1 Purchase of Goods includes LMW Textile Machinery (Suzhou) Co. Ltd B30.85 Lakhs (Previous Year B108.24 Lakhs); LMW Middle East FZE B 7,046.78 Lakhs (Previous Year BNil); Lakshmi Electrical Control Systems Limited B29,929.60 Lakhs (Previous Year B21,265.36 Lakhs); Lakshmi Electrical Drives Private Ltd B9,359.66 Lakhs (Previous Year B6,478.21 Lakhs); Lakshmi Life Sciences Private Limited B 13,953.17 Lakhs (Previous Year B9,465.13 Lakhs); Lakshmi Precision Technologies Limited B7,557.80 Lakhs (Previous Year B5,327.76 Lakhs) & Other related Parties-Associates B 10,657.23 Lakhs (Previous Year B7,284.53 Lakhs)
2 Sale of Goods includes LMW Textile Machinery (Suzhou) Co. Ltd B10,998.99 Lakhs (Previous Year B 11,949.23 Lakhs); LMW Middle East FZE B9,721.67 Lakhs (Previous Year BNil); Lakshmi Electrical Control Systems Limited B 1,607.37 Lakhs (Previous Year B 1,084.62 Lakhs); Lakshmi Life Sciences Private Limited B759.97 Lakhs (Previous Year B599.64 Lakhs); Lakshmi Precision Technologies Limited B 1,709.82 Lakhs (Previous year B791.64 Lakhs); Super Sales India Limited B1,224.66 Lakhs (Previous Year B 1,637.61 Lakhs); The Lakshmi Mills Company Limited B875.24 Lakhs (Previous Year B119.17 Lakhs) & Other related Parties - Associates B265.99 Lakhs (Previous Year B370.10 Lakhs)
3 Purchase of Fixed Assets includes Revantha Services Private Limited B2,013.05 Lakhs (Previous Year B260.16 Lakhs)
4 Sale of Fixed Assets includes LMW Middle East FZE B21.59 Lakhs (Previous Year BNil); Lakshmi Life Sciences Private Limited B45 Lakhs (Previous Year B28.60 Lakhs); Super Sales India Ltd B10 Lakhs (Previous Year B6 Lakhs) & Other related Parties - Associates B7.22 Lakhs (Previous Year BNil)
5 Rendering of Services includes LMW Textile Machinery (Suzhou) Co. Ltd B600.55 Lakhs (Previous Year B501.58 Lakhs); Super Sales India Limited B40.73 Lakhs (Previous Year B34.99 Lakhs); Chakradhara Aerospace and Cargo Private Ltd B34.03 Lakhs (Previous Year B 19.87 Lakhs); Lakshmi Life Sciences Private Limited B13.73 Lakhs (Previous Year B16.18 Lakhs) & Others - Other Related Parties-Associates B31.81 Lakhs (Previous Year B6.04 Lakhs)
6 Receiving of Services includes Chakradhara Aerospace and Cargo Private Ltd B15,376.80 Lakhs (Previous Year B 12,419.13 Lakhs); Revantha Services Private Ltd B2,654.19 Lakhs (Previous Year B1,914.07 Lakhs) & Other Related Parties-Associates B4,711.64 Lakhs (Previous Year B2,971.99 Lakhs)
7 Contribution to gratuity fund includes Lakshmi Machine Works Limited Employees' Gratuity Fund B78.87 Lakhs (Previous Year B2,425 Lakhs)
8 Agency arrangement includes Super Sales India Limited B2,176.20 Lakhs (Previous Year B 1,414.72 Lakhs)
9 Managerial Remuneration includes amount paid to Chairman and Managing Director, Sri Sanjay Jayavarthanavelu B2,252.95 Lakhs (Previous Year B968.31 Lakhs); Sri. K.Soundhar Rajhan,Director Operations B 155.51 Lakhs (Previous Year B 182.45 Lakhs); Sri. V. Senthil,
Chief Financial Officer B75.42 Lakhs (Previous Year B66.22 Lakhs); Sri. C.R Shiv Kumaran, Company Secretary B48.25 Lakhs (Previous Year B 44.50 Lakhs)
10 Outstanding Payables include LMW Textile Machinery (Suzhou) Co. Ltd B326 Lakhs (Previous Year B295.15 Lakhs); LMW Middle East FZE B2,201.73 Lakhs (Previous Year BNil); Lakshmi Electrical Control Systems Limited B3,360.27 Lakhs (Previous Year B3,067.31 Lakhs); Lakshmi Electrical Drives Private Limited B1,000.32 Lakhs (Previous Year B 1,034.75 Lakhs); Super Sales India Limited B2,083.13 Lakhs (Previous Year B 1,285.90 Lakhs); Sri.Sanjay Jayavarthanavelu B 1,995.56 Lakhs (Previous Year B761.25 Lakhs) & Other Related parties-Associates B3,051.22 Lakhs (Previous Year B2,824.02 Lakhs)
11 Outstanding Receivables include LMW Textile Machinery (Suzhou) Co. Ltd B5,437.46 Lakhs (Previous Year B7,290.04 Lakhs); LMW Middle East FZE B3,850.45 Lakhs (Previous Year BNil); Lakshmi Electrical Control Systems Limited B 1,003.49 Lakhs (Previous Year BNil); Lakshmi Precision Technologies Limited B794.50 Lakhs (Previous year BNil); & Others - Other Related Parties - Associates B418.83 Lakhs (Previous Year B15.17 Lakhs)
The salary escalation considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
Gratuity is applicable to all permanent and full time employees of the company.
