Note 1: General Information
Bosch Limited (the “Company”) is the flagship company of Robert Bosch Company in India. Headquartered out of Bengaluru, the Company has its key manufacturing facilities in Bengaluru, Nashik, Naganathapura, Jaipur, Goa, Gangaikondan, Chennai and Bidadi. The Company has presence across automotive technology, industrial technology, consumer goods and energy and building technology. It manufactures and trades in products such as diesel and gasoline fuel injection systems, automotive aftermarket products, starters and generators, industrial equipments, packaging machines, electrical power tools, security systems and industrial and consumer energy products and solutions. The Company’s shares are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). During the year, the Company has discontinued the business relating to starters and generators products.
The financial statements are approved for issue by the Company’s Board of Directors on May 25, 2017.
Note 2: Critical estimates and judgements
The preparation of financial statements in accordance with Ind AS requires that assumptions and estimates be made for some line items. This note provides the areas that involve a higher degree of judgement or complexity.
(a) Estimation of current tax expense and payable - Note 29
Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of Income Tax Act, 1961. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. The recognition of deferred tax assets is premised on their future recoverability being probable.
(b) Estimation of defined benefit obligation - Note 30
Employee benefit obligations are measured using actuarial methods. This requires various assumptions, including with respect to salary trends, attrition rate, discounting factor, etc.
(c) Estimation of provision for warranty claims - Note 15
Warranty estimates are established using historical information on the nature, frequency and average cost of warranty claims and also management estimates regarding possible future outflow on servicing the customers for any corrective action in respect of product failure which is generally expected to be settled within a period of 1 to 3 years.
* Relating to certain DSIR approved R&D facilities, considered eligible for Income tax benefit.
(a) Buildings include Mio INR 0 (2015-16: Mio INR 0) being the value of shares in co-operative housing societies.
(b) Deductions/ adjustments includes transfer of Mio INR 311 (net block) as part of sale of starter motors and generators business (refer note 35) and transfer of Mio INR 46 (net block) to investment properties (refer note 5).
(c) Depreciation for the year includes depreciation for discontinued operation amounting to Mio INR 42 (2015-16: Mio INR 229).
(d) Plant and machinery includes capital spares and government grant capitalised on transition to Ind AS as at April 1, 2015 and subsequent periods (refer note 44).
(e) Capital work-in-progress mainly comprises plant and machinery and building under construction.
(f) Refer note 42 for disclosure of contractual commitment for the acquisition of property, plant and equipment.
(g) Figures in brackets relate to previous year. Gross carrying amount as at April 1, 2015 represents deemed cost of property, plant and equipment.
Rights, preferences and restrictions attached to shares:
The Equity shares of the Company, having face value of Rs. 10/- per share, rank pari passu in all respects including voting rights, entitlement to dividend and share in the proceeds of winding up of the Company in proportion to the number of and amounts paid on the shares held.
Note 3: Employee Retirement Benefits:
Disclosure on Retirement Benefits as required in Indian Accounting Standard (Ind AS) 19 on “Employee Benefits” are given below:
(a) Post Employment Benefit - Defined Contribution Plans
The Company has recognised an amount of Mio INR 287 (2015-16: Mio INR 315) as expense under the defined contribution plans in the Statement of Profit and Loss.
(b) Post Employment Benefit - Defined Benefit Plans
The Company makes annual contributions to the Bosch Employees’ Gratuity Fund and makes monthly contributions to Bosch Employees (Bangalore) Provident Fund Trust and Bosch Workmen’s (Nashik) Provident Fund Trust, funded defined benefit plans for qualifying employees.
The Gratuity Scheme provides for lumpsum payment to vested employees at retirement/death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs only upon completion of five years of service, except in case of death or permanent disability.
The Provident Fund Scheme provides for lumpsum payment/transfer to the member employees at retirement/ death while in employment or on termination of employment of an amount equivalent to the credit standing in his account maintained by the Trusts. The present value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at each balance sheet date.
(c) Total expense recognised in the statement of profit and loss
(d) Remeasurement effects recognised in other comprehensive income (OCI)
(f) Change in defined benefit obligation
(g) Change in fair value of plan assets
(i) Expected company contributions for the next year
(j) Reconciliation of amounts in balance sheet
(k) Reconciliation of Statement of Other Comprehensive Income
(l) Current/ non current liability
(m) Assumptions :
(i) The discount rate is based on the prevailing market yield on Government Bonds as at the balance sheet date for the estimated term of obligations.
