1. Reporting entity
Tamil Nadu Newsprint and Papers Limited (the ‘Company’ or ‘TNPL’) is a company domiciled in India, with its registered office situated at No. 67, Mount Road, Guindy, Chennai - 600 032, India. The Company has been incorporated under the provisions of Indian Companies Act and its equity shares are listed on the Bombay Stock Exchange (‘BSE’) and National Stock Exchange (NSE) in India. Paper Machine (Unit I) was commissioned in October 1985 with an installed capacity of 90,000 Tons Per Annum (‘TPA’) of Newsprint and Fine Paper. The Company has added two more paper machines and present installed capacity is at 400,000 TPA. The Company has recently started a new plant in Trichy district (“Unit II”) to produce 200,000 TPA high grade paper board for usage in pharmaceuticals, healthcare, food, cosmetics and consumer products.
As a part of solid waste management, TNPL has setup 900 tons per day cement plant.
TNPL is self-sufficient with regard to Power to manufacture Paper & Paper Board and Cement.
2. Basis of preparation
a. Statement of compliance
These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of the Companies Act, 2013 (the ‘Act’) and the relevant provisions of the Act.
The Company’s financial statements up to and for the year ended 31 March 2016 were prepared in accordance with the Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act.
As these are the Company’s first financial statements prepared in accordance with Indian Accounting Standards (Ind AS), Ind AS 101, First-time Adoption of Indian Accounting Standards has been applied. An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in the Notes.
b. Functional and presentation currency
These financial statements are presented in Indian Rupees (‘INR’), which is also the Company’s functional currency. All amounts have been rounded-off to the nearest lakhs, unless otherwise indicated.
c. Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following items:
d. Use of estimates and judgements
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.
Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is included in the concerned notes.
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ended 31 March 2017 is included in the concerned notes.
e. Measurement of fair values
A number of the company’s accounting policies and disclosures require measurement of fair values, for both financial and non-financial assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values. The Company regularly reviews significant unobservable inputs and valuation adjustments. If third party information is required, the Company assesses the evidence obtained by the third parties to support the conclusions that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.
Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
Notes 6 - Investment Property Notes 8 - Biological Assets Notes 39 - Financial Instruments
Measurement of fair values Fair value hierarchy
The fair value of investment property (Corporate Office Building) has been determined by external, independent property valuers, having appropriate recognized professional qualifications and recent experience in the location and category of the property being valued. Government guideline value is considered as fair value for Land
The fair value measurement for land has been categorized as Level 1 fair value and for corporate office building has been categorized as Level 2
3.Biological Assets Other than bearer plants See Accounting policies in Notes 3 (e )
a) Reconciliation of carrying amount
As at 31st March 2017, standing crops comprises 7538 acres of plantations (31 March 2016: 7675 acres) . During the year the company harvested 8017 Mts (31 March 2016: 10764 Mts).
b) Measurement of fair values
i. Fair value hierarchy
The fair value measurements for the standing crops have been categorized as Level 3 fair values based on the inputs to the valuation techniques used.
ii. Level 3 fair values
The following table shows a breakdown of the total gains (losses) recognized in respect of level 3 fair values (Standing crops)
iii. Valuation techniques and significant unobservable inputs
The following table shows the valuation techniques used in measuring Level 3 fair values and significant unobservable inputs used in Level 3 fair value measurements.
c) Risk management related to agricultural activities
The Company has identified the risk of fire and allied perils, natural calamities like flood, pests and drying up of plant with regard to Biological Assets. The Company has taken insurance policy covering these risks.
Equity shares designated as at fair value through other comprehensive income
At 1 April 2016, the Company designated the investments shown below as equity shares as FVOCI because these equity shares represent investments that the Company intends to hold for long term for strategic purposes.
Rights, preferences and restrictions attached to equity shares
“The company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the company’s residual assets on winding up. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to his/its share of the paid-up equity share capital of the company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable has not been paid. Failure to pay any amount called up on shares may lead to their forfeiture.
On winding up of the company, the holders of equity shares will be entitled to receive the residual assets of the company, in proportion to the number of equity shares held.”
After the reporting date, the following dividends (excluding dividend distribution tax) were proposed by the Board of Directors subject to the approval at the annual general meeting. The dividends have not been recognized as liabilities. Dividends would attract dividend distribution tax when declared or paid.
