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Notes to Accounts of VST Industries Ltd.

Mar 31, 2016

1. FUTURE LEASE OBLIGATIONS

The Company has entered into various operating lease agreements and the amounts paid under such agreements have been charged to revenue as Rent under Note 25. All these agreements are cancellable in nature.

2. DISCLOSURES REGARDING DERIVATIVE INSTRUMENTS

The Company uses forward exchange contracts to hedge its foreign currency exposures related to the underlying transactions, firm commitments and highly probable forecasted transactions. The use of these foreign exchange forward contracts are intended to reduce the risk or cost to the Company and are not intended for trading or speculation purpose. The information on such derivative instruments is as follows:

3. EMPLOYEE BENEFITS

(a) The Employee Benefit Schemes are as under:

(i) Provident Fund

Eligible employees of the Company receive benefits under the Provident Fund which are defined contribution/benefit plans wherein both the Company and the employees make monthly contributions equal to a specified percentage of the covered employees'' salary. These contributions are made to the Funds administered and managed by the Government of India/ Company''s own Trust. The Company''s own trust plan envisages guarantee of interest at the rate notified by the Provident Fund authority. The Company''s contributions along with interest shortfall, if any, are charged to revenue in the year they are incurred. Expenditure for the year amounted to Rs.267.54 Lakhs (2015 - Rs.230.70 Lakhs).

(ii) Gratuity

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

(iii) Pension Fund

The Company has a defined contribution pension scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees'' salary at their option to either National Pension Scheme of the Government of India and/or to an approved Superannuation Fund. In case of the latter, the contributions are administered by the Company''s own Trust which has subscribed to the ''Group Pension Scheme'' of Life Insurance Corporation of India. The Company''s contributions are charged to revenue in the period they are incurred Rs.109.39 Lakhs (2015 - Rs.101.71 Lakhs).

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

(iv) Leave Encashment

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

(v) Retirement Allowance

The Company has an unfunded defined benefit retirement allowance scheme for its employees in the workmen category. Liability with regard to such scheme is determined by actuarial valuation and charged to revenue in the period determined Rs.327.55 Lakhs (2015 - Rs.367.74 Lakhs). Consequently, liability recognised in the Balance Sheet as at 31st March, 2016 is Rs.770.22 Lakhs (2015 - Rs.571.58 Lakhs).

4. COMPARATIVE FIGURES

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


Mar 31, 2014

(a) Contingent Liabilities

Claims against the Company not acknowledged as debts Rs.2355.48 Lakhs (2013 - Rs.3450.59 Lakhs).

These comprise -

(i) Tax demands disputed by the Company relating to disallowances/additions of fiscal benefits, pending before various judicial forums, aggregating to Rs.2351.23 Lakhs (2013 - Rs.3446.34 Lakhs).

(ii) Other matters relating to labour cases, etc. aggregating to Rs.4.25 Lakhs (2013 - Rs.4.25 Lakhs).

(b) Commitments

Estimated amount of contracts remaining to be executed on capital account (not provided for) - Rs.329.06 Lakhs (2013 - Rs.4277.23 Lakhs).

2. FUTURE LEASE OBLIGATIONS

The Company has entered into various operating lease agreements and the amounts paid under such agreements have been charged to revenue as Rent under Note 26. All these agreements are cancellable in nature.

3. DISCLOSURES REGARDING DERIVATIVE INSTRUMENTS

The Company uses forward exchange contracts to hedge its foreign currency exposures related to the underlying transactions, firm commitments and highly probable forecasted transactions. The use of these foreign exchange forward contracts are intended to reduce the risk or cost to the Company and are not intended for trading or speculation purpose. The information on such derivative instruments is as follows:

(c) Hedges of highly probable forecasted transactions

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

In respect of the aforesaid hedges of highly probable forecasted transactions, the Company has recorded in Shareholders'' Funds under Cash Flow Hedge Reserve Account, a net gain of Rs.52.89 Lakhs (2013 - Rs.67.27 Lakhs). The Company also recorded a net loss of Rs.23.89 Lakhs (2013 - Rs.45.12 Lakhs) in the Statement of Profit and Loss.

The net carrying amount on Company''s ''Cash Flow Hedge Reserve Account'' as at 31st March, 2014 was a gain of Rs.120.16 Lakhs (2013 - Rs.67.27 Lakhs).

4. EMPLOYEE BENEFITS

(a) The Employee Benefit Schemes are as under:

(i) Provident Fund

Eligible employees of the Company receive benefits under the Provident Fund which are defined contribution/benefit plans wherein both the Company and the employees make monthly contributions equal to a specified percentage of the covered employees'' salary. These contributions are made to the Funds administered and managed by the Government of India/ Company''s own Trust. The Company''s own trust plan envisages guarantee of interest at the rate notified by the Provident Fund authority. The Company''s contributions along with interest shortfall, if any, are charged to revenue in the year they are incurred. Expenditure for the year amounted to Rs.167.71 Lakhs (2013 - Rs.173.85 Lakhs).

