Terms/Rights attached to equity shares
The company has only one class of equity shares having a face value of Rs. 5/- each (P.Y Rs. 5/-each). Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the equity shareholders will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Nature and purpose of other reserves
(i) Securities premium
Securities premium is used to record the premium on issue of shares. The reserve can be utilized in accordance with the provisions of the Companies Act, 2013.
(ii) General reserve
General reserve is used for strengthening the financial position and meeting future contingencies and losses.
(iii) Retained earnings
Retained earnings represents the cumulative profits of the Company and effects of remeasurement of defined benefit obligations. This reserve can be utilized in accordance with the provisions of the Companies Act, 2013.
i) Term loans from banks:
The company has availed term loans from HDFC Bank and Bank of Bahrain & Kuwait (BBK). The loan from HDFC is repayable in 16 equal quarterly installments starting from June 2020 and from Bank of Bahrain & Kuwait is repayable in 20 equal quarterly installments starting from Feb 2022.
The loan from HDFC and Bank of Bahrain & Kuwait is availed for the purchase of dumpers and machinery.
During the current financial year, company was sanctioned a term loan of Rs. 73,000.00 lacs for setting up of clinker production unit (1.2 million tonnes per annum), Cement Grinding Unit (0.8 million tonnes per annum) and a split grinding unit (1 million tonnes per annum) at different locations, from State Bank of India, IDBI Bank, Canara Bank and IndusInd Bank. The term loan is repayable in 28 equal quarterly instalments starting from the quarter June'25 and ending March'32 to all the bankers. Out of total loan sanctioned, the company has drawn an amount of Rs. 14,214.06 Lakhs upto 31st March'23
ii) Security:
The term loan from HDFC Bank Ltd, State Bank of India, IDBI Bank, Canara Bank and IndusInd Bank is secured by paripassu first charge on Property, Plant and Equipment and second charge (pari passu) on the current assets. The term loan from Bank of Bharain & Kuwait is secured by exclusive charge on equipments and dumpers purchased out of loan proceeds.
Unsecured loans:
The Company has availed unsecured loans from the directors and the enterprises in which the key management personnel are interested and interest is paid at monthly floating rate of the bank.
Deferred payment liabilities:
The Company in earlier years availed interest free sales tax deferred loan aggregating to Rs.1,631.54 lakhs under a scheme of the State Government, for its enhanced capacity implemented in 2000-01. The balance loan is repayable upto the financial year 2024-25 as per VAT assessment orders completed.
The cash credit facilities/working capital loans which are obtained from various banks, are secured by hypothecation of stocks of raw materials, stock in process, finished goods , spares and book debts and second charge on property, plant and equipment and further secured by the personal guarantee of Mr. M.B. Raju, Executive Chairman and Ms. P. Parvathi, Managing Director.
The company has taken corporate credit card from HDFC Bank Ltd.
For the company's exposure to the interest rate risk and liquidity risk, refer note no. 34 to the financial statements.
a Amount excess spent will be utilized for set-off against CSR Obligation for FY 2023-24 and has been disclosed under Prepaid expenses in Note 9.
28. Exceptional items
Exceptional Item of Rs. 1,863.64 Lakhs for the year ended 31st March, 2022 represents Compensatory charges levied by the Department of Mines and Geology, Government of Telangana.
The amounts receivable from customers become due after expiry of credit period which on an average is 30 to 120 days. There is no significant financing component in any transaction with the customers.
The Company does not provide performance warranty for products, therefore there is no liability towards performance.
The Company does not have any material performance obligations which are outstanding as at the year end as the contracts entered for sale of goods are for short term in nature.
31. (i) Leave obligations
The leave obligation covers the company's liability for earned leave which is unfunded.
(ii) Defined contribution plans
The company has defined contribution plans namely provident fund. Contributions are made to provident fund at the rate of 12% of basic salary plus DA as per regulations. The contributions are made to registered provident fund administered by the Government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the year towards defined contributions plan is as follows
(iii) Post- employment obligations:
a) Gratuity:
The company provides for gratuity for employees as per the Payment of Gratuity Act, 1972. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The company operates post retirement gratuity plan with LIC of India. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The above sensitivity analysis is based on a change in each assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
v) Risk exposure
Through its defined benefit plans, the company is exposed to a number of risks, the most significant of which are detailed below:
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.
Salary inflation risk:
Higher than expected increases in salary will increase the defined benefit obligation.
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.
32 Contingent Liabilites:
Other money for which the company is contingently liabile.
