Inventories are valued at lower of cost and net realisable value. Cost is computed on weighted average basis and is net of GST Input Tax Credit.
Working capital facilities sanctioned by HDFC bank are secured by hypothecation of stocks and book debts. Quarterly statements of stock and book debts are filed with the bank which are in agreement with the books of accounts.
In line with Circular No 04/2015 issued by Ministry of Corporate Affairs dated 10 March, 2015, loans given to employees as per the Company s policy are not considered for the purposes of disclosure under Section 186(4) of the Act.
There are no loans or advances in the nature of loans granted to Promoters, Directors, KMPs and their related parties, either severally or jointly with any other person, that are:
(a) repayable on demand; or
(b) without specifying any terms or period of repayment
♦Subsequent to the year ended 31 March 2023, the authorized share capital was increased from 500,000 equity shares of Rs.10 each amounting to Rs. 50 lakhs to 700,00,000 equity shares of Rs. 10 each amounting to Rs. 7,000 lakhs which was duly approved by the board in meeting dated 3 July 2023 and by the shareholders of the Company by means of an ordinary resolution dated 3 July 2023.
♦♦Post increase of the existing authorised share capital of the company, the Board of Directors at its meeting held on 3 July 2023 had approved the bonus issue of one hundred and fifty new equity share for every one share held on record date which was approved by the shareholders by means of a special resolution dated 3 July 2023. Through a Board resolution dated 6 July 2023, the Company has allotted 558,77,700 equity shares of Rs.10 each as bonus shares to the existing equity shareholders of the Company.
Tcrms/Riglils attached to Eauitv Shares
The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regards to dividends and share in the Company's residual assets. The equity shares are entitled to receive dividend as declared from time to time. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid. Failure to pay any amount called up on shares may lead to forfeiture of the shares. On winding up of the Company, the holder of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.
Nature and nurnose of reserve
Securities Premium: Securities premium is used to record the premium on issue of shares. The reserve is utilized in accordance with the provisions of the Companies Act, 2013.
Retained Earnings: The amount that can be distributed by the Company as dividends to its equity shareholders out of accumulated reserves is determined considering the requirements of the Companies Act, 2013.
(i) The rate of interest of various vehicle loan ranges from 8.30% to 10.50%. The vehicle loan is repayable in equated monthly installments.
.... The current maturity of the said loan amounting to Rs. 5.54 Lakhs has been classified under current maturities of long term borrowings. The loans ' ' are secured by hypothecation of underlying vehicles.
Note 18(b)
The terms of the term loan are as follows:
(i) Secured term loan from bank amounting to 500 Lakhs, outstanding as at 31 March 2023: Rs. 41.05 Lakhs (31 March 2022: 156.83 Lakhs) is repayable in 60 equated monthly installments starting from 7 August 2018 with last installment payable on 7 July 2023. The rate of interest is bank reference rate plus spread of 1% to 1.5% p.a.. The Company has mortgaged certain identified immovable properties against the term loan.
(ii) Secured term loan from bank amounting to Rs. 1,000.00 Lakhs, outstanding as at 31 March 2023: Rs. 958.38 Lakhs (31 March 2022: Nil) is repayable in 60 equated monthly installments starting from 7 January 2023 with last installment payable on 7 December 2027. The rate of interest is is bank reference rate plus spread of 1% to 1.5% p.a.. The Company has mortgaged certain identified immovable properties against the term loan.
(iii) Secured term loan from bank amounting to Rs. 626.40 Lakhs, outstanding as at 31 March 2023: Rs. 620.79 Lakhs (31 March 2022: Nil) is repayable in 84 equated monthly installments starting from 7 March 2023 with last installment payable on 7 February 2030. The rate of interest is is bank reference rate plus spread of 1% to 1.5% p.a.. The Company has mortgaged certain identified immovable properties against the term loan.
The rate of interest is is bank reference rate plus spread of 1% to 1.5% p.a.
Cash credit facility from HDFC Bank is primarily secured by hypothecation by way of first and exclusive charge on all present and future stocks ai book debts. Cash credit facility from BNP Paribas is secured by standby letter of credit.
Quarterly statements of stock and book debts are filed with the HDFC bank which are in agreement with the books of accounts.
Note 20(b)
The terms of the buyer credit facility (sub limit of Cash Credit limit) are as follows:
The rate of interest is LIBOR/SOFR plus spread of 1.5 to 3.0% p.a..
The other terms of the facilities are same as mentioned in Note 20(a).
Note 20(c)
Cash credit facility from Axis Bank is unsecured. The rate of interest is 3months MCLR plus spread of 0.20% to 0.45% p.a..
Note 20(d)
Unsecured loan from related parties carries interest rate in the range of 9.0% to 9.5% p.a. The loan is repayable on demand.
Ltilization of borrowings from banks and financial institutions
Borrowings from banks and financial institutions have been utilized for the specific purpose for which it were taken.
