xi) Provisions and Contingent Liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Onerous Contracts
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
Contingent liability is disclosed for (i) Possible obligations that arises from past events and whose existence 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 (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made, unless the possibility of outflows of resources embodying economic benefits are remote.
xii) Revenue recognition
Revenue towards satisfaction of a performance obligation is
measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation.
The Company applies the five-step approach for recognition
of revenue:-
• Identification of contract(s) with customers;
• Identification of the separate performance obligations in the contract;
• Determination of transaction price;
• Allocation of transaction price to the separate performance obligations; and
• Recognition of revenue when (or as) each performance obligation is satisfied.
1 Sale of goods:
Further the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the entity.
The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
At contract inception, since for most of the contracts it is expected that the period between the transfer of the promised goods or services to a customer and payment for these goods or services by the customer will be one year or less, practical expedient in IND AS 115 have been applied and accordingly:
a) The Company does not adjust the promised amount of consideration for the effects of a significant financing component
b) The Company recognises the incremental costs of obtaining a contract as an expense when incurred
c) No information on remaining performance obligations as of the year end that have an expected original term of one year or less was reported.
A contract liability is the Company’s obligation to transfer goods or services to a customer, for which the Company has already received consideration from customers.
2 Interest and Dividend Income:
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the amortised cost and at the effective interest rate applicable.
Dividend income from investments is recognised when the shareholder’s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
3 Export Incentives:
Income from export incentives is recognised on accrual basis to the extent the ultimate realisation is reasonably certain.
4 Revenue from real estate contracts:
In respect of real estate development projects undertaken by the Company, the control of real estate units is said to be satisfied over time, if any one of the following criteria is met:
a) the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs
b) the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced
c) the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date
In all other cases, where the above criterias for satisfaction of performance obligation and recognising revene over time are not met, revenue would be recognised when control of the real estate units has been transferred and there is no unfulfilled obligation which could affect the customer’s acceptance of the real estate units. Considering the terms of the contract, revenue is recognised at a point in time when:
• The Company has transferred to the customer all significant
risk and rewards of ownership and the Company retains no effective control of the real estate unit to a degree usually associated with ownership;
• The Company has handed over possession of the real estate unit to the customer or deemed possession based on the contract with the customer;
• No significant uncertainty exists regarding the amount of consideration that will be derived from the sale of the real estate unit;
• It is not unreasonable to expect ultimate collection of revenue from customer
Revenue is measured as the fair value of consideration which the Company expects to be entitled to in exchange of transferring the property to the customer (excluding amounts collected on behalf of third parties e.g. taxes). Revenue is recognized with respect to executed sales contracts on transfer of control of the real estate units to the customers
xiii) Foreign currency transactions and balances
In preparing the financial statements of the Company, transactions in currencies other than the Company’s functional currency viz. Indian Rupee are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date.
Exchange differences on monetary items are recognised in the Statement of Profit and Loss in the period in which they arise.
Non-monetary items that are measured in terms of historical costs in a foreign currency are not retranslated.
xiv) Lease accounting
As a lessee:
From 1 April 2019, leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company. Contracts may contain both lease and non lease components. The Company allocates the consideration in the contracts to the lease and nonlease components based on their relative standalone prices. However, the Company has elected not to separate lease and non-lease components and instead account for these as a single lease components.
Assets and liabilities arising from a lease are initially measured on present value basis. Lease liabilities include the net present value of the following lease payments:
- fixed payments (including in substances fixed payments), less any lease incentive receivable
- variable lease payments that depend on an index or a rate,initially measured using the index or rate as at the commencement date;
- any residual value guarantees provided to the lessor by the lessee, a party related to the lessee or a third party unrelated to the lessor that is financially capable of discharging the obligations under the guarantee;
- the exercise price of the purchase option if the Company is reasonably certain to exercise that option, and
- payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option
Lease payments to be made under reasonably certain extension option are also included in the measurement of the liability. The lease payments are discounted using the lessee’s incremental borrowing rate, being the rate that lessee would have to pay to borrow the fund necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar term, security and conditions.
To determine the incremental borrowing rate, the Company:
- where possible, uses recent third party financing received by the lessee as a starting point, adjusted to reflects changes in financing condition since third party financing received
- use a build-up approach that starts with the risk-free interest rate adjusted for credit risk for leases, which does not have recent third party financing, and
- make adjustments specific to the leases, e.g. term, security, currency etc.
