2.13 Provisions, contingent liabilities and contingent assets.
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at current pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability when discounting is used, the increase in the passage of time is recognized as finance costs.
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 out flow of recourses will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is liability that can't be recognized because it can't be measured reliably.
A contingent liability is not recognized in the financial statements, but discloses its existence in the Financial Statement.
When the realization of income is virtually certain, then the related asset is no longer a contingent asset, and is recognized as an asset.
Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.
2.14 Dividend payable
Final dividend on shares is recorded as a liability on the date of approval by the shareholders and interim dividend are recorded as a liability on the date of declaration by the Company's Board of Directors. A corresponding amount is recognized directly in equity.
2.15 Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Monetary items denominated in foreign currencies at the year ended translated at the year ended rates which is likely to be realized from, or required to disburse at the balance sheet date. Exchange differences arising on settlement of monetary items at rates different from those at which they were initially recorded / reported in financial statements are recognized as income or expense in the year in which they arise.
Non-monetary items which are carried at historical cost denominated in a foreign currency are translated using the exchange rate at the date of the initial transaction.
2.16 Employee benefits
a) Short -term employee benefits are recognized as an expense at the undiscounted amount in the Statement Profit & Loss Account of the period in which the related service is rendered.
b) Long -term employee benefits are recognized as an expense in the Statement Profit & Loss Account for the year in which the employee has rendered services.
Defined Benefit Plans
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 (INDAS)-19-'Employee Benefits'.
i. Compensated absences
Accumulated leave, which is expected to be utilized within next 12 months, is treated as short term employee benefit and this is shown under current provisions in the Balance Sheet. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefits and shown under long term provisions in the Balance sheet.
ii. Gratuity
The Company provides for retirement benefits in the form of gratuity. The Company's liability towards this benefit is determined on the basis of actuarial valuation using projected unit credit method at the date of Balance sheet. Actuarial gain and Losses in respect of such benefits are recognized in Other Comprehensive Income.
2.17 Financial instruments
A Financial instrument is any contract that gives rise to financial assets of one entity and a financial liability or equity instrument of another party.
A. Financial Assets
a. Initial recognition
The Company classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial instruments are recognized initially at fair value plus transactions costs that are directly attributable to the acquisition or issue of the financial instrument, except for financial assets at fair value through statement of profit and loss, which are initially measured at fair value, excluding transaction costs (which is recognized in statement of profit and loss).
b. Subsequent measurement
i) Financial assets carried at amortized cost (AC)
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
ii) Financial assets at fair value through other comprehensive income (FVTOCI)
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
iii) Financial assets at fair value through statement of profit and loss (FVTPL)
Equity instruments
All equity investments in scope of Ind AS 109 are measured at fair value either as at FVTOCI or FVTPL. The Company makes such election on instrument-by-instrument basis. For equity instruments measured as at FVTOCI, all fair value changes on the instrument, excluding dividends, are recognized in the OCI. Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit & Loss account.
c. De-recognition
A Financial Assets (or where applicable, part of financial assets) is primarily derecognized when:
1. The contractual right to receive cash flows from the assets have expired or
2. The Company has transferred its right to receive cash flow from the financial assets and subsequently all the risks and rewards of ownership of the assets to third party.
d. Reclassification of financial assets
Company determines the classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities.
e. Impairment of financial assets
The Company recognized loss allowance using the expected credit loss (ECL) model for the financial assets which are not fair valued through Statement of Profit and loss. Loss allowance for trade receivable with no significant financing component is measured at an amount equal to life time ECL
For all other financial assets, expected credit loss are measured at an amount equal to the twelve-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL.
