Dec 31, 2018
1. General information
DIC India Limited (âDICâ or âthe Companyâ) [CIN: L24223WB1947PLC015202] is a public limited company incorporated on April 02, 1947. The Company is a subsidiary of DIC Asia Pacific Pte Limited, Singapore and the ultimate holding Company is DIC Corporation, Japan. The Company is listed on Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Calcutta Stock Exchange(CSE). The Company is engaged in the business of manufacturing of printing inks, which covers newsprint ink, offset ink and liquid ink used in newspapers, other publications and packaging industries. The Company also provides lamination adhesive, synthetic resins, press room chemicals, and rubber blankets. The Company has four manufacturing plants one each at Kolkata (West Bengal), Noida (Uttar Pradesh), Ahmedabad (Gujarat) and Bangalore (Karnataka) and its registered office is situated at Kolkata, West Bengal, India.
The accompanying Indian Accounting Standards (Ind AS) (as amended) financial statements reflect the results ofthe activities undertaken by the Company during the year ended 31 December 2018.
2. Application of new and amended Ind AS
On 16 February 2015, the Ministry of Corporate Affairs (âMCAâ) notified the Companies (Indian Accounting Standards) Rules, 2015. The rules specify the Indian Accounting Standards (Ind AS) applicable to certain class of companies and set out dates of applicability. The Company is required to apply the standards as specified in Companies (Indian Accounting Standards) Rules 2015 and accordingly, the Company has adopted Ind AS (as amended time to time) from annual period beginning from January 1,2018 with transition date as January 1,2017.
As at the date of authorisation ofthe financial statements, the Company has not applied the following Ind AS (as amended from time to time) that have been issued by MCA but are not yet effective:
(i) Ministry of Corporate affairs has notified Ind AS 115 - Revenue from Contract with Customers: On 28 March 2018, Ministry of Corporate Affairs has notified the Ind AS 115. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further, the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty ofrevenue and cash flows arising from the entityâs contracts with customers. The standard permits two possible methods oftransition:
- Retrospective approach- Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors.
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)
The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1,2018. The Company is evaluating the requirements of the amendment and its impact on the financial statements.
(ii) Appendix B to Ind AS 21, Foreign Currency Transactions and Advance Consideration:
On 28 March 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment is effective from 1 April 2018. These amendments are not expected to have material effect on Companyâs financial statements.
(iii) Amendments to IndAS 12 - Recognition ofDeferredTaxAssets for Unrealised Losses.
The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.
Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity ofthe earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact. The Company is evaluating the requirements ofthe amendment and its impact on the financial statements.
(iv) Amendments to IndAS 40 - Transfers of Investment Property
The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in managementâs intentions for the use of a property does not provide evidence of a change in use.
Entities should apply the amendments prospectively to changes in use that occur on or after the beginning ofthe annual reporting period in which the entity first applies the amendments.
An entity should reassess the classification of property held at that date and, if applicable, reclassify property to reflect the conditions that exist at that date. Retrospective application in accordance with IndAS 8 is only permitted if it is possible without the use of hindsight.
The amendments are effective for annual periods beginning on or after 1 April 2018. The Company do not have any investment property, therefore this amendment is not applicable to the Company.
(v) Amendments to Ind 112 Disclosure of Interests in Other Entities:
Clarification ofthe scope of disclosure requirements in IndAS 112
The amendments clarify that the disclosure requirements in IndAS 112, other than those in paragraphs B10B16, apply to an entityâs interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal group that is classified) as held for sale. These amendments are not applicable to the Company.
(vi) IndAS 28 Investments in Associates and Joint Ventures Clarification that measuring investees at fair value through profit or loss is an investment-by-investment choice.
The amendments clarify that:
- An entity that is a venture capital organisation, or other qualifying entity, may elect, at initial recognition on an investment by- investment basis, to measure its investments in associates and joint ventures at fair value through profit or loss.
- If an entity, that is not itself an investment entity, has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, elect to retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associateâs or joint ventureâs interests in subsidiaries. This election is made separately for each investment entity associate or joint venture, at the later ofthe date on which:
(a) the investment entity associate or joint venture is initially recognised;
(b) the associate or joint venture becomes an investment entity; and
(c) the investment entity associate or joint venture firstbecomes aparent.
The amendments should be applied retrospectively and are effective from 1 April 2018. The Company do not have any investment in associates and joint ventures, therefore this amendment is not applicable to the Company.
3. Critical accounting estimates and assumptions
In the application of the Companyâs accounting policies, which are described in note 2, the management of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period ofthe revision and future periods if the revision affects both current and future periods.
3.1 Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
a) Defined benefit plans
The cost ofthe defined benefit plan and the present value are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in the currencies of the postemployment benefit obligation.
The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
b) Useful life of Property, plant and equipment
Property, plant and equipment (asset) represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Companyâs assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.
c) Impairment of Property, plant and equipment and Capital work in progress (CWIP)
The management of the Company reviewed the potential generation of economic benefit from property, plant and equipment & capital work in progress as per IndAS 36- Impairment of assets for its printing ink business. In view ofthe management, the net recoverable value (higher of discounted cash flow and net realisable value) of its ink business is more than itâs the carrying value and no impairment is required to be recognised under IndAS 36. Refer note 5.2 and 5.3 to the financials statements for details.
d) Taxes
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the losses can be utilised. In assessing the probability, the Company considers whether the entity has sufficient taxable temporary differences, which will result in taxable amounts against which the unused tax losses or unused tax credits can be utilised before they expire. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
In view of continuing losses, the Company is of view that it is no longer probable that sufficient taxable income will be available and hence brought forward deferred tax assets amounting to Rs 464.09 Lakhs as at December 31, 2017 has been charged off in books of account, as required under IND- AS 12 âIncome Taxesâ. Refer Note 8 for further details.
3.2 First-time Ind-AS adoption reconciliation
3.2.1 First-time adoption of Ind-AS
The Company has prepared the opening balance sheet as per Ind AS as on January 1,2017 (the transition date) by recognising all assets and liabilities whose recognition is required as per Ind AS and not recognising items of assets or liabilities which are not permitted as per Ind AS. Further, items from previous GAAP have been reclassified as per Ind AS and applying Ind AS in measurement of the recognised assets and liabilities. However, this principle is subject to the certain exception and certain optional exemptions availed by the Company as on the transition date.
3.2.2 Exceptions and Exemptions applied
Ind AS 101 allows first-time adopters certain exceptions and exemptions from the retrospective application of certain requirements under Ind AS.
For transition to Ind AS, the Company has applied the following exceptions:
(i) Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively. However, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.
(ii) Derecognition of financial assets and financial liabilities
The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after January 1,2017 (transition date).
(iii) Business combination
In accordance with Ind AS transitional provision, the Company opted not to restate business combination which occurred prior to the transition date.
(iv) Estimates
Estimates made under Ind AS at January 1, 2017 are consistent with the estimates as under previous GAAP.
(v) Classification and measurement of Financial Assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
For transition to Ind AS, the Company has applied the following exemptions:
(i) Deemed cost for property, plant and equipment and intangible assets
The Company has elected to continue with the carrying value of all of its property, plant and equipment and intangible assets recognised as on January 1, 2017 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as on the transition date.
(ii) Arrangements containing a lease
Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based on conditions in place as at the date of transition.
3.2.7 Note on key reconciliation IndAS adjustments
1. Under previous GAAP, actuarial gain and losses were recognised in statement of profit and loss. Under Ind AS 19, the actuarial gains and losses from part of re-measurement of the net defined benefit obligation which are recognised in other Comprehensive Income. The change does not effect other equity. However, there is a decrease in employee benefit expenses for the year ended December 31,2017. The deferred tax on above has also been recognised to other comprehensive income.
2. As per exemption available under IndAS 101, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as on January 01, 2017 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as on the transition date. Also as per the previous GAAP, lease hold land was classified under fixed assets. Under Ind AS 17, as the ownership of the leasehold land at the end of the lease period does not pass on to the lessee or the upfront payment made at the time of obtaining lease does not equal to fair value of the leasehold land obtained, the upfront payments for the leasehold land is classified as prepayment instead of being classified under Property and Plant & Equipment. Consequently, lease hold prepayment net of accumulated depreciation as on December 31,2017 has been reversed and the corresponding amount has been taken under other non-current assets and other current assets. Also, depreciation for the year ended 31 December 2017 for leasehold land has been transferred to rent expenses.
3. Under previous GAAP, long term investment in cooperative society were measured at cost. The investment were made to purchase the flats. On the date of transition to IndAS, the value of investment has been added to the cost of building because the investment denotes the Companyâs right to the flats and the Company has availed deemed cost exemption as stated in point 2 above. This change does not affect loss after tax for the year ended December 31, 2017 because the investment has been reclassified to Property plant and equipment.
4. Under Previous GAAP, the interest free lease security deposits are recognised at their transaction value. Under Ind AS 109, these deposits are initially recognised at fair value and subsequently measured at amortized cost at the end of each reporting date. Accordingly, the difference between the transaction and fair value of these security deposits is recognized as Deferred lease expense and is amortized over the period of the lease term (along with current and non- current classification). Further, interest is accreted on the present value ofthese security deposits.
5. Under previous GAAP, there was no concept of other comprehensive income. Under Ind AS, specified items of income, expense, gains, or losses are required to be presented in other comprehensive income.
6. Under the previous GAAP, excise duty on sale of goods was reduced from sales to present the revenue from operations. Whereas, under IndAS, this excise duty is included in the revenue from operations and the corresponding expense is included as apart of total expenses. The change does not affect total equity as at January 01,2017 and December 31, 2017, loss before tax or total loss for the year ended December 31,2017.
7. Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements was considered as an adjusting event. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend included under provisions has been reversed with corresponding adjustment to retained earnings.
8. Other equity as at transition date and as at 31 December 2017 has been adjusted consequent to the above IndAS adjustments.
