3.4 Provisions, Contingent Liabilities and Contingent Assets
Provisions:
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, 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.
When the Company expects some or all of a provision to be reimbursed, reimbursement is recognised as a separate asset,
but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of
profit and loss net of any reimbursement.
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 in respective expense.
Contingent Liabilities and Contingent Assets
Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor
disclosed in the Financial Statements.
3.5 Leases
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if
the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether,
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
The company applies a single recognition and measurement approach for all leases, except for short term leases (twelve
month or less) and leases of low-value. For short-term and leases of low value, the Company recognises the lease payments
as an operating expense on a straight line basis over the term of the lease. For all other leases, the Company recognises lease
liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted
for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease
incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease
term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or
changes in circumstances indicate that their carrying amounts may not be recoverable.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease
payments are discounted using the incremental borrowing rate at the lease commencement date. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the
lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a
change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the
underlying asset
Lease liability and ROU asset, if any, have been separately presented in the Balance Sheet and lease payments have been
classified as financing cash flows.
3.6 Inventories:
Inventories are valued as under:
Raw materials& stores and spares
Lower of cost and net realisable value. Cost is determined on a weighted average basis. Materials and other items held
for use in the production of inventories are not written down below costs, if finished goods in which they will be
incorporated are expected to be sold at or above cost.
Finished Goods & Work In Progress
Lower of cost and net realisable value. Cost includes direct materials, labour and a proportion of attributable overheads.
Stock-In-Trade
Valued at lower of cost or net realizable value and for this purpose cost is determined on weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion
and the estimated costs necessary to make the sale.
3.7 Income tax
Current tax:
Provision for current tax is made as per the provisions of the Income Tax Act, 1961.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. 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 relating to items recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either
in OCI or directly in equity. 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.
Deferred tax:
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date.
The carrying amount of deferred tax assets is 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 asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has
become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction
either in OCI or directly in equity.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date.
Minimum Alternative Tax (‘MAT’) credit entitlement under the provisions of the Income-tax Act, 1961 is recognised as
a deferred tax asset when it is probable that future economic benefit associated with it in the form of adjustment of future
income tax liability, will flow to the Company and the asset can be measured reliably. MAT credit entitlement is set off to
the extent allowed in the year in which the Company becomes liable to pay income taxes at the enacted tax rates. MAT
credit entitlement is reviewed at each reporting date and is recognised to the extent that is probable that future taxable
profits will be available against which they can be used. MAT credit entitlement has been presented as deferred tax asset
in Balance Sheet. Significant management judgement is required to determine the probability of recognition of MAT
credit entitlement.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to the same taxation authority.
3.8 Employee Benefits
Short-term Employee Benefits:
Employee benefit liabilities such as salaries, wages and bonus, etc. that are expected to be settled wholly within twelve
months after the end of the period in which the employees render the related service are recognised in respect of
employees’ services up to the end of the reporting period and are measured at an undiscounted amount expected to be
paid when the liabilities are settled.
Post-employment benefit plans:
Defined Contribution Plans:
State governed Provident Fund Scheme and Employees State Insurance Scheme are defined contribution plans. The
contribution paid / payable under the schemes is recognised during the period in which the employees render the related
services.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
The Company’s gratuity scheme is a defined benefit plan. Currently, the Company’s gratuity scheme is unfunded. The
Company recognises the defined benefit liability in Balance sheet. The present value of the obligation under such
defined benefit plan and the related current service cost and, where applicable past service cost are determined based on
an actuarial valuation done using the Projected Unit Credit Method by an independent actuary, which recognises each
period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to
build up the final obligation. The obligations are measured at the present value of the estimated future cash flows.
Re-measurements, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) is
reflected immediately in Other Comprehensive Income in the Statement of Profit and loss. All other expenses related to
defined benefit plans are recognised in Statement of Profit and Loss as employee benefit expenses. Re-measurements
recognised in Other Comprehensive Income will not be reclassified to Statement of Profit and Loss hence it is treated as
part of retained earnings in the Statement of Changes In Equity.
3.9 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. 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 the asset or liability, or
? In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to/ by the Company.
Fair value hierarchy
All financial instruments for which fair value is recognised or disclosed are categorised 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;
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: valuation techniques for which the lowest level input that has a significant effect on the fair value measurement
are observable, either directly or indirectly.
Level 3: valuation techniques for which the lowest level input which has a significant effect on the fair value
measurement is not based on observable market data.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level
input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
3.10 Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
a) Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value
through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
? Debt instruments at amortised cost - The Company has cash & cash equivalents, loans and trade receivables classified
within this category.
? Debt instruments at fair value through other comprehensive income (FVTOCI) - The Company does not have any
financial asset classified in this category.
? Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL) - The Company
does not have any financial asset classified in this category.
? Equity instruments measured at fair value through other comprehensive income (FVTOCI) - The Company does
not have any financial asset classified in this category.
Debt instruments at amortised cost
A ‘debt instrument’ is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest
(SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest
rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortisation and losses arising from impairment are recognised in
the Statement of Profit & Loss. The amortised cost of the financial asset is also adjusted for loss allowance, if any.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as
at amortized cost or as FVTOCI, is classified as at FVTPL.
In addition, the company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria,
as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition
inconsistency (referred to as ‘accounting mismatch’). Company has not designated any such debt instrument as at FVTPL.
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement
of Profit & Loss.
Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it
transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of
ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the
risks and rewards of ownership and it does not retain control of the financial asset. Any gain or loss on derecognition is
recognised in the Statement of Profit and Loss.
Impairment of financial assets
In accordance with IndAS 109, the company applies expected credit loss (ECL) model for measurement and recognition of
impairment loss on the following financial assets and credit risk exposure:
Financial assets that are debt instruments, and are measured at amortised cost e.g. Loans and trade receivables.
The company follows ‘simplified approach’ for recognition of impairment loss allowance on Trade receivables that do not
contain a significant financing component.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
b) Financial liabilities
Initial recognition and measurement
All financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the
instrument.
All financial liabilities are initially measured at fair value deducted by, in the case of financial liabilities not recorded at
fair value through profit or loss, transaction costs that are attributable to the liability.
Subsequent measurement
Financial liabilities are classified as measured at amortised cost using the effective interest method. The Company’s
financial liabilities include trade payables, borrowings and other financial liabilities.
Under the effective interest method, the future cash payments are exactly discounted to the initial recognition value
using the effective interest rate. The cumulative amortization using the effective interest method of the difference
between the initial recognition amount and the maturity amount is added to the initial recognition value (net of principal
repayments, if any) of the financial liability over the relevant period of the financial liability to arrive at the amortized
cost at each reporting date. The corresponding effect of the amortization under effective interest method is recognized as
expense over the relevant period of the financial liability in the Statement of Profit and Loss.
Derecognition:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When
an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange or modification is treated as the Derecognition of the
original liability and the recognition of a new liability. The difference between the carrying amount of the financial
liability derecognized and the consideration paid is recognized in the Statement of Profit and Loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset 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 realise the assets and settle the liabilities simultaneously.
3.11 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an
original maturity of three months or less, which are subject to an insignificant risk of changes in value.
3.12 Revenue Recognition
The Company recognises revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services.
A 5-step approach is used to recognise revenue as below:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligation in contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Sale of goods
Revenue from the sale of goods is recognised when control of the goods have passed to the buyer, usually on delivery of
the goods. In determining the transaction price for the sale of goods, the company considers the effects of variable
consideration, the existence of significant financing components, noncash consideration, and consideration payable to
the customer (if any).
Interest income
Interest income on financial asset is recognised using the effective interest rate (EIR) method.
Dividends
Dividend income from investment is accounted for when the right to receive is established, which is generally when
shareholders approve the dividend.
3.13 Earnings per share
Basic earnings per share is computed using the net profit for the year attributable to the shareholders’ and weighted
average number of equity shares outstanding during the year.
Diluted earnings per share is computed using the net profit for the year attributable to the shareholders’ and weighted
average number of equity shares.
3.14 Cash flow statement
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions
of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income
or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing
activities of the Company are segregated.
3.15 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The board of directors of the Company has been identified as being the chief operating decision maker
by the Management of the company.
3.16 Foreign currency transactions
Transactions in foreign currencies are recorded by the Company entities at their respective functional currency at the
exchange rates prevailing at the date of the transaction first qualifies for recognition. Monetary assets and liabilities
denominated in foreign currency are translated to the functional currency at the exchange rates prevailing at the
reporting date.
Non-Monetary asset and liabilities that are measured at fair value in a foreign currency are translated into the functional
currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities that are measured
based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction.
Exchange differences arising on settlement or translation of monetary items are recognised in the statement of profit and
loss with the exception that the exchange differences on foreign currency borrowings included in the borrowing cost
when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
3.17 Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised as
part of the cost of such assets up to the assets are substantially ready for their intended use. The loan origination costs
directly attributable to the acquisition of borrowings (e.g. loan processing fee, upfront fee) are amortised in the year in
which they occur.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognised in the
statement of profit and loss in the period in which they are incurred.
3.18 Rounding off of figures of financial statements:
In compliance with the amendment made by Ministry of Corporate Affairs (MCA) vide notification dated 24th March
2021 in Schedule III of the Companies Act 2013, all the figures forming part of the Financial Statement are rounded off
in Rupees lakhs until and unless stated otherwise.
