I) Provisions and contingent liabilities
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The
discount rate used to determine the present value is a pre tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or where any present obligation cannot be measured in terms of future outflow of resources or where a reliable estimate of the obligation cannot be made. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
m) Revenue recognition
The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and specific criteria have been met for each of the Company's activities as described below.
Sale of goods
Revenue from sale of goods is recognised when control of the products being sold is transferred to our customers and there are no longer any unfulfilled obligations. The performance obligations in our contracts are fulfilled at the time of dispatch, delivery or upon formal customer acceptance depending on customer terms.
Sales Return
The Company recognises provision for sales return, on the basis of mutual satisfaction which is measured at the Sales value excluding taxes & duties.
Other operating revenue:
Export Incentives under various schemes are accounted in the year in which right to receive is irrevocably established.
Other revenue:
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable rate of interest.
Interest received on delayed payment is accounted on receipt basis.
Revenue in respect of insurance/other claims etc, is recognized only when it is reasonably certain that the ultimate collection will be made.
Dividends
Dividends are generally recognised in the Statement of Profit and Loss only when the right to receive payment is established.
n) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 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 the amounts expected to be paid when the liabilities are settled.
(ii) Other long-term employee benefit obligations
The liabilities for earned leave and sick leave that are not expected to be settled wholly within 12 months are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method.
(iii) Post-employment obligations
The Company operates the following post-employment schemes:
(a) defined benefit plans such as gratuity; and
(b) defined contribution plans such as provident fund.
Gratuity obligations
The liability or asset recognised in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Defined Contribution Plans
Defined Contribution Plans such as Provident Fund, etc., are charged to the Statement of Profit and Loss as incurred.
Termination benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognises termination benefits at the earlier of the following dates: (a) when the Company can no longer withdraw the offer of those benefits; and (b) when the Company recognises costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of terminations benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.
o) Foreign currency translation
Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction dates. Realised gains and losses on settlement of foreign currency transactions are recognised in the Statement of Profit and Loss.
Monetary foreign currency assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognised in the Statement of Profit and Loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are stated using the exchange rates at the dates of the initial transactions.
p) Leases As a Lesee
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is or contains, a lease if the contract conveys the right to control the use of an identified asset fora period of time in exchange for consideration.
The Company recognises a Right-of-Use (ROU) asset and a lease liability at the lease commencement date. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payment made at or before the commencement date, plus any initial direct cost incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentive received.
The ROU asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term. The estimated useful lives of ROU assets are determined on the same basis as those of Property, Plant and Equipment. In addition, the ROU asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.
Short-term leases and leases of low-value assets
The Company has elected not to recognise right-to-use assets and lease liabilities for shortterm lease that have a lease term of 12 months or less and leases of low-value assets. The Company recognise the lease payments associated with these leases as an expenses on a straight-line basis over the lease term.
q) Taxes
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
Deferred income tax is provided in full, using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amount in the financial statement. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are excepted to apply when the related deferred income tax assets is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, only if, it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are off set where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively
Minimum Alternate Tax credit is recognised as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
r) Earnings Per Share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
• the profit attributable to owners of the Company
• weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
• the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
• the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
s) Cash Flow Statement
The Cash Flow statement Is prepared by the “Indirect method” set out in Ind AS-7 on “Cash Flow Statement“ and presents the cash flows by operating, investing and financing activities of the Company.
t) Impairment of Assets:
The Company assesses at each reporting date whether there is an indication that a nonfinancial asset may be impaired based on internal/external factors. An asset is treated as impaired when the carrying cost of asset exceeds its recoverable Value. An impairment loss is charged to the statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in earlier accounting period is reversed if there has been a change in the estimate of recoverable amount. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
u) Assets held for Sale:
Non-current assets held for sale are measured at the lower of its carrying value or fair value less costs to sell. Non-current assets held for sale are not depreciated or amortized. Assets and liabilities classified as held for sale are presented separately in the balance sheet.
v) Exceptional items
Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the company. These are material items of income or expense that have to be shown separately due to their nature or incidence.
w) Recent Pronouncement
The Ministry of Corporate Affairs has vide notification dated March 31, 2023 notified Companies (Indian Accounting Standards) Amendment Rules, 2023 (the ‘Rules') which amends certain accounting standards, and are effective April 1, 2023. The Rules predominantly amends Ind AS 1 - “Presentation of financial statements” and Ind AS 12 - "Income taxes”, whereas the other amendments notified by these rules are primarily in the nature of clarifications. As per the Management’s assessment, these amendments are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions.
15.6 Rights of shareholders
All equity shares carry equal rights with respect to voting and dividend. In the event of liquidation of the Company, the equity shareholders shall be entitled to proportionate share of their holding in the assets remaining after distribution of all preferential amounts.
