17.2 Terms / rights attached to equity shares
The Company has only one class of Equity Shares having a par value of Rs. 5 per share. Each shareholders is eligible for one vote per share held.
In the event of liquidation of the Company, the holders of equity shares will be entitle to receive any of the remaining assets of the Company, after distribution of preferential amount, if any. The distribution will in proportion of the number of equity shares held by the shareholders.
The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuring Annual General Meeting, except in case of interim dividend.
Nature and purpose of Reserves General Reserve:
General Reserve is used from time to time to transfer profits from Retained Earnings for appropriation purposes. As the General Reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in General Reserve will not be reclassified subsequently to Statement of Profit and Loss.
Retained Earning :
Retained Earnings are the profits of the Company earned till date net of appropriation.
The tax rate used for the year ended 31 March 2024 and 31 March 2023 in reconciliations above is the corporate tax rate of 25.17 % and 25.17% respectively payable by corporate entities in India on taxable profits under the Indian tax law.
Provision for tax in the standalone financial statement for the year ended 31 March 2024 and year ended 31 March 2023 are only provisional in the respective years and subject to change at the time of filing of Income Tax Return based on actual addition/deduction as per provisions of Income Tax Act 1961.
(a) Defined Contribution Plans
The Company contributes to the Government managed provident and pension fund for all qualifying employees.
Contribution to provident fund of ' 16.01 (previous year: ' 16.97) is recognized as an expense and included in "Contribution to provident and other funds" in Statement of Profit and Loss.
(b) Defined Benefit Plans:
The Company has defined benefit plan for payment of gratuity to all qualifying employees. It is governed by the Payment of Gratuity Act, 1972. Under this Act, an employee who has completed five years of service is entitled to the specified benefit. The level of benefits provided depends on the employee's length of service and salary at retirement age. The Company’s defined benefit plan is unfunded.
There are no other post retirement benefits provided by the Company.
The most recent actuarial valuation of the present value of the defined benefit obligation were carried out as at 31 March 2024 and 31 March 2023 by Mithras Consultants, Fellow of the Institute of the Actuaries of India. The present value of the defined benefit obligation, the related current service cost and past service cost, were measured using the projected unit credit method.
Estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
These plans typically expose the Company to actuarial risks such as interest rate risk and salary risk.
a) Interest risk: a decrease in the bond interest rate will increase the plan liability.
b) Salary risk: the present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, a variation in the expected rate of salary increase of the plan participants will change the plan liability.
c) Investment risk-since the scheme is unfunded the Company is not exposed to investment risk.
Sensitivity Analysis
Significant actuarial assumptions for the determination of defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumption would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years
The average duration of the defined benefit plan obligation at the end of the reporting period is 14 years ( For PY :-10 years)
C. Other short term and long term employment benefits:
Annual leave & short term leave
The liability towards compensated absences (annual and short term leave) for the year ended 31 March 2024 based on actuarial valuation carried out by using Projected accrued benefit method results increase in liability by ' 2.81 Lakh (previous year : increase in liability by ' 8.80 Lakh), which is included in the employee benefits in the Statement of Profit and Loss.
For the purpose of the Company's capital management, capital includes issued equity share capital, security premium and all other equity reserves attributable to the equity holders of the Company
The Company’ s capital management objectives are:
• to ensure the Company's ability to continue as a going concern
• to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Company manages its capital structure and makes adjustments in light of changes in enomic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total equity. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations, if any.
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 interest-bearing loans and borrowings that define capital structure requirements. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March, 2024 and 31 March, 2023.
Investment in subsidiaries are classified as equity investments have been accounted at historical cost. Since these are scope out of Ind As 109 for the purpose of measurement, the same have not been disclosed in the table above.
The carrying amount reflected above represents the Company’s maximum exposure to credit risk for such financial assets.
(ii) Financial risk management
The Company’s finance function provides services to the business, coordinates access to financial market, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyse exposures by degree and magnitude of the risk. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
The use of financial derivatives is governed by the Company’s policies approved by the Board of Directors of the Company, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments and the investment of the excess liquidity. Compliance with policies and exposure limits is reviewed by the Company on a continuous basis. The Company does not enter into or trade financial instruments including derivative financial instruments for speculative purpose.
