2.16 Provisions

Provision is recognized when the Company has a present obligation (legal or constructive) as a result of past event and 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. 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 recognised as a finance cost.

2.17 Financial instruments - Financial assets, Financial liabilities and Equity instruments

2.17.1 Financial Assets Recognition: Financial assets include Investments, Trade Receivables, Advances, Security Deposits, Cash and Cash equivalents. Such assets are initially recognised at transaction price when the Company becomes party to contractual obligations. The transaction price includes transaction costs unless the asset is being fair valued through the Statement of Profit and Loss.

2.17.2 Classification: Management determines the classification of an asset at initial recognition depending on the purpose for which the assets were acquired. The subsequent measurement of financial assets depends on such classification.

2.17.3 Financial assets classification and measurement

(a) amortised cost, where the financial assets are held solely for collection of cash flows arising from payments of principal and/ or interest.

(b) fair value through other comprehensive income (FVTOCI), where the financial assets are held not only for collection of cash flows arising from payments of principal and interest but also from the sale of such assets. Such assets are subsequently measured at fair value, with unrealised gains and losses arising from changes in the fair value being recognised in other comprehensive income.

(c) fair value through profit or loss (FVTPL), where the assets are managed in accordance with an approved investment strategy that triggers purchase and sale decisions based on the fair value of such assets. Such assets are subsequently measured at fair value, with unrealised gains and losses arising from changes in the fair value being recognised in the Statement of Profit and Loss in the period in which they arise. Trade Receivables, Advances, Security Deposits, Cash and Cash equivalents etc. are classified for measurement at amortised cost while investments may fall under any of the aforesaid classes. However, in respect of particular investments in equity instruments that would otherwise be measured at fair value through profit or loss, an irrevocable election at initial recognition may be made to present subsequent changes in fair value through other comprehensive income. This option has been adopted by the company irrevocably.

2.17.4 Financial Assets at fair value through other comprehensive income: These include financial assets that are equity instruments and are irrevocably designated as such upon initial recognition. Subsequently, these are measured at fair value and changes therein are recognized directly in other comprehensive income, net of applicable income taxes.

Dividends from these equity investments are recognized in the Statement of Profit and Loss when the right to receive payment has been established. When the equity investment is derecognized, the cumulative gain or loss in equity is transferred to Other equity.

2.17.5 Financial assets at fair value through profit or loss: Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs that are directly attributable to the acquisition of financial assets, which are measured at fair value through profit or loss, are immediately recognised in profit or loss.

2.17.6 Cash and cash equivalents: Cash and cash equivalents comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, from the date of purchase which are subject to an insignificant risk of changes in value.

2.17.7 Equity instruments: An equity instrument is any contract that evidences residual interests in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

2.17.8 Financial Liabilities: Borrowings, trade payables and other financial liabilities are initially recognised at the value of the respective contractual obligations. They are subsequently measured at amortised cost. Any discount or premium on redemption/settlement is recognised in the Statement of Profit and Loss as finance cost over the life of the liability using the effective interest method and adjusted to the liability figure disclosed in the Balance Sheet.

Financial liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled or on expiry.

2.17.9 Financial guarantee contracts: These are initially measured at fair value and are subsequently measured at the higher of the amount of loss allowance determined or the amount initially recognized, less the cumulative amount of income recognized.

2.17.10 Other financial liabilities: These are measured at amortized cost using the effective interest rate method.

2.17.11 Determination of fair value: The fair value of a financial instrument on initial recognition is normally the transaction price (fair value of the consideration given or received). Subsequent to initial recognition, the Company determines the fair value of financial instruments, that are quoted in active markets, using the quoted prices (financial assets held) and using valuation techniques for other instruments. Valuation techniques include discounted cash flow method and other valuation models.

2.17.12 Derecognition of financial assets and financial liabilities:

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

Financial liabilities are derecognised when these are extingushed, which is when the obligation is discharged, cancelled or expired.

2.17.13 Impairment of financial assets:

The Company assesses at each reporting date whether a financial asset (or a group of financial assets) such as investments, trade receivables, advances and security deposits held at amortised cost and financial assets that are measured at fair value through other comprehensive income are tested for impairment based on evidence or information that is available without undue cost or effort. Expected credit losses are assessed and loss allowances recognised if the credit quality of the financial asset has deteriorated significantly since initial recognition.

2.17.14 Derivative financial instruments

The Company does not hold any derivative and embedded derivative financial instruments.

2.18 Fair value measurement

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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability, if market participants would take those characteristics into account, when pricing the asset or liability at the measurement date.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

- Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

- Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

- Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

2.19 Segment reporting

The Operating Segment have been reported in a manner consistent with the internal reporting provided to the Chief Financial Officer and the Chief Executive Officer who are the Chief Operating Decision Maker (CODM).The Company is engaged in the manufacturing of the Precured Tread Rubber, Bonding Repair and Extrusion Gum and Rubber Cement, which are used for retreading of tyres and providing tyre retreading service. These products do not have any different risk and returns and thus the CODM performs review based on one operating segment.

