23. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised if, as a result of a past event, the company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions for onerous contracts are recognized whentheexpectedbenefitstobederivedbytheCompany fromacontractarelowerthantheunavoidablecostsof meeting the future obligations under the contract.
A disclosure for contingent liabilities is made where there is a possible obligation or a present obligation that may probably not require an outflow of resources or an obligation for which the future outcome cannot be ascertained with reasonable certainty. When there is a possible or a present obligation where the likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent assets are neither recognized nor disclosed in financial statements.
Conversion of Warrants -
On 9th June, 2022, the Company allotted 12,49,000 Equity Shares of face value of Rs.10 each fully paid up issued at a premium of Rs. 95.20 per equity share to the Promoters group upon exercise of option of conversion of 12,49,000 warrants. The Issue Price of the warrant was Rs. 105.20 per warrant of which 25% was paid on subscription on 9th April, 2021 and the balance 75% i.e. Rs. 78.90 per warrant being the warrant Exercise Price was paid by those Promoter allottees. The entire proceeds have been utilised for the objects of the Preferential Issue. Pursuant to allotment of the Equity Shares in the Preferential Issue, the paid-up share capital of the Company stood increased on 9th June, 2022 from Rs. 13,20,87,890 to Rs. 14,45,77,890 comprising of 1,44,57,789 equity shares of face value of Rs. 10 each and securities premium reserve by Rs. 11,89,04,800.
On 6th October, 2022, the Company allotted 5,00,000 Equity Shares of face value of Rs.10 each fully paid up issued at a premium of Rs. 95.20 per equity share to non- promoters upon exercise of option of conversion of 5,00,000 warrants. The Issue Price of the warrant was Rs. 105.20 per warrant of which 25% was paid on subscription on 9th April, 2021 and the balance 75% i.e. Rs. 78.90 per warrant being the warrant Exercise Price was paid by those non-promoter allottees. The entire proceeds have been utilised for the objects of the Preferential Issue. Pursuant to allotment of the Equity Shares in the Preferential Issue, the paid-up share capital of the Company stood increased on 6th October, 2022 from Rs. 14,45,77,890 to Rs. 14,95,77,890 comprising of 1,49,57,789 equity shares of face value of Rs. 10 each and securities premium reserve by Rs. 4,76,00,000.
(ii) Terms/rights attached to Equity Shares
The Company has only one class shares referred to as equity shares having a par value of Rs.10 per share which rank pari-passu in all respects including voting rights and entitlement to dividend. Each holder of Equity Shares is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
The Board of Directors of Company, at its meeting held on 27th May, 2024 have recommended payment of dividend of Rs. 3.00 (Rupees three only) per equity share of the face value of Rs. 10 each for the financial year ended 31st March, 2024. If approved, the total dividend for the financial year 2023-24 will be Rs. 3.00 (Rupees three only) per equity share of the face value of Rs. 10 each.
Pursuant to the dividend for the financial year 2022-23 approved by the shareholders at the 29th Annual General Meeting held on 15th September, 2023, the Company paid the equity dividend of 25% (Rs. 2.50 per equity share of nominal face value of Rs. 10/- each fully paid up) aggregating to Rs. 3,73,94,473/- (gross) subject to deduction of tax at source as per the applicable rate(s) to the eligible shareholders. The payment was made on 21st September, 2023.
Nature and purpose of reserves
(a) Securities Premium:
The amount received in excess of face value of the equity shares is recognised in Securities premium. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
(b) Retained earnings
Retained earnings or accumulated surplus represents total of all profits retained since Company's inception. Retained earnings are credited with current year profits, reduced by losses, if any, dividend payouts, transfers to General reserve or any such other appropriations to specific reserves.
(c) Other comprehensive income
Other comprehensive income consist of FVOCI financial assets and financial liabilities and remeasurement of defined benefit assets and liability.
(d) Share Forfeiture
The reserve represents the part amounts paid on shares which have been forfeited on account of calls remained unpaid.
(e) Capital Reserve
The Capital Reserve is the amount received against share warrants convertible into equity shares which have lapsed due to non-compliance and hence, forfeited. The amount paid on such forfieted warrants have been transferred to Capital Reserve.
ii. Working Capital Term Loan (WCTL) availed from banks by way of Guaranteed Emergency Credit Line (GECL) under ECLGS Scheme of National Credit Guarantee Trustee Company Limited (NCGTC) is secured against Hypothecation of existing Current Assets, Movable & Immovable fixed assets of the Company. The WCTL, after a moratorium period of 12 months, is repayable in 48 equated monthly installments, commencing from April 2022 and ending in March 2026. The WCTL carried interest @ of 8.75% to 9.95% p.a.
iii. Working Capital Finance availed from banks are repayable on demand and renewed every year. These loans are secured against Hypothecation of Stock, Book Debts, Current Assets, Movable & Immovable fixed assets of Company, Immovable property of its directors, Personal guarantee of some of the Directors and Factory Plot of land of Subsidiary, M/s Bituminex Cochin Private Limited.