(ii) The estimate of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
(n) Risk exposures:
A large portion of assets consists of government and corporate bonds and small portion of assets consists in mutual funds and special deposit account in banks. Through its defined plans, the company is exposed to a number of risks, the most significant of which are detailed below:
Asset Volatility: The plan liabilities are calculated using a discount rate with reference to bond yields, if plan assets underperform this yield, this will create a deficit. Most of the plan asset investments is in fixed income government securities with high grades and public sector corporate bonds. A small portion of the funds are invested in equity securities.
Changes in bond yields: A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings.
(o) Sensitivity analysis on defined benefit obligation
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur.
This sensitivity analysis shows how the defined benefit obligation would have been affected by changes in the relevant actuarial assumption that were reasonably possible at that date.
(p) Plan assets
(q) Expected future cash flows
The weighted average duration of the defined benefit obligation is 14.45 years (2015-16 -11.25 years). The expected maturity analysis is as follows:
Note 4: Fair value measurements:
(i) Financial instruments by category and hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are
(a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Note (a) : The amount includes current portion of sales tax deferral.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, tax free bonds and mutual funds that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges in valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market (for market, traded bonds, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. There are no transfers between levels during the year.
(ii) Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
- the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date
- the fair value of remaining financial instruments is determined using the discounted cash flow analysis
(iii) Valuation process
The finance and accounts department of the company performs the valuation of financial assets and liabilities required for financial reporting purposes, and report to the Executive Director (ED). Discussions on valuation processes and results are held between the ED and valuation team at least once every three months, in line with the Company’s quarterly reporting periods.
The main level 3 inputs are derived and evaluated as follows:
a) Discount rate for sales tax deferral loan are determined using risk free rate.
b) Discount rate for loans to employees are determined using prevailing bank lending rate.
c) The fair values of financial assets and liabilities are determined using the discounted cash flow analysis.
(iv) Fair value of financial assets and liabilities measured at amortised cost
With respect to trade receivables, other receivables, inter-corporate deposit, current portion of loans, cash and cash equivalents, other bank balance, trade payables, capital creditors, employee payables and current maturities of long-term debt, the carrying amount is considered to be the same as their fair value due to their short-term nature.
Note 5: Financial risk management
The Company’s activities expose it to market risk, liquidity risk and credit risk. In order to minimise any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts and foreign currency option contracts are entered into by the Company to hedge certain foreign currency exposure. Derivatives are used exclusively for hedging and not as trading or speculative instruments.
(A) Credit Risk
Credit risk arises from cash and cash equivalents, instruments carried at amortised cost and deposits with banks, as well as credit exposures to customers including outstanding receivables.
(i) Credit risk management
Credit risk on cash and cash equivalents is limited as the Company generally invests in deposits with banks which have high credit ratings assigned by external agencies. Investments primarily include investment in debt based mutual funds whose portfolios have instruments with high credit rating and government bonds. The board of directors periodically review the investment portfolio of the Company. Credit risk on loans given to fellow subsidiaries is guaranteed by the holding company. Credit risk with respect to trade receivable is managed by the Company through setting up credit limits for customers and also periodically reviewing the credit worthiness of major customers.
The gross carrying amount of trade receivables is Mio INR 12,560 (March 31, 2016 - Mio INR 13,783, April 1, 2015 - Mio INR 12,388). During the period, the Company made no significant write-offs of trade receivables and it does not expect to receive future cash flows or recoveries from trade receivables previously written off.
(B) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of internal financing by way of daily cash flow projection to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability of funds.
Management monitors daily and monthly rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. This is generally carried in accordance with standard guidelines. The company has liquidity reserves in the form of highly liquid assets like cash and cash equivalents, debt based mutual funds, deposit accounts, etc.
(i) Financing arrangements: The company had access to the following undrawn borrowing facilities at the end of the reporting period
(ii) Maturity of Financial liabilities
The table below summarises the company’s financial liabilities into relevant maturity groupings based on their contractual maturities for:
a) All non-derivative financial liabilities
b) Net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows
The amounts disclosed in the table are the contractual undiscounted cash flows. Balance due within 12 months equal their carrying balances as the impact of discounting is not significant.
(C) Market risk
(i) Foreign currency risk
The company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD and EUR. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the INR cash flows of highly probable forecast transaction.
The Company imports and exports goods and services which are predominantly denominated in USD and EUR. This exposes the Company to foreign currency risk. To minimise this risk, the Company hedges using forward contracts and foreign currency option contracts on a net exposure basis.
(a) Foreign currency risk exposure: The Company exposure to foreign currency risk at the end of the reporting period expressed in Mio INR are as follows:
(b) Sensitivity: The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments:
(ii) Cash flow and fair value interest rate risk
(a) Interest rate risk exposure: The company does not have interest bearing borrowings and interest rate risk is towards opportunity cost on investment in tax free bonds. Company analyses it based on the sensitivity analysis and manages it by portfolio diversification.
