17.2 Rights, preferences and restrictions
Equity shares : the company has only class of equity shares having a par value of ? 10/- per share. each shareholder is eligible for one vote per share held. the dividend proposed by the board of directors, if any, is subject to the approval of the shareholders in the ensuing annual general meeting, except in case of interim dividend. in the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, if any, in proportion to their shareholding.
During the period of five financial years immediately preceding the Balance Sheet date,
(i) In pursuance of resolution passed at EGM held on 30th March, 2023, the company has issued and allotted 2,60,00,000 fully paid up equity shares by way of bonus issue in the proportion of 26 no of equity shares for every 4 no of equity shares held by each shareholders.
(ii) In pursuance of resolution passed at EGM held on 10th March, 2021, the company has bought back 1,81,800 fully paid up equity shares.
(iii) The Company has not allotted any equity shares pursuant to any contract without payment being received in cash.
(iv) During the year ended March 31, 2024, the company has completed its Initial Public offer (IPO) of 1,00,00,000 equity shares of face value of 7 10 each at an issue price of 7 100 per share aggregating to 7 10,000 lakhs by way of fresh issue. The Equity Shares were listed on the BSE Limited and National Stock Exchange of India Limited on 27th December, 2023. Further, the Company has incurred the expenses related to such IPO agregate amounting to 7 658.58 lakhs (net of tax) which has been netted off against securities premium.
1. Securities premium :
Securities premium reflects issuance of the shares by the Company at a premium, whether for cash or otherwise i.e. a sum equal to the aggregate amount of the premium received on shares is transferred to a “securities premium account” as per the provisions of the Companies Act, 2013. The reserve can be utilised in accordance with the provisions of the Act.
2. Capital redemption reserve
A statutory, non-distributable reserve into which amounts are transferred following the redemption or purchase of a company's own shares out of distributable profits or, in certain circumstances, from the proceeds of a fresh issue of shares.
3. Retained earnings
The retained earnings reflect the profit of the company earned till date net of appropriations. The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the balance in this reserve, after considering the requirements of the Companies Act, 2013.
36. Employee benefits plan 36.1 Defined contribution plan
The Company has defined contribution retirement benefit plans for its employees.
The Company's contributions to provident fund, pension scheme and employee state insurance scheme are made to the relevant government authorities as per the prescribed rules and regulations. The Company's contributions to the above defined contribution plans are recognised as employee benefit expenses in the statement of profit and loss for the year in which they are due.
The Company's contribution to provident, pension, superannuation funds and to employees state insurance scheme aggregating to T 24.65 lakhs (Previous year - T 27.80 lakhs) has been recognised in the statement of profit and loss under the head employee benefits expense [Refer note 29]
(b) Risk exposure to defined benefit plans
The plans typically expose the Company to actuarial risks such as: Investment risk, Liquidity risk, Market risk and Legislative risk.
Actuarial risk:
It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:
Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected.
Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.
Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.
Investment risk:
For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
Liquidity risk:
Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cash flows.
Market risk:
Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
Legislative risk:
Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.
36.2 Defined benefits plan
(a) Gratuity
The Company offers gratuity plan for its qualified employees which is payable as per the requirements of Payment of Gratuity Act, 1972. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting.
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined obligation calculated with the projected unit credit method at the end of reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
(d) Terms and conditions of outstanding balances
The transactions with related parties are made in the normal course of business on terms equivalent to those that prevail in arm's length transactions.
Outstanding balances at the year-end are unsecured.
Note:
1. Loans taken from Kiren R. Zaveri carries interest rate of 10% p.a (31st March, 2023 : 10% p.a).
2. Loans taken from Rajendrakumar Zaveri and Harit R. Zaveri are interest free.
38. Financial instrument and risk management
(a) Capital management
The Company manages its capital structure in manner to ensure that it will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.
The Company's capital structure is represented by equity (comprising issued capital, retained earnings and other reserves as detailed in notes 17 and 18) and debt (borrowings as detailed in note 19).
The Company's management reviews the capital structure of the Company on an annual basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital. The Company's plan is to ensure that the gearing ratio (debt equity ratio) is well within the limit of 2:1.
