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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 530813ISIN: INE001B01026INDUSTRY: Agricultural Products

BSE   ` 277.50   Open: 282.15   Today's Range 276.05
284.20
-4.65 ( -1.68 %) Prev Close: 282.15 52 Week Range 275.75
471.00
Year End :2023-03 

1 On 26 June 1993, M/s. K.B. Overseas had entered into an agreement with M/s. Khushi Ram Bihari Lal Limited wherein M/s. K.B. Overseas had transferred its entire business including all properties and assets to M/s. Khushi Ram Bihari Lal Limited. Further pursuant to declaratory civil suit no. 962/1998 titled M/s. Khushi Ram Bihari Lal Limited vs. M/s. Bhagirath Lal and Others decreed on 24 March 1999, the assets of M/s. K.B. Overseas inter-alia including these land parcels were taken over by M/s. Khushi Ram Bihari Lal Limited and later the name of M/s Khushi Ram Bihari Lal Limited was changed to M/s KRBL Limited on 1 February 2000. These properties were mutated in the name of M/s. KRBL Limited and the name of M/s. KRBL Limited has also been entered in land revenue records as bhumidhar. Thus, M/s. KRBL Limited is the owner of said parcels.

2 The Company has physical possession of these land parcels vide Memorandum of Understandings entered into by the Company with each of the above mentioned directors and their relatives. Further, the Company had also executed and registered the General Power of Attorney, will and other necessary documents with the above mentioned directors and their relative, in favour of the Company. The Company is in process of doing the necessary compliance in relation to the registration of these land parcels in the name of the Company.

3 Pending registration in the name of the Company due to legal dispute. However, the building is in the possession of the Company and used for its business purpose. Further, the Company had already paid its obligation in full as per signed sale agreement dated 15 April, 2015.

C Lease related disclosures

The Company has leases mainly for land and buildings. With the exception of short-term leases, each lease is reflected on the standalone balance sheet as a right-of-use asset and a lease liability. There are no variable lease payments included in the agreement.

D Extension and termination options

Extension and termination options are included in all leases. These terms are used to maximise operational flexibility in terms of managing contracts.

b) Terms/ rights attached to ordinary equity shares

The Company has only one class of equity shares having a face value of ?1 per share. Each holder of equity shares is entitled to have one vote per share.

In the event of liquidation of the Company, the holders of equity shares 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.

e) Shares reserved for issue under option

The Company has not reserved any shares for issuance under options.

f) Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date

No bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date.

Description and purpose of reserves:

(i) Retained earnings

Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.

(ii) General reserve

The Company has transferred a portion of the net profit of the Company to general reserve from time to time and it is not the item of other comprehensive income. Also the Company has earlier forfeited the partly paid equity shares with the requisite approvals. The amount originally received against forfeited shares is also included in the general reserve.

(iii) Securities premium reserve

The amount received in excess of face value of the equity shares is recognised in securities premium reserve.

(iv) Capital reserve

During amalgamation, the excess of net assets taken, over the cost of consideration paid is treated as capital reserve.

(v) Capital redemption reserve

The Company has recognised capital redemption reserve on buyback of equity shares from its retained earnings. The amount in capital redemption reserve is equal to nominal amount of the equity shares bought back.

(vi) Cash flow hedge reserve

The cash flow reserve is used to recognise the effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges.

A Details of security of current borrowings

i. The Company has executed deed of hypothecation in favour of SBICAP Trustee Company Limited (acting as Security Trustee) and created mortgage on its movable and immovable properties located at various locations vide memorandum of entries for an amount of ?155,500 lacs (31 March 2022 : ?155,500 lacs) in the form of loan and other facilities sanctioned by banks under consortium. The same is secured by first pari-passu charge on all current assets including but not limited to stock of raw materials, semi-finished and finished goods, consumable stores and spares, bills receivables and book debts and all other movables of whatsoever nature and where ever arising, both present and future and on all movable and immovable fixed assets of the Company, both present and future (except immovable fixed assets situated at Maharashtra and Madhya Pradesh for which the Company has executed the Non Disposable Undertaking) of the Company.

Further, the current borrowings of the Company are also secured vide the personal guarantees of Mr Anil Kumar Mittal, Mr Arun Kumar Gupta, Mr Anoop Kumar Gupta and Mr. Ashish Mittal (the liability of Mr. Ashish Mittal shall be limited only to the extent of the immovable properties mortgaged by him in favour of the security trustee for the benefit of working capital lenders).


