Contingent liability
Contingent liability is disclosed in the case of:
- a present obligation arising from past events, when it is not probable that an outflow
of resources embodying economic benefits will be required to settle the obligation;
- a present obligation arising from past events, where no reliable estimate is possible; and
- a possible obligation arising from past events, unless the probability of outflow of resources is remote.
A contingent asset is disclosed where an inflow of economic benefits is probable.
Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.
xx. Business combinations
Business combinations are accounted for using the acquisition accounting method as at the date of the acquisition. The consideration
transferred in the acquisition and the identifiable assets acquired and liabilities assumed are recognised at fair values on their acquisition
date. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the net identifiable
assets acquired and liabilities assumed. Consideration transferred does not include amounts related to settlement of pre-existing
relationships. Such amounts are recognised in the Statement of Profit and Loss. Transaction costs are expensed in the standalone
statement of profit and loss as incurred, other than those incurred in relation to the issue of debt or equity securities which are directly
adjusted in other equity.
t.3. Significant accounting judgements, estimates and assumptions
The preparation of the Company's financial statements requires management to make judgements, estimates and assumptions that affect
the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent
liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying
amount of assets or liabilities affected in future periods.
a. Judgements
In the process of applying the Company's accounting policies, the management has made the following judgements, which have the
most significant effect on the amounts recognised in the financial statements:
Determining the lease term of contracts with renewal and termination options - Company as lessee
The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably
certain not to be exercised.
The Company has several lease contracts that include extension and termination options. The Company applies judgement in evaluating
whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant
factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the
Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability
to exercise or not to exercise the option to renew or to terminate.
b. Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below
The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing
circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that
are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Defined benefit plans
The cost of the defined benefit plans and other employment benefits and the present value of the obligation are determined using
actuarial valuation. An actuarial valuation involves making various assumptions that may differ from actual developments in the future.
These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the
valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions
are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate, management considers the
underlying bonds are further reviewed for quality. Those having excessive credit spreads are excluded from the analysis of bonds on
which the discount rate is based, on the basis that they do not represent high quality corporate bonds.
The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at intervals in response to
demographic changes. Future salary increases are based on expected future inflation rates for the country.
Further details about defined benefit obligations are provided in Note 31.
2.4. Recent Prouncements:-
Standard issued but not yet effective
On March 31, 2023, Ministry of Corporate Affairs ("MCA") amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing
the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 2023, as below:
Ind AS 1 - Presentation of Financial Statements
The amendments require companies to disclose their material accounting policies rather than their significant accounting policies.
Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of
primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its
financial statements.
Ind AS 12 - Income Taxes
The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The
amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it
no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company
does not expect this amendment to have any significant impact in its financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change
in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates
are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if
accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company
does not expect this amendment to have any significant impact in its financial statements. The Company has not early adopted any
standard, interpretation or amendment that has been issued but is not yet effective.
The Company's principal financial liabilities comprise of trade and other payables and other financial liabilities. The Company's principal financial
assets includes loans, trade receivables, cash and bank balances, other assets and other financial assets that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees and advises on these risks.
The Company's senior finance team advises on financial risks and provides assurance that the Company's financial risk are identified, measured,
managed and mitigated in accordance with general risk mitigation policies and objectives. All derivative activities are carried out by senior finance
team who has the appropriate skills, expertise and experience and is being overseen by the Managing Director from time to time as per business
needs. It is the Company's policy that no trading in derivatives for speculative purposes be undertaken. The Board of Directors review and agree
policies for managing each of these risks, which are summarised below:
(a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices.
Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk.
Financial instruments affected by market risk include deposits, trade and other receivables and trade and other payables.
The sensitivity analyses in the following sections relate to the position as at 31 March 2023 and 31 March 2022.
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and
derivatives and the proportion of financial instruments in foreign currencies are all constant and on the basis of the hedge designations in place
at 31 March 2023.
The analyses exclude the impact of movements in market variables on: the carrying values of gratuity, pension and other post-retirement
obligations and provisions.
The following assumption has been made in calculating the sensitivity analyses:
The sensitivity of the relevant statement of 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.
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 changes in market interest
rates. The Company does not have any long term & short term borrowings.
The impact of /(-) 25 bps in bank interest rates on deposits is estimated at /(-) INR 20.16 lacs as on 31 March 2023, /(-) INR 6.95 lacs as on
31 March 2022, without considering any change in deposit amounts.
Foreign currency 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 Company's operating activities (when revenue
or expense is denominated in a foreign currency).
Commodity price risk
The Company is affected by the price volatility of resin, base raw material for manufacturing PVC Films and being sourced from both domestic
and international suppliers. The price volatility is due to demand-supply position in international market and exchange impact arising due to
delivery lead time. The upward or downward trend in raw material is generally being passed on to the end customer other than exceptional
cases as per business needs and therefore neutralising the exchange risks arising therefrom and as such the impact of such volatility, is difficult
to be quantified or measured.
Equity price risk
The Company has not made investments in equity securities, hence are not susceptible to market price risk arising from uncertainties about
future values of the investment securities.
(b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial
loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including
deposits with banks, foreign exchange transactions and other financial instruments. A provision is created for a counter party whose payment
is due more than 180 days after its due date.
