Notes to Accounts of Prataap Snacks Ltd.

Mar 31, 2022

The average duration of the defined benefit plan obligation at the end of the reporting period is 8.64 years (As at 31 March 2021: 8.60 years)

note 38: leases

i) Company as a lessee

The Company has lease contracts for land, building and manufacturing facilities with lease term ranging between 2 to 10 years. There are certain lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Company''s business needs. Management exercises judgement in determining whether these extension and termination options are reasonably certain to be exercised.

The Company also has certain leases of office premises and warehouses with lease term of 12 months or less and those of low value. The Company applies the ''short-term lease'' and ''lease of low-value assets'' recognition exemptions as available in Ind AS 116 ''Leases'' for these leases.

III. Contingent liabilities (to the extent not provided for)
	As at 31 March 2022 '' lakhs	As at 31 March 2021 '' lakhs
Claims against the Company not acknowledged as debts
Disputed income tax liability (excluding interest and penalty)*	-	570.50
Provident fund**	Amount not determinable	Amount not determinable
	-	570.50

Notes:

* The Company had received an Income tax demand order disallowing the deduction claimed by the Company u/s 80 IB of the Income tax Act, 1961. The Company has filed an appeal against the said orders before Commissioner of Income tax Appeals (CIT (A)) which is pending for disposal as at year end. During the year the Company has updated its risk assessment of this order and concluded that the demand is not tenable and the risk is remote. Accordingly, this order is not included in the contingent labilities of the Company as on 31 March 2022.

** There were many interpretative issues relating to the Supreme Court (SC) judgement dated 28 February 2019 on Provident Fund (PF) as regards definition of PF wages and inclusion of certain allowances for the purpose of PF contribution, as well as effective date of its applicability. Having consulted and evaluated impact on its standalone financial statement, the company has implemented the changes as per clarifications vide the Apex Court judgement dated 28 February 2019, with effect from 1 March 2019 i.e., immediately after pronouncement of the judgement. The Company will evaluate its position, in case there is any other interpretation issued in future either in form of Social Security Code 2020, or by authorities concerned under the Employees'' Provident Funds and Miscellaneous Provisions Act.

The Code on Social Security 2020 has been notified in the Official Gazette on 29 September 2020. The effective date from which the changes are applicable is yet to be notified and the rules are yet to be framed. Impact if any of the change will be assessed and accounted in the period in which the said Code becomes effective and the rules framed thereunder are notified.

The Company, in respect of the above mentioned contingent liabilities has assessed that it is only possible but not probable that outflow of economic resources will be required.

Terms and conditions of transactions with related parties

The Company''s material related party transactions and outstanding balances are with related parties with whom the Company routinely enters into transactions in the ordinary course of business.

note 41: segment INFORMATION

For management purpose, the Company comprise of only one reportable segment - Snacks food. The Management monitors the operating results of this segment for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the standalone financial statements.

C Notes

1. Segment revenue in the geographical segments considered for disclosure are as follows:

a) Revenue within India includes sales to customers located within India.

b) Revenue outside India includes sales to customers located outside India.

2. The Company does not have any customer, with whom revenue from transactions is more than 10% of Company''s total revenue.

3. Non current assets consist of property, plant and equipment, capital work-in-progress, intangible assets and intangible assets under development.

Purpose of loan - The loan has been given to PSEWT for further advancement to the employees of the Company for purchase of Company''s share under erstwhile Employee Stock Purchase Plan.

note 43: government GRANT

Government grant consists of GST incentive amounting to '' 65.95 lakhs (31 March 2021: '' 80.61 lakhs), freight subsidy amounting to '' 336.78 lakhs (31 March 2021: '' 31.73 lakhs) and capital subsidy amounting to '' 335.63 lakhs (31 March 2021: '' 276.17 lakhs). There are no unfulfilled conditions or contingencies attached to these grants.

NOTE 44: exceptional ITEM

There was a fire accident in one of the Company''s plants situated at Howrah, West Bengal, on 3 November 2021. The fire has severely impacted the building, plant & machinery, leasehold improvements, and inventories lying at the plant; however, there were no human casualties. The total impact of this event is '' 1,393.76 lakhs. Considering the nature of the event and magnitude of impact, this amount is disclosed as an exceptional item in the statement of profit and loss for the year ended 31 March 2022. Pending completion of the survey and acceptance of the claim by the insurance company, the insurance claim receivable has not been recorded in the statement of profit and loss for the year ended 31 March 2022.

