(Q) Provisions
Provisions are recognized when the Company has a present
obligation (Legal or constructive) as as result of past events,
for which it is probable that an outflow of resources will be
required to settle the obligation and a reliable estimate of
the amount can be made.
A provision is recognized when an enterprise has a
present obligation as a result of past event; it is probable
that an outflow of resources will be required to settle the
obligation, in respect of which a reliable estimate can be
made. Provisions are not discounted to its present value
and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect
the current best estimates
Financial Guarantee Contracts
The Company on a case to case basis elects to account for
financial guarantee contracts as a financial instrument
or as an insurance contract, as specified in Ind AS 109
on Financial Instruments and Ind AS 104 on Insurance
Contracts. The Company has regarded all its financial
guarantee contracts as insurance contracts. At the end
of each reporting period the Company performs a liability
adequacy test, (i.e. it assesses the likelihood of a pay-out
based on current undiscounted estimates of future cash
flows), and any deficiency is recognized in profit or loss.
Contingent liabilities are disclosed in the case of:
a) a present obligation arising from the past events,
when it is not probable that an outflow of resources
will be required to settle the obligation;
b) a present obligation arising from the past events,
when no reliable estimate is possible;
c) a possible obligation arising from past events, unless
the probability of outflow of resources is remote.
Contingent assets are not recognized but disclosed in the
financial statements when an inflow of economic benefits
is probable. However, when the realization of income is
virtually certain, then the related asset is not a contingent
asset and is recognized.
(R) Financial Instruments
Financial assets and financial liabilities are recognized
when the Company becomes a party to the contractual
provisions of the instruments.
I. Financial Assets
A. Initial recognition and measurement :
Financial assets are initially measured at
fair value. Transaction costs that are directly
attributable to the acquisition of the financial
asset [other than financial assets at fair value
through profit or loss (FVTPL)] are added to the
fair value of the financial assets. Purchases or
sales of financial assets that require delivery
of assets within a time frame established by
regulation or convention in the market place
(regular way trades) are recognized on the trade
date, i.e., the date that the Company commits to
purchase or sell the asset. Transaction costs of
financial assets carried at FVTPL are expensed
in the Statement of Profit and Loss.
B. Subsequent measurement:
For purposes of subsequent measurement,
financial assets are classified in the
following categories:
(i) Debt instruments at amortized cost
A 'debt instrument' is measured at the
amortized cost if both the following
conditions are met:
a) The asset is held within a business
model whose objective is to hold
assets for collecting contractual
cash flows, and
b) Contractual terms of the asset give
rise on specified dates to cash flows
that are Solely Payments of Principal
and Interest (SPPI) on the principal
amount outstanding.
After initial measurement, such financial
assets are subsequently measured at
amortized cost using the Effective Interest
Rate (EIR) method. Amortized cost is
calculated by taking into account any discount
or premium and fees or costs that are an
integral part of the EIR. The EIR amortization
is included in finance income in the Statement
of Profit and Loss. The losses arising from
impairment are recognized in the Statement
of Profit and Loss. This category generally
applies to trade and other receivables.
(ii) Debt instruments included within the
Fair Value Through Profit or Loss (FVTPL)
category are measured at fair value with
all changes recognized in the Statement of
Profit and Loss.
(iii) Equity instruments: All equity
instruments within the scope of Ind-AS
109 are measured at fair value excluding
Investment in Unquoted equity shares
held for membership purpose.Equity
instruments which are classified as held
for trading are measured at FVTPL. For
all other equity instruments, the Company
decides to measure the same either at
Fair Value Through Other Comprehensive
Income (FVTOCI) or FVTPL. The Company
makes such selection on an instrument-by¬
instrument basis. The classification is made
on initial recognition and is irrevocable.
For equity instruments measured at
FVTOCI, all fair value changes on the
instrument, excluding dividends, are
recognized in Other Comprehensive
Income (OCI). There is no recycling of the
amounts from OCI to Statement of Profit
and Loss, even on sale of such instruments.
iv) Equity instruments included within the
FVTPL category are measured at fair
value with all changes recognized in the
Statement of Profit and Loss.
