q) Provisions:
Provisions are recognized when there is a present legal or constructive obligation that can be estimated reliably,
because of a past event, when it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognized
for future operating losses.
Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation is
recognized as a separate asset. However, this asset may not exceed the amount of the related provision.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable
that an outflow of economic resources will be required to settle the obligation, the provisions are reversed. Where the
effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. When discounting is used, the increase in the provisions due to the passage
of time is recognized as a finance cost.
r) Contingencies:
Where it is not probable that an inflow or an outflow of economic resources will be required, or the amount cannot be
estimated reliably, the asset or the obligation is not recognized in the statement of balance sheet and is disclosed as a
contingent asset or contingent liability. Possible outcomes on obligations/rights, whose existence will only be
confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets or
contingent liabilities.
s) Taxes on Income:
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to
the tax authorities in accordance with the respective laws of the state. Current tax includes taxes to be paid on the profit
earned during the year and for the prior periods.
Deferred income taxes are provided based on the balance sheet approach considering the temporary differences
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the
reporting date.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet
date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes down the
carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient future taxable income will
be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it
becomes reasonably certain that sufficient future taxable income will be available.
t) Prior period items:
In case prior period adjustments are material in nature the Company prepares the restated financial statement as
required under Ind AS 8 - "Accounting Policies, Changes in Accounting Estimates and Errors”. Immaterial items
pertaining to prior periods are shown under respective items in the Statement of Profit and Loss.
u) Cash and cash equivalents:
Cash and cash equivalents include cash on hand and at bank, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less that are readily convertible to a known amount of cash
which are subject to an insignificant risk of changes in value and are held for meeting short-term cash commitments.
For the Statement of Cash Flows, cash and cash equivalents consist of short-term deposits, as defined above, net of
outstanding bank overdraft as they are being considered as integral part of the Company's cash management.
v) Financial Instrument:
A financial instrument is any contract that gives rise to a financial asset of one entity and financial liability or equity
instrument of another entity.
a. Financial Asset:
Initial recognition and measurement
All financial instruments are recognized initially at fair value plus, in the case of financial assets not recorded at fair value
through profit & loss account transaction costs that are attributable to the acquisition of the financial asset, purchase or
sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the
market place are recognized on the trade date i.e. the date that the company commits to purchase or sell the asset.
Subsequent Measurement
For subsequent measurement financial assets are classified as measured at:
1) Amortized Cost
2) Fair value through profit and loss (FVTPL)
3) Fair value through other comprehensive income (FVTOCI)
Financial Asset measured at amortized cost.
Financial Assets held within a business model whose objective is to hold financial assets to collect contractual cash
flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding are measured at amortized cost using effective interest
rate (EIR) method. The EIR amortization is recognized as finance income in the statement of Profit & Loss.
The company, while applying above criteria has classified all the financial assets (except investments in equity shares)
at amortized cost.
Financial Assets Measured at fair value through other comprehensive income.
Financial assets that are held within a business model whose objective is achieved by both, selling financial assets, and
collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair
value through other comprehensive income. Fair value movements are recognized in the other comprehensive income
(OCI). Interest income is measured using the EIR method and impairment losses, if any are recognized in the Statement
of Profit and Loss. On derecognition, cumulative gain or loss previously recognized in OCI is reclassified from the equity
to other income' in the Statement of Profit and Loss.
Financial Assets at fair value through profit or loss (FVTPL)
Financial Asset is measured at fair value through Profit & Loss if it does not meet the criteria for classification as
measured at amortized cost or at FVTOCI. All fair value changes are recognized in the statement of profit & loss.
De-recognition of Financial Assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset
expire, or it transfers the contractual rights to receive the cash flows from the asset.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition
of impairment loss on the debt instruments, that are measured at amortized cost e.g., loans, debt securities, deposits,
trade receivables and bank balance.
Expected credit loss 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.
The management uses a provision matrix to determine the impairment loss on the portfolio of trade and other
receivables. The provision matrix is based on its historically observed expected credit loss rates over the expected life of
the trade receivables and is adjusted for forward-looking estimates.
Expected credit loss allowance or reversal recognized during the period is recognized as income or expense in the
statement of profit and loss. In the case of a balance sheet, it is shown as reduction from the specific financial asset.
b. Financial Liabilities.
Initial recognition and measurement
Financial liabilities are recognized initially at fair value plus any transaction cost that is attributable to the acquisition of
the financial liability except financial liabilities at FVTPL that are measured at fair value.
