requirements from a date of its choice if the information required to apply Ind AS 109 to financial assets and financial liabilities derecognized as a result of past transactions was obtained at the initially accounting for those transactions. The company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

iii) Classification and measurement of financial assets

Para B8 - B8C of Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortized cost has been done retrospectively.

B Optional exemptions from retrospective application

Ind AS 101 “First time Adoption of Indian Accounting Standards” permits Companies adopting Ind AS for the first time to take certain exemptions from the full retrospective application of Ind AS during the transition. The Company has accordingly on transition to Ind AS availed the following key exemptions:

i) Property, plant and equipment, intangible assets and investment property

As per Ind AS 101, property, plant and equipment has been carried in accordance with previous GAAP carrying values with suitable changes as per Ind AS requirement at the date of transition except freehold land where revaluation model as adopted in previous GAAP has been continued on the date of transition. Previous GAAP revaluation surplus (other than on freehold land) has been transferred to retained earnings. In case of intangible assets and investment property, previous GAAP carrying value at the date of transition has been considered as deemed cost as per Ind AS 101.

ii) Determining whether an arrangement contains a Lease

Para D9-D9AA of Ind AS 101 includes an optional exemption that permits an entity to apply the relevant requirements in Appendix C of Ind AS 17 “Leases” for determining whether an arrangement existing at the date of transition contains a lease by considering the facts and circumstances existing at the date of transition (rather than at the inception of the arrangement). The Company has applied the above transitional provision and has assessed all the arrangements at the date of transition.

iii) Designation of previously recognised financial instruments

Para D19B of Ind AS 101 permits an entity to designate particular investments in equity instruments as at fair value through other comprehensive income (FVTOCI) based on facts and circumstances at the date of transition to Ind AS (rather at initial recognition). The Company has opted to avail this exemption to designate its investments in equity instruments as FVTOCI on the date of transition.

14.2 Transition to Ind AS - Reconciliations

The following reconciliations provide the explanation and qualification of the differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101 “First Time Adoption of Indian Accounting Standards”.

a) Reconciliation of Balance sheet as at 1st April, 2016 (Transition Date) and as at 31st March, 2017

b) Reconciliation of Statement of Profit and Loss for the year ended 31st March, 2017

c) Reconciliation of Statement of Cash Flows for the year ended 31st March, 2017

d) Reconciliation of Total Equity as at 1st April, 2016 and 31st March, 2017

Footnotes:

a) Fair valuation of Financial Instruments

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

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

Fair value changes with respect to certain investments in debt instruments measured as FVTOCI have been recognised in FVTOCI - Debt investments reserve as at the date of transition and subsequently in the other comprehensive income for the year ended 31st March 2017.

2) Derivative Financial Instrument : Under Ind AS, mark to market gain/loss on restatement of forward contract as at the reporting date has been recognized in the statement of profit and loss.

3) Under the Indian GAAP, interest free security deposits (that are refundable in cash on completion of the lease term) were recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognised as prepaid rent which has been amortised over it’s lease term as rent expense. The discounted value of the security deposits is increased over the period of lease term by recognising the notional interest income.

b) Deferred Tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.

In addition, the various transitional adjustments lead to temporary differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of other equity as at the date of transition and subsequently in the profit and loss or other comprehensive income for the year ended 31st March, 2017.

c) Deferred Revenue / Government Grant

Under Indian GAAP, grants received from government agencies against specific property, plant and equipment are adjusted to the cost of the assets. Under Ind AS, the same has been presented as deferred revenue being amortised in the statement of profit and loss over the periods and in proportion to depreciation on related assets.

d) Property, Plant and Equipment

Considering the impact of Note No. 55.1 - B(i) the carrying value of property, plant and equipment has been increased by Rs. 424.62. Accordingly, charge on depreciation has increased by Rs. 17.41 and profit on sale of property, plant and equipment is lower by Rs. 2.46.

e) Lease

As per Ind AS 17, “Leases”, the Company has assessed certain long term arrangements, fulfilment of which is dependant on use of specified assets and where the Company has the right to control the use of such assets for being in the nature of a lease.

This resulted in certain arrangements being treated as a lease and classified as finance lease. The impact on total equity and profit and loss is on account of timing difference in recognition of expenses under the lease accounting model as compared to those recognised under the Previous GAAP.

f) Remeasurement benefit of defined benefit plans

Under the Indian GAAP, remeasurement benefit of defined plans (gratuity) was recognised as employee benefits expense in the statement of profit and loss. Under Ind AS, such remeasurement benefits relating to defined benefit plans is recognised in other comprehensive income as per the requirements of Ind AS 19. Consequently, the related tax effect of the same has also been recognised in other comprehensive income.

g) Reclassification

The Company has done the following reclassifications as per the requirements of Ind-AS:

1) Assets / liabilities which do not meet the definition of financial asset / financial liability have been reclassified to other asset / liability.

2) Under Indian GAAP, investment properties were presented as part of Property, Plant and Equipment. Under Ind AS, investment properties have been separately presented on the face of the balance sheet.

3) Jute manufacturing cess on sales was earlier netted off with Revenue from Operations, now the Revenue from Operations is representing gross figure with a corresponding increase in expenses.

15. Previous GAAP figures have been reclassified/regrouped to conform the presentation requirements under Ind AS and the requirements laid down in Division II of the Schedule III of the Companies Act, 2013.


Mar 31, 2017

1. Based on the valuation report by a Chartered Engineer, an external value, freehold land having original cost of Rs, 3.11 was revalued in the years ended 31st March, 1997, 31st March, 2003, 31st March, 2008 and 31st March, 2016 and the resultant increase was Rs, 1,548.11, Rs, 1,630.64 , Rs, 3,075.24 and Rs, 3,390.16 respectively with last revalued amount at Rs, 9,647.26.

2. In accordance with Accounting Standard 10 on property plant and equipment, effective from 1st April, 2016, of Companies (Accounting Standards) Rules, 2006, the Company has adopted the cost model as its accounting policy on all the assets, except freehold land which continues to appear at revalued figures. Till 31st March, 2016, the Company has been charging depreciation on historical cost convention on all its assets with the exception of certain tangible assets (buildings, plant & equipment and electrical installations & equipments) which were revalued and depreciated on replacement values as prevalent during those years.

