(e) Provisions and contingent liabilities and contingent assets
Provisions are recognized when there is a present obligation 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 there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date.
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 recognized as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
Contingent assets are not recognised. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, and is recognised as an asset.
3. Significant accounting judgments, estimates and assumptions
3.1 Use of estimates
In the preparation of the financial statements, the Company makes judgments, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively. Information about assumptions, judgments and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending 31 March 2023 are as below.
(a) Taxes
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
The Company neither have any taxable temporary difference nor any tax planning opportunities available that could partly support the recognition of these losses as deferred tax assets. On this basis, the Company has determined that it cannot recognize deferred tax assets on the tax losses carried forward except for the unabsorbed depreciation.
(b) Significant Influence - Associate Entity
Judgement has been used to determine the influence exercised over an entity and whether the investment in equity securities of an entity needs to be classified as an Associate entity.
3.2 Standards issued 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. During the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
3.3 Standards that became effective during the year
There are no new Standards that became effective during the year. Amendments that became effective during the year did not have any material effect.
22 Capital management
For the purpose of the Company’s capital management, capital includes issued equity capital and other equity reserves attributable to the equity holders. The primary objective of the Company’s capital management is to maximize the shareholder value and to ensure the Company's ability to continue as a going concern.
The Company has not distributed any dividend to its shareholders. The Company monitors gearing ratio i.e. total debt in proportion to its overall financing structure, i.e. equity and debt. Total debt comprises of current and non-current borrowings. The Company manages the capital structure and makes adjustments to it in the lig ht of changes i n economic conditions and the risk characteristics of the underlying assets.
23 Financial risk management objectives and policies
The Company is exposed to market risk. The Company's risk management is coordinated by the Board of Directors and focuses on securing long term and short-term cash flows. The Company does not engage in trading of financial assets for speculative purpos es.
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 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 include borrowings and derivative financial instruments.
(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 exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations with floating interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises principally from the Company’s receivables from deposits with landlords and other statutory deposits with regulatory agencies and also arises from cash held with banks and financial institutions. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.
The Company limits its exposure to credit risk of cash held with banks by dealing with highly rated banks and institutions and retaining sufficient balances in bank accounts required to meet a month’s operational costs. The Management reviews the bank accounts on regular basis and fund drawdowns are planned to ensure that there is minimal surplus cash in bank accounts. The Company does a proper financial and credibility check on the landlords before taking any property on lease and hasn’t had a single instance of non-refund of security deposit on vacating the leased property. The Company also in some cases ensure that the notice period rentals are adjusted against the security deposits and only differential, if any, is paid out thereby further mitigating the non-realization risk. The Company does not foresee any credit risks on deposits with regulatory authorities.
The Company’s maximum exposure to credit risk for the components of the balance sheet at 31 March 2024 and 31 March 2023 is the carrying amounts as mentioned in Note 6 to 7.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. (For example: The key liquidity risk the Company can face is the risk of subscription fee refund. The Management believes that the probability of a liquidity risk arising is not present).
24 Segment reporting
The Company operates has only single reportable business segment and hence no disclosures have been made in this regard. Further the operations are totally in India, hence no disclosure for geographical segment reporting is required.
25 Commitments and Contingent liabilities
There are no commitments or contingent liabilities as on 31 March 2024 (31 March 2023: Nil)
26 Fair values of financial assets and financial liabilities
The fair value of other current financial assets, cash and cash equivalents, trade payables, short-term borrowings and other financial liabilities approximate the carrying amounts because of the short-term nature of these financial instruments.
The amortized cost using effective interest rate (EIR) of non-current financial assets consisting of security deposits are not significantly different from the carrying amount.
Financial assets that are neither past due nor impaired include cash and cash equivalents, security deposits and other financial assets.
b. Details of Benami Properties
No proceedings have been initiated on or are pending against the company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.
c. Borrowing secured against current assets:
The Company has not availed any borrowing secured against current assets of the Company.
d. Revaluation of property, plant and equipment and intangible assets:
The Company does not have any property plant equipment and intangible assets.
e. Title deeds of immovable properties not held in name of the Company:
The Company does not have any immovable properties as at year end.
f. Utilization of borrowed funds and share premium:
The company has not advanced or loaned or invested funds to any other person(s) or entity, including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a. 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
b. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries
The company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall:
a. 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
b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
g. Undisclosed Income:
There are no transactions that has been not recorded in the books of accounts and has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
h. Details of Crypto Currency or Virtual Currency:
There are no transaction/holding of crypto or virtual currency during the year.
i. Transactions with struck-off companies:
Based on information available with company, there are no transactions with struck-off companies under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956, during current and previous year.
j. Wilful Defaulter:
The company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
k. Registration/satisfaction of charges with Registrar:
There are no charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period in the current as well as in the previous year.
l. Compliance with approved scheme(s) of Arrangements:
The company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
m. Utilisation of borrowings availed from banks and financial institutions:
The Company does not have availed any borrowings from banks and financial institutions.
n. Compliance with number of layers of companies:
The company has complied with the number of layers prescribed under the Companies Act, 2013.
28. Going Concern:
During the year ended 31 March 2024, the Company has incurred a net loss of INR 69.55 Lakhs (Previous year INR 65.63 Lakhs) and, has accumulated losses of INR 558.24 Lakhs as at year end (Previous year INR 488.69 Lakhs). Also, the Company’s current liabilities exceeded its current assets by INR 513.26 Lakhs (Previous year INR 443.77 Lakhs) as on the balance sheet date. The Company has adverse financial ratios and no cash inflows from operating activities.
However, investment being significant asset of the Company, the management believes that on occurrence of either or both of the certain events in future namely, declaration of dividend by investee; Innovassynth Technologies (India) Limited (‘ITIL’) and selling off partial/complete investment stake in ITIL, the Company may enable it to generate cash flows.
ITIL is generating operating profits and projects profitable financial performance in future and had also considered expansion of business in past that will add up to its financial stability. The Company is expecting good dividend capitalisation. Based on these factors and letter of support received from ITIL, the management believes that the Company will continue as a going concern and thereby will be able to realizes its assets and discharges its liabilities in the normal course of its business. Accordingly, these financial statements have been prepared based on the going concern assumption and consequently, no adjustments have been made to the carrying values of assets and liabilities.
29. Previous year figures have been regrouped/ reclassified to confirm presentation as per Ind AS as required by Schedule III of the Act.
For P G Bhagwat LLP For and on behalf of the Board of Directors of
Chartered Accountants Innovassynth Investments Limited
Firm Registration Number: 101118W/W100682 CIN: L67120MH2008PLC178923
Abhijit Shetye Dr Hardik Joshipura Sandesh Mhadalkar
Partner CMD Director
Membership No: 151638 DIN: 09392511 DIN: 08929791
Place: Pune Sameer Pakhali
Date: May 29, 2024 Company Secretary & CFO
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