The Company is exposed to potential future increases in variable lease payments based on index or rate, which are not included in the lease liability until they take effect. When adjustment to lease payments based on index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. Finance cost is charged to Statement of Profit and Loss over the lease period so as to produce a constant periodical rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
- the amount of initial measurement of lease liability
- any lease payments made at or before the commencement date less any lease incentives received
- any initial direct costs, and
- restoration costs
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight line basis. If the Company is reasonably certain to exercise purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.
Payments associated with short-term leases of equipment and all leases of low-value assets are recognized on a straight-line basis in the Statement of Profit and Loss. Short term leases are leases with a lease term of 12 months or less.
As a lessor:
Lease income from operating leases where the Company is a lessor is recognized in income on a straight line basis over the lease term. Initial direct costs incurred in obtaining an operating leases are added to the carrying amount of the underlying asset and recognized as expense over the lease term on the same basis as lease income. The respective leased assets are included in the balance sheet based on their nature. The Company did not need to make any adjustments to the accounting for assets held as a lessor as a result of adopting the new leasing standard.
xv) Taxes on Income
Tax expense for the year, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the year. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
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 offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax are recognised in the Statment of Profit and Loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. The Company recognises Minimum Alternate Tax credit under the Income Tax Act, 1961 as an asset only when and to the extent there is convincing evidence that the Company will be liable to pay normal income tax during the specified period.
xvi) Government grants
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received. These are recognised in the Statement of Profit and Loss on a systematic basis over the period in line with the related costs.
xvii) Borrowing Costs
Borrowing costs that are attributable to the acquisition or construction of qualifying assets, which are assets that necessarily takes a substantial period of time to get ready for its intended use or sale, are added to the cost of those assets; until such time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
xviii) Segment Reporting
An operating segment is a component of the Company that engages in business activities from which it may earn revenue and incur expenses, whose operating results are regularly reviewed by the Company’s chief operating decision maker in order to effectively allocate the Company’s resources and assess performance.
xix) Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.
Non-current assets are not depreciated or amortised while they are classified as held for sale.
xx) Cash and cash equivalents
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the Balance Sheet.
xxi) Exceptional Items
Exceptional items reflect items which individually or, if of a similar type, in aggregate, are disclosed separately due to their size or incidence in order to obtain clear and consistent presentation of the Company’s performance.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the accounting policies, which are described in note 2, the directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
3.1 Critical judgements in applying accounting policies
The following are the critical judgements, apart from those involving estimations (see note 3.2 below), that the directors have made in the process of applying the accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
3.1.1. The Svadeshi Mills Company Limited (Svadeshi) is not an associate of the Company although the Company owns a 23% ownership interest (including indirect) in Svadeshi, as the Assets of Svadeshi continue to be in the hands of the Official Liquidator, High Court, Bombay. The Review Petition had been filed against the Order dated 23rd February, 2016 whereby the Special Leave Petition (SLP) was dismissed. The said Review Petition filed before the Hon’ble Supreme Court was dismissed vide Order dated 26th August, 2016. The records of Svadeshi are in the custody of the Official Liquidator. Hence, the Company does not have significant influence over Svadeshi as Svadeshi is under liquidation.
3.2 Key sources of estimation uncertainty
3.2.1 Real Estate Development
The determination of the period over which revenue from real estate development activities should be recognized, the timing of transfer of control to the customer; and determination of whether the Company has an enforceable right to payment as per requirements of Ind AS 115 involves significant judgement.
3.2.2 Contingent Liabilities and Provisions
Contingent Liabilities and Provisions are liabilities of uncertain timing or amount and therefore in making a reliable estimate of the quantum and timing of liabilities judgement is applied and re-evaluated at each reporting date.
3.2.3 Useful life and residual value of Property, Plant and Equipment (including investment properties)
As described in Note 2(iv) and 2(vi), the Company reviews the estimated useful life and residual values of property, plant and equipment at each reporting date.
3.2.4 Fair value measurement and valuation process
Some of the Company’s assets and liabilities are measured at fair value for financial reporting purposes. The management of the Company determines the appropriate valuation techniques and inputs for fair value measurements. In estimating the fair value of an asset or a liability, the company uses market-observable data to the extent it is available. Where such inputs are not available, the Company engages third party qualified valuers to perform the valuation.
3.2.5 Impairment
Determining whether an asset is impaired requires as estimation of fair value/value in use. Such valuation requires the Company to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than expected, a material impairment loss may arise.
3.2.6 Impairment of Trade Receivables
“The impairment provisions for trade receivables are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
3.2.7 Defined Benefit Obligations
The present value of defined benefit obligations is determined by discounting the estimated future cash outflows by reference to market yields at the end of reporting period that have terms approximating to the terms of the related obligation.