As a result, the amount appearing in the revaluation reserve amounting to Rs, 424.62 as on 1st April, 2016, in respect of buildings revalued in the years ended 31st March, 1997 and 31st March, 2003 as well as of plant & equipment and electrical installations & equipments revalued in the years ended 31st March, 1998 and 31st March, 2003, have been adjusted against the carrying amount of the respective item of assets.

On account of the change in the accounting policy, the charge of depreciation for the year is lower by Rs, 17.41 and the profit on sale of fixed assets is higher by Rs, 2.46 with profits for the year correspondingly higher to that extent. Further, on account of such change, charge of depreciation for the year is not comparable with that of previous year.

3. Certain components identified by the Company under the head plant and machinery having a variable useful life have been depreciated at their respective useful lives ranging between 4 and 10 years.

4. Capital commitments not provided for at the date of this balance sheet are estimated at Rs, 52.87 (Previous year Rs, 893.86) in respect of tangible assets, Rs, 4.70 (Previous year Rs, 6.36) in respect of intangible assets and Rs, 300.00 (Previous year Rs, Nil) in respect of investments after netting of advances paid / amount invested.

5. Computer software comprising of Oracle ERP Software, considered material, has a carrying amount of Rs, 62.97 (previous year Rs, 72.08), as on 31st March, 2017, to be amortized over the remaining period of six years and eleven months.

6. Based on the information available with the Company, the principal amount due to Micro and Small Enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is Rs, 0.02 (Previous year Rs, Nil). Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

7. Total stores and spare parts consumed during the year are Rs, 2,441.22 (Previous year Rs, 2,332.95) and include Rs, 354.93 (Previous year Rs, 463.26) debited to relevant expense heads.

8. Expenditure towards corporate social responsibility (CSR) :

a) As per Section 135 of the Companies Act, 2013, gross amount required to be spent by the Company for expenditure towards CSR during the year is Rs, 80.34 (previous year Rs, 72.78).

c) Amount spent during the year includes an amount of Rs, 40.00 (previous year Rs, 40.00) contributed to Jan Priya Trust, a registered trust over which a key management person and his relatives have a significant influence.

9. Jute manufacturing cess, debited under other expenses in Note 28, includes (decrease) / increase in cess, on account of difference between the closing and opening stock of finished goods amounting to ( Rs, 2.15) (previous year Rs, 4.89).

* Includes shares held by custodians of enemy property.

10. ACCOUNTING OF GOVERNMENT GRANTS IN ACCORDANCE WITH AS - 12

Government grants received by the Company comprise of capital incentive of Rs, 91.46 (Previous year Rs, 46.15), export incentives of Rs, 702.45 (Previous year Rs, 604.57) and other revenue grants of Rs, 28.67 (Previous year '' 21.44).

11. EMPLOYEE BENEFITS DISCLOSURES IN ACCORDANCE WITH AS-15 (REVISED)

i. Defined Contribution Plans

The Company has during the year recognized an expense of Rs, 602.72 (Previous year Rs, 573.65) towards defined contribution plans.

Out of the total contribution, made for employees'' provident fund, a sum of Rs, 83.03 (Previous year Rs, 78.01) has been made to Cheviot Company Limited Employees'' Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.

There is no amount included in the fair value of plan assets for :

i. Company''s own financial instrument;

ii. Any property occupied by, or other assets used by, the Company.

Expected rate of return on plan assets is based on the average long-term rate of return expected on investments of the funds during the estimated term of the obligations.

The Company is expected to contribute '' Nil to the gratuity fund during the year ending 31st March, 2018.

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

h. General description of the defined plans :

i Gratuity Plan

This is a funded defined benefit plan for qualifying employees. The Company makes contributions to the Cheviot Company Limited Employees'' Gratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and on resignation/termination of employment in terms of the Provisions of the Payment of Gratuity Act or as per the Company''s rule, whichever is more beneficial to the employee.

ii Leave Plan

Eligible employees can carry forward and encash leave on superannuation, death, permanent disablement and on resignation/termination of employment in accordance with the Company''s scheme subject to a maximum of 45 days depending on the grade/category of employee.

12. RELATED PARTY DISCLOSURE IN ACCORDANCE WITH AS - 18

A. Relationships

1. Controlling Group

i. Holding Company :

Harsh Investments Private Limited (HIPL)

ii. Others :

a. Abhyadoot Finance and Investments Private Limited (AFIPL)

b. Cheviot Agro Industries Private Limited (CAIPL)

c. Cheviot International Limited (CIL)

d. Mr. Harsh Vardhan Kanoria (Mr. H. V. Kanoria)

e. Mrs. Malati Kanoria (Wife of Mr. H. V. Kanoria)

f. Mr. Utkarsh Kanoria (Son of Mr. H. V. Kanoria)

2. Key Management Personnel

i. Mr. H. V. Kanoria

ii. Mr. N. K. Kejriwal

3. Relatives of Key Management Personnel

i. Mrs. Malati Kanoria (Wife of Mr. H. V. Kanoria)

ii. Mr. Utkarsh Kanoria (Son of Mr. H. V. Kanoria)

iii. Mrs. Bimla Kejriwal (Wife of Mr. N. K. Kejriwal)

13. Enterprises over which Key Mnagement Personnel [specified in Para 2(i) above] and relatives of Key Management Personnel [specified in Para 3(i) & (ii) above] have significant influence

i. Jan Priya Trust

ii. Cheviot Foundation

iii. Bright and Shine Micro Products Private Limited (BSMPPL)

There being no doubtful debts, no provision has been made and no amount has been written off or written back during the year in respect of related party transactions.