B Defined benefit plans

Gratuity

In accordance with the Payment of Gratuity Act, 1972, the Company provides for gratuity, as defined benefit plan. The gratuity plan provides for a lump sum payment to the employees at the time of separation from the service on completion of vested year of employment i.e. five years. The liability of gratuity plan is provided based on actuarial valuation as at the end of each financial year based on which the Company contributes the ascertained liability to Kotak Mahindra Life Insurance Company Limited with whom the plan assets are maintained.

Policy for recognizing actuarial gains and losses:

Actuarial gains and losses of defind benefit plan arising from experience adjustments and effects of changes in actuarial assumptions are immediately recognized in other comprehensive income. Risks associated with the plan provisions are actuarial risks. These risk are investment risk, interest rate risk, mortality risk and salary risk.

Interest rate risk

A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Mortality risk

Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan’s liability.

The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occuring at the end of the reporting period, while holding all other assumptions constant and may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of another as some of the assumption may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the balance sheet date ,which is the same method as applied in calculating the defined benefit obligation as recognised in the balance sheet. There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

*During the preceding financial year ended 31 March 2022, ?1,250 lacs and ?64 lacs were remitted to KRBL Foundation and Anamrita Foundation respectively aggregating to ?1,314 lacs for the purpose of aforementioned CSR ongoing projects. Subsequent to the year end 31 March 2022, the said amount had been deposited to the Unspent CSR account, held in the name of the Company which comprises of an amount maintained in the Company’s bank account for ?1,183 lacs and excess spent of ?131 lacs (refer note C below).

42 Capital management

The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to its shareholders. The capital structure of the Company is based on management’s judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investors, creditors and market confidence.

The Company monitors capital using a ratio of “Net Debt” to “Total Equity”. For this purpose, Net Debt is defined as total borrowings less cash and cash equivalents. Total equity comprises of equity share capital and other equity. During the year, no significant changes were made in the objectives, policies or processes relating to the management of the Company’s capital structure.

A Disclosure in respect of financial risk management

1. Credit risk

Credit risk is the risk that 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 investments, cash and cash equivalents, deposits and security deposits.

Credit risk management:

Concentration of credit risk with respect to trade receivables are limited, due to the Company’s customer base being large and diverse. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The long aged trade receivables, mainly comprise of receivables from DISCOM companies and as per past experience, there has been no credit loss on account of customer’s inability to pay as the revenue is agreement driven and all the customers are government companies. Thus, the Company’s historical experience of collecting receivables, supported by the level of default indicate a low credit risk and so trade receivables are considered to be a single class of financial assets.

On the basis of the above assessment, the Company identified and written off an amount of Nil ( 31 March 2022 : ?21 lacs) of trade receivable balances, which were subject to dispute and will not be realisable at the reporting date.

Other financial assets

Further, credit risk in respect of other receivables and loans, mainly comprise of security deposit, unbilled revenue, cash and bank equivalents and interest accrued on deposits which are managed by the Company, by way of assessing financial condition and current economic trends. The Company considers the probability of default associated with the other receivable and loan is very low at the year respective year end and thus would not require any provision, except as disclosed below.

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company’s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses.

The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and other highly marketable debt investments with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.

(iii) Currency Risk

The Company operates internationally and consequently the Company is exposed to foreign exchange risk through its sales in overseas market. The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows policies which includes the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.

The Company has outstanding forward contracts and options of USD 73.45 Mio (P.Y. USD 68.60 Mio).

The Company has designated certain forward contracts and borrowings as eligible hedging instruments for hedge of foreign currency forecast sales. Pursuant to this, the effective portion of change in value of the hedging instruments has been recognised in ‘cash flow hedge reserve’ in other comprehensive income. Such amount is reclassified to statement of profit and loss as and when the forecast transaction occurs or the hedges are no longer effective.

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar, AED, GBP and Euro. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company’s functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the (INR) cash flows of highly probable forecast transactions.

The Company’s policy is to hedge all material foreign exchange risk associated with highly probable forecast sales transactions denominated in foreign currencies. The Company’s policy is to hedge the risk of changes in foreign currency. The Company uses forward contracts (derivative instruments) to hedge its exposure in foreign currency risk. The Company designate both change in spot and forward element of forward contracts and change in spot of PCFCs to hedge exposure in foreign currency risk on highly probable forecast sales.

The Company’s hedging policy only allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessment to ensure that an economic relationship exists between the hedged item and hedging instrument.

