The company has not granted any loan or advance in nature of loan to promoter, directors and KMP either severally or jointly with any other person.
The inter corporate loan given to Olive Ecopack private limited includes accrued interest Rs. 175.00 lakhs (March 31,2024 Rs. 148.05 lakhs) Based on the binding term sheet. The company has granted the unsecured loan of Rs. 1,480.00 lakhs (March 31,2024 Rs. 995.00 lakhs) during the year to Olive Ecopak private limited which is interest bearing. The Company has extended the above loan to facilitate the establishment of a new manufacturing unit in Umbergaon, situated in the Valsad district. The loan enabled OEPL to acquire 12 acres of land and commence preparatory work for the project's development, as well as facilitate the import of necessary production machinery.
Note: 19.1 Terms/ rights attached to equity shares :
i) The Company has only one class of equity shares having at par value of Rs. 5 (F.Y 2023-24 : 10) per share. Each holder of equity share is entitled to one vote per equivalent fully paid up equity share.
ii) In the event of liquidation of the Company, the holder of 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 equivalent fully paid up equity shares held by the shareholders.
iii) The Company declare and pays dividend in Indian Rupees. Each equity share has the same right of dividend.
iv) The Board at its meeting held on 6th August, 2024 approved sub division of equity shares of the company with existing face
value of Rs. 10 each fully paid up into 2 each fully paid shares of Rs. 5 each consequential amendment to the Memorandum of Association of the Company is approved by Shareholders through AGM held on 29th August, 2024.
* During the financial year, the Company allotted 20,000 equity shares of ?10/- each as fully paid-up bonus shares to the preferential allottee. These shares were earlier kept under abeyance. The allotment was made in the ratio of 1:2, i.e., two bonus equity shares of ?10/- each fully paid-up for every one existing equity share of ?10/- each fully paid-up, pursuant to ordinary resolution passed by shareholders vide postal ballots on February 16, 2024.
* The Board at its meeting held on 6th August, 2024 approved sub division of equity shares of the company with existing face value of Rs. 10 each fully paid up into 2 each fully paid shares of Rs. 5 each consequential amendment to the Memorandum of Association of the Company is approved by Shareholders through AGM held on 29th August, 2024.
**Out of the 87,500 shares reserved under the ESOP scheme, an original grant of 13,000 options (which became 26,000 options after the share subdivision) is eligible for the bonus issue declared by the Company in FY 2023-24 at a ratio of 1:2.
As a result, the total number of Original options under the ESOP scheme has increased to 78,000 options.
Note: 19.7 No Class of shares has been bought back by the Company during the period of five years immediately preceding the current year end.
(a) During F.Y 2023-24, the Company allotted 2,44,28,000 equity shares of Rs. 10 each as fully paid up bonus shares by utilising Securities Premium amounting to Rs. 24,22,80,000, pursuant to ordinary resolution passed by shareholders vide postal ballots on February 16, 2024..
(b) On December 11, 2023, the Company has allotted 3,00,000 Warrants convertible into Equity shares, each at an issue price of Rs.209 per share (including a premium of Rs. 199 per share) to non-promoters through preferential allotment. This was approved by the shareholders in the Extra Ordinary General Meeting held on November 8, 2023, by passing a special resolution. Balance 75% of the issue price (i.e. Rs. 156.75 per warrant) shall be payable within 18 months from the date of allottment.The no of outstanding shares warrants as on 31st March 2025 after giving impact of subdivision of shares are 6,00,000 which are also eligible for bonus shares as declared by the company in FY 23-24
Nature and Purpose of Reserves(i) Securities Premium Reserve
Securities premium is used to record the premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.
(ii) Retained earnings
Retained earnings represent the accumulated earnings net of losses if any made by the Company over the years as reduced by dividends or other distributions paid to the shareholders and includes other comprehensive income.
(iii) Share option outstanding account
The company has established equity - settled share based payment plan for certain categories of employees of the company. The balance is employee share options account represent the expenses recorded pursuant to the aforesaid schemes for which the options are not yet vested or exercised (Refer Note No 47).
