Secured:
Loans from Banks are secured by way of hypothecation charge over moveable Property, Plant & Equipment (excluding assets specifically charged to specific project lenders), both present and future and charge created by way of mortgage by deposit of title deeds of certain immovable properties of the Company, ranking pari-passu interse amongst the consortium of working capital lenders (including Buyer’s Credit) and term loan lenders. Loan from a NBFC is secured by way of hypothecation charge on Project Specific Assets, ranking pari-passu interse amongst the project specific working capital lender and term loan lender. Loans from Banks (including Buyer’s Credit)/NBFC are further secured by way of first and/ or second pari-passu charge (specific to term loan) by way of hypothecation of entire Current Assets (excluding assets specifically charged to specific project lenders) both present and future, of the Company viz. inventories, bills receivables, book debts (trade receivables), claims, etc. The term loans are repayable over a period of three to five years, commencing from June-2022 and ending on June-2027 and carry rate of interest varying from 8.40 % to 9.25% p.a. on the reporting date. Buyer’s Credit(s) in Foreign Currency availed from Banks are due for repayment between October, 2023 and August, 2025 and carry rate of interest varying from 3.33% p.a. and 8.19% p.a. specific to each credit on the reporting date. The Buyers Credit(s) from Banks are additionally secured by way of pledge of 12,50,000 equity shares held by the Company in Birla Cable Ltd. and backed by cross corporate guarantee of Birla Cable Ltd.
Unsecured:
Loan from a Body Corporate and Related Parties amounting to ' 23000.00 lakhs presently carry rate of interest of 8.85% p.a. and are due for repayment between March, 2024 to October, 2025 as per mutually agreed repayment schedule with the concerned lenders. Further, the repayment of said Unsecured loans are subject to prior permission of the lead bank under a consortium banking arrangement of the Company for secured loan(s) and borrowings.
* Provision for Warranty represents the expected cost of meeting obligations of rectification/replacement/major maintenance of certain products manufactured /outsourced and supplied by the Company and forming a part of the composite turnkey contracts and services being executed by the Company having stipulation of warranty and also in respect of certain contracts of supply of manufactured and outsourced products executed by the Company. It is expected that the expenditure will be incurred over the contractual warranty period.
(a) Working Capital Loans/Borrowings from Banks are generally renewable within twelve months from the date of sanction or immediately previous renewal date, unless otherwise stated. The lender banks have a right to cancel the credit limits (either fully or partially) and, inter-alia, demand repayment in case of non-compliance of terms and conditions of sanctions or deterioration in the sanctioned loan accounts in any manner.
(b) Working Capital Loans/Borrowings (both fund and non-fund based) from Banks are secured by way of hypothecation on entire Current Assets (excluding assets specifically charged to specific project lenders), both present and future, of the Company viz inventories, bills receivables, book debts (trade receivables), claims, etc. ranking pari-passu amongst working capital consortium banks; and are further secured by way of hypothecation of moveable Fixed Assets (excluding assets specifically charged to specific project lenders), both present and future, and charge created by way of mortgage by deposit of title deeds of certain immovable properties of the Company, ranking pari-passu interse amongst the working capital consortium banks and term loan lender banks. The Working Capital Loans/Borrowings from banks are additionally secured by way of pledge of 12,50,000 equity shares held by the Company in Birla Cable Limited and backed by cross corporate guarantee of Birla Cable Limited.
(c) Working Capital Borrowings ( both fund based and non fund based), specific to projects, are secured by way of hypothecation of entire project specific assets (including entire project cash flows) and/ or ranking pari-passu with a term lender and/or are further secured by second charge on Fixed Assets of the Company (excluding Project Specific Fixed Assets charged to the Project Term Lender).
* Principal amount outstanding as at the year end. There is no overdue amount of principal and interest due to Micro and Small Enterprises. During the period, no interest has been paid to such enterprises. This information has been determined to the extent such enterprises have been identified on the basis of information available with the Company.
35. Contingent liabilities and Commitments (to the extent not provided for) -
(a) Contingent liabilities:
(i) Pending cases with income tax appellate authorities/ judicial authorities where income tax department has preferred appeals - Liability not ascertainable.
(ii) The Company has preferred a Writ Petition before the Hon’ble High Court of Uttarakhand against the Order passed by the Appellate Authority for Advance Ruling, Uttarakhand (AAAR) with regard to eligibility of Input Tax Credit amounting to ' 3255.23 lakhs (' 3233.22 lakhs) on goods and services used for constructing the passive optical fibre cable networks for being used by the telecom operators/service providers under Indefeasible Right-of-Use (IRU) terms. The
said Order of AAAR has been stayed by the Hon’ble High Court of Uttarakhand for the time being and the matter is subjudice. The external consultants / subject matter experts are of the opinion that the Company has a good case on merit and accordingly in the opinion of the management there is no likelihood of adverse outcome based on the facts and circumstances of the case.
