Investments in equity instruments - Subsidiary Company
(a) Investment in Kaynes Embedded System Private Limited, 30,000 equity shares of ' 100 each (2022: 30,000 equity shares) of ' 100/- each, constitutes 60% (2022: 60%) of the capital of that company.
(b) Investment in Kemsys Technologies Private Limited 5,000,000 (of this 10 shares held by the nominee) equity shares (2022: 5,000,000) of face value of Re. 1/- each purchased at par, constitutes 100% (2022: 100%) of the capital of that company.
(c) Investment in Kaynes Technology Europe GmbH- 270 equity shares (of this 27 shares held by the nominee) ' 9,241,162/- (2022: ' 9,241,162/-), constitutes 60% (2022: 60%) of capital of that company.
(d) Investment in Kaynes International Design & manufacturing Private Limited 149,990 (2022: 149,990) equity shares ' 1,499,900/- , constitutes 95.21% (2022: 95.21%) of capital of that company.
Investments in equity instruments- Others
a) Investment in Winfoware Technologies Limited 1,487,120 equity shares (2022: 1,487,120) equity shares) face value of ' 5/- each purchased at a premium, constitutes 18.98% of the capital of that company.
b) I nvestment in Mysuru ESDM Cluster (Company constituted under section 8 of the Companies Act 2013), 2,500 equity shares of ' 10/- each constitutes 0.18% (2022: 0.18%) of the capital of that company.
a. No trade or other receivable are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member. Trade receivables are non-interest bearing.
b. The trade receivables of the Company has been pledged with banks for availing working capital and other facilities.
c. No trade receivables are disputed as at 31 March, 2023 and 31 March, 2022.
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. 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. The distribution will be in proportion to the number of equity shares held by the shareholders.
The Preference Shareholders shall carry such voting rights as are exercisable by persons holding Equity Shares in the Company and shall be treated pari passu with the Equity Shares on all voting matters. In the event of liquidation, the Preference Shareholders will carry a preferential right over the holder of equity shares for payment of dividend and for payment of capital, in proportion to their shareholding and are also eligible to participate in surplus funds.
During the financial year ended 31 March, 2023;
The Company has issued 616,770 fully paid up equity shares of ' 10 each during the financial year on conversion
of Compulsory Converible Preference Share on approval accorded by the EGM held on 22 October, 2022.
During the financial year ended 31 March, 2022, the Company has issued;
(a) 83,323 0.01% Compulsorily Convertible Cumulative Participating Preference Shares (CCPS) of ' 10 each at a premium of ' 590 per share to a Resident Indian Mr. Ganesh Cherapuram Balasubramanian which carries cumulative dividend of 0.01% per annum on 22 October, 2021
(b) 250,000 0.01% Compulsorily Convertible Cumulative Participating Preference Shares (CCPS) of ' 10 each at a premium of ' 590 per share to a Non-Resident Indian Mrs. Freny Firoze Irani which carries cumulative dividend of 0.01 % per annum on 01 November, 2021.
(c) 45,823 0.01 % Compulsorily Convertible Cumulative Participating Preference Shares (CCPS) of ' 10 each at a premium of ' 590 per share to a Resident Indian Mr. Bharadwaj Turlapati which carries cumulative dividend of 0.01% per annum on 25 December, 2021.
Conversion Option as at 31 March, 2022:
CCPS series C shall compulsorily convert into Equity shares of the Company, at the conversion valuation, upon occurrence of any of the following events:
a. At the latest time permitted under applicable laws, when considering the listing of the Equity shares of the Company pursuant to an IPO;
b. Expiry of 120 months from the Execution Date ("Investment period") or
c. Any time prior to the expiry of the Investment period at the option of the holder of the CCPS series C Investor
Term Loans have been availed from various banks. The Company has given primary hypothecation of inventory and Trade Receivables as security for these loans. In addition, the Company has given collateral security of Factory Land and Building situated at Belagola (Food) Industrial Area, Mysuru. Interest rates on these loans vary from 8% to 18%. Repayment schedule of these loans vary from 24 months to 72 months .
Term Loans have been availed from various financial institutions. The Company has given primary hypothecation of inventory and Trade Receivables as security for these loans. In addition, the Company has hypothecated plant and machinery. Interest rates on these loans vary from 8% to 18%. Repayment schedule of these loans vary from 24 months to 72 months.
Non-Convertible Debentures- Secured
NCDs have been secured by specific plant and machinery and specific receivables. These are guaranteed by personal guarantee of promoter director of the Company. 33% shares of the Company held by one of the promoter/director has been pledged. These Debentures are repayable in 16 quarterly instalments. This NCDs was redeemed during 2022-23.
Vehicle Loans
Vehicle loan from banks are repayable in 48 to 72 monthly instalments along with the interest.
Cash credit/Packing Credit from banks (Secured)
Secured Cash credit and Packing credit from Banks are secured against the hypothecation of stock of raw materials, work-in-progress, finished goods, book debts outstanding and common collateral security of factory land and building, canteen building and plant and machinery. Canara Bank which has approved a cash credit, packing credit and bill discounting facility holds a paripassu charge along with HDFC Bank, Indusind Bank and State Bank of India.
Loans from Others ( Unsecured)
Short term loans from shareholders are repaid in FY 2022-23 and closed.
