Notes to Accounts of Gloster Ltd.

Mar 31, 2018

Notes to the Standalone Financial Statements

(All amounts in INR lakhs, unless otherwise stated)

A.2 Ind AS mandatory exceptions

A.2.1 Estimates

An entity''s estimates in accordance with Ind AS''s at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

Investment in equity instruments carried at FVOCI Investment in debt instruments carried at FVTPL A.2.2 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 exists at the date of transition to Ind AS.

Accordingly, the Company has determined the classification and measurements of financial assets on the basis of the facts and circumstances that exists at the date of transition to Ind AS.

B: Reconciliations between previous GAAP and Ind AS Reconciliation of total equity as at 31 March 2017 and 1 April 2016

Particulars	Notes	31 March 2017	1 April 2016
Total equity (shareholder''s funds) as per previous GAAP		1,537.47	1,416.78
Impact of merger with erstwhile Gloster Limited		80,533.69	77,616.38
Total equity		82,071.16	79,033.16
Adjustments
Fair valuation of investments	1	4,469.94	2,654.30
Gain on MTM of derivative instruments	2	155.77	70.97
Reversal of proposed dividend and tax thereon	3	-	313.38
Tax effects on above adjustments		(762.19)	(452.22)
Total equity as per Ind AS		85,934.68	81,619.59

Reconciliation of total comprehensive income for the year ended 31 March 2017

Particulars	Notes	Amount
Profit/ (Loss) after tax as per previous GAAP		120.69
Impact of merger with erstwhile Gloster Limited		2,913.99
Profit/ (Loss) after tax as per previous GAAP- revised		3,034.68
Ind AS adjustments:
Fair valuation of investments measured at FVTPL	1	257.17
Gain on MTM of derivative instruments	2	84.80
Actuarial gain/ loss reclassed from to OCI	4	76.87
Tax effect on above adjustments		(48.77)
Total adjustments		370.07
Profit after tax impact as per Ind AS		3,404.75
Other comprehensive income net of tax effects	5	1,223.72
Total comprehensive income as per Ind AS		4,628.47

No material impact of Ind AS adoption on the statements of cash flows for the year ended 31 March 2017

Notes to the standalone Financial Statements

C: Notes to first-time adoption:

Note 1: Fair valuation of investments

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

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

Note 2: Derivatives

Under the previous GAAP, the Company applied the requirements of the guidance note issued on accounting for derivatives and accordingly all derivative contracts outstanding at the balance sheet were marked to market and resulting loss, if any, was recognized in the statement of profit and loss. However, no gains were recognized.

Under Ind AS, derivatives which are not designated as hedging instruments are fair valued with resulting changes being recognised in profit or loss. Consequently, the total equity has increased as on the date of transition and profit for the year ended 31 March 2017 has also increased.

Note 3: Proposed dividend

Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. 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. Consequently, the total equity increased by an equivalent amount.

Note 4:Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in

(All amounts in INR lakhs, unless otherwise stated) the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. There is no impact on the total equity as at 31 March 2017.

Note 5: Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in Statement of profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes items such as remeasurements of defined benefit plans, equity instruments designated as at FVOCI. Tax effect of such items are also included in ''other comprehensive income''. The concept of other comprehensive income did not exist under previous GAAP.

Note: 40

A. Pursuant to the Scheme of Amalgamation of erstwhile Gloster Limited ("the Transferor Company"), with Kettlewell Bullen & Company Limited (renamed as Gloster Limited) (''the Company'') filed under Section 391 to 394 and other applicable provisions of the Companies Act, 1956 & Companies Act, 2013, to the extent applicable and sanctioned by the National Company Law Tribunal, Kolkata ("NCLT") vide its order dated 19 January 2018 (the ''Scheme''):

a. The Transferor Company stands transferred to and vested in the Company, as a going concern, in accordance with Section 2(1B) of the Income Tax Act without any further act, instrument, deed, matter or thing so as to become, on and from 1 January 2015 (the "Appointed Date"), by virtue of and in the manner provided in the Order. Certified copy of the said Order of NCLT sanctioning the Scheme has been filed by both Transferor Company and the Company with the Registrar of Companies, Kolkata and accordingly, the Scheme became effective on and from 30 March 2018. (the ''Effective Date'').

b. In accordance with the NCLT Order sanctioning the Scheme the Company has accounted the assets and liabilities of the Transferor Company vested in it pursuant to the scheme at their respective fair values as per Purchase method in accordance with Accounting Standard-14-"Accounting for Amalgamations" notified under the Companies Act, 1956 read with Section 133 of The Companies Act, 2013 and Rule 7 of Companies (Accounts) Rules 2014. Although the said accounting treatment is at variance with Ind AS 103, it has been carried out in accordance with the NCLT Order.

