1.9 Provisions and contingent liabilities:
The Company recognizes a provision when there is a present obligation as a result of
a past event that probably requires an outflow of resources and a reliable estimate can
be made of the amount of the obligation. A disclosure for a contingent liability is made
when there is a possible obligation or a present obligation that may, but probably will
not, require an outflow of resources. Where there is a possible obligation or a present
obligation that the likelihood of outflow of resources is remote, no provision or disclosure
is made.
Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs
of meeting the obligations under the contract exceed the economic benefits expected
to be received under it, are recognized when it is probable that an outflow of resources
embodying economic benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
1.10 Taxes:
Tax expense comprises current and deferred tax. Current income tax is measured at the
amount expected to be paid to the tax authorities in accordance with the Income-Tax Act,
1961 enacted in India. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted, at the reporting date.
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be
recovered from or paid to the taxation authorities. Current income tax relating to items
recognized directly in equity is recognised in equity and not in the statement of profit and
loss. Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
Minimum alternate tax
During the current year ended March 31, 2024, the company has made the tax provisions
based on new tax regime.
Deferred tax
Deferred tax is provided using the balance sheet approach on temporary differences
at the reporting date between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purpose at reporting date. Deferred income tax assets
and liabilities are measured using tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date and are expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered
or settled. The effect of changes in tax rates on deferred income tax assets and liabilities
is recognized as income or expense in the period that includes the enactment or the
substantive enactment date. A deferred income tax asset is recognized to the extent that
it is probable that future taxable profit will be available against which the deductible
temporary differences and tax losses can be utilized. The carrying amount of deferred
tax assets are reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax assets to be utilised. Unrecognised deferred tax assets are reassessed at each
reporting date and are recognised to the extent that it has become probable that future
taxable profits will allow deferred tax assets to be recovered. The Company offsets
current tax assets and current tax liabilities, where it has a legally enforceable right to
set off the recognized amounts and where it intends either to settle on a net basis, or to
realize the asset and settle the liability simultaneously
1.11 Earnings Per Share:
The basic earnings per share are computed by dividing the net profit or loss attributable
to equity shareholders for the year by the weighted average number of equity shares
outstanding during the year.
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 period are adjusted for the effects of all dilutive potential equity
shares
1.12 Employee benefits:
Expenses and liabilities in respect of employee benefits are recorded in accordance with
Indian Accounting Standard (Ind AS)-19 - ‘Employee Benefits’
I. Short Term employee benefits:
Short-term employee benefits in respect of salaries and wages, including non-monetary
benefits are recognised as an expense at the undiscounted amount in the statement of
profit and loss for the year in which the related service is rendered.
II. Retirement benefits:
Retirement benefits comprise of Defined contribution plans (Provident fund, ESI, and
Superannuation) and Defined benefit plan (Gratuity) which are recognized as follows:
A. Defined contribution plan
Retirement benefits in the form of provident fund, pension fund, superannuation fund
and ESI are a defined contribution scheme and the contributions are charged to the
statement of profit and loss of the year when the contributions to the respective funds are
due. There are no other obligations other than the contribution payable to the provident
fund/trust.
B. Defined benefit plan
Retirement benefits in the form of gratuity and leave encashment are defined benefit
plans. Gratuity is provided for on the basis of an actuarial valuation on projected unit
credit method made at the end of each financial year. The Company’s liabilities on
account of gratuity and earned leaves on retirement of employees are determined at
the end of each financial year on the basis of actuarial valuation certificates obtained
from registered actuary in accordance with the measurement procedure as per Indian
Accounting Standard 19 (Ind AS 19) ‘Employee Benefits’. Gratuity liability is funded
on year-to-year basis by contribution to respective fund. The costs of providing benefits
under these plans are also determined on the basis of actuarial valuation at each year
end. Actuarial gains and losses for defined benefit plans are recognized through OCI in
the period in which they occur. Re-measurements are not reclassified to profit or loss
in subsequent periods. Accumulated leave, which is expected to be utilized within the
next 12 months, is treated as short-term employee benefit. The Company measures the
expected cost of such absenteeism as the additional amount that it expects to pay as a
result of the unused entitlement that has accumulated at the reporting date. The Company
treats accumulated leave expected to be carried forward beyond twelve months, as
long-term employee benefit for measurement purposes. Such long term compensated
absences are provided for based on actuarial valuation. The actuarial valuation is done
as per projected unit credit method at the year-end.
1.13 Research & Development:
Research & Development expenditure of revenue nature is charged to Statement of
Profit & Loss, while Capital Expenditure is added to the cost of fixed assets in the year
in which they are incurred.