Debts is defined as all long term debt outstanding (including unamortised expense) Contingent liability pertaining to corporate / financial guarantee given Short term debt outstanding in lieu of long term debts.
Total Equity is defined as Equity share capital all reserve (excluding revaluation reserve) deferred tax liabilities -deferred tax assets - intangible assets - intangible asset under development.
Notes:
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
Level 1 : Inputs are Quoted (unadjusted) market prices in active markets for identical assets or liabilities. This includes quoted equity instruments, investments in mutual funds that have quoted price.
Level 2 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. This includes unquoted floating and fixed rate borrowing.
Level 3 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. This includes unquoted equity shares, loans, security deposits, investments in Debentures, floating rate borrowings.
(d) Fair value of financial assets and liabilities measured at amortized cost
The Management has assessed that fair value of loans, trade receivables, cash and cash equivalents, other bank balances, other financial assets, trade payables and other financial liabilities approximate their carrying amounts largely due to their short-term nature. Difference between carrying amount of Bank deposits, other financial assets, borrowings and other financial liabilities subsequently measured at amortised cost is not significant in each of the years presented.
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
(e) Financial risk management
The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The board has established the key management personnel, which is responsible for developing and monitoring the Company's risk management policies. The key management personnel holds regular meetings and report to board on its activities.
The Company's risk management policies are established to identify and analysis the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
(a) Credit Risk
(i) Cash and Cash Equivalents
Credit risk on cash and cash equivalents and other deposits with banks is limited as the Company generally invests in deposits with banks with high credit ratings assigned by external credit rating agencies; accordingly the Company considers that the related credit risk is low.
(ii) Trade receivables:
1. Exposures to credit risk
The Company is exposed to the counterparty credit risk arising from the possibility that counterparties might fail to comply with contractual obligations. This exposure may arise with regard to unsettled amounts.
2. Credit risk management
Credit risk is managed and limited in accordance with the type of transaction and the creditworthiness of the counterparty. The Company has established criteria for admission, approval systems, authorisation levels, exposure measurement methodologies, etc. The concentration of credit risk is limited due to the fact that the customer base is large. None of the customers accounted for more than 10% of the receivables and revenue for the period ended 30th September, 2023 and for the year ended 31st March, 2023. The Company is dependent on the domestic market for its business and revenues.
The Company's credit policies and practices with respect to distribution areas are designed to limit credit exposure by collecting security deposits prior to providing utility services or after utility service has commenced according to applicable regulatory requirements. In respect to generation business, Company generally has letter of credits / bank guarantees to limit its credit exposure.
(e) Financial risk management (a) Credit Risk
3. Other credit enhancements
The Company does not hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets.
4. Age of receivables and expected credit loss
The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experienced and adjusted for forward - looking information. The expected credit loss allowance is based on ageing of the days the receivables are due.
The age of receivables and provision matrix at the end of the reporting period is as follows.
The concentration of credit risk is very limited due to the fact that the large customers are mainly government entities and remaining customer base is large and widely dispersed and secured with security deposit.
Other financial assets:
The Company is having balances in cash and cash equivalents, term deposits with banks, Inter corporate deposits, Loans to related parties, investments in government securities and investment in mutual funds. With respect to investments, the Company limits its exposure to credit risk by investing in liquid securities with counterparties depending on their Composite Performance Rankings (CPR) published by CRISIL. The Company's investment policy lays down guidelines with respect to exposure per counterparty, rating, processes in terms of control and continuous monitoring. The Company therefore considers credit risks on such investments to be negligible. Loans receivable from related parties have negligible credit risk and hence no risk of default is perceived on them.
(b) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
The Company's treasury maintains flexibility in funding by maintaining liquidity through investments in liquid funds and other committed credit lines. Management monitors rolling forecasts of the group's liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected cash flows.
Liquidity Table
The Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods is given below. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.
(c) Regulatory risk
The company's substantial operations are subject to Regulatory risk and intervention. Pursuant to enactment of Real Estate Regulation Act, 2016 the company's operation are subject to liquidity risk since the company is mandatorily required to park the contribution received from purchaser of real estate property in a specified escrow account. This requirement leads to introduction of higher working capital or equity.
