b) Rights, preferences and restrictions attached to the Equity Shares
The Company has only one class of shares referred to as Equity shares having a par value of Rs. 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. 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.
a. Capital Reserve Account
This reserve represents the excess of net assets taken over by the Company over the consideration paid for business combinations. This includes Rs. 3.88 Millions on account of pre-acquisition profit.
b. Development Rebate Reserve, Development Allowance Reserve and Investment Allowance (Utilised) Reserve Transferred from pre-merger reserves.
c. General Reserve
This reserve represents appropriations of profits made from retained earnings and can be distributed / utilized by the Company in accordance with the Companies Act, 2013.
d. Retained Earnings
This reserve represents the cumulative profits and can be distributed / utilized by the Company in accordance with the Companies Act, 2013.
(i) Represents term loans from Lebong Investments Private Limited (Fellow subsidiary company)
(a) Rs Nil (31st March 2023 : Rs 1.00 Million), at interest rate of 8% p.a., repaid in full during the year.
(b) Rs. 128.13 millions (31st March 2023 : Rs 140.63 Millions), at interest rate of 9% p.a., repayable in 41 quarterly instalments of Rs 3.125 millions from the Balance Sheet date.
(ii) Represents term loan
(a) Rs 46.88 Millions (31st March 2023 : Rs 59.37 Millions) from Axis Bank, secured by first charge on the entire property, plant and equipment of one tea estate both movables and immovables. This is payable in 15 equal quarterly instalments of Rs 3.125 Millions from the Balance Sheet date at interest rate linked to respective bank's base lending rate;
(b) Rs Nil (31st March 2023 : Rs 20.55) from HDFC Bank, secured by negative lien on the immovable property of the Company. This was repaid in full during the year.
(iii) Represents term loan
(a) Rs 17.16 Millions (31st March 2023 : Rs Nil) from Candi Solar IN 1 Private Limited, secured by hypothecation of the Solar Plant installed at one of the tea estate of the Company. This is payable in 238 equal monthly instalments of Rs 0.144 Million from the Balance Sheet date.
The Company has not been declared as a wilful defaulter by any bank or financial institution or other lender in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
Note: Demand Loans were secured by hypothecation of entire current assets of the Company including stocks and book debts both present and future on first pari-passu basis.
Equitable mortgage over the immovable properties at four of the Company's Tea Estates and hypothecation charge on movable plant and machinery and other movable fixed assets at the same four Tea Estates of the Company on first pari-passu basis.
The quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the unaudited books of accounts for respective quarters.
Central Excise, Sales Tax and Entry Tax matters relates to amounts disputed by the Company in relation to issues
of applicability, classification and determination, as applicable.
Disputed Claims relates to third party claims arising from disputes relating to contracts.
Future cash flows if any, in respect of above cannot be determined at this stage
(ii) Consequent upon the vesting of the Indian undertakings on 1st January 1978 of the eight Sterling Company's under the scheme of amalgamation, the title in respect of certain tea estates acquired under such scheme, are to be transferred in the name of the Company. The Company has been legally advised that the notification issued by the Government of West Bengal in 1994 for payment of salami for such transfer does not apply to the Company. The matter is subjudice at present. Pending resolution of the same and on the basis of the intimation received from Government of West Bengal, Land & Land Reforms and R.R. & R Department, during the year, the Company has agreed to deposit the salami amount in an agreed manner in order to allow the normal functioning of the estates without prejudice to the Company's stand on applicability of such salami. The sum in dispute stands at Rs. 121.21 Millions (2023 - Rs. 121.21 Millions) as on date. In the event Company's position on Salami is upheld by the court, the sums agreed to be paid by way of deposit will be refunded to the company.
(b) Commitments
Estimated amount of contracts remaining to be executed on capital accounts and not provided for Rs. 3.80 Millions
(2023 - Rs. 11.06 Millions).
Apart from the commitments disclosed above, the Company has no financial commitments other than those in the
nature of regular business operations.
31.4 Corporate Social Responsibility (CSR) - As per Section 135 of the Companies Act, 2013 the Company needs to spend at least 2% of the average net profit earned during the immediately preceding 3 years on CSR activities. The areas for CSR activities identified by the Company are special education for differently abled children, vocational training for livelihood and environmental sustainability.
(a) Gross amount required to be spent by the Company is Rs. Nil (2023 Rs 3.21 Millions)
(b) Amount spent during the year is Rs. 6.63 Millions (2023- Rs 4.88 Millions)
31.5 Employee Benefit Plans:
Defined Contribution Plans
The Company operates defined contribution schemes like provident fund and pension schemes for all qualifying employees. For these schemes, contributions are made by the Company, based on current salaries, to recognised funds maintained by the Company and for certain employees' contributions are made to State Plans.