(iii) The future cash outflows, if any, in respect of (i) & (ii) above are determinable only on receipt of judgements pending at various forums/authorities.
(iv) Cross corporate guarantee given to consortium of Banks as collateral against term loan(s) and working capital credit facilities granted to a Body Corporate - Refer Note No. 44(a).
(v) Claims against the Company not acknowledged as debts ' 59.36 lakhs (' 59.36 lakhs).
(b) Commitments:
Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for ' 2851.64
lakhs (' 1194.17 lakhs).
(c) The Board of Directors in its Meeting held on 18th May, 2023 has recommended a dividend of ' 15/- (150%) per share
(' 10/- (100%) per share) per fully paid up equity shares of ' 10/- each for the financial year ended on 31st March, 2023.
The same is subject to approval by the shareholders in the ensuing Annual General Meeting of the Company.
Trade Receivables are non-interest bearing and are generally due within 90 days except retention and other money held by the customers as per the governing terms and conditions of the contracts.
Contract assets includes Unbilled Revenue as receipt of customer’s acceptance are conditional upon successful completion of milestones and certification of installation. Contract Liabilities include advances received from customers and Excess of Billing over the Revenue.
The estimates of future salary increases, considered in actuarial valuation, take into account the effect of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The overall expected rate of return on plan assets is determined based on the market prices prevailing as on Balance Sheet date, applicable to the period over which the obligation is to be settled.
(b) Provident Fund :
The Company contributes its share to an approved provident fund trust. The Company is liable for shortfall, if any, in the fund asset based on the government specified/notified minimum rate of return. Based on the valuation made by an independent actuary, there is no shortfall in the fund assets as at 31st March, 2023. The Company’s aggregate Contribution of ' 271.96 lakhs (' 240.45 lakhs) to the said Fund is charged to the Statement of Profit and Loss.
(II) Defined Contribution Plans:
Company’s contribution to defined contribution schemes such as Government administered Provident/Family Pension pertaining to select employees rendering services in the state of Jammu and Kashmir and an approved Superannuation Fund are charged to the Statement of Profit and Loss as incurred. The Company has no further obligation beyond its contribution. The Company has recognised the following contributions as expense in the Statement of Profit and Loss.
The Company has common infrastructure including Property, Plant & Equipment etc. for manufacturing and supply of goods and services in the Domestic Market as well as for the Overseas Markets and accordingly separate figures for fixed assets/ additions to fixed assets have not been furnished.
(c) Revenue from a customer is ' 138589.25 lakhs (' 33555.37 lakhs from two customers), which is more than 10% of the total revenue of the Company.
(i) The remuneration to Key Managerial Personnel(s) (Excluding Non-Executive Directors) does not include provision/ payment towards incremental liability on account of gratuity and compensated absences since actuarial valuation is done for the Company as a whole.
(ii) Transaction mentioned above are exclusive of Goods and Services Tax (GST), wherever applicable.
(iii) No amount has been provided as doubtful debt or advance written off or written back in the year in respect of debts due from/ to above Related Parties.
(iv) Transactions and balances relating to reimbursement of expenses to/from the above Related Parties have not been considered in the above disclosure.
(b) Disclosure as required under SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 in respect of transactions with an entity viz. “The Punjab Produce & Trading Company Private Limited” belonging to the promoters/promoter group which holds 10% or more shareholding in the Company [excluding an entity already covered under Note No.: 39(a)(I)]:
(b) The Company has taken certain offices and residential premises/facilities under operating lease/ sub-lease agreements for short period and applied the practical expedient for accounting of short term leases i.e. it has recognised lease payments as expense as per para 6 of Ind AS-116 instead of recognising the lease transaction as right of use asset with corresponding lease liability as required under para 22 of Ind AS-116. Accordingly, the aggregate lease rental of ' 555.38 lakhs (' 449.27 lakhs) on such leases has been charged to the statement of Profit and Loss.
(c) Indefeasible Right-of-Usage (IRU) Agreement(s)
The disclosure relating to Indefeasible Right-of-Usage (IRU) Agreement(s) entered into by the Company with certain customers for providing telecommunications cable network connectivity is given herein:
43. Disclosure on Corporate Social Responsibility Expenses:
(a) Gross amount required to be spent by the Company during the year in pursuance to the provisions of Section 135 of the Companies Act, 2013 and rules made thereunder - ' 268.36 lakhs (' 358.71 lakhs) including ' 1.51 lakhs towards interest income on unutilised CSR transferred to a separate bank account pertaining to ongoing project for the financial year 2021-22.