(iii) Market Risk
The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.
(iv) (a) Foreign Currency risk management
The Company is subject to the risk that changes in foreign currency values mainly impact the Company’s cost of imports of materials/capital goods, royalty expenses and borrowings etc.
Foreign exchange transactions are covered with in limits placed on the amount of uncovered exposure, if any, at any point in time. The aim of the Company's approach to management of currency risk is to leave the Company with minimised residual risk.
(b) Foreign Currency sensitivity analysis
The Company is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to US Dollar.
A 10% strengthening of the INR against key currencies to which the Company is exposed (net of hedge) would have led to additional gain in the Statement of Profit and Loss. A 10% weakening of the INR against these currencies would have led to an equal but opposite effect.
The following table details the Company’s sensitivity to a 10% increase and decrease in the Rupees against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes unhedged external loans, receivables and payables in currency other than the functional currency of the Company.
(v) (a) Interest rate risk management
Interest rate risk refers to the possibility that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. The Company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings.
(b) Interest rate sensitivity analysis
The sensitivity analysis below have been determined based on the exposure to interest rates for floating rate liabilities at the end of the reporting period. For floating rate liabilities, a 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates.
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company’s profit for the year ended 31 March 2024 would decrease/increase by ' 3.20 lakh net of tax (for the year ended 31 March 2023 decrease/increase by ' 4.36 lakh net of tax). This is mainly attributable to the Company's exposure to interest rates on its variable rate borrowings.
(vi) Other price risks
Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. Other price risk arises from financial assets such as investments in equity instruments and mutual funds. The Company does not have investment in equity instruments, other than investments in subsidiary which are held for strategic rather than trading purposes. The Company does not actively trade these investments. The Company’s investment in mutual funds are in debt funds. Hence the Company’s exposure to equity price risk is minimal.
Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as trade receivables, investment in mutual funds, derivative financial instruments, other balances with banks, loans and other receivables.
a) Trade Receivables
Credit risk arising from trade receivables is managed in accordance with the Company's established policy, procedures and control relating to customer credit risk management. The Company considers such amounts as due only on completion of related milestones. Accordingly, risk of recovery of such amounts is mitigated. All trade receivables are reviewed and assessed for default at each reporting period.
For trade receivables, as a practical expedient, the Company computes 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 provision matrix at the end of the reporting period is as follows and during the year the Company has changed the provision matrix considering the long term outstanding and credit risk.
b) Loans and Receivables
The Company applies expected credit losses (ECL) model for measurement and recognition of loss allowance on the loans given by the Company to the external parties. 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 Company expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate.
The Company determines if there has been a significant increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased significantly, an amount equal to 12-month ECL is measured and recognized as loss allowance. However, if credit risk has increased signifi-
cantly, an amount equal to lifetime ECL is measured and recognized as loss allowance.
12 months ECL are a portion of the lifetime ECL which result from default events that are possible within 12 months from the reporting date. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial asset.
ECL are measured in a manner that they reflect unbiased and probability weighted amounts determined by a range of outcomes, taking into account the time value of money and other reasonable information available as a result of past events, current conditions and forecasts of future economic conditions.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense/in-come in the Statement of Profit and Loss under the head 'Other expenses'/'other income’.
c) Other financial assets
Credit risk arising from investment in debt funds, derivative financial instruments and other balances with banks is limited because the counterparties are banks and recognised financial institutions with high credit ratings assigned by the various credit rating agencies. There are no collaterals held against such investments.
Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the committee of board of directors of the Company, which has established an appropriate liquidity risk management framework for the management of the Company's short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
Liquidity and interest risk tables
The following table detail the analysis of derivative as well as non-derivative financial liabilities of the Company into relevant maturity groupings based on the remaining period from the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
(ix) Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required)
The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.
Note:-43 Contingent liabilities:
(a) Contingent liabilities as at 31 March 2024 : Rs. Nil (31 March 2023 : Rs. Nil)
Note:-44 Capital and other Commitments
a) Estimated amounts of contracts remaining to be executed on capital account and not provided for (net of advances) is ' Nil (as at 31 March 2023: ' Nil).
b) Bank guarantees issued by the Company to its customers for ' 843.40 Lakh (as at 31 March 2023 : ' 380.68 Lakh).
