Atul Ltd Annual Report 2016-17

Atul Ltd | Annual Report 2016-17

C) Notes to the reconciliations

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.

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).

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.

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.

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.

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.

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