The fair values of borrowings are based on discounted cash flows using a borrowing rate. They are classified as level 3 fair values in
the fair value hierarchy due to the use of unobservable inputs, including own credit risk.
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
41. Financial Risk Management Objectives and Policies
The Company’s principal financial liabilities comprise borrowings, security deposits, trade and other payables, etc. The main
purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include trade
receivable, security deposit, cash and cash equivalents, etc. that derive directly from its operations. The Company also holds
investments in the shares of its subsidiary measured at amortised cost.
The Company is exposed to market risk, credit risk and liquidity risk. The management oversees the management of these risks. The
management is responsible for formulating an appropriate financial risk governance framework for the Company and periodically
reviewing the same. The management ensures that financial risks are identified, measured and managed in accordance with the
Company’s policies and risk objectives. The management reviews and agrees policies for managing each of these risks, which are
summarised below.
a) 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 prices comprise three types of risk: interest rate risk, foreign currency risk and Equity price risk.
(i) 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. Since the Company has borrowings, therefore Company is exposed to such risk.
(ii) Foreign Currency Risk
The Indian Rupee is the Company’s most significant currency. As a consequence, the Company’s results are presented in
Indian Rupee and exposures are managed against Indian Rupee accordingly. So, the Company is exposed to such risk.
(iii) Equity Price Risk
The Company’s investment in shares are susceptible to market price risk arising from uncertainties about future values of the
investment securities. The Company manages the price risk through diversification and by placing limits on individual and
total instruments. Reports on the portfolio are submitted to the management on a regular basis.
b) Credit Risk
The maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the
balance sheet
c) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to
ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are fallen due, under both normal
and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
The following are the contractual maturities of the financial liabilities, including estimated interest payments as at
31st March 2024:
42. Capital Management
The management policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future
development ofthe business. The Company’s management monitor the return on capital employed.
Company’s Gearing ratio
Reasons for Variances more than 25% in respective ratios
1) There is a decrease in current assets of the company as majority of the loans and advances have been received during the year and
an increase in other current liability by Rs.460.17 lakhs also there is an increase in the inventories by 321.31 lakhs which has led
to a negative variance of94.46% in the ratio.
2) Due to decrease in losses in current year of Rs 126.94 lakhs as compared to loss in previous year of Rs 1447.69 lakhs and decline
in payment of interest there has been drastic change in Debt Service Coverage Ratio.
3) The variance is due to decrease in losses by 957.34 lakhs leading to a decrease in equity and a negative RoE Ratio.
4) There is an increase in the inventory by 321.31 lakhs and also the COGS has decreased which has led to a variance of 1572%.
5) There is a decline in the Revenue of the company by 1505.93 lakhs and trade receivable by 288.29 lakhs which has resulted in a
negative variance of55.98%.
6) There is a decline in the Revenue of the company by 1505.93 lakhs and working capital by 249.15 lakhs resulting a negative
variance of49.99%.
7) The decrease in losses by Rs.957.34 lakhs decline in the Revenue of the company by 1505.93 lakhs has led to a variance in Net
Profit Ratio.
8) The variance is due to the decrease in EBIT by Rs 1257.60 lakhs.
46) Contingent Liability: As at March 31, 2024, contingent liabilities towards disputes related to income tax is Rs. 0.31 Lakhs. The
company has filed an appeal before Commissioner of Income Tax (Appeal), the matter is still pending.
47) During the year the Company has disposed off its entire stake in one of the subsidiaries namely BIOGRAIN PROTINEX PRIVATE
LIMITED on 5th July 2023. The transfer of shares was made at cost. The approvals for the same was taken by the company vide
resolution passed in EGM held on 5th June 2023.
48) During the year ended 31st March 2024 the company has been sanctioned a government grant amounting to Rs. 499.21 Lakhs for
implementation of skill development programmes. The grant is sanctioned from National Backward Finance and Development
Corporation and National Schedule Castes Finance and Development Corporation in equal proportions and is accounted for in
accordance with Ind AS-20 “Accounting for government grant and disclosure of government assistance. The Grant is recognized in
books of accounts considering the deferred income method of accounting. Thus, grant is credited to statement of profit & loss on the
proportion of expenses incurred.
49) There has been difference in some figures of Financial statements and Results published in Annual Financial Results due to some
arithmetical mistake, note of same differences has been given in respective figures notes to accounts.
For: Muchhal & Gupta
Chartered Accountants
FRN: 004423C
Shashank Sharma
Partner
M.No. 426870 Place: Indore
UDIN: 24426870BKEZPK9177 Date: 14 th May, 2024
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