9. Previous GAAP figures have been regrouped and reclassed based on the disclosure requirement under IndAS.
Note:
4.1 As per Ind-AS 101, the Company has elected to continue with the carrying value of all of its property, plant and equipment including CWIP recognised as of 1 January 2017 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as on the transition date. In consequence to adoption of deemed cost exemption as on transition date, the gross block ofthe fixed assets (excluding leasehold land) amounting to Rs. 18,934.42 Lakhs has been netted off with accumulated depreciation Rs.12,199.76 Lakhs.
4.2 During the previous year, consequent to losses incurred in adhesive division and after evaluation of the expected future performance of the division, the management had performed an impairment testing of property, plant and equipment and capital work-in-progress of the adhesive division and impaired the value of its property, plant and equipment and capital work-in-progress (Refer Note 5 for asset class-wise breakup) to the extent of Rs. 1161.66 Lakhs and capital work-in-progress to the extent of Rs.44.26 Lakhs. The same has been disclosed as an âExceptional Itemâ in the Statement of Profit and Loss. While recognising the impairment loss, the Company had considered its adhesive business division as a cash generating unit, in keeping with the accounting policy on Impairment set out in Note 3.12, and the value in use as the recoverable amount. The Company had used a discount rate of 12% for discounting future cash flows while estimating the value in use.
During the current year, the management has carried out an assessment of impaired adhesive division as per Ind AS 36-Impairment of assets. In view of the management, there is no change in the impairment indicators and accordingly management has continued with the impairment charge recorded in the previous year in respect of Adhesive division.
4.3 During the current year, the management has carried out an assessment as per IndAS 36- Impairment of assets for its printing ink business. In view of the management, the net recoverable value (higher of discounted cash flow and net realisable value) of its ink business is more than its the carrying value and no impairment is required to be recognised under IndAS 36.
Note
5.1 As per Ind-AS 101, the Company has elected to continue with the carrying value of all of its Intangible Assets recognised as of 1 January 2017 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date. In consequence to adoption of deemed cost exemption as on transition date, the gross block of the intangible assets amounting to Rs. 565.11 Lakhs has beennetted off with accumulated depreciation Rs. 516.59Lakhs.
Note:
In view of continuing losses, the Company is of view that it is no longer probable that sufficient taxable income will be available and hence brought forward deferred tax assets amounting to Rs 464.09 Lakhs as at December 31, 2017 has been charged off in books of account, as required under IND- AS 12 âIncome Taxesâ.
6.1 The cost of inventories recognised as an expense during the year in respect of operations was Rs.68,550.98 Lakhs (for the year ended December 31,2017: Rs. 57,576.06 Lakhs).
6.2 The cost of inventories recognised as an expense/ (income) includes Rs. 23.10 Lakhs in respect of write-downs of inventory to net realisable value and write back in December 2017 amounting to Rs. 5.57 Lakhs. The closing provision as atyearendis Rs. 64.56 Lakhs (December 2017: Rs. 41.46 Lakhs). Previous write-downs have been reversed as a result of increased sales prices in certain markets.
11.3 The mode of valuation of inventories has been stated in note 3.13.
7.1 The average credit period on sales of goods is 30 to 120 days. No interest is charged on the trade receivables for the amount overdue above the credit period. There are no customers who represent more than 5% of the total balance oftrade receivables.
7.2 The Company assesses the potential customerâs credit quality and defines credit limits customer wise.
7.3 The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due. For computation of expected credit loss allowance, the Company excludes intercompany balances and trade receivables which are secured by dealer deposits. Based on internal assessment which is driven by the historical experience and current facts available in relation to default and delays in collection thereof, the credit risk for these trade receivables is considered low. The provision matrix at the end ofthe reporting period is as follows:
(i) The Company entered into a Memorandum of understanding (MOU) cum agreement including a related addendum thereto, to sell its freehold land at Mumbai which was previously used for Companyâs ink operations. As at 31 December, 2018, the Company has received as per MOU, an advance of Rs 5,740.00 lakhs from the buyer (Refer note 23) and paid Rs 2,025.08 lakhs on behalf of buyer (Refer note 14). Pending completion ofthe transaction relating to sale of Land at Mumbai, the Company is entitled to claim interest amounting to Rs 704.65 lakhs on delayed payments from the buyer. The same has been disclosed as part of other income. (Refer note 14 and note 25)
No impairment loss was recognised on reclassification of the land held for sale as at 31 December 2018 as the Company expected fair value less costs to sell is higher than the carrying amount.
(i) Rights, preferences and restrictions attached to Equity Shares:
The Company has one class of Equity shares having a par value of Rs.10 per Equity Share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
(iv) There were no shares issued pursuant to contracts without payment being received in cash, by way of bonus issue and no shares were bought back in the period of five years immediately preceding the date as at which the Balance Sheet is prepared.
Note:
(i) The weighted average rate of interest on above borrowing sis 7.63% (31 December 2017:7.40%)
(ii) The Companyâs borrowings from the Consortium of Banks (bank overdraft) are secured by first pari pasu charge on inventory, trade receivables, and entire current assets of the Company, both present and future.
8(i) Consequent to introduction of Goods and Service tax (GST) w.e.f 1 July 2017, Central excise, Value added tax etc. have been subsumed into GST. In accordance with Indian Accounting Standard-18 on Revenue and Schedule III ofthe Companies Act, 2013 unlike excise duty, GST is not part of revenue. Accordingly revenue for the Year ended 31 December 2018 and 31 December 2017 are strictly not comparable. The following additional information is being provided to facilitate such understanding:-
Note: Audit fees for year ended 31 December 2017 has been paid to the previous auditors.
(ii) Expenditure on corporate social responsibility
Section 135(5) ofthe Companies Act, 2013 as amended viaNotificationNo.1/2018 read with the Companies (Corporate social responsibility policy) Rules, 2014, requires that the board of directors of every eligible Company, shall ensure that the company spends, in every financial year, at least 2% of the average net profits of the company made during the immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. The company has loss during the immediately preceding financial year. Accordingly, the Company is not required to contribute to the CSR activities during the year. The details of corporate social responsibility expenditure made in previous year is as follows:
(ii) The Company has other commitments, for purchase orders which are issued after considering requirements per operating cycle for purchase of services, employeeâs benefits. The Company does not have any other long term commitments or material non-cancellable contractual commitments /contracts, including derivative contracts for which there were any material foreseeable losses.
(c) There has been no delays in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
9. Transfer Pricing
The company has established a comprehensive system on maintenance of information and documents as required by the transfer pricing legislation under 92-92F of the Income Tax Act, 1961 and has documented Transfer Pricing Benchmarking study for the financial year 2016-17. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the International transactions entered into with the holding Company and other associated enterprises during the year and expects such records to be in existence latest by the due date s required under law. The management is ofthe opinion that its international transactions are at arms-length and the aforesaid legislation will not have any impact on the financial statements.
10. Disclosures under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006
In terms of notification dated September 4, 2015 issued by the Central Government of India, the disclosure related trade payables as at December 31,2018 are as follows:
# The above disclosure is based on information available with the Company regarding status of the suppliers as defined under Section 2 of the Micro, Small and Medium Enterprises Development Act, 2006. This has been relied upon by the auditors.
11 Employee benefit plan
11.1 Defined contribution plans
During the year the Company has recognised an amount of Rs. 196.50 Lakhs (31 December 2017 Rs. 202.24 Lakhs) as expenditure towards defined contribution plans ofthe Company.
11.2 Defined benefit plans
The Company offers the employee benefit schemes of Pension (funded), Gratuity (funded) and Retirement benefit (unfunded) to its employees. Benefits payable to eligible employees of the Company with respect to these schemes, defined benefit plans are accounted for on the basis of an actuarial valuation as at the balance sheet date.
The present value of defined benefit obligation and the related current service cost were measured using the Projected Unit Credit Method with actuarial valuations being carried out at each balance sheet date.
(vii) Sensitivity Analysis
Significant actuarial assumptions for the determination ofthe defined benefit obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions maybe correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end ofthe reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
11.3 Defined benefit plans- Provident Fund
In terms of Guidance on implementing Ind AS 19 on Employee Benefits issued by the Accounting Standard Board of the Institute of Chartered Accountants of India (ICAI), a provident fund set up by the Company is treated as a defined benefit plan in view of the Companyâs obligation to meet shortfall, if any, on account of interest.
The Actuary has carried out actuarial valuation of planâs liabilities and interest rate guarantee obligations as at the balance sheet date using Projected Unit Credit Method and Deterministic Approach as outlined in the Guidance Note 29 issued by the Institute of Actuaries of India. Based on such valuation, there is no future anticipated shortfall with regard to interest rate obligation of the Company as at the Balance Sheet date. Further during the year, the Companyâs contribution of Rs. 187.78 Lakhs (2017 - Rs. 206.59 Lakhs) to the Provident Fund Trust has been expensed under the âContribution to Provident and Other Fundsâ in Note 28. Disclosures given hereunder are restricted to the information available as per the Actuaryâs Report.
12. Financial Instruments
(i) Capital management
The Company manages itâs capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders through the optimization of the debt and equity balance. The Company is not subject to any externally imposed capital requirements. The Companyâs Board of Directors reviews the capital structure of the Company on a periodic basis. As part of this review, the Board of directors considers the cost of capital and the risks associated with capital. The Companyâs gearing ratio at the end of the reporting period was as follows:
Method/ assumption used to estimate the fair value:
(a) The carrying value of trade receivables, Cash and Cash equivalents, bank deposits, trade payables, other current financial assets and other current financial liabilities measured at amortised cost approximate their fair value due to the short-term maturities ofthese instruments.
(b) The fair values of the derivative financial instruments has been determined using valuation techniques with market observable inputs. The models incorporate various inputs including the credit quality of counter-parties and foreign exchange forward rates.
(c) There were no transfers between Level 1, Level 2 and Level 3 of financial assets and liabilities.
(iii) Financial risk management objectives
The Companyâs management monitors and manages key financial risks relating to the operations of the Company by analysing exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.
The Company seeks to minimise the effects of currency risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Companyâs policies approved by the Board of Directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
(iv) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include foreign currency receivables, deposits and borrowings.