C. De-recognition:
A financial asset (or, where applicable, a
part of a financial asset or part of a group
of similar financial assets) is primarily de¬
recognized (i.e. removed from the Company's
balance sheet) when:
- the rights to receive cash flows from the
asset have expired, or
- the Company has transferred its rights to
receive cash flows from the asset or has
assumed an obligation to pay the received
cash flows in full without
material delay to a third party under a 'pass¬
through' arrangement, and either:
(i) the Company has transferred substantially
all the risks and rewards of the asset, or
(ii) the Company has neither transferred nor
retained substantially all the risks and
rewards of the asset, but has transferred
control of the asset.
D. Impairment of financial assets:
In accordance with Ind-AS 109, the Company
applies Expected Credit Loss (ECL) model for
measurement and recognition of impairment
loss on trade receivables and other advances.
The Company follows 'simplified approach' for
recognition of impairment loss on these financial
assets. The application of simplified approach
does not require the Company to track changes
in credit risk. Rather, it recognizes impairment
loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.
II. Financial Liabilities
A. Initial recognition and measurement:
Financial liabilities are classified at initial
recognition as :
(i) financial liabilities at fair value through
profit or loss,
(ii) loans and borrowings, payables, net of
directly attributable transaction costs or
(iii) derivatives designated as hedging
instruments in an effective hedge,
as appropriate.
The Company's financial liabilities include
trade and other payables, loans and borrowings
including derivative financial instruments.
B. Subsequent measurement :
The measurement of financial liabilities depends
on their classification, as described below:
(i) Borrowings: Borrowings are initially
recognized at fair value, net of transaction
costs incurred. Borrowings are
subsequently measured at amortized cost.
Any difference between the proceeds (net
of transaction costs) and the redemption
amount is recognized in the Statement
of Profit and Loss over the period of the
borrowings using the effective interest
method. Fees paid on the establishment of
loan facilities are recognized as transaction
costs of the loan to the extent that it is
probable that some or all of the facility
will be drawn down. In this case, the fee is
deferred until the draw down occurs.
Borrowings are removed from the Balance
Sheet when the obligation specified in the
contract is discharged, cancelled or expired.
The difference between the carrying
amount of a financial liability that has been
extinguished and the consideration paid is
recognized in the Statement of Profit and
Loss as other gains / (losses).
Borrowings are classified as current
liabilities unless the Company has an
unconditional right to defer settlement
of the liability for at least twelve months
after the reporting period. Where there is
a breach of a material provision of a long¬
term loan arrangement on or before the end
of the reporting period with the effect that
the liability becomes payable on demand
on the reporting date, the entity does not
classify the liability as current, if the lender
has agreed, after the reporting period
and before the approval of the financial
statements for issue, not to demand
payment as a consequence of the breach.
(ii) Trade and other payables: These amounts
represent liabilities for goods and services
provided to the Company prior to the end
of financial period which are unpaid. The
amounts are unsecured and are usually
paid within twelve months of recognition.
Trade and other payables are presented
as current liabilities unless payment is
not due within twelve months after the
reporting period. They are recognized
initially at their fair value and subsequently
measured at amortized cost using the
effective interest method.
(iii) Derivative financial instruments: The
Company uses derivative financial
instruments, such as foreign exchange
forward contracts to hedge its foreign
currency risks. Such derivative financial
instruments are initially recognized
at fair value on the date on which a
derivative contract is entered into and
are subsequently re-measured at fair
value at the end of each reporting period.
Derivatives are carried as financial
assets when the fair value is positive
and as financial liabilities when the fair
value is negative.
Hedge accounting :
The Company designates certain hedging
instruments which include derivatives,
embedded derivatives and non derivatives
in respect of foreign currency risk, as
either fair value hedges, cash flow hedges
or hedges of net investments in foreign
operations. At the inception of the hedge
relationship, the Company documents
the relationship between the hedging
instruments and the hedged item, along
with its risk management objectives
and its strategy for undertaking various
hedge transactions. Furthermore, at the
inception of the hedge and on an ongoing
basis, the Company documents whether
the hedging instrument is highly effective
in offsetting changes in fair values or cash
flows of the hedged item attributable to
the hedged risk.
C. De-recognition
A financial liability is derecognized when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another, from the same
lender, on substantially different terms, or the
terms of an existing liability are substantially
modified, such an exchange or modification is
treated as the derecognition of the original liability
and the recognition of a new liability. The difference
in the respective carrying amounts is recognized in
the Statement of Profit and Loss.