NOTE 45: EMPLOYEE STOCK APPRECIATION RIGHTS

The Nomination and Remuneration Committee of the Board of Directors of the Company at its meeting held on 9 August 2019 and 4 February 2022 have granted 3,47,000 and 59,800 Stock Appreciation Rights (''SAR'') respectively to eligible employees of the Company and its subsidiary under the Prataap Employees Stock Appreciation Rights Plan 2018 (''ESAR''). The said ESAR was approved by the shareholders in their Annual General Meeting held on 28 September 2018. The rights entitle the employees, to equity shares of the Company on the satisfaction of service conditions attached to the grant and consequent exercise of the rights by the employees. The SAR''s shall be vested in four equal instalments every year commencing from the end of one year from the grant date. The number of equity shares to be issued shall be determined based on the difference between the base price as per the scheme and the share price on the date of exercise. The SAR''s expire at the end of 5 years from the grant date.

The management assessed that fair value of trade receivables, other current financial assets, current loans, cash and bank balances, trade payables, current borrowings and other current financial liabilities approximate their carrying amounts largely due to the shortterm maturities of these instruments.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

1. Security deposits, loans and other financial assets are evaluated by the Company based on parameters such as interest rates, individual credit worthiness of the counterparties and expected duration of realisability as at the balance sheet date.

The Company determines the fair value of its financial instruments on the basis of the following hierarchy:

Level 1: The fair value of financial instruments that are quoted in active markets are determined on the basis of quoted price for identical assets or liabilities.

Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques based on observable market data.

Level 3: The fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not based on observable market data (unobservable inputs).

*The Board of directors in their meeting held on 29 September 2021 had approved the scheme of amalgamation ("scheme") pursuant to sections 230 to 232 and other relevant provisions of the Companies Act, 2013, providing for the amalgamation of its subsidiaries Avadh Snacks Private Limited and Red Rotopack Private Limited with the Company. The appointed date as per the scheme is 1 April 2021. Further, the Company has filed the necessary application with the exchanges and SEBI for the requisite approval and approval is awaited. The Company based on the updated fair valuation performed for merger application, had re-measured the deferred contingent consideration and recorded a gain in re-measurement of '' 554.35 lakhs as other income for the year ended 31 March 2022. The effect of the scheme would be recognised on receipt of statutory approvals.

note 48: financial RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company''s principal financial liabilities comprise borrowings, lease liabilities, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include loans, subsidy receivable, cash and cash equivalents, trade receivables and other receivables that are derived directly from its operations.

The Company is exposed to market risks, credit risks and liquidity risks. The Company''s senior management oversees the management of these risks. The Company''s senior management provides assurance that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The Board of Directors review and agree policies for managing each of these risks.

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 risks namely interest rate risk, currency risk and price risk, such as equity price risk. The Company is not significantly exposed to currency risk and price risk whereas the exposure to interest risk is given below.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s borrowings.

Interest rate sensitivity

The sensitivity analysis below have been determined based on exposure to interest rates for term loans that have floating rate at the end of the reporting period and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period.

Credit Risk

Credit risk is the risk that the counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk arising on its trade receivables. Based on the historical experience and credit profile of counterparties (schedule banks, government and employees), the Company does not expect any significant risk of defaults arising on financial assets except trade receivables i.e. loans, subsidy receivables, cash and cash equivalents and other financial assets.

a. Trade receivables

Customer credit is managed by the Company''s through established policies and procedures related to customer credit risk management. Each outstanding customer receivables are regularly monitored and if outstanding is above due date, the further shipments are controlled and can only be released if there is a proper justification.

The Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forwardlooking estimates are analysed. Based on the industry practices and the business environment in which the Company operate, management considers the trade receivables are in default (credit impaired) if the payments are more than 365 days past due.

The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets and are monitored at periodical intervals. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.

Liquidity Risk

(i) Liquidity risk management

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s principle sources of liquidity are cash and bank balances, fixed deposits and the cash flow that is generated from operations. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, liquidity risk is considered as low. The Company closely monitors its liquidity position and also maintains adequate source of funding.

(ii) Maturities of financial liabilities

The following tables detail the Company''s remaining contractual maturity for its financial liabilities with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.

Notes:

¹ Debt - equity ratio - Increase in in short term unsecured debt resulted in increase in ratio.

² Debt service coverage ratio - Decrease in profit for the year due to loss by fire and reduction in margins has resulted in decrease in ratio.

³ Return on equity ratio - Decrease in profit for the year due to loss by fire and reduction in margins has resulted in decrease in ratio.

⁴ Trade receivable turnover ratio - Increase in sales in the current year has resulted in the improvement of this ratio.

⁵ Net capital turnover ratio - Decrease in working capital due to reclassification of deferred contingent consideration from non-current to current has resulted in increase in the ratio.

⁶ Net profit ratio - Decrease is primarily due to increase in commodity prices and loss by fire.

note 50: capital MANAGEMENT

For the purpose of the Company''s capital management, equity includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximise the shareholders'' value. The Company''s capital management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximise shareholders'' value. The Company is monitoring capital using debt equity ratio as its base, which is debt to equity. The Company''s policy is to keep healthy debt equity ratio ensuring minimum debt. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants.