3.2.8 Deferred Tax Asset
Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. The Company recognises Minimum Alternate Tax credit under the Income Tax Act, 1961 as an asset only when and to the extent there is convincing evidence that the Company will be liable to pay normal income tax during the specified period.
4. ADOPTION OF NEW AND AMENDED INDIAN ACCOUNTING STANDARDS
(i) New and amended standards adopted by the Company
Ministry of Corporate Affairs (MCA), vide notification dated 31st March, 2023, has made the following amendments to Ind AS which are effective 1st April, 2023:
a. Amendments to Ind AS 1, Presentation of Financial Statements where the companies are now required to disclose material accounting policies rather than their significant accounting policies
b. Amendments to Ind AS 8, Accounting policies, Changes in Accounting Estimates and Errors where the definition of ‘change in account estimate’ has been replaced by revised definition of ‘accounting estimate’.
c. Amendments to Ind AS 12, Income Taxes where the scope of Initial Recognition Exemption (IRE) has been narrowed down
Based on preliminary assessment, the Company does not expect these amendments to have any significant impact on its standalone financial statements.
(ii) New amendments issued but not effective
Ministry of Corporate Affairs (‘MCA’) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31st March, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
6.1 Fair value measurement of the Company’s investment properties
The fair value of the Company’s investment properties as at 31st March, 2024 and 31st March, 2023 have been arrived at on the basis of a valuation carried out as on the respective dates by VS.Modi, independent valuer not related to the Company. VS. Modi is registered with the authority which governs the valuers in India, and has appropriate qualifications and recent experience in the valuation of properties in the relevant locations. The fair value was determined based on the market comparable approach that reflects recent transaction prices for similar properties as well as other lettings of similar properties in the neighbourhood. In estimating the fair value of the properties, the highest and best use of the properties is their current use. Thus, the significant unobservable inputs are recent transaction price, taking into account the differences in location, and individual factors, such as frontage and size, between the comparables and the properties. Details of the Company’s investment properties and information about the fair value hierarchy as at 31st March, 2024 and 31st March, 2023 are as follows:
Retained Earnings: Retained earnings represent the amount of accumulated earnings of the Company
Securities premium reserve: The amount received in excess of the par value of equity shares has been classified as securities premium.
General reserve: The Company created a General Reserve in earlier years pursuant to the provisions of the Companies Act,1956 where in certain percentage of profits was required to be transferred to General Reserve before declaring dividends. As per Companies Act 2013, the requirements to transfer profits to General Reserve is not mandatory. General Reserve is a free reserve available to the Company.
Capital Redemption Reserve: As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. The reserve is utilised in accordance with the provisions of section 69 of the Companies Act, 2013.
Other Comprehensive income: This reserve represents the cumulative gains (net of losses) arising on the revaluation of Equity Instruments measured at fair value through Other comprehensive Income, net of amounts reclassified, If any , to Retained Earnings when those instruments are disposed off.
Capital Reserve: During merger, the excess of net assets acquired, over the cost of consideration paid is treated as capital reserve.
34. Employee Benefits :
Brief description of the Plans:
The Company has various schemes for long term employees benefits such as Provident Fund, Gratuity, Superannuation, Employees State Insurance Fund (ESIC) and Employees’ Pension Scheme, Compensated absences and Post Retirement Medical and Non Compete fees. The Company’s defined contribution plans are Superannuation, Employees State Insurance Fund and Employees’ Pension Scheme (under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans. The Company’s defined benefit plans include Provident Fund, Gratuity, Post Retirement Medical and Non Compete fees.
Gratuity
The Company provides for gratuity payable to employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service.
The gratuity plan is a funded plan and the Company had obtained insurance policies with Life Insurance Corporation of India (LIC) and makes a contribution to LIC for amounts notified by LIC. The Company accounts for gratuity benefits payable in future based on an independent external actuarial valuation carried out at the end of the year using the Projected Unit Credit method.
The Company’s Gratuity Plan is administered by an insurer and the Investments are made in various schemes of the trust. The Company funds the plan on a periodical basis.
The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations, with the objective that assets of the gratuity / provident fund obligations match the benefit payments as they fall due.
Provident Fund
The eligible employees of the Company are entitled to receive post-employment benefits in respect of provident fund, in which both the employees and the Company make monthly contributions at a specified percentage of the employees’ eligible salary. The contributions are made to the provident fund managed by the trust set up by the Company which are charged to the Statement of Profit and Loss as incurred.
