a) The concentration of credit risk on trade receivable is limited due to the fact that the customer base is large and is unrelated to each other.
b) No trade receivable is due from directors & other officers of the Company either singly or severely with any other person or firm or private companies in which any director is interested as partner/ director.
c) The Company has assessed the risk of recovery from trade receivable arising on account of Pandemic Covid-19 and based on its assessment, the management of company do not foresee any impact on realisability of Trade receivable and is of the view that allowance for Expected credit loss created is sufficient and no further provisioning on this account is necessitated.
(d ) Term/ 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 dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
The repayment of Equity share capital in the event of Liquidation and buy back of Shares are possible subject to prevalent regulations. In the event of Liquidation, normally the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion of shareholding.
The Company has not allotted any fully paid up shares pursuant to contract(s) without payment being received in cash. The Company has neither allotted any fully paid up shares by way of bonus shares nor has bought back any class of shares during the period of five years immediately preceding the balance sheet date.
(d) Dividend
The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. The remittance of dividends outside India is governed by Indian law on foreign exchange.
The amount of per share dividend recognized as distributions to equity shareholders during FY 2021-22 pertaing to FY 2020-21 amounted to ' 215.48 Lakhs have been shown as deduction from retained earning.
The Board of directors of the Company in their meeting held on 30th May, 2022 have proposed dividend of ' 1/- per share for the financial year ended 31st March, 2022 for the approval of shareholders.
(i) CCECL (Term Loan) from State Bank of India and Indian Bank are secured by way of Primary :
a) Extension of First pari passu charge by way of hypothecation charge on entire current assets (present and future)
of the Company.
Collateral
a. Extension of First pari passu charge by way of hypothecation charge on entire fixed assets (movable & immovable) of the Company both present & future including plant & machinery except vehicle financed by other banks.
b. Extension of First pari passu charge by way of equitable mortgage over factory land & building of the Company situated at A-1112 & A-1114, RIICO Industrial Area, Phase III, Bhiwadi Rajasthan and at E-538 & E-539A, RIICO Industrial Area, Chopanki, Rajasthan.
Guarantee :
a. Personal Guarantee of whole time directors.
(ii) Vehicle loans from Banks are secured by hypothecation of respective vehicle.
22.1 Working Capital Loan from State Bank of India and Indian Bank are secured by way of Primary :
a. First pari passu charge by way of hypothecation charge on entire current assets (present and future) of the Company. Collateral :
a. First pari passu charge by way of hypothecation charge on entire fixed assets (movable & immovable) of the Company both present & future including plant & machinery except vehicle financed by other banks.
b. First pari passu charge by way of equitable mortgage over factory land & building of the Company situated at A-1112 & A- 1114, RIICO Industrial Area, Phase III, Bhiwadi Rajasthan and at E-538 & E-539A, RIICO Industrial Area, Chopanki, Rajasthan.
Guarantee :
a. Personal Guarantee of whole time directors.
22.2 The quarterly returns or statements of current assets filed by the Company with the banks are in agreement with the books of accounts of the Company.
b) The amount of interest due and payable for the year due to delay in making payment under Micro, Small and Medium Enterprise Development Act 2006 is ' 30.18 Lakhs (P.Y. ' 29.68 Lakhs).
c) Dues to Micro, Small and Medium Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.
Nature of CSR Activity:
During the year the Company has contributed an amount of ' 2.50 Lakhs towards old age home and a rescue center set up by Earth Savior Foundation (NGO). (CSR Reg. No. : CSR00002026)
* Includes unspent amount on on-going project on Education & Skill development program and also medical facilities by Kamdhenu Jeevandhara Foundation amounting to ' 34.30 Lakhs for which provision for liability for the amount has been made as at 31st March, 2022 and is separately disclosed on '’Unspent CSR Expenses" in other current financial liabilities in note no. 25 representing the extent to which the amount is to be transferred with in 30 days of end of financial year ended 31st March, 2022. The Company has since transferred unspent CSR expenses amount of ' 34.30 Lakhs to '’ Unspent CSR account- FY 2021-2022 on 22nd April, 2022 in compliance with provision of section 135 (6) of Companies Act, 2013.