22.1 Term loan from bank as on 31st March, 2025 amounting to Rs. Nil ( 31st March 2024: Rs. 24.07 lakhs) was taken from HDFC and carries interest rate @ 9.25%. The loan is repayable in 36 (Thirty Six) monthly instalments commencing from February 2022 with 12 months Moratorium period. The loan is covered by 100% guarantee from NCGTC (National Credit Guarantee Trustee Company Ltd (Ministry of Finance, Government of India). Further, the loan has been guaranteed by the personal guarantee of directors.
22.2 Term loan from bank as on 31st March, 2025 amounting to Rs. 4.28 lakhs ( 31st March 2024: Rs. 36.95 lakhs) was taken from HDFC and carries interest rate @ 9.25% The loan is repayable in 36 (Thirty Six) monthly instalments commencing from May 2022 with 12 months Moratorium period. The loan is covered by 100% guarantee from NCGTC (National Credit Guarantee Trustee Company Ltd (Ministry of Finance, Government of India). Further, the loan has been guaranteed by the personal guarantee of directors.
22.3 Term loan from bank as on 31st March, 2025 amounting to Rs. 99.84 lakhs ( 31st March 2024: Rs. 146.18 lakhs) was taken from HDFC and carries interest rate @ 9.25%. The loan is repayable in 36 (Thirty six) monthly instalments commencing from February 2024 with 24 months Moratorium period. The loan is covered by 100% guarantee from NCGTC (National Credit Guarantee Trustee Company Ltd (Ministry of Finance, Government of India). Further, the loan has been guaranteed by the personal guarantee of directors.
22.4 Term loan from bank as on 31st March, 2025 amounting to Rs. 207.67 lakhs ( 31st March 2024: Rs. 254.36 lakhs) was taken from Shamrao Vithal Co-operative Bank and carries interest rate @ 9.25%. The loan is repayable in 84 (Eighty four) monthly instalments commencing from Dec 2021 with 6 months Moratorium period. The loan is secured by hypothecation of Current Asset, Plant & Machinery and third party land & Building. Further, the loan has been guaranteed by the personal guarantee of directors.
22.5 Term loan from bank as on 31st March, 2025 amounting to Rs. 276.46 lakhs ( 31st March 2024: Rs. 336.95 lakhs) was taken from Shamrao Vithal Co-operative Bank and carries interest rate @ 9.25%. The loan is repayable in 84 (Eighty four) monthly instalments commencing from Jan 2022 with 6 months Moratorium period. The loan is secured by hypothecation of Current Asset, Plant & Machinery and third party land & Building. Further, the loan has been guaranteed by the personal guarantee of directors.
22.6 Term loan from bank as on 31st March, 2025 amounting to Rs. 98.59 lakhs ( 31st March 2024: Rs. 123.02 lakhs) was taken from Shamrao Vithal Co-operative Bank and carries interest rate @ 9.25%. The loan is repayable in 84 (Eighty four) monthly instalments commencing from Jan 2022. The loan is secured by hypothecation of Current Asset, Plant & Machinery and third party land & Building. Further, the loan has been guaranteed by the personal guarantee of directors.
22.7 Term loan from bank as on 31st March, 2025 amounting to Rs. 226.13 lakhs ( 31st March 2024: Rs. 267.87 lakhs ) was taken from Shamrao Vithal Co-operative Bank and carries interest rate @ 9.25%. The loan is repayable in 84 (Eighty four) monthly instalments commencing from Aug 2022 with 6 months Moratorium period. The loan is secured by hypothecation of Current Asset, Plant & Machinery and third party land & Building. Further, the loan has been guaranteed by the personal guarantee of directors.
22.8 Term loan from bank as on 31st March, 2025 amounting to Rs. Nil ( 31st March 2024: Rs. 7.32 lakhs) was taken from Shamrao Vithal Co-operative Bank and carries interest rate @ 9.25%. The loan is repayable in 84 (Eighty four) monthly instalments commencing from Jul 2022 with 6 months Moratorium period. The loan is secured by hypothecation of Current Asset, Plant & Machinery and third party land & Building. Further, the loan has been guaranteed by the personal guarantee of directors.
