A Oneindia Venture
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Notes to Accounts of Prataap Snacks Ltd.
Mar 31, 2025
(J) Provisions
Provisions are recognised when the Company has
a present obligation (legal or constructive)as a
result of a past event, for which it is probable that
an outflow of resources embodying economic
benefits will be required to settle the obligation and
a reliable estimate can be made of the amount
of obligation. The expense relating to a provision
is presented in the statement of profit and loss.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax
rate that reflects current market assessments of
the time value of money and the risks specific to the
liability. When discounting is used, the increase in the
provision due to the passage of time is recognised
as a finance cost.
(K) Employee benefits
I. Short term employee benefits
Short-term employee benefit obligations such
as salaries, incentives, special awards, medical
benefits are measured on an undiscounted basis
and are expensed as the related service is provided.
II. Post-employment obligations
The Company operates the following post¬
employment schemes:
a. Defined contribution plan
Retirement benefits in the form of provident
fund is a defined contribution scheme. The
Company recognises contribution payable to
the provident fund scheme as an expenditure,
when an employee renders the related service.
The Company has no obligation, other than the
contribution payable to the provident fund.
b. Defined benefit plan
The cost of providing benefits under the defined
benefit plan is determined using the projected
unit credit method. Remeasurements of the
net defined benefit liability, which comprise
actuarial gains and losses, the return on plan
assets (excluding interest) and the effect of
the asset ceiling (if any, excluding interest),
are recognised in OCI. Remeasurements
are not reclassified to profit or loss in
subsequent periods.
Past service costs are recognised in the
statement of profit and loss on the earlier of:
⢠The date of the plan amendment or
curtailment, and
⢠The date that the Group recognises related
restructuring costs
Net interest is calculated by applying the
discount rate to the net defined benefit liability
or asset. The Company recognises the following
changes in the net defined benefit obligation as
an expense in the statement of profit and loss:
⢠Service costs comprising current service
costs, past-service costs, gains and
losses on curtailments and non routine
settlements; and
⢠Net interest expense or income.
A liability for a termination benefit is recognised
at the earlier of when the entity can no longer
withdraw the offer of the termination benefit
and when the entity recognises any related
restructuring costs.
The liability for the defined benefit gratuity plan
is determined based on actuarial valuations
carried out by an independent actuary as
at year end. 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 for plans operated in India, the
management considers the government bonds
yield rates for the life of the 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.
III. Other long term employee benefit
The Company has leave encashment policy for
all the employees. Liabilities for such benefits
are provided on the basis of valuation, as at the
balance sheet date, carried out by an independent
actuary. The actuarial valuation method used by an
independent actuary for measuring the liability is
the projected unit credit method. Actuarial gain and
loss are recognised in the statement of profit and
loss during the year in which they occur.
The Company presents the leave as the current
liability in the balance sheet to the extent it does
not have the unconditional / legal and contractual
right to defer its settlement for twelve months
after the reporting date. Where the Company has
the unconditional / legal and contractual right to
defer its settlement beyond twelve months after the
reporting date, it is presented as the non current
liability in Balance sheet.
IV. Share-based payments
Share-based compensation benefits are provided
to employees via Employee Stock Appreciation
Rights Plan whereby employees render services as
consideration for equity instruments (equity-settled
transactions).
The cost of equity-settled transactions is determined
by the fair value at the date when the grant is made
using an appropriate valuation model.
That cost is recognised, together with a corresponding
increase in Employee stock appreciation rights
(''ESAR'') reserve in equity, over the period in which the
performance and/or service conditions are fulfilled
in employee benefits expense. The cumulative
expense recognised for equity-settled transactions
at each reporting date until the vesting date reflects
the extent to which the vesting period has expired
and the Company''s best estimate of the number
of equity instruments that will ultimately vest. The
expense or credit in the statement of profit and loss
for a period represents the movement in cumulative
expense recognised as at the beginning and end
of that period and is recognised in employee
benefits expense.
Service and non-market performance conditions
are not taken into account when determining the
grant date fair value of awards, but the likelihood
of the conditions being met is assessed as part
of the Company''s best estimate of the number of
equity instruments that will ultimately vest. Market
performance conditions are reflected within the
grant date fair value. Any other conditions attached
to an award, but without an associated service
requirement, are considered to be non-vesting
conditions. For share-based payment awards
with non-vesting conditions, the grant date fair
value of the share-based payment is measured to
reflect such conditions and there is no true-up for
differences between expected and actual outcomes.
No expense is recognised for awards that do not
ultimately vest because non-market performance
and/or service conditions have not been met. Where
awards include a market or non-vesting condition,
the transactions are treated as vested irrespective
of whether the market or non-vesting condition is
satisfied, provided that all other performance and/
or service conditions are satisfied.
(L) Taxation
Income tax expense comprises of current tax and
deferred tax. Income tax expense is recognised in the
statement of profit and loss, except when it relates
to items recognised in the other comprehensive
income or items recognised directly in the equity.
In such cases, the income tax expense is also
recognised in the other comprehensive income or
directly in the equity as applicable.
Current taxes
The current income tax charge is calculated on
the basis of the tax laws enacted or substantively
enacted at the end of the reporting period.
Management periodically evaluates positions
taken in the tax returns with respect to situations
in which applicable tax regulations are subject to
interpretation or under dispute with authorities and
establishes provisions where appropriate.
Current income tax assets and liabilities are
measured at the amount expected to be recovered
from or paid to the taxation authorities. Current
tax assets and current tax liabilities are offset only
if there is a legally enforceable right to set off the
recognised amounts, and it is intended to realise
the asset and settle the liabilities on a net basis
or simultaneously.
Deferred taxes
Deferred tax is recognised in respect of temporary
differences between the tax bases of assets and
liabilities and their carrying amounts for financial
reporting purposes at the reporting date.
Deferred tax is recognised for all taxable temporary
differences, except for:
⢠Temporary difference arising on the initial
recognition of goodwill or an asset or liability in
a transaction that is not a business combination
and, at the time of the transaction, affects neither
the accounting nor taxable profit or loss
⢠Taxable temporary differences associated with
investments in subsidiaries when the timing
of the reversal of the temporary differences
can be controlled and it is probable that the
temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax
assets are recognised to the extent that it is probable
that taxable profit will be available against which
the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses
can be utilised.