1.14 Impairment:
Non-financial assets
Property, plant and equipment, intangible assets and assets classified as investment
property with finite life are evaluated for recoverability whenever there is any indication
that their carrying amounts may not be recoverable. If any such indication exists, the
recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is
determined on an individual asset basis unless the asset does not generate cash flows that
are largely independent of those from other assets. In such cases, the recoverable amount
is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If the recoverable amount of an asset or CGU is estimated to be less than its carrying
amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.
An impairment loss is recognized in the statement of profit or loss.
An impairment loss is reversed in the statement of profit and loss if there has been a
change in the estimates used to determine the recoverable amount. The carrying amount
of the asset is increased to its revised recoverable amount, provided that this amount
does not exceed the carrying amount that would have been determined (net of any
accumulated amortization or depreciation) had no impairment loss been recognized for
the asset in prior years.
Impairment losses on continuing operations, including impairment on inventories are
recognized in the statement of profit and loss, except for properties previously revalued
with the revaluation taken to other comprehensive income. For such properties, the
impairment is recognized in OCI up to the amount of any previous revaluation surplus.
Financial assets
The Company applies ‘simplified approach’ measurement and recognition of impairment
loss on the following financial assets and credit risk exposure:
• Financial assets that are debt instrument and are measured at amortized cost e.g.
loans, debt securities, deposits, and bank balance.
• Trade receivables
The application of simplified approach does not require the Company to track changes in
credit risk. Rather, it recognizes impairment loss allowance based on lifetime expected
credit loss at each reporting date, right from its initial recognition.
1.15 FINANCIAL ASSETS
All regular way purchases or sales of financial assets are recognised and derecognised
on a trade date basis. Regular way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the time frame established by regulation or
convention in the marketplace. All recognised financial assets are subsequently measured
in their entirety at either amortised cost or fair value, depending on the classification of
the financial assets.
Classification of financial asset
Financial assets that meet the following conditions are subsequently measured at
amortised cost less impairment loss (except for investments that are designated as at fair
value through profit or loss (FVTPL) on initial recognition):
• the asset is held within a business model whose objective is to hold assets in order
to collect contractual cash flows; and
• the contractual terms of the instrument give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding.
Financial assets that meet the following conditions are subsequently measured at fair value
through other comprehensive income (FVTOCI) (except for investments that are designated as
at fair value through profit or loss on initial recognition):
• the asset is held within a business model whose objective is achieved both by
collecting contractual cash flows and selling financial assets; and
• the contractual terms of the instrument give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
Financial Liabilities and Equity Instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities
or as equity in accordance with the substance of the contractual arrangements and the definitions
of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity
after deducting all of its liabilities. Equity instruments issued by the Company are recognised at
the proceeds received, net of direct issue costs.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest
method or at FVTPL. However, financial liabilities that arise when a transfer of a financial
asset does not qualify for derecognition or when the continuing involvement approach applies,
financial guarantee contracts issued by the Company are measured in accordance with the
specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either held for
trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
• it has been incurred principally for the purpose of repurchasing it in the near term; or
• on initial recognition it is part of a portfolio of identified financial instruments that the
Company manages together and has a recent actual pattern of short-term profit-taking; or
• it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL
upon initial recognition if: such designation eliminates or significantly reduces a measurement
or recognition inconsistency that would otherwise arise. Financial liabilities at FVTPL are stated
at fair value, with any gains or losses arising on remeasurement recognised in profit or loss.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company’s obligations
are discharged, cancelled or they expire. The difference between the carrying amount of the
financial liability derecognised and the consideration paid and payable is recognised in profit or
loss.
1.16 LEASES
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind
AS 116. Identification of a lease requires significant judgement. The Company uses judgement
in assessing whether a contract (or part of contract) includes a lease, the lease team (including
anticipated renewals), the applicable discount rate, variable lease payments whether are in¬
substance fixed.
The judgement involves assessment of whether the asset included in the contract is a fully or
partly identified asset based on the facts and circumstances, whether the contract include a
lease and non-lease component and if so, separation thereof for the purpose of recognition and
measurement, determination of lease term basis, inter alia the non-cancellable period of lease
and whether the lessee intends to opt for continuing with the use of the asset upon the expiry
thereof, and whether the lease payments are fixed are variable or a combination of both.
The Company, as a lessee, recognises a right-of-use asset and a lease liability for its leasing
arrangements, if the contract conveys the right to control the use of an identified asset.
The contract conveys the right to control the use of an identified asset, if it involves the use of
an identified asset and the Company has substantially all of the economic benefits from use of
the asset and has right to direct the use of the identified asset. The cost of the right-of-use asset
shall comprise of the amount of the initial measurement of the lease liability adjusted for any
lease payments made at or before the commencement date plus any initial direct costs incurred.