(a) The balance unspent CSR amount of ' 191.20 lakhs pertaining to Ongoing CSR Project(s) 2022-23 has been transferred subsequent to the end of the year in a Special Bank Account within the time prescribed therefor as per the provisions of sub-section (6) of Section 135 of the Companies Act, 2013 read with rules made and clarifications issued thereunder.
(b) The balance unspent CSR amount of ' 176.16 lakhs pertaining to an Ongoing CSR Project 2021-22 has been duly spent on the project concerned during the financial year 2022-23.
(b) Investments made: Details of Investments made are given in Note No. 5. Further, no loans within the meaning of Section 186 of the Companies Act, 2013 have been given by the Company requiring disclosure, save and except loans and/or advances made by the Company to its employees in accordance with the conditions of service applicable to employees read together with remuneration policy of the Company as disclosed in Note No. 6 & Note No.12.
The fair value of financial assets and liabilities is included at the amount at which instruments could be exchanged in a current
transaction between the willing parties. The following methods and assumptions were used to estimate the fair value:
(A) The Company has opted to fair value its quoted equity instruments at its market quoted price through Other Comprehensive Income (OCI), save and except investments in Associates which are valued at cost.
(B) The Company has opted to fair value its unquoted equity instruments at its Net Asset Value/Adjusted Net Asset Value through OCI, save and except investments in Wholly Owned Subsidiaries, a Joint Venture Entity and an Associate which are valued at cost.
(C) The fair values of cash and cash equivalents, other bank balances, trade receivables, other current financial assets, short term borrowings, trade payables and other current financial liabilities approximates their carrying amounts largely due to the short-term maturities of these instruments. The Company has adopted Effective Interest Rate Method (EIR) for fair valuation of long-term borrowings, non-current financial assets and non-current financial liabilities.
(D) The fair value of forward exchange and swap contracts is based on valuation certificate given by respective banks.
Fair Value Hierarchy
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
46. Financial Risk Management Objectives and Policies:
The Company’s activities are exposed to a variety of Financial Risks from its Operations. The key financial risks include Market
Risk, Credit Risk and Liquidity Risk.
(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 mainly four types of Risk: Foreign currency Risk, Interest rate Risk, Rights of the Way and other Contractual Obligation Risk, Other Price Risk such as Commodity Price risk and Equity Price Risk.
(i) Foreign Currency Risk:
Foreign Currency Risk has underlying risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company is exposed to foreign exchange risk arising from foreign currency transactions of imports, exports and borrowings primarily with respect to USD and EURO. The Company’s exports are denominated generally in USD and EURO, thereby providing a natural hedge to that extent against foreign currency payments on account of imports of raw materials and/or the repayment of borrowings and interest thereon. The foreign currency transaction risk is also managed through selective hedging programmes by way of forward contracts including for underlying transactions having firm commitments or highly probable forecast of crystallisation.
(ii) Interest Rate Risk:
Interest rate risk has underlying risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Any changes in the interest rates could have unforeseen impact on Company’s cost of borrowings, thus impacting the profit and loss. The Company mitigates this risk by regularly assessing the market scenario, finding appropriate financial instruments like interest rate negotiations and low cost instruments like fixed interest bearing Redeemable Non-Convertible Debentures.
(iii) Rights of the Way and other Contractual Obligation Risk:
The Rights of the Way and other permission are subject to governing terms and conditions and varying interpretations each of which may result in modifications, expiry of terms, additional payments and/or restoration liability which could adversely affect the passive optical fibre cable networks under IP-1/Turnkey Projects. Further, the contracts/ IRU agreements with customers have certain underlying obligations relating to rectification, replacement and major maintenance of the network during the validity period of such agreements. The Company makes provision for warranty for the same as per management’s best estimates of expected cost to meet such obligations.
(iv) Commodity Price Risk:
The Company is affected by the price volatility of certain commodities. Its operating activities require the purchase of raw materials and bought out components for manufacturing of Cables and Turnkey Contract & Services respectively. It requires a continuous supply of certain raw materials & bought out components such as optical fibre, copper, aluminium, plastic and polymers, ducts, power cables, conductors, transformers, fabricated steel, poles etc. To mitigate the commodity price risk, the Company has an approved supplier base to get the best competitive prices for the commodities and also to manage the cost without any compromise on quality.
(v) Equity Price Risk:
The Company is exposed to equity price risk arises from Investments in Quoted Equity Shares held by the Company and classified in the Balance Sheet at cost and at fair value through OCI. Having regard to the nature of quoted equity shares, intrinsic worth, intent and long term nature of investments, fluctuation in market prices are considered acceptable and do not warrant any management estimation.