(b) Sensitivity: Profit or loss is sensitive to changes in interest rate for tax free bonds. A change in the market interest level by 100 basis points would have the following effect on the profit after tax:
(iii) Price risk
(a) Exposure: The Company has invested in equity securities and the exposure is equity securities price risk from investments held by the Company and classified in the balance sheet as fair value through OCI.
(b) Sensitivity: The table below summarises the impact of increase/decrease of the index in the company’s equity and impact on OCI for the period. The analysis is based on the assumption that the equity index had increased/ decreased by 10% with all other variables held constant, and that all the Company’s equity instruments moved in line with the index.
Other components of equity would increase/decrease as a result of gains/ (losses) on equity securities classified as fair value through other comprehensive income.
Note 6: Capital management
(a) Risk management
The Company has equity capital and other reserves attributable to the equity shareholders, as the only source of capital and the company does not have any interest bearing borrowings/ debts.
Note 7: Segment Information
(a) Description of segments and principal activities
The Company’s operations predominantly relate to operating segments in the automotive business which consists of diesel systems, gasoline systems and automotive aftermarket products and services and are aggregated into one reportable segment ‘Automotive Products’ in accordance with the aggregation criteria. Aggregation is done due to the similarities of the products and services provided to the customers, similar production processes and similarities in the regulatory environment. The Company also operates in other businesses consisting of Industrial technology, consumer goods and energy and building technology products and services which are non-automotive and do not meet the threshold criteria for reporting as separate segments. Therefore, the reportable segment consists of “Automotive Products” and “Others”.
Revenue by geographical areas is stated on the basis of origin and there are no non-current assets located outside India.
The Accounting principles and policies adopted in the preparation of the financial statements are also consistently applied to record income/ expenditure and assets/ liabilities in individual segments. The inter-segment revenue have been accounted for based on the transaction price agreed to between segments which is primarily market based.
Note 8: Discontinued operation :
Consequent to the approvals received from the Board of Directors on February 5, 2016 and from the shareholders on April 4, 2016, the Company has executed a Business Transfer Agreement on August 1, 2016 and has sold/ transferred the business of Starter Motors and Generators under the automotive products segment of the Company on a going concern basis by way of Slump sale to Robert Bosch Starter Motors Generators India Private Limited, a fellow subsidiary. Gain on sale of business amounting to Mio INR 3,971 has been recognised during the current year and disclosed under discontinued operation in the statement of profit and loss.
(a) Financial performance and cash flow information:
The financial performance and cash flow information presented are for the period ended August 1, 2016 (March 31, 2017 column) and the year ended March 31, 2016:
(c) The carrying amount of assets and liabilities as at the date of transfer (August 1, 2016) are as follows:
(d) There are no assets and liablities of disposal group to be classified as assets held for sale on either of the reporting dates.
Note 9: Related Party Disclosure :
Holding Company : Robert Bosch GmbH, Federal Republic of Germany
Subsidiary Company : MICO Trading Private Limited, India
Associate (also a fellow subsidiary) : Newtech Filter India Private Limited, India
Whole time directors : Dr. Steffen Berns (till December 31, 2016), Mr. Soumitra Bhattacharya, Dr. Andreas Wolf and Mr. Jan Oliver Rohrl (from February 11, 2017)
Non-whole time directors : Mr. V.K. Viswanathan, Mr. Peter Tyroller, Mr. Bernhard Steinruecke, Mr. Prasad Chandran,
Ms. Renu S. Karnad and Mr. Bhaskar Bhat
Other related entities: Bosch India Foundation
(a) Key management personnel compensation:
(b) Related Party transactions/ balances - summary:
Note 10: Leases
Information on leases as per Indian Accounting Standard(Ind AS) 17 on “Leases”:
(a) Operating Lease Expense :
The Company has various operating leases for office facilities, warehouses, guest houses and residential premises for employees that are renewable on a periodic basis. Rental expenses for operating leases recognised in the Statement of Profit and Loss for the year is Mio INR 549 (2015-16: Mio INR 541).
(b) Operating Lease Income :
The Company has leased out certain office spaces that are renewable on a periodic basis. All leases are cancellable with 3 months notice. Rental income received during the year in respect of operating lease is Mio INR 875 (2015-16: Mio INR 493). Details of assets given on operating lease as at year end are as below.