B. Financial liabilities
a. Initial recognition and measurement
All financial liabilities are recognized initially at fair value and in case of loans and borrowings and payables, net of directly attributable cost. The Company's financial liabilities include trade and other payable, loans and borrowing including bank over drafts, financial guarantee contracts and derivative financial instruments. Fees of recurring nature are directly recognized in statement of profit and loss as finance cost.
b. Subsequent measurement
Financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
i) Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate (EIR) method. Gains and losses are recognized in statement of profit and loss when liabilities are de-recognized. Amortized 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 amortization is included as finance cost in the statement of profit and loss.
ii) Compound financial instruments
At the issue date the fair value of the liability component of a compound instrument is estimated using the market interest rate for a similar non-convertible instrument. This amount is recorded as a liability at amortized cost using the effective interest method until extinguished upon conversion or at the instrument's redemption date. The equity component is determined as the difference of the amount of the liability component from the fair value of the instrument. This is recognized in equity, net of income tax effects, and is not subsequently re-measured.
c. De-recognition of financial instruments
A financial liability is derecognized where the obligation under the liability is discharged or cancelled or expires where an existing financial liability is replaced by another from the same tender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of new liability. The difference in the respective carrying amounts is recognized in the statement of Profit and Loss.
d. Offsetting of financial instruments
Financial assets and financial liabilities including derivative instruments are offset and the net amount is reported in the Balance sheet, if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis or to realize the assets and settle the liabilities simultaneously.
e. Fair value measurement
Fair value is a market-based measurement, not an entity-specific measurement. Under Ind AS, fair valuation of financial instruments is guided by Ind AS 113 "Fair Value Measurement” (Ind AS - 113).
For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions (i.e. an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).
Three widely used valuation techniques specified in the said Ind AS are the market approach, the cost approach and the income approach which have been dealt with separately in the said Ind AS.
Each of the valuation techniques stated as above proceeds on different fundamental assumptions, which have greater or lesser relevance, and at times there is no relevance of a particular methodology to a given situation. Thus, the methods to be adopted for a particular purpose must be judiciously chosen. The application of any particular method of valuation depends on the Company being evaluated, the nature
of industry in which it operates, the Company's intrinsic strengths and the purpose for which the valuation is made.
In determining the fair value of financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date.
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 : Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 : Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs) f) Share capital
An equity instrument is a contract that evidences residual interest in the assets of the Company after deducting all of its liabilities. Incremental costs directly attributable to the issuance of new equity shares are recognized as a deduction from equity, net of any tax effects.
2.18 Impairment Non-financial assets
The carrying amount of any property, plant and equipment and intangible assets with finite lives are reviewed at each balance sheet date, if there is any indication of impairment based on internal /external factor. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. Recoverable amount is higher of an asset's or cash generating unit's net selling price and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.
An impairment loss is charged to the Statement of Profit and loss in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounting periods is reversed if there has been change in the estimate of the recoverable amount. At each balance sheet date, the Company assesses whether there is any indication that any property, plant and equipment and intangible assets with finite lives may be impaired. If any such impairment exists, the recoverable amount of an asset is estimated to determine the extent of impairment. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the impairment loss previously recognized is reversed such that the asset is recognized at its recoverable amount but not exceeding written down value which would have been reported if the impairment loss had not been recognized.
2.19 Taxes
Income tax expense comprises current tax and deferred tax and is recognized in the Statement of Profit and Loss except to the extent it relates to items directly recognized in Equity or in Other Comprehensive Income (OCI). Current tax
Provision for current tax is made with reference to taxable income computed for the accounting period for which the financial statements are prepared by applying the tax rates and laws that are enacted or substantively enacted at the balance sheet date. The tax is recognized in statement of profit and loss, except to the extent that it related to items recognized in the OCI or in other equity. In this case, the tax is also recognized in other comprehensive income and other equity.
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 assets and settle the liabilities simultaneously.
Deferred tax
Deferred tax is recognized using the balance sheet approach. Deferred tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in financial statements, except when the deferred tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profits or loss at the time of the transaction.
Deferred tax assets are recognized for deductible temporary differences, the carry forward of and any unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each balance sheet 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 recovered.
Unrecognized deferred tax assets are re-assessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off deferred tax assets against deferred tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
2.20 Earnings per Share
The Company presents basic and diluted earnings per share ("EPS”) data for its equity shares. Basic EPS is calculated by dividing the profit/loss before other comprehensive income/loss for the year attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit/loss before other comprehensive income/loss for the year attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.
2.21 Non-current assets (or disposal groups) held for sale and discontinued operations
a) Non-current assets (or disposal groups) are classified as held for sale if their carrying amount would be recovered principally through a sale/distribution rather than through continuing use and a sale/distribution is considered highly probable.