(ii) Gratuity

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

(iii) Pension Fund

The Company has a defined contribution pension scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees'' salary. These contributions are administered by the Company''s own Trust which has subscribed to ''Group Pension Scheme'' of Life Insurance Corporation of India. The Company''s contributions are charged to revenue in the period they are incurred - Rs.97.65 Lakhs (2013 - Rs. 102.18 Lakhs).

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

(iv) Leave Encashment

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

(v) Retirement Allowance

The Company has an unfunded defined benefit retirement allowance scheme for its employees in the workmen category. Liability with regard to such scheme is determined by actuarial valuation and charged to revenue in the period it is determined - Rs.303.29 Lakhs (2013 - Nil). Consequently, asset/(liability) recognised in the Balance Sheet as at 31st March, 2014 is Rs.(303.29) Lakhs (2013 - Nil).


Mar 31, 2013

1. CONTINGENT LIABILITIES AND COMMITMENTS

(a) Contingent Liabilities

Claims against the Company not acknowledged as debts Rs.3450.59 Lakhs (2012 - Rs.3188.08 Lakhs).

These comprise -

(i) Tax demands disputed by the Company relating to disallowances/additions of fiscal benefits, pending before various judicial forums, aggregating to Rs.3446.34 Lakhs (2012 - Rs.3174.71 Lakhs).

(ii) Other matters relating to labour cases, etc. aggregating to Rs.4.25 Lakhs (2012 - Rs.13.37 Lakhs).

(b) Commitments

Estimated amount of contracts remaining to be executed on capital account (not provided for) - Rs.4277.23 Lakhs (2012 - Rs.2371.12 Lakhs).

2. FUTURE LEASE OBLIGATIONS

The Company has entered into various operating lease agreements and the amounts paid under such agreements have been charged to revenue as rent under Note 26. All these agreements are cancellable in nature.

3. DISCLOSURES REGARDING DERIVATIVE INSTRUMENTS

The Company uses forward exchange contracts to hedge its foreign currency exposures related to the underlying transactions, firm commitments and highly probable forecasted transactions. The use of these foreign exchange forward contracts are intended to reduce the risk or cost to the Company and are not intended for trading or speculation purpose. The information on such derivative instruments is as follows:

4. HEDGE ACCOUNTING

Effective 1st April, 2012, the Company has adopted Accounting Standard (AS) 30, "Financial Instruments - Recognition and Measurement" issued by the Institute of Chartered Accountants of India to the extent the adoption does not contradict with existing Accounting Standards and other authoritative pronouncements of the Company Law and other regulatory requirements. Accordingly, change in fair value of derivative financial instruments (comprising of foreign currency forward contracts) that are designated as effective cash flow hedges, is recognised directly in the shareholders'' fund and is reclassified in the Statement of Profit and Loss upon occurance of the hedged transaction. Had the Company not adopted the principles of hedge accounting set out in AS 30, the net assets of the Company would have been lower by Rs.67.27 Lakhs without impacting on the profits for the year.

5. EMPLOYEE BENEFITS

(a) The Employee Benefit Schemes are as under:

(i) Provident Fund

Eligible employees of the Company receive benefits under the Provident Fund which are defined contribution/benefit plans wherein both the Company and the employees make monthly contributions equal to a specified percentage of the covered employees'' salary. These contributions are made to the Funds administered and managed by the Government of India/ Company''s own Trust. The Company''s own trust plan envisages guarantee of interest at the rate notified by the Provident Fund authority. The Company''s contributions along with interest shortfall, if any, are charged to revenue in the year they are incurred. Expenditure for the year amounted to Rs.173.85 Lakhs (2012 - Rs.178.52 Lakhs).

(ii) Gratuity

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

(iii) Pension Fund

The Company has a defined contribution pension scheme to provide pension to the eligible employees . The Company makes monthly contributions equal to a specified percentage of the covered employees'' salary. These contributions are administered by the Company''s own Trust which has subscribed to ''Group Pension Scheme'' of Life Insurance Corporation of India. The Company''s contributions are charged to revenue in the period they are incurred - Rs.102.18 Lakhs ( 2012 - Rs.110.08 Lakhs).

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

(iv) Leave Encashment

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

6. COMPARATIVE FIGURES

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


Mar 31, 2011

I Contingent Liabilities

Claims against the Company not acknowledged as debts Rs. 3907.77 Lakhs (2010 - Rs. 267.19 Lakhs). These comprise -

a. Tax demands disputed by the Company relating to disallowances/additions of fiscal benefits, pending at various stages of appeal, aggregating to Rs. 3894.40 Lakhs (2010 - Rs. 149.00 Lakhs).

b. Land disputes representing claims towards land grabbing cases pending before Honble Special Court aggregating to Rs. Nil (2010 - Rs. 103.16 Lakhs).

c. Other matters relating to labour cases etc. aggregating to Rs. 13.37 Lakhs (2010 - Rs. 15.03 Lakhs).