15.7 During the period under review, the company has successfully completed the Rights issue of 7,00,00,000 Equity Shares of face value of ?5/- each at an issue price of ?9/- per Equity Share (including premium of ?4/- per Equity Share) aggregating to ?6,300 lakhs. The allotment of equity shares was made on July 3, 2023. Consequently, ?2800 lakhs are credited to Share premium and ?3500 lakhs are credited to Equity Share capital.
15.8 Pursuant to rights issue of 7,00,00,000 Equity Shares of face value of ?5/- each at an issue price of f9l- per Equity Share (including premium of f41- per Equity Share) aggregating to ?6,300 lakhs, Nirma Chemical Works Private Limited (NCWPL) has subscribed to 5,16,69,490 equity shares of the company. The overall effective holding of NCWPL in the company has increased thereby from 37.46% to 56.53%. Owing to the effective ownership being more than 50%, NCWPL is thereby recognised as the holding company of Shree Rama Multi-Tech Limited and accordingly the Company became the subsidiary of NCWPL.
(a) Securities Premium
The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve. The reserve is utilised in accordance with the specific provisions of the Companies Act, 2013.
(b) Capital Redemption Reserve
Capital Redemption Reserve is created out of profit available for distribution towards redemption of preference shares. This reserve can be utilised in accordance with the specific provisions of the Companies Act, 2013.
(c) Debenture Redemption Reserve
Debenture Redemption Reserve is created out of profit available for distribution towards redemption of debentures. This reserve can be utilised in accordance with the specific provisions of the Companies Act, 2013.
(d) Warrants Forfeited Account
Warrants Forfeited Account is created out of paid amount of forfeited warrants.
(e) General Reserve
General Reserve has been created by transfer out of profit generated by the Company and is available for distribution to shareholders. Under the erstwhile Companies Act, 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, 2013, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn.
(f) Capital reserve
The Company had issued equity shares in the earlier years. This reserve is created on account of forfeiture of share application money received on account of issuance of equity shares as the shareholders did not exercise their options.
(g) Retained Earnings
Retained earnings are the profits that the Company has earned till date including effect of remeasurement of defined benefit obligations less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained Earnings is a free reserve available to the Company.
39. Financial Instruments - Fair Values & Risk Management Accounting Classifications & Fair Value Measurements
The fair values of the financial assets and liabilities are measured at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The fair value of investment in quoted equity shares and mutual funds is measured at quoted price or NAV.
Fair values of cash and shortterm deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying amounts largely due to short-term maturities of these instruments.
Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on the evaluation, allowances are taken to account for the expected losses of these receivables.
The company uses the following hierarchy for determining and disclosing the fair values of financial instruments by valuation technique:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than the quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 : Input that is significant to the fair value measurement is unobservable.
43. Capital Management
The company’s objectives when managing capital are to
a. safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
b. Maintain an optimal capital structure to reduce the cost of capital.
Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio:
Net debt (total borrowings net of cash and cash equivalents) divided by Total ‘equity’ (as shown in the balance sheet, including non-controlling interests).
46.2 Andhra bank Ltd. has filed suit in Debt Recovery Tribunal against East West Polyart Ltd. as Principal Debtor and the Company as a guarantor and Recovery Officer has demanded ?933.34 lakhs (net of Recovery already made and including interest). Review Application filed by the Company against Demand Notice has been admitted by Debt Recovery Tribunal, Ahmedabad. The matter is pending before DRT.
46.3 The Company has received Order from the National Company Law tribunal, Ahmedabad Bench on July 28, 2023 u/s 55(3) of the Companies Act, 2013 granting Approval to issue and allot 7,66,666 Preference Shares of ? 100/- each to the existing preference shareholder of the value equivalent to the outstanding 6,66,666 unredeemed preference shares amounting to ?666.66 lakhs together with unpaid dividend of ?100 lakhs thereon. Accordingly, the Company has issued and allotted further 15% Cumulative Redeemable Preference Shares of ?100/- each on September 11, 2023 for the tenure of five years to be redeemed in three equal instalments at the end of third, fourth and fifth year from the date of allotment. On issue of new Preference Shares, the Preference shareholder has waived the right to claim accumulated dividend on preference shares and accumulated interest on delayed payment of Dividend. The Company has written back the provision for interest on delayed payment of dividend on preference shares of ?47.50 lakhs.
46.4 The Company has settled and made payment of ?6171.86 lakhs to the Lenders of outstanding Loans and Debentures out of the proceeds of the Rights issue. The principal amount has been repaid as per the settlement agreement and the Lenders have waived outstanding interest and other charges as applicable on the Borrowings amounting to ?18336.26 lakhs, which was hitherto disclosed in Contingent Liability. The Company is now no longer required to make any provision for payment of interest, since the principal amount has been paid as per the settlement agreement.