Wilful Defaulter --—--
Tfle Company has not been declared as wilful defaulter by any bank or financial institution or any other lender
The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
Significant Management judgment is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income in which the relevant entity operates and the period over which deferred income tax assets will be recovered.
Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used.
As the Company does not have any intention to dispose off investments in unlisted subsidiaries and associates in the foreseeable future, deferred tax asset on indexation benefit in relation to such investments has not been recognised.
Deferred tax assets on long term capital loss on sale shares in subsidiary companies are not recognized on account of uncertainity that future long capital gain will be available against which the same shall be set off. The Company has a claim to carry forward the loss till assessment year 2031-32.
37 Disclosures under Ind AS 116 Leases: a) The Company as lessee:
The Company has leasing arrangements for certain Factory buildings and Mumbai office building. Non-cancellable period for those lease arrangements vary. The Company pays lease charges as fixed amount as per the respective lease agreements. Right-of-use asset is measured, on a lease by lease basis, at carrying amount. Discounting to arrive the value of asset is done based on the incremental borrowing rate at the date of initial application.
Events Occurring after the Reporting Period
Dividends paid during the year aggregating to Rs. 558.77 lakhs is out of Retained Earnings for the year ended 31 March 2022.
-On 16 June 2023, in respect of the year ended 31 March 2023, the Board of Directors of the Company have proposed an interim dividend of Rs.250 iper equity share outstanding as on 31 March 2023 resulting in a cash outflow of Rs. 931.30 lakhs.
41 Earning per share (EPS)
Restated basic EPS is calculated by dividing the Profit / (loss) for the year attributable to equity holders by the weighted average number of equity shares outstanding during the year.
Restated diluted EPS are calculated by dividing the Profit / (loss) for the year attributable to equity holders by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.
Subsequent to year end, on 3 July 2023, Company has issued 5,58,77,700 equity shares of Rs.10 each as bonus shares in ratio of 1:150 to the existing equity shareholders. This has been approved by Board and Shareholders on 3 July 2023. Impact of the same has been considered in the calculation of Basic and Diluted EPS for the year ended 31 March 2023 and Basic and Diluted EPS for 31 March 2022 have been retrospectively adjusted.
42 Employee Benefits :
a) Defined contribution plans:
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund, Labour Welfare Fund and Employees' State Insurance, which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to profit or loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund, Labour Welfare Fund and Employees' State Insurance for the year aggregated to Rs 973,71 Lakhs (31 March 2022: 687 19 Lakhs).
b) Defined benefit plans:
The Company’s gratuity benefit scheme is a defined benefit plan (unfunded). The Company’s net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The calculation of the Company’s obligation is performed annually by a qualified actuary using the projected unit credit method.
The Company recognises all actuarial gains and losses arising from defined benefit plans immediately in the standalone statement of profit and loss except remeasurement of Defined Benefit Obligations which is recognised in Other Comprehensive Income. All expenses related to defined benefit plans are recognised in employee benefits expense in the Statement of profit and loss. When the benefits of plan are improved, the portion of the increased benefit related to past service by employees is recognised in the standalone statement of profit and loss. The Company recognises gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. In arriving at the valuation for gratuity following assumptions were used:
43 Operating Segment
a) The Company has determined its business segment as "Stationery Products". Since the Company's business is from single business reporting segment i.e. sale of stationery products, there are no other primary reportable segments. Thus, the segment revenue, segment results, total carrying amount of segment assets, total carrying amount of segment liabilities, total cost incurred to acquire segment assets, total amount of charge for depreciation during the year is as reflected in the standalone financial statement.
44 Financial instruments - Fair values and risk management (continued) a. Fina ncial instruments by category and their fair value (continued)
Notes :-
i) The Company has not disclosed the fair value of financial assets such as Investments, trade receivables, trade payables, short term loans, deposits etc. because their carrying amounts are a reasonable approximation of fair value.
ii) The carrying amounts of the borrowings that are not measured at fair value are reasonable approximation of fair value, as they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period.
b) Measurement of fair values
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual funds that have quoted price. The mutual funds are valued using the closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.
There were no changes made during the year to valuation menthods or the processes to determine classification of level.
c) Financial risk management
The Company has a well-defined risk management framework. The Board of Directors of the Company has adopted a Risk Management Policy. The Company has exposure to the following risks arising from financial instruments:
Ý Credit risk;
Ý Liquidity risk ; and
Ý Market risk
i) Credit risk
Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or fail to pay amounts due causing financial loss to the company. The potential activities where credit risks may arise include from cash and cash equivalents, security deposits or other deposits and principally from credit exposures to customers relating to outstanding receivables. The maximum credit exposure associated with financial assets is equal to the carrying amount.
Trade and other receivables
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer and the geography in which it operates. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
The Company has a policy under which each new customer is analysed individually for creditworthiness before offering credit period and delivery terms and conditions.