Subsequent Measurement
Financial liabilities are subsequently measured at amortized cost using the EIR method. Financial liabilities carried at
fair value through profit or losses are measured at fair value with all changes in fair value recognized in the Statement of
Profit and Loss.
Financial Liabilities at amortized cost
Amortized cost for financial liabilities represents amount at which financial liability is measured at initial recognition
minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any
difference between the initial amount and the maturity amount.
All the financial liabilities of the company are subsequently measured at amortized cost using the Effective Interest
method.
De recognition of Financial Liabilities
Financial liability shall be derecognized when, and only when, it is extinguished i.e. when the obligation specified in the
contract is discharged or cancelled or expires.
w) Offsetting.
Financial assets and financial liabilities are off set and the net amount presented in the balance sheet when, and only
when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on
a net basis or to realize the asset and settle the liability simultaneously.
1 The Loans referred at (a to f) above are Primary secured by hypothecation of entire current assets, present and future on
pari-passu basis with other working capital lenders and First charge by way of equitable mortgage of properties standing
in the name of the company and Second charge on Fixed Assets of the company raking pari-passu with other lenders in
the working capital consortium.
2 The Loans referred at (g) & (j) above are secured by 1st pari-passu charge by hypothecation of land & Buildings at
Toopran, Part -B, Industrial park, and guaranted by Managing Director and other two promoter directors.
3 The Loans referred at (h & i) above are secured by 1st pari-passu charge by hypothecation of land & Buildings at
Toopran, Part -A, Industrial park, & 1st parripassu charge by hypothecation of plant & machinery created our of the
finance and guaranted by Managing Director and other two promoter directors.
4 Hire Purchase Loans above are secured by hypothecation of the respective asset and guaranted by one of the Directors
of the Company and repayable in monthly installments.
5 Loan From Axis Finance Ltd is secured by hypothecation of Promoters Land at Medchal
6 Loan From Oxyzo Financial Services Ltd are secured by an exclusive charges on the personal property of Directors
situated at Shahazadiguda village, Medchal-Malkajgiri district, Telangana.
The loan is further secured by personal guarantee of Srikrishna Mullapudi (Exucutive director), Lokeswara Rao Mullapudi
(Managind Director), Srinivasa Mullapudi (Executive director) and M Vasantha Lakshmi (Promoter group)
Tprm?; nf Rpnavmpnts
c) Performance obligation:
All sales are made at a point in time and revenue recognised upon satisfaction of the performance obligations which is
typically upon dispatch/ delivery. The Company does not have any remaining performance obligation for sale of goods or
rendering of services which remains unsatisfied as at March 31,2025 and March 31,2024.
d) Disaggregation of revenue:
Refer Note 44 for disaggregated revenue information. The management determines that the segment information
reported is sufficient to meet the disclosure objective with respect to disaggregation of revenue under Ind AS 115
"Revenue from contract with customers".
37. Fair Value Measurement:
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price 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 fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place either in the principal market for such asset or liability, or
in the absence of a principal market, in the most advantageous market which is accessible to the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the
asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within
the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
a. Level 1 - Quoted (unadjusted market prices) in active markets for identical assets or liabilities.
b. Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurements is
directly or indirectly observable.
c. Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
39. Employee benefits plan
a) Defined contribution plans
Refer Note 31 for the Company's contribution to the defined contribution plans with respect to employee benefit
funds i.e Provident Fund and Employees' State Insurance Scheme.
b) Defined benefit plan
The Company has a defined benefit gratuity plan (funded). The gratuity plan is governed by the Payment of Gratuity
Act, 1972. Under the Gratuity Act, an employee who has completed five years of service is entitled to specific
benefits. The level of benefits provided depends on the member's length of service, managerial grade and salary at
retirement age.
41. Segment information
(a) The primary reporting of the company has been performed on the basis of business segment. The company is
organized into two business segments i.e. Machines Division and Component Division. Segments have been
identified and reported based on the nature of the products, risks and returns, the organization structure and the
internal financial reporting system.
The expenses that are not directly attributable to the business segments are shown as unallocated corporate
costs.
Segment assets include all operating assets used by a segment and consist principally of debtors, inventories,
advances and fixed assets, net of allowances.
Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.
42. Financial Risk Management
The Company's activities expose it to market risk, credit risk and liquidity risk. Company's overall risk management
focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial
performance.