1 CPC demand of ' 1.74 mn against the disallowance made by ITO against under 35(2AB) for A.Y. 2016-17 and thereby reducing the MAT credit availed by the Company which was disputed in appeal before CIT(A) and the matter is resolved in FY 2021-22.
2 Income tax authorities Disallowed R& D expenditure and raised a demand for non submission of certificate from DSIR, Delhi. We requested for extension of time and in the process of obtaining the certificate to substantiate the claim.
3 The disallowance on account of delay in payment of employer's contribution to EPF & ESI . Filed appeal against the order and submitted the relevant documentation. Assessing officer is in the process of reviewing supportings provided by us to substantiate our claim.
4 Commissioner of Income tax, Bengaluru has issued a notice on Short deduction of TDS for various years commencing from FY 2009-10 to FY 2022-23 and imposed a Interest and penalty .Demand appearing in the TDS Portal amounts to ' 62.69 mn . We are in the process of adjusting the demand against the unconsumed challans available. We have already submitted a request to the commissioner for extension of time for reconciliation of TDS.
5 There are 16 cases relating to excise, VAT, Customs and CST amounting to ' 56.9 mn covering a period commencing from FY 2012-13 to FY 2018-19 pertaining to units located in various states in Karnataka, Uttarakand, Haryana, Tamilnadu and Maharashtra. Many of the cases required Information provided to the Concerned authorities and are in progress.
30 SEGMENT INFORMATION
Based on the management approach as defined in IND AS 108 - Operating Segments, the Chief Operating Decision Maker (CODM) evaluates the Company's performance and allocates resources based on an analysis of various performance indicators by geographical segments. Accordingly, the Company has identified India and Outside India as its reportable segment.
As expenses, assets and liabilities are not separately identified for the individual segments, these are considered as common cost and unallocated. Hence, information with respect to revenue alone is provided by the Company for the geographical segments identified.
* The Company has issued bonus shares during the period ended 31 March, 2022. In line with the requirements of Para 28 of Ind AS 33, for the purpose of EPS calculations, bonus shares issued have been considered as if the event of bonus issue had occurred at the beginning of the earliest period presented.
# Pursuant to the resolutions passed on EGM on 21 February, 2022 and Board of Directors on 25 February, 2022, company had issued bonus shares in the ratio of Five Bonus shares of One Equity share held post the reporting date 31 March, 2022. In line with the requirements of Para 64 of Ind AS 33, retrospective adjustments of the same has been considered in computation of the EPS and Diluted EPS.
36 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company's principal financial liabilities comprise of short tenured borrowings, trade and other payables. Most of these liabilities relate to financing for working capital requirements. the Company has trade and other receivables, loans and advances that arise directly from its operations.
The Company is accordingly exposed to market risk, credit risk and liquidity risk.
The Company's senior management oversees management of these risks. The senior professionals working to manage the financial risks and the appropriate financial risk governance framework for the Company are accountable to the Board of Directors and the Audit Committee. This process provides assurance that the Company's financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with Group's policies and overall risk appetite.
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 two types of risk: interest rate risk and currency rate risk. Financial instruments affected by market risk include loans and borrowings, deposits and advances.
i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. the Company's exposure to the risk of changes in market interest rates relates primarily to the Company's debt obligations with floating interest rates.
The Company has no exposure to financial instruments with an interest rate risk as on 31 March, 2023 and 31 March, 2022.
ii) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. the Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenue or expense is denominated in a foreign currency) and the Company's net investments in foreign subsidiaries.
Foreign currency sensitivity
The sensitivity analysis has been based on the composition of the Company's financial assets and liabilities at the end of the respective reporting periods. The period end balances are not necessarily representative of the average debt outstanding during the period.
Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities, deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
A. Trade Receivables
Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on exchange losses historical data.
The Company does not hold collateral as security. the Company evaluates the concentration of risk with respect to trade receivables as low, as its customers (which are in the nature of reputed banking and financial institutions) are located in several jurisdictions and industries and operate in largely independent markets.
The Company creates allowance for all unsecured receivables based on lifetime expected credit loss based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The management makes estimates of the expected losses on receivables taking into account past history and their assumptions. Expected credit loss allowance is calculated by comparing the management estimates with the provision matrix.
B. Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the treasury department in accordance with the Company's policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the management on an annual basis and may be updated throughout the year subject to approval of the Company's Finance Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty's potential failure to make payments.
Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. the Company's objective is to, at all times maintain optimum levels of liquidity to meet it cash and collateral requirements. the Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including loans, debt and overdraft from both domestic and international banks at an optimised cost.
The Company has assessed that trade receivables, cash and cash equivalents, bank balances, other assets, borrowings, trade payables and other liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
39 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).
The following table provides the fair value measurement hierarchy of the Company's assets and liabilities.
3. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.4. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
5. (i) 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:
(a) 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
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(ii) 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 Company shall:
(a) 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
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
6. The Company has neither declared nor paid any interim dividend or final dividend during the year.7. The Company does not have any such transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
8. The Company has complied with the number of layers prescribed under clause (87) of Section 2 of the Act read with Companies (Restriction on number of layers) Rules, 2017.
The Company's CSR Activities primarily involve in the promotion of education, healthcare, art and cultural promotion, animal welfare, rural developement, natural calamities relief and skill developement for underprivileged people.
The shortfall in the previous year has arisen due to the lack of eligible projects due to the impact of the pandemic.
45 Previous year figures have been regrouped/ re-classified wherever necessary.
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