2.12 Provisions and contingent liabilities
"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.
The Company records a provision for decommissioning costs. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognized as part of the cost of the particular asset. The cash flows are discounted at a current pre-tax rate that reflects t h e ri sks sp eci fi c to th e decommissioning liability. The unwinding of the discount is expensed as incurred and recognized in the statement of profit and loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.
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.
2.13 Cash and cash equivalents
"Cash and cash equivalent in the balance sheet comprise cash at banks, cash on hand and short-term deposits net of bank overdraft with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, cash in banks and shortterm deposits net of bank overdraft."
2.14 Corporate social responsibility (CSR)
Provisions are recognised for all CSR activities undertaken by the Company for which an obligation has arisen during the year and are recognized in Statement of profit on loss on accrual basis. No provision is made against unspent amount, if any.
2.15 Government grants and subsidies
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the group will comply with all attached conditions. Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
2.16 Borrowing Costs
Interest and other borrowing costs attributable to qualifying assets are capitalised. Other interest and borrowing costs are charged to Statement of Profit and Loss.
2.17 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
[i] . Initial recognition and measurement
At initial recognition, financial asset is measured at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
(ii) . Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in following categories:
a) at amortized cost; or
b) at fair value through other comprehensive income; or
c) at fair value through profit or loss.
The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows."
Amortized cost: Assets that are held for
collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method (EIR).
Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in Statement of Profit and Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. Interest income from these financial assets is included in other income.
Equity instruments:
Investments in subsidiaries are recognised at cost as per Ind AS 27 less impairment, if any, except where investments accounted for at cost shall be accounted for in accordance with Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations, when they are classified as held for sale.
All other equity investments are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value (currently no such choice is made). The Company makes such election on an instrument- by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling
of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Investment in Limited Liability Partnership (LLP):
Investments in capital of Limited liability partnership (LLP), where the Company has control over these LLP's, are recognised at cost as per Ind AS 27 less impairment, if any.
(iii). Impairment of financial assets
"The Company assesses on a forward looking basis the expected credit losses(ECL) associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk."
The impairment methodology for each class of financial assets stated above is as follows:
Trade receivables from customers: The Company applies the simplified approach to providing for expected credit losses prescribed by Ind AS 109, which requires the use of the lifetime expected loss provision for all trade receivables.
"Debt investments measured at amortised cost and FVOCI: Debt investments at amortised cost and those at FVOCI where there has been a significant increase in credit risk, lifetime expected credit loss provision method is used and in all other cases, the impairment provision is determined as 12 months expected credit losses.
For recognition of impairment loss on financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in subsequent years, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12 month ECL."
Life time ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12 month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the year end.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider all contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.
ECL impairment loss allowance (or reversal) recognized during the year is recognized as income/expense in the statement of profit and loss. In balance sheet ECL for financial assets measured at amortized cost is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
(iv). Derecognition of financial assets
"A financial asset is derecognized only when
a) the rights to receive cash flows from the financial asset is transferred or
b) retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients."
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
Where the financial asset is transferred then in that case financial asset is derecognized only if substantially all risks and rewards of ownership of the financial asset is transferred. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.
(b). Financial liabilities
(i). Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value
through profit or loss and at amortized cost, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs.
(ii) . Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in Statement of Profit and Loss when the liabilities are derecognized as well as through the EIR amortization process. 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 costs in the Statement of Profit and Loss.
(iii) . Compound financial instruments
Compound financial instruments issued by the Company which can be converted into fixed number of equity shares for fixed price at the option of the holders irrespective of changes in the fair value of the instrument are accounted by separately recognising the liability and the equity components. The liability component is initially recognised at the fair value of a comparable liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. The directly attributable transaction costs are allocated to the liability and the equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of the compound financial
instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequently."
(iv). 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 in the respective carrying amounts is recognized in the Statement of Profit and Loss as finance costs.
(c}> Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
2.18 Employee benefits
(a) . Short-term obligations
Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within 12 months after the end of the year in which the employees render the related service are recognized in respect of employees' services up to the end of the year and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
(b) . Other long-term employee benefit obligations
"Compensated Absences: Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.
Accumulated compensated absences, which are
expected to be availed or encashed beyond 12 months from the end of the year end are treated as other long term employee benefits. The Company's liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the statement of profit and loss in the year in which they arise.
Compensated absences can be encashed only on discontinuation of service by employee."
