q) Provisions, contingent liabilities and contingent asset Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provisions are discounted, if the effect of the time value of money is material, using pre-tax rates that reflects the risks specific to the liability. When discounting is used, an increase in the provisions due to the passage of time is recognised as finance cost. These provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
Necessary provision for doubtful debts, claims, etc., are made if realisation of money is doubtful in the judgement of the management.
Contingent liability
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. Contingent liabilities are disclosed separately.
Show cause notices issued by various Government authorities are considered for evaluation of contingent liabilities only when converted into demand.
Contingent assets
Where an inflow of economic benefits is probable, the Company discloses a brief description of the nature of the contingent assets at the end of the reporting period, and, where practicable, an estimate of their financial effect. Contingent assets are disclosed but not recognised in the financial statements.
r) Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances with original maturity of less than 3 months, highly liquid investments that are readily convertible into cash, which are subject to insignificant risk of changes in value.
s) Cash Flow Statement
Cash flows are presented using indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.
Bank borrowings are generally considered to be financing activities. However, where bank overdrafts which are repayable on demand form an integral part of an entity’s cash management, bank overdrafts are included as a component of cash and cash equivalents for the purpose of Cash flow statement.
t) Earnings per share
The basic earnings per share are computed by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
Diluted EPS is computed by dividing the net profit after tax by the weighted average number of equity shares considered for deriving basic EPS and also weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for bonus shares, as appropriate
u) Other Accounting Standards Disclosures
There are no transactions and disclosures to be made both for the year under report and the previous year presented, in respect of the following accounting standards:
Ind AS-102 - Share Payment, Ind AS-103 - Business Combinations, Ind AS-104-Insurance Contracts, Ind AS-106-Exploration for and evaluation of Mineral Resources, Ind AS-110-Consolidated Financial Statements, Ind AS-111-Joint Arrangements, Ind AS-112-Discloure of Interest in other Entities, Ind AS-114-Regulatory Deferral Accounts, Ind AS-20-Accounting for Govt Grants and Disclosure of Govt Assistance, Ind AS-27-Separate Financial Statement, Ind AS-28-Investment in Associates and Joint Ventures, Ind AS-29-Financial Reporting in Hyperinflationary Economies and Ind AS-41-Agriculture.
38 Operating Segments
The Company’s main business segments namely “Textile” and “Rental services” meet the reportable segment thresholds given in Ind AS 108 “Operating Segments” and hence disclosed respectively. This reporting complies with the IndAS segment reporting principle.
The Company has discontinued its Textile operations and informed the exchanges on August 31, 2023. Hence the Revenue and Profit/Loss arising from such Discontinued operations (Textile Activity) are disclosed as “Discontinued Operations”. Consequently, the Revenue and Profit/Loss arising from such Discontinued operations (Textile activity) relating to the entire period from April 01,2023 to March 31,2024 are disclosed as Discontinued Operations relating to the year ended March 31, 2024. Accordingly, the Company has re-presented the comparable information by segregating the Operations that the company is continuing and the operations that have been discontinued by the end of March 31,2024. The Break-up of Profit/Loss from discontinued operations for the year ended March 31, 2024 along with re-presentated comparitive information for the year ended March 31,2023 is given below:
41 Disclosues pursuant to Ind AS-113 Fair Valuation techniques :
Ind AS 113 specifies following valuation techniques to measure fair values:
i) Market Approach
- The market approach uses prices and other relevant information generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities, such as a business.
- For example, valuation techniques consistent with the market approach often use market multiples derived from a set of comparables. Multiples might be in ranges with a different multiple for each comparable. The selection of the appropriate multiple within the range requires judgement, considering qualitative and quantitative factors specific to the measurement.
ii) Income Approach
- The income approach converts future amounts (e.g. cash flows or income and expenses) to a single current (i.e. discounted) amount. When the income approach is used, the fair value measurement reflects current market expectations about those future amounts.
- It is a present value of all future earnings from an entity whose fair values are being evaluated or in other words all future cash flows to be discounted at current date to get fair value of the asset / liability.
- Assumption to the future cash flows and an appropriate discount rate would be based on the other market participant’s views. Related risks and uncertainty would require to be considered and would be taken into either in cash flow or discount rate.
iii) Cost Approach
- This method describes how much cost is required to replace existing asset/ liability in order to make it in a working condition. All related costs will be its fair value. It actually considers replacement cost of the asset/ liability for which we need to find fair value.
Key Inputs to Fair Valuation
- The inputs refer broadly to the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk.