22.9 Term loan from bank as on 31st March, 2025 amounting to Rs. 322 lakhs ( 31st March 2024: Rs. Nil) was taken from Shamrao Vithal Co-operative Bank and carries interest rate @ 9.25%. The loan is repayable in 56 (Fifty six) monthly instalments commencing from Apr 2025 with 12 months Moratorium period. The loan is secured by hypothecation of Current Asset, Plant & Machinery and third party land & Building. Further, the loan has been guaranteed by the personal guarantee of directors.
22.10 Term loan from bank as on 31st March, 2025 amounting to Rs. 156 lakhs ( 31st March 2024: Rs. Nil) was taken from Shamrao Vithal Co-operative Bank and carries interest rate @ 9.25%. The loan is repayable in 60 (Sixty) monthly instalments commencing from Apr 2025. The loan is secured by hypothecation of Current Asset, Plant & Machinery and third party land & Building. Further, the loan has been guaranteed by the personal guarantee of directors.
22.11 Term loan from bank as on 31st March, 2025 amounting to Rs. 280.56 lakhs ( 31st March 2024: Rs. 392.78 lakhs) was taken from CITI Bank and carries interest rate @ 7.25%. The loan is repayable in 18 (Eighteen) Quarterly instalments commencing from Apr 2023 with 6 months Moratorium period. The loan is secured by hypothecation of Current Asset, Plant & Machinery and third party land & Building. Further, the loan has been guaranteed by the personal guarantee of directors.
22.12 Term loan from bank as on 31st March, 2025 amounting to Rs. 274.44 lakhs ( 31st March 2024: Rs. 384.22 lakhs) was taken from CITI Bank and carries interest rate @ 7.25%. The loan is repayable in 18 (Eighteen) Quarterly instalments commencing from May 2023 with 6 months Moratorium period. The loan is secured by hypothecation of Current Asset, Plant & Machinery and third party land & Building. Further, the loan has been guaranteed by the personal guarantee of directors.
22.13 Term loan from bank as on 31st March, 2025 amounting to Rs. 875.38 lakhs USD 10.23 lakhs ( 31st March 2024: Rs. Nil) was taken from CITI Bank and carries interest rate @ 6.83%. The loan is repayable in 20 (twenty) Quarterly instalments commencing from Aug 2024. The loan is secured by hypothecation of Current Asset, Plant & Machinery and third party land & Building. Further, the loan has been guaranteed by the personal guarantee of directors.
22.14 Term loan from bank as on 31st March, 2025 amounting to Rs. 368.89 lakhs USD 4.31 lakhs ( 31st March 2024: Rs. Nil) was taken from CITI Bank and carries interest rate @ 6.94%. The loan is repayable in 20 (twenty) Quarterly instalments commencing from Nov 2024. The loan is secured by hypothecation of Current Asset, Plant & Machinery and third party land & Building. Further, the loan has been guaranteed by the personal guarantee of directors.
22.15 Term loan from bank as on 31st March, 2025 amounting to Rs. 87.98 lakhs USD 1.03 lakhs ( 31st March 2024: Rs. Nil) was taken from CITI Bank and carries interest rate @ 6.94%. The loan is repayable in 20 (twenty) Quarterly instalments commencing from Dec 2024. The loan is secured by hypothecation of Current Asset, Plant & Machinery and third party land & Building. Further, the loan has been guaranteed by the personal guarantee of directors.
22.16 Car Loan from HDFC bank as on 31st March, 2025 amounting to Rs. Nil ( 31st March 2024: Rs. 12.65 lakhs) was taken and carries an interest rate of 8.63%. The loan is repayable in 84 (Eighty Four) monthly instalments commencing from Oct 2017. The Loan is secured by hypothecation of the said Vehicle.
22.17 Car Loan from HDFC bank as on 31st March, 2025 amounting to Rs. 0.96 lakhs ( 31st March 2024: Rs. 3.70 lakhs) was taken and carries an interest rate of 8.20%. The loan is repayable in 60 (Sixty) monthly instalments commencing from Aug 2020. The Loan is secured by hypothecation of the said Vehicle.
