1.15 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS PROVISION
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a current pre-tax rate. The increase in the provision due to the passage of time is recognised as interest expense.
CONTINGENT LIABILITY
Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. The Company does not recognize a contingent liability but discloses its existence in the consolidated financial statements. CONTINGENT ASSET
Contingent asset is not recognised in standalone financial statements since this may result in the recognition of income that
may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognized. Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.
1.16 REVENUE RECOGNITION
The Company derives revenue primarily from manufacture of Polymers & Co-Polymers business comprising of Styrene, Divinyl Benzene, Acrylic Acid and Acrylates.
Revenue is recognised upon transfer of control of promised products or services to customers at the amount of transaction price (net of variable consideration) that reflects the consideration the Company expects to receive in exchange for those products or services. Revenue is measured based on the fair value of consideration specified in the contract with customer and excludes amounts collected on behalf of third parties.
Goods and Service Tax (GST) collected on behalf of the government is excluded from Revenue, as it is not an economic benefit to the Company.
OTHER OPERATING REVENUE
Other Operating Income consists of revenue generated from export incentives, duty drawbacks, and realized exchange gains. This income is recognized when performance obligations, as specified are fulfilled, and there is no significant uncertainty regarding the amount of consideration to be received
1.17 RECOGNITION OF INTEREST AND DIVIDEND INCOME Interest
Interest income is recognized using the effective interest rate method.
Dividend
Dividends are recognised in the Statement of Profit and Loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
1.18 TAXES ON INCOME Current Tax
Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the relevant tax laws and based on the expected outcome of assessments/appeals.
Current income tax relating to items recognized directly in equity is recognized in equity and not in the Statement of Profit and Loss.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the balance sheet approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside the Statement of Profit and Loss is recognized outside the Statement of Profit and Loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.
The break-up of the major components of the deferred tax assets and liabilities as at balance sheet date has been arrived at after setting off deferred tax assets and liabilities where the Company have a legally enforceable right to set-off assets against liabilities.
1.19 EMPLOYEE BENEFITS Short-term obligations
Short-term employee benefits are measured on an undiscounted basis and expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Post-employment obligations
The Company operates the following post-employment schemes:
• defined benefit plans such as gratuity; and
• defined contribution plans such as provident fund.
Defined Benefit Plans
The liability or asset recognized in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in Statement of Profit and Loss as past service cost.
Defined contribution plans
The Company makes specified monthly contributions towards government administered provident fund scheme. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. Other long-term employee benefit obligations
The liabilities for leave are not expected to be settled wholly within twelve months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Measurements as a result of experience adjustments and changes in actuarial assumptions are recognized in Statement of Profit and Loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
1.20 EARNINGS PER SHARE (EPS)
BASIC EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit (or loss) attributable to the owners of the Company by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares)..
DILUTED EARNINGS PER SHARE
Diluted earnings per share is computed by dividing the profit (considered in determination of basic earnings per share) after considering the effect of interest and other financing costs or income (net of attributable taxes) associated with dilutive potential equity shares by the weighted average number of equity shares considered for deriving basic earnings per share adjusted for the weighted average number of equity shares that would have been issued upon conversion of all dilutive potential equity shares.
4.03 Employee benefits
1) Defined Contribution Plans:
The amounts of contribution to provident fund and ESIC recognized as expenses during the year is Rs. 21.13 Lakhs (March 31, 2023: Rs.20.07 Lakhs) for the year ended March 31, 2024.
2) Defined Benefit Plans:
The Company provides for gratuity, a defined benefit retirement plan covering eligible employees, as governed by the Payment of Gratuity Act, 1972 (Gratuity Act). The gratuity plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount equivalent to 15 days' salary for each completed year of service. Vesting occurs upon completion of Five (5) continuous years of service as governed by the Gratuity Act. The Present value of the defined benefit obligations and related current service cost were measured using the Projected Unit Credit Method, with actuarial valuation being carried out at each Balance Sheet date.
The Gratuity Plan is administered by "Polychem Limited Employees Group Gratuity Scheme" & "Life Insurance Corporation of India" that is legally seperated from the Company.
The company expect to pay Rs. 2,28,819 in contributions to defined benefit plans in financial year 2024-25.
Investment Risk The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to government bond yields. If the return on plan asset is below this rate, it will create a plan deficit. Currently the plan has investment with LIC of India.
Interest Risk A decrease in the interest rate will increase the plan liability. However, this will be partially offset by an increase in the return on the plan's debt investments.
4.07 Financial Instruments
i) Methods & assumptions used to estimate the fair values
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
(a) The carrying amounts of receivables and payables which are short term in nature such as trade receivables, other bank balances, deposits, loans to employees, trade payables, other financial liabilities and cash and cash equivalents are considered to be the same as their fair values.
(b) The fair values for long term security deposits given and remaining non current financial assets were calculated based on cash flows discounted using a current rate at 9%. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs.
(c) For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
ii) Categories of financial instruments
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: directly or indirectly observable market inputs, other than Level 1 inputs; and Level 3: inputs which are not based on observable market data
4.08 Financial Risk Management
The Company's financial risk management is an integral part of how to plan and execute its business strategies. The Company's financial risk management policy is set by the Board of Directors. The details of different types of risk and management policy to address these risks are listed below:
The Company's activities are exposed to various risks viz. Credit risk, Liquidity risk and Market risk. In order to minimize any adverse effects on the financial performance of the Company, it uses various instruments and follows policies set up by the Board of Directors / Management. i) Credit Risk
Credit risk arises from the possibility that counter party will cause financial loss to the Company by failing to discharge its obligation as agreed.
Credit risks from balances with banks are managed in accordance with the Company policy. For derivative and financial instruments, the Company attempts to limit the credit risk by only dealing with reputable banks having high credit-ratings assigned by credit-rating agencies.
Based on the industry practices and business environment in which the Company operates, management considers that the trade receivables are in default if the payment are more than 12 months past due.
4.17 Additional Regulatory Information pursuant to the requirement in Division II of Schedule III to the Companies Act 2013
(a) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(b) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
(c) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(d) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
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
(e) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
i. 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
ii. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(f) The Company has not entered 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.
(g) The Company has no borrowings from banks and financial institutions on the basis of security of current assets.
(h) None of the entities in the Company have been declared wilful defaulter by any bank or financial institution or government or any government authority.
(i) The Company has complied with the number of layers prescribed under the Companies Act, 2013.
(j) The Company has not entered into any scheme of arragment which has an accounting impact on current or previous financial year.
4.18 The provisions of the Companies Act, 2013 and rules made thereunder requires that the Company uses only such accounting software for maintaining its books of account which has a feature of recording audit trail for each and every transaction, creating an edit log of each change made in books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled or tampered with effect from April 1, 2023.
The Company has taken all necessary steps to be compliant with the above requirement of audit trail functionality since it's effective date.
4.19 Recent 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. As at March 31, 2024, MCA has not notified any new standards or amendments to the existing standards which are applicable to the Company.
As per our report of even date For and on behalf of the Board of Directors
For Nayan Parikh & Co.
Chartered Accountants Tanil R. Kilachand Chairman (DIN No.: 00006659)
Firm Registration No.: 107023W Parthiv T. Kilachand Managing Director (DIN No.: 00005516)
Deepali N Shrigadi Kanan V. Panchasara Chief Financial Officer
Partner Deepali V. Chauhan Company Secretary & Compliance Officer
Membership No.: 133304
Place: Mumbai Date: 14th May, 2024 Place: Mumbai Date: 14th May, 2024
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