NOTE 51: other STATUTORY INFORMATION

(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company do not have any transactions with companies struck off under section 248 of Companies act 2013

(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period

(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the current financial year and previous financial year

(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

(vii) The Company do not have any such transactions which has not been recorded in the books of accounts but has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961

(viiI) The company has not been declared as wilful defaulter by any bank of financial institution or other lender

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Mar 31, 2018

NOTE 1: CORPORATE INFORMATION

Prataap Snacks Limited (‘PSL’ or ‘the Company’) is a public Company domiciled in India and is incorporated under the provisions of the Companies Act, applicable in India. The principal place of business of the Company is located at Khasra No. 378/2, Nemawar Road, Near Makrand House, Dist. Indore -452020 (M.P.) India having CIN L15311MP2009PLC021746. The Company is principally engaged in the business of snacks food.

The standalone financial statements were authorised for issue in accordance with a resolution of the Board of Directors on May 16, 2018.

NOTE 2.2: BASIS OF PREPARATION

The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time).

For all periods up to and including the year ended March 31, 2017, the Company prepared its standalone financial statements in accordance with accounting standards notified under the Section 133 of the Companies Act, 2013 (‘the Act’) read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). These standalone financial statements for the year ended March 31, 2018 are the first standalone financial statements that are prepared in accordance with Ind AS. Refer to Note 50 on first time adoption of Ind AS.

The standalone financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:

- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments).

The standalone financial statements are presented in India Rupee (T) and all values are rounded to the nearest lakhs (Rs.00,000), except when otherwise indicated.

Notes:

1 The Company’s investment property consist of one industrial property in Tillore, Madhya Pradesh including land on which factory building has been constructed, which is leased to wholly owned subsidiary

2 The Company has no restrictions on the realisability of its investment property and no contractual obligations to purchase, construct or develop investment property or for repairs, maintenance and enhancements.

3 Leasing arrangements : Investment property is leased to wholly owned subsidary under long term operating leases with rentals payable monthly, (refer Note 39).

4 Factory building was under development amounting to Rs.1,061.75 lakhs and Rs.1,306.00 lakhs at the end of financial year 2016 and 2017 respectively and the same has been capitalised during the current financial year

The above valuation of the investment properties are in accordance with the Collector’s / Registrar’s Guideline Rate rates prescribed by the Government of Madhya Pradesh for the purpose of levying stamp duty. The Company has referred to the Government publications rates and have made the suitable adjustments. Since the valuation is based on the published rates, the Company has classified the same under Level 2.

* aggregate number of equity shares held post sub-division of shares of face value of Rs.10 each into equity shares of face value of Rs.1 each.

** aggregate number of equity shares held post consolidation of shares of face value of Rs.1 each into equity shares of face value of Rs.5 each.

***fresh issue of shares - The Company has completed the IPO of fresh issue of 26.65 lakhs equity shares (including pre IPO of 5.33 lakhs equity shares) of Rs.5 each at an issue price of Rs.938 per share (Rs.848 per share for employees). The equity shares of the Company were listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) w.e.f. October 5, 2017.

(c) Terms/ rights attached to equity shares

The Company has only one class of equity shares having par value of Rs.5 [(March 31, 2017: Rs.1),(April 1, 2016: Rs.10)] per share. Each equity share carries one vote and is entitled to dividend that may be declared by the Board of Directors, which is subject to the approval of the shareholders in the ensuing Annual General Meeting.

I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Each of Series A CCPS, Series A1 CCPS and Series A2 CCPS was converted into converted into 60 equity shares of Rs.1 each in 2017-18.

As at March 31, 2018 - Allottment of bonus shares in the ratio of 3 equity shares for every equity share of Rs.5 each held to the existing equity shareholders as approved by the shareholders at their extra-ordinary general meeting held on June 3, 2017.

As at March 31, 2017 - Allottment of bonus shares in the ratio of 5 equity shares for every equity share of Rs.1 each held to the existing equity shareholders as approved by the shareholders at their extra-ordinary general meeting held on September 24, 2016.

Shares issued under Employee Stock Purchase Plan (ESPP)

For details of shares issued under the ESPP of the Company, refer Note 44.

Notes:

1. The following loans from banks were secured by an exclusive first charge on the entire property, plant and equipment (present as well as future) of the Company and equitable mortgage of four land properties and building thereon. The loans were also secured by a second charge on the entire current assets (present as well as future) of the Company and personally guaranteed by Mr. Arvind Mehta, Chairman and Executive Director of the Company. The loans have been prepaid during the financial year 2017-18.

2. I ndian rupee unsecured loan secured by a personal guarantee of Mr. Arvind Mehta, Chairman and Executive Director of the Company - March 31, 2018: Nil [(March 31, 2017: Rs.750.00 lakhs), (April 1, 2016: Rs.700.00 lakhs)].

3. The aforementioned loans carry a rate of interest ranging between 8.40% and 10.35%. The interest is to be serviced as and when charged.