D. Offsetting of financial instruments
Financial assets and financial liabilities are
offset and the net amount is reported in the
balance sheet if there is a currently enforceable
legal right to offset the recognized amounts and
there is an intention to settle on a net basis,
to realize the assets and settle the liabilities
simultaneously.
(S) Significant accounting judgments, estimates and
assumptions
The preparation of the Company's financial statements requires
management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses,
assets and liabilities and the accompanying disclosures, and
the disclosure of contingent liabilities. Uncertainty about
these assumptions and estimates could result in outcomes
that require a material adjustment to the carrying amount of
assets or liabilities affected in future periods.
Judgments
In the process of applying the Company's accounting
policies, management has made the following judgments,
which have the most significant effect on the amounts
recognized in the financial statements:
(a) Operating lease commitments - Company as lessor;
(b) Assessment of functional currency;
(c) Evaluation of recoverability of deferred tax assets
Estimates and assumptions
The preparation of the financial statements in conformity
with Ind AS requires the management to make estimates,
judgments and assumptions. These estimates, judgments
and assumptions affect the application of accounting
policies and the reported amounts of assets and liabilities,
the disclosures of contingent assets and liabilities at the
date of the financial statements and reported amounts of
revenues and expenses during the period. The application
of accounting policies that require critical accounting
estimates involving complex and subjective judgments and
the use of assumptions in these financial statements have
been disclosed. Accounting estimates could change from
period to period. Actual results could differ from those
estimates. Appropriate changes in estimates are made as
management becomes aware of changes in circumstances
surrounding the estimates. Changes in estimates are
reflected in the financial statements in the period in
which changes are made and, if material, their effects are
disclosed in the notes to the financial statements.
The following are the key assumptions concerning the future
and other key sources of estimation uncertainty at the end
of the reporting period that may have a significant risk of
causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year :
a) Useful lives of property, plant and equipment,
investment property and intangible assets;
b) Fair value measurements of financial instruments ;
c) Impairment of non-financial assets;
d) Taxes;
e) Defined benefit plans (gratuity benefits);
f) Provisions;
g) Valuation of inventories;
h) Contingencies
(T) Recent accounting pronouncements
Ministry of Corporate Affairs (“MCA") notifies new standards
or amendments to the existing standards under Companies
(Indian Accounting Standards) Rules as issued from time
to time. For the year ended March 31, 2025, MCA has
notified Ind AS 117 - Insurance Contracts and amendments
to Ind AS 116 - Leases, relating to sale and leaseback
transactions, applicable to the Company w.e.f. April 1,2024.
The Company has reviewed the new pronouncements and
based on its evaluation has determined that it does not
have any significant impact in its financial statements.
5.1 Leases
The Company has entered into agreements for taking lease certain offices and warehouses on lease and license basis. The lease term
is a period ranging from 12 to 45 months. The Company has contracts which have fixed rentals. The Company has also taken leasehold
factory lands on one time payment basis. The lease term is a period ranging from 30 years to 99 years.
The following is the summary of practical expedients elected on initial application:
a) Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date
b) Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on
the date of initial application
c) Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
d) Applied the practical expedient to grandfather the assessment of which transactions are leases. Accordingly, Ind AS 116 is
applied only to contracts that were previously identified as leases under Ind AS 17
Disclosure as per the requirement of Ind AS 116
(i) Amounts recognized in balance sheet
The balance sheet shows the following amounts relating to teases
e) The Company has not allotted any equity shares for consideration other than cash, issued any fully paid-up bonus shares, or
bought back any shares during the five years immediately preceeding March 31, 2025
f) Dividend
The final dividend on shares is recorded as a liability on the date of approval by the shareholders and interim dividends are
recorded as a liability on the date of declaration by the Company's Board of Directors.
The Company declares and pays dividends in Indian rupees. Companies are required to pay/distribute dividend after deducting
applicable withholding income taxes. The remittance of dividends outside India is governed by Indian law on foreign exchange
and is also subject to withholding tax at applicable rates.
32. Segment Information
A. Factors used to identify the entity’s reportable segments, including the basis of organization
For management purposes, as the Company is in the business of manufacturing and trading of specialty petroleum products,
the Company has considered petroleum products as the only business segment for disclosure in this context of Indian
Accounting Standard 108.
The Managing Director (MD) evaluates the Company's performance and allocates resources based on an analysis of various
performance indicators by operating segment. The MD reviews revenue and gross profit as the performance indicator for the
operating segment. However, the Company's finance (including finance cost and finance income) and income taxes are managed
on a company as a whole basis and are not allocated to any segment.