- In order to establish comparability and consistency in fair value measurement, Ind AS 113 has made some hierarchy to define the level of inputs for fair value.
- The hierarchy is purely based on the level of inputs available for the specific Asset/ liability for which the fair value is to be measured.
Level 1 Inputs
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
- A quoted price in an active market provides the most reliable evidence of fair value and shall be used without adjustment to measure fair value whenever available
Level 2 Inputs
- Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
- If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.
- Level 2 inputs include the following:
i. quoted prices for similar assets or liabilities in active markets.
ii. quoted prices for identical or similar assets or liabilities in markets that are not active
iii. inputs other than quoted prices that are observable for the asset or liability.
Level 3 inputs
- Level 3 inputs are unobservable inputs for the asset or liability.
- Unobservable inputs shall be used to measure fair value to the extent that relevant observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
- Unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk.
Fair Valuation principle :
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation
The treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
The Company seeks to minimise the effects of these risks by using natural hedging financial instruments and forward contracts to hedge risk exposures. The use of financial derivatives is governed by the Company’s policies approved by the board of directors, which provide written principles on foreign exchange risk, the use of financial derivatives, and the investment of excess liquidity. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
Market risk
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company actively manages its currency and interest rate exposures through its finance division and uses derivative instruments such as forward contracts and currency swaps, wherever required, to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management.
Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company actively manages its currency rate exposures through a centralised treasury division and uses natural hedging principles to mitigate the risks from such exposures. The use of derivative instruments, if any, is subject to limits and regular monitoring by appropriate levels of management.
Forward foreign exchange contracts
It is the policy of the company wherever applicable to enter into forward foreign exchange contracts to cover (a) repayments of specific foreign currency borrowings; (b) the risk associated with anticipated sales and purchase transactions out to 6 months within 50% to 70% of the exposure generated.
Disclosure of hedged and unhedged foreign currency exposure
The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
Foreign currency sensitivity analysis
Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company’s revenues from its operations. Any weakening of the functional currency may impact the Company’s cost of imports and cost of borrowings and consequently may increase the cost of financing the Company’s capital expenditures. The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 2% change in foreign currency rates.
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year. Further the company is not exposed to foreign currency exposure during the FY:2023-24 and FY:2022-23.
Interest rate risk management
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.The 25 basis point interest rate change will impact profitability by INR. 8.27 lakhs for the year (Previous year INR.10.27 Lakhs)
Interest rate sensitivity analysis
Credit risk arises when a customer or counterparty does not meet its obligations under a customer contract or financial instrument, leading to a financial loss. The Company is exposed to credit risk from its operating activities primarily trade receivables and from its financing/ investing activities, including deposits with banks, mutual fund investments, investments in debt securities and foreign exchange transactions. The Company has no significant net concentration of credit risk with any counterparty.
Credit risk arises when a customer or counterparty does not meet its obligations under a customer contract or financial instrument, leading to a financial loss. The Company is exposed to credit risk from its operating activities primarily trade receivables and from its financing/ investing activities, including deposits with banks, mutual fund investments, investments in debt securities and foreign exchange transactions. The Company has no significant concentration of credit risk with any counterparty.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure is the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables, margin money and other financial assets excluding equity investments.
(a) Trade Receivables
The Company has credit evaluation policy for each customer and, based on the evaluation, credit limit of each customer is defined. Wherever the Company assesses the credit risk as high, the exposure is backed by either bank, guarantee/letter of credit or security deposits.
As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
(b) Investments, Derivative Instruments, Cash and Cash Equivalents and Bank deposits
Credit Risk on cash and cash equivalents, deposits with the banks/financial institutions is generally low as the said deposits have been made with the banks/financial institutions, who have been assigned high credit rating by international and domestic rating agencies.
Investments of surplus funds are made only with approved Financial Institutions/ Counterparty. The Company has standard operating procedures and investment policy for deployment of surplus liquidity, which allows investment in debt securities and mutual fund schemes of debt and arbitrage categories and restricts the exposure in equity markets.
Offsetting related disclosures
Offsetting of cash and cash equivalents to borrowings as per the consortium agreement is available only to the bank in the event of a default. Company does not have the right to offset in case of the counter party’s bankruptcy, therefore, these disclosures are not required.
Liquidity risk management
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus funds in bank fixed deposit and mutual funds, which carry minimal mark to market risks. The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.
Liquidity tables
The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. 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.