*Demand of ' 912.64 Lakhs as penalty under Rule 26 of Central Excise Rules, 2002, at Kamdhenu Limited as Co-noticee in various matters out of which ' 8 Lakhs has been deposited under protest. All matters are pertaining to FY 2008-09 and appeal before CESTAT have been filed against each orders except order dated 22nd March, 2022 of ' 607.64 Lakhs which is under appeal filing process.
**Demand of ' 709.83 Lakhs has been determined under section143(3) of Income tax Act 1961 for A.Y. 2018-19 out of which ' 142.30 Lakhs has been deposited under protest and appeal is pending before National Faceless Appeal Centre (NFAC). **Demand of ' 3.39 has determined under section154 of Income tax Act 1961 for A.Y. 2019-20 out of which ' 0.70 Lakhs has been deposited under protest and appeal is pending before National Faceless Appeal Centre (NFAC).
II) Method of Valuation
a) Projected unit credit (PUC) actuarial method to assess the plan’s liabilities allowing for retirements, deaths-in-service and withdrawals (Resignations / Terminations).
b) Under the PUC method a projected accrued benefit is calculated at the beginning of the period and again at the end of the period for each benefit that will accrue for all active members of the plan. The projected accrued benefit is based on the plan accrual formula and service as at the beginning and end of the period, but using member’s final compensation, projected to the age at which the employee is assumed to leave active service. The plan liability is the actuarial present value of the projected accrued benefits as on the date of valuation.
B) LEAVE ENCASHMENT
The provision for leave encashment based on actuarial valuation has been included in provisions - current and non-current and does not require disclosure as mentioned in para 158 of Ind AS 19.
The Company makes contribution to Statutory Provident Fund in accordance with Employees Provident Funds and Miscellaneous Provisions Act 1952. This is the post employment benefit and is in the nature of defined contribution plan. The total amount contributed to provident fund during the financial year is ' 184.60 Lakhs (previous year ' 159.56 Lakhs) and is included in Note no. 34 " Employees Benefit expenses".
FINANCIAL RISK MANAGEMENT
The Company’s activities expose it to variety of financial risks viz. commodity price risk, credit risk, liquidity risk and capital risk. These risks are managed by the senior management of the Company supervised by the Board of Directors to minimize potential adverse effects on the financial performance of the Company.
i) Commodity Risk
Demand/supply risk are inherent in the prices of Ingot/Billet, the main raw material and also the prices of TMT bar, the main product in Steel segment. The requirement of raw material is sourced on spot basis so as to float with fluctuations in the market and to guard against price volatility. The Company has also linked its sales to raw material prices so that the Company has adequate cushion to protect its margin in the event of any increase/decrease in raw material costs. The main raw material in paint segment is Alkyd Resin/Titanium Dioxide and its prices fluctuates based on change in international crude oil prices. In Paints segment, the volatility in final product prices is dependent on market forces.
ii) Credit Risk
Credit risk from cash and cash equivalents and bank deposits is considered immaterial in view of the credit worthiness of the banks, the Company works with. The Company has specific policies for managing customer credit risk on an ongoing basis; these polices factor in the customer’s financial position, past experience and other customer specific factors. Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. The Company makes provision for doubtful debt or writes off when a debtor fails to make contractual payments based on provisioning matrix. When loans or receivables have either been provided for or written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. When recoveries are made, these are recognized in Statement of Profit and Loss. The Company has followed Expected Credit Loss (ECL) model to provide for provision for ECL allowance.
The Company do not envisage any financial difficulties resulting in additional credit risk higher than usual credit terms due to COVID-19 outbreak and allowance for expected credit loss is not estimated to exceed the amount already created in books of accounts. The Company has invested in Portfolio Management Scheme with reputed asset management company and do not foresee any credit risk.
iii) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash and another financial asset. The Company’s approach to managing liquidity is to ensure as far as possible that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed condition, without incurring unacceptable losses or risking damage to the Company’s reputation.
The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of surplus funds, bank overdrafts, bank loans. The Company considers liquidity risk as low risk.