Geographical segment of the organization
For the purpose of geographical segment the sales are divided into two segments - Domestic and Overseas. The accounting
policies of the segments are the same as those described in Note 2 (O)
36. Financial Instruments : Accounting classifications and fair value measurements
(i) Accounting classifications
The fair values of the financial assets and liabilities are determined 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.
The following methods and assumptions were used to estimate the fair values:
The carrying amounts of trade receivables, cash and cash equivalents, bank balances, short term deposits, trade payables,
payables for acquisition of property, plant and equipment, short term loans from banks, financial institutions and other current
financial assets and liabilities are considered to be the same as their fair values, due to their short-term nature.
(ii) Fair value measurements
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by
valuation technique:
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.
37. Financial risk management
Risk management framework
The Company has identified financial risks and categorized them in three parts viz. (i) Credit Risk, (ii) Liquidity Risk and (iii) Market
Risk. Details regarding sources of risk in each such category and how Company manages the risk is explained in following notes:
(i) Credit risk
Credit risk refers to the possibility of a customer and other counterparties not meeting their obligations and terms and conditions
which would result into financial losses. Such risk arises mainly from trade receivables and investments. Credit risk is managed
through internal credit control mechanism such as credit approvals, establishing credit limits and continuously monitoring
the credit worthiness of customers to which the Company grants credit terms in the normal course of business. The Company
establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of trade
and other receivables and investments. The maximum exposure to credit risk in case of all the financial instruments covered
below is restricted to their respective carrying amount.
Trade receivables
As per the credit policy of the Company, generally no credit are given exceeding the accepted credit norms. The Company deals
with large corporate houses and State Electricity Boards after considering their credit standing. The credit policy with respect
to other customers is strictly monitored by the Company at periodic intervals. Credit risk is managed through credit approvals,
establishing credit limits and continuously monitoring the credit worthiness of customers. In addition, for amounts recoverable
on exports, the Company has adequate insurance to mitigate overseas customer and country risk.
The Company uses an allowance matrix to measure the expected credit losses of trade receivables (which are considered good).
The following table provides information about the exposure to credit risk and loss allowance (including expected credit loss
provision) for trade receivables:
Note:- Impairment under expected credit loss includes H 0.14 Crore for doubtful debts P.Y. H 0.14 Crore
Cash and cash equivalents
The Company held cash and cash equivalents of H 32.96 Crore as at 31.3.2025 (31.3.2024: H 62.03 Crore). The cash and cash
equivalents are held with banks with good credit ratings. Also, the Company invests its surplus funds in bank fixed deposits,
which carry no / low mark to market risks for short duration and therefore, does not expose the Company to credit risk.
Investments
The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a
good credit rating. The Company does not expect any losses from non-performance by these counter-parties, and does not have
any significant concentration of exposures to specific industry sectors or specific country risks.
Derivatives
The forward contracts were entered into with banks having an investment grade rating and exposure to counterparties is closely
monitored and kept within the approved limits.
(ii) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations on due date. The Company has a strong
focus on effective management of its liquidity to ensure that all business and financial commitments are met on time. This is ensured
through proper financial planning with detailed annual business plans, discussed at appropriate levels within the organization.
Annual business plans are divided into quarterly plans and put up to management for detailed discussion and an analysis of the
nature and quality of the assumptions, parameters etc. Daily and monthly cash flows are prepared, followed and monitored at senior
levels to prevent undue loss of interest and utilize cash in an effective manner. Cash management services are availed to avoid any
loss of interest on collections. In addition, the Company has adequate borrowing limits with reputed banks in place duly approved.
a) Financing arrangements
The Company has an adequate fund and non-fund based Limits lines with various banks. The Company's diversified source
of funds and strong operating cash flow enables it to maintain requisite capital structure discipline. The financing products
include working capital loans, buyer's credit loan, supplier's credit loan etc.
b) Maturities of financial liabilities
The amounts disclosed in the table are the contractual undiscounted cash flows within one year
(iii) Market Risk
The risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market price. Market
risk further comprises of (a) Currency risk , (b) Interest rate risk and (c) Commodity risk.
a) Currency Risk
The Company is exposed to currency risk mainly on account of its import payables and export receivables in foreign currency.
