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Notes to Accounts of AVT Natural Products Ltd.

Mar 31, 2017

E) SHARES ALLOTTED AS FULLY PAID UP BY WAY OF BONUS SHARES (DURING 5 YEARS PRECEDING MARCH 31, 2017)

The Company allotted 7,61,42,000 Equity Shares as Fully Paid up Bonus Shares in the ratio of 1:1 by capitalization of Capital Redemption Reserve and General Reserve on 28th September 2013 pursuant to Share Holders Resolution passed by postal ballot on 19th September 2013. .

The company has a process where by periodically all foreign exchange forward contracts are assessed. At the year end, the company has reviewed the forward exchange contracts and there are no material foreseeable losses on such contracts.

The Company has adopted the provisions mentioned in the guidance note issued by ICAI with respect to Hedge Accounting insofar as it relates to Forward contracts that are in the essence derivative instruments entered into by the Company to hedge foreign currency risk on firm commitments and highly probable forecast transactions meeting the necessary criteria for designation as “Cash Flow Hedge”. The gains and losses on effective cash flow hedges are recognized in “Hedge Reserve Account” and retained until the underlying forecasted transaction occurs.

1 As per Section 135 of the Companies, Act 2013, a CSR committee has been formed by the company. The areas for CSR activities are promoting education, health care, development of sports, sanitation, women empowerment and rural development projects. The total amount spent during the year on such activities which are specified in Schedule VII of the Companies Act, 2013 amounts to Rs. 83,26,799/- ( PY Rs.95,87,482/- )

2 Disclosure on Specified Bank Notes ( SBNs )

During the year, the company had specified bank notes or other denomination note as defined in the MCA notification GSR 308E dated 31st March 2017 on the details of Specified Bank Notes ( SBNs ) held and transacted during the period 8th November 2016 to 30 th December 2016, the denomination wise SBNs and other notes as per the said notification is given below:

* For the purpose of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs No. SO 340E dated 8th November 2016.

3 Due to Micro & Small Enterprises:

Based on the information available with the company, the principal amount due to Micro, Small & Medium Enterprises as on 31.03.2017 is Rs. 2,60,31,494/- ( PY Rs. 4,83,789/-). There are no overdue principal amounts and therefore no interest was paid or payable.

4 Segment Reporting :

The Company operates in solvent extracted products which is the primary reportable segment. Therefore, segment reporting is not applicable.

5 Dividends :

The Board of Directors, in its meeting on 29th May 2017, proposed a Final Dividend of Rs 0.20 Per equity share for the Financial Year ended March 31, 2017. The proposal is subject to the approval of Share Holders at the Annual General Meeting to be held on 10th August 2017 and if approved would result in a cash outflow of Approximately Rs 366.57 lakhs including Corporate Dividend Tax.

In terms of revised Accounting Standard (AS) 4 Contingencies and Events occurring after Balance Sheet date as notified by the Ministry of Corporate Affairs (MCA) through amendments to Companies (Accounting Standard) Amendment Rules 2016, dated 30th March, 2016, proposed dividend is not recognized as liability as on 31st March, 2017. Accordingly balance of Reserves and Surplus is higher by Rs 366.57 lakh and balance of other liabilities is lower by an equivalent amount.

6 Research and Development Expenditure :

Expenditure incurred at R&D Centres approved by Department of Scientific and Industrial Research (DSIR) eligible for Weighted deduction under the Income Tax Act

7 Employee Benefits:

i) Defined Benefit Plans:

a) Description of the Company’s defined benefit plan:

i) Gratuity Scheme:

This is a funded defined benefit plan for qualifying employees for which, the Company makes contribution to the Gratuity Fund managed by the Life Insurance Corporation of India. The scheme provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment. Vesting occurs upon completion of five years of service.

ii) Leave Encashment:

The company also operates a non funded leave encashment scheme for its employees.

b) Reconciliation of changes in the Present Value of Obligation:

ii) Defined Contribution Plans:

The Company makes contribution towards employees’ provident fund, family pension fund, superannuation fund and employees’ state insurance scheme. Under the rules of these schemes, the Company is required to contribute a specified percentage of payroll costs. The Company during the year recognized Rs. 2,20,63,459/- as expense towards contributions to these plans.