The right-of-use assets is subsequently measured at cost less any accumulated depreciation,
accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability.
The right-of-use assets is depreciated using the straight-line method from the commencement
date over the shorter of lease term or useful life of right-of-use asset.
The Company measures the lease liability at the present value of the lease payments that are
not paid at the commencement date of the lease. The lease payments are discounted using the
interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be
readily determined, the Company uses incremental borrowing rate. For short-term and low value
leases, the Company recognises the lease payments as an operating expense on a straight-line
basis over the lease term.
The Company, as a lessor, classifies a lease either as an operating lease or a finance lease. Leases
are classified as finance lease whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee. All other leases are classified as operating leases.
Note 2.17.1 Dues to Micro & Small Enterprises
With the promulgation of the Micro, Small and Medium Enterprises Development Act, 2006, the Company
is required to identify Micro, Small and Medium Suppliers and pay them interest on overdue beyond the
specified period irrespective of the terms with the suppliers. The Company has circulated letter to all
suppliers seeking their status. Response from few suppliers has been received and is still awaited from
other suppliers. In view of this, the liability of interest calculated and the required disclosures made, in the
below table, to the extent of information available with the Company.
3. With respect to the Balances of Debtors & Creditors and advances/deposits received from the
customers as per books of account, confirmations of balances are awaited and adjustments if
any will be made in the books on receipt of confirmations and reconciliation.
4. The Company has recorded a Net Profit of Rs.26.74 lakhs achieving a turnover of
Rs.2738.14 lakhs for the year ended 31st March 2024 as against Net Loss of Rs. (165.63)
lakhs achieving a turnover of Rs.2893.96 lakhs in the previous year ended 31st March 2023.
The Company has Retained earnings of Rs.79.37 lakhs at the end of FY 2023-24 as against
Rs.53.23 lakhs at the end of FY 2022-23.
With the improvement in the performance at the latter part of the year, increase in receipt
of big orders, the capability in productivity, the continuous working capital support by the
bankers and the promoters, the Management is confident of generating profits in years to
come and meet its financial obligation as they arise consequently resulting in wiping off
the erosion of Net worth soon. The Company is continuously increasing its clientele and
anticipates higher rates of growth which will augur well for better prospects. Based on the
above improving factors, the accompanying Financial Statements have been prepared on a
going concern basis.
5. DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES:
The management is regularly in the process of identifying enterprises which have provided
goods and services to the company which qualify under the definition of micro, small
and medium enterprises, as defined in Micro, Small and Medium Enterprises Act 2001.
Accordingly, based on information available, the amount payable to such enterprises as on
31st March 2024 is Nil. However,there are no over dues with regards to payments to MSMEs.
6. The computation of profit under section 198 of the Companies Act, 2013 is not considered
necessary as the managerial remuneration that is paid is minimum remuneration based on the
effective capital of the Company as prescribed under Schedule V of the said Act.
8. During the financial year, there are no default in repayment of Loans and Interest in case of
Term Loans, Lease obligations, Demand loans, Public Deposits, and other loans (including
loans and advances from related party)
9. SEGMENTAL REPORTING:
The Company currently operates in one business segment in manufacturing of PP bags and
one geographical segment in India. In line with Accounting Standard 17, as the relevant
information is available from the balance sheet and the profit and loss account itself, and
therefore keeping in view of the objective of segment reporting, the Company has not
disclosed segment information.
13. Secured Loans availed from The Karnataka Bank Limited are secured by first charge on
specific assets acquired out of the loan and personal guarantees of directors Sri. G.P.N.
Gupta, Sri. G. S. Sridhar and Sri. G.V. Gopinath.
14. (a) Working capital facilities from The Karnataka Bank Limited are secured by first charge
on the current assets consisting of stock of raw materials, finished goods, work-in
process, debtors and personal guarantees of directors G.P.N. Gupta, Sri. G. S. Sridhar
and Sri. G.V. Gopinath.
(b) Additional Term loan facilities from The Karnataka Bank Limited sanctioned in
the month of August 2022 under Overdraft facility, repayable in 15 months, secured
by Hypothecation of stocks and book debts and personal guarantees of directors, Sri.
G.S Sridhar and Sri. G.V. Gopinath. The facility obtained under this Scheme shall rank
second charge with the existing facilities availed from the Karnataka Bank.
18. FINANCIAL INSTRUMENTS:
A. Capital risk management
The capital structure of the company consists of debt, cash and cash equivalents and equity
attributable to equity shareholders of the company which comprises issued share capital and
accumulated reserves disclosed in the Statement of Changes in Equity.