4. Cash credit from a bank is secured by an exclusive first charge on entire stock of raw material except for potato stock in warehouse / cold storage, finished goods and book debts of all locations. The cash credit is re-payable on demand and carries an interest rate ranging between 9.65% and 9.75%. The said borrowings are secured by a personal guarantee of Mr. Arvind Mehta, Chairman and Executive Director of the Company.

5. Foreign currency buyers credit is secured against first pari passu charge over entire property, plant and equipment of the Company and second pari passu charge over entire current assets of the Company. Further the said loan is secured by a personal guarantee of Mr. Arvind Mehta, Chairman and Executive Director of the Company.

6. Short term loan from bank were secured against warehouse / cold storage receipts.

7. Bank overdraft which is re-payable on demand is secured against post dated cheques issued from cash credit account and personal guarantee of Mr. Arvind Mehta, Chairman and Executive Director of the Company.

8. Unsecured short term loan from a bank with a specific condition of one undated cheque and personal guarantee of Mr. Arvind Mehta, Chairman and Executive Director of the Company.

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority

(f) During the year, the increase of the Corporate income tax rate from 34.608% to 34.944% was substantively enacted on February 1, 2018 and will be effective from April 1, 2018. As a result, the relevant deferred tax balances have been remeasured. Deferred tax liability expected to be reversed after March 31, 2018 has been measured using the effective rate that will apply for the period.

The impact of the change in tax rate has been recognised in tax expense in the statement of profit and loss, except to the extent that it relates to items previously recognised outside profit or loss.

*Based on the information available with Company as at period end there are no dues outstanding to the suppliers who are registered as micro and small enterprises registered under “The Micro, Small and Medium Enterprises Development Act, 2006”. This has been relied upon by the auditors.

Trade payables are non interest bearing and are normally settled in 0 to 45 days terms. There are no other amounts paid / payable towards interest / principal under the MSMED.

For explanations on the Company’s credit risk management processes, refer Note 48.

There was an accidental fire at Namkeen plant on December 28, 2014 which resulted in loss of property, plant and equipment and inventories aggregating Rs.291.88 lakhs. The amount of recovery from the insurance company could not be determined and hence the entire amount of Rs.291.88 lakhs had been treated as an exceptional expense in the statement of profit and loss for the previous year ended March 31, 2015.

The Company received an interim claim of Rs.99.98 lakhs from the insurance company in the year ended April 1, 2016 which was reflected as an exceptional income. During the previous year an amount of Rs.95.73 lakhs has been received as a full and final settlement from the insurance company which is treated as an exceptional item in the statement of profit and loss for the year ended March 31, 2017.

NOTE 3: EARNINGS PER SHARE (‘EPS’)

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of equity shares outstanding during the year

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.

NOTE 4: EMPLOYEE BENEFITS

(a) Defined contribution plans

a. Provident fund

Provident fund is a defined contribution scheme established under a state plan. The contributions to the scheme are charged to the statement of profit and loss in the period when the contributions to the funds are due.

(b) Defined benefit plans Gratuity - Non-funded

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets gratuity on retirement at 15 days of last drawn salary for each completed year of service. The aforesaid liability is provided for on the basis of an actuarial valuation made at the end of the financial year. The gratuity plan is non funded.

The major categories of plan assets of the fair value of the total plan assets are as follows:

Not applicable

Details of asset-liability matching strategy

There are no minimum funding requirements for a gratuity benefits plan in India and there is no compulsion on the part of the Company to fully or partially pre-fund the liabilities under the plan. Since the liabilities are unfunded, there is no asset-liability matching strategy deviced for the plan.

A description of any funding arrangements and funding policy that affect future contributions:

Currently there is no specific funding arrangement that affect the future contributions.

Sensitivity analysis is performed by varying a single parameter while keeping all the other parameters unchanged. Sensitivity analysis fails to focus on the interrelationship between underlying parameters. Hence, the results may vary if two or more variables are changed simultaneously. The method used does not indicate anything about the likelihood of change in any parameter and the extent of the change if any.

Sensitivity due to mortality are not material and hence impact of change not calculated.

NOTE 5: COMMITMENTS AND CONTINGENCIES

I. Operating lease commitments

(a) Company as a lessee

The Company has entered into operating lease arrangements for its factory building and warehouses.

Future minimum rentals payable and charged to the statement of profit and loss under non-cancellable operating leases as at March 31, are as follows:

(b) Company as a lessor

The Company has entered into an agreement for leasing its investment property consisting of freehold land and factory building at Piplya Lohar, Indore to its wholly owned subsidiary. The agreement has a lock in period of ten years.

Notes:

* Income tax demand in the previous year comprise of demand from the income tax department for AY 2010-11. The Company had filed an appeal before the CIT(A) and the assessment has been closed in the current year.