22.18 Commercial Vehicle Loan from HDFC bank as on 31st March, 2025 amounting to Rs. 4.23 lakhs ( 31st March 2024: Rs. 8.17 lakhs) was taken and carries an interest rate of 7.01%. The loan is repayable in 47 (fourty seven) monthly instalments commencing from May 2022. The Loan is secured by hypothecation of the said Vehicle.
22.19 Car Loan from HDFC bank as on 31st March, 2025 amounting to Rs. 7.38 lakhs ( 31st March 2024: Rs. 12.42 lakhs) was taken and carries an interest rate of 7.90%. The loan is repayable in 48 (fourty eight) monthly instalments commencing from Aug 2022. The Loan is secured by hypothecation of the said Vehicle.
22.20 Car Loan from HDFC bank as on 31st March, 2025 amounting to Rs. 24.10 lakhs ( 31st March 2024: Rs. 29.19 lakhs ) was taken and carries an interest rate of 7.90%. The loan is repayable in 60 (sixty) monthly instalments commencing from Feb 2024. The Loan is secured by hypothecation of the said Vehicle.
22.21 Car Loan from FEDERAL bank as on 31st March, 2025 amounting to Rs. 5.62 lakhs ( 31st March 2024: Rs. 6.57 lakhs) was taken and carries an interest rate of 7.90%. The loan is repayable in 72 (Seventy two) monthly instalments commencing from Nov 2023. The Loan is secured by hypothecation of the said Vehicle.
22.22 Car Loan from HDFC bank as on 31st March, 2025 amounting to Rs. 14.80 lakhs ( 31st March 2024: Rs. Nil ) was taken and carries an interest rate of 9.25%. The loan is repayable in 60 (sixty) monthly instalments commencing from Mar 2025. The Loan is secured by hypothecation of the said Vehicle.
a) Cash credit from HDFC as on 31st March, 2025 amounting to Rs. 2,349.59 lakhs ( 31st March 2024: Rs. 2,021.59 lakhs) is secured by hypothecation of Current Assets, Plant & Machinery and Factory land & building. The credit facility has been guaranteed by personal guarantee of directors. The cash credit is repayable on demand and carries interest @ 8.75% as on 31st March, 2025.
b) Cash credit from Shamrao Vithal Co-operative Bank as on 31st March, 2025 amounting to Rs. 498.67 lakhs ( 31st March 2024: Rs. 509.25 lakhs). The loan is secured by hypothecation of Current Assets, Plant & Machinery and third party Land & Building. The credit facility has been guaranteed by personal guarantee of directors. The cash credit is repayable on demand and carries interest @ 9.25% as on 31st March, 2025.
c) Cash credit from CITI Bank as on 31st March, 2025 amounting to Rs. 2,925.66 lakhs ( 31st March 2024: Rs. 2,366.94 lakhs). The loan is secured by hypothecation of Current Assets, Plant & Machinery and third party Land & Building. The credit facility has been guaranteed by personal guarantee of directors. The cash credit is repayable on demand and carries interest @ 8.25% as on 31st March, 2025.
d) Cash credit from AXIS Bank as on 31st March, 2025 amounting to Rs. 532.57 lakhs ( 31st March 2024: Rs. 401.98 lakhs). The loan is secured by hypothecation of Current Assets, Plant & Machinery and third party Land & Building. The credit facility has been guaranteed by personal guarantee of directors. The cash credit is repayable on demand and carries interest @ 8.75% as on 31st March, 2025.
e) Unsecured Cash credit in form of WCDL from Bajaj as on 31st March, 2025 amounting to Rs. 755.35 lakhs ( 31st March 2024: Rs. Nil). The facility is repayable within 120 days and carries interest @ 9.6% as on 31st March, 2025.