Note:-45 Balance confirmation
The Company has a system of obtaining periodic confirmation of balances from banks, trade receivables/payables/ advances to vendors and other parties (other than disputed parties). Adjustments/restatement/impairment loss/ provisions on advances, if any will be accounted for on confirmation/reconciliation of the same, which in the opinion of the management will not have a material impact on the standalone financial statement.
Note:-46 Segment information
The Company is engaged only into single reportable Segment during the year as per Ind AS 108 Note:- 47 Revenue from contracts with customers as per Ind AS 115 (A) Disaggregated revenue information
In the following table, revenue from contracts with customers is disaggregated by primary major products and service lines Since the Company has only one reportable business segment, no reconciliation of the disaggregated revenue is required:
Note:- 57 Other statutory information's:
(i) The company does not have any transaction with the companies struck off under SEC 248 of the Companies Act 2013 or section 560 of the Companies Act 1956 during the year ended 31 March 2024 and 31 March 2023.
(ii) There are no charges or satisfaction which are to be registered with the registrar of companies during the year ended 31 March 2024 and 31 March 2023.
(iii) The Company complies with the number of layers of companies in accordance with clause 87 of Section 2 of the Act read with the Companies (Restriction on number of layers) rules 2017 during the year ended 31 March 2024 and 31 March 2023.
(iv) The Company has not invested or traded in cryptocurrency or virtual currency during the year ended 31 March 2024 and 31 March 2023.
(v) No proceedings have been initiated on or are pending against the company for holding Benami property under the Prohibition of Benami Property Transaction Act 1988 (as amended in 2016) (formally the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder during the year ended 31 March 2024 and 31 March 2023.
(vi) The Company has not been declared a wilful defaulter by any bank or financial institution or government or any government authorities during the year ended 31 March 2024 and 31 March 2023.
(vii) The Company has not entered into any scheme of arrangement approved by the competent authority in terms of sections 232 to 237 of the Companies Act 2013 during the year ended 31 March 2024 and 31 March 2023.
(viii) During the year ended 31 March 2024 and 31 March 2023, the Company has not surrendered or disclosed as income any transactions not recorded in the books of accounts in the course of tax assessments under the Income Tax Act, 1961 (such as search or survey or any other relevant provisions of the Income Tax Act 1961).
(ix) During the year ended 31 March 2024 and 31 March 2023, the Company has not advanced or loaned or invested funds (either borrowed funds or the share premium or kind of funds) to any other person or entities, including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the intermediary shall:
a. directly or indirectly land 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.
(x) During the year ended 31 March 2024 and 31 March 2023, the Company has not received any funds from any persons or entities 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."
(xi) The Company does not have any transaction which is not recorded in the books of accounts but 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).
(xii) Quarterly returns or statements of the current assets filed by the Company with banks or financial institutions are in agreement with books of accounts.
Note:-58 The company has a comprehensive system of maintenance of information and documents as required by the Goods and Services Act ("GST Act”). Since the GST Act requires existence of such information and documentation to be contemporaneous in nature, books of accounts of the company are also subject to filing of GST Periodic and
Annual Return as per applicable provisions of GST Act to determine whether the all transactions have been duly recorded and reconcile with the GST Portal. Adjustments, if any, arising while filing the GST Annual Return shall be accounted for as and when the return is filed for the current financial year. However, the management is of the opinion that the aforesaid annual return will not have any material impact on the Standalone financial statements.
Note:-59 The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment benefits has received Presidential assent on 28 September 2020. The Code has been published in the Gazette of India. However, the effective date of the Code is yet to be notified and final rules for quantifying the financial impact are also yet to be issued. In view of this, the Company will assess the impact of the Code when relevant provisions are notified and will record related impact, if any, in the period the Code becomes effective.
Note:-60 Events after the reporting period
There were no significant adjusting events that occurred subsequent to the reporting period other than the events disclosed in the relevant notes.
Note:-61 Previous year comparatives
Previous year’s figures have been regrouped / reclassified, wherever necessary, to conform to current year classification.
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