Actions required to complete the sale/distribution should indicate that it is unlikely that significant changes to the sale/ distribution would be made or that the decision to sell/distribute would be withdrawn. Management must be committed to sale/distribution expected within one year from the date of classification.
b) Immediately before the initial classification of the assets (and disposal groups) as held for sale, the carrying amount of the assets (or all the assets and liabilities in the disposal groups) are measured in accordance with their applicable accounting policy.
Non-current assets (or disposal groups) held for sale/for distribution to owners are subsequently measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits and financial assets which are specifically exempt from this requirement.
c) Non-current assets including those that are part of a disposal group (PPE and Intangible assets) once classified as held for sale/ distribution to owners are neither depreciated nor amortized. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognized.
d) Non-current assets (including assets of a disposal group) classified as held for sale are presented separately from the other assets in the Balance sheet. The liabilities of a disposal group classified as held for sale/ distribution are presented separately from other liabilities in the Balance sheet.
e) A disposal group qualifies as discontinued operation, if it is a component of equity that has either being disposed of or is classified as Held for sale, and that represents a separate major line of business or geographical area of operations, or is part of a single co-ordinate plan to dispose of a separate major line of business or geographical area of operations or is a subsidiary exclusively with a view to resale.
Discontinued operations are excluded from the results of continuing operations and are presented separately as a single amount as profit or loss after tax from discontinued operations in the Statement of Profit and Loss and comparative information is restated accordingly.
f) All notes to the financial statements mainly include amounts for continuing operations, unless stated otherwise.
2.22 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. Revenue and expenses are identified to segments on the basis of their relationship to the operating activities of the segment. Inter segment revenue are accounted for based on the cost price. Revenue, expenses, assets and liabilities which are not allocable to segments on a reasonable basis, are included under "Unallocated revenue/ expenses/ assets/ liabilities".
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director who makes strategic decisions.
The accounting policies adopted for segment reporting are in line with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
2.23 Cash and cash equivalents
Cash and cash equivalents in the Balance sheet comprise cash on hand, cheques on hand, balance with banks on current accounts and debit balance of cash credit account if any and short term, highly liquid investments with an original maturity of three months or less and which carry insignificant risk of changes in value.
For the purpose of the Cash Flow Statement, Cash and cash equivalents consist of Cash and cash equivalents, as defined above and net of outstanding book overdrafts as they are considered an integral part of the Company's cash management.
2.24 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit/loss before tax 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 flows. The cash flows from operating, investing and financing activities of the Company are segregated.
Note No. : 2A Key accounting judgment, estimates and assumptions
The preparation of the financial statements requires the use of accounting estimates, which, by definition would seldom equal the actual results. Management also needs to exercise judgment and make certain assumptions in applying the Company accounting policies and preparation of financial statements.
The use of such estimates, judgments and assumptions affects the reported amounts of revenue, expenses, assets and liabilities including the accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in the future periods.
Estimates and judgments are continually evaluated. They are based on historical experience and other factors including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.
Estimates and Assumptions
The Company has based its assumptions and estimates on parameters available when the financial statement was prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below.
i) Depreciation and useful lives of property, plant and equipment: Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation to be recorded during any reporting period. The useful lives and residual values are based on the Company's historical experience with similar assets and take into account anticipated technological changes. The depreciation for future periods is adjusted if there are significant changes from previous estimates.
ii) Income Tax: Management judgment is required for calculation of income tax and deferred tax assets and liabilities. Deferred tax assets are recognized for unused losses (carry forward of prior years' losses) to the extent that it is probable that taxable profit would be available against which the losses could be utilized. The Company reviews at each balance sheet date the carrying amount of deferred tax. The factor used in estimate may differ from actual outcome which may lead to significant adjustment in the amounts in financial statement.
iii) Recoverability of trade receivable: Judgments are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
iv) Provisions for contingencies: Provisions are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgment to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
v) Impairment of non-financial assets: The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or CGU's fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transaction are taken into account, if no such transactions can be identified, an appropriate valuation model is used.
vi) Estimation of Defined benefit obligations: The Company's obligation on account of gratuity and compensated absences is determined based on actuarial valuation.