An amount of Rs. 285.16 Millions (2023 - Rs. 271.96 Millions) has been charged to the Statement of Profit and Loss on account of defined contribution schemes.
Defined Benefit Plans
The Company also operates defined benefit schemes in respect of gratuity, pension, provident fund and postretirement medical benefit towards its employees. These schemes offer specified benefits to the employees on retirement. The pension benefits and medical benefits are restricted to certain categories of employees. The liabilities arising in the Defined Benefit Schemes are determined in accordance with the advice of independent, professionally qualified actuaries, using the projected unit credit method as at year end. The Company makes regular contributions to these Employee Benefit Plans. Additional contributions are made to these plans as and when required based on actuarial valuation.
Provident Fund, Pension and Gratuity Benefits are funded and Post-Retirement MedicalBenefits are unfunded in nature. The funds are administered through approved Trusts, which operate in accordance with the Trust Deeds, Rules and applicable Statutes. The concerned Trusts are managed by Trustees who provide strategic guidance with regard to the management of their investments and liabilities and also periodically review their performance.
Risk Management
The above benefit plans expose the company to actuarial risks such as follows-
(a) Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase
(b) Salary inflation risk: Higher than expected increases in salary will increase the defined benefit obligation
(c) Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.
These Plans have a relatively balanced mix of investments in order to manage the above risks. The investment strategy is designed based on the interest rate scenario, liquidity needs of the Plans and pattern of investment as prescribed under various statutes. The Trustees regularly monitor the funding and investments of these Plans. Robust risk mitigation systems are in place to ensure that the health of the portfolio is regularly reviewed and investments do not pose any significant risk of impairment. Pension obligation of the employees is secured by purchasing annuities thereby de-risking the Plans from future payment obligation.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting year, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet. There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
31.9 Relationship with struck off companies: The Company does not have any transactions or relationships with any companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.
31.10 There are no transactions that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 which have not been recorded in the books of account.
31.11 There are no charges or satisfaction of charges yet to be registered with Registrar of Companies beyond the statutory period.
31.12 The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
31.13 The company has not advanced or loaned or invested funds (either from borrowed funds or share premium or any other source or kind of funds) to or in 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 to or on behalf of the Ultimate Beneficiaries.
The company has not received any fund from any person(s) or entity(ies), including foreign entities ('Funding Parties') 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 company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
31.14 The Company has not declared or paid any dividend during the year and has not proposed final dividend for the year.
31.15 The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
31.16 The Company does not have any CIC as part of the group in India.
31.17 The Company has used accounting software for maintaining its books of account, which has a feature of recording audit trail as per the requirement of the Companies (Accounts) Rules, 2014 as amended by Ministry of Corporate Affairs (MCA) notification dated 24th March 2021, except that:
a) the audit trail feature was not enabled for certain critical tables at the application layer throughout the financial year;
b) the audit trail feature was disabled in the application layer for the period 20th October 2023 to 23rd October 2023; and
c) the audit trail was not enabled at the database level to log any direct data changes throughout the financial year.
The aforesaid audit trail were not enabled / disabled during the financial year due to performance issues related to storage in the software, which is currently being optimised.
32. Segment Information
32.1 Consequent to the adoption of Ind AS, the Company has identified one operating segment viz, "Tea" which is consistent with the internal reporting provided to the chief executive officer, who is the chief operating decision maker.
32.2 The Company deals in only one product i.e., Tea. The products and their applications are homogenous in nature.
32.3 Geographical Information
The Company is domiciled in India. It sells products in India and overseas (outside India). Geographical revenues are segregated based on the location of the customer who is invoiced or in relation to which the revenue is otherwise recognised.
32.4 The Company is not reliant on revenues from transactions with any single external customer and does not receive 10% or more of its revenues from transactions with any single external customer.
34. Financial Instruments and Related Disclosures 34.1 1. Capital Management
The Company aims at maintaining a strong capital base, maximising shareholders' wealth, safeguarding business continuity and augments its internal generations with a judicious use of borrowing facilities to fund spikes in working capital that arise from time to time as well as requirements to finance business growth. The Company determines the capital management requirement based on annual operating plans and long term and other strategic investment plans. The funding requirement are met through equity, borrowings and operating cash flows.
