Atul Ltd 2016-17

Atul Ltd | Annual Report 2016-17 C) Notes to the reconciliations a) Investment property Under IGAAP, there was no requirement to present investment property separately, and the same was included under non-current investment and measured at cost less provision for diminution other than temporary. Under Ind AS, investment property is required to be presented separately on the face of the Balance Sheet. Accordingly, the carrying value of investment property under IGAAP has been reclassified to a separate line item on the face of the Balance Sheet. b) Fair valuation of investments Under IGAAP, investments in equity instruments and mutual funds were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, Fair value changes with respect to investments in equity instruments designated as at FVOCI have been recognised in FVOCI – Equity investments reserve as at the date of transition and subsequently in the Other Comprehensive Income. This increased other reserves by ` 287.52 cr as at March 31, 2016 (April 01, 2015: ` 325.89 cr). c) Proposed dividend Under IGAAP, 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 (including dividend distribution tax) of ` 35.70 cr as at March 31, 2016 (April 01, 2015: ` 30.35 cr) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount. d) Deferred tax Under IGAAP, deferred tax accounting was done using the income statement approach which focuses on differences between taxable profit and accounting profit for the period. Ind AS requires entities to account for deferred taxes using the Balance Sheet approach which focuses on temporary differences between the carrying amount of an asset or liability in the Balance Sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred taxes on temporary differences which were not required to be recorded under IGAAP. In addition, the various transitional adjustments have led to consequential deferred tax implication which the Group has accounted for. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or Other Comprehensive Income on the date of transition. e) Excise duty Under IGAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive excise duty. Excise duty paid is presented on the face of the Consolidated 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 ` 164.80 cr. There is no impact on the total equity and profit. f) Deferment of Government grant Under IGAAP, Government grants received towards assets can be shown as deduction from the value of assets or as deferred Government grant. Accordingly, the Group had opted to show asset at net of grant. However, Ind AS does not give the option for such netting off. Government grants will be recognised in the Consolidated Statement of Profit and Loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate. g) Hedge accounting The contracts, which were designated as hedging instruments under IGAAP, have been designated as at the date of transition to Ind AS as hedging instrument in cash flow hedges of either expected future sales for which the Group has firm commitments or expected purchases from suppliers that are highly probable. The corresponding adjustment has been recognised as a cash flows hedge reserve. On the date of transition, cash flows hedge reserve was recognised in Other Comprehensive Income net of tax and subsequently taken to cash flows reserve. Transition to Ind AS (continued) Notes to the Consolidated Financial Statements