II Future lease obligations

The Company has entered into various operating lease agreements and the amounts paid under such agreements have been charged to revenue as Rent under Schedule 17. All these agreements are cancellable in nature.

III Disclosures regarding Derivative Instruments

The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The use of these foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts for trading or speculation purposes.

IV Amalgamation of VST Distribution, Storage & Leasing Company Private Limited (DSL) with the Company

Pursuant to the scheme of amalgamation of erstwhile wholly owned subsidiary DSL with the Company, as sanctioned by the Honble High Court of Andhra Pradesh on 16th March, 2011, the assets and liabilities of the erstwhile DSL were transferred to and vested in the Company, pending mutation, with effect from 1st April, 2010. The scheme has accordingly been given effect to in these accounts.

The amalgamation has been accounted for under the pooling of interest method prescribed by the Accounting Standard on Amalgamation (AS-14).

The assets and liabilities and other reserves of the erstwhile DSL as at 1st April, 2010 have been taken over at their book values.

Consequently, the investment of the Company in DSL and the Equity Share Capital of DSL stands cancelled.

In veiw of the aforesaid amalgamation with effect from 1st April, 2010, the figures for the current year are not comparable to those of the previous year.

V Micro and small scale business entities

There are no micro and small enterprises, to whom the Company owes dues, which are outstanding as at 31st March, 2011. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

VI Employee Benefits

a. The Employee Benefit Schemes are as under:

i. Provident Fund

Eligible employees of the Company receive benefits under the Provident Fund which are defined contribution/benefit plans wherein both the employee and the Company make monthly contributions equal to a specified percentage of the covered employees salary. These contributions are made to the Funds administered and managed by the Government of India/Companys own Trust. The Companys monthly contributions are charged to revenue in the period they are incurred.

ii. Gratuity

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

iii. Pension Fund

The Company has a defined contribution pension scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees salary. These contributions are administered by the Companys own Trust which has subscribed to Group Pension Scheme of Life Insurance Corporation of India. The Companys contributions of Rs. 103.66 Lakhs (2010 - Rs. 100.64 Lakhs) are charged to revenue in the period they are incurred.

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

iv. Leave Encashment

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

(I) Directors Remuneration

(II) Exceptional items represents expense incurred under Voluntary Retirement Scheme for employees for the year ended 31st March, 2010 - Rs. 1241 Lakhs.

(V) Segment Reporting

The Companys business activity primarily falls within a single primary business segment viz. Tobacco and related products and hence no business segment information is provided.

The entire activity pertaining to sales outside India is carried out from India, hence all segment assets are considered entirely to be in India.

20. Additional Information pursuant to the provisions of Paragraphs 3, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956

a. CLASS OF GOODS, CAPACITY AND PRODUCTION

* The figure of Registered/Licenced Capacity is as re-endorsed on the Certificate of Registration as on 30th September, 1985 and is exclusive of an additional 25 per cent of the approved Registered/Licenced Capacity available to the Company under the Central Governments Liberalised Industrial Policy.


Mar 31, 2010

I Contingent Liabilities

Claims against the Company not acknowledged as debts Rs.267.19 Lakhs (2009 - Rs.242.62 Lakhs). These Comprise -

a. Tax demands disputed by the Company relating to disallowances/additions of fiscal benefits, pending at various stages of appeal, aggregating to Rs.149.00 Lakhs (2009 - Rs.Nil).

b. Land disputes representing claims towards land grabbing cases pending before Honble Special Court aggregating to Rs.103.16 Lakhs (2009 - Rs.227.59 Lakhs).

c. Other matters relating to labour cases etc. aggregating to Rs.15.03 Lakhs (2009 - Rs.15.03 Lakhs).

II Future lease obligations

The Company has entered into various operating lease agreements and the amounts paid under such agreements have been charged to revenue as Rent under Schedule 17. All these agreements are cancellable in nature.

Assets acquired by way of finance lease, are stated at the amount, equal to the lower of their fair value and the present value of the minimum lease payments.

III Disclosures regarding Derivative Instruments

The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The use of these foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts for trading or speculation purposes.

IV Micro and small scale business entities

There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding as at 31st March, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

V Employee Benefits

a. The Employee Benefit Schemes are as under:

i. Provident Fund

Eligible employees of the Company receive benefits under the Provident Fund which are defined contribution/benefit plans wherein both the employee and the Company make monthly contributions equal to a specified percentage of the covered employees salary. These contributions are made to the funds administered and managed by the Government of India/Companys own Trust. The Companys monthly contributions are charged to revenue in the period they are incurred.

ii. Gratuity

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

iii. Pension Fund

The Company has a defined contribution pension scheme to provide pension to the eligible employees . The Company makes monthly contributions equal to a specified percentage of the covered employees salary. These contributions are administered by the Companys own Trust which has subscribed to Group Pension Scheme of Life Insurance Corporation of India. The Companys contributions of Rs.100.64 Lakhs (2009- Rs.93.57 Lakhs) are charged to revenue in the period they are incurred.

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

iv. Leave Encashment

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

 
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