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ASPINWALL AND COMPANY LTD.

14 May 2021 | 12:00

Industry >> Plantations - Tea & Coffee

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ISIN No INE991I01015 52Week High 234 Book Value (Rs.) 172.45 Face Value 10.00
Bookclosure 08/08/2019 52Week Low 94 EPS 0.00 P/E 0.00
Market Cap. 145.22 Cr. P/BV 1.08 Div Yield (%) 1.35 Market Lot 1.00

NOTES TO ACCOUNTS

You can view the entire text of Notes to accounts of the company for the latest year
Year End :2018-03 

1. First time adoption of Ind AS

These are the Company's first standalone financial statements prepared inaccordance with Ind AS. For the year ended 31 March 2017, the Company had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act ("previous GAAP"/ "IGAAP").

The accounting policies set out in Note 2 have been applied in preparing these standalone Ind AS financial statements for the year ended 31 March 2018 including the comparative information for the year ended 31 March 2017 and the opening Ind AS balance sheet on the date of transition i.e. 1 April 2016.

In preparing its Ind AS balance sheet as at 1 April 2016 and in presenting the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in standalone financial statements prepared in accordance with previous GAAP. This note explains the principal adjustments made by the Company in re stating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company's financial position, financial performance and cash flows.

A. Optional exemptions availed

In preparing these standalone financial statements, the Company has availed the following optional exemptions:

(i) in respect of property, plant and equipment, the Company has elected to continue with the carrying value as at 1 April 2016, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property, plant and equipment, and

(ii) in respect of investment in subsidiaries, the Company has elected to measure investments at previous GAAP carrying amount at the date of transition.

B. Mandatory exceptions availed

1. Estimates

As per Ind AS 101, an entity's estimates in accordance with Ind AS at the date of transition to Ind AS or at the end of the comparative period presented in the entity's first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the previous GAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any differences in accounting policies.

As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP, those estimates should be made to reflect conditions that existed at the date of transition (for preparing opening Ind AS balance sheet) or at the end of the comparative period (for presenting comparative information as per Ind AS).

The Company's estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statements that were not required under the previous GAAP are listed below:

-Fair valuation of financial instruments carried at FVTPL.

-Fair valuation of biological assets measured at fair value less cost to sell.

-Impairment of financial assets based on the expected credit loss model.

-Determination of the discounted value for financial instruments carried at amortised cost.

2. Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.

Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

A Biological assets other than bearer plants

The Company has teak, rose wood and mahagony trees in plantation division which were not recognised in books under previous GAAP. Under Ind AS 41 these trees are considered as biological assets and accounted in the books at fair value. The fair value of biological assets on transition was at Rs 370 lakhs and have been recognised in retained earnings as at the date of transition.

B Other tax assets

Under Ind AS, deferred tax has been recognised on fair valuation of biological assets and fair valuation of forward contracts.

C Other equity

Under Ind AS, retained earnings as at 1 April 2016 and 31 March 2017, has been adjusted consequent to above Ind AS transition adjustments.

Explanations for reconciliation of statement of profit and loss as previously reported under previous GAAP to Ind AS

A Reclassification of fair value movement of cash flow hedges

Under previous GAAP, the Company was accounting for the fair valuation movement of forward contracts (cash flow hedges) directly in reserves following hedge accounting principles. Under Ind AS, the Company has opted to account for fair value movement on cash flow hedges through statement of profit and loss as they do not meet the requirements of hedge accounting principles of Ind AS 109.

B Employee benefits expenses

Under Ind AS, remeasurements ie. acturial gains and losses and the return on plan assets, excluding those included in the net interest expenes on the net defined benefit liability are recognised in other comprehensive income instead of statement of profit and loss. Under the previous GAAP, these measurements were forming part of profit and loss for the year. As a result of this change, the profit for the year ended 31 March 2017 increased by Rs 65 lakhs. There is no impact on the total equity as at 31 March 2017.

C Deferred tax

Deferred tax has been recognised on the adjustment made on transition to Ind AS namely, fair valuation of biological assets and fair valuation of forward contracts.

D Other comprehensive income

Under Ind AS all items of income and expenses recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expenses that are not recognised in profit or loss but are shown in the statement of profit and loss as other comprehensive income includes remeasurement of defined benefit plans. The concept of comprehensive income did not exist under previous GAAP.

b. Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of the equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is 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 of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by shareholders.

d. Details of buyback, bonus shares, issue for consideration other than for cash for past 5 years

There were no shares allotted as fully paid up by way of bonus shares, shares issued for consideration other than for cash and shares bought back during the 5 years immediately preceding the balance sheet date.

e. The Company does not have a holding company and none of the shares are held by any of the subsidiary companies.

Notes:

1. Show cause notices received from Service tax department pending formal demand notices, have not been considered as contingent liabilities.

2. The Land Tribunal, Manjeri had passed orders conferring absolute title of the rubber estate at Pullangode to the Company. Appeals against this order filed by some of the Jenmis before the Land Reforms Appellate Authority have also been disposed of in favour of the Company and accordingly no adjustment is required in the financial statements in this regard. Further, appeal filed by some of the Jenmis is pending before the Honb'le High Court of Kerala.

3. The Company's writ petition against the order of the Government of Kerala revising the lease rent in respect of the leasehold land at Fort Kochi effective from 13 November 1995 upto 31 March 2007, is pending before the Hon'ble High Court of Kerala. Pursuant to interim application filed in the above writ petition by the company, the High Court has directed the Government to consider the representation regarding lease rent filed by the company, and take appropriate decision in this regard. Pursuant to this, Government of Kerala has issued an order reaffirming the demand for the period upto 31 March 2007. Adequate provision is available in the books for meeting this liability.

