Note no.2:
Share application money pending allotment shall be classified into equity or liability in accordance with relevant Indian Accounting Standards. Share application money to the extent not refundable shall be shown under the head Equity and share application money to the extent refundable shall be separately shown under 'Other financial liabilities'.
Note no.3:
Preference shares including premium received on issue, shall be classified and presented as 'Equity' or 'Liability' in accordance with the requirements of the relevant Indian Accounting Standards. Accordingly the disclosure and presentation requirements in that regard applicable to the relevant class of equity or liability shall be applicable mutatis mutandis to the preference shares. For instance, plain vanilla redeemable preference shares shall be classified and presented under 'non-current liabilities' as 'borrowings' and the disclosure requirements in this regard applicable to such borrowings shall be applicable mutatis mutandis to redeemable preference shares.
Note no.4:
Compound financial instruments such as convertible debentures, where split into equity and liability components, as per the requirements of the relevant Indian Accounting Standards, shall be classified and presented under the relevant heads in 'Equity' and 'Liabilities' *During the Financial year 2017-18 the company had issued 53 Lakhs share warrants to the promoters of the company at Rs. 40 Per share. The company has received Rs. 10 (25%) against the same on 28th April 2017. Such warrants had to be convertible into one equity share at any time within a period of 18 Months from the date of allotment of such warrents. Balance 75% (i.e.Rs.30) had to be paid before the date of subscription to equity shares. On expiry of the said period of 18 months only 8 lakh share warrants had been converted in to equity shares by payment of Rs. 30 per share and the balance amount of Rs. 450 lakhs received has been forfeited and the same has been treated as capital reserve.
Capital Reserve: Capital reserve represents share and share warrants forfited. Capital Reserve is utilised in accordance with the provisions of the Act.
Security Premium: Securities Premium is created due to premium on issue of shares. These reserve is utilised in accordance with the provisions of the Act.
Retained Earnings/Surplus: Surplus is created out of the profits generated . The same can be utilised in accordance with the provisions of the Act to distribute among the shareholders by way of dividend or by way of issue of bonus shares etc after setting off accumulated loss.
* The Land and Factory buliding having a carrying value of Rs 807.63 Lakhs (31.03.2023 Rs. 818.47 Lakhs) has been mortaged to Canara Bank (Erstwhile Syndicate Bank) as a security against working capital limits sanctioned by them as on the date of the balance sheet. The currrent assets of the comapny including Raw Material, WIP, Finished goods are also hypothicated against cash credit limit of Rs 2,200 Lakhs
# Current maturities of long term debts has been regrouped under from Other Current Liabilities to borrowings
Penalty payable if any for delay in filing returns and payment of dues under Income Tax Act and Goods and Service Tax Act are not ascertainable and will be accounted on determination of the same.
Note No. 36.1
The Company has received the final approval from NCLT for reducton of Capital on account of cancellation of shares issued to Cimellia and capital has been reduced and transferred the amount to Capital Reserve during the year along with the premium on forfeited shares.
Note No 36.2
During the FY 2021-22 the Company has sold its investment in the Dubai subsidiary and necessary share transfer agreement has been executed. The Company had few advances given to its erstwhile subsidiary and amount receivable from them have been classified under loans and necessary agreement has been entered with the Purchaser of shares for refund of advance amount. The advance amount includes the advance amount paid by the Company to vendors in Dubai on behalf of their erstwhile subsidiary.
Note No 38
As per Ind As 116 , A lessee may elect not to apply the requirements in paragraphs 22 to 49:
(a) short-term leases; and
(b) leases for which the underlying asset is of low value
As per the managements judgement, the leases for which the underlaying asset is low value amounts to Rs 15,00,000 below which management does not consider the recognition of rent under Ind As 116.
