n) Provisions and Contingent Liabilities and Assets:
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Company or where any present obligation cannot be measured in terms of future outflow of resources or where a reliable estimate of the obligation cannot be made.
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.
A contingent asset is disclosed, where an inflow of economic benefits is probable. An entity shall not recognize a contingent asset unless the recovery is virtually certain.
o) Cash and Cash Equivalents:
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short- term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
p) Impairment of Assets:
Assets are assessed by the Company at each reporting period whether there is an indication of impairment that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is higher of an asset’s fair value less cost of disposal and value in use.
q) Earnings Per Share:
Basic earnings per share: A basic earnings per share is calculated by dividing:
i. the profit attributable to owners of the Company
ii. by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year .
Diluted earnings per share: Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
i. the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
ii. the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
r) Segment Reporting:
The Company’s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which the customers of the Company are located.
Segment Accounting Policies:
The Company prepares its segment information in conformity with the accounting policies that are adopted for preparing and presenting the financial statements of the Company as a whole.
s) Rounding of:
All amounts disclosed In the financial statement and notes have been rounded off to the nearest Lakhs, unless otherwise stated
t) Critical Estimates and Judgements
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company’s accounting policies. This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The preparation of the financial statements in conformity with GAAP requires the Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. These estimates and associated assumptions are based on historical experience and management’s best knowledge of current events and actions the Company may take in future.
Information about critical estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities are:
i. Impairment of financial assets (including trade receivable)
ii. Estimation of defined benefit
iii. Estimation of current tax expenses and payable
iv. Estimation of provisions and contingencies
u) Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
i) Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment
ii) Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate
used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Company’s lease liabilities are included in Interestbearing loans and borrowings
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of Land & building (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low value assets are recognised as expense on a straight-line basis over the lease term.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same.
(b) Terms and Rights attached to Equity Shares
The Company has only one class of Equity shares having a par value of ? 2/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend 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. In the event of liquidation of the Company, the holders of the 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.
(d) Shares reserved for issue under options
As at 31st March 2024 the Company does not have any outstanding options.
(e) Information regarding issue of shares for the period of five years immediately preceding the date at which the Balance Sheet is prepared:
i) The Company has not issued any shares without payment being received in cash
ii) The Company has not undertaken any buy-back of shares.
(b) Defined Benefit Plan
Gratuity: The Company has a defined Gratuity Plan for its employees. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.
The Scheme is funded with an insurance company in the form of qualifying insurance policy.
b) Fair Value Hierarchy
All Financial Assets & Financial Liabilities are carried at amortised cost except Current Investments and Foreign Currency Forward Contracts, which have been fair valued using Level 1 & Level 2 Hierarchy respectively Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
The following table represents the fair value hierarchy of Financial Assets and Financial Liabilities measured at Fair Value on a recurring basis :
46. Financial Risk Management Objectives and Policies
The Company’s financial liabilities comprise loans, Trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operation. The Company’s principal financial assets include Investments, loans , Trade and other receivables and cash and cash equivalents that derive directly from its operations. The Company is exposed to market risk, credit risk and liquidity risk. The Company regularly assess these risks, monitor, evaluate and deploy mitigation measures to manage the risks within risk appetite.
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
a. Market Risk
Market risk is the risk that the fair value of future cash Lows of a financial assets will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowing, investments ,trade receivables etc.
i. Interest Rate Risk and Sensitivity
The Company’s exposure to the risk of changes in market interest rates relates primarily to the long term debt obligations with Floating rate of interest.
The following table demonstrates the sensitivity to a reasonably possible changes in interest rates on that portion of loans and borrowings affected. With all other variables remaining constant, the company’s profit before tax and equity before tax is affected through the impact on floating rate borrowings, as follows:
ii. Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash Lows 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.Such foreign currency exposures are hedged by the Company.
b. Credit Risk
Credit risk is the risk that the counter party will not meet its obligation under a financial instruments or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables).
The Company extends credit to customers in normal course of business. The Company considers factors such as credit track record in the market and past dealings for extension of credit to customers. The Company monitors the payment track record of the customers and Outstanding receivables are regularly monitored.
c. 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 maintain a balance between continuity of funding and flexibility through the use of Bank loans, Credit purchases etc.
The table below provides undiscounted cash flows towards Financial Liability into relevant maturity based on the remaining period at the balance sheet date to the contract maturity date.
47 Capital Management
For the purpose of the Company’s Capital Management, Capital includes issued equity capital, shares premium and all other Equity Reserves attributable to the Equity holders of the Parent. The Primary objective of the Company’s capital management is to maximise the Shareholder value.