An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each financial year end.
vii) Impairment of financial assets: The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on Company's past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
viii) Fair value measurement of financial instruments: When the fair value of the financial assets and liabilities recorded in the balance sheet cannot be measured based on the quoted market price in activate markets, their fair value is measured using valuation technique. The input to these models are taken from the observable market where possible, but if this is not feasible, a review of judgment is required in establishing fair values. Changes in assumption relating to this assumption could affect the fair value of financial instrument.
ix) Material uncertainty about going concern: In preparing financial statements, management has made an assessment of Company's ability to continue as a going concern. Financial statements are prepared on a going concern basis. The Management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the Company's ability to continue as a going concern.
Recent pronouncements
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. For the year ended March 31,2024,
MCA has not notified any new standards or amendments.
I) Terms & Conditions of Secured Loans
1. Term Loan from Uttarakhand State Co-Operative Bank Limited
Term Loan from Uttarakhand State Co-Operative Bank Limited are secured by First charge on all movable assets forming part of fixed/block assets both present & future, and Joint Equitable Mortgage on company's immovable properties situated at Village Libberheri, Roorkee, District Haridwar (Uttarakhand) on First Charge basis and also guaranteed by Managing Director of the company.
2. Term Loan from Zila Sahkari Bank Limited, Ghaziabad:-
a) For payment of cane price arrears of Sugar Season 2016-17 and 2017-18
Term Loans from Zila Sahkari Bank Limited, Ghaziabad for the sugar units of the company are secured on First charge basis on all movable assets forming part of fixed/block assets, both present & future and Joint Equitable Mortgage on company's immovable properties of respective units situated at Village Shermau, Village Khaikheri and Village Barkatpur for which credit facility is availed and also guaranteed by Managing Director of the company.
b) Term Loan for Incineration Boiler installation at Barkatpur Unit
Term Loan from Zila Sahkari Bank Limited, Ghaziabad for installation of Incineration Boiler at Barkatpur Unit is secured by way of first charge basis on all Fixed assets of the sugar factory at Barkatpur Unit of the Company, both present & future on pari-passu basis, including Incineration Boiler financed by them and also guaranteed by Managing Director of the company.
c) Term Loan for installation of Distillery at Barkatpur Unit
Term Loan from Zila Sahkari Bank Limited, Ghaziabad for expansion of Distillery unit at Barkatpur is secured by way of exclusive first charge on fixed assets of the company financed by the Bank and also by first charge on all other fixed assets situated at Barkatpur Unit of the company on pari-passu basis and also guaranteed by Managing Director of the company.
3. Term Loan from Punjab National Bank
a) First Parri passu charge by way of mortagae of factory land and building of the company at Libberheri, Barkatpur, Kahikheri and Shermau.
b) Term loan from Punjab National Bank is secured by first pari passu charge by way of Hypothecation of other fixed assets (inclusive of all movables, plant and machinery) both present and future of the borrower ( excluding specific charge) shared with other term lender/soft loan lenders on parri-passu basis.
c) Third Charge on current assets of the company (except stock pledged) both present and future.
d) Term loan from Punjab National Bank is also guaranteed by Managing Director of the company and corporate guarantee of Uttam Adlakha & Sons Holding Private Limited.
4. Vehicle loans
Vehicle loans from Punjab National Bank/ Non-Banking Finance Company are secured by way of hypothecation of vehicle financed by them.
II) Terms & Conditions of Unsecured Loans
Unsecured Loans from Related parties shall be repayable after a period of three years. Simple interest @ 10% will be accrued annually on 31st March every year but is payable on maturity or date of repayment of loan, whichever is earlier.
1. Non-Fund Based Working Capital Limits from Punjab National Bank
a) Non-Fund Based Working Capital Limits from Punjab National Bank are secured/to be secured by first pari passu charges by hypothecation of stocks of raw materials, sugar, molasses, other stores and spares and book debts/receivables of the Company both present and future and third pari passu charge on movable and immovable assets of the Company.
b) Non-Fund Based Working Capital Limit is also guaranteed by Managing Director of the company and corporate guarantee of Uttam Adlakha & Sons Holdings Private Limited.