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Rs. in Lakhs
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Particulars
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As at
31.03.2023
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As at
31.03.2022
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(i)
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Sales tax:
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|
|
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a)
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Sales tax demand with respect to packing materials in the Asst Year 1993-94 for which the company had filed TREVC 50/2008 before the Hon'ble Telangana High Court and obtained stay on payment of 50% of the disputed demand. An amount of Rs.5,84,554/- was paid under protest.
As per OTS the Company has paid (Rs.2,26,403) 40% of the disputed amount and withdrawn the matter, and matter is closed.
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Nil
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11.52
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Rs. in Lakhs
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| |
Particulars
|
As at
31.03.2023
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As at
31.03.2022
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|
b)
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Sales tax demand for the deemed excess production based on the Energy audit for the years 1999-2000 & 2000-01. Stay has been granted by the High court of Telangana in SPLA 1/2007 and SPLA 2/2007, matters are pending for hearing.
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85.68
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85.68
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|
c)
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Sales tax demand for interest of Rs.1,37,24,338/- on alleged excess utilisation of sales tax incentive. Stay was granted by Additional Commissioner (CT) (Legal) subject to 50% payment of disputed amount. An amount of Rs.68,62,169/- had been paid under protest. Appeal (TA 240/2014) was pending before the Appellate Tribunal. As per OTS the Company has paid (Rs.10,29,325) 15% of the disputed amount and withdrawn the matter, and matter is closed.
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Nil
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137.24
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d)
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Sales tax demand for Rs.51,60,765/- recovery on excess paid interest for the assessment years 2002-03 to 2004-05. Appeal (SPLA 2/2013) was pending before the Telangana Hon'ble High Court.
As per OTS the Company has paid (Rs.7,74,115) 15% of the disputed amount and withdrawn the matter, and matter is closed.
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Nil
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51.61
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(ii)
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VAT demand for 25% penalty of the disputed tax for the year 201415. Appeal (TA 83/2019) was pending before the VAT Appellate Tribunal, Hyderabad. 50% of the disputed amount i.e., Rs.81,035/-was paid for filing the appeals.
As per OTS the Company has paid (Rs.12,115) 15% of the disputed amount and withdrawn the matter, and matter is closed.
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Nil
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1.62
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(iii)
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Water Usage Rate:
The A.P Government has issued a G.O. Ms.No 39, levying water cess on the quantum of water used in the generation of power and demanded payment of Rs.723.29 Lakhs for the period 1997 to February 2008. Company has filed Writ Petition 2816/2003 before the Hon'ble Andhra Pradesh, and the matter is pending.
An amount of Rs.39,16,506/- has been paid out of Total demand of Rs.7,62,45,560.
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723.29
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723.29
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(iv)
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Electricity Duty:
Duty on electricity generated and consumed was levied by the AP Govt at 25 paise per unit from 17-07-2003 to 23-5-2013.
As per the directions of Hon'ble Supreme Court, subject to outcome of the SLP 18363/2016 (WP 6340/2004), the company has paid 15 paisa per unit generated and consumed out of total duty of 25 paisa per unit.
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230.00
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230.00
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Rs. in Lakhs
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Particulars
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As at
31.03.2023
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As at
31.03.2022
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(v)
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Forest Transit Fees:
Government of Andhra Pradesh issued G.O. Ms. No. 35 dated 06.02.2010 enhancing the rate of transit permit fee from Rs.500/-per 100 permits to Rs.10/- per ton/cmt for limestone, levied under Rule 5 of Andhra Pradesh forest Produce Rules, 1970.
The company has filed Writ Petition 26340/2010 and obtained interim stay from the Hon'ble Telangana High Court and is paying one-third of revised fee till final order.
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1,476.58
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1,347.67
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(vi)
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Entry Tax:
Levy of entry tax on the purchase of certain goods from financial year 2012-13 to financial year 2016-17. Appeals are pending before Appellate Tribunal. 50% of the disputed amount has been paid before filing the appeals.
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18.38
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18.38
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(vii)
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Voltage Surcharge Matter:
Difference in the voltage surcharge charged by AP Transco for the period from Jan 1999 to Mar 2000 for which the company has filed WP 25326/1999, WP 595/2000, WP 2635/2000, WP 6802/2000 before the Hon'ble Telangana High Court, wherein the Hon'ble single judge bench passed the order favouring to APTRANSCO. Accordingly, the Company has paid entire demand of Rs.109.94 Lakhs and filed Writ Appeals.