A large portion of provident fund trust assets consists of government and corporate bonds, although the Company also invests in equities, cash and mutual funds. The plan asset mix is in compliance with the requirements of the regulations in case of Provident fund.
The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations, with the objective that assets of the provident fund obligations match the benefit payments as they fall due.
Post retirement medical and non-compete fees
Under the post-retirement medical and non-compete fees, eligible whole-time directors and on their demise, their spouses are entitled to medical benefits subject to certain limits and fixed monthly payment as non-compete fee. The Company accounts for these benefits payable in future based on an independent external actuarial valuation carried out at the end of the year using the Projected Unit Credit method.
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk. Investment risk
The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields
at the end of the reporting period on government bonds. Plan investment is a mix of investments in government securities, and other debt instruments.
Interest risk
A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s investments.
Longevity risk
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.
Salary risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.
L. Provident Fund
The Company has established ‘Forbes & Company Ltd. Employees Provident Fund’ in respect of all the employees to which both the employee and employer make contribution equal to 12% of the employees’ basic salary respectively. The Company’s contribution to the provident fund for all employees, are charged to the Statement of Profit and Loss. In case of any liability arising due to shortfall between the return from its investments and the administered interest rate, the same is required to be provided for by the Company. In accordance with the recent actuarial valuation, there is no deficiency in the interest cost as the present value of expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest.
35.3 Market Risk
The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (Refer Note 35.6). The Company enters into a variety of derivative financial instruments to manage its exposure to foreign currency risk.
35.4 Credit risk management Trade receivables
Trade receivables are generally unsecured and are derived from revenue earned from customers. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix and forwardlooking information and an assessment of the credit risk over the expected life of the financial asset to compute the expected credit loss allowance for trade receivables. Historical experience of collecting receivables of the Company is supported by low level of past default and hence the credit risk is perceived to be low.
Investments in subsidiaries, associates and joint ventures
The Company had invested in various subsidiaries, associates and joint ventures. The approved future business plans and cash flow projections of these entities are evaluated by the management of the Company on an ongoing basis and based on this evaluation the recoverability of the investments is considered to be good. (Also refer Note 8)
Other Financial assets
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are mutual funds and banks with high credit-ratings assigned by credit-rating agencies.
In addition, the Company is exposed to credit risk in relation to the financial guarantees by way of Corporate Guarantee/ Fixed Deposit as a security given to banks on behalf of subsidiaries by the Company. The Company’s maximum exposure in this respect is the maximum amount the Company could have to pay if the guarantee is called on is 'Nil as at 31st March, 2024 (Previous year as at 31st March, 2023 is ' 69.33 Lakhs). Based on expectations at the end of the reporting period, the Company considers that it is more likely that such an amount will not be payable under the arrangement. However, this estimate is subject to change depending on the probability of the counterparty claiming under the guarantee which is a function of the likelihood that the financial receivables held by the counterparty which are guaranteed suffer credit losses.
35.5 Liquidity Risk
Liquidity Risk refers to insufficiency of funds to meet the financial obligations. Liquidity Risk Management implies maintenance of sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit lines to meet obligations when due.
The Company manages liquidity risk by banking facilities and by continuously monitoring forecast and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities. The below table sets out details of additional undrawn facilities that the Company has at its disposal to further reduce liquidity risk.
35.6 Derivatives Instruments and unhedged Foreign Currency (FC) exposure
The Company is exposed to Currency Risk arising from its trade exposures and capital/Loan receipt/payments denominated, in other than the Functional Currency. The Company has a Foreign Exchange Risk Management policy within which the treasury has to perform and also lays down the checks and controls to ensure the continuing success of the treasury function. The Company has defined strategies for addressing the risks for each category of exposures (e.g. for exports , for imports, for loans, etc.). The centralised treasury function aggregates the foreign exchange exposure and takes prudent measures to hedge the exposure based on prevalent macro-economic conditions.
40. Segment reporting
The Chief Operating Decision maker of the Company examines Company’s performance both from a product and from a geographic perspective. From a product perspective, the management has identified the reportable segments Engineering and Real Estate at standalone level.
Segment revenue, segment results, segment assets and segment liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.
Details of product categories included in each segment comprises:
Coding and Industrial Automation Segment includes manufacture/ trading in conventional and Automatic Marking Systems and Industrial Automation Business. The Company caters to the needs of domestic and export markets.
Real Estate includes income from renting out investment properties and revenue from real estate development project.
Unallocable Corporate Assets mainly comprises of investments, tax receivables and other unallocable assets.