Gratuity payment is based on last drawn basic salary and dearness allowance at the time of termination or retirement. The Scheme takes into account each completed year of service or part thereof in excess of six months. The entire contribution is borne by the company.
Leave encashment benefits are provided as per the rules of the Company. The liabilities on account of defined benefit obligations are expected to be contributed within the next financial year.
The company expects to make a contribution of B500.00 Lakhs (as at 31st March, 2023: B78.87 Lakhs) to the defined benefit plans during the next financial year.
The above sensitivity analysis are based on change in an 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 and when calculating the defined benefit liability recognised in the balance sheet.
J. Brief description of the plans & risks
These plans typically expose the company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
Investment risk
The present value of the defined benefit plan liability is calculated using a discount which is determined by reference to market yields at the end of the reporting period on government bonds. Plan investment is a mix of investments in government securities, other debt instruments and equity shares of listed companies.
Interest Rate risk
A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset by an increase in the return on the plan's debt investments, if any.
Longevity risk
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan's liability.
Salary risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan's liability.
30.10 Segment information
Products and services from which reportable segments derive their revenues.
Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the type of goods or services delivered or provided. The company has chosen to organise the company around differences in products and services. No operating segments have been aggregated in arriving at the reportable segments of the company.
1) The accounting policies of the reportable segments are the same as the company's accounting policies. Inter Segment transfers are accounted on cost plus basis vis-a-vis at competitive market price charged to Unaffiliated customers for similar goods.
2) Segment profit represents the profit before tax earned by each segment without allocation of unallocable expenses, finance costs and unallocable income. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.
3) Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.
30.13 Revenue Recognition
The company derives revenue primarily from the sale of Textile Machinery, machine tools, castings and aero space parts.
Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.
Arrangements with customer for sale of above-mentioned products or services are on fixed price. Revenue is recognised to depict the transfer of promised goods or services to customers in an amount that reflects the consideration entity expects to be entitled in exchange for those goods or services.
Revenue on fixed price contract are recognised at the time of dispatch of goods. Till then the consideration received is accounted as 'Advance received' shown under financial liabilities. Control over the goods passed to the customer at the time of dispatch of the goods at the company's factory.
The expected cost of warranty issued is accounted as provision. The contract with customer are entered between the company and the end customer. The company is primarily responsible for honouring the contract entered with customer. Since the company acts as a "Principal" for the contracts entered into through selling agent the revenue is to be recognised in gross by the company.
Contract modifications are accounted for when additions, deletions or changes are approved either to the contract scope or contract price. The accounting for modifications of contracts involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catch up basis, while those that are distinct are accounted for prospectively, either as a separate contract, if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price.
30.14 Financial Risk Management Objectives
The Company's activity exposes itself to variety of financial risk which includes market risk, credit risk, liquidity risk, interest rate risk and price risk. The Company monitors and manages the above financial risks relating to the operations of the Company through internal risk reports which analyses exposures by degree and magnitude of risks. The primary focus is to identify risks and take steps for mitigation of risk or to minimise the potential adverse effects on the financial performance of the Company. The Company does not enter into any derivative financial instruments to hedge risk exposures.