[c]. Post employment obligations
(i) . Defined contribution plan
Provident Fund: Contribution towards provident fund is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis which are charged to the Statement of Profit and Loss.
Employee's State Insurance Scheme: Contribution towards employees' state insurance scheme is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis which are charged to the Statement of Profit and Loss.
(ii) . Defined benefit plans
Gratuity: The Company provides for gratuity, a defined benefit plan (the 'Gratuity Plan") covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary. The Company's liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the other comprehensive income in the year in which they arise.
2.19 Earnings per share
"Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Earnings considered in ascertaining the Company's earnings per share is the net profit or loss for the year after deducting preference dividends and
any attributable tax thereto for the year. The weighted average number of equity shares outstanding during the year and for all the years presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares."
2.20 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker regularly monitors and reviews the operating result of the whole Company as one segment of manufacturing of technical textile. Thus, as defined in Ind AS 108 "Operating Segments", the Company's entire business falls under this one operational segment and hence the necessary information has already been disclosed in the Balance Sheet and the Statement of Profit and Loss.
2.21 Contributed equity
"Equity Shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds."
2.22 Dividends
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
2.23 Rounding off amounts
All amounts disclosed in financial statements and notes have been rounded off to the nearest millions as per requirement of Schedule III of the Act, unless otherwise stated.
3. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and 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 future years.
3.1 Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the year end 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. The Company based its assumptions and estimates on parameters available when the financial statements were 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.
(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.
(b) . Defined benefit plans and other long term
benefits (gratuity benefits and compensated absences)
The cost of the defined benefit plans and other long term benefits such as gratuity and compensated absences are determined using actuarial valuations. 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 year end.
The principal assumptions are the discount and salary growth rate. The discount rate is based upon the market yields available on government bonds at the accounting date with a term that matches that of liabilities. Salary increase rate
takes into account of inflation, seniority, promotion and other relevant factors on long term basis.
(c) . Intangible asset under development
The Company capitalises intangible asset under development for a project in accordance with the accounting policy. Initial capitalisation of costs is based on management's judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits.
(d) . Foreign currency convertible bonds (FCCB)
FCCB issued by the company are converted into fixed number of equity shares for fixed price at the option of the holders at fixed rate of exchange. Hence, FCCB issued by the Company is Compound financial instrument and is accounted separately, recognising the liability and the equity components. Based on management estimate, the coupon rate at the time of issue of FCCB is same as coupon rate applicable to comparable liability that does not have an equity conversion option. On initial recognition, the fair value of liability component of FCCB is same as consideration received, resulting in Nil equity component. Hence, entire FCCB is recognised as liability.
(e) . Useful lives of property, plant and equipment
"The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods."
47. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company is exposed to various financial risks. These risks are categorized into market risk, credit risk and liquidity 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 purposes.
(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 is exposed 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.
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings. With all other variables held constant, the Company's profit / loss before tax is affected through the impact on floating rate borrowings, as follows:
(B) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations. Credit risk is primarily attributable to the Company's trade and other receivables. The amounts presented in this standalone statement of financial position are net of allowances for doubtful receivables, estimated by management based on prior experience and their assessment of the current economic environment.
The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.
(C) Liquidity risk
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. Processes and policies related to such risks are overseen by senior management who monitors the Company's net liquidity position through rolling forecasts on the basis of expected cash flows.
48.CAPITAL MANAGEMENT
For the purpose of the Company's capital management, capital includes issued equity capital, share premium and all 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 its gearing ratio i.e. total debt in proportion to its overall financing structure, i.e. equity and debt. Total debt comprises of non-current borrowing (including current maturities from long term debts) and current borrowing of the Company. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
Note 1 - Debt Equity Ratio: The increase in Ratio is on mainly account of losses incurred by the Company leading to fall in shareholder's equity.
Note 2 - Debt Service Coverage Ratio: The ratio has improved due to increase in earning available for debt service. There is no major change in debt service with in a year due to continous defaults in repayment of loans and overutilisation of cash credit facilities.
Note 3 - Return on Equity: The fall in ratio is on account of the losses incurred by Company.
Note 4 - Inventory Turnover Ratio: Ratio has increased due to fall in average inventory levels at the end of current year and increase in Cost of goods sold (due to increase in Net Sales) as compared to previous year.
Note 5 - Net Capital Turnover Ratio: Ratio is decreased due to fall in turnover and the level of working capital as compared to previous year.