Note: 28.1 Details of dues to micro and small enterprises as defined under the MSMED Act, 2006 The Ministry of Micro, Small and Medium Enterprises has issued an Official Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprise as at 31 March 2024 and 31 March 2023, has been made in the financial statements based on information received and available with the Company. The Company has not received any claim for interest from any supplier under the Micro, Small and Medium Enterprises Development Act, 2006 ("MSMED Act, 2006").
* It is not practicable for Company to estimate the timings of cash outflow if any in respect of the above only on receipt of Income Tax matter since judgement/decision in respect of the above matter are pending with the respective authorities.
The Company has received all its pending litigations & Proceedings and has disclosed contingent liability wherever applicable in the financial statements. The Company does not expect the outcome of those proceedings to have materially adverse effect on its financial position.
** The Company has obtained license under Export Promotion Capital Goods Scheme (EPCG) for import of capital goods on zero percent custom duty. Under the EPCG the Company needs to fulfil certain export obligations, failing which, it is liable for payment of custom duty. Export Obligations as on 31st March, 2025 is Rs. 1,605.27 lakh ( 31st March 2024: Rs. 3,895.33 lakh).
*** The Company has obtained Advance License for import of goods on zero percent custom duty. Under the Advance Licence scheme the Company needs to fulfil certain export obligations, failing which, it is liable for payment of custom duty saved on import. Export Obligations as on 31st March, 2025 is Rs. 254.27 lakh ( 31st March 2024: Rs. 72.65 lakh).
The Board at its meeting held on 6th August, 2024 approved sub division of equity shares of the company with existing face value of Rs. 10 each fully paid up into 2 each fully paid shares of Rs. 5 each consequential impact of the same is provided in EPS and it is accordingly restated.
Note: 46 Disclosure relating to employee benefits as per Ind AS 19 'Employee Benefits'
(i) Disclosures for defined contribution plan
The Company has defined contribution plan - Provident Fund. The obligation of the Company is limited to the amount contributed and it has no further contractual obligation. Following is the details regarding Company's contributions made during the year:
(ii) Disclosures for defined benefit plans
(a) Defined benefit obligations - Gratuity (funded)
The Company has a defined benefit gratuity plan for its employees. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, every employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the employee's length of service and salary at retirement age. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service as per the provisions of the Payment of Gratuity Act, 1972. The scheme is funded.
Rajshree Polypack Limited formulated Employee Stock Option Plan viz. "Rajshree Polypack Limited - Employee Stock Option Plan - 2022" (the "Plan") for the benefit of employees of the Company. The shareholders vide its special resolution dated August 4, 2022 passed through postal ballots approved the Plan. Under the said plan the Nomination and Remuneration Committee is empowered to grant 5,63,000 Employee Stock Options in form of equity shares linked to the completion of a minimum period of continued employment to the eligible employees of the Company, monitored and supervised by the Board of Directors. The employees can purchase equity shares by exercising the options as vested at the price specified in the grant. Once vested, the options remain exercisable for a period of 2 years.
Options are granted under the plan for no consideration and carry no dividend or voting rights. When exercisable, each option is convertible into 1 number of equity share. The exercise price of the share options is equal to the Face value of the underlying shares on the date of grant. There are no cash settlement alternatives for the employees.
The Committee granted 16,500 options on February 6, 2023, 3,900 options on October 31,2023, each stock option is exercisable into one equity share of face value of Rs. 10 each. Further The Committee granted 9500 options on February 5, 2025, each stock option is exercisable into one equity share of face value of Rs. 5 each.
The Company has made bonus issue of shares in the ratio of 2:1 during previous year, and accordingly outstanding employee stock options have been proportionately adjusted. As a result, the 20,400 outstanding options have been adjusted to reflect the bonus issue as follows:
Pre-bonus options: 20,400
Bonus shares entitlement (2:1): 40,800
Total adjusted options post-bonus: 61,200
Further, The Board at its meeting held on 6th August, 2024 approved sub division of equity shares of the company with existing face value of Rs. 10 each fully paid up into 2 each fully paid shares of Rs. 5 each. As a result 61,200 outstanding options have been adjusted to reflect the sub division as follows:
Options before sub division: 61,200
New Number of share on account of Sub division: 61,200
Total number of options after subdivision: 1,22,400
(a) Primary Segments - Business Segment :
The Company is mainly engaged in the business of manufacturing "Thermoformed Packaging Products ". All other activities of the Company revolve around the main business and as such, there are no business segments that require reporting under IND AS 108 - "Segment Reporting".