The Company enters into a derivative financial instruments to manage its exposure to foreign currency risk, including forward foreign exchange contracts to hedge the exchange rate risk arising on the imports.
(v) Foreign Currency risk management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.
The Company uses a foreign exchange forward contracts to hedge its exposure in foreign currency risk. The Company generally enters into forward exchange contracts to cover specific foreign currency payments to reduce foreign exchange fluctuation risk.
The carrying amounts of the companyâs foreign currency denominated monetary assets (trade receivables) and monetary liabilities (trade payables) at the end ofthe reporting period are as follows:
The Company has hedged itâs trade payable for Import of raw material. Accordingly, the year end foreign currency exposure that have not been hedged by a derivative instrument or otherwise are given:
(v) (a) Foreign Currency sensitivity analysis
The Company is mainly exposed to the fluctuation in the value of USD and JPY. The following table details the company sensitivity to a 10% increase and decrease in INR against the relevant foreign currency. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents managementâs assessment ofthe reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjust there translation at the period end for a 10% change in foreign currency rate. A positive number below indicates an increase in profit or equity where the Rs. strengthens 10% against the relevant currency. For a 10% weakening of the Rs. against the relevant currency, there would be a comparable impact on the profit or equity.
The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each currency by 10%.
(vi) Interest rate risk management
The Company is subject to variable interest rate on its interest bearing liabilities. The Companyâs interest rate exposure is mainly related to debt obligations. The Companyâs exposure to interest rates on financial liabilities are detailed in the liquidity risk management.
(vi) (a) Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates at the end of the reporting period. For floating rate borrowings, the analysis is prepared assuming the amount of the borrowings outstanding at the end of the reporting period was outstanding for the whole year. A50 basis point increase or decrease is used for disclosing the sensitivity analysis.
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Companyâs loss for the year ended December 31,2018 would increase/decrease by Rs 19.34 Lakhs (for the year ended December 31, 2017: increase/decrease by Rs 12.95 Lakhs). This is mainly attributable to the Companyâs exposure to interest rates on its variable rate borrowings.
(vii) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.
Trade Receivable and other financial assets
The company has adopted a policy of dealing with creditworthy counterparties and obtaining deposits, where appropriate, as a means of mitigating the risk of financial loss from defaults. Before accepting any new customer, the Company assess the potential customers credit quality and defines credit limit by customers. Limits attributed to customer are reviewed annually. Ongoing credit evaluation is performed on the financial condition of accounts receivable. Concentration of credit risk to any counterparty did not exceed 10% of total monetary assets at any time during the year.
Cash and Cash equivalents and bank deposits
The Company maintains its cash and cash equivalents and bank deposits with reputed banks. The credit risk on these instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.
(viii) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the companyâs short-term, medium-term and long-term funding and liquidity management requirements. The company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The table below provides details regarding the contractual maturities of financial liabilities based on contractual undiscounted payments.
13 Operating Lease arrangements
(a) The Companyâs significant leasing arrangements are in respect of operating leases for premises (like residential property, office premises, godowns, etc). These leasing arrangements, which are cancellable, range between 1 year to 6 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals in this regard amounting to Rs. 509.20 Lakhs (2017-Rs.433.41 Lakhs) are charged as rent under Note 31.
(b) The Company acquired certain assets under Operating lease, which are non-cancellable for a period of 4 years with an option to renew the same for a further period at a minimum rent. Details of Lease payments outstanding as at 31st December 2018 are given below:
14 Segment Information
Information reported to the Chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on two segments i) Printing Inks and ii) Adhesives. The segment wise revenue, assets and liabilities, in accordance with the Indian Accounting Standard on Segment Reporting (AS-108) is asunder:
Notes:
1 The Company has considered business segment as the primary segment for disclosure on the basis that the risks and returns of the Company is primarily determined by the nature of products. The reporting segments are Printing Inks (including allied products) andAdhesives.
2 The Segment wise revenue, results, assets and liabilities relate to the respective amounts identifiable to each of the segments. Unallocable income/ expenses refer to income/ expenses which relate to the Company as a whole and are not allocable to segments on a reasonable basis. This is the measure reported to the chief operating decision maker for the purpuses of resource allocation and assessment of segment performance.
3 The Company operates predominantly within the geographical limits of India and accordingly this segments have not been considered.
4 Administrative and corporate expenses, interest expense, unallocated other income and provision for tax have not been allocated to reportable segments. Consequently, segment wise net profit has not been disclosed.
5 Unallocated other income has not been measured and reported segment wise as these components are not realistically allocable and identifiable.
6 Unallocated corporate expenses include expenses such as depreciation, employee remuneration and benefits, administrative and other expenses which are not directly related to the specific segments.
7 Unallocated assets includes Property, plant and equipment, Capital work in progress, Intangible assets, cash & bank balances, deferred tax assets and other assets which are not directly related to the specific segments.
8 Unallocated liabilities include provision for staff benefits and other current liabilities.
9 No single customers contributes 10%ormoretotheCompanyâsrevenue.
15 Reconciliation of liabilities arising from financing activities.
The table below details change in the Companyâs liabilities arising from financing activities, including both cash and non cash changes. Liabilities arising from financing activities are those for which cash flows where, or future cash flows will be, classified in the Companyâs statement of cashflows as cashflows from financing activities.
The cash flows arising from bank loans make up the net amount of proceeds from borrowings and repayments of borrowings in the statement of cash flows.
16 The Company does not have any long-term contracts including derivative contracts for which there are any material foreseeable losses.
17 Events after the reporting period
There are no events which have occurred after the reporting period.
18 Approval of financial statements
The financial statements for the year ended 31 December 2018 were approved and authorised for issue by the board of directors on 30 January 2019.
Dec 31, 2016
Notes to the Financial Statements
EMPLOYEE BENEFITS
(a) Short-term Employee Benefits
Short term Employee Benefits (i.e. benefits falling due within one year after the end of the period in which employees render the related service) are recognised as expense in the period in which employee services are rendered as per the Company''s scheme based on expected obligations on undiscounted basis.
(b) Post-Employment Benefit Plans
Post-employment benefits comprise Provident Fund, Superannuation Fund, Gratuity, Pension and Retirement Benefits which are accounted for as follows:
i. Provident Fund - Certain employees of the Company receive provident fund benefits, which are administered by the Provident Fund Trust set up by the Company. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employees and the Company make monthly contributions at specified percentage of the employees'' salary
to such Provident Fund Trust. The Company has an obligation to fund any shortfall in return on plan assets over the interest rates prescribed by the authorities from time to time. In view of the Company''s obligation to meet the shortfall, this is a defined benefit plan. Actuarial valuation of the Company''s liability under such scheme is carried out under the Projected Unit Credit (PUC) Method at the year end and the charge, if any, is recognised in the Statement of Profit and Loss. Actuarial gains/ losses are recognised immediately in the Statement of Profit and Loss as income/expense.
ii. Superannuation Fund - This is a defined contribution plan. The Company contributes a certain percentage of the eligible salary for employees covered under the scheme towards superannuation fund administered
by the Trustees. The Company has no further obligations for future superannuation benefits other than its contributions and recognises such contributions as expense in the period in which the related employee services are rendered.
iii. Gratuity - This is a defined benefit plan covering eligible employees. As per the scheme, the Gratuity Fund Trust administered by Trustees, makes payment to vested employees at retirement, death, incapacitation, or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. Vesting occurs upon completion of five years of service. The liability is determined based on year-end actuarial valuation using PUC Method. Actuarial gains/losses are recognised immediately in the Statement of Profit and Loss as income/expense.
iv. Pension - The Company has discontinued the Defined Pension Benefit scheme with effect from st May 2009 and all the employees who were members of the erstwhile Defined Pension Benefit scheme has been brought under the Defined Contribution scheme for benefit provisions under the Pension plan. The present value of benefit obligation is actuarially determined at the end of each year by discounting the present value of crystallised pension as at 30th April 2009. Actuarial gains/ losses are recognised immediately in the Statement of Profit and Loss as income/expense.
v. Retirement Benefit - Liability accrued during the year in respect of retirement benefit payable to certain employees governed by agreement with the Union representing them are treated as a defined benefit plan.
As per the scheme, a lump sum benefit is paid to the eligible employees on cessation of service with the Company. The Company''s liability is actuarially determined using the PUC method at the end of each year. Actuarial gains/ losses are recognised immediately in the Statement of Profit and Loss as income/expense.
(c) Other Long-term Employee Benefit s (unfunded)
The cost of providing other long-term employee benefits (Leave Encashment) is determined using Projected Unit Credit Method, with actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses and past service cost are recognised immediately in the Statement of Profit and Loss for the period in which they occur. Other long-term employee benefit obligation recognised in the Balance Sheet represents the present value of related obligation.
(d) Terminal benefits are recognised as expense as and when incur red.
PROVISIONS AND CONTINGENT LIABILITIES
Provisions are recognised when there is a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation as at the Balance Sheet date and are not discounted to its present value.
A disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
TAXATION
Current tax is provided as the amount of tax payable in respect of taxable income for the year, measured using the applicable tax rates and tax laws.
Deferred tax is provided on timing differences between taxable income and accounting income measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets are recognised only if there is a virtual / reasonable certainty, as applicable, in keeping with Accounting Standard 22 on ''Accounting for Taxes on Income'' that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are reviewed for the appropriateness of their respective carrying amount at each Balance Sheet date.
Also refer Note
LEASES
Leases in which a significant portion of the risks and rewards of ownership are retained by the less or are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the period of lease.
1
Dec 31, 2015
(a) Rights, preferences and restrictions attached to Equity Shares:
The Company has one class of Equity Shares having a par value of
Rs.10.00 per Equity Share. Each shareholder is eligible for one vote
per share held. The dividend proposed by the Board of Directors is
subject to the approval of the shareholders in the ensuing Annual
General Meeting, except in case of interim dividend. In the event of
liquidation, the equity shareholders are eligible to receive the
remaining assets of the Company after distribution of all preferential
amounts, in proportion to their shareholding.