** Value added tax demand in the previous year comprised of demand from the commercial taxes department for FY 2014-15. During the current year the Company has paid the disputed demand of Rs.4.50 lakhs and the assessment has been closed.

*** Central Sales tax demand in the previous year comprised of demand from the Central Sales tax authorities for FY 2012-13, 2013-14 and 2014-15. During the current year, the Company has submitted the required forms and supporting documentary evidences within the time granted and the assessment has been closed.

Terms and conditions of transactions with related parties

The transactions from related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest bearing and settlement will occur in cash. There have been no guarantees provided or received for any related party receivables or payables other than disclosed in aforesaid table. For the year ended March 31, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken at each financial year end through examining the financial position of the related party and the market in which the related party operates.

NOTE 6: SEGMENT INFORMATION

For management purpose, the Company comprise of only one reportable segment - Snacks food

The Management monitors the operating results of this segment for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.

C] Notes

1 The business of the Company comprise of only one reportable segment i.e. Snacks food. The management monitors the operating results of this segment for the purpose of resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the standalone financial statements.

2. Segment revenue in the geographical segments considered for disclosure are as follows:

a) Revenue within India includes sales to customers located within India.

b) Revenue outside India includes sales to customers located outside India.

3. The Company does not have any customer, with whom revenue from transactions is more than 10% of Company’s total revenue.

4. Non current operating assets for this purpose consist of property, plant and equipment, capital work-in-progress, investment property, investment property under development, intangible assets and intangible assets under development

NOTE 7: DISCLOSURE REQUIRED UNDER SECTION 186(4) OF THE ACT

Included in financial assets are certain loans the particulars of which are disclosed below as required by Section 186(4) of the Act

NOTE 8: GOVERNMENT GRANT

I. Sales tax incentive - Assam

The Company commissioned its Guwahati Unit 1 on July 17, 2014 and Guwahati Unit 2 on April 8, 2016. As per the Industrial and Investment Policy of Assam, 2014, the Units are entitled for exemption of tax payable under the Assam Value Added Tax Act 2005 and the Central Sales Tax Act 1956 for 15 years from the date of commencement of commercial production.

a) Guwahati Unit 1 :

The total VAT/CST recovery for Guwahati Unit 1 after taking VAT input credit for the year ended March 31, 2018 is Nil (March 31, 2017: Rs.730.1 1 lakhs). The Company has deposited Rs.247.88 lakhs with the Government authorities and recognised the balance amount of Rs.482.22 lakhs as other operating revenue income (refer Note 28) during the year ended March 31, 2017. The Company has received the eligibility certificate for Guwahati Unit 1 plant on November 15, 2016.

b) Guwahati Unit 2 :

The total VAT/CST recovery for Guwahati Unit 2 after taking VAT input credit for the year ended is Rs.147.66 lakhs (March 31, 2017: Rs.345.09 lakhs). The Company has deposited Rs.1.48 lakhs (March 31, 2017: Rs.3.44 lakhs) with the Government authorities and recognised the balance amount of Rs.146.18 lakhs (March 31, 2017: Rs.340.43 lakhs) after adjusting brought forward input credit of ‘ Nil (March 31, 2017: Rs.1.72 lakhs) as other operating revenue income (refer Note 28). The Company has completed the process of application with respect to the Guwahati Unit 2 to the Assam Sales Tax Authorities on March 31, 2017 and the eligibility certificate is awaited. However, the sales tax incentive of Rs.144.70 lakhs (March 31, 2017: Rs.340.43 lakhs) of Guwahati Unit 2 has been recognised as income.

The Assam Government has revised the incentive scheme under the GST regime, As per the notification no. FTX.113/2017/72 dated January 19, 2018, the Company is entitled to reimbursement of 100% of the state tax (SGST) paid through debit in the electronic cash ledger account maintained by the unit.

II. Sales tax incentive - Madhya Pradesh

As per the Madhya Pradesh Industrial Investment Promotion Assistance Scheme, 2004, the Company is entitled for refund of the commercial taxes and sales tax deposited by them for a period of three years from the date of commercial production. The Company has been sanctioned Industrial Investment Promotion Assistance (IIPA) by Government of Madhya Pradesh on February 21, 2018. The eligible amount sanctioned under the aforesaid scheme for both the Chips plant at Indore capitalised on January 27, 2010 and October 26, 2012 amounts to Rs.143.68 lakhs and Rs.540.61 lakhs respectively. The total amount of Rs.684.28 lakhs has been recognised as other operating revenue income (refer Note 28) and the same has been subsequently received in cash on April 4, 2018.

III. Freight subsidy

The Guwahati units of the Company are eligible for freight subsidy under the Freight Subsidy Scheme (‘FSS’), 2013 introduced by the Ministry of Commerce and Industry vide notification no. F. No. 1 1(5)/2009-DBA-II/NER. The Company is eligible for the freight subsidy for a period of 5 years from the commencement of the scheme or operations, whichever is later. The Company has estimated that the claim under the scheme shall be received within a period of 6 years from the end of the relevant quarter and has accordingly recognised income of Rs.155.23 lakhs at present value as other operating revenue income (refer Note 28) in the financial year ended March 31, 2018.