4 Analysis of items of Other Comprehensive Income (OCI), net of tax
a) Items of OCI
i) Hedging reserve
ii) Remeasurements of defined benefit liability
iii) Equity instruments through OCI
Effective portion of cash flow hedges
This comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred.
Remeasurements of defined benefit liability
Remeasurements of defined benefit liability comprises actuarial gains and losses.
Equity instruments through OCI
The Company has elected to recognize changes in the fair value of investment in equity securities in other comprehensive income. These changes are accumulated within the FVOCI equity investments within equity. The Company transfers amounts there from to retained earnings when the relevant equity securities are derecognized.
b) Capital Management
The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital, as well as the level of dividends to equity shareholders.
The Board of Directors seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowing and the advantages and security afforded by a sound capital position. The weighted-average interest expense on interest-bearing borrowings was 8.78 percent (2015-16: 9.56 percent).
5 Earnings per share
Basic and diluted earnings per share
The calculations of profit attributable to equity shareholders and weighted average number of equity shares outstanding for purposes of basic earnings per share calculation are as follows:
i. Profit (loss) attributable to equity shareholders (basic and diluted)
ii. Weighted average number of equity shares (basic and diluted)
6 Borrowings ( continued)
See accounting policies in Notes 3 (b)
A. Terms and repayment schedule
B. Secured Bank Loan
# Secured by a first pari passu charge on fixed assets created out of respective loans.
$ Secured by a first pari passu charge on fixed assets to be created at Mondipatti out of respective term loans and first charge on all the movable fixed assets of the company situated at Kagithapuram, Karur Dist., Tamil Nadu on pari passu basis both present & future except which are under specific charge to the respective term lenders and an equitable mortgage by deposit of title deeds in respect of 566.26 acres of land situated at Kagithapuram, Karur District, Tamilnadu.
@ Secured by a first charge on Wind Mill movable assets and subservient charge on the fixed assets of the Company (excluding the machinery which has been specifically charged to the respective lenders) situated at Kagithapuram, Karur Dist.,.
A Secured by a first charge on all the fixed assets of the company situated at Kagithapuram, Karur Dist., (movable & immovable ) on pari passu basis both present and future (except assets under specific charge to other lenders) situated at Kagithapuram, Karur Dist., including an equitable mortgage by deposit of title deeds in respect of 566.26 acres of land situated at Kagithapuram, Karur District, Tamilnadu and pari passu second charge on the current assets of the company viz., stock of raw materials, finished goods, stores and other movables.
* Secured by an exclusive charge on movable & immovable properties of Mayanur Unit-equitable mortgage of 38.40 acres of Land & Buildings and charge on Plant & Machinery and subservient charge on movable plant & machinery at Kagithapuram, Karur Dt.,
& Secured by a first pari passu charge on movable fixed assets of the company (except assets under specific charge to other lenders) situated at Kagithapuram, Karur Dist.,
&& Secured by residual charge on current assets of the company.
aa Exclusive hypothecation charge on revamped power plant & machinery
$$ Residual charge on moveable fixed assets of the company.
## First Pari Passu Charge on moveable Fixed Assets with at least 1x cover.
** Secured by a first charge on current asses of the company, namely raw materials, stock-in-process, semi-finished goods, finished goods, consumable stores & spares and receivables and a second charge by way of extension of equitable mortgage on immovable properties of the company in Kagithapuram, Karur District, Tamil nadu and second charge on the other fixed assets of the company excluding wind mills, vehicles and Computer Software and assets created/proposed to be created out of the ASRS, LSFM,RSPS and DIP projects.
The Company has made a provision of Rs.69.42 lakh (Previous Year Rs.63.69 lakh) in respect of obligation on decommissioning of Plant & Machinery erected at various Off-sites (Sugar Mills), The unwinding of discount of RS.5.73 lakh (Previous Year Rs.5.26 lakh) recognized as expenses.
(i) Government grants
The company has recognized in its books Government subsidy of Rs.30 lakh for creation of environment protection infrastructure facility at Board Plant. As subsidy relates a specific asset, the same was treated as deferral income and amortized over the useful life of the asset.