For operations carried out under tax holiday period
(Section 80IB and 80IE benefits of Income Tax Act,
1961), deferred tax assets or liabilities, if any, have
been recognised for the tax consequences of those
temporary differences between the carrying values
of assets and liabilities and their respective tax
bases that reverse after the tax holiday ends.
The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of
the deferred tax asset to be utilised. Unrecognised
deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that
it has become probable that future taxable profits
will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply in the
year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the
reporting date.
Deferred tax relating to items recognised outside
profit or loss is recognised outside profit or loss (either
in OCI or in equity). Deferred tax items are recognised
in correlation to the underlying transaction either in
OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are
offset if a legally enforceable right exists to offset
current tax assets against current tax liabilities and
the deferred taxes relate to the same taxable entity
and the same taxation authority.
Minimum alternate tax (MAT)
MAT expense in a year is charged to the statement
of profit and loss as current tax for the year. The MAT
credit available only to the extent that it is probable
that the Company will pay normal income tax
during the specified period, i.e., the period for which
MAT credit is allowed to be carried forward and is
disclosed as deferred tax asset. In the year in which
the Company recognises MAT credit as an asset, it
is created by way of credit to the statement of profit
and loss and shown as part of deferred tax asset.
The Company reviews the "MAT credit entitlement"
asset at each reporting date and writes down the
asset to the extent that it is no longer probable that
it will pay normal tax during the specified period.
(M) Foreign currencies
Transactions in foreign currencies are initially
recorded by the Company at its functional currency
spot rate at the date the transaction first qualifies
for recognition. Exchange differences arising on
settlement or restatement of transactions, are
recognised as income or expense in the year in
which they arise. Monetary assets and liabilities
denominated in foreign currencies are translated
at the functional currency spot rates of exchange
at the reporting date. Exchange differences arising
on settlement or translation of monetary items
are recognised in the statement of profit and loss.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rates at the dates of the
initial transactions.
(N) Fair value measurement
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability; or
⢠In the absence of a principal market, in the most
advantageous market for the asset or liability.
The principal or the most advantageous market
must be accessible by the Company.
The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
assuming that market participants act in their
economic best interest. A fair value measurement
of a non-financial asset takes into account a market
participant''s ability to generate economic benefits
by using the asset in its highest and best use or by
selling it to another market participant that would
use the asset in its highest and best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorised within the fair value hierarchy,
described as follows, based on the lowest level input
that is significant to the fair value measurement as
a whole:
⢠Level 1 â Quoted (unadjusted) market prices in
active markets for identical assets or liabilities
⢠Level 2 â Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable
⢠Level 3 â Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable
For assets and liabilities that are recognised in
the financial statements on a recurring basis, the
Company determines whether transfers have
occurred between levels in the hierarchy by re¬
assessing categorisation (based on the lowest level
input that is significant to the fair value measurement
as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the
Company has determined classes of assets and
liabilities on the basis of the nature, characteristics
and risks of the asset or liability and the level of
the fair value hierarchy as explained above. Other
fair value related disclosures are given in the
relevant notes.
(O) Financial instruments
I) Recognition and initial measurement
A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. Trade
receivables are initially recognised when they are
originated. All other financial assets and financial
liabilities are initially recognised when the Company
becomes a party to the contractual provisions of
the instrument.
A financial assets (unless it is a trade receivable
without a significant financing component) or
financial liabilities is initially measured at fair
value plus or minus, for an item not at fair value
through profit and loss (FVTPL), transaction costs
that are directly attributable to its acquisition
or issue. A trade receivable without a significant
financing component is initially measured at the
transaction price.
II) Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified
as measured at:
⢠amortised cost;
⢠FVOCI - debt investment;
⢠FVOCI - equity investment; or
⢠FVTPL.
Financial assets are not reclassified subsequent
to their initial recognition unless the Company
changes its business model for managing financial
assets, in which case all affected financial assets
are reclassified on the first day of the first reporting
period following the change in the business model.
A financial asset is measured at amortised cost if
it meets both of the following conditions and is not
designated as at FVTPL:
⢠it is held within a business model whose objective
is to hold assets to collect contractual cash
flows; and
⢠its contractual terms give rise on specified dates
to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
These assets are subsequently measured at
amortised cost using the effective interest method.
The amortised cost is reduced by impairment losses.
Interest income, foreign exchange gains and losses
and impairment are recognised in the statement of
profit or loss. Any gain or loss on derecognition is
recognised in the statement of profit or loss.
A debt investment is measured at FVOCI if it
meets both of the following conditions and is not
designated as at FVTPL:
⢠it is held within a business model whose objective
is achieved by both collecting contractual cash
flows and selling financial assets; and
⢠its contractual terms give rise on specified dates
to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
These assets are subsequently measured at fair
value. Interest income calculated using the effective
interest method, foreign exchange gains and losses
and impairment are recognised in the statement
of profit or loss. Other net gains and losses are
recognised in OCI. On derecognition, gains and
losses accumulated in OCI are reclassified to the
statement of profit or loss.
On initial recognition of an equity investment that is
not held for trading, the Company may irrevocably
elect to present subsequent changes in the
investment''s fair value in OCI. This election is made
on an investment-by-investment basis.
These assets are subsequently measured at fair
value. Dividends are recognised as income in the
statement of profit or loss unless the dividend
clearly represents a recovery of part of the cost
of the investment. Other net gains and losses are
recognised in OCI and are never reclassified to the
statement of profit or loss.