2. Working Capital Demand Loan/RDL (WHR) from State Bank of India
Working Capital Demand Loan/RDL from State Bank of India is secured by Exclusive Charge by way of pledge of stocks kept under commodity backed warehouse receipt finance scheme of SBI and also guaranteed by Managing Director of the company and Corporate Guarantee of Uttam Adlakha and Sons Holding Pvt. Limited.
3. Cash Credit (Pledge) Limit from Punjab National Bank
a) Cash Credit (Pledge) Limit from Punjab National Bank is secured by way of pledge of stocks of sugar at Libberheri, Barkatpur, Khaikheri and Shermau units of the company.
b) Cash Credit (Pledge) Limit from Punjab National Bank is also guaranteed by Managing Director of the company and corporate guarantee of Uttam Adlakha & Sons Holdings Private Limited.
c) Cash Credit (Pledge) Limit from Punjab National Bank is secured/to be secured on the third pari passu charge on immovable assets of the Company.
4. Cash Credit facility from Uttarakhand State Co-Operative Bank Limited
Cash Credit facility from Uttarakhand State Co-Operative Bank Limited is secured by Pledge of sugar stocks of Libberheri unit of the company and Hypothecation of Molasses stock of Libberheri Factory of the Company. The Cash Credit Facility is also secured by Residual charge on immovable and movable assets of the Libberheri Factory of the Company.
5. Cash Credit facility from District Co-operative Bank Ltd. Muzaffarnagar
Cash Credit facility from District Co-operative Bank Ltd. Muzaffarnagar is secured by Pledge of stocks of sugar at Khaikheri Sugar Factory of the Company. The Cash Credit Facility is also secured by Residual charge on immovable and movable properties of the Khaikheri Sugar factory of the Company.
6. Cash Credit facility from Zila Sahkari Bank Limited, Ghaziabad
a) Cash Credit facility for Khaikheri Unit
Cash Credit facility from Zila Sahkari Bank Limited Ghaziabad is secured by pledge of stocks of sugar at Khaikheri Sugar Factory of the Company. The Cash Credit Facility is also secured by Residual charge on immovable and movable properties of the Khaikheri Sugar factory of the Company.
b) Cash Credit facility for Shermau Unit
Cash Credit facility from Zila Sahkari Bank Limited Ghaziabad is secured by pledge of stocks of sugar at Shermau Sugar Factory of the Company. The Cash Credit Facility is also secured by Residual charge on immovable and movable properties of the Shermau Sugar factory of the Company.
7. Cash Credit facility from District Co-operative Bank Ltd. Saharanpur (since fully repaid during the year) for Shermau Unit
Cash Credit facility from District Co-operative Bank Ltd. Saharanpur was secured by pledge of stocks of sugar at Shermau Sugar factory of the Company. The Cash Credit facility was also secured by Residual charge on immovable and movable properties of the Shermau Sugar factory of the Company. This facility was also guaranteed by Managing Director of the company.
8. Cash Credit facility from Indusind Bank Limited
Cash Credit facility from Indusind Bank Limited is secured by Exclusive charge by way of pledge of stocks as per the warehouse receipt. The Cash Credit facility is also guaranteed by Managing Director and corporate guarantee of Uttam Adlakha & Sons Holdings Private Limited.
9. Cash Credit facility from Axis Bank Limited
Cash Credit facility from Axis Bank Limited is secured by Pledge of Warehouse Receipts and Storage Receipts. The Cash Credit facility is also guaranteed by Managing Director of the company.
10. Terms & Condition of unsecured loan from Uttarakhand State Government
Financial Assistance from Uttarakhand State Government amounting to '656.68 lakhs and interest accrued & due thereon of '503.63 lakhs was repayable in three years in quarterly installments w.e.f. January 2008 however the same continues to be unpaid. An application for waiver off such loan is pending with the Government of Uttarakhand.
q. The details of performance obligation in terms of Ind AS 115 - Revenue from contracts with customers are as follows:
Sugar:- The Sugar segment of the Company principally generates revenue from manufacturing and sale of sugar and its by-products and power. Domestic sales of sugar is made on ex-factory/delivery basis in terms agreed to wholesaler /institutional buyers/merchant exporters within the country. Domestic sugar sales are majorly done on advance payment terms. Export sales of sugar to merchant exporters are done on ex-factory /delivered basis in terms of the agreement and revenue is recognized when the goods have been shipped to / delivered to the buyers' specific location. The sale price and payment terms is fixed as per contracted terms.