(d) Market Risk
Market risk is the risk arising from changes in market prices such as interest rates will affect the Company's income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including long term debt. The Company is exposed to market risk primarily related to interest rate risk and the market value of the investments. Thus, the exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities.
(e) 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 debt obligations with floating interest rates and investments
Most of the Company's borrowings are on a floating of interest. The Company has exposure to interest rate risk, arising principally on changes in Marginal Cost of Funds based Lending Rate (MCLR). The Company uses a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirements for its day to day operations like short term credit lines besides internal accruals.
(f) Price Risk Exposure
The Company's exposure to securities price risk arises from investments held in mutual funds and Equity Instruments which are classified in the balance sheet at fair value through profit or loss and fair value through Other Comprehensive Income respectively. To manage its price risk arising from such investments, the company diversifies its portfolio. Further these are all debt base securities for which the exposure is primarily on account of interest rate risk. Quotes (NAV) of these investments in Mutual fund are available from the mutual fund houses and Unquoted Price of these investments in Equity Instruments is available from the Audited / Unaudited financial Statements.
Profit and Other Comprehensive Income for the year would increase/decrease as a result of gains/losses on these securities classified as at fair value through profit or loss and fair value through Other Comprehensive Income respectively.
The Company has initiated the process of obtaining the confirmation from suppliers who have registered themselves under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006). The above information has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.
41. Other regulatory information
(a) Title deeds of immovable property
The title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the Company.
(b) Revaluation of property, plant and equipment (including right-of-use assets) and intangible assets
The Company has not revalued any of its property, plant and equipment, including intangible assets.
(c) Loans or advances in the nature of loans are granted to promoters, directors, KMPs and the related parties
The company has not granted any loans or advances to promoters, directors, KMP's and the related parties
(f) Details of benami property held
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 there under.
(g) Borrowings obtained on the basis of security of current assets
The company has obtained borrowings on the basis of security of current assets from bank and the quarterly return of current assets filled are in agreement with the books of accounts
(h) Wilful defaulter
The Company has not been declared Wilful Defaulter by any bank or financial institution or any other lender.
(i) Relationship with struck off companies
The Company does not have any transactions with struck off companies.
(j) Registration of charges or satisfaction with registrar of companies (ROC) The company does not have any charges or satisfaction, which is yet to be registered with ROC beyond the statutory period.
(k) Compliance with number of layers of companies The Company is in compliance with number of layers of companies in accordance with clause 87 of Section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
(l) Approved scheme of arrangements
The Company has not entered into any scheme of arrangement approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013.
(m) Utilisation of borrowed funds and share premium
The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or kind of funds) to any other persons or entities, including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:
(i) 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
(ii) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
The Company have not received fund from any persons or entities, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(i) 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 (ii) provide any guarantee, security, or the like on behalf of the ultimate beneficiaries.
42. Undisclosed income
The Company does not have any 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.
43. Details of crypto currency or virtual currency
The Company has not traded or invested in crypto currency or virtual currency during the financial year.
44. Corporate social responsibility (CSR)
The Company fall under the provisions of Section 135 of the Companies Act, 2013 and accordingly is required to spend
the requesit amount for CSR for the financial year ended 31st March, 2023, and 31st March, 2022 . Refer Note 32(b)
45. Statement of management
(a) The non-current financial assets, current financial assets and other current assets are good and recoverable and are approximately of the values, if realized in the ordinary courses of business unless and to the extent stated otherwise in the Accounts. Provision for all known liabilities is adequate and not in excess of amount reasonably necessary. There are no contingent liabilities except those stated in the notes.
(b) Balance Sheet, Statement of Profit and Loss, cash flow statement and change in equity read together with Notes to the accounts thereon, are drawn up so as to disclose the information required under the Companies Act, 2013 as well as give a true and fair view of the statement of affairs of the Company as at the end of the year and financial performance of the Company for the year under review.
47 . The previous year's figures have been reworked, regrouped and reclassified wherever necessary so as to make them comparable with those of the current year.
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