All financial assets not classified as measured
at amortised cost or FVOCI as described above
are measured at FVTPL. On initial recognition, the
Company may irrevocably designate a financial
asset that otherwise meets the requirements to be
measured at amortised cost or at FVOCI as at FVTPL
if doing so eliminates or significantly reduces an
accounting mismatch that would otherwise arise. "
Financial liabilities
Financial liabilities are classified as measured
at amortised cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held-for-
trading, it is a derivative or it is designated as such
on initial recognition. Financial liabilities at FVTPL are
measured at fair value and net gains and losses,
including any interest expense, are recognised in the
statement of profit or loss. Other financial liabilities
are subsequently measured at amortised cost using
the effective interest method. Interest expense and
foreign exchange gains and losses are recognised
in the statement of profit or loss. Any gain or loss on
derecognition is also recognised in the statement of
profit or loss.
III) De-recognition
Financial assets
The Company derecognises a financial asset when
the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to
receive the contractual cash flows in a transaction
in which substantially all of the risks and rewards of
ownership of the financial asset are transferred or
in which the Company neither transfers nor retains
substantially all of the risks and rewards of ownership
and does not retain control of the financial asset.
If the Company enters into transactions whereby it
transfers assets recognised on its balance sheet, but
retains either all or substantially all of the risks and
rewards of the transferred assets, the transferred
assets are not derecognised.
Financial liabilities
A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the terms
of an existing liability are substantially modified,
such an exchange or modification is treated as
the de-recognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognised in the
statement of profit and loss.
IV) Offsetting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the balance sheet
if there is a currently enforceable legal right to offset
the recognised amounts and there is an intention
either to settle on a net basis or to realise the assets
and settle the liabilities simultaneously.
V) Impairment of financial assets
In accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement
and recognition of impairment loss on the following
financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and
are measured at amortised cost e.g., loans,
debt securities, deposits, trade receivables and
bank balance
b) Financial assets that are measured at FVTOCI
c) Trade receivables or any contractual right to
receive cash or another financial asset that
result from transactions that are within the
scope of Ind AS 115
The Company follows ''simplified approach'' for
recognition of impairment loss allowance on
Trade receivables.
The application of simplified approach does not
require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance
based on lifetime ECLs at each reporting date, right
from its initial recognition.
For recognition of impairment loss on other financial
assets and risk exposure, the Company determines
that whether there has been a significant increase
in the credit risk since initial recognition. If credit risk
has not increased significantly, 12-month ECL is used
to provide for impairment loss. However, if credit risk
has increased significantly, lifetime ECL is used. If, in
a subsequent period, credit quality of the instrument
improves such that there is no longer a significant
increase in credit risk since initial recognition, then
the entity reverts to recognising impairment loss
allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting
from all possible default events over the expected
life of a financial instrument. The 12-month ECL is a
portion of the lifetime ECL which results from default
events that are possible within 12 months after the
reporting date.
ECL is the difference between all contractual cash
flows that are due to the Company in accordance
with the contract and all the cash flows that the
entity expects to receive (i.e., all cash shortfalls),
discounted at the original EIR. When estimating the
cash flows, an entity is required to consider:
⢠All contractual terms of the financial instrument
(including prepayment, extension, call and similar
options) over the expected life of the financial
instrument. However, in rare cases when the
expected life of the financial instrument cannot
be estimated reliably, then the entity is required
to use the remaining contractual term of the
financial instrument
⢠Cash flows from the sale of collateral held or
other credit enhancements that are integral to
the contractual terms
As a practical expedient, 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 forward-looking estimates are analysed.
ECL impairment loss allowance (or reversal)
recognized during the period is recognized as
(income) / expense in the statement of profit and loss
(p&l). Financial assets measured as at amortised
cost, contractual revenue receivables and lease
receivables: ECL is presented as an allowance, i.e., as
an integral part of the measurement of those assets
in the balance sheet. The allowance reduces the
net carrying amount. Until the asset meets write-off
criteria, the Company does not reduce impairment
allowance from the gross carrying amount.
For assessing increase in credit risk and impairment
loss, the Company combines financial instruments
on the basis of shared credit risk characteristics
with the objective of facilitating an analysis that is
designed to enable significant increases in credit
risk to be identified on a timely basis.
The Company does not have any purchased or
originated credit-impaired (POCI) financial assets,
i.e., financial assets which are credit impaired on
purchase/ origination.
(P) Cash and cash equivalents
Cash and cash equivalents consist of cash at banks
and on hand and short-term deposits with an
original maturity of three months or less, which are
subject to an insignificant risk of changes in value.
For the purpose of the cash flow statement, cash
and cash equivalents consist of cash and short¬
term deposits, as defined above, net of outstanding
bank overdrafts as they are considered an integral
part of the Company''s cash management.
(Q) Borrowing cost
Borrowing costs directly attributable to the
acquisition, construction or production of an asset
that necessarily takes a substantial period of time to
get ready for its intended use or sale are capitalised
as part of the cost of the respective asset. All other
borrowing costs are expensed in the period they
are incurred. Borrowing cost includes interest and
other costs that an entity incurs in connection with
the borrowing of funds. Borrowing cost also includes
exchange differences to the extent regarded as an
adjustment to the borrowing costs.
(R) Earnings per share
Basic earnings per share is calculated by dividing
the net profit or loss for the period attributable
to equity shareholders by the weighted average
number of equity shares outstanding during the
period. The weighted average number of equity
shares outstanding during the period is adjusted
for events such as bonus issue, bonus element in
a rights issue, share split, and reverse share split
(consolidation of shares) that have changed the
number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per
share, the net profit or loss for the period attributable
to equity shareholders and the weighted average
number of shares outstanding during the period
are adjusted for the effects of all dilutive potential
equity shares.
(S) Contingent liability and contingent assets
A contingent liability is a possible obligation that
arises from past events whose existence will be
confirmed 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 is not recognised because it is not probable
that an outflow of resources will be required to settle
the obligation. A contingent liability also arises
where there is a liability that cannot be recognised
because it cannot be measured reliably. The
Company does not recognise a contingent liability
but discloses its existence in the financial statements.
Contingent asset is not recognised in financial
statements since this may result in the recognition
of income that may never be realised. However,
when the realisation of income is virtually certain,
then the related asset is not a contingent asset and
is recognized.
Contingent liabilities and contingent assets are
reviewed at each balance sheet date.