Power is supplied to distribution companies from the Company's facilities in accordance with the sale price, payment terms and other conditions as per the Power Purchase Agreements ("PPA”).
Bagasse are sold generally on advance payment terms on ex-factory basis as per the terms of the agreement and revenue is recognized when the goods have been shipped to / delivered to the buyer.
The distillery segment of the Company principally generates revenue from sale of industrial alcohol which mainly constitutes ethanol sold under contracts with Public and Private Oil Marketing Companies and other products to institutional buyers.
For sale of Ethanol, sale price is pre-determined based on Expression of Interest /Tender floated from Oil Marketing Companies. The prices are on delivered cost basis at Oil Marketing Companies locations inclusive of all duties/levies/taxes/charges etc. Payment terms is within 21 days after delivery of material and submission of original invoices.
Rectified Spirit, Extra Neutral Alcohol (ENA), etc. are sold on bulk basis to institutional buyers on ex-factory basis as per agreed terms. Revenue is recognized when goods have been shipped to the buyers' specific location as per agreed terms. The payment terms are fixed as per Company's policy which are generally on advance payment basis.
Note No. 35 : Financial Risk Framework
The Company's financial liabilities comprise borrowings, capital creditors and trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's financial assets include Loans, trade and other receivables, cash and cash equivalents. The Company is exposed to market risk, credit risk and liquidity risk.
The Company's senior management overseas the management of these risks. The Company's senior management provides assurance that the company's financial risks activities are governed by appropriate policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized 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 price. Market risk comprises three types of risk interest rate risk, currency risk and other risks, such as regulatory risk and commodity 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. The company's exposure to the risk of changes in market interest rates relates primarily to the company's borrowing obligations with floating interest rates.
ii) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates, the company's exposure to the risk of changes in foreign exchange rates relates primarily to the Direct exports made by the company which are made during the year however same is very negligible as compare to total turnover.
Sensitivity
1% increase or decrease in foreign exchange rates will have no material impact on profit.
iii) Other risk
a) Regulatory risk
Sugar industry is regulated both by central government as well as by the state government, Central and state governments policies and factors such as State Advised Price (SAP) and fair and Remunerative Price (FRP) of sugar cane affects the sugar industry and the company's operations and profitability. Distillery business is also dependent on the Government policy as the price of ethanol decided by the Government. Similarly sugar prices are also effected by the Government Policies like restriction on sale, import of sugar by way of allocation of monthly Quota, export of sugar and import duty / export duty determination of sugar and MSP of sugar.
The regulatory risks listed above are Government policy driven and are beyond the control of the company and can't be alleviated unless the industry is decontrolled. Various representation through the body of industry like ISMA, UPSMA and UPDA submitted to Government to come out solutions regarding above risks.
Power business is also dependent on the regulations prescribed by Central/State regulatory commissions. They fix power purchase rates and other guide lines for supply based on cost of bagasse and other inputs.
b) Commodity price risk
Sugar Prices in domestic and international markets depends primarily on the supply and demand situation. Fluctuation in demand and supply arise on account of the change in the availability and price of sugar variation in the production capacity of the competitor's availability of substitutes for the sugar products and international demand and supply position. The company has mitigated this risk by adding more value added products by diversifying into co- generation and distillation, thereby utilizing the by- products. Similarly, in sugar product also the company's products are diversifying in specialty sugar segments like brown sugar, sachet, pharma sugar, icing sugar, liquid sugar etc.
B. Credit Risk
Credit risk is the risk that counter party will default on its obligations under a Contractual arrangement leading to a financial loss. The company's sugar sales are mostly on advance payment basis. Power and ethanol are sold to state government companies and petroleum companies; thereby the credit default risk is significantly mitigated. Company has also taken advances and security deposits from its customers / agents, which mitigate the credit risk to an extent Financial assets are written off when there is no reasonable expectation of recovery, however, the company continues to attempt to recover the receivables. Where recoveries are made, these are recognized in the statement of profit and loss.