In hedges of foreign currency forcast sales, ineffectiveness mainly arises because of Change in timing of hedged item from that of the hedging instrument and cost of hedging. The ineffectiveness arised in the hedges have been disclosed in above table.

1. The management assessed that fair values of cash and cash equivalents, other bank balances, trade receivables, other financial assets, borrowings, trade payables , lease liabilities and other financial liabilities approximate their respective carrying amounts largely due to the short-term maturities of these instruments.

Further, these instruments are valued at level 3 and their fair value are considered to be same as their carrying value, as there is an immaterial change in the lending rate.

2. Investment in equity instrument in the subsidiary has been accounting at cost in accordance with Ind AS 27. Therefore, the same are not in the scope of Ind AS 109 and not disclosed here.

2. Fair value hierarchy

This section explains the judgements and estimates made in determining the fair value of financial instruments that are (a) recognised and measured at fair value (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three level prescribed under the accounting standard. An explanation each level follows underneath the table.

Assets and liabilities measured at amortised cost, for which fair value are disclosed.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices, for example listed equity instruments, traded bonds and mutual funds that have quoted prices.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques that maximise 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: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. There are no transfers among levels 1, 2 and 3 during the year.

The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

3. Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include the use of discount cash flows for estimating fair value of loans to employees, security deposits and borrowings.

The carrying amounts of trade receivables, cash and cash equivalents, interest accrued, other receivables, other bank balances, trade payables, employee payables and other current payables are considered to be the same as fair values, due to their short term nature.

The fair value of security deposits were calculated based on cash flow discounted using a current lending rate. They are classified as level 3 fair value in the fair value hierarchy due to the inclusion of unobservable inputs, including own credit risk. The fair value of loans to employees and security deposits approximates the carrying amount.

The fair value for borrowings was calculated based on cash flow discounted using a current borrowing rate. They are classified as level 3 fair value in the fair value hierarchy due to the inclusion of unobservable inputs, including own credit risk. The fair value of borrowings approximates the carrying amount.

The fair valuation of investments in quoted equity shares is based on the current bid price of respective investments as at the balance sheet date.

45 Segmental reporting

A Operating segments

Agri - Comprises of agricultural commodities such as rice, furfural, seed, bran, bran oil, etc.

Energy - Comprises of power generation from wind turbine, husk based power plant and solar power plant.

B Identification of segments

The chief operational decision maker monitors the operating results of its Business segment separately for the purpose of making decision about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Operating segment have been identified on the basis of nature of products and other quantitative criteria specified in the Ind AS 108.

C Segment revenue and results [refer note 2(g)]

The expenses and income which are not directly attributable to any business segment are shown as unallocable expenditure .

D Segment assets and liabilities:

Assets used by the operating segments mainly consist of property, plant and equipment, trade receivables, cash and cash equivalents and inventories. Segment liabilities include trade payables and other liabilities. Common assets and liabilities which cannot be allocated to any of the segments are shown as a part of unallocable assets/liabilities.

B A portion of land parcels and building thereupon, situated at Dhuri, Punjab was attached by the Directorate of Enforcement (‘ED’) to the extent of value of ?1,532 Lakh in connection with a money laundering investigation which is currently pending before the Special Judge, CBI Court. The Appellate Tribunal, PMLA, New Delhi, (“Appellate Tribunal”) had restored the possession of the attached land on interim basis in favour of the Company. However, aforesaid attachment would continue till conclusion of the matter. Against the order of the Appellate Tribunal, ED had filed an appeal before the Hon’ble High Court of Delhi, which is pending for hearing. The Company filed an application before the Hon’ble High Court of Delhi for restoration of possession of the land in favour of the Company and High court allowed the Company to take physical possession of the said land parcels and building thereupon for specified purpose against the deposit of ?1,113 Lakh, (deposited on 5 November, 2020), as an interim relief until conclusion of the aforesaid matter, without prejudice to the rights and contentions of the parties to be decided in the appeal. The management based upon the legal assessments, is confident that it has a favourable case and the said attachment shall be vacated and no adjustment is required in the accompanying Statement.