After hearing the Writ Appeals the division bench of Hon'ble Telangana High Court has set aside the order of single judge and remanded the matter for fresh adjudication.
Accordingly, the Writ Petitions are active and pending for hearing. As the entire demand of Rs.109.94 lakhs has already been paid under protest, there is no contingent liabilities.
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Nil
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Nil
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(viii)
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Wheeling and Transmission Charges:
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|
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Consequent to the judgement passed by the Hon'ble Supreme court, the Company had made a provision of Rs.962.41 Lakhs towards wheeling charges during the financial year 2019-2020.
(A) The company has received demand notice from TSSPDCL for Rs.2,336.05 Lakhs (including interest of Rs. 1,725.76 Lakhs). The Company has filed Writ Petition 31170/2021 challenging the levy of interest. The Hon'ble High Court of Telangana put a stay on the interest portion of Rs.1,725.76 Lakhs till further order, whereas, as per the directions of the Hon'ble High Court of Telangana, the Company has paid the entire differential Wheeling Charges of Rs.726.64 Lakhs to TSSPDCL.
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Rs. in Lakhs
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Particulars
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As at
31.03.2023
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As at
31.03.2022
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(viii)
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(B) The Company had received demand of Rs.101.62 Lakhs from APCPDCL for differential Wheeling Charges for the period 201415 to 2018-19. However, on the representation of the Company, APCPDCL revised the demand to Rs.22.04 Lakhs, subject to verification/reconciliation. Accordingly, the Company has paid Rs.22.04 Lakhs to APCPDCL on 18.09.2020.
(C) The Company had received demand of Rs.10.03 Lakhs from APSPDCL for the differential Wheeling Charges for FY 2015-16. The Company has paid the said amount on 11.11.2022.
(D) APTRANSCO has issued an Invoice for Rs.138.19 Lakhs towards Transmission Charges from 2004-14. The dispute is on method of calculation of Transmission Charges. APTRANSCO has filed an application (OP 33/2022) before the Hon'ble APERC to decide on method of calculation. Matter is pending.
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723.64
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723.64
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(ix)
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Wheel Loader Matter:
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24.12
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Nil
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The Joint Commissioner, Office of the Commissioner of Customs, Chennai-II (Imports) in their adjudication order F.No.ADJ/ ADC/677/2022-GR 5 DATE:09-03-2023, have confirmed the demand of differential duty amounting to Rs.14,35,420/-, confirmed the accrued interest of Rs.2,76,659/-, imposed redemption fine of Rs.5,00,000/- in terms of provisions of 125(1) of the Customs Act, 1962, and imposed a penalty of Rs.17,12,079/- under section 114A of the Customs Act, 1962, and imposed a penalty of Rs.2,00,000/- in terms of 114AA of the Customs Act, 1962, and appropriated of the amount of Rs.17,12,079/- paid vide TR-6 Challan No. MCM 1001810 dated 10.01.2022 deposited by the Company towards differential duty and interest.
The Company has filed an appeal before the Commissioner of Customs (Appeals-II) against the order passed by the Commissioner.
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33. Commitments:
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Capital and Other commitments
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Rs. in Lakhs
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Particulars
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As at
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As at
|
|
31st March 2023
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31st March 2022
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|
Estimated amount of contracts remaining to be executed on capital account not provided for (net of advances)
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22,402.77
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22,228.07
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Other commitments
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-
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-
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36. Financial instruments and risk management Fair values
1. The carrying amounts of trade payables, other financial liabilities (current), borrowings (current),trade receivables, cash and cash equivalents, other bank balances and loans are considered to be the same as fair value due to their short term nature.
2. Borrowings (non-current) consists of loans from banks and government authorities, other financial liabilities (current) consists of security deposits from stockists.
The fair value of financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Set out below, is a comparison by class of the carrying amounts and fair value of the Company's financial instruments, other than those with carrying amounts that are reasonable approximation of fair values:
*Fair value of instruments is classified in various fair value hierarchies based on the following three levels:
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques, which maximise the use of observable market data and rely as little as possible on entity specific estimates. If 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 are not based on observable market data, the instruments are included in Level 3.
Management uses its best judgement in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of the amounts that the Company could have realized or paid in sale transactions as of respective dates. As such, the fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date.
The Company is exposed to market risk (fluctuation in foreign currency exchange rates, price and interest rate), liquidity risk and credit risk, which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.