3. Financial risk management objectives
The Company's activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company continues to focus on a system-based approach to business risk management. The Company's financial risk management process seeks to enable the early identification, evaluation and effective management of key risks facing the business. Backed by strong internal control systems, the current Risk Management System rests on policies and procedures issued by appropriate authorities; process of regular reviews / audits to set appropriate risk limits and controls; monitoring of such risks and compliance confirmation for the same.
a) Market risk
The Company's business primarily agricultural in nature, exposes it to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of adverse weather conditions and lack of future markets. The Company closely monitors the changes in market conditions and select the sales strategies to mitigate its exposure to risk.
i. Foreign currency risk
The Company undertakes transactions denominated in foreign currency which results in exchange rate fluctuations. Such exchange rate risk primarily arises from transactions made in foreign exchange and reinstatement risks arising from recognised assets and liabilities, which are not in the Company's functional currency (Indian Rupees). A significant portion of these transactions are in US Dollar, euro, etc.
Foreign currency sensitivity
The impact of sensitivity analysis on account of outstanding foreign currency denominated assets and liabilities is insignificant.
ii. Interest rate risk
Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The objectives of the Company's interest rate risk management processes are to lessen the impact of adverse interest rate movements on its earnings and cash flows and to minimise counter party risks.
The Company is exposed to interest rate volatilities primarily with respect to its short terms borrowings from banks as well as financial institutions which are taken and squared off during the year. Such volatilities primarily arise due to changes in money supply within the economy and/or liquidity in banking system due to asset/liability mismatch, poor quality assets etc. of banks. The Company manages such risk by operating with banks having superior credit rating in the market as well as financial institutions.
Interest rate sensitivity
The table below shows the sensitivity of the Company's profitability related to change in rate of borrowings by 100 basis points on loans outstanding as at 31st March, 2024.
The above impact is based on only on change in interest rate, keeping all other business factors constant
iii. Price risk
The Company invests its surplus funds primarily in debt mutual funds measured at fair value through profit or loss. However, aggregate value of such investments as at 31st March, 2024 is Rs Nil (31st March, 2023 - Rs. Nil).
Investments in the mutual fund schemes are measured at fair value. Accordingly, these do not pose any significant price risk.
b) Liquidity risk
Liquidity risk is the risk that the Company may encounter difficulty, including seasonality in meeting its obligations. The Company mitigates its liquidity risks by ensuring timely collections of its trade receivables, close monitoring of its credit cycle and ensuring optimal movements of its inventories.
c) Credit risk
Credit risk is the risk that counterparty will not meet its obligations leading to a financial loss. The Company has its policies to limit its exposure to credit risk arising from outstanding receivables. Management regularly assess the credit quality of its customer's basis which, the terms of payment are decided. Credit limits are set for each customer which are reviewed on periodic intervals. The credit risk of the Company is low as the Company largely sells its teas through the auction system which is on cash and carry basis and through exports which are mostly backed by letter or credit or on advance basis. There is no significant financing component involved.
4. Fair value measurements Fair value hierarchy
Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:
Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities
Level 2: Inputs other than quoted price including within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs) If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty. This is the case with listed instruments where market is not liquid and for unlisted instruments.
The management consider that the carrying amounts of financial assets (other than those measured at fair values) and liabilities recognised in the financial statements approximate their fair value as on March 31, 2024 and March 31, 2023.
There has been no change in the valuation methodology for Level 3 inputs during the year. The Company has not classified any material financial instruments under Level 3 of the fair value hierarchy. There were no transfers between Level 1 and Level 2 during the year.
36. The financial risk associated to agriculture would include climate change, price fluctuation, currency fluctuation and input cost increases. Being dependent on rainfall, any shortfall would directly impact the production. The sale of tea being largely through the auction system, any price fluctuation would impact profitability. Increased wages also has a direct impact on the cost of production because of labour intensive nature of the business operations.
Management is continuously monitoring all the above factors. Investment in irrigation, a planned replanting programme to ensure higher yields and improving efficiency of labour and modernisation are some of the measures taken by the management to mitigate the risks.
37. The Central Government has published The Code on Social Security, 2020 and Industrial Relations Code, 2020 ("the Codes") in the Gazette of India, inter alia, subsuming various existing labour and industrial laws which deals with employees related benefits including post-employment. The effective date of the code and the rules are yet to be notified. The impact of the legislative changes, if any, will be assessed and recognised post notification of the relevant provisions.
38. The figures for the previous period/year have been regrouped/rearranged wherever necessary to make them comparable with the current period's figures.
39. The financial statements were approved for issue by the Board of Directors on 21st May, 2024.
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