(b) There were no shares issued pursuant to contracts without payment
being received in cash, by way of bonus issue and no shares were bought
back in the period of five years immediately preceding the date as at
which the Balance Sheet is prepared.
1. (a) Commitments
Estimated amount of contracts remaining to be executed on Capital
Account and not provided for (net of advances) Rs. 5.72 Million (2014-
Rs. 3.45 Million)
(b) Contingent Liabilities
Claims against the Company not acknowledged as debt :
i) Income Tax matters Rs.46.40 Million (2014 - Rs. 26.38 Million)
pending in appeals.
ii) Disputed Indirect Tax matters for which appeals before the relevant
authorities are pending disposal are as follows :
a) Custom Duty matters Rs.20.16 Million (2014 - Rs.0.16 Million)
b) Excise Duty matters Rs.45.22 Million (2014 - Rs.45.22 Million)
c) Service Tax matters Rs.42.09 Million (2014 - Rs.38.86 Million)
d) Sales Tax / VAT / Entry Tax matters Rs.18.66 Million (2014 -
Rs.24.76 Million)
iii) Rent under dispute Rs.3.72 Million (2014 - Rs.3.72 Million)
pending in appeals.
In respect of above, it is not practicable for the Company to estimate
the timings of cash outflows, if any, pending resolution of the
respective proceedings. The Company does not expect any reimbursements
in respect of the above contingent liabilities.
* Figures are below the rounding off norm adopted by the Company (c)
Mark-to-market losses provided for as at the year end Rs.0.31 Million
(2014 - Rs. 0.28 Million)
2. Assets acquired under Operating Lease
(a) The Company's significant leasing arrangements are in respect of
Operating leases for premises (like residential property, office
premises, godowns etc). These leasing arrangements, which are
cancellable, range between 11 months to 4 years generally, or longer,
and are usually renewable by mutual consent on mutually agreeable
terms. The aggregate lease rentals in this regard amounting to Rs.29.65
Million (2014 - Rs.25.07 Million) are charged as Rent under Note 25.
3. Provision for Taxation
Provision for taxation made in these accounts is based on the results
for the current financial period including the results for the period
from 1st January 2015 to 31st March 2015 forming part of the assessment
year 2015-2016. Ultimate liability for taxation for the assessment year
2016-2017 will be determined on the basis of the results for the last
nine months of the current financial period together with that of
subsequent three months upto 31st March 2016 as one composite income.
Note :
The above particulars, as applicable, have been given in respect of
Micro and Small Enterprises to the extent they could be identified on
the basis of the information available with the Company.
* Amount is below the rounding off norm adopted by the Company.
4. Related Parties Disclosures (in accordance with Accounting
Standard 18 specified under the Act) (i) Related Parties
Names of Related Parties Relationship
(A) Where control exists
DIC Corporation, Japan Ultimate Holding Company
DIC Asia Pacific Pte Ltd., Singapore Holding Company
(B) Others with whom transactions have taken place during the year
Benda-Lutz Werke GmbH Fellow Subsidiary
Coates Screen Inks GmbH. Fellow Subsidiary
DIC (Malaysia) Sdn. Bhd. Fellow Subsidiary
DIC (Shanghai) Co., Ltd. Fellow Subsidiary
DIC Alkylphenol Singapore Pte., Ltd. Fellow Subsidiary
DIC Australia Pty Ltd Fellow Subsidiary
DIC Compounds (Malaysia) Sdn. Bhd. Fellow Subsidiary
DIC Europe GmbH Fellow Subsidiary
DIC Fine Chemicals Private Limited Fellow Subsidiary
DIC Lanka (Private) Ltd. Fellow Subsidiary
DIC New Zealand Ltd Fellow Subsidiary
Hartmann Druckfarben GmbH Fellow Subsidiary
Nantong DIC Color Co., Ltd. Fellow Subsidiary
PT. DIC Graphics Fellow Subsidiary
Siam Chemical Industry Co. Ltd. Fellow Subsidiary
Sun Chemical AG Fellow Subsidiary
Sun Chemical Group S.P.A. Fellow Subsidiary
Sun Chemical N.V./S.A. Fellow Subsidiary
Sun Chemical ZAO Fellow Subsidiary
Sun Chemical (South Africa) (Pty.) Ltd. Fellow Subsidiary
Sun Chemical Limited Fellow Subsidiary
Tintas S.A.S Fellow Subsidiary
Sun Chemical Corp. Fellow Subsidiary
Sun Chemical Group Cooperatief U.A. Fellow Subsidiary
DIC Graphics (Thailand) Co. Ltd. Fellow Subsidiary
Sun Chemical (Chile) S.A. Fellow Subsidiary
Sun Chemical Sp (z.o.o) Fellow Subsidiary
DIC (Taiwan) Ltd. Fellow Subsidiary
Sun Chemical Turkey Fellow Subsidiary
Sun Chemical S.A. Fellow Subsidiary
Mr. Yasuo Ikeda Key Management Personnel
Mr. Samir Bhaumik Key Management Personnel (up to 26th April 2014)
Mr. Shailendra Hari Singh Key Management Personnel (w.e.f. 23rd March
2015)
Figures within brackets relate to previous year.
(1) Purchases of Goods from Fellow Subsidiaries include purchases from
DIC Fine Chemicals Private Limited Rs.93.61 Million (2014 - Rs.87.73
Million), DIC Compounds (Malaysia) Sdn. Bhd. Rs.29.71 Million (2014 -
Rs.22.20 Million) and Sun Chemical Limited Rs.29.05 Million (2014-
Rs.28.76 Million).
(2) Sale of Products to Fellow Subsidiaries include sales to DIC
Australia Pty Ltd. Rs. 78.27 Million (2014- Rs.68.25 Million), Sun
Chemicals ZAO Rs. 26.44 Million (2014 - Rs.46.88 Million), DIC Lanka
(Private) Ltd. Rs. 18.48 Million (2014 - Rs.14.99 Million) and Tintas
S.A.S Rs. 19.74 Million (2014 - Rs.23.87 Million).
(3) Commission Income from Fellow Subsidiaries include income from Sun
Chemical N.V./S.A. Rs.0.33 Million (2014 - Rs. 0.04 Million) and
Hartmann Druckfarben GmbH Rs.0.22 Million (2014 - Rs. Nil)
(4) Reimbursement of Expenses from Fellow Subsidiaries include
reimbursement from Siam Chemical Industry Co.Ltd Rs.1.55 Million (2014
- Rs.1.41 Million)
(5) Trade Payables to Fellow Subsidiaries include payable to DIC Fine
Chemicals Private Limited Rs. 17.89 Million (2014 - Rs.51.35 Million),
Nantong DIC Color Co., Ltd. Rs. 6.33 Million (2014 - Rs.3.81 Million)
and DIC Compounds (Malaysia) Sdn. Bhd. Rs. 5.25 Million (2014 - Rs.
11.83 Million)
(6) Trade Receivables from Fellow Subsidiaries include receivable from
DIC Australia Pty Ltd. Rs. 33.52 Million (2014 - Rs.20.64 Million).
(7) Short-term Loans and Advances to Fellow Subsidiaries include
receivable from Sun Chemical N.V./S.A. Rs. 0.31 Million (2014 - Rs.0.55
Million) and Siam Chemical Industry Co. Ltd. Rs. 0.27 Million (2014 -
Rs.0.22 Million).
(8) Sale of Fixed Assets include sale to Mr. Samir Bhaumik Rs. Nil
(2014 - Rs. 0.05 Million).
(9) Managerial Remuneration includes remuneration to Mr. Shailendra
Hari Singh Rs. 8.82 Million (2014 - Rs. Nil), Mr. Yasuo Ikeda Rs. 11.28
Million (2014 - Rs. 6.52 Million) and Mr. Samir Bhaumik Rs. Nil (2014 -
Rs. 5.79 Million).
(10) Advance recovered includes advance recovered from Mr. Samir
Bhaumik Rs. Nil (2014 - Rs. 0.03 Million).
(11) Employee Related Liabilities includes payable to Mr. Shailendra
Hari Singh Rs. 3.28 Million (2014 - Rs. Nil) and Mr. Yasuo Ikeda Rs.
3.63 Million (2014 - Rs. Nil).
* After considering exceptional item
Notes:
1 The Company has considered business segment as the primary segment
for disclosure. The components of this business segment is Printing
Inks (including allied products) and Adhesives.
2 The Segment wise revenue, results, assets and liabilities relate to
the respective amounts directly identifiable to each of the segments.
Unallocable income/ expenses refer to income/ expenses which relate to
the Company as a whole and are not allocable to segments on a
reasonable basis.
3 The Company operates predominantly within the geographical limits of
India and accordingly secondary segments have not been considered.
* Restricted to lower of the amount per computation about and present
value of any economic benefits available
in the form of refunds from the Plan or reductions in future
contributions to the Plan.
* Recognised under "Contribution to Provident and Other Funds" in Note
22 for Pension and Gratuity and under "Staff Welfare Expenses" in Note
22 for Retirement Benefit
The estimate of future salary increases considered in the actuarial
valuation takes into account inflation, seniority, promotion and other
relevant factors, such as demand and supply in the employment market.
The expected return on plan assets is determined after taking into
consideration composition of the plan assets held, assessed risks of
asset management, historical results of the return on plan assets, the
Company's policy for plan asset management and other relevant factors.
(b) In terms of Guidance on implementing Accounting Standard 15
(Revised 2005) on Employee Benefits issued by the Accounting Standard
Board of the Institute of Chartered Accountants of India (ICAI), a
provident fund set up by the Company is treated as a defined benefit
plan in view of the Company's obligation to meet shortfall, if any, on
account of interest.
The Actuary has carried out actuarial valuation of plan's liabilities
and interest rate guarantee obligations as at the balance sheet date
using Projected Unit Credit Method and Deterministic Approach as
outlined in the Guidance Note 29 issued by the Institute of Actuaries
of India. Based on such valuation, there is no future anticipated
shortfall with regard to interest rate obligation of the Company as at
the Balance Sheet date. Further during the year, the Company's
contribution of Rs.14.84 Million (2014 - Rs.17.53 Million) to the
Provident Fund Trust has been expensed under the 'Contribution to
Provident and Other Funds' in Note 22. Disclosures given hereunder are
restricted to the information available as per the Actuary's Report -
(c) During the year the Company has recognized an amount of Rs. 19.34
Million (2014 - Rs.17.81 Million) as expenditure towards defined
contribution plans of the Company.