Unallocable Liabilities comprise borrowings, provisions and other unallocable liabilities not identifiable to any specific segment.
48. Ind AS 115 ‘Revenue from Contracts with Customers’, a new accounting standard notified by the Ministry of Corporate Affairs (MCA) on 28th March, 2018 was effective from accounting period beginning on or after 1st April, 2018 and replaced the existing revenue recognition standards. The application of Ind AS 115 had a significant bearing on the Company’s accounting for recognition of revenue from real estate development projects. Considering the terms of the contract, receipt of Occupancy Certificate for Phase II of the real estate development project, issuance of possession letters and transfer of control of the real estate units to the customers, the Company has recognized revenue of ' 7,557.00 Lakhs for the year ended 31st March 2024 and ' 238.00 Lakhs for the year ended 31st March 2023.
49. The board of directors of Forbes Technosys Limited (FTL) have pursuant to provisions of Section 230 to 232 applied to the National Company Law Tribunal (NCLT) for merger of Forbes Campbell Service Limited (“FCSL”) and FTL for a consideration of ' 3.00 Lakhs effective 1st October, 2021 and also proposed for reduction in the share capital of FTL. The NCLT, in its order dated 16th September 2022 (‘the Order’) approved the Composite Scheme of Arrangement for amalgamation of Forbes Campbell Service Limited (‘FCSL’) into FTL and reduction of share capital of FTL. The appointed date of the Scheme was 1st October 2021, and the scheme has been effective from 29th September, 2022 i.e., the last date on which the certified copy of the order was filed with the Registrar of Companies. Pursuant to the scheme, the Company has written off the investment of '13,183.00 Lakhs and provision created for the investment amounting to ' 13,183.00 Lakhs is reversed in the year ended 31st March 2023.
The Company has made provision for doubtful trade & contractual receivable amounting to ' 3.00 Lakhs for the quarter ended 31st March 2023 and ' 22.00 Lakhs for the year ended 31st March 2023 with respect to FTL.
The Company has made a provision for doubtful debts on loans & advances given to the following companies: -
a) Forbes Technosys Limited (FTL) - In view of continuing losses in FTL, the Company has made a provision for obligation of bank guarantees of '114.00 Lakhs for the quarter ended 31st December, 2023. The Company had given ' 60.00 Lakhs (Net) Lakhs as an Inter Corporate Deposit for Settlement of Bank Guarantees obligations. The net amount of ' 54.00 Lakhs has been reversed in the quarter ended 31st March, 2024 in view of FTL has completed its Bank Guarantee obligations. The provision for obligation of Bank guarantees and loan and advances of FTL for the year ended 31st March, 2023 was ' 401.00. Lakhs.
b) Forbes Concept Hospitality Services Private Limited (FCHSPL): The Company has made a provision for loans and advances amounting to ' 18.00 Lakhs for the quarter ended 31st March, 2023 as the recoverability of loan was doubtful.
Accordingly, the total provision for the loans and advances of ' 60.00 Lakhs has been provided as at 31st March, 2024 was ' 419.00 Lakhs for 31st March, 2023.
50. Forbes Technosys Limited (FTL), a subsidiary, is facing serious challenges in terms of operations and due to continuing losses and withdrawal of support from its operational creditors to provide further credit on outstanding dues and non-receipt of its dues by its trade receivables, a corporate insolvency resolution process (“CIRP”) under Section 10 of the Insolvency and Bankruptcy Code, 2016 has been initiated by the FTL voluntarily vide application filed before the NCLT on 20th February, 2024. The hearing of the said application is awaited.
51. A) The Board of Directors of the Company, in their meeting
held on 22nd December, 2020, approved entering into a Memorandum of Understanding (“MOU”) for sale of approximately 3.804 acres of land at Chandivali. Accordingly, the net carrying value aggregating '2,315.70 Lakhs [including ' 2,277.08 Lakhs paid towards seeking permission under the Urban Land (Ceiling & Regulation) Act, 1976 for the transfer/ sale/ development/ redevelopment of the land during quarter ended 31st March, 2022], has been reflected as asset held for sale as on 31st March, 2022.
Pursuant to the Board of Directors meeting dated 24th March, 2022, the Company has entered into a new Agreement for Sale (AFS) for the aforesaid land, with Equinix India Private Limited (Equinix) for an aggregate consideration of ' 23,500.00 Lakhs, which was executed on 24th March, 2022 and the completion of the said transaction was subject to fulfilment of conditions precedent.