The Company has not disclosed the fair value of financial instruments such as trade receivables, trade payables,
short term loans, deposits etc. because their carrying amounts are a reasonable approximation of fair value.
c) Fair value hierarchy:
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either
observable or unobservable and consists of the following three levels:
a) Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices in an active market. This included listed equity instruments, traded debentures and mutual funds that have quoted price. The fair value of all equity instruments (including debentures) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.
b) Level 2: Level 2 hierarchy includes financial instruments that are not traded in an active market (for example, traded bonds/ debentures, over the counter derivatives). The fair value in this hierarchy is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2
c) Level 3: If one or more of the significant Inputs is not based on observable market data, the instrument is included in level 3. Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. Financial instruments such as unlisted equity shares, loans are included in this hierarchy.
d) Inter level transfers: There are no transfers between levels 1 and 2 as also between levels 2 and 3 during the year.
e) Valuation technique used to determine fair value
i) the use of quoted market prices for the equity instruments and Mutual Funds
ii) the fair value of the unlisted shares are determined based on the income approach or the comparable market
Financial Risk Management Risk management framework
The company's activities expose it to market risk including currency risk, interest rate risk, liquidity risk and credit risk.
The company's risk management is carried out by finance department as per the policies approved by the Board of Directors.
The board provides principles for overall risk management as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, and investment of shortterm/longterm surplus funds.
A) Market Risk i) Foreign Currency Risk
Foreign currency risk arises from commercial transactions , assets and liabilities denominated in a currency that is not the Company's functional currency (INR).
Company does not have major exposure on FC transactions which needs to hade hedging arrangement. Hence, no such arrangement has been obtained with any banks. Suitably FC cost recognised during the execution
The exposure of the Company to foreign currency risk is not significant. However, this is closely monitored by the management to decided that there is no such arrangement in the company that requires hedging. Hence the company has not made any arrangements with the banks for hedging.
ii) Interest Rate Risk
The company does not have any borrowings other than borrowings from the bank in the current year hence there is no exposure to companies borrowing to interest rate changes at the end of the reporting period
During the previous year exposure of the company's borrowing to interest rate changes at the end of the reporting period depends on the mix of fixed rate and floating rate of the borrowings and the expected movement of market interest rate. The status of borrowings in terms of fixed rate and floating rate are as follows:
iii) Price Risk
The company's exposure to securities price risk arises from investments held by the company in units of mutual fund classified in the balance sheet at fair value through profit and loss. However, company does not have a practice of investing in market equity securities with a view to earn fair value changes gain. Company has invested in units of mutual funds when short term surplus fund exists with prior approval of the Board . Considering the size of the investment the price/market risk is not significant.
B) Credit Risk
Credit risk arises when a counter party defaults on contractual obligations resulting in financial loss to the company. Trade receivables consist of large number of customers, spread across diverse industries and geographical areas. In order to mitigate the risk of financial loss from defaulters, the Company has an ongoing credit evaluation process in respect of customers who are allowed credit period. In respect of walk-in customers the company does not allow any credit period and therefore, exposed to any credit risk.
C) Liquidity Risk
The Company has a liquidity risk management framework for managing its short term, medium term and long term sources of funding vis-a-vis short term and long term utilization requirement. This is monitored through a rolling forecast showing the expected net cash flow, likely availability of cash and cash equivalents, and available undrawn borrowing facilities.
II Audit Qualification (each audit qualification separately):
a) The Company has prepared its financial results on a going concern basis notwithstanding the fact that, the Company has Incurred significant operating losses during the last two financial years, Substantially reduced its workforce and ceased certain key operations, including refurbishment activities and experienced a substantial decline in revenues, also the Company has challenges in meeting its obligations, servicing its current liabilities including Income tax dues and Reported a gearing ratio of23.70%, exceeding its strategic cap of 20%. These events and conditions, collectively, indicate the existence of material uncertainties that may cast significant doubt on the Company’s ability to continue as a going concern. We were unable to obtain sufficient appropriate audit evidence to support management’s assertion that the going concern basis of accounting is appropriate.
b) The company has reported Rs.10.03 Crore as carrying value of inventory including E-waste inventory as on 31.03.2025 after devaluing the stock to the extent of Rs.19.95 crore on adhoc basis, for which we have not been provided with item-wise details, movement of inventory during the period and basis for the valuation. Due to the nature of inventory majority being E-waste stock, we could not verify the quantity of the inventory and in the absence of sufficient audit evidence we are unable to comment on the compliance of Ind AS - 2 “Inventory” and also we are unable express opinion on the correctness of the quantity and the carrying value of inventory held as on 31.03.2025 and its consequential impact, if any, on the standalone Financial Results.