Trade receivables
Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and control relating to customer
credit risk management. 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. Outstanding customer receivables are regularly monitored and any shipments to major customers
are generally covered by letters of credit or other forms of credit insurance.
An impairment analysis is performed at each reporting date on an individual basis for major clients. The calculation is based on actual
incurred historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets
disclosed in note 10. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to
trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
The COVID-19 pandemic has brought economies, businesses and lives around the world to a standstill, and our country is no exception. On
the basis of current assessment and estimates, the management foresees risk of recoverability from some of its customers. Accordingly, the
Company has made appropriate provisions in the books of accounts arising from COVID-19 pandemic. However, the impact assessment of
COVID-19 is a continuous process, given the uncertainties associated with its nature and duration. The Company will continue to closely
monitor any material changes to future economic conditions."
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Company's treasury department in accordance with the
Company's policy.
The Company's maximum exposure to credit risk for the components of the Balance Sheet as at 31 March 2023 and 31 March 2022 is the
carrying amounts as illustrated in note 10 and note 11. The Company's maximum exposure relating to financial instruments is noted in the
liquidity table below.
1) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any
Benami property.
2) The Company does not have any transactions with struck off companies.
3) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
4) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
5) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with
the understanding that the Intermediary shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate
Beneficiaries); or
b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;
6) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding
(whether recorded in writing or otherwise) that the Company shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party
(Ultimate Beneficiaries) or;
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
7) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as
income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the
Income Tax Act, 1961
8) The Company has filed monthly statements of current assets with the banks in agreement with the books of accounts.
9) The Company does not have any immovable property (other than properties where the Company is the lessee and the lease agreements are duly
executed in favour of the lessee) whose title deeds are not held in the name of the Company.
10) The Company has not made any Loans or Advances in the nature of loans that are granted to promoters, directors, KMPs and the related parties
(as defined under Companies Act, 2013,) either severally or jointly with any other person, that are:
(a) repayable on demand or
(b) without specifying any terms or period of repayment
11) The company has not been declared as a wilful defaulter
NOTE 44:
1) As part of the Business Transfer Agreement, of the total liabilities, the carrying amount of public fixed deposit liability of ' 10959.79 lacs
taken over from PPI division of Bilcare Limited has remained unpaid as on March 31, 2023. The compliances and claim if any, in respect to this
continues to be with Bilcare Limited.
2) The Company pursuant to the change in the accounting policy has adopted revaluation model for its Property Plant and Equipment and a
revaluation surplus of ' 63584.37 lacs has been recognised in the books.
3) Public fixed deposits carries interest @9.55% to 11.75% p.a.
NOTE 45:
Exceptional Items are as under:
a) During the year ended March 31, 2023 the company has sold the investment property for consideration of '.770 lacs and profit of '.711.12
lacs has been recorded.
b) The company has assigned its receivable of '.245.74 lacs (Outstanding since 2005) from disposal of assets of the activities identified as non
core (referrred to as Non Core Assets) of the company to M/s Durable Stationery Pvt.Ltd. at a consideration of '.63.98 lacs due to prolonged
litigation. Further, the company entered into a Share Purchase Agreement with M/s Durable Stationery Pvt.Ltd. for sale of 2,34,000 Equity shares
of '.10 each of Roha Paper Mills Ltd. (under voluntary winding up) for a consideration of '.23.40 lacs. The net loss is '.158.36 lacs has been
recorded in the books.
c) Consequent upon business transfer of Assets and Liabilities, '.2047.95 lacs on account of additional compensation paid to capital creditor,
stamp duty for conveyance deed and expenses relating to acquisition of PPI division.
d) Consequent upon business transfer of Assets and Liabilities, gain of '.14177.03 lacs has been recorded on account of One time settlement of
term loan and working capital loans of various banks, Asset Reconstruction Company and Other lenders.
NOTE 46:
The Company had given interest free advances aggregating to ' 3049.90 lakhs to a customer/vendor for proposed new line of products. Subsequently
the advance was refunded in full in December 2022 on cancellation of the order by the customer/vendor. The advances were given as trade advances
in the normal course of business and no futher compliances under the Companies Act, 2013 are required.
NOTE 47:
The previous years numbers relating to income tax assets / liabilities have been regrouped to correspond with the current year's classification for
better presentation.
NOTE 48:
The previous years numbers has been restated wherever application for better presentation.
NOTE 49:
The figures in the financial statements for the year ended March 31,2022 and as at April 01,2021 have been restated and certfied by management
to include the effect of Business Transfer Agreement of PPI division of Bilcare Limited acquired by the Company.
As per our report of even date For and on behalf of the Board of Directors of Caprihans India Limited
For Batliboi & Purohit
Chartered Accountants
ICAI Firm Registration No.: 101048W
Per Kaushal Mehta Ankita J. Kariya Siddharth S. Shetye Pritam Paul
Partner Chairperson and Managing Director Director CFO & Company Secretary
Membership No.: 111749 DIN: 08292735 DIN: 06943119 FCS Membership No: 5861
Place: Mumbai Place: Mumbai Place: Mumbai Place: Mumbai
Date: May 30, 2023 Date: May 30, 2023 Date: May 30, 2023 Date: May 30, 2023
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