iv. Working capital facility from HDFC Bank Ltd is further secured by fixed deposit worth Rs. 200 lakhs held and pledge with the bank as 10% cash margin towards the additional working capital facility of Rs 2,000 lakhs provided by the bank.
v. Working capital facility from Axis Bank Ltd is further secured by fixed deposit worth Rs. 500 lakhs held and pledge with the bank as 10% cash margin towards the working capital facility of Rs 5,000 lakhs provided by the bank.
vi. Overdraft facility availed from banks are repayable on demand. Same is secured against the fixed deposits of Rs. 591.82 Lakhs held with respective banks.
vii. Reconciliation of quarterly returns submitted to the working capital lender being Kotak Mahindra Bank, HDFC Bank, IDFC Bank, Axis Bank and Citi Bank from which working capital facility and working capital term loan have been availed based on security of current assets:
Note : 1 On account of inclusion of advance to suppliers in quarterly statements, valuation of inventory including custom and other duties / taxes paid thereon and non-adjustments of exchange rate differences.
Note : 2 No material discrepancies.
Note : 3 Amount reported in quarterly statements pertains to trade payable in respect of goods and other trade payable were not included therein.
Note : 4 On account of inclusion of taxes and advances receivable in quarterly statement, effect of expected credit loss provision, writing off of bad debts and regrouping of advance received.
Note : 5 On account of non-inclusion of stock in transit and corresponding trade payable in quarterly statement and valuation of inventory Note : 6 On account of regrouping of advance received and effect of expected credit loss provision.
Note : 7 On account of non-inclusion of trade payables in respect of goods which were in transit.
Note : 8 Amount of trade payable excessive reported in the statement submitted to bank.
Note : 9 Advances given and outstanding was adjusted while reporting the trade payable in the statement submitted to bank.
d) Nature of CSR activities undertaken by the Company -
i) Eradicating hunger, poverty and malnutrition
ii) Promoting health care including preventive health care and sanitation
iii) Promoting education, including special education and employment enhancing vocation skills
41 Financial instruments
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying amounts largely due to short term maturities of these instruments.
2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments is not materially different from their carrying amounts.
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
42 Financial risk factors
The Company's principal financial liabilities comprise loans and borrowings, advances and trade and other payables. The purpose of these financial liabilities is to finance the Company's operations and to provide to support its operations. The Company's principal financial assets include loans, trade and other receivables and cash and cash equivalents that derive directly from its operations.
The Company's activities exposes it to Liquidity Risk, Market Risk and Credit risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised as below.
(a) Liquidity risk
The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk management implies maintenance sufficient cash including availability of funding through an adequate amount of committed credit facilities to meet the obligations as and when due.
The Company manages its liquidity risk by ensuring as far as possible that it will have sufficient liquidity to meet its short term and long term liabilities as and when due. Anticipated future cash flows are expected to be sufficient to meet the liquidity requirements of the Company.
(b) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk includes investment, deposits, foreign currency receivables and payables. The Company's treasury team manages the Market risk, which evaluates and exercises independent control over the entire process of market risk management.
(i) Foreign currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company has foreign currency loan and trade payables and is therefore exposed to foreign exchange risk. The exchange rates have been volatile in the recent
(ii) Interest rate risk
I nterest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. According to the Company, interest rate risk exposure is only for floating rate borrowings. The Company is not significantly exposed to the interest rate risk, since the borrowings of the Company are on Fixed interest rate basis.
(iii) Commodity risk
Commodity price risk arises due to fluctuation in prices of crude oil. Volatility in Crude Oil prices, Currency fluctuation of Rupee vis-a-vis other prominent currencies coupled with demand-supply scenario in the world market affect the effective price and availability. The Company manages this risk by widening its source base, appropriate contracts and commitments and well planned procurement.
(c) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations. The Company is exposed to credit risks from its operating activities, primarily trade receivables, cash and cash equivalents, deposits with banks and other financial instruments. Credit risk is managed by the Company through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course
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Trade and other receivables
The Company considers the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risks on an ongoing basis throughout each reporting period.
To assess whether there is a significant change increase in credit risk, the Company compares the risks of default occurring on the assets as at the reporting date with the risk of default as at the date of initial recognition. It considers the reasonable and supportive forward looking information such as:
(i) Actual or expected significant adverse changes in business.
(ii) Actual or expected significant changes in the operating results of the counterparty.
(iii) Financial or economic conditions that are expected to cause a significant change to the counterparty's ability to meet its obligations.
44 Segment Reporting
The Company's Board of Directors consisting of Managing Director together with the Chief Financial Officer has been identified as the Chief Operating Decision Maker (CODM) as defined under Ind AS 108 "Operating Segments". The CODM evaluates the Company's performance and allocated the resources based on an analysis of various performance indicators. The Company is principally engaged in the business activities of Ancillary Infra i.e. manufacturing and trading of Bitumen and Allied Products, Logistics of Bitumen and Liquefied Petroleum Gas (LPG) and energy generation through Wind Mills. The Company has accordingly identified these 3 activities as Operating segments in accordance with requirements of Ind AS 108 on 'Operating segments'.