NOTE 9: EMPLOYEE STOCK PURCHASE PLAN (‘ESPP’)

The Company had an ESPP under which 0.11 lakhs shares of equity capital were reserved for issuance to its eligible employees. Eligible employees could purchase a limited number of shares of the Company’s equity capital at the fair market value as determined by a Merchant Banker. The ESPP was approved in the Board Meeting held on August 23, 2013 and the grant of options was approved in the Board Meeting held on June 10, 2016 for issue of stock options to the eligible employees of the Company. In the year ended March 31, 2017, 0.05 lakhs equity shares were issued under ESPP and the balance 0.01 lakhs equity shares of ESPP policy has been revoked by the Company on June 21, 2016.

NOTE 10: SHARE ISSUE EXPENSES RECOVERABLE

During the year ended March 31, 2018, the Company had completed its IPO through an Offer for Sale of 30.06 lakhs equity shares and a fresh issue of Rs.21.32 lakhs equity shares of Rs.5 each at an issue price of Rs.938 per share (Rs.848 per share for employees). The Company has incurred total share issue expenses Rs.2,953.50 lakhs (March 31, 2017: Rs.439.83 lakhs). Since the issue was an offer for sale and a fresh issue, all the share issue expenses related to the IPO have been proportionately distributed between the Company and the selling shareholders. The Company’s share of expenses have been adjusted against securities premium to the extent permissible under Section 52 of the Act on successful completion of IPO.

NOTE 11: FAIR VALUES

Set out below, is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments:

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

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

1. Security deposits, loans and advances and other financial assets are evaluated by the Company based on parameteres such as interest rates, individual credit worthiness of the counterparties and expected duration of readability. Based on this evaluation, allowances are taken into account for the expected credit losses of these loans and other financial assets.

2. The fair value of bank borrowings are estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.

NOTE 12: FAIR VALUE HIERARCHY

The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities:

NOTE 13: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s principal financial liabilities, comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include advances and deposits, trade and other receivables and cash and cash equivalents that derive directly from its operations.

The Company is exposed to market risks, credit risks and liquidity risks. The Company’s senior management oversees the management of these risks. The Company’s senior management provides assurance that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. The Board of Directors review and agree policies for managing each of these risks, which are summarised below.

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 risks namely interest rate risk, foreign currency risk and other price risk, such as equity price risk. The Company is not significantly exposed to other price risk whereas the exposure to currency risk and interest risk is given below.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s borrowings. However the Company has only current borrowings, hence it is not significantly exposed to interest rate risk.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s current borrowings, receivables and payables due to transactions entered in foreign currencies.

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in USD and JPY exchange rates, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities.

Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and deposits with banks.

Trade receivables

Customer credit is managed by the Company’s through established policies and procedures related to customer credit risk management. Each outstanding customer receivables are regularly monitored and if outstanding is above due date the further shipments are controlled and can only be released if there is a proper justification.

The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets and are monitored at periodical intervals. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.

Liquidity risk

(i) Liquidity risk management

The Company’s principle sources of liquidity are cash and cash equivalents, current investments and the cash flow that is generated from operations. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived. The Company closely monitors its liquidity position and maintains adequate source of funding.

(ii) Maturities of financial liabilities

The following tables detail the Company’s remaining contractual maturity for its financial liabilities with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay

(iii) Maturities of financial assets

The following table details the Company’s expected maturity for its financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on financial assets is necessary in order to understand the Company’s liquidity risk management as the liquidity is managed on a net asset and liability basis.

NOTE 14: CAPITAL MANAGEMENT

For the purpose of the Company’s capital management, equity includes issued equity capital, compulsory convertible preference shares, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximise the shareholder value. The Company’s capital management objectives are to maintain equity including all reserves to protect economic viability and to finance any growth opportunities that may be available in future so as to maximise shareholders’ value. The Company is monitoring capital using debt equity ratio as its base, which is debt to equity. The Company’s policy is to keep healthy debt equity ratio ensuring minimum debt. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants.

NOTE 15: FIRST-TIME ADOPTION OF IND AS

These standalone financial statements, for the year ended March 31, 2018, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2017, the Company prepared its standalone financial statements in accordance with accounting standards notified under Section 133 of the Act, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the Company has prepared standlone financial statements which comply with Ind AS applicable for the year ended on March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017, as described in the summary of significant accounting policies. In preparing these standalone financial statements, the Company’s opening balance sheet was prepared as at April 1, 2016, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP standalone financial statements, including the balance sheet as at April 1, 2016 and the standalone financial statements as at and for the year ended March 31, 2017.