The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

2.20 Earnings per share

Basic earnings per share are computed by dividing profit/loss for the period by the weighted average number of shares outstanding during the year. Partly paid up shares are included as fully paid equivalents according to the fraction paid up. Diluted earnings per share are computed using the weighted average number of shares and dilutive potential shares, except where the result would be anti-dilutive.

2.21 Government grants and subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance that (i) the Company will comply with the conditions attached to them, and (ii) the grant/ subsidy will be received.

Where 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 reduced from the respective cost of an asset and accordingly depreciation is calculated on reduced amount

2.22 Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

2.23 Recent Pronouncements

There are no pronouncements after 31st March 2024 by Ministry of Corporate Affairs.

Notes

(i) Capital reserve

Capital reserve represents the amount on account of forfeiture of equity shares of the Company.

(ii) Securities premium

Securities Premium represents amount received on issue of shares in excess of the par value.

(iii) General reserve

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. Central cash subsidy amounting to Rs. 30 lakh received for the installation of plant at Nalagarh in 2006 is included in general reserve.

However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

(iv) Retained earnings

Retained earnings represent the amount of accumulated earnings of the Company.

(v) Other comprehensive income

It comprises amounts that will not be re-classified to profit & loss and are eligible to be re-classified in retained earning.

(vi) Payment of Dividend

The final dividend on shares is recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company’s Board of Directors. The Company declares and pays dividends in Indian rupees. Companies are required to pay/distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.

33 Segment Information

The Operating Segment has been reported in a manner consistent with the internal reporting provided to the Chief Financial Officer and the Chief Executive Officer who are the Chief Operating Decision Maker (CODM).The Company is engaged in the manufacturing of the Precured Tread Rubber, Bonding Repair and Extrusion Gum and Rubber Cement, which are used for retreading of tyres and providing tyre retreading service. These products do not have any different risk and returns and thus the CODM performs review based on one operating segment.

40 Employee benefit plans

a. Defined contribution plans

The Company makes contribution to Provident Fund and Employee State Insurance Scheme which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

All provident fund contributions are charged to the statement of profit and loss.

b. Defined benefit plan Gratuity

The Company has a defined benefit gratuity plan. Employees who have completed five years or more of service are eligible for Gratuity when leaving the Company at 15 days last drawn salary for each completed year of service.

The most recent valuation of the present value of defined benefit obligation was carried as at 31 March, 2024 by an actuary in which the present value of the defined benefit obligation, and the related current service cost and past service cost were measured using the projected unit credit method.

In the course of its business, the Company is exposed primarily to fluctuations in Interest rates, security price risk, credit risk and liquidity risk which may adversely impact the fair value of its financial instruments, the operation of the Company did not have an exposure for foreign currency exchange rates as the majority of the operations are in India only. The Company has a risk management policy covering risks associated with the financial assets and liabilities such as interest rate risk, security price risk and credit risk. The risk management policy has been approved by the board of directors. The risk management framework aims to:

• Create a stable business planning environment by reducing the impact of interest rate fluctuations on the Company’s business plan.

• Achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.

The Company does not use the derivative financial instruments for risk mitigation.

a. Market risk

Market risk is the risk of any loss in future earnings, in realisable fair values or in 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 foreign currency exchange rates, interest rates, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.

i. Foreign currency exchange rate risk

The Company operates majorly in India but is exposed to foreign exchange risk arising through its sale and purchase of goods and services with overseas suppliers and investment in foreign currency transactions primarily with respect to US Dollar (‘USD’). The Company does not use the derivative financial instruments to manage it’s risk. .

The company is virtually debt free and the exposure to Interest Rate risk from the perspective of financial liabilities is negligible. Further, treasury activities focus on managing investments and debt instruments and are administered under a set of approved policies guided by safety, liquidity and returns.

Financial assets

The Company’s investments are primarily in fixed rate interest bearing investments. Hence the Company is not significantly exposed to interest rate risk.

b. Security price risk

The Company is exposed to equity price risks arising from equity investments held by the Company and classified in the balance sheet as fair value through OCI.

i. Equity price sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to equity price risks at the end of the year.

If the equity instruments (equity shares and equity linked mutual fund) prices had been 5% higher / lower. Other comprehensive income for the year ended 31 March, 2024 would increase / decrease by Rs.280.33 Lakh (for the year ended 31 March 2023: increase / decrease by Rs. 244.03 lakh) as a result of the change in fair value of equity investment measured at FVTOCI.

ii. Exposure in mutual funds (Other than equity linked mutual fund)

The Company manages the surplus funds majorly through investments in debt based mutual fund schemes. The price of investment in these mutual fund schemes is reflected though Net Asset Value (NAV) declared by the Asset Management Company on daily basis as reflected by the movement in the NAV of invested schemes. The Company is exposed to price risk on such Investments.