(T) Interest Income
For all debt instruments measured at amortised
cost, interest income is recorded using the Effective
Interest Rate (''ElR''). EIR is the rate that exactly
discounts the estimated future cash receipts over the
expected life of the financial instrument or a shorter
period, where appropriate, to the gross carrying
amount of the financial asset. When calculating
the EIR, the Company estimates the expected cash
flows by considering all the contractual terms of
the financial instrument (for example, prepayment,
extension, call and similar options) but does not
consider the expected credit losses.
(U) Recent Pronouncements
Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time. For the year
ended March 31, 2025, MCA has notified Ind AS - 117
Insurance Contracts and amendments to Ind AS 116 -
Leases, relating to sale and leaseback transactions,
applicable to the Company w.e.f. April 1, 2024. The
Company has reviewed the new pronouncements
and based on its evaluation has determined
that it does not have any significant impact in its
financial statements.
Note 33: 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 of the parent 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 34: Employee benefits
(a) Defined contribution plans
a. Provident and other fund
The Company makes provident and other funds to defined contribution plan for eligible employees. Under
the scheme, the Company is required to contribute a specified percentage of the payroll costs. The Company
has no obligation, other than the contribution payable to the fund. The Company recognises contribution
payable to the provident fund scheme as an expense, when an employee renders the related service.
Note 35: 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.
b. During the year ended March 31, 2025, the Company received a show cause notice from the office of
the Directorate General of GST Intelligence, Karnataka regarding the classification issue for its product
category Extruded Namkeen (including Fried Pellet Namkeens "Fryums") under the Goods and Service
Tax Act. This notice is issued for all the GST registrations of the Company across different states for the
period July 2017 to March 2024.
Based on the information available with the Company, this matter is an industry vide issue and similar
notices have also been issued to other key players of the industry.
The Company has filed a writ petition before the Hon''ble High Court of Karnataka and obtained stay on
the proceedings of the said Show Cause Notice. No demand order has been issued in this matter till
date. Further, the pending writ petition has now been listed with similar writs filed by other key players
of the industry and the same is pending for disposal as at the year end.
The Company has assessed the impact of this matter on its financial statements and based on past
favorable judgements by the Hon''ble Supreme Court of India on similar classification matter under
the erstwhile indirect tax regime and opinion obtained from its tax advisors, it is of the view that the
contention of the tax authorities in this matter is not tenable and unlikely to be retained.
2. There were many interpretative issues relating to the Supreme Court (SC) judgement dated February 28, 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
financial statement, the Company has implemented the changes as per clarifications vide the Apex Court
judgement dated February 28, 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.
Note 38: Related party transactions
Names of related parties and related party relationship
(a) Related parties where control exists: Nil
(b) Other related parties with whom transactions have taken place during the current year or previous year:
Enterprise having significant influence Peak XV Partners Growth Investments II (formerly known as SCI Growth
Investment II) (upto 25.02.2025)
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, goodwill, intangible
assets, capital advances and intangible assets under development.
Note 40: Government grants
Government grant consists of GST incentive amounting to '' 171.92 Lakhs (March 31, 2024: '' 39.53 Lakhs) and capital
subsidy amounting to '' 293.48 Lakhs (March 31, 2024: '' 317.62 Lakhs). There are no unfulfilled conditions or contingencies
attached to these grants.
Note 41: Exceptional item
A fire occurred at one of the Company''s plants located in Jammu on December 30, 2024. This incident significantly
affected the building, plant and machinery, leasehold improvements, and inventories at the site; however, there
were no human casualties. The total financial loss resulting from this event is estimated at '' 3,433.53 Lakhs. The
Company has adequate insurance coverage to recover its loss and has initiated the requisite claim process with the
Insurance Company.
During the year ended March 31, 2025, the Company also received an insurance claim amounting to '' 892.81 Lakhs.
This claim was filed in an earlier year with respect to the loss of property, plant and equipment, and inventories due
to a fire accident that occurred on November 3, 2021 at one of the Company''s plants located in Howrah, West Bengal.
Given the nature and impact of these events on the Company''s financial statements, the cumulative impact of the
above amounts has been disclosed as an exceptional item in the Statement of Profit and Loss for the year ended
March 31, 2025.
There was another fire accident in the finished goods warehouse of a Co-manufacturing plant located in Hoogly,
West Bengal, on June 6, 2023. The fire affected inventories lying at the warehouse; however, there were no human
casualties. The total financial loss from this event amounted to '' 95.91 Lakhs and this was disclosed as an exceptional
item in Statement of Profit and Loss for the year ended March 31, 2024.
Note 42: Employee Stock Appreciation Rights
The Nomination and Remuneration Committee of the Board of Directors of the Company at its meeting held on August
09, 2019, February 04 2022, August 19, 2022, August 02, 2023 and August 01, 2024 have granted 3,47,000, 59,800, 2,00,821,
4,927 and 43,146 Stock Appreciation Rights (''SAR'') respectively to eligible employees of the Company 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 September 28, 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 shall be vested in four 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 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 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. 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).
There are no transfers between different fair value hierarchy levels in March 31, 2025 and March 31, 2024.
Fair value measurements
The following table shows the valuation technique used in measuring level 2 for financial instruments
Note 45: 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 has 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.
If the interest rates had been 100 basis points higher or lower and all the other variables were held constant, the effect
on Interest expense for the respective financial years and consequent effect on Company''s profit in that financial
year would have been as below:
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 and
loan to employees under Employee Stock Purchase Plan. Based on the historical experience and credit profile of
counterparties (scheduled banks, government and employees), the Company does not expect any significant risk of
defaults arising on financial assets except trade receivables and loan to employees under Employee Stock Purchase
Plan i.e. loans, subsidy receivables, cash and cash equivalents and other financial assets.
Refer Note a and b below for credit risk and other information in respect of trade receivables and Loan to employees
under Employee Stock Purchase Plan respectively.
a. Trade receivables
Customer credit is managed by the Company 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 forward-looking 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 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.
