41.
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CONTINGENT LIABILITIES AND COMMITMENTS'
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|
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(i)
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Estimated amount of Contingent Liabilities not provided for
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|
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a.
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Claims against the Company not acknowledged as Debts
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51.62
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51.62
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b.
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Bank Guarantees outstanding
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65.61
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67.22
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(ii)
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Commitments
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Estimated amount of contracts to be executed on Capital Account and not provided for (net of Advances)
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205.99
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104.13
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D. Risk Management
The above benefit plans expose the company to actuarial risks such as follows:
Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, ^ ’ the defined benefit obligation will tend to increase
(ii) Salary inflation risk: Higher than expected increases in salary will increase the defined benefit obligation
(iii) Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.
The Company's business activities expose it to certain financial risks - market risk, liquidity risk and credit risk. In order to minimize those risks, the Company has risk management policies and procedures in place as approved by the Audit Committee of the Board of Directors of the Company after due evaluation of key risks facing the business of the Company:
a) Market Risk
The Company's business of Cultivation, Manufacture and Sale of Tea is primarily agricultural in nature. Moreover, the sale price of Tea is largely determined by the market forces of demand and supply. Thus, adverse weather conditions and uncertain tea market expose it to the risk that the fair value or future cash flows may adversely fluctuate. The Company closely monitors the changes in market conditions and select the sales strategies to mitigate its exposure to various market risks. Other Market risks are as under:
i. Foreign Currency Risk
The Company undertakes significant transactions denominated in foreign currency with its customers in relation to Exports by Rossell Tea Division and 100% EOU of Rossell Techsys Division as well as dealing with Foreign OEMs in relation to Aerotech Services Division. This results in wide exposure to exchange rate fluctuations. Such exchange rate risk primarily arises from transactions made in foreign exchange and reinstatement risks arising from recognized assets and liabilities, which are not in the Company's functional currency (Indian Rupees). A significant portion of these transactions are in US Dollar, Euro and British Pound Sterling etc.
The Company as Risk Management Policy, hedges its exposure in foreign exchange whenever considered appropriate based on the their perception about such market and reviews periodically its exposure therein to ensure that results from fluctuating currency exchange rate are appropriately managed.
The impact of sensitivity analysis (10% appreciation / depreciation of the foreign currency with respect to functional currency) arising on account of above outstanding foreign currency denominated assets and liabilities would be ' 27.86 Lakhs (31st March, 2021 - ' 399.08 Lakhs).
ii. Interest Rate Risk
Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The objectives of the Company's interest rate risk management processes are to lessen the impact of adverse interest rate movements on its earnings and cash flows and to minimize counter party risks.
The Company is exposed to interest rate volatilities primarily with respect to its borrowings from banks. Such volatilities primarily arise due to changes in Marginal Cost of Lending rates of Banks as well as other economic parameters of the Country. The Company manages such risk by operating with Banks having strong fundaments with comparatively lower Marginal Cost of Lending Rates in the Market.
Interest rate sensitivity
Since the significant amount of borrowings of the Company are short term in nature, the possible volatility in the interest rate is minimal.
b) Liquidity Risk
Liquidity risk is the risk that the Company may encounter difficulty, including seasonality, in meeting its obligations due to shortage of liquid assets.
The Company mitigates its liquidity risks by ensuring timely collections of its trade receivables, close monitoring of its credit cycle, ensuring optimal movements of its inventories and avoid blockage of working capital in non-productive current assets.
c) Credit Risk
Credit risk is the risk that counter party will not meet its obligations leading to a financial loss to the Company.
The Company has its policies to limit its exposure to credit risk arising from outstanding receivables. Management regularly assess the credit quality of its customer's based on which, the terms of payment are decided. Credit limits are set for each customer which are reviewed at periodic intervals. The credit risk of the Company is low as the Company sells a significant volume of its Teas through the auction system which is on cash and carry basis. The exports are made mostly to worldwide reputed Corporates like Boeing, Starbucks, and Taylors of Harrogate etc., and otherwise backed by letter or credit or on advance basis.
48. Fair Value measurements Fair value hierarchy
Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:
Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize 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: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
The management consider that the carrying amounts of financial assets (other than those measured at fair values) and liabilities recognized in the financial statements approximate their fair value as on the reporting date.
There were no transfers between Level 1, Level 2 and Level 3 during the year.
50. Sale/Disposal of Tea Estate
The Company sold/disposed off Bokakhat Tea Estate w.e.f. 1st April, 2021 to Dhansiri Tea Pvt. Ltd. as a going concern. Extraordinary item for the year ended 31st March 2022 represents the profit on sale of Assets pertaining to Bokakhat Tea Estate.
51. Monthly/Quarterly returns or statements of current assets filed by the Company with banks are generally in agreement with the books of accounts and there is no material discrepancies.
52. Impact of Pandemic COVID 19
The Company has considered the possible after effects of COVID 19 in this Financial Results and based on related estimates and assumption, no material adjustment is required in the carrying value of any current and non-current assets of the Company.
55. No funds has been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).
The Company has not received any fund from any party (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entity identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
56. General
Previous Years' figures have been regrouped / rearranged wherever considered appropriate to make them comparable with this year.
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