c) Loans and advances given by the company includes Rs.5.95 Crore receivable from its subsidiary
company which is outstanding for more than 3 years. Also, the subsidiary company’s auditors expressed concerns over the subsidiary company’s ability to continue as going concern, as the net worth of the subsidiary company has been completely eroded. The company has not made any provision for expected credit loss of said loan and its investment in equity shares (book value of Rs.0.035 Crore) of the said subsidiary company. And hence, we are unable to express opinion on the correctness of the carrying value of the Loans receivable from its subsidiary company and investment in equity shares of its subsidiary company._
d) Total Trade receivables of the company as on 31.03.2025 is Rs. 148.39 crore, out of which Rs. 145.86 crore is outstanding for more than 1 year. However, the company has made provision for bad and doubtful debts only to the extent of Rs.68.86 crores on adhoc basis and written off to the extent of Rs.2.32 crore during the year. Also, the balance of trade receivables is subject to confirmation and the company has not assessed the loss allowance for expected credit loss and therefore, we are unable to express opinion on the correctness of the provisions for bad and doubtful debts, carrying value of the said receivables and its impact, if any, on the standalone financial results.
e) The company is having outstanding dues recoverable from an overseas party amounting to Rs. 100.28 Crore on account of sale consideration of Company’s erstwhile subsidiary M/s Cerebra Middle East FZCO Dubai, vide sale agreement dated 17.03.2022 and settlement of advances due from said erstwhile subsidiary company. As per the terms of the said agreement, the payment period now stands expired and overdue for payment for more than 2 years and the balances are subject to confirmation. The Company has not made any provision for bad and doubtful receivables, also the said balances were not restated as per the requirement of Ind AS 21 “The effects of changes in foreign exchange rates”. Hence, we are unable to comment on the regulatory compliances, recoverability of dues and its impact on the standalone Financial results.
f) The company has given Rs.20.29 crore (Rs.10.81 crore reported under current assets and Rs.9.49 crore reported -under Non current assets) towards Capital Advances and Other Advances to various parties, which are outstanding for more than 1 year and are subject to confirmation. Also, no provision has been made in the books for bad and doubtful portion. Hence, we are unable to comment on its recoverability and its consequential impact, if any, on the standalone financial results.
a) Type of Opinion - Disclaimer
b) Frequency of Qualification: First Time
c) For Audit Qualification (s) where the impact is quantified by the auditors, (Managements view)
Nil
d) For the Audit Qualification(s) where the impact is not quantified by the auditors :
i) Managements estimation on impact of the qualifications : No quantification
ii) If Management is unable to estimate the impact, Reasons for the same.
With respect to the qualification mentioned above point no. II (a) The management is identifying the root causes of the erosion and are exploring strategies to increase revenue. The management has already considered cost cutting measures to reduce losses by streamlining operations and reducing workforce. The management has already begun fund raising options by debt or equity to improve the financial position.
With respect to the qualification mentioned above point no. II (b) management of the opinion that, company have maintained stock records. However, nature of inventory measurement of EPR materials can be done only on estimated basis, However company has initiated the development software to address the requirement.
With respect to the qualifications mentioned above. Auditor has quantified only qualification mentioned point II (c). With respect to the same management is looking at merging the company with the parent company as an option or it will look out for outright sale for recovery of advance.
With respect to the qualification mentioned above in point no. II (d) the management is of the opinion that it is continuously following up with the customers for recovery and also formed bad debts provision policy for making provision for bad and doubtful debts. However, the management is confident of recovering most of the receivables.
With respect to the qualification mentioned above in point no. II (e) the management is of the opinion that the company is taking steps to revalidate the agreement by extending the period and is confident of recovering the dues.
With respect to the qualification mentioned above in point no. II (f) the management is of the opinion that it is continuously following up for recovery and also formed bad debts provision policy for making provision for bad and doubtful debts. However, the management is confident of recovery.
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