Exemptions applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

i) Since there is no change in the functional currency, the Company has elected to continue with the carrying value for all of its property, plant and equipment, intangible assets and investment property as recognised in its Indian GAAP financial as deemed cost at the transition date.

ii) The Company has availed the option to continue recording of investments (in each of these cases) at cost as per Indian GAAP as on transition date amongst available options of fair valuation or cost as per Ind AS 27 ‘separate financial statement’.

iii) The Company has availed the exemption available under Ind AS 101 for not restating the past business combinations at fair value.

iv) Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease in substance or legal form. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has done the assessment of lease in contracts based on conditions in prevailing as at the date of transition as per transition provision of Ind AS 101.

Estimates

The estimates at April 1, 2016 and at March 31, 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies).

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2016, the date of transition to Ind AS and as of March 31, 2017.

Footnotes to the reconciliation of equity as at April 1, 2016 and March 31, 2017 and profit or loss for the year ended March 31, 2017:

1 Government grant:

Under IGAAP Company had presented Government grants related to specific property, plant and equipment in the balance sheet by reducing the grant from the gross value of the concerned assets while arriving at their book value. As per Ind AS 20, the grant received shall be recognised separately as deferred income and should be recognised as income in the statement of profit and loss in equal amount over the expected of useful life of related asset for availing grant. Since capital subsidy (incentive received for Indore plant) recognised under IGAAP is related to property, plant and equipment, unamortised portion of capital subsidy of Rs.22.45 lakhs as on transition date is transferred to deferred Government grant.

Hence the Company has re-stated the net book value of property, plant and equipment on the transition date by Rs.487.97 lakhs (March 31, 2017: Rs.428.09 lakhs) with a corresponding credit to deferred Government grant. Accordingly the Company has recognised additional depreciation of Rs.59.88 lakhs and deferred Government grant income of Rs.62.38 lakhs for the year ended March 31, 2017.

2 Interest free loan to subsidiary

The Company had given Rs.820.72 lakhs as interest free loan to its subsidary company. Under Ind AS, such interest free loans are measured at fair value on initial recognition and subsequently at amortised cost. Accordingly, the Company has adjusted carrying value of interest free loan given to its subsidiary company under IGAAP at amortised cost with corresponding credit to retained earning amounting to Rs.147.43 lakhs for recording the fair value on initial recognition and the benefit of interest free loan, the Company has debited the Investments by Rs.374.32 lakhs. During the year ended March 31, 2017, the Company has recognised interest income of Rs.50.00 lakhs on such interest free loan.

3 Amortisation of security deposits:

Under Ind AS, security deposits paid are measured at amortised cost. Accordingly, the Company has recognised net deferred lease asset of Rs.157.06 lakhs (March 31, 2017: Rs.140.01 lakhs) and adjusted Rs.10.08 lakhs (net) against retained earnings on transition date. Further during the year ended March 31, 2017, Company has expensed out the deferred lease asset amounting to Rs.24.85 lakhs and recognised as interest income amounting to Rs.20.30 lakhs towards unwinding of security deposit paid.

4 Reclassification of CCPS:

Under Ind AS, compulsorily convertible preference shares are compound financial instrument, wherein the liability component will be the dividend payouts in the form of cash i.e. Contractual obligation to pay 0.001% as cumulative dividend and equity component will be the number of equity shares to be issued on conversion. Accordingly equity portion of Rs.115.50 lakhs is reclassified from equity share capital to other equity

5 Amortisation of loan processing fees:

Under Ind AS, financial asset or financial liability are measured at its fair value adjusted for transaction cost on initial recognition and subsequently at amortised cost. Accordingly unamortised transaction cost on borrowings is adjusted in carrying value of the borrowings with corresponding credit to retained earnings amounting to Rs.19.78 lakhs as on transition date. During the year ended March 31, 2017, the Company has recognised additional finance cost of Rs.6.27 lakhs on account of amortisation of loan processing fees.

6 Reversal of inflation linked lease rent escalations:

As per Ind AS 17, lease rentals from operating leases is accounted for on a straight-line basis over the lease terms, except where escalation in rent is in line with expected general inflation. As the escalation is in line with inflations, the Company has reversed straight-lining provision of Rs.94.60 lakhs as on transition date and Rs.122.86 lakhs as on March 31, 2017.

7 Reversal of sales promotion inventory

Under Ind AS the sales promotion inventory have to be expensed as and when incurred and not to be carried forward in the balance sheet as other current assets as the same does not meet the definition of an asset. Hence sales promotion inventory amounting to Rs.49.68 lakhs as on transition date and Rs.21.42 lakhs as on March 31, 2017 has been reversed with corresponding impact to retained earnings and the statement of profit and loss respectively.

8 Scheme on sales

Under Ind AS, revenue is measured at the fair value of the consideration received or receivable taking into account the amount of discounts and rebates allowed by the Company. Accordingly, discount of Rs.1,056.44 lakhs has been reclassified from cost of materials consumed to sale of products.