47 New Subsidiary - Incorporations and Acquistion of 100% stake
a. Formation of new Subsidiary "AICL Finance Private Limited"
During the previous financial year, the Company have incorporated the wholly owned subsidiary company in India, ""AICL Finance Private Limited"" with the objectives to carry on the business activities of non-banking financial companies.
The company is in the process of completing the required compliances of Reserve Bank of India (RBI) and of Ministry of Corporate Affiars (MCA) so as to get the Certificate of Registration under Reserve Bank of India Act, 1934 and to commence the business activity of Non Banking Financial Company.
b. Acquisition of 100% stake in Agarwal Translink Private Limited ('ATPL')
During the financial year 2021-22, on 9th April, 2021, the Company has acquired 100% equity shares of Agarwal Translink Private Limited (ATPL) for a consideration of Rs. 1,249.82 lakhs by way of purchase of 11,08,980 fully paid-up equity shares from selling shareholders of ATPL in pursuance of Share Purchase Agreement dated 15th January, 2021. Pursuant to the Acquisition, ATPL has become wholly owned subsidiary of the Company with effective from 9th April 2021.
Agarwal Translink Private Limited is a private company which is principally engaged in the logistics business activities of Bitumen and Trading of Petroleum Products through its Petrol Pump. The purchase consideration of Rs. 1,249.82 lakhs have been paid by the Company by allotments of 11,88,042 fully paid-up Equity Shares of face value of Rs. 10 each at Rs. 105.20 per equity shares including a share premium of Rs. 95.20 per equity share aggregating to Rs. 1,249.82 lakhs for consideration other wise than in cash.
50 Recent accounting pronouncements
New Standards issued or amendments to the existing standard but not yet effective :
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time.
As on 31 March 2024, there is no new standard notified or amendment to any of the existing standards under Companies (Indian Accounting Standards) Rules, 2015.
51 ADDITIONAL REGULATORY INFORMATION REQUIRED BY SCHEDULE III TO THE COMPANIES ACT, 2013
i) Event after reporting date
There have been no events after the reporting date.
ii) Details of Benami Property Held
No proceedings have been initiated during the financial year or pending as at the end of the financial year against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
iii) Wilful Defaulter
The Company has not been declared as a wilful defaulter by any bank or financial institution or other lender in the current or preceeding financial year.
iv) Compliance with number of layers of companies
The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017 for the financial years ended 31st March 2024 and 31st March 2023.
v) Utilisation of borrowed funds and share premium
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, 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 also not received any fund from any parties (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 Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
vi) Compliance with approved Scheme(s) of Arrangements
There is no any scheme of Arrangement or Amalgamation initiated or approved by the Board of Directors and Shareholders of the Company during the year ended 31st March 2024 and 31st March 2023.
vii) Undisclosed income
There is no income surrendered or disclosed as income during the year in tax assessments under the Income Tax Act,1961 (such as search or survey), that has not been recorded in the books of account.
viii) Title deeds of Immovable Properties not held in name of the Company
The title deeds of the immovable properties possess by the Company are held in the name of the Company (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee).
ix) Details of Crypto Currency or Virtual Currency
The Company has not traded or invested in Crypto currency or Virtual currency during the current or preceeding financial year.
x) Registration of charges or satisfaction with Registrar of Companies (ROC)
All charges or satisfaction are registered with ROC and the Company does not have any charges or satisfaction of charges which is yet to be registered with Registrar of Companies within the statutory period for the financial years ended 31st March 2024 and 31st March 2023..
However, two of the charge registered in favor of HDFC Bank Ltd needs to be modified so as to align the same with the present working capital facility and bank guarantee facility obtained from the Bank.
xi) Relationship with Struck off Companies
The Company have not entered into any transaction during the current or previous financial year with the companies whose names have been struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956 and there is no outstanding receivable from / payable to such companies as at the end of year.
53 The Company is yet to receive balance confirmations in respect of certain financial assets and financial liabilities. The Management does not expect any material difference affecting the current year's financial statements due to the same.
54 Thefi nancial statements were approved for issue by the Board of Directors on 27th May, 2024.
55 The figures of the previous year's have been regrouped or reclassified wherever necessary to make them comparable.
As per our report of even date For and on behalf of Board of Directors of
For Ladha Singhal & Associates Agarwal Industrial Corporation Limited
Chartered Accountants CIN : L99999MH1995PLC084618
(Firm Registration No : 120241W)
Ajay Singhal Jaiprakash Agarwal Mahendra Agarwal
Partner Managing Director Director
Membership No. 104451 (DIN : 01379868) (DIN : 01366495)
Lalit Agarwal Vipin Agarwal Dipali Pitale
Place : Mumbai Whole Time Director Chief Financial Officer Company Secretary
Date : 27th May 2024 (DIN : 01335107)
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