c. Further, in keeping with the Scheme the Company has: i. accounted for the excess of fair value of equity shares issued and cancellation of investment in Transferor Company, over the fair value of net assets of Transferor Company amounting to ? 45,348.03 lakhs so acquired, being ?33,330.86 lakhs as Goodwill, representing underlying intangible assets, acquired on amalgamation as on 1 January 2015 (included under point B of this note).

ii) amortized Goodwill acquired on account of amalgamation as indicated in (c) (1) above, during the year in the Statement of Profit and Loss for Rs 1,666.54 lakhs on the basis of management''s estimated useful life of 20 years. Had Goodwill not been amortized, the Depreciation and Amortization expense for the year ended 31 March, 2018 would have been lower by ? 1,666.54 lakhs and Profit before tax for the year ended 31 March, 2018 would have been higher by an equivalent amount and the carrying amount of Goodwill (under Intangible Assets- Refer Note 3(d))

and Retained Earnings as at 31 March, 2018 would have been higher by Rs. 5,416.28 lakhs and ? 3,682 lakhs respectively, considering the cumulative effect of aforesaid amortization from 1 January, 2015.

d. Upon the Scheme coming into effect, the Company has recorded issuance of 34,71,630 (Thirty four lakhs seventy one thousand six hundred and thirty) equity shares of face value of ? 10/- each at fair value of ?2,261 per share and accordingly credited to its share capital ? 347.61 lakhs on 10 May, 2018 being , the aggregate face value of the equity shares issued on Amalgamation. The excess of the fair value of the equity shares over the face value of the shares issued amounting to ? 78,146. 39 lakhs has been credited to Securities Premium Account on 10 May, 2018. Further, the entire shareholding of the Company in transferor Company stands cancelled. Since allotment of such shares was pending till year end, the related amount of Rs. 78,493.55 lakhs has been disclosed as ''Equity Share Suspense'' in Note 12 to the Financial Statements.

B. The Statement of Assets & Liabilities as at 1 January, 2015, being the Appointed Date, transferred pursuant to the Scheme of Amalgamation is set out below:

Particulars	Amount
Assets acquired
Property, Plant & Equipment	29,892.63
Identified intangible assets	9,379.42
Capital Work-in-progress	155.05
Other Non-current Assets	2,919.45
Current Assets	11,160.19
Liabilities assumed
Non-current Liabilities	1,244.89
Current Liabilities	6,913.82
Net identifiable assets	45,348.03
Consideration for the above	78,678.89
Goodwill arising on amalgamation	33,330.86

Note: 41 Net debt reconciliation

This section sets out an analysis of net debt and the movements in net debt

Particulars	31 March 2018	31 March 2017
Current borrowings	1,548.21	3,441.65
Non-current borrowings	128.40	166.67
Net debt	1,676.61	3,608.32

Particulars	| Liabilities from financing activities
	Non-current borrowings	Current borrowings
Net debt as at 01 April 2017	166.67	3,441.65
Proceeds from borrowings during the year	128.40	1,281.02
Repayment of borrowings during the year	(166.67)	(3,333.67)
Proceeds from bills discounted	-	267.19
Settlement of bills discounted	-	(107.98)
Net debt as at 31 March 2018	128.40	1,548.21

Note: 42 Dues to micro and small enterprises

The Company has certain dues to Suppliers registered under The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) are:

Sl.no.	Particulars	31 March 2018	31 March 2017	1 April 2016
1	The principal amount remaining unpaid to any supplier as at the year end	1.08	0.33	1.21
	The interest remaining unpaid to any supplier as at the year end	1.75	1.62	1.44
2	Principal amounts paid to suppliers beyond the appointed day during the year.	5.61	13.86	11.16
	Interest paid under Section 16 of the MSMED Act, to suppliers during the year.	-	-	-
3	The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the MSMED Act, 2006
4	The amount of interest accrued and remaining unpaid at the end of the year	0.13	0.17	0.25
5	The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23 of the MSMED Act, 2006.	1.75	1.61	1.44

*included in SI No. 1 above is Rs 1.08 lakhs (31.03.2017 Rs. 0.33 lakhs, 01.04.2016 Rs. 1.21 lakhs) being interest on principal amount remaining unpaid as at the beginning of the accounting year.

Note:

The information has been given in respect of such vendors to the extent they could be identified as "Micro, Small & Medium" enterprises on the basis of information available with the Company.

	For Price Waterhouse & Co Chartered Accountants LLP
	Firm Registration No. 304026E/E-300009
	Chartered Accountants
				Hemant Bangur	Executive Chairman
				D.C. Baheti	Managing Director
	Sunit Kumar Basu			S.B. Mainak	Director
Place: Kolkata	Partner	Shankar Lai Kedia	Ajay Kumar Agarwal	S.N. Bhattacharya	Director
Date:29th May, 2018	Membership No.55000 Chief Financial Officer Company Secretary			Prabir Ray	Director