Note 11: Research and Development expenses
Total gross Research and Development expenditure recognised in the Statement of Profit and Loss (including amounts shown under Note 4 and Note 28 to the Financial Statements) amounts to Mio INR 2,961 (2015-16: Mio INR 1,741)
Note 12: Earnings Per Share
(a) Basic and diluted earnings per share
(b) Reconciliation of earnings used in calculating earnings per share
(c) Weighted average number of shares used as the denominator
Note 13: The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.
Note 14: Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances)
Note 15: Advances include dues from directors and officers of the Company
Note 16: First-time adoption of Ind AS
The Company has prepared the financial statements in accordance with Ind AS.
The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended March 31, 2017, the comparative information presented in these financial statements for the year ended March 31, 2016 and in the preparation of an opening Ind AS balance sheet as at April 1, 2015 (the Company’s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.
A. Exemptions and exceptions availed
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS
A.1 Ind AS optional exemptions
A.1.1 Deemed cost
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and investment properties covered by Ind AS 40 Investment Properties. Accordingly, the Company has elected to measure all its property, plant and equipment, intangible assets and investment properties at their previous GAAP carrying value.
A.1.2 Designation of previously recognised financial instruments
Under Ind AS 109, at initial recognition of a financial asset, an entity may make an irrevocable election to present subsequent changes in the fair value of an investment in an equity instrument in other comprehensive income. Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS. The Company has elected to apply this exemption for its investment in equity investments.
A.1.3 Business combinations
Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. Accordingly, the Company has elected to apply Ind AS 103 prospectively to business combinations occuring after its transition date.
A.2 Ind AS mandatory exceptions A.2.1 Estimates
The Company’s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:
- Investment in equity instruments carried at FVOCI;
- Investment in debt instruments carried at FVPL; and
- Impairment of financial assets based on expected credit loss method.
A.2.2 Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
A.2.3 Government loan at below market rate of interest - Government grant
Ind AS 101 requires a first-time adopter to apply the requirements of Ind AS 109, Financial instruments and Ind AS 20, Accounting for Government Grants and Disclosure of Government Assistance, prospectively to government loans at below market rate of interest obtained after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the requirements of Ind AS retrospectively to any government loan originated before the date of transition to Ind AS provided that the information needed to do so had been obtained at the time of initially accounting for that loan. Consequently, if the company did not under its previous GAAP recognise and measure the government loan at below market rate of interest on a basis consistent with Ind AS requirements, it shall use its previous GAAP carrying amount of the loan at the date of transition to Ind AS as the carrying amount of the loan in the opening Ind AS balance sheet. Accordingly the company has applied the above requirement prospectively.
B. Reconciliation between previous GAAP and Ind AS
Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliation from previous GAAP to Ind AS.
1) Fair Valuation of Investments
Under the previous GAAP, investments in equity instruments and mutual funds were classified as long-term investments or current investments based on the intended holding period. Long-term investments were carried at cost less provision for other than temporary decline in the value of such instruments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments (other than equity instruments designated at FVOCI) have been recognised in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended March 31, 2016. This increased the retained earnings by Mio INR 4,432 as at March 31, 2016 (April 1, 2015 : Mio INR 2,099).
Fair value changes with respect to investments in equity instruments designated at FVOCI have been recognised in FVOCI
- Equity investments reserve as at the date of transition and subsequently in the other comprehensive income for the year ended March 31, 2016. This increased other reserves by Mio INR 4,452 as at March 31, 2016 (April 1, 2015 : Mio INR 5,316).
Consequent to the above, the total equity as at March 31, 2016 increased by Mio INR 8,884 ( April 1, 2015 : Mio INR 7,415) and profit for the year increased by Mio INR 2,333 and other comprehensive income for the year ended March 31, 2016 decreased by Mio INR 864.
2) Loans to employees
Under the previous GAAP, interest free and concessional loans to employees are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly, the company has fair valued the loans to employees under Ind AS. Difference between the fair value and transaction value of the loans to employees has been recognised as deferred expenses. Consequent to this change, the amount of loans to employees decreased by Mio INR 96 as at March 31, 2016 (April 1, 2015 - Mio INR 132). The deferred expense increased by Mio INR 102 (April 1, 2015 - Mio INR 132). The profit for the year and total equity as at March 31, 2016 decreased by Mio INR 30 which is off-set by the notional income of Mio INR 36 recognised on loans to employees.
3) Proposed dividend and dividend distribution tax
Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Mio INR 3,212 as at March 31, 2016 ( April 1, 2015 - Mio INR 3,212) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.
4) Deferred tax
Deferred tax have been recognised on account of long term capital loss on transition to Ind AS which increased the deferred tax assets by Mio INR 430 as on March 31, 2016 and deferred tax credit for the year ended March 31, 2016 by Mio INR 430.