Note 47: Capital management
For the purpose of the Company''s capital management, equity includes issued equity capital, securities premium
and all other equity reserves attributable to the equity holders of the Company. 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 48: Loan to employees under Employee Stock Purchase Plan
The Company had formulated an Employee Stock Purchase Plan (ESPP) where the company granted loan to employees
through a separate Prataap Snacks employee welfare trust (the ''Trust'') for providing monetary assistance to the
employees for acquisition of shares granted under the ESPP plan. The Trust was identified as a subsidiary. In the
standalone financial statements, the Company had adopted the policy of considering the trust as a legal entity
separate from the Company and therefore, was not consolidating the Trust in the standalone financial statements.
During the year ended March 31, 2024, the Company changed its accounting policy whereby it decided to consolidate
the Trust in the financial statements to reflect a more appropriate presentation of the activity of the Trust in the financial
statements as the Trust carried out activities for the benefit of the employees of the Company. Consequently, in the
financial statements of the Company, the loan given to the Trust (including interest) is eliminated.
(iii) The Company does not have any charges or
satisfaction which is yet to be registered with ROC
beyond the statutory period
(iv) The Company has not traded or invested in Crypto
currency or Virtual Currency during the current
financial year and previous financial year
(v) The Company has 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 has 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 does 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) Except for the instances mentioned below, the
Company has used accounting softwares for
maintaining its books of account, which have a
feature of recording audit trail (edit log) facility
and the same has operated throughout the
year for all relevant transactions recorded in the
respective software:
(a) The feature of recording audit trail (edit log)
facility was not enabled at the application layer
to log any data changes in the following:
- certain fields/tables of the accounting
software related to the revenue process
and general ledger from April 1, 2024 to
June 13, 2024.
- certain fields/tables of the accounting
software related to the payroll process
during the period April 1, 2024 to June 13,
2024/ February 25, 2025, as applicable.
- certain fields/tables of the accounting
software used for maintaining inventory
records during the period April 1, 2024
to June 13, 2024/ February 25, 2025,
as applicable.
(b) The feature of recording audit trail (edit log)
facility was also not enabled during the period
from April 1, 2024 to June 13, 2024 for another
software used by the Company for maintaining
certain records related to procurement,
inventory and revenue process.
(c) The feature of audit trail was not enabled at
the database level for the accounting software
used for maintaining the books of account to
log any direct data changes.
Further, wherever the audit trail (edit log)
facility was enabled and was operating for the
respective accounting software, there were
no instance of the audit trail feature being
tampered with. Additionally, the audit trail has
been preserved by the Company as per the
statutory requirements for record retention.
(ix) The Company has not been declared as wilful
defaulter by any bank of financial institution or
other lender.
(x) The Company has not entered into any scheme of
arrangement which has an accounting impact on
current or previous financial year.
(xi) The Company has borrowings from banks on the
basis of security of current assets. No quarterly
returns or statements of current assets are required
to be submitted with such banks.
As per our report of even date For and on behalf of the Board of Directors of
For B S R & Co. LLP Prataap Snacks Limited
ICAI Firm registration number: 101248W/
W-100022
Chartered Accountants
Ashwin Bakshi Amit Kumat Arvind Mehta
Partner Managing Director and Chief Chairman and Executive Director
Membership no.: 506777 Executive Officer DIN - 00215183
DIN - 02663687
Sumit Sharma Sanjay Chourey
Chief Financial Officer Company Secretary
Place: Indore Place: Indore
Date: May 05, 2025 Date: May 05, 2025
Mar 31, 2024
(i) I n accordance with IND AS 36 "Impairment of Assets" the Company has assigned the carrying value of goodwill to the Avadh business (Cash Generating Unit (''CGU'')). Impairment testing of such Goodwill is performed by applying the value in use approach i.e. using cash flow projections based on financial budgets covering a period of 5 years.
Based on the results of the Goodwill impairment test, the estimated value in use for CGU was higher than the respective carrying amount, and accordingly no impairment loss has been recognised during the year (31 March 2023 - Nil). Management believes that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the Goodwill.
The key assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions represent management''s assessment of future trends in the relevant industry and are based on historical data from both external and internal sources.
Discount rate (Pre Tax) - Weighted Average Cost of Capital % (WACC) = Risk free return (Market risk premium x Beta for the Company).
Revenue growth rate and EBITDA rate - The growth rates and EBITDA rate used to estimate cash flows for the first five years are based on past performance, and based on the strategic plan.
Terminal growth rate - long-term average growth rate for the products, industries, or country in which the entity operates.
(c) Terms and rights attached to equity shares
The Company has only one class of equity shares having par value of '' 5 (31 March 2023: '' 5) per share. Each equity share carries one vote and is entitled to dividend that may be declared by the Board of Directors, which may be subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
The Company has Prataap Employee Stock Appreciation Rights (''ESAR'') Plan 2018 under which options to subscribe for the Company''s shares have been granted to certain employees. The Employee stock appreciation rights reserve is used to recognise the value of equity-settled share-based payments provided to employees. The said reserve shall be utilised for issue of equity shares of the Company against the rights exercisable by the employees under the ESAR Plan 2018.
* Refer Note 50
1. The secured term loan from bank carries a rate of interest of 3M T Bill rate spread (31 March 2024 : 8.05%) and interest is to be serviced at the end of each month. The term loan is repayable in 20 equal quarterly instalments, the first installment is due on 30 April 2025. The term loan is secured by first charge on current assets (inventory and receivables) and the movable fixed assets of its plant located at Jammu & Kashmir with a carrying amount of '' 2479.96 Lacs.
2. The Unsecured short term loan from a bank carries a rate of interest of Nil (31 March 2023 : 8.10%) and interest is to be serviced as and when charged. The said loan is repayable on demand.
NOTE 33: EARNINGS PER SHARE CEPS'')
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 of the parent 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 34: EMPLOYEE BENEFITS (a) Defined contribution plans
a. Provident and other fund
The Company makes provident and other funds to defined contribution plan for eligible employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs. The Company has no obligation, other than the contribution payable to the fund. The Company recognises contribution payable to the provident fund scheme as an expense, when an employee renders the related service.
(b) Defined benefit plans Gratuity - Non-funded
The Company has a defined benefit gratuity plan. Every employee who has completed five years of service is eligible for 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 unfunded.