The major exposures of the Company are in U.S. dollars. The Company hedges its import foreign exchange exposure partly
through exports and depending upon the market situations partly through forward foreign currency covers. The Company
has a policy in place for hedging its foreign currency exposure. The Company does not use derivative financial instruments
for trading or speculative purposes.
Sensitivity analysis
The table below shows sensitivity of open forex exposure to USD / INR movement. We have considered 1% ( /-) change in
USD / INR movement, increase indicates appreciation in USD / INR whereas decrease indicates depreciation in USD / INR.
The indicative 1% movement is directional and does not reflect management forecast on currency movement.
c) Commodity Risk
Raw Material Risk
Timely availability and also non-availability of good quality base oils from across the globe could negate the qualitative
and quantitative production of the various products of the Company. Volatility in prices of crude oil and base oil is
another major risk for this segment. The Company procures base oils from various suppliers scattered in different
parts of the world. The Company tries to enter into long term supply contracts with regular suppliers and at times
buys the base oils on spot basis.
38. Capital Management
For the purpose of the Company's capital management, capital includes issued equity capital, securities premium and all other
equity reserves attributable to the equity holders. The primary objective of the Company's capital management is to maximize the
shareholder value and to ensure the Company's ability to continue as a going concern.
The Company's objectives when managing capital are to:
• safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits
for other stakeholders, and
• Maintain an optimal capital structure to reduce the cost of capital.
(i) Net Debt comprises of total borrowings (including interest accrued but not due) and lease liabilities reduced by Cash and cash
equivalents and Bank balances other than cash and cash equivalents.
(ii) Equity comprises of Equity share capital and other equity.
39. Benami Transactions
The Company does not hold any Benami Property as defined under Benami Transactions (Prohibition) Act (45) of 1988 and rules
made thereunder.
40. Transactions with struck off Companies
The Company does not have any transactions with companies struck off under section 248 of Companies Act 2013 or Section 560 of
Companies Act 1956, during the financial year ending 31 March 2025 and 31 March 2024.
41. Restriction on number of layers
The Company has complied with the number of layer prescribed under clause (87) of section 2 of the Act read with Companies
(Restriction on Number of Layers) Rules, 2017.
42. Undisclosed Income
The Company does not have any undisclosed income during the financial year ended 31 March 2025 and 31 March 2024.
43. Crypto/Virtual Currency
The Company does not traded or invested in Crypto Currency or Virtual Currency during the financial year ended 31 March 2025
and 31 March 2024.
44. Code on Social Security, 2020
The Indian Parliament has approved the Code on Social Security, 2020 which subsumes the Provident Fund and the Gratuity Act and
the Rules thereunder. The Ministry of Labour and Employment has also released draft rules thereunder on 13 November 2020, and
has invited suggestions from the stakeholders which are under active consideration by the Ministry. The Company will evaluate the
rules, assess the impact, if any, and account the same once the rules are notified and become effective.
45. Utilization of borrowed funds and share premium
(a) No funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from
borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity,
including foreign entity (“Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary
shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(b) No funds (which are material either individually or in the aggregate) have been received by the Company from any person or
entity, including foreign entity (“Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the
Company shall, whether, 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.
46. Rounding off amount
The amount of financial statements of the company have been reported in H(in Crore) rounded off to 2 decimals. However, while doing
so, some of the above reported amounts might appear as 00 due to rounding off of amounts.
47. Previous year figures
The company has reclassified previous year figures to conform to this year's classification.
48. Subsequent Event
There are no subsequent events after the reporting period as confirmed by management.
49. Authorization for issue of the Financial Statements
The Financial Statements were authorized for issue by the Management under the direction of the Board of Director on May 26, 2025.
Signature to Notes 1 to 49 of the financial statements
As per our report of even date attached
For JMR & Associates LLP For and on behalf of the board of directors of
Chartered Accountants Panama Petrochem Limited
Firm Registration No. 106912W / W100300
CA. Nikesh Jain Amirali E. Rayani Samir A. Rayani
Partner Chairman Managing Director & CEO
Membership No : 114003 DIN:00002616 DIN:00002674
Place: Mumbai Place: Mumbai Place: Mumbai
Date : 26 May 2025 Date : 26 May 2025 Date : 26 May 2025
Pramod Maheshwari Gayatri Sharma
CFO Company Secretary & Compliance Officer
Place: Mumbai Place: Mumbai
Date : 26 May 2025 Date : 26 May 2025
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