Balances with Banks - Other Financial Assets
Credit risk from balances with banks is managed in accordance with Company's policy. Company considers factors such as track record, size of the institution, market reputation and service standards to select the banks with which term deposits are maintained. Generally, term deposits are maintained with banks with which Company has also availed borrowings.
The Company's maximum exposure to credit risk for the components of the balance sheet as at 31st March, 2024 and 31st March, 2023 is the carrying amounts as stated under Note No. 10.
C. Liquidity risk
i. Liquidity Risk Management
Liquidity risk is the risk that a company may encounter difficulties in meeting its obligations associated with financial liabilities that are settled by delivering cash or other financial assets. The Company's objective is to maintain optimum levels of liquidity to meet its cash and its collateral requirements. The company's Management is responsible for liquidity funding as well as settlement. Management monitors the company's net liquidity position through rolling forecast on the basis of expected cash flows.
Note No. 36 : Capital Management a) Risk Management
For the purpose of the Company's capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity shareholder of the Company. The Primary objective of capital management is to maximize shareholder value and also to maintain an optimum capital structure and to safeguard its ability to continue at a going concern.
The Company's Capital management objectives are to maintain equity including all reserve to protect economic viability and to finance any growth opportunities that may be available in future so as to maximize shareholder value.
The Company manages its capital structure and makes adjustments in the amount of dividends return on capital to shareholders issue new shares or sell assets to reduce debts.
b) Loan Covenants:
In order to achieve this overall objective, the Company's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest bearing loans and borrowing that define capital structure requirements. The company has compiled with these covenants and there have been no breaches in the financial covenants of any interest - bearing loans and borrowings.
No changes were made in the objectives, policies or processes for managing capital during the year ended 31st March 2024 and 31st March, 2023.
Note No. 37: Other disclosures
a. The Company has utilized the borrowings from banks for the specific purpose for which they were taken from banks.
b. The Company has during the year sanctioned working capital limits in excess of '5 crore, in aggregate, from banks on the basis of pledge of sugar stocks, the quarterly returns or statement filed by the company they are in agreement to books of account except value of inventory of pledged sugar provided to bank which is valued in accordance with terms and condition of sanction letter at average Net realizable value whereas in the books of account same has been in considered at lower of Cost or Net realizable value in accordance with the Indian Accounting Standard.
h. The Company has not traded or invested in any crypto currency or virtual currency during the year and previous year.
i. The Company have not advanced or loaned or invested funds to any other person(s) or entity (ies), including foreign entities (intermediaries) with the understanding that the intermediary shall:- 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
- Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
j. The Company have not received any fund from any other person(s) or entity (ies), including foreign entities (funding party) with the understanding (whether recorded in writing or otherwise) that the group shall:- 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
- Provide any guarantees, security or the like on behalf of the ultimate beneficiaries.
k. The Company does not have any transaction not recorded on books of accounts that has been surrendered or disclosed as income during the year and previous year in the tax assessments under the income Tax Act, 1961.
l. Audit trail features (Edit log), as mandated by the Companies (Accounts) Rules, 2014 (as amended) with effect from April 01, 2023, has been enabled in the accounting software used by the company. The Company also a set up practices for daily backup of the entire database and applications in remote locations.
Note No. 39 :
The previous year figures have been reworked, regrouped, rearranged and reclassified wherever necessary. The figures are rounded off to nearest rupee in lakhs up to two decimals.
AS PER OUR REPORT OF EVEN DATE for and on behalf of Board of Directors
Firm Registration No. 00852C For B. K. Kapur & Co.
Chartered Accountants (RAJ KUMAR ADLAKHA) (SHANKAR LAL SHARMA)
Managing Director Executive Director
(M.S.KAPUR) FCA DIN 00133256 DIN 09018381
Partner
Membership No. 074615
(SANJAY BHANDARI) (RAJESH GARG)
Chief Financial Officer Co. Secretary &
Place : Noida Compliance Officer
Date : 6th MAY, 2024
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