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.
The average duration of the defined benefit plan obligation at the end of the reporting period is 8.44 years (As at 31 March 2023: 8.52 years)
NOTE 35: 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.
1. I n the previous year, the Company received a demand order in respect of the period 2017-2021 from the Commercial Tax department "GST" Madhya Pradesh regarding the classification issue for its product category "Fried Namkeen - Fryums". The Company has filed an appeal against the said order before Joint Commissioner (Appeals) which is pending for disposal as at year end. The Company has assessed the impact of this matter on subsequent year also and accordingly disclosed the above amount.
2. 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 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.
3. 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''s routinely enters into transactions in the ordinary course of business at arm''s length price.
For management purpose, the Company comprises 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, goodwill, intangible assets, capital advances and intangible assets under development.
Government grant consists of GST incentive amounting to '' 39.53 lakhs (31 March 2023: '' 94.77 lakhs) and capital subsidy amounting to '' 317.62 lakhs (31 March 2023: '' 336.50 lakhs). There are no unfulfilled conditions or contingencies attached to these grants.
There was a fire accident in the finished goods warehouse of one of the Company''s Co-manufacturing plant situated at Hoogly, West Bengal, on 6 June 2023. The fire impacted the inventories lying at the warehouse; however, there were no human casualties. The total financial loss due to this event is '' 95.91 lakhs. Considering the nature of the event and magnitude of financial impact, this loss has been disclosed as an exceptional item in the statement of profit and loss for the year ended 31 March 2024. Pending completion of the survey and acceptance of the claim by the insurance company, the insurance claim receivable has not been recorded in the financial statements.
NOTE 42: 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, 4 February 2022, 19 August 2022 and 02 August 2023 have granted 3,47,000, 59,800, 2,00,821 and 4,927 Stock Appreciation Rights (''SAR'') respectively to eligible employees of the Company 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 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. 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).
There are no transfers between different fair value hierarchy levels in 31 March 2024 and 31 March 2023.
Fair value measurements
The following table shows the valuation technique used in measuring level 2 for financial instruments
NOTE 45: 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.
If the interest rates had been 100 basis points higher or lower and all the other variables were held constant, the effect on Interest expense for the respective financial years and consequent effect on Company''s profit in that financial year would have been as below:
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 (scheduled 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.
Refer Note a below for credit risk and other information in respect of trade receivables. a. Trade receivables
Customer credit is managed by the Company 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 forward-looking 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 long term secured debt resulted in increase in ratio.
2. Debt service coverage ratio - Increase in profit for the year has resulted in increase in ratio.
3. Return on equity ratio - Increase in profit for the year has resulted in increase in ratio.
4. Net capital turnover ratio -Increase in working capital has resulted in decrease in ratio.
5. Net profit ratio - Increase in profit for the year has resulted in increase in ratio.
6. Return on capital employed - Increase in profit for the year has resulted in increase in ratio.
7. Return on Investment- Increase in rate of interest on fixed deposits has resulted in increase in ratio.
For the purpose of the Company''s capital management, equity includes issued equity capital, securities 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.
(i) The Company does not have any Benami property. Further, there are no proceedings initiated or pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
(ii) Except as disclosed below, the Company does not have any transactions with companies struck off under section 248 of Companies act 2013 :
Buoyant Insurances Services Private Limited held 15 shares at face value of '' 5 per share.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the current financial year and previous financial year
(v) The Company has 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 has 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 does 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 NOTE 49: SCHEME OF AMALGAMATION
The Board of Directors of the Company at its meeting held on 29 September 2021 had approved the Scheme of Arrangement (the "Scheme") for merger of its subsidiaries (transferor companies) with the company (transferee company). Application seeking approval of the Scheme was subsequently filed with Hon''ble National Company Law Tribunal (NCLT), Ahmedabad bench and Indore bench on 8 June 2022 and 12 May 2022 respectively.
NCLT, Ahmedabad bench sanctioned the Scheme and pronounced its order on 10 February 2023 certified copy of which was received by the company on 23 February 2023. NCLT, Indore bench sanctioned the Scheme and pronounced its order on 3 March 2023 and suo moto amended on 15 March 2023 certified copy of which was received by the company on 21 March 2023.
Accordingly, the Company had given effect to the Scheme from the appointed date i.e. 1 April, 2021 in the financial statements for the year ended 31 March 2023 by restating the earlier standalone financial statements for the year ended 31 March 2022 as if the business combination had occurred from the beginning of the preceding period i.e. 1 April 2021.
Pursuant to the Scheme, all the assets, liabilities, reserves and surplus of the transferor companies had been transferred to and vested in the Company with effect from the appointed date at their respective carrying values as per requirements of Appendix C to Ind AS 103.
Pursuant to the Scheme the merger had been accounted for as per the applicable accounting principals prescribed under the relevant Indian Accounting Standards.
(a) Accounting Treatment
(i) The transferee Company had recorded all the assets and liabilities of the transferor companies vested in it pursuant to this Scheme, at the carrying values as appeared in the consolidated financial statements of Transferee Company.
(ii) The identity of the reserves had been preserved and the Transferee Company recorded the reserves of the Transferor Companies, at the carrying amount as appeared in the consolidated financial statements of Transferee Company.
(iii) The value of all investments held by the Transferee Company in the Transferor Companies stood cancelled pursuant to amalgamation and difference, if any that arised after taking the effect of schemes had been transferred to "Capital Reserve Account" in the financial statements of the Transferee Company.
(iv) Pursuant to the amalgamation of the Transferor Companies with the Transferee Company, inter-company balances between Transferee Company and the Transferor Companies, if any, appearing in the books of the Transferee Company stood cancelled.
(a) The authorised share capital of the Transferee Company as at 31 March 2023 automatically stood increased, by clubbing the authorised share capital of the Transferor Companies which is '' 1075 lakh divided into 215 lakh equity shares of '' 5 each.
(b) Further, pursuant to the approval of the Scheme from the specified retrospective appointed date of 1 April 2021, a revised return of income for the year ended 31 March 2022 after taking into consideration the overriding effect of the provision in the Scheme was filed by the Company. The impact of such revised return on the current and deferred tax was recognised in the statement of profit and loss for the year ended 31 March 2023.