C The Company’s Joint Managing Director, Mr. Anoop Kumar Gupta (‘JMD’), had been detained and released on bail by the Directorate of Enforcement (‘ED’) pursuant to certain allegations against the Company, KRBL DMCC (a subsidiary of KRBL Limited) and JMD. As per criminal complaint filed it is alleged that M/s Rawasi Al Khaleej General Trading LLC (‘RAKGT’) had received proceeds of crime of USD 24.62 million in AgustaWestland case during the period 20082010 which in turn had been transferred to KRBL Limited through KRBL DMCC. Basis the affidavit filed by Balsharaf Group (one of the Customer of the Company) in the Hon’ble High Court of Delhi in the said matter, the amount of USD 24.62 million had been received by RAKGT in the account of Balsharaf Group. Pursuant to this, ED had attached 1,43,33,221 shares of Balsharaf Group held in KRBL Limited. Based on the opinion taken from the independent legal counsel, the management is of the view that since the investigation is still ongoing no adverse opinion can be drawn. The Company had appointed an independent professional firm (‘IP’) to review the aforesaid allegations, to assess the impact, if any, on the financial statement and control environment of the Company during the year ended 31 March 2022. Further during the current year, the IP had issued a report to the Board of Directors with respect to the aforesaid review which was discussed and approved in their previously held meeting, wherein the Board of Directors had responded to the observations contained therein and basis that no further action was proposed. Pending the ongoing investigation on the above matter, no adjustment has been made in the financial statements. The management of the Company is confident that the above stated matter will be resolved soon.

D Other matter comprise of civil cases pending under various CPC 1908, Trade Mark Act 1999, Consumer Protection Act 1986 and other recovery suits.

* The Company on the basis of the legal opinion is of the firm belief that the above demands are not tenable and highly unlikely to be retained by higher authorities and is accordingly not carrying any provision in its books in respect of such demands. The amounts disclosed are based on the orders/ notices received from the authorities.

50 Disclosures pursuant to Regulation 34(3) of Securities and Exchange Board of India (Listing Obligations And Disclosure Requirements) Regulations, 2015 And Section 186 of the Companies Act, 2013

The Company has not provided any loans, security and corporate guarantees covered under section 186 of the Companies Act, 2013 and accordingly, the disclosure requirements to the extent does not apply to the Company. Refer note 7 for details of investment in subsidiaries and note 12 for details of other investments.

51 Additional regulatory information required by Schedule III to the Companies Act, 2013

i. The Company does not have any benami property held in its name. No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

ii. The Company has not been declared wilful defaulter by any bank or financial institution or other lender or government or any government authority.

iii. The Company has complied with the requirement with respect to number of layers as prescribed under section 2(87) of the Companies Act, 2013 read with the Companies (Restriction on number of layers) Rules, 2017.

iv. The Company does not have any charges or satisfaction of charges which is yet to be registered with Registrar of Companies beyond the statutory period.

v. The Company has not traded or invested in Crypto currency or virtual currency during the year.

vi. There is no income surrendered or disclosed as income during the year in tax assessments under the Income-tax Act, 1961 (such as search or survey), that has not been recorded in the books of account.

vii. The Company has 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.

viii. The Company have 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 to or on behalf of the Ultimate Beneficiaries.

ix. Basis the management’s assessment, it has been concluded that the Company has made no transactions with struck-off companies under Section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956. Further, there are no outstanding balances at balance sheet date with struck-off companies.

A Formulae used for calculation of ratios:

1. Total Debt represent aggregate of borrowing from the banks, related parties and lease liabilities.

2. Earnings available for debt service represent the Net Profit after taxes Depreciation and other amortizations Interest expense other adjustments on account of Gain/loss on sale of property, plant and equipment.

3. Debt service represent Interest payment lease payments Principal repayments.

4. Working capital represents excess of current assets over current liabilities.

5. Capital employed represents Tangible net worth Total debt Deferred tax liability.

B The Debt-equity ratio has upward marginally from 0.04 to 0.05 due to additional debt availed by the Company in form of working capital loan.

C The Debt-service coverage ratio has improved from 15.6 to 25.8 due to higher profitability in current year in comparision to previous year.

D The return on equity has increased from 12% to 16% due to higher profitability in current year in comparision to previous year.

E The trade payable turnover ratio has been improved from 14.4 to 29.1 is because of the higher inventory.

53 Transfer pricing

As per the international transfer pricing norms introduced in India with effect from 1 April, 2001, the Company is required to use certain specified methods in computing arm’s length price of international transactions between the associated enterprises and maintain prescribed information and documents relating to such transactions. The appropriate method to be adopted will depend on the nature of transactions/ class of transactions, class of associated persons, functions performed and other factors, which have been prescribed. The Company is in the process of conducting a transfer pricing study for the current financial year. However, in the opinion of the management the same would not have a material impact on these financial statements. Accordingly, these financial statements do not include any adjustments for the transfer pricing implications, if any.