The transaction for sale of Chandivali land with Equinix got concluded on 28th June 2022 post completion of the conditions precedent and the Company received entire consideration of ' 23,500.00 Lakhs during the year ended 31st March, 2023. The difference between the net disposal proceeds and the carrying amount of the land amounting to ' 20,684.00 Lakhs has been recognized as gain on disposal for the year ended 31st March, 2023 and reflected in other income in these financial results. The capital gains tax impact of the aforesaid transaction has been appropriately considered during the year ended 31st March, 2023.
B) The Board of Directors of the Company, in their meeting held on 26th May 2023, approved for sale of approximately 0.53 acres of land at Chennai for an aggregate consideration of ' 15 Crores. The transaction got concluded on 1st June, 2023 by executing sale deed in favour of the buyer. Accordingly, the difference between the net disposal proceeds and the carrying amount of the land amounting to ' 1,447.00 Lakhs has been recognized as gain on disposal during the quarter ended 30th June, 2023 and the year ended 31st March, 2024 and reflected in other income in these financial results. The capital gains tax impact of the aforesaid transaction has been appropriately considered during the quarter ended 30th June, 2023 and the year ended 31st March, 2024.
C) The Board of Directors of the Company at their meeting held on 23rd February, 2022 has approved entering into a binding term sheet for the sale of its entire shareholding in Forbes Facility Services Private Limited (FFSPL), a wholly-owned subsidiary of the Company to SILA Solutions Private Limited. This binding term sheet was executed on 23rd February, 2022 and agreement for sale was executed on 20th May, 2022. The transaction was completed on 1st July, 2022 a sales consideration of ' 4,200.00 Lakhs. The Company has received the consideration of ' 3,960.00 Lakhs after deduction of ' 240.00 Lakhs for the legal disputes with multiple customers. The difference between the net disposal proceeds and the carrying amount of investment and expenditure incurred on the transactions and provision made on account of the obligations undertaken by the company under the agreement for sale the net amount of '
3.202.00 Lakhs was recognized as gain on disposal for the year ended 31st March, 2023 and reflected in Exceptional items in these financial results.
The capital gains tax impact of the aforesaid transaction was appropriately considered in the year ended 31st March, 2023. Additionally, as per the terms of the agreement to sale, the Company has taken over current receivables and payable balances of FFSPL to/ from related parties aggregating ' 122.00 Lakhs and ' 237.00 Lakhs respectively and receivable from non-related party amounting to ' 114.00 lakhs is received by the Company from FFSPL.
During the quarter ended 31st December 2023, the Company has received an amount of ' 74.00 Lakhs and '
41.00 Lakhs in the month of January, 2024 on settlement of legal disputes between FFSPL and customers against the previously withheld amount of ' 240.00 Lakhs. The provision made earlier on account of legal disputes is reversed to the extent of ' 115.00 Lakhs and recognized as gain in the profit & loss account.
D) The Board of Directors of the Company, at their meeting held on 30th May 2022, have approved the sale of the entire shareholding in SPFSL. The Company has sold
3,75,000 equity shares of ' 10 each and 2,21,50,000 Zero Percent Redeemable Preference Shares of ' 10 each of SPFSL to M/s G.S Enterprises, a related party for an aggregate purchase consideration of ' 2,900.00 Lakhs during the year ended 31st March, 2023. The net carrying value of the investments in SPFSL as at the date of sale was ' 2,756.00 Lakhs and consequently, the Company has recognized an exceptional gain of ' 144.00 Lakhs for the year ended 31st March, 2023.
E) The Company was holding 50% shareholding in Forbes Concept Hospitality Services Private Limited (FCHSPL), a Joint Venture of the Company. The Board of Directors of the Company at their meeting held on 3rd August, 2023 has approved sale of its 60% shareholding in FCHSPL, to Metamix Technologies Private Limited and balance 40% shareholding to Floral Finance Private limited for a consideration of ' 0.03 Lakh and '0.02 Lakh respectively. Pursuant to the said sale of the entire shareholding in FCHSPL, it has ceased to be a Joint Venture of the Company effective from 3rd August, 2023.
The Company has made provision for doubtful debts amounting to ' 18.00 Lakhs in earlier years with respect to Forbes Concept Hospitality Services Private Limited (FCHSPL). The Company has received the said loan & advances from FCHSPL and accordingly the provision made in earlier years is now reversed and recognized as a gain in profit & loss account during the quarter ended 31st December, 2023 and year ended 31st March, 2024.