Ind AS 109 requires borrowings to be accounted as financial liabilities at amortised cost. Accordingly, borrowings as at March 31, 2016 have been reduced by Mio INR 42 and deferred income has increased by Mio INR 79 with a corresponding adjustment to retained earnings of Mio INR 37. As a result of the interest expense on reinstatement of borrowing, the profit for the year ended March 31, 2016 has decreased by Mio INR 57 which is off-set by the notional income of Mio INR 18 due to amortisation of deferred income.
6) Government Grant
a) The Company had received government grants in earlier years and property, plant and equipments related to grants were fully depreciated before transition date. Such grants amounting to INR 1,820 Mio INR were disclosed under capital reserve as per requirement of erstwhile Accounting Standard 12 on Government Grants. This amount has been reclassified and disclosed under retained earning in the current year as per requirement of Ind AS 20. During the year ended March 31, 2016 the Company had received grants amounting to Mio INR 261 which has been disclosed as other income and tax expense of Mio INR 90 pertaining to this grant is disclosed under income tax expense.
b) As per Ind AS 20, Government grant related to assets shall be presented in the balance sheet by setting up the grant as deferred income. The grant set up as deferred income is recognised in statement of profit or loss on a systematic basis over the useful life of the asset. Under the previous GAAP, the grant was shown as a deduction from the asset concerned in arriving at its carrying value. Accordingly, the company has recognised the asset related government grant outstanding as on the transition date as deferred income with corresponding adjustment to property, plant and equipment. Consequent to this the deferred income and property, plant and equipment increased by Mio INR 83 as at March 31, 2016 (April 1, 2015: Mio INR 112) and depreciation and other income has increased by Mio INR 60 for the year ended March 31, 2016. There is no impact on the total equity and profit.
7) Capital Spares
As per Ind AS 16, spare parts are to be recognised as Property, Plant and Equipment if they are held for use in production or supply of goods or services and are expected to be used during more than one period. Otherwise such items are to be recognised as Inventory. Under the previous GAAP, only those spares that can be used in connection with Fixed Assets and their use is expected to be irregular are recognised as Property, Plant and Equipment and depreciated over the remaining useful life of the asset. Accordingly, the Company has identified spare parts qualifying for recognition as Property, Plant and Equipment. This change has resulted in increase in the net carrying value of Property Plant and Equipment by Mio INR 42 as at March 31, 2016 (April 1,2015: Mio INR 13) and reduction in value of Inventories by Mio INR 76 as at March 31, 2016 (April 1, 2015 Mio INR 38). Total equity decreased by Mio INR 25 as at April 1,2015. The profit for the year and total equity as at March 31, 2016 decreased by Mio INR 7 due to depreciation charge of Mio INR 83 for the year on the spare parts recognised as Property, Plant and Equipment and reversal of consumption of machinery spares capitalised amounting to Mio INR 76.
8) Excise Duty
Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended March 31, 2016 by Mio INR 7,405. There is no impact on the total equity and profit.
9) Discounts and sales incentives
Under the previous GAAP, certain discounts and sales incentives were disclosed as part of other expenses. Under Ind AS, amounts disclosed as revenue are net of discounts and sales incentives. This change has resulted in an decrease in total revenue and other expenses for the year ended March 31, 2016 by Mio INR 460.
10) Remeasurement of post-employment benefit obligations
Under Ind AS, remeasurements i.e., actuarial gains and loses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these measurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31, 2016 decreased by Mio INR 39 (net of tax of Mio INR 20). There is no impact on the total equity as at March 31, 2016.
11) Other Comprehensive income
Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans and fair value gains or (losses) on FVOCI equity instruments. The concept of other comprehensive income did not exist under previous GAAP.
12) Retained Earnings
Retained Earnings has been adjusted consequent to the above Ind AS transition adjustments.
Note 17: Offsetting financial assets and financial liabilities
The Company provides the incentives to selected customers under the terms of the agreements, the amounts payable by the Company are offset against receivables from the customers and only the net amounts are settled. The amounts offset as at March 31, 2017 is Mio INR 960 (March 31, 2016: Mio INR 653; April 1, 2015: Mio INR 716) which is disclosed under note 8(b).
Note 18: Disclosure on specified bank notes (SBNs)
During the year, the Company has specified bank notes or other denomination notes as defined in the MCA notification G.S.R.308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016, the denomination wise SBNs and other notes as per the notification is given below:
* 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 8th November, 2016.
Note 19: Rounding off
Amounts mentioned as “0” in the financial statements denote amounts rounded off being less than Rupees one million.
Notes to the financial statements 1 to 47
The accompanying notes are an integral part of these financial statements.