i) Term / Rights attached to Equity shares
The Company has one class of equity shares having a par value of '10 per share. Each shareholder is eligible for one vote per share held. 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.
In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
Capital Reserve - Capital reserve is created on amalgamation of Bhilwara Processors Limited and BSL Wulfing Limited with the company and the same will be utilized as per the provisions of the Companies Act, 2013.
Capital Redemption Reserve - Capital redemption reserve is created on redemption of preference share capital and the same will be utilized as per the provisions of the Companies Act, 2013.
Securities Premium - Security premium is created on issue of equity shares at premium and the same will be utilized as per the provisions of the Companies Act, 2013.
(i) The Other Comprehensive Income (Net gains/(loss) on hedging instruments) represents the cumulative effective portion of gain / (losses) arising on changes in fair value of designated portion of hedging instruments entered into for Cash Flow Hedge reserve. The cumulative gain/ (losses) arising on changes in fair value of designated portion of the hedging instruments that are recognized and accumulated under the heading of Cash Flow Hedge Reserve will be reclassified to the Profit and Loss only when the hedge transaction affects the Profit and Loss account.
(ii) Details of Dividend Proposed
After the reporting date, the Board of Directors of the company has recommended a dividend @15% (P.Y.@12%) to Equity shareholder i.e. '1.50 (P.Y. '1.20) per Equity share amounting to ' 154.38 Lac (P.Y. '123.51 lacs).The dividend proposed by the Board is subject to approval at the annual general meeting of the company. The dividend has not been recognized as liability.
i) Nature of Security: The Term Loans from Banks are secured by way of joint equitable mortgage / hypothecation of all immovable and movable existing and future assets of the Company except book debts ranking pari-passu subject to prior charge created in favor of the Company's bankers on stocks of raw materials, semi-finished, finished goods for working capital.
The GECL 2.0 (WCTL) loans under ECLGS-2.0 are secured against hypothecation of stocks of raw materials, finished goods and goods in process. The same is also secured by second charge created in favor of Company's Bankers by way of joint equitable mortgage on immovable properties of the Company which is ranking pari-passu.
Vehicle Loans are secured against hypothecation of respective vehicles.
ii) Terms of Repayment of Secured Borrowing: Secured term loans from banks are repayable in quarterly/monthly installments and having floating interest rates ranging from Base Rate/MCLR spread (0.50% to 5.0% as on 31.03.2023 and 0.50% to 5.45% as on 31.03.2022) and vehicle loans are repayable in monthly installments and having interest rates ranging from 7.95% to 9.76% as on 31.03.2023 and 7.95% to 12.93% as on 31.03.2022. Period of maturity and installments outstanding are as under:-
iii) No term loan is guaranteed by Directors or Others.
i) Bank loans for working capital are secured against hypothecation of stocks of raw materials, finished goods and goods in process. The same is also secured by second charge created/ in favor of Company's Bankers by way of joint equitable mortgage on immovable properties of the Company which is ranking pari-passu and having floating interest rate ranging from 8.15% to 10.65% as on 31.03.2023 and 7.50% to 12.10% as on 31.03.2022
ii) No Working Capital loan is guaranteed by Directors or Others.
iii) Unsecured loans are having interest rate from 8.50% to 15.00 % as on 31.03.2023 and 7.25% to 11.85 % as on 31.03.2022.
(xii) Description on Risk Exposure
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to
various risks as follows:-
A) Salary Increases- Actual salary increases will increase the Plan's liability. Increase in salary increase rate assumption in future valuations will also increase the liability.
B) Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
C) Discount Rate : Reduction in discount rate in subsequent valuations can increase the plan's liability
D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan's liability.
43. SEGMENT REPORTING
The Company's operation predominantly relates to Textiles. Hence primary reportable segment is textiles only. Further the geographical segment have been considered as secondary segment and bifurcated into Domestic & Export segments.
Valuation Technique used to determine Fair Value
The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used to estimate the fair values:
1) Fair value of cash and deposits, trade receivables, trade payables, and other current financial assets and liabilities measured at amortized cost is approximate to their carrying amounts largely due to the short-term maturities of these instruments. The fair value of other non-current financial assets and liabilities (security deposit taken/given and advance to employees) carried at amortized cost is approximately equal to fair value. Hence carrying value and fair value is taken same.
2) Long-term variable-rate borrowings measured at amortized cost are evaluated by the Company based on parameters such as interest rates, specific country risk factors, credit risk and other risk characteristics. Fair value of variable interest rate borrowings approximates their carrying values. Risk of other factors for the company is considered to be insignificant in valuation.
3) The fair values of the forward contract are determined using the forward exchange rate at the balance sheet date based on quotes from banks and financial institutions. Management has evaluated the credit and non-performance risks associated with its derivative counterparties and believe them to be insignificant and not warranting a credit adjustment.
(C) FINANCIAL RISK MANAGEMENT OBJECTIVES & POLICIES
The Company's principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations.
The company's activities expose it to a variety of financial risks: currency risk, interest rate risk credit risk and liquidity risk. The company's overall risk management strategy seeks to minimize adverse effects from the unpredictability of financial markets on the company's financial performance. The Company's senior management is supported by a financial risk committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The financial risk committee provides assurance to the Company's senior management the Company's financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives The Audit committee reviews and agrees policies for managing each of these risks, which are summarized below.