Interest rate is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rate. The Company has taken term loan and working capital limits from bank which has considered as variable rate borrowing.
The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.
The Company monitors capital using gearing ratio which is net debt divided by total equity. The Company’s net debts includes interest and non interest bearing loans less cash and bank balances.
A) OPERATING SEGMENT
Operating segments are established on the basis of those components that are evaluated regularly by the Management in deciding how to allocate resources and in assessing performance. The Company is principally engaged in two business segment viz., Steel and Paint.
The accounting policies adopted for segment reporting are in line with the accounting policy of the Company with following additional policies for segment reporting:
a) Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and Expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Unallocable".
b) Segment Assets and Segment Liabilities represent Assets and Liabilities in respective segments. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocable".
The Ministry of Corporate Affairs ( MCA ) through Companies ( Indian Accounting Standard) Amendment Rules 2019 and Companies ( Indian Accounting Standard) Second Amendment Rules has notified Ind AS 116 'leases’ which replaces existing lease standard, Ind AS 17 Leases and other Interpretation. Ind AS 116 sets out the principles for recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single on balance sheet lease accounting model for lessees.
The Company has adopted Ind AS 116 effective annual reporting period beginning from 1st April, 2019 and applied the standard to its leases retrospectively with the cumulative effect of initially applying the standard, recognised on the date of initial application (1st April, 2019). The cumulative effect of initially applying standard has been recognised as an adjustment to opening balance of retained earnings as on 1st April, 2019.
On application of Ind AS 116, the nature of expense has changed from lease rent in previous periods to depreciation cost for right of use asset and finance cost for interest accrued on lease liability.
Depreciation on right of use asset is ' 183.30 Lakhs and interest on lease liability for year ended 31st March, 2022 is ' 73.43 Lakhs Lease Contracts entered by the Company majorly pertains to building taken on lease to conduct the business activities in ordinary course.
Impact of Covid-19
The leases that the Company has entered with lessors towards properties used as corporate office/office are long term in nature and no changes in terms of those leases are expected due to Covid-19.
The Hon'ble National Company Law Tribunal, Chandigarh Bench, Chandigarh ('NCLT') during the hearing held on 22nd April, 2022, has reserved the order on the Scheme of Arrangements ('Scheme') including the De-merger of the Paint Business of the Company into a separate entity. The order is pending to be pronounced by the NCLT. Accordingly, no disclosure of accounting effect of such amalgamation and de-merger in the books of accounts of the Company has been made in the financial statements for the FY 2021-22.
The Company continues to monitor the impact of COVID 19 on its business including its impact on customers, supply chain etc. Due care has been exercised on significant accounting judgement and estimates including in relation to recoverability of receivables, inventory and other financial assets based on information available to date while preparing the Company’s financial statements for the FY 2021-22.
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under companies (Indian Accounting Standards) Rules as issued from time to time on 23rd March, 2022. MCA amended the companies (Indian Accounting Standards) Amendment Rules, 2022, as below
Ind AS 16- Property Plant and equipment- The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing. If any, shall not be recognized in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment. The effective date for adoption of this amendment is annual periods beginning on or after 1st April, 2022. The Company has evaluated the amendment and there is no impact on its financial statements.
Ind AS 37- Provisions, Contingent Liabilities and Contingent Assets- The amendment specifies that the "cost of fulfilling” a contract comprises the 'costs that relate directly to the contract', Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labor, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The effective date for adoption of this amendment is annual periods beginning on or after 1st April, 2022, although early adoption is permitted, The Company has evaluated the amendment and there is no impact on the financial statement.
DISCLOSURE IN ACCORDANCE WITH REQUIREMENTS UNDER IND AS-10 EVENT AFTER THE REPORTING DATE:
The Board of Directors of the Company have recommended dividend of ' 1/- per share for the financial year ended 31st March, 2022 for the approval of shareholders. The actual dividend outgo will be dependent on share capital outstanding as on record date.
Previous years figures have been regrouped, rearranged or reclassified, whenever necessary to confirm the current year’s classification.
|