(ii) Deferred Rent Payable
TNPL has taken Government lands for lease (Operating lease) for the purpose of captive plantations. The lease period is for thirty years. Incremental rent on year on year basis is applicable till the end of 4th year and thereafter it will be flat.
The Company’s exposure to currency and liquidity risks related to above financial liabilities is disclosed in Notes 39
# Other payables includes:
a) Rs.2410.35 lakh being the guarantee commission in respect of IBRD Loan guaranteed by Govt. of India lying since 2002
b) Rs. 2579.05 lakh being Electricity Generation Tax for the generation of energy from captive generation plant for own use.
c) Revenue received in advance Rs. Nil (Previous Year Rs.6439.31 lakh)
d) Amount payable for fixed assets Rs.2711.38 lakh (Previous Year Rs.2913.78 lakh)
e) Confirmation of balances from Creditors have been received and the same is being reconciled
* Excluding cost of bagasse procured in lieu of steam / fuel supplied to Sugar Mills which is included in the respective natural heads of accounts
# Includes embedded lease rent of Rs.48 lakhs to M/s.OMYA towards procurement of Wet Precipitated Calcium Carbonate / Wet Grinded Calcium Carbonate as it is considered as a part of cost of chemicals
7 Operating leases
See accounting policies in Notes 3 (n)
A) Leases as lessor
The Company leases out its investment property on operating lease basis (Notes 6).
i) Future minimum lease receivable
At 31 March, the future minimum lease payments under non-cancellable leases are receivable as follows
ii) Amounts recognized in profit and loss - Grouped under other income Notes 27
During the year ended 31 March 2017, property rentals of Rs.113.01 lakhs (31 March 2016: Rs.99.54 lakhs) have been included in other income (Notes 27) in profit or loss, is as follows:
B) Leases as lessee
TNPL has taken Government lands for lease (Operating lease) for the purpose of captive plantations. The lease period is for thirty years. Incremental rent on year on year basis is applicable till the end of 4th year and thereafter it will be flat.
i) Future minimum lease payments
At 31 March, the future minimum lease payments to be made under non-cancellable operating leases are as follows
ii) Amounts recognized in profit and loss - Grouped under other expenses- Notes 34
C. Financial risk management
The Group has exposure to the following risks arising from financial instruments:
- Credit Risk (see (C)(ii));
- Liquidity Risk (see (C)(iii)); and
- Market Risk (see (C)(iv)).
i. Risk management framework
The Company’s board of directors has overall responsibility for the establishment and oversight of the company’s risk management framework. The Company’s risk management policies are established to identify and analyze 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’s 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.
ii. 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 loans. The carrying amounts of financial assets represent the maximum credit risk exposure.
Trade receivables and loans
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.
The company has established a credit policy under which each new customer is analyzed individually for creditworthiness before the company’s standard payment and delivery terms and conditions are offered. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the management of the company.
The company limits its exposure to credit risk from trade receivables by establishing a maximum payment period of 90 days for customers. More than 85% of the company’s customers have been transacting with the company for over four years, and none of these customers’ balances are credit-impaired at the reporting date.
Confirmation of balances from Debtors & Loans and Advances have been received and the same is being reconciled Cash and cash equivalents
The company holds cash and cash equivalents of Rs.2144.62 lakhs at 31 March 2017 (31 March 2016: Rs.1621.28 lakhs). The cash and cash equivalents are held with bank and cash on hand.
The derivatives are entered into with bank as counterparties.
iii. Liquidity Risk
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 approach to managing liquidity is to ensure, 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 uses process costing to cost its products, which assists it in monitoring cash flow requirements and optimizing its cash return on investments.
iv. Market Risk
Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - 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 optimizing the return.
The company is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables and borrowings are denominated and functional currency. The functional currency of the Company is INR. The currencies in which these transactions are primarily denominated are US dollars.
The Company Forex risk management policy is to hedge currency exchange fluctuation and mitigate currency volatility and risks and to avoid uncertainties in cash flows. All foreign currency exposures - financial assets and liabilities and firm commitments (imports) & probable forecast transactions (exports) which are off-balance sheet exposures are covered under FRMP policy. Hedging of trade exposures viz., imports and exports are hedged separately and not on net exposures basis. The company mostly uses forward exchange contracts to hedge its currency risks mostly with the maturity of less than one year from the reporting date. Forward contracts booked to hedge currency risk relating to foreign currency transactions of firm commitments and probable forecast transactions are generally designated as cash flow hedge. All other forward contracts are designated as fair value hedge for the purpose of accounting.