(A) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of currency risk, interest rate risk and price risk. Financial instruments affected by market risk include loans and borrowings, trade receivables and trade payables involving foreign currency exposure. The sensitivity analyses in the following sections relate to the position as at March 31, 2023 and March 31,2022.
The analysis exclude the impact of movements in market variables on the carrying values of financial assets and liabilties .
The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2023 and 31 March 2022.
(i) Foreign currency exchange rate risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the capital advances. The risks primarily relate to fluctuations in Euros against the functional currencies of the Company. The Company's exposure to foreign currency changes for all other currencies is not material. The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks.
The following tables demonstrate the sensitivity to a reasonably possible change in Euros exchange rates, with all other variables held constant. The impact on the Company's profit before tax is due to changes in the fair value of monetary assets and liabilities.
(ii) Sensitivity
The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and from foreign forward exchange contracts:
The movement in the pre-tax effect is a result of a change in the fair value of monetary assets and liabilities denominated in Euros, where the functional currency of the entity is a currency other than Euros.
(ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's debt obligations with floating interest rates. As the Company has certain debt obligations with floating interest rates, exposure to the risk of changes in market interest rates are dependent of changes in market interest rates.
As the Company has no significant interest bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company's profit before tax is affected through the impact on floating rate borrowings, as follows:
The assumed increase/decrease in interest rate for sensitivity analysis is based on the currently observable market environment.
(B) Credit Risk
Credit risk is the risk arising from credit exposure to customers, cash and cash equivalents held with banks and current and non-current held-to financial assets of the Company include trade receivables, employee advances, security deposits held with government authorities and bank deposits which represents Company's maximum exposure to the credit risk.
With respect to credit exposure from customers, the Company has a procedure in place aiming to minimise collection losses. Credit Control team assesses the credit quality of the customers, their financial position, past experience in payments and other relevant factors. 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, including default risk associate with the industry and country in which customers operate. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. With respect to other financial assets viz., loans & advances, deposits with government and banks, the credit risk is insignificant since the loans & advances are given to employees only and deposits are held with government bodies and reputable banks. The credit quality of the financial assets is satisfactory, taking into account the allowance for credit losses.
(iii) Significant estimates and judgements Impairment of financial assets:
The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the company's past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
(C) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding to meet obligations when due and to close out market positions. Company's treasury maintains flexibility in funding by maintaining availability under deposits in banks.
(iii) Management expects finance cost to be incurred for the year ending 31 March 2024 is Rs. 1,216.94 Lakhs.
37. Capital management
A. Capital management and gearing ratio
For the purpose of the Company's capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the company's capital management is to maximise the shareholder value.
The company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The company monitors capital using a gearing ratio, which is debt divided by total capital. The company includes within debt, interest bearing loans and borrowings.
In order to achieve this overall objective, the Company's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2023 and 31 March 2022.
38. Segment information:
a) The Company's Executive Chairman, Managing Director and Chief Financial Officer examine the Company's performance from a product perspective and have identified two operating segments viz., Cement Division and Power Division. Operations of both the segments are based in India. As per the threshold limits prescribed under Ind AS 108 "Operating Segments", the management has identified one reportable segment "Cement Division". Other segment "Power Division" is below the threshold limits prescribed under Ind AS 108. Hence, segment reporting is not given.
b) Information about products:
Revenue from external customers - Sale of Cement : Rs. 77,270.51 Lakhs (PY: Rs. 78048.08 Lakhs) Revenue from external customers - Sale of Power: Rs. 745.98 Lakhs (PY: Rs. 939.12 Lakhs)
c) The Company has not made external sales to a single customer meeting the criteria of 10% or more of the entity's revenue.
39. Impact assessment of the global health pandemic COVID - 19 and related estimation uncertainty:
The Company has considered the possible effects that may result from the pandemic relating to Covid-19 in the preparation of the financial statements including the recoverability of carrying amounts of financial and non-financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Company has, at the date of approval of these financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of Covid-19 on the Company's financial statements may differ from that estimated as at the date of approval of these financial statements.
b. The Company has borrowings from banks on the basis of security of current assets. The quarterly statements of current assets filed by the Company with banks are in agreement with the books of accounts.
c. Registration of charges or satisfaction with Registrar of Companies : As on 31st March 2023, there are no charges that are to be created or satisfied.
41. Previous year figures are regrouped and rearranged wherever necessary
42. The Board of Directors approved the financial statements for the year ended March 31,2023 and authorised for issue on May 27, 2023.
43. Code on Social Security
The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
The accompanying notes are an integral part of the financial statements.
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