Note: 50 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 transactions with companies struck off u/s 248 of Companies Act, 2013.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have 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:
(a) 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
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company have 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:
(a) 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
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company have 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
(viii) The Company has used the borrowings from banks for the purpose for which it was obtained.
(ix) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
(x) The Company has complied with no of layers under clause 87 of section 2 of the Companies Act, 2013 read with Companies (Restriction on Number of Layers), Rules, 2017 .
1. The Quarterly statements were prepared and filed before the completion of all financial statement closure activities including IND AS related adjustment/reclassification, as applicable, which led to certain differences between the final books of accounts and the quarterly statements which were based on provisional books of accounts. Further there are certain items which are included/excluded erroneously/inadvertently in quarterly statements filed with the bank.
Note: 51 The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/ interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
(b) Fair valuation techniques
The Company maintains policies and procedures to value financial assets or financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The management assessed that fair value of Trade receivables (net), Cash and cash equivalents, Other bank balances, Loans -current, Other financial asset - current , Borrowings - Current, Trade payables and Other financial liabilities - current approximate their carrying amounts largely due to the short-term maturities of these instruments.
The amortized cost using effective interest rate (EIR) of non-current financial assets consisting of security deposits are not significantly different from the carrying amount. The impact of fair value on non-current borrowing, non-current security deposits and non-current term deposits is not material and therefore not considered for above disclosure.
(c) Fair value hierarchy
Financial assets and financial liabilities are measured at fair value in the financial statement and are grouped into three levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as follows:
Level 1 : Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 : Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3 : Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
Note: 55 Risk management framework
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. The Company is exposed to various financial risks. These risks are categorised into market risk, credit risk and liquidity risk.
The Company has exposure to the following risks arising from financial instruments:
• Credit risk;
• Liquidity risk;
• Market risk
(a) Credit risk :
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments.
Trade receivable
Customer credit risk is managed by the business unit subject to the Company's established policy, procedures and control relating to customer credit risk management. To manage trade receivable, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts and aging of such receivables. For receivables, as a practical expedient, the Company computes expected credit loss allowance based on a provision matrix. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 54. The Company does not hold collateral as security.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the management in accordance with the Company's policy. Counterparty credit limits are reviewed by the management on an annual basis, and may be updated throughout the year / period. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty's potential failure to make payments.
(b) Liquidity risk :
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to Company's reputation.
Management monitors rolling forecasts of the Company's liquidity position and cash and cash equivalents on the basis of expected cash flows to ensure it has sufficient cash to meet operational needs. Such forecasting takes into consideration the Company's debt financing plans, covenant compliance and compliance with internal statement of financial position ratio targets.
(c) Market 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. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of certain commodities. Thus, its exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities. The objective of market risk management is to avoid excessive exposure in revenues and costs.
(i) 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.
Fair value sensitivity analysis for fixed-rate instruments
The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.
Fair value sensitivity analysis for floating-rate instruments
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Group's profit before tax is affected through the impact on floating rate borrowings, is as follows:
Note: 56 Capital risk management
The Company manages its capital to ensure that it will be able 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 cost of capital. The Company manages its capital structure and make adjustments to, in light of changes in economic conditions, and the risk characteristics of underlying assets. In order to achieve this overall objective, the Company's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the borrowings that define the capital structure requirements.
Consistent with others in the industry, the Company monitors capital on the basis of the gearing ratio. The ratio is calculated as net debt divided by equity. Net debt is calculated as total borrowing (including current and non-current terms loans less cash and bank balances as shown in the balance sheet).
Note: 57 Investment in Securities, Loans to Related Parties
Disclosures pursuant to Regulation 34(3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 186 of the Companies Act, 2013
Note: 58 Previous year figures have been rearranged and reclassed wherever considered necessary
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