46.5 In respect of Tax assessments for A.Y. 2012-13 & 2013-14, the income tax department has made additions or disallowances amounting to ?20270.00 lakhs in respect of treatment of gain arising on settlement /waiver of loans and for other matters which has resulted into reduction of carried forward losses under income tax Act, against which the department has filed appeal before the High Court and Income Tax Appellate Tribunal.
46.6 The Assistant Commissioner of income Tax, TDS Circle, Ahmedabad vide its order dated March 16, 2022 (“Order") directed our company to pay an aggregate amount of ?1.35 lakhs towards failure of deduction of TDS for the assessment year 2015-16 and interest payable under section 201(1 A) of the Income Tax Act, 1961. The Assistant Commissioner of Income Tax vide its notices dated March 16, 2022 and June 02, 2022 directed our company to pay a sum of ?1.35 lakhs. Against this order, appeal was filed before CIT(A), which is pending as on date.
46.7 (a) In respect of AY 2021-22, the Income Tax Department has made disputed addition of ?2.03
lakhs and adjusted demand of ?2.07 lakhs against which the Company has preferred appeal before ITAT and no provision is made for the same.
(b) Order under sec 154 of Income Tax Act was passed on June 05, 2023 for AY 2020-21 under which total income determined was ?59.59 lakhs and total demand payable was ?7.04 lakhs. The company has filed an appeal to CIT (Appeals) and the matter is pending as on date.
46.8 (a) The Excise Department had raised demand for Accounting Year 2004-05 by denying
CENVAT Credit of ?131.45 lakhs in respect of Raw Material used for new Plant in the Trial Run and also imposed the penalty of ?131.45 lakhs against which the Company has filed an Appeal before CESTAT and it has allowed the Company’s Appeal. The Department has filed an Appeal against the said Order in the High Court which is pending for Final Hearing.
(b) The Central GST Division, Kalol has also raised Demand for ?10.73 lakhs and also imposed interest for audit of Excise for the period March, 2014 to March, 2016 against which the Company has filed an Appeal to the Commissioner and matter is remanded back to the Assessing Officer for fresh Adjudication.
(c) The State GST Division, Kalol Gujarat has raised a tax demand by issuing a notice for an amount of ?7.58 lakhs and also imposed interest at 18% and a penalty at 10% on tax demand for the period July 2017 to March 2018. The company has filed an appeal to the Commissioner (Appeal) against this.
46.9 The company has imported Auto Flex Die & a new MLFP Machine which has been received and put to use in the financial year 2023-2024 and 2024-25 respectively. The company has saved import duty to the extent of ?540.18 lakhs under the Export Promotion Capital Goods Scheme. The Company has an obligation of Incremental Export Turnover of ?3241.10 Lakhs in Six Years i.e six times of Duty Saved. The Company has achieved Average Export Turnover of f3235.00 Lakhs during Last Three Years. Thus Company has an obligation of Export Turnover of ?22651.10 Lakhs to be achieved in Next Six (6) years. The company can also fulfil the criteria by achieving 75% of the stipulated export turnover within the next 4 years.
In view of the facts and positive outcome, the Management is of the view that no any provisions is required for the above.
54. The Company evaluates events and transactions that occur subsequent to the Balance Sheet date prior to the approval of the financial statements to determine the necessity for recognition and/or reporting of any of these events and transactions in the Financial Statements. As of May 18, 2024 there was no subsequent event to be recognised or reported that are not already disclosed elsewhere in these Financial Statements.
55. The company does not hold any benami property as defined under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder. No proceeding has been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
56. The Company has not traded or invested in crypto currency or virtual currency during the financial year.
57. The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 ( Such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
58. 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:
(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.
59. The Company have 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
60.3 There are no non-current assets other than in India.
60.4 There is a reputed customer accounted for more than 10% of the revenue during the year 2023-24. Further, there are 2 customers having outstanding balance of more than 10% of the total receivable as on 31s1 March, 2024.
61. Previous year’s figures have been regrouped / re-stated / reclassified wherever necessary. Figures in brackets relate to previous year unless otherwise stated. Previous year figures in notes forming part of accounts are recalculated to bring the figures in line with relevance in the matter.
As per our report of even date attached herewith For and on behalf of the Board
For Mahendra N. Shah & Co. Mittal K. Patel Shailesh Desai
Chartered Accountants Chairman Managing Director
FRN: 105775W (DIN: 03619139) (DIN: 01783891)
Chirag M. Shah HemantShah SandipMistry
Partner M. No.: 045706 Chief Financial Officer Company Secretary
A-6548
Place : Ahmedabad Place : Moti-Bhoyan
Date : 18/05/2024 Date : 18/05/2024
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