5. Exceptional Item represents separation costs pursuant to closure of
the manufacturing unit relating to Printing Inks Segment of the Company
located in Mumbai.
6. Effective 1st January, 2015, the Company has revised the useful
lives of certain tangible Fixed Assets in keeping with the provisions
of Schedule II to the Companies Act, 2013. As a result, depreciation
expense for the year ended 31st December, 2015 is higher and profit
before tax is lower by Rs. 47.52 Million and net book value aggregating
Rs.20.70 Million (Net of Deferred Tax Rs.10.67 Million) relating to
assets, where the revised useful lives have expired by 31st December,
2014 has been adjusted against opening balance of Retained Earnings
(Note 2) as on 1st January, 2015.
The aforesaid revision of useful lives will result in decrease in
depreciation expense in future periods by Rs. 16.15 Million as compared
to the original useful life of the assets.
7. Previous year's figures have been re-grouped / re-arranged,
wherever necessary to conform to current year's classification.
Dec 31, 2014
(a) Rights, preferences and restrictions attached to Equity Shares:
The Company has one class of Equity Shares having a par value of Rs.10
per Equity Share. Each shareholder is eligible for one vote per share
held. The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting,
except in case of interim dividend. In the event of liquidation, the
equity shareholders are eligible to receive the remaining assets of the
Company after distribution of all preferential amounts, in proportion
to their shareholding.
(b) There were no shares issued pursuant to contracts without payment
being received in cash, by way of bonus issue and no shares were bought
back in the period of five years immediately preceding the date as at
which the Balance Sheet is prepared.
2. (a) Commitments
Estimated amount of contracts remaining to be executed on Capital
Account and not provided for (net of advances) Rs. 3.45 Million (2013 -
Rs. 3.13 Million)
(b) Contingent Liabilities
Claims against the Company not acknowledged as debt :
i) Income Tax matters Rs.26.38 Million (2013 - Rs. 19.99 Million)
pending in appeals.
ii) Disputed Indirect Tax matters for which appeals before the relevant
authorities are pending disposal are as follows :
a) Custom Duty matters Rs.0.16 Million (2013 - Rs.2.45 Million)
b) Excise Duty matters Rs.45.22 Million (2013 - Rs.46.93 Million)
c) ServiceTax matters Rs.38.86 Million (2013 - Rs.38.39 Million)
d) Sales Tax / VAT / Entry Tax matters Rs.24.76 Million (2013 -
Rs.25.12 Million)
iii) Rent under dispute Rs.3.72 Million (2013 - Rs.1.99 Million)
pending in appeals.
In respect of above, it is not practicable for the Company to estimate
the timings of cash outflows, if any, pending resolution of the
respective proceedings. The Company does not expect any reimbursements
in respect ofthe above contingent liabilities.
3. Assets acquired under Operating Lease
(a) The Company''s significant leasing arrangements are in respect of
operating leases for premises (like residential property, office
premises, stores, godowns etc). These leasing arrangements, which are
cancellable, range between 11 months to 4 years generally, or longer,
and are usually renewable by mutual consent on mutually agreeable
terms. The aggregate lease rentals in this regard amounting to Rs.25.07
Million (2013 - Rs.23.80 Million) are charged as Rent under Note 25.
4. Provision for Taxation
Provision for taxation made in these accounts is based on the results
for the current financial period including the results for the period
from 1st January 2014 to 31st March 2014 forming part of the assessment
year 2014- 2015. Ultimate liability for taxation for the assessment
year 2015-2016 will be determined on the basis of the results for the
last nine months ofthe current financial period together with that of
subsequent three months upto 31st March 2015 as one composite income.
5. Related Parties Disclosures (in accordance with Accounting Standard
18 prescribed under the Companies Act, 1956)
(i) Related Parties
Names of Related Parties Relationship
(A) Where control exists
DIC Corporation, Japan Ultimate Holding Company
DIC Asia Pacific Pte Ltd., Singapore Holding Company
(B) Others with whom transactions have taken place during the year
Benda-Lutz Werke GmbH Fellow Subsidiary
Coates Screen Inks GmbH. Fellow Subsidiary
DIC (Malaysia) Sdn. Bhd. Fellow Subsidiary
DIC (Shanghai) Co. Ltd. Fellow Subsidiary
DIC Alkylphenol Singapore Pte. Ltd. Fellow Subsidiary
DIC Australia Pty Ltd Fellow Subsidiary
DIC Compounds (Malaysia) Sdn. Bhd. Fellow Subsidiary
DIC Europe GmbH Fellow Subsidiary
DIC Fine Chemicals Private Limited Fellow Subsidiary
DIC Graphics (Hong Kong) Ltd. Fellow Subsidiary
DIC Lanka (Private) Ltd. Fellow Subsidiary
DIC New Zealand Ltd Fellow Subsidiary
DIC Performance Resins GmbH Fellow Subsidiary
Hartmann Druckfarben GmbH Fellow Subsidiary
Nantong DIC Color Co., Ltd. Fellow Subsidiary
P.T. Pardic Jaya Chemicals Fellow Subsidiary
PT. DIC Graphics Fellow Subsidiary
Siam Chemical Industry Co. Ltd. Fellow Subsidiary
Sun Chemical AG Fellow Subsidiary
Sun Chemical Group S.P.A. Fellow Subsidiary
Sun Chemical N.V./S.A. Fellow Subsidiary
Sun Chemical ZAO Fellow Subsidiary
Sun Chemical (South Africa) Fellow Subsidiary
(Pty.) Ltd.
Sun Chemical Ltd. Fellow Subsidiary
Tintas S.A.S Fellow Subsidiary
Sun Chemical Corp. Fellow Subsidiary
Sun Chemical Group Cooperatief U.A. Fellow Subsidiary
Deqing DIC Synthetic Resins Ltd. Fellow Subsidiary
DIC Graphics (Thailand) Co. Ltd. Fellow Subsidiary
Mr. Yasuo Ikeda Key Management Personnel
(w.e.f. 1st January, 2014)
Mr. Samir Bhaumik Key Management Personnel
(up to 26 th April, 2014)
Dec 31, 2013
1. (a) Commitments
Estimated amount of contracts remaining to be executed on Capital
Account and not provided for (net of advances) Rs. 3.13 Million (2012-
Rs. 15.70 Million)
(b) Contingent Liabilities
Claims against the Company not acknowledged as debt :
i) Income Tax matters Rs.19.99 Million (2012 - Rs. 20.39 Million)
pending in appeals.
ii) Disputed Indirect Tax matters for which appeals before the relevant
authorities are pending disposal are as follows :
a) Custom Duty matters Rs.2.45 Million (2012 - Rs.9.31 Million)
b) Excise Duty matters Rs.46.93 Million (2012 - Rs.45.02 Million)
c) Service Tax matters Rs.38.39 Million (2012 - Rs.37.10 Million)
d) Sales Tax / VAT matters Rs.25.12 Million (2012 - Rs.202.12 Million)
iii) Rent under dispute Rs. 1.99 Million (2012 - Rs. Nil) pending in
appeals.
In respect of above, it is not practicable for the Company to estimate
the timings of cash outflows, if any, pending resolution of the
respective proceedings. The Company does not expect any reimbursements
in respect of the above contingent liabilities.
2. Assets acquired under Operating Lease
(a) The Company''s significant leasing arrangements are in respect of
operating leases for premises (like residential property, office
premises, stores, godowns etc). These leasing arrangements, which are
cancellable, range between 11 months to 4 years generally, or longer,
and are usually renewable by mutual consent on mutually agreeable
terms. The aggregate lease rentals in this regard amounting to Rs.23.80
Million (2012 - Rs.19.33 Million) are charged as Rent under Note 24.
(b) The Company acquired certain assets under Operating lease, which
are non-cancellable for a period of 4 years with option to renew the
same for a further period at a minimum rent. Details of Lease payments
outstanding as at 31st December 2013 are given below:
3. Provision for Taxation
Provision for taxation made in these accounts is based on the profit
for the current financial period including the results of the
operations for the period from 1st January 2013 to 31st March 2013
forming part of the assessment year 2013-2014. Ultimate liability for
taxation for the assessment year 2014-2015 will be determined on the
basis of the profit for the last nine months of the current financial
period together with that of subsequent three months upto 31st March
2014 as one composite income.
4. Previous Year Figures
Previous year''s figures have been re-grouped / re-arranged, wherever
necessary to conform to current year''s classification.
Dec 31, 2012
A) Rights, preferences and restrictions attached to Equity Shares:
The Company has one class of Equity Shares having a par value of Rs.
10.00 per Equity Share. Each shareholder is eligible for one vote per
share held. The dividend proposed by the Board of Directors is subject
to the approval of the shareholders in the ensuing Annual General
Meeting, except in case of interim dividend. In the event of
liquidation, the equity shareholders are eligible to receive the
remaining assets of the Company after distribution of all preferential
amounts, in proportion to their shareholding.
B) There were no shares issued pursuant to contracts without payment
being received in cash, by way of bonus issue and no shares were bought
back in the period of five years immediately preceeding the date as at
which the Balance Sheet is prepared.
1. Capital Commitments
Estimated amount of contracts remaining to be executed on Capital
Account and not provided for Rs. 15.70 Million (2011-Rs. 48.01 Million)
2. Contingent Liabilities
(a) Contingent Liabilities not provided for in respect of:
i) Income Tax matters Rs. 20.39 Million (2011 - Rs. 32.67 Million)
pending in appeals.
ii) Disputed Sales Tax, Excise Duties, etc. Rs. 293.55 Million (2011 -
Rs. 288.75 Million) for which appeals before the relevant authorities
are pending disposal.