Cash Flow Hedges
The Company holds the following instruments to hedge exposures to changes in foreign currency 40 Operating segments
A) 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 Board of Directors (BoD) to make decisions about resources to be allocated to the segments and assess their performance.
The Company has three reportable segments, as described below, which are the Company’s strategic business units. For each of the business units the Company’s Board of Directors reviews internal management reports on at least a quarterly basis.
B) Information about reportable segments and reconciliations
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 Board of Directors. 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. Inter-segment pricing is determined on an arm’s length basis.
8. Explanation of transition to Ind AS
As stated in Note 2 (a), these are the Company’s first financial statements prepared in accordance with Ind AS. For the year ended 31 March 2016, 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’).
The accounting policies set out in Note 3 have been applied in preparing these financial statements for the year ended 31 March 2017 including the comparative information for the year ended 31 March 2016 and the opening Ind AS balance sheet on the date of transition i.e. 1 April 2015.
In preparing its Ind AS balance sheet as at 1 April 2015 and in presenting the comparative information for the year ended 31 March 2016, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. This note explains the principal adjustments made by the Company in restating 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.
Optional exemptions availed and mandatory exceptions
In preparing these financial statements, the Company has applied the below mentioned optional exemptions and mandatory exceptions.
A. Optional exemptions availed
1. Property plant and equipment, intangible assets and investment properties
As per Ind AS 101 an entity may elect to:
i. measure an item of property, plant and equipment at the date of transition at its fair value and use that fair value as its deemed cost at that date
ii. use a previous GAAP revaluation of an item of property, plant and equipment at or before the date of transition as deemed cost at the date of the revaluation, provided the revaluation was, at the date of the revaluation, broadly comparable to:
a. fair value;
b. or cost or depreciated cost under Ind AS adjusted to reflect, for example, changes in a general or specific price index.
The elections under (i) and (ii) above are also available for intangible assets that meets the recognition criteria in Ind AS 38, Intangible Assets, (including reliable measurement of original cost); and criteria in Ind AS 38 for revaluation (including the existence of an active market).
iii. use carrying values of property, plant and equipment, intangible assets and investment properties as on the date of transition to Ind AS (which are measured in accordance with previous GAAP and after making adjustments relating to decommissioning liabilities prescribed under Ind AS 101).
As permitted by Ind AS 101, the Company has elected to continue with the carrying values under previous GAAP for all the items of property, plant and equipment. The same election has been made in respect of intangible assets and investment property also. The carrying values of property, plant and equipment as aforesaid are after making adjustments relating to decommissioning liabilities.
2. Determining whether an arrangement contains a lease
Ind AS 101 includes an optional exemption that permits an entity to apply the relevant requirements in Appendix C of Ind AS 17 for determining whether an arrangement existing at the date of transition contains a lease by considering the facts and circumstances existing at the date of transition (rather than at the inception of the arrangement).
The Company has elected to avail of the above exemption.
3. Designation of previously recognized financial instruments
Ind AS 101 permits an entity to designate particular equity investments (other than equity investments in subsidiaries, associates and joint arrangements) as at fair value through other comprehensive income (FVOCI) based on facts and circumstances at the date of transition to Ind AS (rather than at initial recognition). Other equity investments are classified at fair value through profit or loss (FVTPL). The Company has opted to avail this exemption to designate investments in quoted equity shares as FVOCI on the date of transition.
4. Decommissioning liabilities included in the cost of property, plant and equipment
Ind AS 101 permits an entity not to comply with the requirements for changes in decommissioning liabilities that occurred before the date of transition to Ind ASs. The entity shall:
i. measure the liability as at the date of transition to Ind ASs in accordance with Ind AS 37;
ii. to the extent that the liability is within the scope of Appendix A of Ind AS 16, estimate the amount that would have been included in the cost of the related asset when the liability first arose, by discounting the liability to that date using its best estimate of the historical risk-adjusted discount rate(s) that would have applied for that liability over the intervening period; and
iii. calculate the accumulated depreciation on that amount, as at the date of transition to Ind ASs, on the basis of the current estimate of the useful life of the asset, using the depreciation policy adopted by the entity in accordance with Ind ASs. The Company has elected to avail the above exemption.