NOTE 50: CONSOLIDATION OF PRATAAP SNACKS EMPLOYEE WELFARE TRUST (THE ''TRUST'')
The company had formulated an Employee Stock Purchase Plan (ESPP) where the company granted loan to employees through a separate Prataap Snacks employee welfare trust (the ''Trust'') for providing monetary assistance to the employees for acquisition of shares granted under the ESPP plan. The Trust was identified as a subsidiary. In the standalone financial statements, the Company had adopted the policy of considering the trust as a legal entity separate from the Company and therefore, was not consolidating the Trust in the standalone financial statements. The Company recognized the loan given to the Trust as financial asset and tested it for impairment on a periodic basis in accordance with the requirements of applicable accounting standards. However, given that the Trust was identified as a subsidiary, in the consolidated financial statements of the Company, the Trust was consolidated for the purpose of consolidated financial statements and consequently, the related loan to Trust (including interest) appearing in the standalone financial statements of the Company was eliminated.
During the year ended 31 March 2024, the Company changed its accounting policy whereby it decided to consolidate the Trust in the financial statements to reflect a more appropriate presentation of the activity of the Trust in the financial statements as the Trust carried out activities for the benefit of the employees of the Company. Consequently, in the financial statements of the Company, the loan given to the Trust (including interest) is eliminated.
This change in accounting policy in the financial statements has been given effect by restating the comparative information for the preceding period in accordance with the requirements of applicable standards for change in accounting policy.
Mar 31, 2023
(J) Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive)as a result of a past event, for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. The expense relating to a provision is presented in the statement of profit and loss.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(K) Employee benefits
I. Short term employee benefits
Short-term employee benefit obligations such as salaries, incentives, special awards, medical benefits are measured on an undiscounted basis and are expensed as the related service is provided.
II. Post-employment obligations
The Company operates the following post-employment schemes:
a. Defined contribution plan
Retirement benefits in the form of provident fund is a defined contribution scheme.
The Company recognises contribution payable to the provident fund scheme as an expenditure, when an employee renders the related service. The Company has no obligation, other than the contribution payable to the provident fund.
b. Defined benefit plan
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. Remeasurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognised in the statement of profit and loss on the earlier of:
⢠The date of the plan amendment or curtailment, and
⢠The date that the Group recognises related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
⢠Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non routine settlements; and
⢠Net interest expense or income.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
The liability for the defined benefit gratuity plan is determined based on actuarial valuations carried out by an independent actuary as at year end. 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 for plans operated in India, the management considers the government bonds yield rates for the life of the 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.
III. Other long term employee benefit
The Company has leave encashment policy for all the employees. Liabilities for such benefits are provided on the basis of valuation, as at the balance sheet date, carried out by an independent actuary. The actuarial valuation method used by an independent actuary for measuring the liability is the projected unit credit method. Actuarial gain and loss are recognised in the statement of profit and loss during the year in which they occur.
The Company presents the leave as the current liability in the standalone balance sheet to the extent it does not have the unconditional / legal and contractual right to defer its settlement for twelve months after the reporting date. Where the Company has the unconditional / legal and contractual right to defer its settlement beyond twelve months after the reporting date, it is presented as the non current liability in standalone balance sheet.
IV. Share-based payments
Share-based compensation benefits are provided to employees via Employee Stock Appreciation Rights Plan whereby employees render services as consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
That cost is recognised, together with a corresponding increase in Employee stock appreciation rights
(''ESAR'') reserve in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit and loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company''s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
No expense is recognised for awards that do not ultimately vest because non-market performance and/ or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
(L) Taxation
I ncome tax expense comprises of current tax and deferred tax. Income tax expense is recognised in the statement of profit and loss, except when it relates to items recognised in the other comprehensive income or items recognised directly in the equity. In such cases, the income tax expense is also recognised in the other comprehensive income or directly in the equity as applicable.
Current taxes
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically
evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation or under dispute with authorities and establishes provisions where appropriate.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liabilities on a net basis or simultaneously.
Deferred taxes
Deferred tax is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax is recognised for all taxable temporary differences, except for:
⢠Temporary difference arising on the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting nor taxable profit or loss
⢠Taxable temporary differences associated with investments in subsidiaries when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
For operations carried out under tax holiday period (Section 80IB and 80IE benefits of Income Tax Act, 1961), deferred tax assets or liabilities, if any, have been recognised for the tax consequences of those temporary differences between the carrying values of assets and liabilities and their respective tax bases that reverse after the tax holiday ends.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in OCI or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to offset current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT)
MAT expense in a year is charged to the statement of profit and loss as current tax for the year. The MAT credit available only to the extent that it is probable that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward and is disclosed as deferred tax asset. In the year in which the Company recognises MAT credit as an asset, it is created by way of credit to the statement of profit and loss and shown as part of deferred tax asset. The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.
(M) Foreign currencies
Transactions in foreign currencies are initially recorded by the Company at its functional currency spot rate at the date the transaction first qualifies for recognition. Exchange differences arising on settlement or restatement of transactions, are recognised as income or expense in the year in which they arise. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Exchange differences arising on settlement or translation of monetary items are recognised in the statement of profit and loss. Non-monetary items that are
measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
(N) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability; or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
⢠Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 â Valuation techniques for which the
lowest level input that is significant to the fair value measurement is directly or indirectly observable
⢠Level 3 â Valuation techniques for which the
lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. Other fair value related disclosures are given in the relevant notes.
(O) Financial instruments
I) Recognition and initial measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial assets (unless it is a trade receivable without a significant financing component) or financial liabilities is initially measured at fair value plus or minus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.
