(a) (i) Equity shares issued during the year
The Board of Directors of the Company had raised funds via fresh issue of equity shares through Initial Public Offering (IPO) of 84,745,762 equity Shares of face value of ' 10 each at an issue price of ' 59 per equity share. The Company’s equity shares were listed on the National Stock Exchange (NSE) and on the BSE Limited (BSE) on 17th October 2022. Consequently, an amount of ' 847.46 has been accounted under equity share capital, followed by securities premium to the tune of ' 3,798.56, net of share issue expenses amounting to ' 353.98.
(b) Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of ' 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing general meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.
(d) Details of shares issued without payment being received in cash:
During the year ended 31st March 2019, the Company had issued 300,003,000 equity shares of ' 10 each fully paid up to the partners of the erstwhile partnership firm M/s. Bajaj Electronics pursuant to conversion of the said firm into the Company.
(e) Shareholding of promoters
For the purpose of reporting of the shareholding of promoters, Mr Pavan Kumar Bajaj and Mr Karan Bajaj has been considered as promoters as defined under the Provisions of the Companies Act, 2013. There was no change in the promoter holding during the year ended 31st March 2022. Further, refer table below for details of changes in promoters share holding during the year ended 31st March 2023 owing to fresh issue of equity shares via IPO as detailed in note 14(a)(i) above.
(f) In terms of the requirements of Regulation 38 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR), the listed entities (except entities listed on Innovators Growth Platform without making a public issue) are required to comply with the minimum public shareholding (MPS) of 25% as specified in Rule 19(2) and Rule 19A of the Securities Contracts (Regulation) Rules, 1957 (SCRR) in the manner as specified by the Securities and Exchange Board of India (SEBI) from time to time and within a period of 3 years from being listed. In accordance with the said requirements, management is evaluating the options available as per the SEBI guidelines and will ensure compliance of the same within the prescribed timelines.
Nature and purpose of reserves
(a) Surplus in Statement of Profit and Loss
Surplus in Statement of Profit and Loss represents the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions to shareholders.
(b) Securities Premium
Securities premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.
(c) Actuarial gain on employment benefits
The reserve represents the remeasurement gains arising from the actuarial valuation of the defined benefit obligations of the Company. The remeasurement gains are recognised in other comprehensive income and accumulated under this reserve within equity. The amounts recognised under this reserve are not reclassified to Statement of Profit and Loss.
Note: The aforementioned working capital loans from banks and financial institution are personally guaranteed by Pavan Kumar Bajaj, Karan Bajaj and Renu Bajaj. Further, the working capital facility availed from HDFC bank is also secured by way of pledge of certain personal properties of Pavan Kumar Bajaj, Karan Bajaj and Renu Bajaj.
(iv) Terms and conditions of unsecured loans
(a) The Company has availed unsecured loans amounting to ' 520.06 (31st March 2022: ' 270.87) from IDFC First Bank Limited for meeting the working capital requirements carrying an interest rate of 9.50% p.a.(31st March 2022: 9.50% p.a). These amounts are repayable on demand.
(b) The Company has availed unsecured loans amounting to ' 607.92 (31st March 2022: ' 1,366.09) from Bajaj Finance Limited for meeting the working capital requirements carrying an interest rate of 12.75% p.a. (31st March 2022: 12.75% p.a.) These amounts are repayable on demand.
(a) Defined contribution plan
The Company contributed ' 36.06 (31st March 2022: ' 30.83) to provident fund and ' 7.14 (31st March 2022: ' 6.60) towards employee state insurance fund during the year ended 31st March 2023.
(b) Defined benefit plan
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Under the gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure @ 15 days of last drawn salary for each completed year of service. The level of benefits provided depends on the member5 s length of service and salary at retirement age.
(ii) The management assessed that cash and bank balances, trade receivables, trade payables and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
(iii) In respect of fixed rate financial Liabilities, the management has assessed the carrying value of these liabilities approximates to the fair value mainly since the same are short term borrowings which are repayable on demand. Further, disclosure fair value of Lease liabilities are not presented in line with the requirements of Para 29(d) of IND AS 107. In respect of the balance of non-current financial assets and liabilities in the nature of loans and borrowings, the management has assessed the carrying value of these assets and liabilities approximates to the fair value mainly due to the interest rates are at the market rate or linked to market rate, as the case maybe.
31 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company’s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company’s primary risk management focus is to minimise potential adverse effects of market risk on its financial performance. The Company’s risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Board of Directors is responsible for overseeing the Company’s risk assessment and management policies and processes.
(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 for the Company comprises primarily of interest risk. Financial instruments affected by market risk include loans and borrowings. The sensitivity analysis in the following sections relate to the position as at 31 March 2023.
The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions; and the non-financial assets.
The following assumptions have been made in calculating the sensitivity analysis:
(1) 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.
(b) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments when a counterparty defaults on its obligations. The Company’s exposure to credit risk arises primarily from loans extended, security deposits, balances with bankers and trade and other receivables. The Company’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The credit risk has always been managed by the Company through credit approvals, establishing credit limits, and continuously monitoring the credit worthiness of the customers to whom the Company grants credit terms in the normal course of business. Outstanding customer receivables are regularly monitored.