The future cash outflow on account of above cannot be determined at
this stage.
(b) Commitments not provided for in respect of:
Guarantee or Counter Guarantee or Counter Indemnity given by the
Company to banks Rs. 42.02 Million. (2011-Rs. NIL)
3. Assets acquired under Operating Lease
(a) The Company''s significant leasing arrangements are in respect of
operating leases for premises (like residential property, office
premises, stores, godowns etc). These leasing arrangements, which are
not non-cancelable, range between 11 months to 4 years generally, or
longer, and are usually renewable by mutual consent on mutually
agreeable terms. The aggregate lease rentals payable are charged as
Rent under Note 24.
(b) The Company acquired certain assets under Operating lease, which
are non-cancelable for a period of 4 years with option to renew the
same for a further period at a minimum rent. Details of Lease payments
outstanding as at 31 st December 2012 and amount paid during the year
are given below:
4. Provision for Taxation
Provision for Taxation made in these accounts is based on the profit
for the current financial period including the results of the
operations for the period from 1st January 2012 to 31st March 2012
forming part of the Assessment Year 2012-2013. Ultimate liability for
Taxation for the Assessment Year 2013-2014 will be determined on the
basis of the profit for the last nine months of the current financial
period together with that of subsequent three months upto 31 st March
2013 as one composite income.
Notes:
(1) This information has been determined to the extent such parties
have been identified on the basis of the information available with the
Company.
(2) Included in SI No. (v) above is Rs. 5.59 Million (2011 - Rs. 4.53
Million) being Interest on amount outstanding as at the beginning of
the accounting year.
Figures within brackets relate to previous year.
(1) Purchase from fellow Subsidiaries includes purchase from Aekyung
Chemicals Co. LtdRs.33.93 Million (2011 - Rs.20.66 Million), Dequing
DIC Synthetic Resins Ltd Rs.36.80 Million (2011 - Rs.39.34 Million),
Hartman Drukfarben GmBH Rs. 42.38 Million (2011- Rs. 51.90 Million)
andNantong DIC Color Co. Ltd. Rs. 71.49 Million (2011 - Rs. 70.22
Million).
(2) Sale to fellow Subsidiaries includes sales to DIC Australia Pty
Ltd. Rs. 50.72 Million (2011- Rs.29.26 Million), DIC Lanka (Pvt) Ltd.
Rs. 12.04 Million (2011 - Rs. 12.55 Million), Sun Chemicals
S.A./N.V.(Ink Division) Rs. 13.47 Million (2011 - Rs. 5.92 Million) and
Sun Chemicals Zao Rs. 11.83 Million (2011 - Rs. 7.67 Million).
(3) Rendering of services to fellow Subsidiary includes services
rendered to Sun Chemicals NV Rs. 0.25 Million (2011 - Rs. 0.23 Million)
The estimates of future salary increases considered in the actuarial
valuation takes into account factors like inflation, future salary
increases, seniority, supply and demand in the employment market etc.
The expected return on Plan Assets is based on actuarial expectation of
the average long term rate of return expected on investments of the
funds during the estimated term of the obligations.
In terms of the Guidance on implementing Accounting Standard 15 on
Employee Benefits issued by the Accounting Standard Board of the
Institute of Chartered Accountants of India, the Provident Fund set up
by Company is a Defined Benefit plan in view of the Company''s
obligation to meet shortfall, if any, on account of interest. Unlike
previous year, consequent upon issuance of Guidance Note by the
Institute of Actuaries of India in 2011-12, actuarial valuation of
Provident Fund as at the year end has been done under the Deterministic
Method and the resultant charge was Rs.NIL. Disclosures given hereunder
are restricted to the information available as per the Actuary''s
Report.
5. Note on Changes in Acounting Policy
With effect from 1 st April 2012 the Company has changed the basis of
valuation of all categories of Inventory except for Stores and Spare
parts from Weighted Average Cost to First in First out (FIFO) basis. If
the Company would have valued the same under Weighted Average Cost
method, the profit for the year and carrying amount oflnventory would
have been higher by Rs.4.83 Million.
6. Previous Year Figures
The financial statements for the year ended 31 st December 2011 had
been prepared as per the then applicable, pre-revised Schedule VI to
the Companies Act, 1956. Consequent to the notification of Revised
Schedule VI under the Companies Act, 1956, the financial statements for
the year ended 31 st December 2012 are prepared as per Revised Schedule
VI. Accordingly, the previous year figures have also been reclassified
to conform to this year''s classification. The adoption of Revised
Schedule VI for previous year figures does not impact recognition and
measurement principles followed for preparation of financial
statements.
Dec 31, 2011
1. Capital Commitments
Estimated amount of contracts remaining to be executed on Capital
Account and not provided for Rs. 48,013,347 (2010-Rs. 82,869,014)
2. Contingent Liabilities
Contingent Liabilities not provided for in respect of:
(a) Income Tax matters Rs. 32,665,150 (2010 - Rs. 30,986,350) pending
in appeals.
(b) Disputed Sales Tax, Excise Duties, etc. Rs.288,746,552 (2010 - Rs.
161,399,243) for which appeals before the relevant authorities are
pending disposal.
(c) In respect of Bills Discounted Rs. NIL (2010-Rs.2,505,254)
The future cash outflow on account of above cannot be determined at
this stage.
3. Secured Loans
The Company's borrowings from the Consortium of Banks are secured by:
(a) Mortgage of immovable properties of industrial land at Plot 633 &
634 at Vatwa Industrial Estate at Ahmedabad; Transport Depot Road,
Kolkata; Chandivali Farm, Mumbai; Plot C-55ANoida Phase II, U.P.
(together with all structures thereon) and also by deposit of title
deeds/share certificates in respect of the residential flats at Mumbai,
Kolkata, Chennai and New Delhi.
(b) Hypothecation of movable properties of the Company, including Plant
and Machinery, Spares, Stores, Tools and Accessories both present and
future;
(c) Hypothecation of Stock- in- Trade of the Company both present and
future; and
(d) Hypothecation of Book Debts of the Company both present and future.
The consortium of banks shares the relevant securities on pari passu
basis. It is, however, agreed that the banks will release the first
charge in case the Company borrows in future against securities
mentioned in Item 3(a) above.
4. Assets acquired under Operating Lease
(a) The Company's significant leasing arrangements are in respect of
operating leases tor premises (like residential property, office
premises, stores, godowns etc). These leasing arrangements, which are
not non- cancelable, range between 11 months to 4 years generally, or
longer, and are usually renewable by mutual consent on mutually
agreeable terms. The aggregate lease rentals payable are charged as
Rent under Schedule 16.
(b) The Company acquired certain assets under operating lease, which
are non-cancelable for a period of 4 years with option to renew the
same for a further period at a minimum rent. Details of lease payments
outstanding as at 31.12.2011 and amount paid during the year are given
below :
5. Provision for Taxation
Provision for taxation made in these accounts is based on the profit
for the current financial period including the results of the
operations for the period from 1st January 2011 to 31st March 2011
forming part of the Assessment Year 2011-2012. Ultimate liability for
taxation for the Assessment Year 2012-2013 will be determined on the
basis of the profit for the last nine months of the current financial
period together with that of subsequent three months upto 31st March
2012 as one composite income.
* Included in Serial No.5 above is Rs.4,528,329 (2010 - Rs.4,140,921)
being interest on amount outstanding as at the beginning of the
Accounting Year.
* Under the Industrial Policy Statement dated 24th July 1991 and the
Notification issued thereunder, no licensing is required for the
Company's products.
** As certified by the Management.
Figures within brackets related to previous year.
* The entire processing of Lamination Adhesive of 1,782 M.T. (2010- 1,998
M.T.) is done on behalf of the Company by Valspar (India) Coatings
Corporation Pvt. Ltd. (erstwhile DIC Coatings India Limited), as a job
worker pursuant to an agreement with effect from May 2006.
Figures within brackets relate to previous year.
Figures within brackets relate to previous year.
(1) Purchase from Fellow Subsidiary includes purchase from Hartman
Drukfarben GMBH Rs.51,896,190 (2010 - Rs.56,091,240), Dequing DIC
Synthetic Resins Ltd. 39,337,204 (2010 - Rs. Nil) and Nantong DIC Color
Co. Ltd. Rs.70,216,906 (2010-Rs.89,245,815).
(2) Sale to Fellow Subsidiary includes sales to DIC Australia Pty Ltd.
Rs.29,263,264 (2010 - Rs.20,229,972), DIC Lanka (Pvt) Ltd.
Rs.12,548,826 (2010 - Rs.8,851,080), DIC Pakistan Rs. Nil (2010 -
Rs.13,406.723) and Sun Chemicals Zao Rs.7,673,452 (2010-Rs.Nil)
(3) Rendering services to Fellow Subsidiary includes services rendered
to DIC Fine Chemicals Pvt. Ltd. Rs. Nil (2010 - Rs.2,500,000), Sun
Chemicals NVRs.231,791
(2010-Rs.Nil)and DIC(Malayasia)SdnBhd.Rs.l34,554(2010-Rs.557,983)
(4) Expenses incurred by the Company on behalf of the Fellow Subsidiary
relates to DIC Fine Chemicals Pvt. Ltd.
Note:
1. The Company has considered business segment as the primary segment
for disclosure. The components of this business segment are Printing
Inks and Adhesives.
2. The Segment wise revenue, results, assets and liabilities relate to
the respective amounts directly identifiable to each of the segments.
Unallocable income/expenditure refers to income/expenditure incurred on
common services at corporate level.
6. Retirement Benefit
The Company operates Defined Contribution Schemes like Provident Fund
and Superannuation Schemes. Contributions to Provident Funds are made
by the Company, based on current salaries, to recognized funds
maintained by the Company. In case of Provident Fund Schemes,
contributions are also made by the employees. The interest rate payable
to the members of the trust are not lower than the statutory rate of
interest declared by the Central Government and shortfall if any is
made good by the Company. Implication of Guidance Note 29 issued by the
Institute of Actuaries of India during the year, on the valuation of
interest rate guarantee on Exempt Provident Fund under Accounting
Standard 15 (Revised), is currently being examined by the Company and
not considered for the purpose of these accounts, financial impact not
being material. Contribution to Superannuation Schemes are applicable
for certain categories of employees and the contribution by the Company
is invested with Insurance Companies and charges to Profit & Loss
Account.