The Company manages its capital structure and makes adjustments inlight of changes in economic conditions and the requirements of the financial covenants.
51 The main Products of the Company i.e. Katha & Cutch along with its Raw Materials like Khair Wood, Katha Lugdi, Cutch Lugdi, are covered under U. P. Forest Act and a transit fee has to be paid on movement of all these items. Uttar Pradesh Government by its various amendments changed the transit fee from Rs. 38/- Per M.T to Rs. 200/- Per Cubic Meter and subsequently 5% advolrum.
Honorable Supreme Court in its interim order dated 26/04/2016, directed the Uttar Pradesh Government to collect transit fees @ 5% advolrum subject to final outcome of the case and also directed U. R Government to keep the said amount in a separate account so that it can be paid back to the effected parties with interest @ 9% Rer Annum if final order is in favour of the parties.
Subsequently Honorable Supreme Court by its final order dated 15/09/2017 directed Uttar Pradesh Government to collect transit fees @ Rs 38/- Per M.T only and refund the excess amount collected from parties along with interest @ 9% per annum.
In view of the above, an excess amount of Rs. 1000.29 lakhs paid as transit fees to the Forest Department of Uttar Pradesh is refundable with interest @ 9% per annum. The company has made necessary applications which is under process and will be accounted for as and when the company will get the refund.
52. Contingent Liabilties and Commitments
a) Demand for sales tax and GST amounting to Rs. 165.05 lacs (Rs. 135.40 lacs) which are not acknowledged as debts. Against the same company has paid under protest a total of Rs. 30.28 lacs (Rs. 15.29 lacs) included in loans and Advances and TDR of Rs. 2.64 lacs (Rs. 2.64 lacs) are deposited with the sales tax authorities.
b) Mandi Samitee demand on Katha amounting to Rs. 2.38 lacs (Rs. 2.38 Lacs) has been disputed by the Company and stayed by Honorable High Court, Allahabad.
c) During the FY 2017 - 18, Commissioner of Customs, Nhava Sheva had passed an Ex-Partie Judgement and raised a demand of Rs. 341.78 Lacs and imposed a penalty of Rs 341.78 Lacs against a Show Cause Notice issued by the Additional Director General, Directorate of Revenue Intelligence, Kolkata in the year 2010. The said order passed by the Commissioner being contrary to law and against the principle of natural justice, based on assumption and presumptions without any evidence on record and was not acceptable to the Company, hence an appeal was preferred by the Company before CESTAT Nhava Sheva by producing evidence of pre-deposit of Rs.40.00 lacs being 11.7% of duty demanded against the requirement of 7.5% of the duty demanded while filing the appeal.Simultaneously, (2) two of the Whole Time Directors were also made liable in the above said order on whom a penalty of Rs.15.00 lacs and Rs.10.00 lacs respectively imposed. An appeal was also preferred on their behalf and a sum of Rs.1.90 las was deposited by the Company and the amount is appearing in Loans & Advances account.Consequently, as per the legal advice obtained, no provision is made at this stage. Final adjustment if any will be done as and when the matter is crystalized.
d) During the year, the Company received an order from the Income Tax Department under section 144B of the Income Tax Act, for the Assessment Year 2018 - 19 for a tax demand of Rs. 17,17,49,287/-. The Company believes that the said demand is not maintainable and has filed an appeal against the said order.
53. Disclosure of Transactions with Struck Of Companies
The Company did not have any material transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
54 No transactions to report against the following disclosure requirements as notified by MCA pursuant to amended Schedule III:
(a) Crypto Currency or Virtual Currency
(b) Benami Property held under Prohibition of Benami Property Transactions Act, 1988 and Rules made thereunder
(c) Registration of charges or satisfaction with Registrar of Companies
(d) Relating to borrowed funds:
i. Wilful defaulter
ii. Utilisation of borrowed funds & share premium
iii. Discrepancy in utilisation of borrowings
iv. Current maturity of long term borrowings
56 For better presentation previous year’s figures have been regrouped / re-arranged wherever necessary.
In terms of our Report attached For and on behalf of Board of Directors of
For S K Agrawal and Co Chartered Accountants LLP The Indian Wood Products Co. Ltd.
Chartered Accountants
Firm Registration Number - 306033E/E300272 Krishna Kumar Mohta Bharat Mohta
Jugal Kishor Choudhury Chairman & MD WTD & CEO
Partner DIN: 00702306 DIN: 00392090
Membership No.: 009367
Raj Kumar Agarwal Anup Gupta
Place: Kolkata Chief Financial Officer Company Secretary
Date: May 30, 2024 M. No. - A36061
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