4. Future cash outflows in respect of the above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities. Management believes that the position taken by it on the matter is tenable and hence, no adjustment has been made to the financial statements.

3. Operating segment

Basis for segmentation

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's other components, and for which discrete financial information is available. All operating segments' operating results are reviewed regularly by the Company's Chief Financial Officer (CFO) to make decisions about resources to be allocated to the segments and assess their performance.

The Company has identified business segments as its primary segment and geographical segments as its secondary segment. Business segments are logistics, coffee and related activities, plantation, natural fibre products, IT enabled services and others. Revenues and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reportable segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographical segments of the Company are Americas (including Canada and South American countries), Europe, India and others.

Information about reportable segments

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit (before tax), as included in the internal management reports that are reviewed by the Company's CFO. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Intersegment pricing is determined on an arm's length basis.

4. Leases

The Company is obligated under cancellable operating leases for office, port and residential space. Total rental expense under cancellable operating leases [including Rs. 1,255 lakhs (previous year - Rs. 711 lakhs) grouped under handling charges] during the year was Rs.1,388 lakhs (previous year: Rs.843 lakhs)

*Includes provision for gratuity, provision for leave encashment, provision for bonus and actuarial gain/ loss on remeasurment of defined benefit liability recognised in other comprehensive income.

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.

5. Employee Benefits

a) The employee benefit schemes are as under:

The Company recognised Rs. 51 lakhs (31 March 2017: Rs. 51 lakhs) for superannuation contribution and other retirement benefit contributions in the statement of profit and loss.

The Company also makes contribution towards social security and insurance - in the case of a foreign national employee who is employed at Hertogenbosch (Netherlands). The Company had recognised Rs. 16 lakhs (31 March 2017: Rs. 12 lakhs) for social security and insurance contributions in the statement of profit and loss.

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on death or resignation or retirement at 15 days salary (last drawn salary) for each completed year of service. In the case of executive staff, gratuity is payable at 15 days salary (last drawn salary) for the first 15 years of service and at 30 days salary ( last drawn salary) for service above 15 years. The scheme is funded and an amount of Rs. 64 lakhs (31 March 2017: Rs.56 lakhs) has been recognised and included in "'Contribution to provident and other funds" in the statement of profit and loss on account of provision.

All employees of the Company receive benefits under the provident fund which is a defined benefit plan wherein the Company provides the guarantee of a specified return on contribution. The contribution is made both by the employee and the Company equal to 12% of the employees' salary (with Company's contribution to the plan being 12% less contribution towards employee pension scheme). These contributions are made to the Fund administered and managed by the Company's own Trust.

b) The following tables sets out the particulars of the employee benefits as required under the Ind AS 19- ''Employee Benefits".

Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.

The Company has not disclosed the fair value of cash and bank balances , loans, trade receivables, other financial assets, borrowings, trade payables and other financial liabilities because their carrying amounts are a reasonable approximation of fair value.

B Capital management

The key objective of the Company's capital management is to ensure that it maintains a stable capital structure with the focus on total equity to uphold investor, creditor and customer confidence and to ensure future developments of the business. The Company is focused on maintaining a strong equity base to ensure independence, security as well as financial flexibility for potential future borrowings, if required, without impacting the risk profile of the Company.

C Financial risk management

The Company has exposure to the following risks arising from financial instruments:

(i) Credit risk;

(ii) Liquidity risk; and

(iii) Market risk

Risk management framework

The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The audit committee oversees how management monitors compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

(i) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers and investments in liquid mutual funds

The carrying amount of following financial assets represents the maximum credit exposure.

Trade receivables

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry.

Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers based on which the Company agrees on the credit terms with customers in the normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables and unbilled revenue. The provision matrix takes into account available external and internal credit risk factors and the Company's historical experience for customers.

Credit risk exposure

The allowance for lifetime expected credit loss on customer balances for the year ended 31 March 2018 was Rs. 160 lakhs (31 March 2017 Rs.155 lakhs, 01 April 2016 Rs.123 lakhs).

(ii) Liquidity risk

Liquidity risk is the risk that the Company will encounter in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach for managing liquidity is by ensuring, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of bank facilities and by ensuring adequate internally generated funds.

(iii) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates which will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

(a) Foreign currency risk

The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which transactions are denominated and the functional currency of the Company. The functional currency of company is INR. The currencies in which these transactions are primarily denominated is US Dollars, GBP, sGd and Euro.

The summary quantitative data about the Company's exposure to currency risk at the end of reporting period expressed in INR are as follows

Sensitivity analysis

The sensitivity of profit or loss to changes in exchange rates arises mainly from foreign currency denominated financial instruments.

(b) Interest rate risk

The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's long-term debt obligations with a fixed/ floating interest rate and bank deposits.

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, remain constant.

6. Dividends

The Board of Directors has proposed a dividend of Rs. 3.5/- per equity share (previous year Rs. 3/- per equity share) for the year ended 31 March 2018, subject to the approval of the shareholders at the ensuing Annual General Meeting. The proposed dividend including dividend distribution tax of Rs. 330 lakhs (previous year Rs.269 lakhs, excluding Rs.13 lakhs being dividend distribution tax relating dividend received from wholly owned subsidiary companies) is not recognised as liability as on 31 March 2018.

Note: The term 'Specified Bank Notes' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 08 November 2016.