8 Related Party Transactions :

Following companies are related to the Company on account of Common Control through Constitution of Board/ Shareholdings:

- A V Thomas & Company Ltd.

- L J International Ltd.

- A V Thomas Investments Company Ltd.

- The Nelliampathy Tea & Produce Co. Ltd.

- Neelamalai Agro Industries Ltd.

- The Midland Rubber and Produce Company Ltd.

- AVT McCormick Ingredients Private Ltd.

- AVT Tea Services Ltd.

- AVT Holdings Private Ltd.

- A V Thomas Leather & Allied Products Pvt. Ltd.

Key Management Personnel:

Mr. Ajit Thomas, Chairman

- AVT Tea Services North America, LLC

- A V Thomas Exports Ltd.

- Midland Latex Products Ltd.

- Sermatech Private Ltd.

- Aspera Logistics Pvt. Ltd.

- Midland Corporate Advisory Services Pvt. Ltd.

- AVT Gavia Foods Pvt. Ltd.

- Midland Charitable Trust

- AVT International Ltd.

Mr. M.N. Satheesh Kumar, President and CEO

Mr. A. Ramadas, Sr. Vice President and CFO

Mr. Dileepraj. P, Company Secretary

9 Previous year’s figures have been regrouped wherever necessary to conform to Current year’s classification


Mar 31, 2015

A) Transactions of a non-cash nature.

b) Any deferrals or accruals of past or future operating cash receipts or payments and

c) Items of income or expense associated with investing or financing cash flows.

Cash and cash equivalents (including bank balances) are reflected as such in Cash Flow Statement.

E) SHARES ALLOTTED AS FULLY PAID UP BY WAY OF BONUS SHARES (DURING 5 YEARS PRECEDING MARCH 31,2015)

The Company allotted 7,61,42,000 Equity Shares as Fully Paid up Bonus Shares in the ratio of 1:1 by capitalisation of Capital Redemption Reserve and General Reserve on 28th September 2013 pursuant to Share Holders Resolution passed by postal ballot on 19th September 2013.

The Company has a process where by periodically all foreign exchange forward contracts are assessed. At the year end, the Company has reviewed the forward exchange contracts and there are no material forseeable losses on such contracts.

2 The Company has adopted the useful life of fixed assets prescribed under Part C of Schedule II of the Companies Act 2013 for providing depreciation from 1st April 2014 except in the case of Plant and Machinery relating to Continuous Processing Plant of Marigold and Spices Processing for which the useful life has been taken as per the technical evaluation. As a result the standalone depreciation for the year ended 31.03.2015 is higher by Rs.47,72,830/- with consequential effect on statement of profit and loss before tax by this amount. For the tangible Fixed Assets that had completed useful life as at 01.04.2014, the carrying amount of Rs. 43,86,007/- has been charged to Statement of Profit & Loss as per Note 7 of Part C of Schedule II to the Companies Act 2013.

3 As per Section 135 of the Companies Act 2013, a CSR committee has been formed by the Company. The areas for CSR activities are promoting education, health care, sanitation, women empowerment and rural development projects. The total amount spent during the year on such activities which are specified in Schedule VII of the Companies Act 2013 amounts to Rs.15,00,512/-

4 Due to Micro & Small Enterprises:

Based on the information available with the Company, the principal amount due to Micro, Small & Medium Enterprises as on 31.03.2015 is Rs. Nil (Previous Year Nil). There are no overdue principal amounts and therefore no interest was paid or payable.

5 Segment Reporting :

The Company operates in solvent extracted products which is the primary reportable segment. Therefore, segment reporting is not applicable.

6 Employee Benefits:

i) Defined Benefit Plans:

a) Description of the Company's defined benefit plan:

i) Gratuity Scheme:

This is a funded defined benefit plan for qualifying employees for which, the Company makes contribution to the Gratuity Fund managed by the Life Insurance Corporation of India. The scheme provides for a lumpsum payment to vested employees at retirement, death while in employment or on termination of employment. Vesting occurs upon completion of five years of service.

ii) Leave Encashment:

The Company also operates a non funded leave encashment scheme for its employees.

ii) Defined Contribution Plans:

The Company makes contribution towards employees' provident fund, family pension fund, super annuation fund and employees' state insurance scheme. Under the rules of these schemes, the Company is required to contribute a specified percentage of payroll costs. The Company during the year recognised Rs. 2,26,03,725/- as expense towards contributions to these plans.