F) The Company has made a provision of ' 559.00 Lakhs of property tax against the demand raised by MCGM for payment of additional property tax of ' 1,034.00 Lakhs (including penalties) for the retrospective period from April, 2010 to March, 2023. The balance amount of ' 475.29 Lakhs which is in the nature of penalties are shown as contingent liability. The MCGM has changed the subzone of property from 0014 to 0027 for determination of property tax. The property valuation in Subzone 0027 is much higher compared to the subzone 0014. The subject property is historically valued in Subzone 0014 for property tax. The Company has disputed the entire demand notice.
G) The Indian Parliament has approved the Code on Social Security, 2020 (“the code”) which, inter alia, deals with employees benefits during employment and postemployment. The code has been published in the Gazette of India. The effective date of the code is yet to be notified and the rules for quantifying the financial impact are also
yet to be issued. In view of this, the impact of change, if any, will be assessed and recognised post notification of the relevant provisions.
52. Scheme of Arrangement
The Board of Directors of the Company (FCL or the “Demerged Company) and Forbes Precision Tools and Machine Parts Limited (“FPTL” or the “Resulting Company”) in their respective meetings held on 26th September 2022, approved the Scheme of Arrangement (“Scheme”) between the Company and FPTL, as well as their respective shareholders, in accordance with Sections 230 to 232 of the Companies Act, 2013, and other applicable provisions and rules. This Scheme entails the demerger of the “Precision Tools business” from the Company into FPTL, with an appointed date of 1st April, 2023.
The Honorable National Company Law Tribunal (“NCLT”) of the Mumbai bench approved the scheme via Order No. C.P.(CAA)/303/MB-V/2023 dated 9th February, 2024. The certified true copy of the order was received on 22nd February, 2024 and filed with the Registrar of the Company on 1st March 2024. The Scheme became effective / operative from the effective date of 1st March, 2024, with this, the Precision Tools business of FCL being transferred to and vested in FPTL with effect from the appointed date i.e., 1st April, 2023.
Upon the coming into effect of the Scheme, the existing investment in shares capital of FPTL, amounting to ' 5.00 lakhs divided into 50,000 shares of ' 10 each, fully paid up, prior to the Scheme becoming effective, shall stand cancelled without any further application, act, instrument, or deed, as an integral part of this Scheme, with adjustments done through General reserve of the Company. As per the Composite Scheme of Arrangement, the Resulting Company has issued four fully paid-up equity shares of ' 10/- each for every one fully paid-up equity share of ' 10/- each held by the equity shareholders of the Demerged Company (FCL) as of the Record Date, which was 7th March, 2024. The shareholders of the Company (FCL) are entitled to receive 4 shares of FPTL against each share held by them. The record date for allotment was fixed as 7th March, 2024, and the issuance and allotment of equity shares took place on 13th March, 2024. From the appointed date, the precision tools business of FCL, including all its assets and liabilities is transferred and vested to FPTL in accordance with this Scheme. FPTL is in process of listing of its shares with BSE Limited.
From the appointed date, the precision tools business of FCL, including all its assets and liabilities is transferred and vested to FPTL in accordance with this Scheme, Consequently, the deferred tax liability related to those assets and liabilities will be remeasured and will result in a direct charge of ' 234.44 Lakhs to the opening balance of retained earnings of FPTL.
Pursuant to the demerger, the book value of assets and liabilities transferred under the scheme of arrangement as on appointed date are listed below:
Further, the net impact of certain assets and liabilities transferred from the Company to FPTL is resulting in net payable of ' 881.93 Lakhs to Forbes Precision Tools Limited (FPTL). Details of which are as follows:
53. The Company and MACSA ID, S.A., have entered into a 50:50 Joint Venture Agreement on 5th December, 2022 (JVA) for providing innovative laser marking and traceability solutions for the entire range of materials metal and non-metals. Pursuant to the terms of the JVA, a joint venture company viz., FORBES MACSA PRIVATE LIMITED has been incorporated on 9th December, 2022.
54. Forbes Lux International AG (FLIAG), a subsidiary of the Company, along with its subsidiary Lux International AG (LIAG) and step-down subsidiaries, has been facing with a severe liquidity crisis for the past several years. Given the ongoing losses and financial difficulties, the management of FLIAG, LIAG, and Lux Schweiz AG submitted an application on 11th April, 2023, seeking a provisional debt restructuring moratorium from the Bulach District Court in Wallissellen, Switzerland. By an order dated 17th April, 2023, the court granted a provisional moratorium, which will be in effect for four months, until 17th August, 2023, to facilitate the restructuring of these companies. A Provisional Administrator was appointed to assess the prospects for this restructuring. The Provisional Administrator submitted the final report to the Court on 2nd August, 2023. Based on the Administrator’s final report, the Court determined that FLIAG, being a pure holding company that hasn’t generated any income for a considerable period and has ceased its operational activities, is not viable. Similarly, Lux Schweiz AG has also discontinued its operational activities and income generation, leading to the decision to initiate bankruptcy proceedings for these companies. As for LIAG, the court has granted an extension of the moratorium period until 1st December, 2023. Consequently, FLIAG and Lux Schweiz have been declared bankrupt by an order dated 14th August, 2023.
