Terms / Rights attached to Equity Shares

The company has only one class of equity shares having a par value of Rs 10/- Per share. Each Holder of equity shares is entitled to 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 in the proportion to the number of equity shares held by the shareholders.

During the year the company has made preferential allotment for 4634224 equity shares on 10th June 2022.

During the year the company has made preferential allotment for 4360000 equity shares on 26th December 2022.

During the year the company has made preferential allotment for 1995000 equity shares on 5th January 2023.

During the year the company has converted 4552436 warrants to equity shares fully paid on 23rd March 2023.

During the year the company has neither issued any bonus shares nor bought back any shares.

Description of nature and purpose of Reserve:

(i) Capital Reserve represents gain of a capital nature. It can be used in writing off the capital losses from sale of fixed assets, shares & debentures and issue of fully paid up bonus shares to existing shareholders. Capital Reserve is not available for distribution to shareholders as dividend.

(ii) Share Premium records the premium component on issue of shares and convertible warrants and can be utilised only in accordance with the provisions of Companies Act, 2013.

(iii) Revaluation Reserve is the reserve which is created when any Fixed Asset / Non Current Asset (As per Ind AS) is revalued. It cannot be utilised for the purpose of issue of fully paid up bonus shares or write off of capital losses, unless the revalued fixed assets have been disposed off.

(iv) Capital redemption reserve is transferred from undistributed profits i.e. general reserves, profit or loss account. It can be utilized for the purpose of buy back of shares, incremental effect of fresh equity shares or preference shares issued to redeem the old preference shares, issuing fully paid bonus shares and not available for distribution to shareholders as dividend.

(v) Special General reserve is created for specific purposes. It can be utilized only for the purpose for which it has been created and cannot be utilized for other purposes and not available for distribution to shareholders as dividend.

(vi) Reserves for equity instruments through other comprehensive income is created with value changes recognised in profit or loss on account of measurement at fair value of all equity investments, except for those investments for which the entity has irrevocably elected to present value changes in other comprehensive income (OCI) and not available for distribution to shareholders as dividend.

The 925000 Non-convertible, Redeemable and cumulative Preference Shares of Rs.100/- each fully paid up with coupon rate of 5% / 7.5% subscribed by Vensunar Holdings (P) Ltd. (since amalgamated with Trala Electromech Systems (P) Ltd.) and due for redemption on 30th Sept. 2022 has been extended by the above shareholder for a further period of 12 months, i.e., upto 30th Sept. 2023.

350000 Non-convertible, Redeemable and cumulative Preference Shares Rs. 100/- each fully paid up with a coupon rate of 10% subscribed by Vensunar (P) Ltd. which are due for redemption on 31st Aug. 2022 has been extended by the above shareholder for a further period of 12 months, i.e., upto 31st Aug. 2023.

a. Write back of liability to the tune of Rs. 84.75 Millions pertaining to discontinued Electro-porcelain products division’s and continuing business of turnkey projects from erstwhile operations’s long outstanding creditors and debtors with credit balances.

b. Liabilities provided amounting to Rs. 41.02 Millions pertaining to the Vizag unit of Electro-porcelain products division, since discontinued.

B Defined Benefit Plan:

Gratuity: The employees are eligible for Gratuity benefits as per the Payment of Gratuity Act, 1972.The amount of Contribution to be made is arrived at based on an actuarial valuation done at the Balance Sheet date.

Leave Encashment Benefits: The Company has different leave plans including paid leave of absence plans and encashment of leave plans for employees at different grades and the amount of contribution to be made is arrived at based on an actuarial valuation done at the Balance Sheet date.

(b) Fair value hierarchy

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by Valuation technique:

Level 1: Quoted (Unadjusted) prices in active markets for identical assets or liabilities.

Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable Market Data

II - Financial Risk Management

The Board of Directors (BOD) has overall responsibility for the establishment and oversight of the Company’s risk management framework and thus established a risk management policy to identify and analyse the risk faced by the Company. Risk Management systems are reviewed by the BOD periodically to reflect changes in market conditions and the Company’s activities. The Company through its training and management standards and procedures develop a disciplined and constructive controlled environment.The Audit Committee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the risk management framework.

The Board of Directors regularly reviews these risks and approves the risk management policies, which covers the management of these risks:

1. Credit Risk

Credit Risk is the risk of financial loss to the Company if the customer or counterparty to the financial instruments fails to meet its contractual obligations and arises principally from the Company’s receivables, treasury operations and other operations that are in the nature of lease.

a) Receivables

Concentration of credit risk with respect to trade receivables is low, due to the Company’s customer base primarily are limited to government and other group entities. All trade receivables are reviewed and assessed on a quarterly basis.

b) Financial Instruments and Cash deposits

Investments are made only with the approved counterparties. The Company places its cash equivalents based on the creditworthiness of the financial institutions.

2. Liquidity Risk

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Company’s short, medium and long term funding and liquidity management requirements.

3. Market Risk

a) Foreign Currency Risk

The Company’s exposure in foreign currency denominated transactions in connection with import of raw materials, capital goods & spares, besides exports of finished goods in foreign currency, gives rise to exchange rate fluctuation risk. The Company has following policies to mitigate this risk:

Decisions regarding borrowing in Foreign Currency and hedging thereof, and the quantum of coverage is driven by the necessity to keep the cost comparable. Foreign Currency loans, imports and exports transactions are hedged by way of forward contract after taking into consideration the anticipated Foreign exchange inflows/ outflows, timing of cash flows, tenure of the forward contract and prevailing Foreign exchange market conditions.

b) Cash flow and fair value interest rate risk

There were no facilities extended to the Company by Banks / financial institutions as at the end of the year under review. Interest rate risk arises from short term borrowings with variable rates which exposes the Company to cash flow interest rate risk.