7 Related Party Transactions :

Following companies are related to the Company on account of Common Control through Constitution of Board/ Shareholdings:

- A V Thomas & Company Ltd - A V Thomas Leather & Allied Products Pvt. Ltd

- LJ International Ltd - AVT Tea Services North America, LLC

- A V Thomas Investments Company Ltd - A V Thomas Exports Ltd

- The Nelliampathy Tea & Produce Co. Ltd - Midland Latex Products Ltd

- Neelamalai Agro Industries Ltd - Sermatech Private Ltd

- The Midland Rubber and Produce Company Ltd - Ajit Thomas Holdings Private Limited

- AVT McCormick Ingredients Private Ltd - Midland Corporate Advisory Services P Ltd

- AVT Natural Pte Ltd. - AVT Gavia Foods Pvt Ltd

- AVT Tea Services Ltd - Midland Charitable Trust

- Teleflex Medical Private Ltd - Midland Natural Pte. Ltd

- AVT Holdings Private Ltd - AVT International Ltd.

8 Previous year's figures have been regrouped wherever necessary to conform to Current year's classification.


Mar 31, 2013

1 The Company has opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules, 2009 on Accounting Standard 11 (AS-11) notified by the Government of India on 29th December 2011. Accordingly, the effect of exchange differences on foreign currency term loan availed for acquisition of fixed assets has been adjusted to the cost of fixed assets and depreciation has been provided over the balance life of assets. The unamortised amount as on 31.03.2013 on account of the above is Rs. 0.76 Crores.

2 Employee Benefits:

i) Defined Benefit Plans:

a) Description of the Company''s defined benefit plan:

i) Gratuity Scheme:

This is a funded defined benefit plan for qualifying employees for which, the Company makes contribution to the Gratuity Fund managed by the Life Insurance Corporation of India. The scheme provides for a lumpsum payment to vested employees at retirement, death while in employment or on termination of employment. Vesting occurs upon completion of five years of service.

ii) Leave Encashment:

The company also operates a non funded leave encashment scheme for its employees.


Mar 31, 2012

Year ended Year ended 31.03.2012 31.03.2011 Rs. Rs.

1 CONTINGENT LIABILITIES IN RESPECT OF

a) Sales tax demand disputed in appeals, against which Rs.71,23,260/- paid and included under Advances 1,51,46,028 1,51,46,028

b) Service Tax demand disputed in appeal 5,41,50,000 5,41,50,000

c) The company through its banker State Bank of India, Palarivattom Branch has given a Letter of Comfort to State Bank of India, Shanghai, China for Working Capital Facility of US$ 1.5 Million (Rs.750 Lacs) to the Ultimate Subsidiary Heilongjiang AVT-Bio Products Ltd, China 7,50,00,000 Nil

2 The Company has certain unexpired foreign currency derivative contracts to the tune of US $ 4.8 Million as on 31.03.2012, which were entered into to hedge the risk of changes in foreign exchange currency rates on future export sales against existing long term export contracts. The mark to market negative variation on currency position as on 31.03.2012 of Rs.3.37 crores has not been considered as loss on foreign currency derivates. As the hedge transactions have been entered into based on firm export sale contracts and as per the costing systems of the company, such hedge transaction will only result in current profit for the relevant period of execution of the contract. On the principle of going concern, such hedge transactions will not result in losses requiring recognition as on this date.

3 The Company has opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules, 2009 on Accounting Standard 11 (AS-11) notified by the Government of India on 29th December 2011. Accordingly, the effect of exchange differences on foreign currency term loan availed for acquisition of fixed assets has been adjusted to the cost of fixed assets and depreciation has been provided over the balance life of assets. The unamortised amount as on 31.03.2012 on account of the above is Rs. 0.64 Crores.