Subsequently, following due process, the bankruptcy officials issued a publication on 8th September, 2023, announcing the closure of the bankruptcy proceedings due to lack of assets unless a creditor requests implementation within a specified 10-day period. Since no opposition was filed with the Bankruptcy Officer during the stipulated timeline, Forbes Lux International AG, in Liquidation and Lux Schweiz AG, in Liquidation were liquidated and dissolved. In the context of FLIAG’s bankruptcy proceedings, Lux International AG, in Liquidation (LIAG), a subsidiary of FLIAG, has been disposed of by the bankruptcy official. Consequently, FLIAG and its subsidiaries are no longer considered subsidiaries of the Company.
55. As per the Ministry of Corporate Affairs (MCA) notification, proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, for the financial year commencing April 1, 2023, every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled. The interpretation and guidance on what level edit log and audit trail needs to be maintained evolved during the year and continues to evolve.
In Forbes & Copmany Limited, the audit trail is implemented at the application level across all tables and fields to facilitate the maintenance of financial records and relevant transactions. However, the global standard ERP used by the Company has not been enabled with the feature of an audit trail log at the database layer due to its existing design. We are currently collaborating with the vendor to address this issue. In the meantime, the Company ensures that direct write access to the database is granted only through an approved change management process, maintaining the security and integrity of our data.
56. Additional Regulatory Information as per Schedule III of the Division II of the Companies Act, 2013
i. Details of benami property held
There are not any proceedings that have 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 as at 31st March, 2024.
ii. Wilful defaulter
The Company has not been declared wilful defaulter by any bank or financial Institution or other lender who has powers to declare a company as a wilful defaulter at any time during the financial year or after the end of reporting period but before the date when financial statements
are approved or in an earlier period and the default has continued for the whole or part of the current year.
iii. Relationship with struck off companies
The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.
iv. The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies Act 2013 read with Companies (Restriction on number of Layers) Rules, 2017.
v. (a) The company has not advanced or loaned or invested
any funds (either borrowed funds or share premium or any other sources or kind of funds)during the year to any other person(s) or entity(ies), 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.
(b) The company has not received any fund from any person(s) or entity(ies), including foreign entities (funding party) during the year 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 to or on behalf of the ultimate beneficiaries.
vi. Undisclosed income
The company does not have any transaction that are 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), during the year.
vii. Details of crypto currency or virtual currency The group has not traded or invested in crypto currency or virtual currency during the current or previous year.
viii. Valuation of PP&E, intangible asset and investment property. The group has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
57. Other regulatory information
i. Registration of charges or satisfaction with Registrar of Companies
There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.
ii. Utilisation of borrowings availed from banks and financial institutions
The borrowings obtained by the company from banks and financial institutions have been applied for the purposes for which such loans were was taken.
iii. The Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India.
The Group has five CICs which are part of the Group
- SP Finance Private Limited,
- SC Finance and Investments Private Limited,
- Hermes Commerce Private Limited,
- Renaissance Commerce Private Limited and
- Shapoorji Pallonji Energy Private Limited (formarly known as Shapoorji Pallonji Oil and Gas Private Limited).
58. Previous year figures have been regrouped/ reclassified, wherever necessary to conform to current year classification.
59. The financial statements were approved by the Board of Directors of the Company at their respective meetings held on 29th May, 2024. Signature to Notes 1 to 59
In terms of our report of even date
In terms of our report of even date
For Sharp & Tannan Associates For and on behalf of the Board of Directors
Firm Registration No. 0109983W M.C. TAHILYANI
Chartered Accountants Chairman
DIN : 1423084
Parthiv S. Desai NIRMAL JAGAWAT JAI L. MAVANI
Partner Chief Financial Officer Director
Membership Number: (F) 042624 DIN : 05260191
Pritesh Jhaveri RAVINDER PREM
Company Secretary Whole-time Director
Membership No : A51446 DIN : 07771465
Place: Mumbai Place: Mumbai
Date: 29th May, 2024 Date: 29th May, 2024
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