2.11 Provisions and contingent liabilities
Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
The Company records a provision for decommissioning costs. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognized as part of the cost of the particular asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognized in the statement of profit and loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.
If the Company has a contract that is onerous, the present obligation under the contract is recognised and measured as a provision. However, before a separate provision for an onerous contract is established, the Company recognises any impairment loss that has occurred on assets dedicated to that contract.
An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Company cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract (i.e., both incremental costs and an allocation of costs directly related to contract activities).
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence
of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
2.12 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks, cash on hand and short-term deposits net of bank overdraft with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, cash in banks and shortterm deposits net of bank overdraft.
2.13 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(a) Financial assets
(i) Initial recognition and measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
(ii) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
a) at amortized cost; or
b) at fair value through other comprehensive income; or
c) at fair value through profit or loss.
The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows."
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method (EIR).
Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in Statement of Profit and Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
Fair value through profit or loss (FVTPL): Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. Interest income from these financial assets is included in other income.
Equity instruments:
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS103 applies are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument- by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.
(iii) Impairment of financial assets
In accordance with Ind AS 109, Financial Instruments, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on financial assets that are measured at amortized cost and FVOCI.
For recognition of impairment loss on financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL
is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in subsequent years, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12 months ECL.
Life time ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12 months ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the year end.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider all contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.
In general, it is presumed that credit risk has significantly increased since initial recognition if the payment is more than 30 days past due.
ECL impairment loss allowance (or reversal) recognized during the year is recognized as income/expense in the statement of profit and loss. In balance sheet ECL for financial assets measured at amortized cost is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
(iv) Derecognition of financial assets
A financial asset is derecognized only when
a) the rights to receive cash flows from the financial asset is transferred or
b) retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the financial asset is transferred then in that case financial asset is derecognized only if substantially all risks and rewards of ownership of the financial asset is transferred. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.
(b) Financial liabilities
(i) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss and at amortized cost, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs.
(ii) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
Borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in Statement of Profit and Loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.
(iii) Derecognition
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 as finance costs.
(c) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
2.14 Employee Benefits
(a) Short-term obligations
Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within 12 months after the end of the year in which the employees render the related service are recognized in respect of employees' services up to the end of the year and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
(b) Other long-term employee benefit obligations
(i) Defined contribution plan
Provident Fund: Contribution towards provident fund is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis which are charged to the Statement of Profit and Loss.
(ii) Defined benefit plans
Gratuity: The Company provides for gratuity, a defined benefit plan (the 'Gratuity Plan") covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary. The Company's liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the other comprehensive income in the year in which they arise.
Compensated Absences: Accumulated
compensated absences, which are expected to be availed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.
Accumulated compensated absences, which are expected to be availed beyond 12 months from the end of the year end are treated as other long term employee benefits. The Company's liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the statement of profit and loss in the year in which they arise.
Leaves under define benefit plans can't be encashed.
(c) Share-based payments
Employees (including senior executives) of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions). The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
That cost is recognised, together with a corresponding increase in share-based payment (SBP) reserves in equity, over the period in which the performance and/ or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Companies' best estimate of the number of equity instruments that will ultimately vest. The statement of profit and loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
2.15 Equity share capital
Equity shares are classified as equity share capital. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
2.16 Provision for Dividend
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
2.17 Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate. Where the grant relates to an asset, it is recognized as deferred income and is allocated to statement of profit and loss over the periods and in the proportions in which depreciation on those assets is charged.
2.18 Borrowing cost
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset are capitalized as part of the cost of the respective asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset which necessarily takes a substantial period of time to get ready for its intended use or sale. Ancillary cost of borrowings in respect of loans not disbursed are carried forward and accounted as borrowing cost in the year of disbursement of loan. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest expenses calculated as per effective interest method, exchange difference arising from foreign currency borrowings to the extent they are treated as an adjustment to the borrowing cost and other costs that an entity incurs in connection with the borrowing of funds.
2.19 Segment reporting
Ind AS 108 establishes standards, for the way that business enterprises report information about operating segments and related disclosures about products, services and geographic areas, and major customers.
The primary reporting of the Company has been performed on the basis of business segments. Based on the "management approach" as defined in Ind AS 108, the Chief Operating Decision Maker (CODM) evaluates the Company's performance and allocates resources to manufacture of "Thermoformed Packaging Products" only hence it has been considered as the only reportable business segment and hence no separate financial disclosures provided in respect of its single business segment.
2.20 Statement of Cash Flows
Cash flows are reported using the indirect method, where by net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.
2.21 Earnings Per Share
"Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Earnings considered in ascertaining the Company's earnings per share is the net profit or loss for the year after deducting preference dividends and any attributable tax thereto for the year. The weighted average number of equity shares outstanding during the year and for all the years presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares."