4 Segment Reporting :

The Company operates in solvent extracted products which is the primary reportable segment. Therefore, segment reporting is not applicable.

5 Employee Benefits:

i) Defined Benefit Plans:

a) Description of the Company's defined benefit plan:

i) Gratuity Scheme:

This is a funded defined benefit plan for qualifying employees for which, the Company makes contribution to the Gratuity Fund managed by the Life Insurance Corporation of India. The scheme provides for a lumpsum payment to vested employees at retirement, death while in employment or on termination of employment. Vesting occurs upon completion of five years of service.

ii) Leave Encashment:

The company also operates a non funded leave encashment scheme for its employees.

ii) Defined Contribution Plans:

The Company makes contribution towards employees' provident fund, family pension fund, super annuation fund and employees' state insurance scheme. Under the rules of these schemes, the Company is required to contribute a specified percentage of payroll costs. The Company during the year recognised Rs. 97,41,489/- as expense towards contributions to these plans.

6 Previous year's figures have been regrouped wherever necessary to conform to Current year's classification.


Mar 31, 2011

Year Ended Year Ended 31.03.2011 31.03.2010 Rs. Rs.

1 CONTINGENT LIABILITIES IN RESPECT OF

a) Salestax demand disputed in appeals, against which Rs.71,23,260/- paid and included under Advances 1,51,46,028 1,52,86,216

b) Service Tax demand disputed in appeal 5,41,50,000 4,30,81,160

c) Outstanding Bank Guarantees/Letters of Credit 3,87,63,541 9,66,83,981

2 The Company has certain unexpired foreign currency derivative contracts to the tune of US $ 9.6 Million as on 31.03.2011, which were entered into to hedge the risk of changes in foreign exchange currency rates on future export sales against existing long term export contracts. The mark to market negative variation on currency position as on 31.03.2011 of Rs.1.12 crores has not been considered as loss on foreign currency derivates. As the hedge transactions have been entered into based on firm export sale contracts and as per the costing systems of the company, such hedge transaction will only result in current profit for the relevant period of execution of the contract. On the principle of going concern, such hedge transactions will not result in losses requiring recognition as on this date.

3 The Company has opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules, 2009 on Accounting Standard 11 (AS-11) notified by the Government of India on 31st March 2009. Accordingly, the effect of exchange differences on foreign currency term loan availed for acquisition of fixed assets has been adjusted to the cost of fixed assets and depreciation has been provided over the balance life of assets. The unamortized amount as on 31.03.2011 on account of the above is Rs. 0.24 Crores.

4 Due to Micro & Small Enterprises:

Based on the information available with the company, the principal amount due to Micro , Small & Medium Enterprises as on 31.03.2011 is Rs.Nil. There are no overdue principal amounts and therefore no interest was paid or payable.

5 Employee Benefits:

i) Defined Benefit Plans:

a) Description of the Company's defined benefit plan: i) Gratuity Scheme:

This is a funded defined benefit plan for qualifying employees for which, the Company makes contribution to the Gratuity Fund managed by the Life Insurance Corporation of India. The scheme provides for a lumpsum payment to vested employees at retirement, death while in employment or on termination of employment. Vesting occurs upon completion of five years of service.

ii) Leave Encashment:

The company also operates a non funded leave encashment scheme for its employees.

ii) Defined Contribution Plans:

The Company makes contribution towards employees' provident fund, family pension fund, super annuation fund and employees' state insurance scheme. Under the rules of these schemes, the Company is required to contribute a specified percentage of payroll costs. The Company during the year recognised Rs. 98,33,873/- as expense towards contributions to these plans.

6 Related Party Transactions:

Following associate companies are related to the company on account of Common Control through Constitution of Board/Shareholdings:

- A V Thomas & Company Ltd - A V Thomas Leather (UK) Ltd

- LJ International Ltd - A V Thomas Exports Ltd

- A V Thomas Investments Company - Midland Latex Products Ltd Ltd

- The Nelliampathy Tea & Produce - Sermatech Private Ltd Co. Ltd

- Neelamalai Agro Industries Ltd - Ajit Thomas Holdings Private Limited

- The Midland Rubber and Produce - Midland Corporate Advisory Company Limited Services Pvt. Ltd

- AVT McCormick Ingredients - AVT Gavia Foods Pvt. Ltd Company Limited

- AVT Natural Pte Ltd. - Midland Charitable Trust

- Heilongjiang AVT Bio-Products - Mdland Natural Pte. Ltd. Ltd.