III) Capital Management

For the purpose of the Company’s capital management, capital inludes issued equity share capital and all other equity reserves attribute to the equity holders of the Company. the primary objective of the Company’s capital management is to maximize the Shareholders’ wealth. The Company managers its capital structure and makes adjustments in the light of changes in economic conditions and the requirements of the financial covenants. The Company has positive networth as at the end of the year under review.

The Status of the cases filed before various courts and regulatory authorities as reported last year in the Annual Report remains unchanged except the following:

(i) Consequent to the full and final settlements made, the secured lenders has withdrawn the application filed under Section 19 (4) of the Recovery of Debts Due to Banks &Financial Institutions Act 1993 on behalf of Punjab National Bank and Indian Overseas Bank before the DRT II.

(ii) Company has paid an amount of Rs. 0.59 million as penal damages for delayed contribution against the appeal filed by the Company before the Central Government Industrial Tribunal Cum Labour Court at Hyderabad against the Order dated 15/02/2018 bearing No. AP/VSP/55323/PD/14B/ZONE-55/2018/5992 passed by Assistant Provident Fund Commissioner (PD), The Employees Provident Fund Organization, Regional Office, Visakhapatnam under Sec 14-B of the Employees Provident Fund Scheme, 1952 and the appeal ordered and closed.

(iii) The Company has proposed a one time settlement offer of a lumpsum payment of Rs. 12.50 millions as full and final settlement of all the claims of M/s.Uttar Haryana Bijli Vitran Nigam Limited, Haryana. Further UHBVN has once again sent mail for the appointment of Arbitrator despite of the past discussion and the Company has replied to that. UHBVN made ARB appeal before High Court of Punjab and Haryana at Chandigarh for the appointment of the arbitrator proposed by them. The Company has taken steps to defend the same.

(iv) A Writ Petition that was filed by the trespasser before the High Court of Madras with respect to patta pertaining to 54 cents of the Company’s land in Chennai has withdrawn and the case disposed off.

(v) A Public Interest Litigation that was filed by a litigant on 16.03.2020 with reference to the G.O. (Ms.) No. 145 dated 22.11.2018 received by the Company has withdrawn and the case disposed off.

(vi) A Public Interest Litigation that was filed by a litigant on 16.03.2020 with reference to the lands of an extent of 6 cents in possession of the Company has withdrawn and the case disposed off.

(vii) With reference to land of 0.60 acres in the possession of the Company since 26.02.1964 the Tahsildar, Maduravoyal Taluk, Chennai has raised a show cause regarding the ownership of the same. The Company has filed its response with requisite supporting documents with a request to withdraw the said show cause notice and thus render justice. Further the Company has requested for a personal hearing for the submission of additional documents. Reply awaited.

(viii) The appeal filed by the Company for the waiver of late filing levy u/s 234E and interest thereon u/s 220(2) of the Income Tax Act with respect to its Vizag Insulator Division before the CIT (A), Visakhapatnam got ordered and closed.

NOTE 45

Completed the sale of 2.214 acres of land located at Pondicherry on 19th May 2022 for a consideration of Rs.20 millions.

NOTE 46

With reference to SEBI Circular No.SEBI/HO/DDHS/CIR/P/2018/144 dt. 26 11 2018, on “Fund raising by issuance of Debt Securities by Large Entities”, the company does not fall under the Large Corporate category.

NOTE 47

The Company had participated in an e-auction on 09.03.2023 pursuant to which the Company stood as the successful bidder and purchased the property, being an auction under SARFAESI, a Sale Certificate was issued confirming the ownership and possession on 27.03.2023. Accordingly, the Company had remitted the sale consideration of Rs. 1073.50 millions. The Company is in the process of registering the Sale Certificate with Sub Registrar Office of Sunguvarchatram. Pending mutation in favour of the Company the purchase consideration paid amounting to Rs.1073.50 millions has been classified as Capital advance in financial statements, not withstanding the fact that possession has been held by the company.

NOTE 48

The Company’s shares are listed in Mumbai and National Stock Exchanges. The listing fees there against have been paid up to date.

NOTE 49

Additional regulatory Information required by Schedule III of Companies Act 2013

a) Title Deeds of Immovable properties not held in name of the company

The company does not hold any property which is not in the name of the company

b) Relationship with struck off companies

The Company does not have transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.

c) Details of Benami property held:

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.

d) Borrowing secured against current assets

The Company does not have any borrowings from banks and financial institutions on the basis of security of current assets.

e) Wilful defaulter

The company has not been declared Wilful defaulter by any bank or financial institution or government or any government authority.

f) Registration of charges

The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

g) Compliance with number of layers of companies

The Company has complied with the number of layers prescribed under the Companies Act, 2013.

h) Compliance with approved scheme(s) of arrangements

The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

i) Utilization of borrowed funds and share premium

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 directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the group (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

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 group shall 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 provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

j) Undisclosed income

There is no income surrendered or disclosed as income during the current or previous financial year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

k) Details of crypto currency or virtual currency

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

l) Valuation of PP&E, intangible asset and investment property

The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous financial year.

m) Loans & Advances

“There are no loans or advances in the nature of loans granted to promoter, directors, KMPs and related parties (as defined under companies act, 2013), that are

a) Repayable on demand, or

b) Without specifying any terms or period of repayment.”

NOTE 50

Figures have been regrouped/reclassified wherever necessary, to conform to this year’s classifications.