II) Classification and subsequent measurement Financial assets
On initial recognition, a financial asset is classified as measured at:
⢠amortised cost;
⢠FVOCI - debt investment;
⢠FVOCI - equity investment; or
⢠FVTPL.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
⢠it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
⢠i ts contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in the statement of profit or loss. Any gain or loss on derecognition is recognised in the statement of profit or loss.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
⢠it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
⢠i ts contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
These assets are subsequently measured
at fair value. Interest income calculated
using the effective interest method, foreign exchange gains and losses and impairment are recognised in the statement of profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to the statement of profit or loss.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment''s fair value in OCI. This election is made on an investment-by-investment basis.
These assets are subsequently measured at fair value. Dividends are recognised as income in the statement of profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to the statement of profit or loss.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing
so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial liabilities
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in the statement of profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in the statement of profit or loss. Any gain or loss on derecognition is also recognised in the statement of profit or loss.
III) De-recognition Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
I f the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
IV) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention either to settle on a net basis or to realise the assets and settle the liabilities simultaneously.
V) Impairment of financial assets
I n accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance
b) Financial assets that are measured at FVTOCI
c) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115
The Company follows ''simplified approach'' for recognition of impairment loss allowance on Trade receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a
portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider:
⢠All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms
As a practical expedient, 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 forward-looking estimates are analysed.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as (income) / expense in the statement of profit and loss (P&L). Financial assets measured as at amortised cost, contractual revenue receivables and lease receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
The Company does not have any purchased or originated credit-impaired (POCI) financial assets, i.e., financial assets which are credit impaired on purchase/ origination.
(P) Cash and cash equivalents
Cash and cash equivalents consist of cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
(Q) Borrowing cost
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period they are incurred. Borrowing cost includes interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
(R) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
(S) Contingent liability and contingent assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed 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 is not recognised because it is
not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the standalone financial statements.
Contingent asset is not recognised in financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognized.
Contingent liabilities and contingent assets are reviewed at each balance sheet date.
(T) Interest Income
For all debt instruments measured at amortised cost, interest income is recorded using the Effective Interest Rate (''EIR''). EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the EIR, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
(U) Standards issued but not yet effective
On March 31,2023, the Ministry of Corporate Affairs (MCA) issued certain amendments and annual improvements to Ind AS. These amendments are applicable for accounting periods beginning on or after April 01, 2023.
Amendment to Ind AS 12 and Ind AS 101
Now the Initial Recognition Exemption (IRE) does not apply to transactions that give rise to equal and offsetting temporary differences. Narrowed the scope of IRE (with regard to leases and decommissioning obligations). Accordingly, companies will need to recognise a deferred tax asset and a deferred tax liability for temporary differences arising on transactions such as initial recognition of a lease and a decommissioning provision.
The amendments apply to transactions that occur on or after the beginning of the earliest comparative period presented.
The application of this amendment is not expected to have a material impact on the Company''s financial statements.
Amendment to Ind AS 1 and Ind AS 34 and Ind AS 107
Companies should now disclose material accounting policies rather than their significant accounting policies. The application of this amendment is not expected to have a material impact on the Company''s financial statements.
Amendment to Ind AS 8
Definition of ''change in account estimate'' has been replaced by revised definition of ''accounting estimate''. As per revised definition, accounting estimates are monetary amounts in the financial statements that are subject to measurement uncertainty. The application of this amendment is not expected to have a material impact on the Company''s financial statements.
Notes:
(a) As the appointed date of the Scheme is 1 April 2021, the previous year''s numbers i.e. for the year ended 31 March 2022 have been revised to include the financial information of the Transferor Companies.
(b) The authorised share capital of the Transferee Company, automatically stands increased, by clubbing the authorised share capital of the Transferror Companies which is '' 1075 lakh divided into 215 lakh equity shares of '' 5 each (31 March 2022: '' 1075 lakh divided into 107.50 lakh equity shares of '' 10 each)
(c) Further, pursuant to the approval of the Scheme from the specified retrospective appointed date of 1 April 2021, a revised return of income for the year ended 31 March 2022 after taking into consideration the overriding effect of the provision in the Scheme would be filed by the Company. The impact of such revised return on the current and deferred tax has been recognised in the statement of profit and loss for the year ended 31 March 2023.
As per our report of even date
For B S R & Co. LLP For and on behalf of the Board of Directors of
ICAI Firm registration number: 101248W/W-100022 Prataap Snacks Limited Chartered Accountants
Vikram Advani Amit Kumat Arvind Mehta
Partner Managing Director and Chief Executive Officer Chairman and Executive Director
Membership no.: 091765 DIN - 02663687 DIN - 00215183
UDIN: 23091765BGYZJP1313
Sumit Sharma Om Prakash Pandey
Chief Financial Officer Company Secretary
Place : New Delhi Place : Indore
Date : 26 May 2023 Date : 26 May 2023
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)
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.
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
Mar 31, 2018
NOTE 1: CORPORATE INFORMATION
Prataap Snacks Limited (âPSLâ or âthe Companyâ) 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 (âthe Actâ) 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 Companyâs 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 Collectorâs / Registrarâs 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 âThe Micro, Small and Medium Enterprises Development Act, 2006â. 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 Companyâs 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 (âEPSâ)
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 armâs 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 Companyâs 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 â 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 (âFSSâ), 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 (âESPPâ)
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 Companyâs 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 Companyâs 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 Companyâs 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 Companyâs assets and liabilities:
NOTE 13: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Companyâs principal financial liabilities, comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs 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 Companyâs senior management oversees the management of these risks. The Companyâs senior management provides assurance that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs 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 Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs 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 Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs 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 Companyâs 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 Companyâs 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 Companyâs 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 Companyâs 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 Companyâs 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 Companyâs liquidity risk management as the liquidity is managed on a net asset and liability basis.
NOTE 14: CAPITAL MANAGEMENT
For the purpose of the Companyâs 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 Companyâs capital management is to maximise the shareholder value. The Companyâs 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 shareholdersâ value. The Company is monitoring capital using debt equity ratio as its base, which is debt to equity. The Companyâs 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 Companyâs opening balance sheet was prepared as at April 1, 2016, the Companyâs 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 âseparate financial statementâ.
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 Companyâs 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 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 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 Companyâs 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 Companyâs current practice is in line with the Interpretation, the Company does not expect any effect on its standalone financial statements.
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