The ageing analysis of trade receivables is disclosed in Note 11.
Exposures to customers outstanding at the end of each reporting period are reviewed by the management to determine incurred and expected credit losses. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.
The management assesses and manages credit risk based on the Company’s credit policy. The management assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and informed credit assessment and including forward looking information.
Other financial assets
Other financial assets includes loan to employees, security deposits, investments, cash and cash equivalents, other bank balance, advances to employees etc.
• Cash and cash equivalents and Bank deposits are placed with banks having good reputation and past track record with adequate credit rating.
• Company has given security deposits to lessor for lease . the Company does not have exposure to any credit risk.
ii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are proposed to be settled by delivering cash or other financial asset. The Company’s financial planning has ensured, as far as possible, that there is sufficient liquidity to meet the liabilities whenever due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company has practiced financial diligence and syndicated adequate liquidity in all business scenarios.
(iii) Market risk - Currency risk
Market risk is the risk that changes in market prices — such as foreign exchange rates, interest rates and equity prices — will affect the Company s income or the value of its holdings of financial instruments.
The Company’s operations result in it being exposed to foreign currency risk on account of trade receivables, trade payables and borrowings. The foreign currency risk may affect the Company’s income and expenses, or its financial position and cash flows. The objective of the Company’s management of foreign currency risk is to maintain this risk within acceptable parameters, while optimising returns. The Company’s exposure to, and management of these risks is explained below:
A 10% strengthening/weakening of the respective foreign currencies with respect to functional currency of the Company would result in increase or decrease in profit or loss and equity as shown in table below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. The following analysis has been worked out based on the exposures as of the date of statements of financial position.
If the rate is increased by 10% then there will be increase in profit and equity ofRs. 50.47 lakhs for the year ended 31 March 2023 and decrease in profit and equity of INR 99.92 lakhs for the year ended 31 March 2022.
Market risk - Interest rate risk
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.
The Company’s portfolio of borrowings comprise of a mix of fixed rate and floating rate loans which are monitored continuously in the light of market conditions.
Capital Management
The Company defines capital as total equity including issued equity capital, share premium and all other equity reserves attributable to equity holders of the Company (which is the Company’s net asset value). The primary objective of the Company’s financial framework is to support the pursuit of value growth for shareholders, while ensuring a secure financial base.
The Company monitors capital using a ratio of ‘adjusted net debt’ to ‘adjusted equity’. For this purpose, adjusted net debt is defined as total interest-bearing loans and borrowings less cash and bank balances. Total equity comprises all components of equity.
xii. Guarantees issued on behalf of subsidiary
Company has given corporate gaurantee of Rs. 1,100 lakhs to Bank for bankmg facility of Pioneer Stationery Pvt Ltd.
Terms and conditions of transactions with related parties
The transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances on at the year end are unsecured and settlement occurs in cash
46 Ind AS 115 - Revenue from Contracts with Customers
i) The Company is in the business of manufacturing, trading and selling of stationery. All sales are made at a point in time and revenue recognised upon satisfaction of the performance obligations which is typically upon dispatch/delivery depending on the contractual terms with the customers. Accruals for discounts/incentives are estimated (using the most likely method) based on accumulated experience and underlying schemes and agreements with customers. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established and the Company does not give significant credit period resulting in no significant financing component.
47 Corporate Social Responsibility
As per Section 135 of the Companies Act 2013, the Company has formed a Corporate Social Responsibility (CSR) Committee. The CSR Committee approved CSR Policy where certain focus areas out of list of activities covered in Schedule VII of the Companies Act 2013, have been identified to incur CSR expenditure.
Gross amount required to be spent by the Company during the year Rs 21.04 Lakhs (31 March 2022: Rs Nil). During the current year, the company i) has spent Rs. 31.00 Lakhs (31 March 2022: Rs. Nil) for purpose other than construction/acquition of asset. Out of the excess amount spent, the company has carried forward Rs. 9.95 Lakhs (31 March 2022: Rs. 10.41 Lakhs) to next year to offset against the mandatory spend in the next year.
49 Transaction with Struck off Companies
The Company has reviewed transactions to identify if there are any transactions with struck off companies. To the extent information is available on struck off companies, there are no transactions with struck off companies.
50 Disclosure of Intermediaries
The Company has not advanced or loaned or invested funds - either borrowed funds or share premium or any other sources or kind of funds to any other person or entity, including foreign entities (Intermediaries) with an 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 or provide any guarantee, security or the like to or on behalf of the Company.
The Company has not received any fund from any person or entity, including foreign entities (Funding Party) 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 to or on behalf of the Ultimate Beneficiaries.
51 Other statutory information
i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
ii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
iii) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.
iv) The Company has not 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).
v) The Company is in compliance with the number of layers prescribed under Clause (87) of Section 2 of the Companies Act read with the Companies (Restriction on number of Layers) Rules, 2017.
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