2.22 Rounding off amounts
All amounts disclosed in financial statements and notes have been rounded off to the nearest lakhs as per requirement of Schedule III of the Act, unless otherwise stated.
a) Term loan from bank as on 31st March, 2024 amounting to Rs. 24.07 lakhs/- ( 31st March 2023: Rs. 49.54 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.
b) Term loan from bank as on 31st March, 2024 amounting to Rs. 36.95 lakhs/- ( 31st March 2023: Rs. 66.74 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.
c) Term loan from bank as on 31st March, 2024 amounting to Rs. 146.18 lakhs/- ( 31st March 2023: Rs. 153.50 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.
d) Term loan from bank as on 31st March, 2024 amounting to Rs. 254.36 lakhs/- ( 31st March 2023: Rs. 297.67 lakhs/-) was taken from Shamrao Vithal Co-operative Bank and carries interest rate @ 9.80%. 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.
e) Term loan from bank as on 31st March, 2024 amounting to Rs. 336.95 lakhs/- ( 31st March 2023: Rs. 393.08 lakhs/-) was taken from Shamrao Vithal Co-operative Bank and carries interest rate @ 9.80%. 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.
f) Term loan from bank as on 31st March, 2024 amounting to Rs. 123.02 lakhs/- ( 31st March 2023: Rs. 151.73 lakhs/-) was taken from Shamrao Vithal Co-operative Bank and carries interest rate @ 9.80%. 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.
g) Term loan from bank as on 31st March, 2024 amounting to Rs. 267.87 lakhs/- ( 31st March 2023: Rs. 306.65 lakhs /-) was taken from Shamrao Vithal Co-operative Bank and carries interest rate @ 9.80%. 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.
h) Term loan from bank as on 31st March, 2024 amounting to Rs. 7.32 lakhs/- ( 31st March 2023: Rs. 20.36 lakhs/-) was taken from Shamrao Vithal Co-operative Bank and carries interest rate @ 9.80%. 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.
i) Term loan from bank as on 31st March, 2024 amounting to Rs. 392.78 lakhs/- ( 31st March 2023: Rs. 505.00 lakhs/-) was taken from CITI Bank and carries interest rate @ 9%. 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.
j) Term loan from bank as on 31st March, 2024 amounting to Rs. 384.22 lakhs/- ( 31st March 2023: Rs. 494.00 lakhs/-) was taken from CITI Bank and carries interest rate @ 9%. 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.
k) Car Loan from HDFC bank as on 31st March, 2024 amounting to Rs. 12.65 lakhs/- ( 31st March 2023: Rs. 27.08/- 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.
l) Car Loan from HDFC bank as on 31st March, 2024 amounting to Rs. 3.70 lakhs/- ( 31st March 2023: Rs. 6.22/- 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.
m) Commercial Vehicle Loan from HDFC bank as on 31st March, 2024 amounting to Rs. 8.17 lakhs/- ( 31st March 2023: Rs. 11.85 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.
n) Car Loan from HDFC bank as on 31st March, 2024 amounting to Rs. 12.42 lakhs/- ( 31st March 2023: Rs. 17.09 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.
o) Car Loan from HDFC bank as on 31st March, 2024 amounting to Rs. 29.19 lakhs/- ( 31st March 2023: Rs. Nil ) 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.
p) Car Loan from FEDERAL bank as on 31st March, 2024 amounting to Rs. 6.57 lakhs/- ( 31st March 2023: Rs. Nil) 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.
a) Cash credit from HDFC as on 31st March, 2024 amounting to Rs. 2,021.59 lakhs/- ( 31st March 2023: Rs. 1,971.12/- 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 @ 9.94% as on 31st March, 2024.
b) Cash credit from Shamrao Vithal Co-operative Bank as on 31st March, 2024 amounting to Rs. 509.25 lakhs/- ( 31st March 2023: Rs. 385.57 /- 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 @ 9.80% as on 31st March, 2024.
c) Cash credit from CITI Bank as on 31st March, 2024 amounting to Rs. 2,366.94 lakhs/- ( 31st March 2023: Rs. 36.90/- 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% as on 31st March, 2024.
d) Cash credit in form of WCDL from CITI Bank as on 31st March, 2024 amounting to Rs. Nil/- lakhs ( 31st March 2023: Rs. 2,500 lakhs/-) is secured by hypothecation of Current Asset, Plant & Machinery and third party Land & Building. The credit facility has been guaranteed by the personal guarantee of directors. The facility is repayable on demand and carries interest @ 8.25% as on 31st March, 2023.
e) Cash credit from AXIS Bank as on 31st March, 2024 amounting to Rs. 401.98 lakhs/- ( 31st March 2023: Rs. Nil/- 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, 2024.
Note: 49 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.
(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: 54 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 51. 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.
Note: 55 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).
As per our report of even date attached For and on behalf of the Board of Directors
M S K A & Associates Rajshree Polypack Limited
Chartered Accountants CIN : L25209MH2011PLC223089
Firm Registration No.: 105047W
Ramswaroop Thard Naresh Thard
Rajesh Murarka Chairman & MD Jt. Managing Director
Partner DIN : 02835505 DIN : 03581790
Membership No. 120521
Mitali Shah Sunil Sharma
Company Secretary & Chief Financial Officer
Compliance Officer
Place: Thane Place: Thane
Date : May 28th, 2024 Date : May 28th, 2024
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