(D) FOREIGN CURRENCY RISK MANAGEMENT
Foreign exchange risk is the risk that the fair value of future cash flows of financial instruments will fluctuate because of changes in foreign exchange rate. The Company derives significant portion of its revenue in foreign currency, exposing it to fluctuations in currency movements. The Company has laid down a foreign exchange risk policy as per which senior management team reviews and manages the foreign exchange risks in a systematic manner, including regular monitoring of exposures, proper advice from market experts, hedging of exposures, etc.
The Company uses derivative financial instruments, such as foreign exchange forward contracts, to mitigate foreign exchange related risk exposures. Derivative financial instruments relating to a firm commitment or a highly probable forecast transaction are marked to market at every reporting date. In management's opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.
Interest Rate Risk Management
The company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is managed by the company by maintaining an appropriate mix between fixed and floating rate borrowings. The company's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.
Interest Rate Sensitivity Analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease represents management's assessment of the reasonably possible change in interest rates.
Other Price Risks
The company is not exposed to any instrument which has price risks arising from equity investments which is not material.
Credit Risk Management
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company's exposure to credit risk primarily arises from trade receivables, balances with banks, investments and security deposits. The credit risk on bank balances is limited because the counterparties are banks with good credit ratings.
Trade Receivables
Credit risk is managed through credit approvals, establishing credit limits, continuous monitoring of creditworthiness of customers to which the company grants credit terms in the normal course of business. The Company also assesses the financial reliability of customers taking into account the financial condition, current economic trends and historical bad debts and ageing of accounts receivables.
Cash & Cash Equivalent
With respect to credit risk arising from financial assets which comprise of cash and cash equivalents, the Company s risk exposure arises from the default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets at the reporting date. Since the counter party involved is a bank, Company considers the risks of non-performance by the counterparty as non-material.
Liquidity Risk Management
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. The company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
Liquidity and Interest risk tables
The following tables detail the company's remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the company may be required to pay.
FOREIGN CURRENCY EXPOSURE
(a) The Company hedges its export realizations and import payables through Foreign Exchange Hedge Contracts in the normal course of business so as to reduce the risk of exchange fluctuations. No Foreign Exchange Hedge Contracts are taken /used for trading or speculative purpose.
(b) The Company has following gross forward contract exposure outstanding as on balance sheet date which have been designated as cash flow hedge to its exposure to movements in foreign exchange rates :
46. CAPITAL MANAGEMENT
The company manages its capital to ensure that the entities in the Company will be able to continue as going concern while maximizing the return to shareholders and also complying with the ratios stipulated in the loan agreements through the optimization of the debt and equity balance.
The capital structure of the Company consists of net debt (borrowings as detailed in note 19 and 24 offset by cash and cash equivalents as detailed in note 11 and total equity of the Company. The company is not subject to any externally imposed capital requirements.
49. During the year the company has taken term loan of ' 12566.60 Lac for its capex plan of installation of 29184 Cotton Spindles & modernization of synthetic spinning, weaving & processing divisions at the existing site and the vehicle loan of ' 143.17 lacs for purchases of vehicles. All these loans are utilized for the same purpose for which these are taken.
51. Additional Regulatory Informationa. Title deeds of immovable property not held in name of the company
Bhilwara Processors Limited is amalgamated with the company w.e.f. 01.04.2009; however Leasehold Land of ' 143.46 lacs of amalgamated company is under name transfer process with state government authorities.
b. No proceeding has been initiated or pending against the company during the year for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
c. The company has borrowing of ' 14177.07 Lac from banks on the basis of security of current assets. All the quarterly return and statements of current assets filled by the company during the year with banks are in agreement with the books of accounts.
d. The Company has not been declared willful defaulter by any bank or lender during the year.
e. The company has not made any transactions during the year with companies struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956.
i) Debt equity ratio increased mainly due to new term loans/ working capital loans taken for new cotton spinning project and other capex plans of the company.
ii) Profit for the year is higher due to increase in per unit sales realization and favourable market sentiments across all segments.
iii) During the year, the company has taken short term borrowings for meeting higher turnover requirements resulting into lower net working capital with higher turnover.
g. The company has not advanced or loaned or invested funds to any other person or entity including foreign entity during the year 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 company (Ultimate Beneficiary) or provide any guarantee, security or the like to or on behalf of the ultimate beneficiary.
h. The company has not received any fund from any persons or entity including foreign entity (funding party) during the year with the understanding that the company 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.
i. The company has not surrendered or disclosed any transaction not recorded in the books of accounts as income during the year in the tax assessment under the Income Tax Act, 1961.
j. CSR Expenditure - The Company has made CSR expenditure of ' 11.21 lacs during the year. Details of the same are as under:-
i) Amount require to be spent - ' 10.90 lacs
ii) Amount of expenditure incurred - ' 11.21 lacs
iii) Shortfall at the end of the year - NIL
iv) Total of previous years shortfall - NIL
v) Reasons for shortfall - N.A.
vi) Nature of CSR Activities -
• Eradicating hunger, poverty & malnutrition, promoting preventive healthcare - 2.29 lacs
• Promoting education and enhancing vocation skills - 8.50 lacs
• Environment sustainability and ecological balance - 0.42 lacs
k. The company has not made any transaction in crypto currency or virtual currency during the year.
52. APPROVAL OF FINANCIAL STATEMENTS
The financial statements of the Company for the year ended 31st March, 2023 are approved for issue by the Company's Board of Directors on 08th May, 2023.
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