5. Long Term Foreign Currency Monetary Items
A first-time adopter may continue the policy adopted for accounting for exchange differences arising from translation of longterm foreign currency monetary items recognized in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP.
B. Mandatory exceptions
As per Ind AS 101, an entity’s estimates in accordance with Ind AS at the date of transition to Ind AS 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 and/ or FVOCI.
- 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 amortized cost.
- Discounted value of liability for decommissioning costs.
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 amortized 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 amortized cost has been done retrospectively except where the same is impracticable.
a) Lease arrangement
Under previous GAAP, arrangements that did not take the legal form of lease were accounted for based on the legal form of such arrangements e.g. purchase of Wet Precipitated Calcium Carbonate (PCC)/ Wet Grinded Calcium Carbonate (GCC) chemicals from Omya India Private Limited. Under Ind AS, any arrangement (even if not legally structured as lease) which conveys a right to use an asset in return for a payment or series of payments are identified as leases provided certain conditions are met. In case such arrangements are determined to be in the nature of leases, such arrangements are required to be classified into finance or operating leases as per the requirements of Ind AS 17, Leases.
The Company has entered into agreement with Omya India Private Limited for purchase of PCC / GCC chemicals which have been identified to be in the nature of lease and have been classified as operating lease arrangements.
Chemicals consumed includes embedded lease rent of Rs.48 lakh to M/s.OMYA towards procurement of Wet Precipitated Calcium Carbonate / Wet Grinded Calcium Carbonate as it is considered as a part of cost of chemicals. Hence, this has no impact on the profit or loss of the company
b) Re-measurement of defined benefit liability
Under Ind AS, re-measurement of defined benefit liability are recognized under other comprehensive income. Under previous GAAP the Company recognized actuarial gains and losses in profit or loss. However, this has no impact on the total comprehensive income and total equity as on 1 April 2015 or as on 31 March 2016.
c) Investment property
Based on Ind AS 40, the company has reclassified land with undetermined future use and let out portion of Corporate Office building to investment property. Under the previous GAAP, this was disclosed as a part of property, plant and equipment.
As this is only re-classification from Plant, Property & equipment to investment property, there is no impact on statement of profit or loss.
Reclassification from PPE to Investment Property
d) Proposed dividend
Under previous GAAP, dividends proposed by the Board of Directors after the reporting date but before the approval of financial statements were considered to be adjusting event and accordingly recognized (along with related dividend distribution tax) as liabilities at the reporting date. Under Ind AS, dividends so proposed by the Board of Directors are considered to be nonadjusting event. Accordingly, provision for proposed dividend and dividend distribution tax recognized under previous GAAP has been reversed.
e) Excise duty
Under previous GAAP, revenue from sale of goods was presented net of the excise duty on sales. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. Excise duty is presented in the Statement of Profit and Loss as an expense. This has resulted in an increase in the revenue from operations and expenses for the year ended 31 March 2016. The total comprehensive income for the year ended and equity as at 31 March 2016 has remained unchanged.
f) Loss allowance
On transition to Ind AS, the Company has recognized impairment loss on trade receivable based on the expected credit loss model as required by Ind AS 109.
g) Fair valuation of investments
In accordance with Ind AS, financial assets representing investment in equity shares have been fair valued. The Company has designated these investments at fair value through other comprehensive income as permitted by Ind AS 109. Under the previous GAAP, the application of the relevant accounting standard resulted in all these investments being carried at cost.
h) Biological assets other than bearer plants
Under Ind AS 41, Agriculture, biological assets are measured at fair value less costs to sell. Under previous GAAP biological assets were measured at cost.
i) Other Comprehensive Income
Under Ind AS, All items of income and expense recognized in a period should be included in profit and loss account, unless a standard requires or permits otherwise. Items of income and expenses that are not recognized in profit or loss but are shown in the profit or loss as “other comprehensive income” includes re-measurements of define benefit plan, fair value of equity investments and Gain/Loss on Hedging instruments in a Cash Flow hedge. This concept of other comprehensive did not exist under previous GAAP.
j) Deffered Tax
Deffered Tax has been considered on Ind AS transition adjustments.