Note 6 - Net Profit Ratio: The ratio has decreased in current year due to one time gain on restructuring amounting to Rs. 599.70 million (Refer Note 51) included in net loss of previous year.
Note 7 - Return on capital employed: The return on capital employed has reduced due to increase in loss during current year and negative net worth at the end of current year.
* As the Company does not have any cashflow from its investments, hence Return on Investment ratio is not presented herewith.
52 . As on March 31, 2024, the Company has defaulted in repaying the principal and interest component of loan
instalments amounting to Rs 359.42 millions and Rs. 273.96 millions respectively to IFCI LTD (The interest default cited here is net of TDS (as applicable). Loan of IFCI Ltd has been assigned to Phoenix ARC Private Limited on 19th April, 2024 vide confirmation letter dated 22nd April, 2024.
As on March 31,2024, the Company was in default in repaying the principal and interest component for FCCB issued to TPG Growth II SF Pte. Ltd. amounting to Rs 1,875.91 millions and Rs 885.33 millions respectively and also was in default in redemption of FCCB from International Finance Corporation (IFC) amounting to Rs 750.37 millions. Interest accrued and payable to IFC amounts to Rs. 286.37 millions. The interest default cited here is net of TDS (as applicable) and before adjusting for the effects mentioned in Note 54 below.
As per correspondence with TPG Growth II SF Pte. Ltd. dated 15 February 2024, the Company has entered into a one time settlement of the FCCBs and waiver of interest. Settlement amount was payable on or before 31 March 2024. Time line for payment further extended uptill 30th April, 2024 and the Company has paid settlement amount on 30th April, 2024.
IFC has also agreed for a one time settlement of the FCCB and waiver of interest, Settlement amount was payable by 15th February 2024. This time line further extended uptill 30th April, 2024. The Comapny has paid settlement amount on 29th April, 2024. As per the correspondence with IFC, the Company has received no dues certificate dated 8 May 2024.
Total gain to the company on one time settlement of principal amount of FCCBs is USD 21.42 Million.
The Company has devolved Letter of Credit issued by banks and such devolvement has resulted in over utilisation of cash credit facilities by Rs 2,196.92 millions (including interest) as on March 31, 2024, based on drawing power sanctioned by banks in the month of February 2024.
53 . The Company has incurred net losses of Rs. 1,850.88 millions during the year ended March 31, 2024 and has a net
current liability position of Rs. 7,416.39 millions as on that date. Further, in respect of certain loan arrangements for which the amounts have fallen due as mentioned in Note 52 above; the Company has entered into settlement agreements with its lenders for restructuring of loans through an Inter Creditor Agreement. Consequently, the Company's ability to meet its obligations is dependent on restructuring of loans. The Company will also require further financing to sustain its operations in the normal course of business for which the Company is also contemplating monetisation of certain assets. These events along with other conditions cast significant doubt on the ability of the Company to continue as a going concern. The Company is confident that such cash flows would enable it to service its debt and discharge its obligations.
Accordingly, these financial statements of the Company have been prepared on a going concern basis.
54 .The Company has entered into a settlement with TPG Growth II SF Pte. Ltd. and International Finance Corporation
("lenders") for one time settlement of its FCCB and waiver of interest. Settlement amount has been paid to TPG and IFCon 30th April, 2024 and 29th April, 2024 respectively (Refer note 52 above). The Company has not accrued interest amounting to Rs 238.75 millions, Rs 272.62 millions, Rs 203.07 millions, Rs. 171.44 millions and Rs. 183.29 millions for the year ended March 31,2024, for the year ended March 31,2023, for the year ended March 31,2022, for the year ended March 31,2021 and for the year ended March 31,2020 respectively.
The aggregate interest not accrued for the period April 1, 2019 to March 31, 2024 amounts to Rs 1,069.17 millions. This amount of Rs 1,069.17 millions has been waiaved by FCCB's holders.
56. Tuff Subsidy and Government Subsidy receivable by the Company Rs 69.03 millions which pertains to the period prior to financial year 2016-17. The Company is pursuing with respective banks and Ministry of Textiles through a Consultant. The Company is confident that the said government subsidy will be released, once the joint inspection (JIT) and other procedure laid down by the Ministry of Textile are completed.