Provision for contingency represents estimates made mainly for probable claim arising out of dispute in respect of indirect tax pending before the Hon''ble Supreme Court. The probability and timing of the outflow with regard to interest depends on the ultimate settlement / conclusion.

b. Contingent liabilities not provided for :

i. Sales Tax in dispute - Rs, 0.22 (Previous year Rs, 82.88) under appeal and not acknowledged as debt, against which a sum aggregating to Rs, Nil (Previous year Rs, 46.06) has been deposited.

ii. Income Tax in dispute - Rs, 69.98 (Previous year Rs, 162.68) under appeal and not acknowledged as debt.

iii. Wealth Tax in dispute - Rs, Nil (Previous year Rs, 222.75 under appeal and not acknowledged as debt).

iv. Excise Duty including penalty in dispute - Rs, 4,949.99 (Previous year Rs, 4,949.99) and interest thereon (amount not yet quantified) under appeal before CESTAT, being barred by limitation as per legal opinion was not acknowledged as debt and against which Rs, 185.62 had been deposited in the year ended 31st March, 2016.

v. Service Tax in dispute - Rs, 2.80 (Previous year Rs, 1.44) against show cause notice not acknowledged as debt, for which appropriate reply has been furnished and matter not yet adjudicated.

14. The Company is maintaining separate books of account for its different undertakings viz, DTA at Budge Budge and EOU at Falta, SEZ.

15. Details of specified bank notes held and transacted during the period from 8th November, 2016 to 30th December, 2016 :

16. The Board of Directors of the Company has recommended a dividend of Rs, 1/- per ordinary share for approval by shareholders at the ensuing annual general meeting. If approved, the total liability would be Rs, 54.29 including dividend tax of Rs, 9.18.

17. The previous year''s figures have been re-grouped/re-classified to conformto the current year''s classification


Mar 31, 2016

1. Based on the valuation report by a Chartered Engineer, an external valuer, certain fixed assets of the Company''s DTA unit were revalued, on appraisal method as follows :

a) Freehold land was revalued in the years ended 31st March, 1997, 31st March, 2003 and 31st March, 2008 with last revalued amount at Rs. 6,257.10. Freehold land has further been revalued at Rs. 9,647.26 on 31st March, 2016, resulting in increase in the net book value of the said asset by Rs. 3,390.16 with a corresponding credit to the revaluation reserve account;

b) Buildings were revalued in the years ended 31st March, 1997 and 31st March, 2003 with last revalued amount at Rs. 4,165.09;

c) Plant & equipment and electrical installations were revalued in the years ended 31st March, 1998 and 31st March, 2003 with last revalued amount at Rs. 7,083.95 and Rs. 415.93 respectively.

2. Capital commitments not provided for at the date of this balance sheet are estimated at Rs. 893.86 (Previous year Rs. 1.27) in respect of tangible assets and Rs. 6.36 (Previous year Rs. 9.03) in respect of intangible assets after netting of advances paid.

3. Computer software comprising of Oracle ERP Software, considered material, has a carrying amount of Rs. 72.08 (Previous year Rs. 81.19), as on 31st March, 2016, to be amortized over the remaining period of seven years and eleven months.

4. Based on the information available with the Company, the principal amount due to Micro and Small Enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is Rs. Nil (Previous year Rs. Nil). Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

5. Due to insolvency of a party, appearing under trade receivable, claim had been lodged with the Official Administrator, appointed by the Court, for outstanding amount of Euro 100612.56 and for related expenses incurred. The Company has received claim against said receivable to the extent of 80% of the original Invoice amount from ECGC Ltd. under its buyer exposure policy, credited under trade payable, with a contingency that out of the amount received from the party, 80% thereof is reimbursable to ECGC Ltd. Accordingly, provision for doubtful receivables, has been made in respect of outstanding amount as on 31st March, 2016, net of amount recovered from ECGC Ltd.

6. Total stores and spare parts consumed during the year are Rs. 2,310.43 (Previous year Rs. 1,869.21) and include Rs. 463.26 (Previous year Rs. 296.81) debited to relevant expense heads.

7. Expenditure towards corporate social responsibility (CSR) :

a) As per Section 135 of the Companies Act, 2013, gross amount required to be spent by the Company for expenditure towards CSR during the year is Rs. 72.78 (Previous year Rs. 74.64).

c) Amount spent during the year includes an amount of Rs. 40.00 (Previous year Rs. 65.00) contributed to Jan Priya Trust, a registered trust over which a key management person and his relatives have a significant influence.

8. Jute manufacturing cess, debited under other expenses in Note 27, includes increase / (decrease) in cess, on account of difference between the closing and opening stock of finished goods amounting to Rs. 4.89 [Previous year (Rs. 3.24)].

9. Derivative instruments and unhinged foreign currency exposure :

a) The Company uses forward exchange contracts to hedge its exposures in foreign currency. Forward exchange contracts for trade receivables outstanding as at balance sheet date is Rs. 540.84 (Previous year Rs. 72.97).

b) Forward cover for firm commitment in respect of future sales against export order as at balance sheet date is Rs. 1,369.96 (Previous year Rs. 148.39). The mark to market gain thereon amounting to Rs. 24.95 (Previous year Rs. 26.08) has not been accounted for due to prudent accounting policy.

c) Foreign currency exposure (net) at year end that are not hedged by derivative instruments or otherwise is Rs. 619.23 (Previous year Rs. 1,215.24).

10. ACCOUNTING OF GOVERNMENT GRANTS IN ACCORDANCE WITH AS-12

Government grants received by the Company comprise of capital incentive of Rs. 46.15 (Previous year Rs. 10.31), export incentives of Rs. 604.57 (Previous year Rs. 303.03) and other revenue grants of Rs. 8.36 (Previous year Rs. 2.88).

11. EMPLOYEE BENEFITS DISCLOSURES IN ACCORDANCE WITH AS-15 (REVISED)

i. Defined Contribution Plans

The Company has during the year recognized an expense of Rs. 573.65 (Previous year Rs. 513.62) towards defined contribution plans.

Out of the total contribution, made for employees'' provident fund, a sum of Rs. 78.01 (Previous year Rs. 74.60) has been made to Cheviot Company Limited Employees'' Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.