The company’s capital management objective is to achieve an optimal weighted average cost of
capital while continuing to safeguard the company’s ability to meet its liquidity requirements
(including its commitments in respect of capital expenditure) and repay loans as they fall due.
B. Financial Risk Management
a) The company’s activities expose it primarily to the financial risk of changes in interest
rates. There have been no changes to the company’s exposure to market risk or the
manner in which it manages and measures the risk in the recent past.
(i) Currency risk
The company’s exposure arises mainly on import (of raw material and capital items). Management
uses certain derivative instruments to manage its exposure to the foreign currency risk. Foreign
currency transactions are managed within approved policy parameters.
The carrying amounts of the Company’s foreign currency denominated monetary assets and
monetary liabilities at the end of each reporting period are as follows :
Foreign currency sensitivity analysis
The Company is mainly exposed to US Dollars and Euro
The following table details the Company’s sensitivity to a 1% increase and decrease in the
INR against the relevant foreign currencies. 1% is the rate used in order to determine the
sensitivity analysis considering the past trends and expectation of the management for changes
in the foreign currency exchange rate. The sensitivity analysis includes the outstanding foreign
currency denominated monetary items and adjusts their translation at the period end for a 1%
change in foreign currency rates. A positive number below indicates a increase in profit or equity
where the INR Strengthens 1% against the relevant currency. For a 1 % weakening of the INR
against the relevant currency, there would be a comparable impact on the profit or equity and
balance below would be negative.
Notes:
l.This is mainly attributable to the exposure of payable outstanding in the above mentioned
currencies to the Company at the end of the reporting period.
ii) Interest rate risk
The company is exposed to interest rate risk as the company 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. The use of interest rate swaps are also entered into,
especially to hedge the floating rate borrowings or to convert the foreign currency floating
interest rates to the domestic currency floating interest rates.
b) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy
counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating
the risk of financial loss from defaults. The Group only transacts with entities that are rated the
equivalent of investment grade and above. The Group uses other publicly available financial
information and its own trading records to rate its major customers. The Group’s exposure and
the credit ratings of its counterparties are continuously monitored and the aggregate value of
transactions concluded is spread amongst approved counterparties. Trade receivables consist
of a large number of customers, concentrated in the automoile industry, mainly the Original
Equipment Manufacturers (“OEM”). Ongoing credit evaluation is performed on the financial
condition of accounts receivable and, where appropriate, security deposits are received from
customers.
At 31 March 2024, the company did not consider there to be any significant concentration of
credit risk which had not been adequately provided for. The carrying amount of the financial
assets recorded in the financial statements, grossed up for any allowances for losses, represents
the maximum exposure to credit risk.
c) Liquidity Risk
The company manages liquidity risk by maintaining adequate reserves and banking facilities, by
continuously monitoring forecast and actual cash flows and by matching the maturity profiles
of financial assets and liabilities for the company. The company has established an appropriate
liquidity risk management framework for it’s short term, medium term and long term funding
requirement.
21. ADDITIONAL REGULATORY INFORMATION:
a. The title deeds of all the immovable properties (other than properties where the Company is
the lessee, and the lease agreements are duly executed in favour of the lessee) are held in the
name of the Company.
b. The Company has not revalued its Property, Plant and Equipment (including Right of use
assets) or intangible assets during the year ended 31 March 2023
c. The company has not given any Loans or Advances in the nature of loans to promoters,
directors, KMPs and their related parties (as defined under Companies Act, 2013,) either
severally or jointly with any other person.
g. The Company has not traded or invested in Crypto currency or Virtual Currency during the
financial year.
h. The Company does not have any charges or satisfaction which are yet to be registered with
ROC beyond the statutory period.
i. There are no transactions and / or balance outstanding with companies struck off under
section 248 of the Companies Act, 2013.
j. The company does not have any investments through more than two layers of investment
companies as per section 2(87) (cd) and section 186 of Companies Act, 2013.
k. There were no transactions relating to previously unrecorded income that were surrendered
or disclosed as income in the tax assessments under the Income Tax Act, 1961 (43 of 1961)
during the year.
l. No proceedings have been initiated during the year or are pending against the Company
as of March 31, 2023, for holding any benami property under the Benami Transactions
(Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.
m. The Company has not been declared a willful defaulter by any bank or financial institution
or government or any government authority.
22. Previous year figures have been regrouped and reclassified wherever considered necessary
to conform to this year’s classifications.
Signatories to Notes 1 to 22
As per our report attached
For Darpan and Associates For and on behalf of the Board of Directors
Chartered Accountants
FRN: 016156S
Darpan Kumar G.V Gopinath G S Sridhar
Partner Managing Director Whole Time Director & CFO
Membership No. 235817 DIN: 02352806 DIN: 01966264
Place: Chennai
Date: 30th April 2024
|