- Tele flex Medical Private Ltd

- AVT Infotech Private Ltd

- A V Thomas Leather & Allied Products Pvt.Ltd Key Management Personnel : Mr. Ajit Thomas, Chairman

Mr. M.S.A. Kumar, Managing Director


Mar 31, 2010

1 CONTINGENT LIABILITIES IN RESPECT OF

a) Salestax demand disputed in appeals, against which Rs.71,40,702 paid and included under Advances 1,52,86,216 1,52,86,216

b) Service Tax demand disputed in appeal 4,30,81,160 Nil

c) Outstanding Bank Guarantees/Letters of Credit 9,66,83,981 1,35,75,067

d) Capital Commitments not provided for (net of advances) Nil 1,73,77,130

2 The Company has certain unexpired foreign currency derivative contracts to the tune of US $ 14.4 Million as on 31.03.2010, which were entered into to hedge the risk of changes in foreign exchange currency rates on future export sales against existing long term export contracts.The mark to market negative variation on currency position as on 31.03.2010 of Rs. 2.28 crores has not been considered as loss on foreign currency derivates. As the hedge transactions have been entered into based on firm export sale contracts and as per the costing systems of the company, such hedge transaction will only result in current profit for the relevant period of execution of the contract.On the principle of going concern, such hedge transactions will not result in losses requiring recognition as on this date.

3 The Company has opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules, 2009 on Accounting Standard 11 (AS-11) notified by the Government of India on 31st March 2009. Accordingly, the effect of exchange differences on foreign currency term loan availed for acquisition of fixed assets has been adjusted to the cost of fixed assets and depreciation has been provided over over the balance life of assets. The unamortised amount as on 31.03.2010 on account of the above is Rs.0.18 Crores.

4 Due to Micro & Small Enterprises:

Based on the information available with the company, the principal amount due to Micro , Small & Medium Enterprises as on 31.03.2010 is Rs.Nil. There are no overdue principal amounts and therefore no interest was paid or payable.

5 Employee Benefits:

i) Defined Benefit Plans:

a) Description of the Companys defined benefit plan: i) Gratuity Scheme:

This is a funded defined benefit plan for qualifying employees for which, the Company makes contribution to the Gratuity Fund managed by the Life Insurance Corporation of India. The scheme provides for a lumpsum payment to vested employees at retirement, death while in employment or on termination of employment. Vesting occurs upon completion of five years of service.

ii) Leave Encashment:

The company also operates a non funded leave encashment scheme for its employees.

b) Reconciliation of changes in the Present Value of Obligation:

6 Related Party Transactions :

Following associate companies are related to the company on account of Common Control through Constitution of Board/Shareholdings:

- A V Thomas & Company Ltd - A V Thomas Leather & Allied Products Pvt.Ltd

- A V Thomas International Ltd - A V Thomas Leather (UK) Ltd

- LJ International Ltd - A V Thomas Exports Ltd

- A V Thomas Investments Company Ltd - Midland Latex Products Ltd

- The Nelliampathy Tea & Produce Co.Ltd - Sermatech Private Ltd

- Neelamalai Agro Industries Ltd - Ajit Thomas Holdings Private Limited

- The Midland Rubber and Produce Company Ltd - Midland Corporate Advisory Services P Ltd

- AVT McCormick Ingredients Private Ltd - IQ Tech Private Limited

- AVT Natural Pte Ltd. - AVT Gavia Foods Pvt Ltd

- Heilongjiang AVT Bio- Products Ltd - Tekessence Software Solutions P Ltd

- Teleflex Medical Private Ltd - Tek Health Services Inc USA

- AVT Infotech Private Ltd - Midland Charitable Trust

Key Management Personnel: Mr Ajit Thomas, Chairman

Mr M S A Kumar, Managing Director

7 Previous years figures have been regrouped wherever necessary to conform to Current years classification.

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