Foreign Currency Risk
The Company undertakes transactions denominated in foreign currencies and consequently has exposure to exchange rate fluctuations. The company operates internationally and a major portion of the international sales transaction are in USD and balance in EUR, purchases from overseas suppliers are in various foreign currencies. The exposure at the end of the reporting period does not reflect the transaction during the year and there is a natural hedge in the currency for USD and EUR. The exchange rate between INR and other currency does have an impact on the business. The company is a net exporter and export realisation combined with a depreciating INR has given the company a net foreign exchange gain.
Price sensitivity analysis
The sensitivity analysis for equity price risk is conducted by assuming a range of equity price changes, which involves a 5% increase or decrease in equity prices. Additionally, we take into account other relevant factors such as changes in equity prices for different equity markets and individual equity securities, correlations between these markets and securities, and the holding period.
Credit risk - Credit risk arises from the risk of default on its obligation by the counterparty resulting in financial loss, such as cash and cash equivalents and outstanding receivables.
Credit risk on cash and cash equivalents is considered negligible as the company generally invests in fixed deposits with reputable banks. They are not impaired or past due for each of the reporting dates.
Credit risk on outstanding receivables is the exposure to billed receivable and are normally unsecured and derived from revenue earned from customer mostly from India. Credit risk is managed by the company through credit approvals and continuously monitoring the credit worthiness of the customer to which the company grants credit in the normal course of business. The company applied simplified approach of estimated credit loss for trade receivable, which provide for expected credit loss based on life-time expected losses. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. The Company does not have any significant credit risk exposure to any single counterparty.
The concentration of credit risk is limited due to the fact that the customer base is large and unrelated.
Liquidity risk - Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The company's principal source of liquidity is from cash and cash equivalent and the cash flow from operations. The company does not have any external borrowings from banks or any other financial institution. The company believes that the working capital through internal accruals is sufficient to meet its current requirements and hence the Company does not perceive any such risk.
Market risk
Market risk is the risk of any loss in future earnings, in realisable fair values or in future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.
Equity Price risk
Equity Price risk is related to the change in market reference price of the investments in equity securities. The fair value of some of the Company's investments measured at fair value through other comprehensive income exposes the Company to equity price risks. These investments are subject to changes in the market price of securities. The fair value of Company's investment in quoted equity securities as of 31st March 2023 and 2022 was B16,977.40 Lakhs and B16,446.92 Lakhs respectively.
A 5% change in equity price as of 31st March 2023 and 2022 would result in an impact of B848.87 Lakhs and B822.35 Lakhs respectively.
(Note: The impact is indicated on equity before consequential tax impact, if any).
Capital management - The company's objective is to safeguard its financial stability, financial independence and its ability to continue as a going concern in order to generate returns for the shareholders and benefits for the other stake holders. The company incentivise the shareholders by paying optimum and regular dividends.
The Company determines the amount of capital required on the basis of annual operating plans and other strategic investment plans. The funding requirements are met through internally generated funds . The Company does not have any borrowings in its capital portfolio.
30.15 Revenue Expenditure on Research & Development of Textile Machinery Division amounting to B3,594.52 Lakhs (FY 2021-22 B 1,805.97 Lakhs) and for Machine Tool Division amounting to B 1,589.64 Lakhs (FY 2021-22 B398.83 Lakhs) has been charged to Statement of Profit and Loss and Capital expenditure relating to Research and Development for Textile Machinery Division amounting to B431.15 (FY 2021-22 BNil ) and for Machine Tool Division amounting to BNil (FY 2021-22 BNil) has been included in Fixed Assets.
30.16 Additional regulatory information required by Schedule III
i) 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.
ii) Wilful Defaulter
The company had not been declared a wilful defaulter by any bank or Financial Institution or other lender (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines of the wilful defaulter issued by the Reserve Bank of India.
iv) Compliance with number of layers of companies
The Company has complied with the number of layers prescribed under the Companies Act, 2013.
v) Compliance with approved scheme(s) of arrangements
No scheme of arrangement has been approved by the competent authority in terms of Section 230 to 237 of the Companies Act, 2013.
vi) Utilisation of borrowed funds
The Company does not have borrowed funds.
vii) Undisclosed income
There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
viii) 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.
ix) Valuation of Property, Plant & Equipment, intangible asset and investment property
The Company has not revalued its property, plant and equipment or intangible assets or both during the current or previous year.
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