12. SEGMENT REPORTING IN ACCORDANCE WITH AS - 17

The Company is engaged in a single business segment i.e. manufacturing and sale of Jute goods. Hence, disclosure requirements as required by Accounting Standard - 17 are not applicable in respect of business segment. However, the geographical segments considered for disclosure are as under :

13. RELATED PARTY DISCLOSURE IN ACCORDANCE WITH AS - 18

A. Relationships

1. Controlling Group

i. Holding Company :

Harsh Investments Private Limited (HIPL)

ii. Others :

a. Abhyadoot Finance and Investments Private Limited (AFIPL)

b. Cheviot Agro Industries Private Limited (CAIPL)

c. Cheviot International Limited (CIL)

d. Mr. Harsh Vardhan Kanoria (Mr. H.V. Kanoria)

e. Mrs. Malati Kanoria (Wife of Mr. H.V. Kanoria)

f. Mr. Utkarsh Kanoria (Son of Mr. H.V. Kanoria)

2. Key Management Personnel

i. Mr. H. V. Kanoria

ii. Mr. N. K. Kejriwal

3. Relatives of Key Management Personnel

i. Mrs. Malati Kanoria (Wife of Mr. H.V. Kanoria)

ii. Mr. Utkarsh Kanoria (Son of Mr. H. V. Kanoria)

iii. Mrs. Bimla Kejriwal (Wife of Mr. N.K. Kejriwal)

4. Enterprises over which Key Management Personnel [specified in Para 2 (i) above] and relatives of Key Management Personnel [specified in Para 3 (i) & (ii) above] have significant influence.

i. Jan Priya Turst

ii. Bright & Shine Micro Products Pvt. Ltd. (BSMPPL)

14. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS IN ACCORDANCE WITH AS - 29

a. In accordance with AS - 29 - "Provisions, Contingent Liabilities and Contingent Assets", the Company as a prudent measure, has made following provisions in the books :

Provision for contingencies represents estimates made mainly for probable claims arising out of disputes pending with the authorities under various statutes. The probability and timing of the outflow with regard to these matters depend on the ultimate settlement / conclusion with the relevant authorities.

b. Contingent liabilities not provided for :

i. Sales Tax in dispute - Rs. 82.88 (Previous year Rs. 16.49) under appeal and not acknowledged as debt, against which a sum aggregating to Rs. 46.06 has been deposited till date (Previous year Rs. Nil).

ii. Income Tax in dispute - Rs. 162.68 (Previous year Rs. 236.27) under appeal and not acknowledged as debt.

iii. Wealth Tax in dispute - Rs. 222.75 (Previous year Rs. 222.75) under appeal and not acknowledged as debt.

iv. Excise Duty including penalty in dispute - Rs. 4,949.99 and interest thereon (amount not yet quantified) (Previous year Rs. 2,475.00 against show cause cum demand notice) under appeal before CESTAT, being barred by limitation as per legal opinion was not acknowledged as debt and against which Rs. 185.62 has been deposited (Previous year Rs. Nil).

v. Service Tax in dispute - Rs. 1.44 (Previous year Rs. 1.44) against show cause notice not acknowledged as debt, for which appropriate reply has been furnished and matter not yet adjudicated.

vi. Additional bonus liability for the previous year ended 31st March, 2015 amounting to Rs. 127.94 (Previous year Rs. Nil) not acknowledged by the Company on account of judicial pronouncements including interim stay granted against retrospective amendment of The Payment of Bonus Act, 1965, pending adjudication.

15. The Company is maintaining separate books of account for its different undertakings viz, DTA at Budge and EOU at Falta, SEZ. Effective from 1st April 2015, operations of the Company''s Captive Power Plant [CPP] unit have been combined with DTA unit since the CPP unit is not required to function as an independent unit due to completion of exemption period available under Section 80-IA of the Income Tax Act, 1961.

16. The Company had paid interim dividend of Rs. 17/- per ordinary share of the face value of Rs. 10/- each amounting to Rs. 766.91 during the year ended 31st March, 2016. No further final dividend was recommended by the Board of directors for the year ended 31st March, 2016 (Previous year - dividend of Rs. 17/- per ordinary share amounting to Rs. 766.91 was recommended).

17. The previous year''s figures have been re-grouped/re-classified to conform to the current year''s classification.


Mar 31, 2013

1. Based on the valuation report by a Chartered Engineer, an external valuer, the Company''s freehold land had been revalued on appraisal method at Rs. 6,257.10 on 31st March, 2008 resulting in increase in the net book value of the assets of Rs. 3,075.24 by a corresponding credit to revaluation reserve account.

2. Certain assets transferred from DTA unit to Falta SEZ unit, during the year, of gross block of Rs. 187.36 and accumulated depreciation of Rs. 177.32 have been shown as capital work in progress at Falta SEZ unit, as yet to be installed there.

3. Capital commitments not provided for at the date of this Balance Sheet are estimated at Rs. 751.61 (Previous year Rs. 116.32) after netting of advances paid.

4. Based on the information available with the Company, the principal amount due to Micro and Small Enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is Rs. Nil (Previous year Rs. Nil). Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

5. Total stores and spare parts consumed during the year are Rs. 2,108.47 (Previous year Rs. 2,150.21) and include Rs. 216.74 (Previous year Rs. 251.22) debited to relevant expense heads.

6. Consignment sales expenses, disclosed in Note 28, comprise of cess, rent, rates and taxes, insurance, delivery charges, brokerage and commission and miscellaneous expenses, the amount of rent being Rs. Nil (Previous year Rs. 0.52), rates and taxes being Rs. Nil (Previous year Rs. 0.30) and insurance being Rs. Nil (Previous year Rs. 0.29).

7. Foreign currency exposure (net) at year end that are not hedged by derivative instruments or otherwise is Rs. 1,254.43 (Previous yearRs. 1,628.78).

8. EXCHANGE DIFFERENCE ON FOREIGN CURRENCY IN ACCORDANCE WITH AS - 11

Exchange difference (net), other than finance cost, amounting to Rs. 184.19 (Previous year Rs. 340.45) have been credited to respective revenue heads in the Statement of Profit and Loss.

9. ACCOUNTING OF GOVERNMENT GRANTS IN ACCORDANCE WITH AS - 12

Government grants received by the Company comprise of capital subsidy of Rs. 100.42 (Previous year Rs. 55.52), export incentives of Rs. 142.46 (Previous year Rs. 209.51) and other revenue grants of Rs. 69.36 (Previous year Rs. 72.79).