Defined Pension benefits offer specified benefits to certain categories
of employees on retirement. The Company has discontinued the Defined
Pension Benefit Scheme with effect from 1.5.2009 and all the employees
who were erstwhile member of the Defined Pension Benefit Scheme has
been brought under the Defined Contribution Scheme for benefit
provisions under the Pension Plan. The present value of benefit
obligation on 31.12.2011 is calculated by discounting the present value
of crystalized pension as at 30.4.2009 by an independent actuary in
compliance with Accounting Standard 15 (Revised 2005) on Employees
Benefits.
The Company also operates defined benefit schemes like retirement,
gratuity and post retirement benefits. The Company has its own
recognized Gratuity Fund and all contribution are given to the Fund for
investment. Post retirement benefit is given in the form of a fixed
amount to certain category of employees on resignation/retirement
subject to a minimum service period. However, liability in the accounts
have been provided as per actuarial valuation in respect of the above.
The Company also pays the amount due on accumulated leave on
retirement. The liability under this Scheme is also actuarially valued
and provided for in the Accounts.
The estimates of future salary increases considered in the actuarial
valuation takes into account factors like inflation, future salary
increases, seniority, supply and demand in the employment market etc.
The expected return on Plan Assets is based on actuarial expectation of
the average long term rate of return expected on investments of the
funds during the estimated term of the obligations.
Amount recognized as an expense:
Contribution to Provident and other Funds in Schedule 16 includes
contribution on account of Gratuity Rs.70,05,000 (2010 - Rs.30,272,000)
and contribution on account of Pension Plan Rs.4,386,000 (Cr.) [2010
-Rs. 14,211,000 (Cr.)].
Contribution to Provident and other Funds in Schedule 16 includes
contribution to Defined Contribution Plans like Provident and
Superannuation Fund amounting to Rs. 40,341,486 (2010 - Rs.
35,960,096).
7. Previous years, figures have been regrouped/rearranged wherever
considered necessary.
Dec 31, 2010
1. Capital Commitments
Estimated amount of contracts remaining to be executed on Capital
Account and not provided for Rs.82,869,014 (2009 - Rs.37,777,107).
2. Contingent Liabilities
Contingent Liabilities not provided for in respect of:
(i) Income Tax matters Rs.30,986,350 (2009 - Rs.30,986,350) pending in
appeals.
(ii) Disputed Sales Tax, Excise Duties, etc. Rs.l6l,399,243 (2009 -
Rs.121,484,125) for which appeals before the relevant authorities are
pending disposal.
(iii) In respect of Bills Discounted Rs.2,505,254 (2009 - Rs.Nil)
The future cash outflow on account of above cannot be determined at
this stage.
3. Secured Loans
The Companys borrowings from the Consortium of Banks are secured by:
(i) Mortgage of immovable properties of industrial land at Plot 633 &
634, Vatwa Industrial Estate, Ahmedabad; Transport Depot Road, Kolkata;
Chandivali Farm, Mumbai; Plot C-55A Noida Phase II, U.P. (together with
all structures thereon) and also by deposit of title deeds/share
certificates in respect of the residential flats at Mumbai, Kolkata,
Chennai and New Delhi;
(ii) Hypothecation of movable properties of the Company, including
Plant & Machinery, Spares, Stores, Tools and Accessories both present
and future;
(iii) Hypothecation of Stock-in-Trade of the Company both present and
future; and
(iv) Hypothecation of Book Debts of the Company both present and
future.
The consortium of Banks shares the relevant securities on pari passu
basis. It is, however, agreed that the Banks will release the first
charge in case the Company borrows in future against securities
mentioned in Item 3(0 above.
4. Assets Acquired under Operating Lease
(i) The Companys significant leasing arrangements are in respect of
operating leases for premises (like residential property, office
premises, stores, godowns etc). These leasing arrangements, which are
not non-cancelable, range between 11 months and 4 years generally, or
longer, and are usually renewable by mutual consent on mutually
agreeable terms. The aggregate lease rentals payable are charged as
Rent under Schedule 16.
5. Extraordinary Item
Extraordinary Item represents profit (net-off relevent expenses
amounting Rs.17,461,193) arising out of sale of shares in the wholly
owned subsidiary, DIC Coatings India Ltd. in accordance with the Share
Purchase Agreement dated 26th March, 2010.
6. Provision for Taxation
Provision for Taxation made in these accounts is based on the profit
for the current financial period including the results of the
operations for the period from 1st January, 2010 to 31st March, 2010
forming part of the assessment year 2010-2011. Ultimate liability for
taxation for the assessment year 2011-2012 will be determined on the
basis of the profit for the last nine months of the current financial
period together with that of subsequent three months upto 31st March,
2011 as one composite Income.
7. Related Parties disclosure pursuant to Accounting Standard 18
issued by the Institute of Chartered Accountants of India
(i) Names of Related Parties
(a) Holding Company
DIC Asia Pacific Pte Ltd., Singapore
(b) Ultimate Holding Company (as certified by the Management) DIC
Corporation, Japan
(c) Subsidiary
DIC Coatings India Limited, till 31st May, 2010
8. Retirement Benefit
The Company operates Defined Contribution Schemes like Provident Fund
and Superannuation Schemes. Contributions to Provident Funds are made
by the Company, based on current salaries, to recognized funds
maintained by the Company. In case of Provident Fund Schemes,
contributions are also made by the employees. Contributions to
Superannuation Schemes are applicable for certain categories of
employees and the contribution by the Company is invested with
Insurance Companies.
The Company also operates Defined Benefit Schemes like Retirement
Gratuity, Defined Pension Benefits and post Retirement Benefits. The
Company has its own recognized Gratuity Fund and all contributions are
given to the Fund for investment, however liability in the accounts has
been provided as per actuarial valuation. Post Retirement Benefit is
given in the form of a fixed amount to certain category of employees on
resignation/retirement subject to a minimum service period. The Pension
Benefits offer specified benefits to certain categories of employees on
retirement. Annual actuarial valuations are carried out by an
independent actuary in compliance with Accounting Standard 15 (revised
2005) on Employees Benefits.
The Company also pays the amount due on accumulated leave on
retirement. The liability under this scheme is also actuarially valued
and provided for in the accounts.
The Company has discontinued the Defined Pension Benefit Scheme with
effect from 1st May, 2009 and all the employees who were erstwhile
members of the Defined Pension Benefit Scheme have been brought under
the Defined Contribution Scheme for benefit provisions under the
Pension Plan. The present value of benefit obligation on 31st
December, 2010 is calculated by discounting the preset value of
crystalized pension as at 30th April, 2009-
9. Previous years figures have been regrouped/rearranged wherever
considered necessary.
Dec 31, 2009
1. Capital Commitments
Estimated amount of contracts remaining to be executed on Capital
Account Rs.37,777,107 (2008 - Rs.47,641,150).
2. Contingent Liabilities
Contingent Liabilities not provided for in respect of:
(i) Income Tax matters Rs.30,986,350 (2008 - Rs.9,091,4l9);
ii) Disputed Sales Tax, Excise Duties, etc. Rs.121,484,125 (2008 -
Rs.235,548,644) for which appeals before the relevant authorities are
pending disposal; iii) In respect of Bills Discounted Rs.Nil (2008 -
Rs.88,938,247);
The future cash outflow on account of above cannot be determined at
this stage.
3. Secured Loans
The Companys borrowings from the Consortium of Banks are secured by:
(i) Mortgage of immovable properties of industrial land at Plot 633 &
634 at Vatwa Industrial Estate at Ahmedabad; Transport Depot Road,
Kolkata; Chandivali Farm at Mumbai; Plot C-55A Noida Phase II, U.P.
(together with all structures thereon) and also by deposit of title
deeds/share certificates in respect of the residential flats at Mumbai,
Kolkata, Chennai and New Delhi;
(ii) Hypothecation of movable properties of the Company, including
Plant & Machinery, Spares, Stores, Tools and Accessories both present
and future;
(iii) Hypothecation of Stock-in-trade of the Company both present and
future; and
(iv) Hypothecation of Book Debts of the Company both present and
future;
The consortium of Banks shares the relevant securities on pari passu
basis. It is, however, agreed that the banks will release the first
charge in case the Company borrows in future against securities
mentioned in item 3(0 above.
4. Assets Acquired under Operating Lease
(i) The Companys significant leasing arrangements are in respect of
operating leases for premises (like residential property, office
premises, stores, godowns etc). These leasing arrangements, which are
not non-cancelable, range between 11 months and 4 years generally, or
longer, and are usually renewable by mutual consent on mutually
agreeable terms. The aggregate lease rentals payable are charged as
Rent under Schedule 16.
5. Provision for Taxation
Provision for taxation made in these accounts is based on the profit
for the current financial period including the results of the
operations for the period from 1st January, 2009 to 31st March, 2009
forming part of the assessment year 2009-2010. Ultimate liability for
taxation for the assessment year 2010-2011 will be determined on the
basis of the profit for the last nine months of the current financial
period together with that of subsequent three months upto 31st March,
2010 as one composite income.
6. Related Parties disclosure pursuant to Accounting Standard 18
issued by the Institute of Chartered Accountants of India
(i) Names of Related Parties
(a) Holding Company
DIC Asia Pacific Pte Ltd., Singapore
(b) Ultimate Holding Company (as certified by the Management) DIC
Corporation, Japan
(c) Subsidiary
DIC Coatings India Limited
(d) Fellow Subsidiaries (as certified by the Management)
Aekyung Chemical Co. Ltd
Allmake Rollers Ltd
Bridgestone REI Komposit Sdn. Bhd
Camus Water Technologies LLC
Changzhou Huari New Material Co. Ltd
Chia Lung Chemical Industrial Corp
Coates Brothers (Caribbean) Ltd
Coates Brothers (East Africa) Ltd
Coates Brothers (South Africa) Limited
Coates Brothers (West Africa) Ltd
Coates Brothers (Zambia) Ltd. (formerly: Coates Zambia Ltd.)