9 Excise duty

Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of products includes excise duty. Excise duty on sale of products is separately presented in the statement of profit and loss. Thus, sale of products under Ind AS has increased by Rs.413.72 lakhs with a corresponding recognition of excise duty in expenses. There is no impact on the total equity and profit.

10 Employee benefits expense

As per Ind AS 19 Employee Benefits, actuarial gains and losses on defined retirement benefits of Rs.37.46 lakhs and income tax impact thereon of Rs.12.96 lakhs are recognised in other comprehensive income and not reclassified to the statement of profit and loss in a subsequent period.

11 Deferred taxes

Under Ind AS, deferred tax is calculated using balance sheet approach on various transitional adjustments which lead to temporary differences between the carrying amount of an asset or liability and its tax base. On transition date, net deferred tax assets amounting to Rs.67.39 lakhs is created due to transition adjustment.

Further the computation of deferred tax has been rectified to give effect to tax expense of earlier earliers amounting to Rs.514.13 lakhs as at the transition date and Rs.95.71 lakhs for the year ended March 31, 2017.

Also, following the definition of deferred tax asset as per Ind AS 12, MAT credit has been reclassified from loans and advances under IGAAP to deferred tax assets under Ind AS. During the year ended March 31, 2017, net decrease in deferred tax asset is Rs.33.99 lakhs on account of these adjustments.

12 Rental income from subsidiary

The Company had given the investment property to its subsidary for which no lease rental were charged. Under Ind AS, this investment property given to subsidiary without lease rentals is debited to investment in subsidiary with income of Rs.34.77 lakhs is recognised for the year ended on March 31, 2017.

13 Other comprehensive income

Under Indian GAAP, the Company has not presented OCI separately. Hence, it has reconciled Indian GAAP profit or loss as per Ind AS. Further, Indian GAAP profit is reconciled to total comprehensive income as per Ind AS.

14 Cash flow statement

The transition from Indian GAAP to Ind AS did not have a material impact on the cash flow statement.

15 Revenue from operations

The revenue from operations for the year ended March 31, 2017 has been adjusted by Rs.62.38 lakhs on account of recognition of government grant income (refer Note 1 above), Rs.1,056.44 lakhs on account of reclassification of discounts and rebates on sales (refer Note 8 above) and Rs.413.72 lakhs on account of reclassification of excise duty on sale of products (refer Note 9 above).

16 Other Income

The other income for the year ended March 31, 2017 has been adjusted by Rs.50 lakhs on account of interest income on interest free loan to subsidiary (refer Note 2 above), Rs.20.30 lakhs on account of interest income on security deposits (refer Note 3 above) and Rs.34.77 lakhs on account of rental income from subsidiary (refer Note 12 above).

17 Other expense

The other expense for the year ended March 31, 2017 has been adjusted by Rs.24.85 lakhs on account of amortisation of deferred lease expenses (refer Note 3 above), Rs.28.26 lakhs on account of reversal of straightlining of lease rental expenses (refer Note 6 above) and Rs.28.26 lakhs on account of sales promotion inventory (refer Note 7 above).

NOTE 16: STANDARDS ISSUED BUT NOT YET EFFECTIVE

The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Company’s standalone financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.

The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and Companies (Indian Accounting Standards) Amendment Rules, 2018 amending the following standard:

Ind AS 115 Revenue from Contracts with Customers

Ind AS 115 was issued on 28 March 2018 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will supersede all current revenue recognition requirements under Ind AS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after April 1, 2018. The Company is evaluating the requirements of the amendment and the effect on the standalone financial statements

Recognition of deferred tax assets for unrealised losses - Amendments to Ind AS 12

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.

These amendments are effective for annual periods beginning on or after April 1, 2018. The Company will adopt the new standard on the required effective date. The amendment is not likely to have any material impact on the standalone financial statements.

Transfer of investment property - Amendments to Ind AS 40

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 management’s 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 of the 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 Ind AS 8 is only permitted if it is possible without the use of hindsight. The amendments are effective for annual periods beginning on or after April 1, 2018. The Company will apply amendments when they become effective. However, since Company’s current practice is in line with the clarifications issued, the Company does not expect any effect on its standalone financial statements.

Appendix B to Ind AS 21 Foreign Currency Transactions and Advance Consideration

The Appendix clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment or receipt of advance consideration.

Entities may apply the Appendix requirements on a fully retrospective basis. Alternatively, an entity may apply these requirements prospectively to all assets, expenses and income in its scope that are initially recognised on or after:

(i) The beginning of the reporting period in which the entity first applies the Appendix, or

(ii) The beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies the Appendix.

The Appendix is effective for annual periods beginning on or after April 1, 2018. However, since the Company’s current practice is in line with the Interpretation, the Company does not expect any effect on its standalone financial statements.