Exposure to credit risk:
At the end of the reporting year, the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position. No other financial assets carry a significant exposure to credit risk.
Credit risk concentration profile:
At the end of the reporting year, there were no significant concentrations of credit risk. The maximum exposures to credit risk in relation to each class of recognised financial assets is represented by the carrying amount of each financial assets as indicated in the balance sheet. Financial assets that are neither past due nor impaired:
None of the Company’s cash and bank balances, loans, security deposits were past due or impaired as at 31st March 2023. Trade and other receivables including’s loans that are neither past due nor impaired are from various individual customers and reputed financial institutions. Financial assets that are either past due or impaired:
The Company doesn’t have any significant trade receivables or other financial assets which are either past due or impaired. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the management also evaluates the factors that may influence the credit risk of its customer base, including the default risk. The management has established a credit policy, procedures and controls relating to customer credit risk management under which each new customer is analysed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information.
Financial instruments and cash deposits
Credit risk from balances with banks is managed by the Company’s finance team in accordance with the Company’s policy. Investments of surplus funds are made only with approved and reputed banks and within credit limits assigned to each bank. The amounts invested and details of relevant banks are reviewed by the Company’s Board of directors on annual basis.
(c) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company’s reputation.
Management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected cash flows. This is generally carried out by the Company in accordance with practice and limits set by the management.
(d) Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry. In order to avoid excessive concentrations of risk, the Company’s policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
32 CAPITAL MANAGEMENT
Capital includes equity and all other reserves attributable to share holders. The primary objective of the capital management is to ensure that it maintains an efficient capital structure and healthy capital ratios in order to support its business and maximise share holders value. The Company manages its capital structure and make adjustments to it, in light of changes in economic conditions or its business requirements. The Company monitors capital using a gearing ratio, which is net debt divided by equity plus net debt.
The Company includes within net debt, interest bearing loans and borrowings, less cash and bank balances.
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. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing for the year ended 31st March 2023.
There have been no changes made in the objectives, policies or processes for managing capital during the year ended 31st March 2023.
33 SEGMENT REPORTING
In accordance with Indian Accounting Standard (Ind AS) 108 on “Operating Segments”, segment information has been disclosed in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements..
Note: The Company has received an order from the National Anti-Profiteering Authority of the Central Goods and Services Tax Act, 2017 demanding an amount of ' 3.43 alleging certain non-compliances with the anti-profiteering regulations of the Goods and Services Act, 2017. The management has filed necessary appeals in this regard with the appropriate appellate authorities which is pending for adjudication as at the date of the standalone financial statements. However, on the basis of its internal assessment of the nature of the allegations, the facts of the case and an independent advise received in this regard, management is confident of resolving this matter in favour of the Company.
(d) (i) All the secured non-current borrowings amounting to ' Nil (31st March 2022: ' 618.82) and current borrowings from HDFC Bank
Limited amounting to ' 3,889.84 (31st March 2022: ' 2,684.83), have been personally guaranteed by Pavan Kumar Bajaj, Karan Bajaj and Renu Bajaj.
(ii) The working capital facility from HDFC bank is also secured by way of pledge of certain personal properties of Pavan Kumar Bajaj, Karan Bajaj and Renu Bajaj.
(iii) All secured current borrowings from Bajaj Finance Limited amounting to ' 995.70 (31st March 2022: ' 995.80), have been personally guaranteed by Pavan Kumar Bajaj and Karan Bajaj.
(iv) All the secured non-current borrowings from ICICI bank, Axis bank and Bajaj finance Limited amounting to ' 1,257.40 (31st March 2022: ' Nil ), have been personally guaranteed by Pavan Kumar Bajaj and Karan Bajaj
(e) The transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free. The settlement for these balances occurs through payment. There have been no guarantees provided or received for any related party receivables or payables. The assessment of Impairment of receivables relating to amount owed by related parties is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
40 DISCLOSURES PURSUANT TO THE REQUIREMENT AS SPECIFIED UNDER PARAGRAPH 6(L)(IX)(A) AND (B) OF THE GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET OF SCHEDULE III TO THE ACT:
For the purpose of reporting under this clause, management has provided disclosures only with respect to information on trade receivables, inventories and net advances [advances to vendors less trade payable] furnished to the lenders. The details of disagreement between current assets as furnished to the lenders and as per books as disclosed below, mainly attributed to the use of estimated information prior to completion of all the book closure activities such as accrual of incentives, valuation of inventories, recording cut-off related adjustments etc. In order to avoid such differences, management has sought and obtained extention of due date by 7 days to provide relevant and accurate current assets details to the bankers with effect from the quarter ended 31 December 2021. Further, No differences were noted in the quarterly returns or statements of current assets filed by the Company with banks or financial institutions upon comparision with the books of accounts during the year ended 31 March 2023.
Note: The above details were also furnished to HDFC Bank Limited and Bajaj Finance Limited, for the quarters ended 30 June 2021 and
30 September 2021.
41 (i) No funds have 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 persons or entities, including foreign entities (“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).
(ii) 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 entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries..
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