10. EMPLOYEE BENEFITS DISCLOSURES IN ACCORDANCE WITH AS - 15 (REVISED)

i. Defined Contribution Plans

The Company has during the year recognised an expense of Rs. 481.13 (Previous year Rs. 436.94) towards defined contribution plans.

Out of the total contribution, made for employees'' provident fund, a sum of Rs. 71.72 (Previous year Rs. 60.48) has been made to Cheviot Company Limited Employees'' Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.

11. SEGMENT REPORTING IN ACCORDANCE WITH AS - 17

The Company operates through two business segments namely, a) Jute goods and b) Captive power generation. However, Captive power generation is not a reportable segment in terms of the criteria laid down in paragraph 27 of the Accounting Standard -17, as the revenue/results/assets of this segment are not more than the threshold limit of 10% of the total segment revenue/results/assets and as such the disclosure requirements as required by Accounting Standard -17 are not applicable in respect of business segment. However, the geographical segments considered for disclosure are as under:

12. RELATED PARTY DISCLOSURE IN ACCORDANCE WITH AS - 18

A. Relationships

1. Controlling Group

i. Holding Company:

Harsh Investments Private Limited (HIPL) ii. Others:

a. Abhyadoot Finance and Investments Private Limited (AFIPL)

b. Cheviot Agro Industries Private Limited (CAIPL)

c. Cheviot International Limited (CIL)

d. Mr. Harsh Vardhan Kanoria (Mr. H. V. Kanoria)

e. Mrs. Malati Kanoria (Wife of Mr. H. V. Kanoria)

f. Mr. Utkarsh Kanoria (Son of Mr. H. V. Kanoria)

2. Associates

i. Jan Priya Trust ii. Shashvat Foundation

3. Key Management Personnel

i. Mr. H.V. Kanoria ii. Mr. N. K. Kejriwal

iii. Mr. D. Mazumdar iv. Mr. D. K. Mohta

v. Mr.M.K.Patni

4. Relative of Key Management Personnel

Mrs. Bimla Kejriwal (Wife of Mr. N. K. Kejriwal)

13. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS IN ACCORDANCE WITH AS - 29

a. In accordance with Accounting Standard 29 - "Provisions, Contingent Liabilities and Contingent Assets", the Company as a prudent measure, has made following provisions in the books :

Provision for contingencies represents estimates made mainly for probable claims arising out of disputes pending with the authorities under various statutes (i.e. Excise and Sales Tax). The probability and timing of the outflow with regard to these matters depend on the ultimate settlement / conclusion with the relevant authorities.

b. Contingent liabilities not provided for:

i. Sales Tax in dispute - Rs. 0.62 (Previous year Rs. 5.06) under appeal and not acknowledged as debt.

ii. Income Tax in dispute - Rs. 188.76 (Previous year Rs. 145.82) under appeal and not acknowledged as debt.

14. The Company is maintaining separate books of account for its different undertakings viz, DTA, Captive Power Plant at Budge Budge and EOU at Falta, SEZ.

15. The Board of Directors recommend payment of dividend of Rs. 15/- (Previous year Rs. 13/-) per Ordinary share of the face value of Rs. 10/- each for the year ended 31st March, 2013.

16. The previous year''s figures have been re-grouped / re-classified to conform to the current year''s classification.


Mar 31, 2012

1. Based on the valuation report by a Chartered Engineer, an external valuer, the Company's freehold land had been revalued on appraisal method at Rs 6,257.10 on 31st March, 2008 resulting in increase in the net book value of the assets of Rs 3,075.24 by a corresponding credit to revaluation reserve account.

2. Capital commitments not provided for at the date of this balance sheet are estimated at Rs 116.32 (Previous year Rs 521.12) after netting of advances paid.

3. Based on the information available with the Company, the principal amount due to Micro and Small Enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is Rs Nil (Previous year Rs Nil). Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

4. Total stores and spare parts consumed during the year are Rs 2,150.21(Previous year Rs 1,943.04) and include Rs 251.22 (Previous year Rs 198.63) debited to relevant expense heads.

5. Consignment sales expenses, disclosed in Note 28, comprise of cess, rent, rates and taxes, insurance, delivery charges, brokerage and commission and miscellaneous expenses, the amount of rent being Rs 0.52 (Previous year Rs 0.12), rates and taxes being Rs 0.30 (Previous year Rs 3.67 ) and insurance being Rs 0.29 (Previous year Rs 0.29).

6. Forward cover for foreign currency receivables outstanding at year end is Rs Nil (Previous year Rs 94.88). Foreign currency exposure (net) at year end that are not hedged by derivative instruments or otherwise is Rs 1,628.78 (Previous year Rs 777.82).

7. EXCHANGE DIFFERENCE ON FOREIGN CURRENCY IN ACCORDANCE WITH AS - 11

Exchange difference (net), other than finance cost, amounting to Rs 340.45 (Previous year Rs 196.17) have been credited to respective revenue heads in the Statement of Profit and Loss. Such difference includes premium received amounting to Rs Nil (Previous year Rs 0.43) and exchange loss amounting to Rs Nil (Previous year Rs 0.16) in respect of outstanding forward contracts. Premium on outstanding forward exchange rate contracts to be recognised in the subsequent year amounts to Rs Nil (Previous year Rs 0.82).

8. ACCOUNTING OF GOVERNMENT GRANTS IN ACCORDANCE WITH AS - 12

Government grants received by the company comprise of capital subsidy of Rs 55.52 (Previous year Rs 27.21), export incentives of Rs 209.51 (Previous year Rs 499.77) and other revenue grants of Rs 72.79 (Previous year Rs 32.30).

9. EMPLOYEE BENEFITS DISCLOSURES IN ACCORDANCE WITH AS - 15 (REVISED)

i. Defined Contribution Plans

The Company has during the year recognised an expense of Rs 436.94 (Previous year Rs 399.55) towards defined contribution plans.

Out of the total contribution, made for employees' provident fund, a sum ofRs 60.48 (Previous year Rs 53.24) has been made to Cheviot Company Limited Employees' Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.