Coates Brothers (Zimbabwe) Private Ltd
Coates Lorilleux Murekkep Ve Kimya
San.Tic.A.S.
Coates Screen Inks GmbH
Coates Thailand Ltd
CST Grafiska AB, Dainichi Building Materials,
Inc
Dainippon Ink & Chemicals (HK) Ltd
Dainippon Ink & Chemicals (Philippines) Inc
Dainippon Ink & Chemicals (Thailand) Co. Ltd
Dainippon Ink Eco-Engineering Co. Ltd
Deqing DIC Synthetic Resins Ltd
DH Material Inc
DIC Logistics China Co. Ltd
DIC (MALAYSIA) Sdn. Bhd
DIC (Taiwan) Ltd
DIC (Vietnam) Co., Ltd
DIC Alkylphenol Singapore Pte. Ltd
DIC Americas Inc
DIC Australia Pty Ltd
DIC Bayer Polymer Ltd
DIC Berlin GmbH R&D Laboratory
DIC Capital Corp
DIC Career Co. Ltd
DIC Coatings, S.L
DIC Color (Thailand) Co., Ltd
DIC Color Coating, Inc
DIC Colorants Inc
DIC Colorants Taiwan Co. Ltd
DIC Colour & Design Co. Ltd
DIC Compounds (Malaysia) Sdn. Bhd
DIC EP Inc
DIC Epoxy (Malaysia) Sdn. Bhd
DIC Europe GmbH
DIC Express Co. Ltd
DIC Filtec Inc
DIC Fine Chemicals Private Limited
DIC Global Logistics Co. Ltd
DIC Graphics (Guangzhou) Ltd
DIC Graphics (Hong Kong) Ltd
DIC Graphics (Shenzhen) Ltd
DIC Holdings Austria GmbH
DIC Holdings B.V
DIC Imaging Products U.S.A., LLC
DIC India Ltd
DIC Information Service Inc *
DIC Interior Co. Ltd
DIC International (Thailand) Co. Ltd
DIC International (USA) LLC
DIC International Chemicals(S) Pte. Ltd
DIC Investments Japan Inc
DIC Korea Corp
DIC Lanka (Private) Ltd
DIC Lifetec Co. Ltd
DIC Machinery & Printers Supplies Inc
DIC New Zealand Ltd
DIC Pakistan Ltd
DIC Performance Resins GmbH
DIC Plapallet Pte., Ltd
DIC Plastics Inc
DIC Precision Corp
DIC Space Amenity Co. Ltd
DIC Synthetic Resins (Zhongshan) Co. Ltd
DIC Technologies Ltd
DIC Technology Corp
DIC Zhangjiagang Chemicals Co. Ltd
DIC (China) Co. Ltd
Earthrise Nutritionals LLC
ECG Holdings Ltd
Eques Coatings B.V.
Eques Coatings C.V.
European Manufacturers Insurance Co.Ltd
Fuji Label Co. Ltd
General Printing Ink Corp
Gibbon Finecal Ltd
Glenside Properties Limited
Guangzhou DIC International Co. Ltd
Gunma Kosoku Offset Inc
Hainan DIC Microalgae Co. Ltd
Hamamatsu Dainippon Ink Hanbai Inc
Hartman d.o.o.
Hartmann Druckfarben GmbH
Hartmann-Sun Chemical EOOD
IMS Concepts, S.A./N.V.
Inmobiliaria Sunchem S.A. de C.V.
Interbak Ambalaj Sanayii Ve Ticaret Anonim
Sirketi (Interbak AS)
Japan Fine Coatings Inc
Japan Formalin Company Inc
Japan Vilene Co. Ltd
Kangam Chemical Co. Ltd
Kitanihon DIC Co. Ltd
Kyodo Printing Co.(Spore) Pte. Ltd
Kyushu Polymer Co. Ltd
Lidye Chemical Co. Ltd
Lorilleux Maroc S.A.
Mizushima Kasozai Inc
Mondis Manufacturers Insurance Company N.V
Nantong DIC Color Co. Ltd
New England Manufacturers Insurance Corp
Nichiei Development Co. Ltd
Nichiei Plastics Inc
Nihon Packaging Material Co. Ltd
Nippon DecorInc
Nippon Epoxy Resin Manufacturing Co. Ltd
Nippon Plapallet Co
Nishinihon Butylphenol Inc
Oxirane Chemical Corp
P.T. DIC Astra Chemicals
P.T. Pardic Jaya Chemicals
Parker Williams Design Ltd
PT. DIC Graphics
Qingdao DIC Finechemicals Co. Ltd
Qingdao DIC Liquid Crystal Co. Ltd
Renaissance Inc
Rycoline Products LLC
Samling Housing Products Sdn. Bhd
SC Funding LLC
Seiko PMC (Shanghai) Commerce & Trading Corp
Seiko PMC (Zhangjiagang) Corp
Seiko PMC Corp
Shanghai DIC Ink Co. Ltd
Shanghai DIC International Trading Co. Ltd
Shanghai DIC Pressure-sensitive Adhesive
Materials Co. Ltd
Shanghai Long Feng Food Additives Co. Ltd
Shanghai Showa Highpolymer Co. Ltd
Shenzhen Coates Lorilleux Chemicals Ltd
Shenzhen-DIC Co. Ltd
Shin DIC Kako Co. Ltd
Shin Nihon Kasei Inc
Siam Algae Co. Ltd
Siam Chemical Industry Co. Ltd
Sinclair del Centro America S.A.
Sinclair S.A. *
Societe Fonciere de la Manche
Sun Chemical (Chile) S.A.
Sun Chemical (Colores) S.A. de C.V.
Sun Chemical A/S (Denmark)
Sun Chemical A/S (formerly:Coates Lorilleux
A/S) (Norway)
Sun Chemical AB
Sun Chemical AG
Sun Chemical AG (S.A. Ltd)
Sun Chemical B.V
Sun Chemical Central Europe Beteiligungs
GmbH
Sun Chemical Central Europe Holding & Co KG
Sun Chemical Corp
Sun Chemical de Centro America S.A. de C.V.
Sun Chemical de Panama S.A.
Sun Chemical do Brasil Ltda
Sun Chemical Group B.V.
Sun Chemical Group S.p.A.
Sun Chemical Holding B.V.
Sun Chemical Holding GmbH
Sun Chemical Ink Ireland
Sun Chemical Inks A/S
Sun Chemical Inks S.A.
Sun Chemical Investments LLC
Sun Chemical Lasfelde GmbH
Sun Chemical Ltd. (Canada)
Sun Chemical Ltd. (U.K.)
Sun Chemical Management LLC
Sun Chemical Murekkep ve Kimya Sanayi ve
Ticaret A.S.
Sun Chemical N.V./S.A.
Sun Chemical Nyomdafestek Kereskedelmi Es
Gyatro KFT (Sun Chemical KFT)
Sun Chemical of Michigan LLC
Sun Chemical Osterode Druckfarben GmbH
Sun Chemical Oy
Sun Chemical Pigments S.L.(formerly:Coates
Lorilleux S.A.)
Sun Chemical Portugal-Tintas Graficas Ltda
Sun Chemical Printing Ink d.o.o.
Sun Chemical S.A.
Sun Chemical S.A. de C.V.
Sun Chemical S.A.S.
Sun Chemical s.r.l.
Sun Chemical Sp (z.o.o) (formerly:Sun
Chemical Sp (z.o.o) Ltd)
Sun Chemical Ukraine Ltd
Sun Chemical Zagreb d.o.o.
Sun Chemical ZAO
Sun Chemical, d.o.o.e.l
Sun Chemical
S.r.o. (Czech Republic)
Sun Chemical
S.r.o. (Slovakia)
SUNDIC Incorporated
Suzhou Lintong Dyestuff Chemical Co. Ltd
Taiyuan Coates Lorilleux Chemicals Ltd
Techno Science Inc
TFE Company Ltd
Tien Lee Hong Co. Ltd
Tintas S.A
TOA-DIC Zhangjiagang Chemicals Co. Ltd
TOPIC.Co. Ltd
Tsuruga Chemicals Service Co
Tsuruga Terminals Co
Watt Gilchrist Ltd
Weesp Finance C.V.
Weesp Unlimited
Wuxi DIC Epoxy Co. Ltd
YD Plastics Co. Ltd
Yunnan DIC Ink Co. Ltd
Zhaoqing DIC Gum Rosins Ltd
Zhongshan DIC Colour Co. Ltd
(e) Key Management Personnel
(i) Dr P K Dutt - Chairman & Chief Executive Officer *
(ii) Mr A D Chatterjee - Wholetime Director
(iii) Mr S Bhaumik - Wholetime Director
7. Retirement Benefit
The Company operates Defined Contribution Schemes like Provident Fund
and Superannuation Schemes. Contributions to Provident Funds are made
by the Company, based on current salaries, to recognized funds
maintained by the Company. In case of Provident Fund Schemes,
contributions are also made by the employees. Contribution to
Superannuation Schemes are applicable for certain categories of
employees and the contribution by the Company is invested with
Insurance Companies.
The Company also operates Defined Benefit Schemes like Retirement
Gratuity, Defined Pension Benefits and post Retirement Benefits. The
Company has its own recognized Gratuity Fund and all contribution are
given to the Fund for investment, however liability in the accounts
have been provided as per actuarial valuation. Post Retirement Benefit
is given in the form of a fixed amount to certain category of employees
on resignation/retirement subject to a minimum service period. The
Pension Benefits offer specified benefits to certain categories of
employees on retirement. Annual actuarial valuations are carried out by
an independent actuary in compliance "with Accounting Standard 15
(revised 2005) on Employees Benefits.
The Company also pays the amount due on accumulated leave on
retirement. The liability under this scheme is also actuarially valued
and provided for in the accounts.
8. Previous years figures have been regrouped/rearranged wherever
considered necessary.
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