Mutual fund price sensitivity analysis - The sensitivity analysis below have been determined based on Mutual Fund Investment at the end of the year.

If NAV has been 1% higher / lower: Profit for the year ended 31 March 2024 would increase / decrease by Rs. 31.42 lakh (for the year ended 31 March 2023 by Rs. 30.27 Lakh) as a result of the changes in fair value of mutual fund investments.

iii. If the investment in bonds and preference shares prices had been 1% higher / lower:

Profit for the year ended 31 March 2024 would increase / decrease by Rs.34.45 Lakh (for the year ended 31 March 2023: increase / decrease by Rs. 29.65 Lakh) as a result of the change if there is no change in the market risk and other assumptions.

c. Credit risk

Credit risk arises from the possibility that the counter party may not be able to settle it’s obligations. To manage trade receivables, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts and ageing of such receivables.

Financial instruments that are subject to credit risk, principally consist of investments, trade receivables and loans and advances. None of the financial instruments of the Company carry material concentration of credit risks. Financial assets for which loss allowance is measured relates to trade receivables where loss allowance at the year ended March 2024 was estimated at Rs. 179.65 lakh (Previous year Rs. 150.63 lakh).

Other than financial assets mentioned above, none of the Company’s financial assets are either impaired or past due, and there are no indications that defaults in payment obligations would occur as exposure to Trade Receivable is diversified. There is no single customer whose sales are exceeding 10% of the turnover of the Company.

d. Liquidity risk

Liquidity risk refers to the risk that the Company can not meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per the requirements.

During the year ended, the Company generated sufficient cash flows from operations to meet its financial obligations as and when they fall due.

The amounts disclosed in the table are the contractual undiscounted cash flows. The table below provides details regarding the contractual maturities of significant financial liabilities as at:

Level 1: Quoted prices in the active market. This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market.

Level 2: Valuation techniques with observable inputs. This level of hierarchy includes items measured using inputs other than quoted prices included within Level 1 that are observable for such items, either directly or indirectly.

Level 3: Valuation techniques with unobservable inputs. This level of hierarchy includes items measured using inputs that are not based on observable market data (unobservable inputs). Fair value 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 instruments nor based on available market data.

The fair value of the financial assets are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

a. Investments in mutual funds: Fair value is determined by reference to the quotes of net asset value (NAV) declared by the financial institutions.

b. Quoted equity investments: Fair value is derived from quoted market prices in active markets.

c. Unquoted investments: Fair value is derived on the basis of income approach, in this approach the discounted cash flow method is used to capture the present value of the expected future economic benefits to be derived from the ownership of these investments or from valuation declared by fund house.

Trade receivables, trade payables and other current financial assets and liabilities is considered to be equal to the carrying amounts of these items as generally they are of short term nature. There has been no change in the valuation methodology for Level 3 inputs during the year ended.

Derivative contracts: The Company has not entered into any forward contracts and swaps to manage its exposure as the Company management expects that there are nominal exposure of the Company for foreign exchange and are manageable.

45 Other statutory information :

(a) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(b) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(c) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(d) The Company, its associate companies, joint venture companies and joint operations have not advanced or loaned or invested funds to any person(s) or entity(is), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(i) 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

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(e) The Company,its associate companies, joint venture companies and joint operations have not received any fund from any person(s) or entity(is), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(i) 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

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(f) The Company does not have any 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.

(g) The Company is not declared as willful defaulter by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof or other lender in accordance with the guidelines on willful defaulters issued by the Reserve Bank of India.

(h) The Company has complied with the number of layers for its holding in downstream companies prescribed under clause (87) of section 2 of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017

(i) There are no transactions with struck-off companies for the year ending March 31, 2024.

46 Disclosure required under Section 186(4) of the Companies Act, 2013

The Company has given loans only to staff members which as on 31 March 2024 amounted to Rs. 16.61 lakh (As on Mar’23 Rs. 18.00 lakh). The investments made by the Company in various entities have been detailed in Notes 7 and 13. The Company has not granted any loans or advances in the nature of loans to promoters, directors, KMP’s and the related parties.

48 Previous year figures

Previous year figures have been regrouped/reclassified, wherever necessary to conform to this year’s classification.

As per our report of even date For and on behalf of the Board of Directors

For Khanna & Annadhanam Nand Lal Khemka Vijay Shrinivas

Chartered Accountants Chairman cum Managing Director CEO & Whole Time Director

ICAI Firm’s Registration No.: 001297N DIN : 00211084 DIN : 08337007

B. J. Singh

Partner Sonal Garg Anil Bhardwaj

Membership No. 007884 Company Secretary GM (Accounts) & CFO

Place: New Delhi Date: 14 May, 2024