Expected rate of return on plan assets is based on the average long-term rate of return expected on investments of the funds during the estimated term of the obligations.

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

a. General description of the defined plans :

i. Gratuity Plan

This is a funded defined benefit plan for qualifying employees. The Company makes contributions to the Cheviot Company Limited Employees' Gratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and on resignation/termination of employment in terms of the Provisions of the Payment of Gratuity Act or as per the Company's rule, whichever is more beneficial to the employee.

ii. Leave Plan

Eligible employees can carry forward and encash leave on superannuation, death, permanent disablement and on resignation/termination of employment in accordance with the Company's scheme subject to a maximum of 45 days depending on the grade/category of employee.

10. SEGMENT REPORTING IN ACCORDANCE WITH AS - 17

The Company operates through two business segments namely, a) Jute goods and b) Captive power generation. However, Captive power generation is not a reportable segment in terms of the criteria laid down in paragraph 27 of the Accounting Standard -17, as the revenue/results/assets of this segment are not more than the threshold limit of 10% of the total segment revenue/results/assets and as such the disclosure requirements as required by Accounting Standard -17 are not applicable in respect of business segment. However, the geographical segments considered for disclosure are as under:

11. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS IN ACCORDANCE WITH AS - 29

a. In accordance with Accounting Standard 29 - "Provisions, Contingent Liabilities and Contingent Assets", the Company as a prudent measure, has made following provisions in the books :

Year ended Year ended

31st March, 2012 31stMarch,2011

PROVISIONFORCONTINGENCIES Indirect taxes Indirect taxes

Balance at the beginning of the year 396.94 163.48

Additional provision during the year 93.55 233.46

Provision used during the year 5.94 -

Provision reversed during the year 213.13 -

Balance at the end of the year 271.42 396.94

Provision for contingencies represents estimates made mainly for probable claims arising out of disputes pending with the authorities under various statutes (i.e. Excise and Sales Tax). The probability and timing of the outflow with regard to these matters depend on the ultimate settlement / conclusion with the relevant authorities.

b. Contingent liabilities not provided for:

i. Sales Tax in dispute - Rs 5.06 (Previous year Rs 6.58) under appeal and not acknowledged as debt.

ii. Income Tax in dispute - Rs 145.82 (Previous year Rs 236.65) pending revision and not acknowledged as debt.

iii. Employees' state insurance in dispute Rs Nil (Previous year Rs 14.38) being contested in view of liability foreseen of Rs Nil (Previous year Rs 5.26). Provision has thus been made of Rs Nil (Previous year Rs 5.26), and against which a sum of Rs Nil (Previous year Rs 5.20) has been deposited.

12. The Company is maintaining separate books of account for its different undertakings viz, DTA, Captive Power Plant at Budge Budge and EOU at Falta, SEZ.

13. The Board of Directors recommend payment of dividend of Rs 13/- (Previous year Rs 12/-) per Ordinary share of the face value of Rs 10/- each for the year ended 31st March, 2012.

14. In view of the revision to the Schedule VI as per notification issued by the Central Government, the financial statements for the year ended 31st March, 2012 have been prepared as per the requirements of the revised Schedule VI to the Companies Act, 1956. The previous year's figures have been accordingly re-grouped / re-classified to conform to the current year's classification.


Mar 31, 2011

1. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognised when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.

2. Based on the valuation report by a Chartered Engineer, an external valuer, the Companys freehold land had been revalued on appraisal method at Rs. 6,257.10 on 31 st March, 2008 resulting in increase in the net book value of the assets ofRs. 3,075.24 by a corresponding credit to revaluation reserve account.

3. Certain assets transferred from DTA unit to Falta SEZ unit, in the previous year, of gross block ofRs. 187.07 and accumulated depreciation ofRs. 168.99 had been shown as capital work in progress at Falta SEZ unit but have been installed and put to use by such unit in the current year.

4. Capital commitments not provided for at the date of this Balance Sheet are estimated at Rs. 521.12 (Previous yearRs. 3.45) after netting of advances paid.

5. Based on the information available with the Company, the principal amount due to Micro and Small Enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is Rs. Nil (Previous yearRs. Nil).

Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

6. Consignment sales expenses, disclosed in Schedule -17, comprise of cess, rent, rates and taxes, insurance, delivery charges, brokerage & commission and miscellaneous expenses, the amount of brokerage and commission being Rs. 9.25 (Previous yearRs. 3.91).

7. Total stores and spare parts consumed during the year are Rs. 1,943.04 (Previous year Rs. 1,317.37) and include Rs. 198.63 (Previous year Rs. 167.48) debited to relevant expense heads.

8. Government grants received by the Company comprise of capital subsidy of Rs. 27.21 (Previous year Rs. 43.62), export incentives of Rs. 499.77 (Previous year Rs. 188.27) and other revenue grants of Rs. 32.30 (Previous yearRs. Nil).

9. Fixed assets amounting to Rs. Nil (Previous year Rs. 1.47) has been written off during the year as no longer usable.

10. Exchange difference (net) amounting to Rs. 196.17 (Previous year Rs. 11.86) have been credited to respective revenue heads in the Profit & Loss account. Such difference includes premium received amounting to Rs. 0.43 (Previous year Rs. Nil) and exchange loss amounting to Rs. 0.16 (Previous year Rs. Nil) in respect of outstanding forward contracts. Premium on outstanding forward exchange rate contracts to be recognised in the subsequent year amounts to Rs. 0.82 (Previous year Rs.Nil).

11. Disclosure pursuant to Accounting Standard -15 (Revised 2005)Employee Benefits:

i. Effective 1 st April, 2007, the Company has adopted Accounting Standard -15 (revised 2005) on "Employee Benefits".

ii. Defined Contribution Plans

The Company has during the year recognised an expense of Rs. 399.55 (Previous year Rs. 286.34) towards defined contribution plans.

Out of the total contribution, made for employees provident fund, a sum of Rs. 53.24 (Previous year Rs. 47.15) has been made to Cheviot Company Limited EmployeesProvident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.

Expected rate of return on plan assets is based on the average long term rate of return expected on investments of the funds during the estimated term of the obligations.