44 Audit Trail
The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which uses accounting software for maintaining its books of accounts, 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 accounts along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
The Company uses the accounting software “Tally” for maintaining books of account. During the year ended 31 March 2024, the Company had not enabled the feature of recording audit trail (edit log) at the database level for the said accounting software Tally to log any direct data changes on account of recommendation in the accounting software administration guide which states that enabling the same all the time consume storage space on the disk and can impact database performance significantly. Audit trail (edit log) is enabled at the application level.
45 Retirement benefit plans Defined contribution plans
In accordance with Indian law, eligible employees of the Company are entitled to receive benefits in respect of provident fund and super annuation fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees’ salary. The contributions, as specified under the law, are made to the Provident Fund.
The total expense recognised in profit or loss of Rs.2.32 Lakhs (for the year ended March 31, 2023: Rs.16.27 Lakhs) represents contribution paid to these plans by the Company at rates specified in the rules of the plan.
Defined benefit plans
(a) Gratuity
Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same, gratuity is computed by multiplying last drawn salary (basic salary including dearness Allowance if any) by completed years of continuous service with part thereof in excess of six months and again by 15/26. The Act provides for a vesting period of 5 years for withdrawal and retirement and a monetary ceiling on gratuity payable to an employee on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from time to time. However, in cases where an enterprise has more favourable terms in this regard the same has been adopted.
46 Additional regulatory and other information as required by the Schedule III to the Companies Act 2013
(i) The Company has not granted any loans and Advance in the nature of loans to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person that are repayable on demand or without specifying any terms or period of repayment.
(ii) The Company has been maintaining their books of accounts at the Registered Office in electronic mode in server physically located in India. Daily backups are being taken regularly by the Company.
(iii) There are no proceeding initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder. Hence the disclosure mandated in respect thereof are not applicable
(iv) The Quarterly returns or statements of current assets filed by the Company with banks or financial institutions
Return on Capital employed = (Total Comprehensive Income Interest) / (Average of (Equity Total Debt))
Return on Investment (Assets) = Total Comprehensive Income / Average Total Assets Reasons for Variation if more than 25%
Debt Service Coverage Ratio
The variation in the Debt Service Ratio is on account of the higher loss in the current year compared to the losses in the
previous year
Interest Coverage Ratio
The variation in the Interest Coverage Ratio is on account of the higher loss in the current year compared to the losses in the previous year Inventory Turnover Ratio
The variation in the Inventory Turnover Ratio is on account of the textile operations being discontinued in the current year Trade receivables Turnover Ratio
The variation in the Trade receivable Turnover Ratio is on account of the textile operations being discontinued in the current year
Trade Payables Turnover Ratio
The variation in the Trade Payables Turnover Ratio is on account of the textile operations being discontinued in the current year
Net Capital Turnover Ratio
The variation in the Net Capital Turnover Ratio is on account of increase in Trade receivables Turnover Ratio along with increase in the Inventory Turnover Ratio and Trade payable Turnover Ratio in the current year compared to the Previous Year
Net Profit Ratio
The variation in the Net Profit Ratio is on account of the higher loss in the current year compared to the losses in the previous year
(xi) Compliance with approved Scheme(s) of Arrangements
There are no schemes approved by competent Authority in terms of section 230 to 237 of the companies Act, 2013
(xii) Utilisation of Borrowed funds and share premium:
(A) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium orany other sources or kind of funds) 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) 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,
Notes:
1. All related party transactions were made on terms equivalent to those that prevail in an arm’s length transaction.
2. Outstanding balances at the year-end are unsecured and settlement takes place in cash/ transfer of assets.
3. For the year ended 31 March 2024 and 31 March 2023, the company has not recorded any impairment provision in respect of receivables relating to amounts owed by related parties.
4. For the year ended 31 March 2024 and 31 March 2023, the company has not written-off any receivable amounts owed by related parties. Further as at 31 March 2024 and 31 March 2023, there were no outstanding provision for doubtful debts in respect of amount owed by related parties.
5. There have been no guarantees provided or received by the company in respect of any related party
receivables or payables. Further there were no outstanding commitments in respect of any related parties.
6. For the year ended 31 March 2024 and 31 March 2023, there are no amounts incurred for provision of key
management personnel services that are provided by a separate entity.
For and on behalf of the board As per our report of even date attached
For M/s CSK Prabhu & Co
Sumanth Ramamurthi Nikhil Govind Ramamurthi Chartered Accountants
Chairman and Managing Director Director Firm Regn No. 002485S
DIN:00002773 DIN:10089593
G. K. Narmatha Mahesh Prabhu
Company Secretary Partner
Membership No. 214194
Coimbatore UDIN: 24214194BKBGAA7927
May 25, 2024
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