(b) Credit Risk:
Credit risk is the risk that a customer or counterparty to a financial instrument fails to perform or pay the amounts due causing financial loss to the Company. The Company is exposed to credit risk from its operating activities primarily arising from Trade Receivables from customers and other financial instruments, Corporate guarantee given to banks as collateral against term loan(s) and working capital credit facilities to a body Corporate, Birla Cable Limited.
Customer credit risk is managed by each business segment and is subject to the Company’s established policy, procedures and control framework relating to customer credit risk management. The Company assesses the credit quality of the counterparties taking into account their financial position and credit worthiness, on the age of specific receivable balance and the current and expected collection trends, age of its contracts in progress, historically observed default over the expected life of trade receivables. Company’s EPC business segment customers profile include Government owned utilities/ entities/ and both public and private telecom sector operators and service providers. Credit risk on Receivables is limited due to the Company’s large and diverse customer base which includes public sector enterprises, Central/State utilities and private corporates. Credit risk is reduced to a significant extent if the projects(s) are funded by the Central and State Governments and also by receiving pre-payments (including mobilization advances) and achieving project completion milestone within the contracted completion schedule. Credit risk is also actively managed by securing payment through Letter of credit, advance payments and bill discounting without recourse to the Company. Outstanding Customer Receivables are regularly monitored and assessed. Impairment allowance for Trade Receivables if any, is provided on the basis of respective credit risk of individual customer as on the reporting date.
The lenders assesses the credit quality of Birla Cable Limited on a regular basis. Further, considering its financial position, intrinsic value, business profile and future growth prospects, the credit risk is low. The Company has also accepted corporate guarantee from Birla Cable Limited (Cross corporate guarantee) against its total credit facilities and term loan(s) availed from its consortium of banks.
The fixed deposits with banks predominantly comprises of margin money against bank guarantees, letter(s) of credit, etc. as per the terms of sanction of non fund based credit facilities and the Company are not exposed to credit risk based on historical records of no or stray cases of invocation of bank guarantees or devolvement of LC’s.
(c) Liquidity Risk:
Liquidity risk is the risk where the Company may encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach is to ensure as far as possible that it will have sufficient liquidity to meet its liabilities when due.
49. Capital Management:
The Company’s primary objective with respect to capital management is to ensure continuity of business and support the growth of the Company while at the same time provide reasonable returns to its various stakeholders and maximise shareholders value. In order to achieve these objectives, requirement of capital is reviewed periodically with reference to operating and business plans that take into account capital expenditure and strategic investments. Sourcing of capital is done through judicious combination of equity/ internal accruals and borrowings, both short term and long term. The capital structure is governed by policies approved by the Board of Directors and the Company monitors capital by applying net debt (total borrowings less investments and cash and cash equivalents) to equity ratio. The Company manages its capital structure and make adjustments in the light of changes in economic conditions and the requirements of financial covenants attached to the interest bearing loans and borrowings that define capital structure requirements. No changes were made in the objectives, policies or processes for managing capital during the year ended 31st March, 2023 or corresponding previous year.
50. Additional Regulatory Information pursuant to amendment in Schedule III of the Companies Act, 2013 as notified vide Notification No. GSR 207(E) dated 24.03.2021 has been given to the extent applicable to the Company and not disclosed elsewhere.
(a) Compliance with number of layers of companies:
No layers of companies has been established beyond the limits prescribed under clause 87 of section 2 of the Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017.
(c) Undisclosed income:
No transactions have been recorded in the books of account that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act,1961(Previous Year ' Nil).
(d) 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 (whether recorded in writing or otherwise) that the Intermediary shall:
(i) 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
(ii) Provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(e) The Company has not received any fund from any other person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(i) 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
(ii) Provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(f) Title deeds of all the immoveable properties are held in the name of the Company.
(g) No proceeding has been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.
Notes: Explanation for changes in Ratio by more than 25%
(i) Debt Service Coverage Ratio improved due to increase in profitability.
(ii) Return on Equity improved due to higher profitability of the current year as compared to previous year.
(iii) Inventory Turnover Ratio improved due to higher turnover in current year as compared to previous year.
(iv) Trade Receivable Turnover Ratio improved due to higher turnover in current year as compared to previous year.
(v) Net Capital Turnover Ratio improved due to higher turnover in current year as compared to previous year.
(vi) Return on Capital Employed Ratio improved due to higher profitability in current year as compared to previous year.
(vii) Return on Investment declined primarily due to decline in the aggregate market value of the quoted Equity Instruments.
51. The Quarterly Returns or Statement submitted to Banks pursuant to working capital facilities provided, are materially in agreement with Books of Accounts.
52. Previous year figures have been regrouped/rearranged, wherever considered necessary to conform to current year classification. The figures in brackets are those in respect of the previous accounting year.
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