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

g. General description of the defined plans : i. Gratuity plan

This is a funded defined benefit plan for qualifying employees. The Company makes contributions to the Cheviot Company Limited EmployeesGratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and on resignation/termination of employment in terms of the Provisions of the Payment of Gratuity Act or as per the Companys rule, whichever is more beneficial to the employee.

ii. Leave plan

Eligible employees can carryforward and encash leave on superannuation, death, permanent disablement and on resignation/termination of employment in accordance with the Companys scheme subject to a maximum of 45 days depending on the grade/category of employee.

20. Segment reporting as per Accounting Standard -17 for the year ended 31 st March, 2011

The Company operates through two business segments namely Jute Goods and Captive Power Generation. However, Captive Power Generation is not a reportable segment in terms of the criteria laid down in paragraph 27 of the aforesaid Accounting Standard -17, as the revenue/results/assets of this segment are not more than the threshold limit of 10% of the total segment revenue/results/assets and as such the disclosure requirements as required by Accounting Standard -17 are not applicable in respect of business segment. However, the geographical segments considered for disclosure are as under:

21. Related Party Disclosures

Related party disclosures, as required by Accounting Standard -18 for the year ended 31st March, 2011 are as follows :

A. Relationships

1. Controlling Group

i. Holding Company

Harsh Investments Private Limited (HIPL)

ii. Others

a. Abhyadoot Finance & Investments Private Limited (AFIPL)

b. Cheviot Agro Industries Limited (CAIL)

c. Cheviot International Limited (CIL)

d. Mr. H. V. Kanoria

e. Mrs. Malati Kanoria (Wife of Mr. H. V. Kanoria)

f. Mr. Utkarsh Kanoria (Son of Mr. H. V. Kanoria)

2. Associates

i. Jan Priya Trust ii. Shashvat Foundation

3. Key Management Personnel

i. Mr. H.V. Kanoria ii. Mr. N. K. Kejriwal

iii. Mr. D. Mazumdar iv. Mr. D. K. Mohta

v. Mr. M. K. Patni

4. Relative of Key Management Personnel Mrs. Bimla Kejriwal (Wife of Mr. N. K. Kejriwal)

22. Derivative instruments outstanding :

a) Forward cover for foreign currency receivables outstanding at year end is Rs. 94.88 (Previous year Rs. Nil).

b) Foreign currency exposure (net) at year end that are not hedged by derivative instruments or otherwise is Rs. 1,214.09 (Previous year Rs. 783.21).

Provision for Contingencies represents estimates made mainly for probable claims arising out of disputes pending with the authorities under various statutes (i.e. Excise and Sales Tax). The probability and timing of the outflow with regard to these matters depend on the ultimate settlement/conclusion with the relevant authorities.

b. Contingent Liabilities not provided for -

i. Sales tax in dispute Rs. 6.58 (Previous year Rs. 6.58) under appeal and not acknowledged as debt.

ii. Income tax in dispute Rs. 236.65 (Previous year Rs. 90.83) under appeal and not acknowledged as debt.

iii. Employees state insurance in dispute Rs. 14.38 (Previous year Rs. 49.37) and interest thereon (amount not yet quantified) being contested in view of liability foreseen of Rs. 5.26 (Previous yearRs. 2.66) only with interest thereon of Rs. Nil (Previous year Rs. 0.16). Provision has thus been made of Rs. 5.26 (Previous year Rs. 2.82), and against which a sum of Rs. 5.20 (Previous year Rs. 1.50) has been deposited.

iv. Counter guarantees for bonds executed by State Bank of India - Rs. 306.16 (Previous year Rs. 216.86).

26. The Company is maintaining separate books of account for its different undertakings viz, DTA, Captive Power Plant at Budge Budge and EOU at Falta, SEZ.

27. Previous years figures have been re-grouped/re-arranged wherever necessary to make them comparable.


Mar 31, 2010

1. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of piist events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.

2. CONTINGENT LIABILITIES NOT PROVIDED FOR

i. Sales tax in dispute - Rs. 6.58 (Previous year Rs. 14.90) under appeal and not acknowledged as debt.

ii. Excise duty including penalty in dispute - Rs. Nil (Previous year Rs. 1,078.35) and interest thereon Rs. Nil (Previous year amount not quantified) under appeal before CESTAT, of which Rs. Nil (Previous year Rs. 847.12) being barred by limitation as per legal opinion was not acknowledged as debt. (Refer note no.3 of this Schedule).

iii. Income tax in dispute - Rs. 90.83 (Previous year Rs. Nil) under appeal and not acknowledged as debt.

iv. Employeesstate insurance in dispute Rs. 49.37 (Previous year Rs. Nil) and interest thereon (amount not yet quantified) being contested in view of liability foreseen of Rs. 2.66 only with interest thereon of Rs. 0.16. Provision has thus been made of Rs. 2.82, against which a sum of Rs. 1.50 has been deposited.

v. Counter guarantees for bonds executed by State Bank of India - Rs. 216.86 (Previous year Rs. 226.39).

3. Provision in respect of excise duty including penalty in dispute of Rs. 231.23 along with interest thereon of Rs. 50.04 was made in the year ended 31.03.2008 against which an appeal was preferred before CESTAT. Such appeal has since been disposed off vide Honble CESTAT order dated 16.03.2010 and as per terms of the Order, provision of penalty on excise duty amounting to Rs. 115.61 and interest thereon of Rs. 25.02, being no longer payable has been written back in the accounts and included under the head related income for the current year and demand of Rs. 847.12, considered as contingent liability, being barred by limitation has been set aside. As a result, balance provision of Rs. 110.73 [net of cenvat credit allowed as per CESTAT order amounting to Rs. 4.88] and interest thereon of Rs. 52.75 [including Rs. 27.73 provided in the current year] upto 31.03.2010, remains fully provided in these accounts, representing the amount payable in terms of said CESTAT Order, against which an appeal is being filed before the Honble Supreme Court.