57 . The Company was getting export incentive under Merchandise Export from India Scheme and recognized export
incentive receivable till 29th January 2020. Government of India has withdrawn this scheme with retrospective that is from 7 March 2019. The Company has claims amounting to Rs 103.52 millions of export incentive receivable. FIBC manufacturer association (IFIBCA) has challenged retrospective withdrawal of incentive scheme by the Government before Hon'ble High Court, New Delhi. FIBC manufacturer association (IFIBCA) has challenged retrospective withdrawal of incentive scheme by the Government before Hon'ble High Court, New Delhi. The Hon'ble High Court has issued order in favour of the association. (IFIBCA). The Company has applied offline to DGFT for MEIS script.
58 . The Company had executed Business Transfer Agreement (BTA) with its subsidiary company, Flexituff Technology
International Limited on 28 August 2023 for sale of Flexible Intermediate Bulk Container (FIBC) business of Pithampur units of the Company. The sale is completed on 30 April 2024 via slump sale for a lump sum consideration of Rs. 319.00 Crores (Rupees Three Hundred Nineteen Crores only) on the terms and conditions outlined in the BTA.
59 . The Company has made financing arrangement with IFCI Limited. As a part of financing arrangement, the Company
has arranged security guarantee from certain parties ("guarantors"), who pledged the shares of the Company held by them as security with IFCI Limited. Consequent to the default in repayment of loan by the Company as mentioned in Note 22(d), IFCI Limited has forfeited the guarantees. Upon forfeiture of such security provided by guarantors, the Company has made compensation amounting to Rs 94.85 millions to guarantors as a part of security guarantee arrangement.
60. (a) The Company had executed Business Transfer Agreement (BTA) with company, Flexituff Technology International Limited on 28 August 2023 for sale of Flexible Intermediate Bulk Container (FIBC) business of Pithampur units of the Company. The sale is completed on 30 April 2024 via slump sale for a lump sum consideration of Rs. 319.00 Crores (Rupees Three Hundred Nineteen Crores only) on the terms and conditions outlined in the BTA. The Company is in process of transferring assets and liabilities of FIBC business of Pithampur units via slump sale at their book values as shown below:
(b) Assets and liabilities held for slump sale
As at 31 March 2024, following assets and liabilities included in total assets and liabilities are held for sale at their book values via slump sale w.e.f 30 April 2024:
61 . The Company does not have any Benami property, where any proceeding has been initiated or pending against the
company for holding any Benami property.
62 . The Company has borrowings from banks and financial institutions on the basis of security of current assets. The
quarterly returns or statements of current assets filed by the company with banks or financial institutions are in agreement with the books of accounts and there were no material discrepancies noted. However , in the view of restructuring proposal and holding-on-operations as requested to bankers, the Company could not make available such quarterly returns or statements to the Statutory Auditors.
63 . The company has defaulted in meeting its payment / repayment obligations of interest and Principal respectively as
mentioned in Note 22(d) and 25(c). However, the Company has not been declared wilful Defaulter by any Bank or Financial Institutions or other lender.
64 . The Company does not have any transactions with companies struck off under section 248 of the Companies Act,
2013 or section 560 of Companies Act, 1956.
65 . The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory
period.
66 . The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with
the Companies (Restriction on number of Layers) Rules, 2017.
67 . Utilisation of Borrowed funds and share premium:
(i) The Company has 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.
(ii) 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.
68 . There is no income surrendered or disclosed as income during the current or previous year in the tax assessments
under the Income Tax Act, 1961, that has not been recorded in the books of accounts.
69 . The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
70 . The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets
or both during the current or previous year.
71 . The borrowings obtained by the company from banks and financial institutions have been applied for the purposes
for which such loans were was taken.
72 . The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the
company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
73 . The Financials are presented in Rs Million and decimal thereof except for the per share information or as otherwise
stated.
74 . Previous year figures have been regrouped/ reclassified to confirm presentation as per Ind AS as required by
Schedule III of the Act.
As per our report of even date For and on behalf of the Board of Directors of
For Mahesh C. Solanki & Co. Flexituff Ventures International Limited
Chartered Accountants CIN: L25202MP1993PLC034616
Firm Registration No.: 006228C
Saurabh Kalani Rahul Chouhan
Mahesh Solanki Whole time director Whole time director
Partner DIN: 00699380 DIN: 03307553
Membership No.: 074991 Place: Pithampur Place: Pithampur
Place: Indore Date: May 30, 2024 Date: May 30, 2024
Date: May 30, 2024
Rishabh Kumar Jain Ramesh Chand Sharma
Company Secretary Chief Financial Officer
Membership No: F7271
Place: Pithampur Place: Pithampur
Date: May 30, 2024 Date: May 30, 2024
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