I. Market Risk
Market risk is the risk of loss of the future earnings, fair values or future cash flows that may result from a change in
the price of a financial instrument. The value of a financial instrument may change as a result of changes in the
interest rates, foreign currency exchange rates, commodity prices and other market changes that affect market
risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including
investments and deposits, foreign currency receivables, payables and borrowings.
a. Foreign Currency Risk - Foreign Currency Risk is the risk of impact related to fair value or future cash flows of an
exposure in foreign currency, which fluctuate due to change in foreign currency rates. The Company's exposure to
the risk of changes in foreign exchange rates relates primarily to impact of raw materials and spare parts, capital
expenditure and export of Machines. The company does not enter into any derivative instruments for trading or
speculative purposes and the impact foreign currency risk is negligible.
b. Interest Rate Risk - Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market
rates relates primarily to the Company's short term borrowing. The Company constantly monitors the credit
markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost. Since all
the borrowings are on floating rate and constantly monitored, no significant risk of change in interest rate.
II. Credit Risk
Credit risk arises when a customer or counterparty does 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/investing activities, including deposits with banks. The
company has a prudent and conservative process for managing its credit risk arising in the course of its business
activities. The Company is receiving payments regularly from its customers and hence the Company has no
significant credit risk.
III. Liquidity Risk
Liquidity risk is defined as the risk that the company will not be able to settle or meet obligations on time or at
reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable
securities and the availability of funding through an adequate amount of credit facilities to meet obligations when
due. The Company's treasury team is responsible for liquidity, funding as well as settlement management. In
addition, processes and policies related to such risks are overseen by senior management. Management monitors
the Company's liquidity position through rolling forecasts based on expected cash flows.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March, 2025
and 31 March, 2024
44. Corporate Social Responsibility
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least
2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR)
activities. A CSR committee has been formed by the company as per the Act. The funds were primarily allocated to a
corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013:
46. Additional disclosures as per Schedule III of the Companies Act, 2013:"
i) The Company do not have any Benami property and neither any proceedings have been initiated or is pending
against the Company for holding any Benami property.
ii) The Company do not have any transactions with companies struck off.
iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory
period.
iv) The Company has not been declared a willful defaulter by any bank or financial institution or any other lender during
the current period.
v) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other
sources or kind of funds), other than in the ordinary course of business by the Company to or in any other person(s)
or entity(ies), including foreign entities ("Intermediaries”) with the understanding, whether recorded in writing or
otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate
Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding
that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on
behalf of the Company ("Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries”
vi) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year
vii) he Company has not made 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 I ncome Tax Act, 1961).
viii) The Company has complied with number of layers prescribed under clause (87) of Section 2 of the Act read with the
Companies (Restriction on number of Layers) Rules, 2017"
47. OFAC Sanctions:
The Company soon after becoming aware that its name was featured in the sanctions list of the United States
Department of Treasury published on October 30, 2024, informed the Stock Exchanges vide letter dated November 02,
2024, stating that the company is not aware of any machines being sold or having dealt with any sanctioned entities or
individuals, which lead to the inclusion of Company's name in the list.
Furthermore, due to OFAC Sanctions, during the period starting from October 30, 2024, to March 31,2025, the Company
was unable to enter into any foreign currency transactions.
Further, the Company is in the process of getting its name removed from the sanction list of the United State Department
of Treasury for which the Company through a US based lawyer firm filed an application before Office of Foreign Assets
Control, U.S. Department of the Treasury ("OFAC”) for expedited removal/reconsideration of Designation on the list of
Specially Designated Nationals and Blocked Persons on January 31,2025 (EST) and had also intimated to the Stock
Exchanges vide letter dated February 01,2025 (IST).
In view of the OFAC sanctions and challenging macro-economic conditions, the company has taken certain cost cutting
initiative and as a result of which, the Company is able to minimize the impact of sanctions on the operations of the
Company.
Furthermore, the Company has undertaken renewed strategic initiatives aimed at recouping the business. These
measures have begun to yield positive outcomes, evidenced by the emergence of new opportunities and the onboarding
of new customers
48. Previous Year's figures have been regrouped wherever necessary to correspond with the current year's figures. Except
when otherwise stated, the figures are presented in Rupees in Lakhs.
As per our report of even date attached
For and on behalf of the Board
For Brahamayya & Co M. LOKESWARA RAO M. SRINIVAS
Chartered Accountants Managing Director Director
Firm's Registration No : 000513S DIN : 00989447 DIN : 00917565
K Shravan V. SUDHAKARA REDDY GURPRIT SINGH
Partner Chief Financial Officer Company Secretary
Membership No.:215798
Place : Hyderabad
Date : May 28, 2025
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