4. Based on the valuation report by a Chartered Engineer, an external valuer, the Companys Freehold land had been revalued on appraisal method at Rs. 6,257.10 on 31st March, 2008 resulting in increase in the net book value of the assets of Rs. 3,075.24 by a corresponding credit to revaluation reserve account.

5. i. Consequent to debonding of Export Oriented Unit (EOU), Budge Budge, all its assets have been transferred to Domestic Tariff Area (DTA) unit effective 1st April, 2009. Depreciation on fixed assets of such EOU was being provided on written down value method at applicable rates specified in Schedule XIV to the Companies Act, 1956. In view of depreciation on fixed assets of corresponding period at DTA unit being provided on straight line method, the basis of charging depreciation on the assets of EOU has been changed in the current year, with retrospective effect, from written down value method to straight line method in respect of assets added upto 31st March, 1999, at applicable rates, to be in conformity with the policy followed in DTA unit;

ii. In view of the change mentioned in (i) above, the quantum of depreciation provided in the books in respect of such assets pertaining to EOU upto 31 st March, 2009 is found to be provided in excess by Rs. 59.02 which has been written back in these accounts;

iii. Had the previous practice been followed, the depreciation charge in respect of such assets would have amounted to Rs. 6.50 as against actual charge of Rs. 6.97 in these accounts, and consequently the profits for the year would have been higher by Rs. 0.47.

6. Certain assets transferred from DTA unit to Falta SEZ unit, during the year, of gross block of Rs. 187.07 and accumulated depreciation of Rs. 168.99 have been shown as capital work in progress at Falta SEZ unit, as yet to be installed there.

7. Capital commitments not provided for at the date of this Balance Sheet are estimated at Rs. 3.45 (Previous year Rs. 1,873.85) after netting of advances paid.

8. Based on the information available with the company, the principal amount due to Micro and Small Enterprises, as defined under the Micro, Small, and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is Rs. Nil (Previous year Rs. Nil).

Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

9. Consignment sales expenses, disclosed in Schedule-17, comprise of cess, rent, rates and taxes, insurance, delivery charges, brokerage & commission and miscellaneous expenses, the amount of brokerage and commission being Rs. 3.91 (Previous year Rs. 15.43).

10. Total stores and spare parts consumed during the year are Rs. 1,317.37 (Previous year Rs. 1,596.61) and include Rs. 167.48 (Previous year Rs. 208.51) debited to relevant expense heads.

11. Government grants received by the company comprise of capital subsidy of Rs. 43.62 (Previous year Rs. 19.50) and export incentives of Rs. 188.27 (Previous year Rs. 218.14).

12. Fixed Assets amounting to Rs. 1.47 (Previous year Rs. 6.49) has been written off during the year as no longer usable.

13. Remaining amortisation period of specialised software comprising of Oracle ERP software, considered material, is Nil (Previous year one year) of which the carrying amount is Rs. Nil (Previous year Rs. 2.38) as on 31.03.2010.

14. Exchange difference (net) amounting to Rs. 11.86 (Previous year Rs. 168.96) have been credited to respective revenue heads in the profit and loss account.

15. Disclosure pursuant to Accounting Standard (AS) - 15 (Revised 2005) "Employee Benefits"

i. Effective 1 st April, 2007, the company has adopted Accounting Standard 15 (revised 2005) on "Employee Benefits" issued by Institute of Chartered Accountants of India (ICAI).

ii. Defined Contribution Plans

The Company has durirtg the year recognised an expense of Rs. 286.34 (Previous year Rs. 317.60) towards defined contribution plans.

Out of the total contribution, made for employees provident fund, a sum of Rs. 47.15 (Previous year Rs. 59.73) has been made to Cheviot Company Limited Employees Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.

iii. Defined Benefit Plans

g. General description of the defined plans :

a. Gratuity plan

This is a funded defined benefit plan for qualifying employees. The Company makes contributions to the Cheviot Company Limited EmployeesGratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and on resignation/termination of employment in terms of the Provisions of the Payment of Gratuity Act or as per the Companys rule, whichever is more beneficial to the employee.

b. Leave plan

Eligible employees can carry forward and encash leave on superannuation, death, permanent disablement and on resignation/termination of employment in accordance with the Companys scheme subject to a maximum of 45 days depending on the grade/category of employee.

16. Segment reporting as per Accounting Standard (AS) -17 issued by the ICAI for the year ended 31 st March, 2010

The Company operates through two business segments namely Jute Goods and Captive Power Generation. However, Capitve Power Generation is not a reportable segment in terms of the criteria laid down in paragraph 27 of the aforesaid AS-17, as the revenue / results / assets of this segment are not more than the threshold limit of 10% of the total segment revenue / results / assets and as such the disclosure requirements as required by AS-17 are not applicable in respect of business segment. However, the geographical segments considered for disclosure are as under:

17. Related Party Disclosures

Related party disclosures, as required by AS -18 as issued by the ICAI for the year ended 31 st March, 2010 are as follows: A. Relationships

1. Controlling Group

i. Holding Company

Harsh Investments Private Limited ii. Others

a. Abhyadoot Finance & Investments Private Limited

b. Cheviot Agro Industries Limited

c. Cheviot International Limited

d. Powertone Trading Co, Private Limited

e. Mr. H. V. Kanoria

f. Mrs. Malati Kanoria (Wife of Mr. H. V. Kanoria)

g. Master Utkarsh Kanoria (Son of Mr. H. V. Kanoria)

2. Associates

a. Jan Priya Trust

b. Shashvat Fondation

3. Key Management Personnel

a. Mr. H. V. Kanoria b. Mr. N. K. Kejriwal c. Mr. D. Majumdar d. Mr. D. K. Mohta e. Mr. P. K. Chatterjee f. Mr. P. C Kothari g. Mr. M. K. Patni h. Mr. S. Datta i. Mr. A. K. Das j. Mr. D. K. Bera

4. Relative of Key Management Personnel

Mrs. Bimla Kejriwal {Wife of Mr. N. K. Kejriwal)

18. The Company is maintaining separate books of account for its different undertakings viz., DTA, Captive Power Plant at Budge Budge and EOU at Falta SEZ.

19. Previous years figures have been re-grouped/re-arranged wherever necessary to make them comparable.

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