xii. Provisions
A provision is recorded when the Company has a present legal or constructive obligation as a result of past events
and it is probable that an outflow of resources will be required to settle the obligation and the amount can be
reasonably estimated. The estimated liability for product warranties is accounted based on technical evaluation,
when the products are sold. Provisions are evaluated at the present value of management's best estimate of the
expenditure required to settle the present obligation at the end of the reporting period. The discount rate used
to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as
interest expenses.
xiii. Earnings per share
"The basic Earnings / (loss) per share is computed by dividing the net profit/ (loss) attributable to owners of the
Company for the year by the weighted average number of equity shares outstanding during the reporting period.
The number of shares used in computing diluted earnings/ (loss) per share comprises of weighted average shares
considered for deriving basic earnings/ (loss) per share and also the weighted average number of equity shares
which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity
shares are deemed converted as of the beginning of the reporting date, unless they have been issued at a later
date. In computing diluted earnings per share, only potential equity shares that are dilutive and which either reduces
earnings per share or increase loss per share are included."
Note 1- Term Loan for purchase of machinery at Unit 2 from Karnr Vyasa Bank Ltd.
(37 monthly instalments after a holiday period of 6 months. Monthly interest to be serviced as and when
debited)
(First Charge on the Land and building and other fixed assets of the company at Unit II Manapparai and
Second charge on the land and building and other fixed assets of the Unit I of the company situated at mysore
along with Indian Overseas Bank)
Note 2- To meet capital requirements as guaranteed by the Government of India, due to Covid 19 pandemic availed
from Karur Vyasa Bank Ltd.
Terms of Repayment - One year Moratarium and three year repayment - 36 monthly instalments of Rs.
5,84,574/- per month starting from November 2021.
Note 3- First Charge on the Land and building and other Fixed assets of the company at Unit II at Mannapparai and
Second charge on the Land and building and other fixed assets of the Unit I of the company situated at Mysore
along with Indian Overseas Bank. Pari Passu Second Charge on the Land and Buildings and other Fixed Assets
of Unit 1 of the Company situated in the Factory at Hunsur, Mysore District, along with Indian Overseas
Bank.
Terms of Repayment - 78 monthly instalments of Rs. 14,67,949/- per month starting from August 2023.
Note 4- To meet capital requirements as guaranteed by the Government of India, due to Covid 19 pandemic availed
from Karur Vyasa Bank Ltd.
Terms of repayment - Two year moratorium and three year repayment. 36 monthly instalments of
Rs. 5,50,000/- per month starting from December 2024.
Note 5- Term Loan availed for Installation of Auto Doffer Machineries from Karur Vysya Bank for Unit II Manapparai.
Terms of Repayment - Six months of Moratarium and five & half years of repayment - 66 monthly instalments
of Rs.5,96,729/- per month starting from August 2024.
Note 6- Term availed for purchase of car from Indian Overseas Bank Ltd.
Terms of Repayment - 36 monthly instalments of Rs. 46,694/-. Per month starting from November 2021.
Note 7- Term loan availed for purchase of machinery and construction of factory building for expansion/modernisation
at Unit 1 - Hunsur from Indian Overseas Bank.
Terms of repayment - 84 monthly instalments of Rs. 24,40,476/- per month starting from November 2022.
Note 8- Term loan availed for purchase of machinery and construction of factory building for expansion/modernisation
at Unit 1 - Hunsur from Indian Overseas Bank.
Terms of repayment - 84 monthly instalments of Rs. 4,16,700/- per month with a holiday period of 12 months.
Repayment starting from December 2023.
Note 9- To meet capital requirements as guaranteed by the Government of India, due to Covid 19 pandemic availed
from Indian Overseas Bank Ltd
Terms of Repayment - One year Moratarium and three year repayment - 36 monthly instalments of
Rs. 10,00,551/- per month starting from November 2021.
Note 10- To meet capital requirements as guaranteed by the Government of India, due to Covid 19 pandemic availed
from Indian Overseas Bank Ltd
Terms of Repayment - Two year Moratarium and three year repayment - 36 monthly instalments of
Rs. 7,77,778/- per month starting from December 2023.
Note 11- Loan Against Fixed Deposit provided by the Indian Overseas Bank Repayment due on 16th July 2024
Note 12- Term Loan availed for long term working capital requirement of the company at Unit 1 - Hunsur from Karur
Vysya Bank.
Terms of Repayment - One year Moratarium and Five year repayment - 60 monthly instalments of
Rs. 25,00,000/- per month starting from December 2024.
Note 31 - EPS
Earnings Per Share
Basic earnings per share (EPS) amounts are calculated by dividing the profit for the year attributable to equity holders
of the Company by the weighted average number of equity shares outstanding during the year.
The following reflects the income and share data used in the basic EPS computations:
Note 32 - Capital Management
The Company’s objectives of capital management is to maximize the shareholder value. The Company manages its capital
structure and makes adjustments in light of changes in economic conditions and the requirements of the financial
covenants.
The Company monitors capital using a gearing ratio, which is net debt divided by total equity plus net debt as below.
Equity includes equity share capital and all other equity components attributable to the equity holders
Net debt includes borrowings (non-current and current), trade payables and other financial liabilities, less cash and cash
equivalents (including bank balances other than cash and cash equivalents and margin money deposits with banks)
In order to achieve the objective of maximize shareholders value, the Company’s capital management, amongst other
things, aims to ensure that it meets financial covenants attached to the interest-bearing borrowings that define capital
structure requirements. Any significant breach in meeting the financial covenants would allow the bank to call borrowings.
There have been no breaches in the financial covenants of above-mentioned interest-bearing borrowing.
No changes were made in the objectives, policies or processes for managing capital during the current and previous
years.
Note 33 - Defined Benefit Plan - Gratuity
The Company operates defined gratuity plan for its employees. Under the plan, every employee who has completed atleast
five years of service gets a gratuity on departure at 15 days of last drawn salary for each completed year of service.
The scheme is funded with LIC in the form of qualifying insurance policy.
The following tables summarize the components of net benefit expense recognized in the statement of profit and loss
and the funded status and amounts recognized in the balance sheet for gratuity.
(i) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that
are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed
in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value,
the group has classified its financial instruments into the three levels prescribed under the accounting standard. An
explanation of each level follows underneath the table.
Note - 35 - Financial risk management
The company’s activities expose it to market risk, liquidity risk and credit risk. This note explains the sources of risk
which the entity is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial
statements.
The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice. Subject to
the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time in INR and have an
average maturity ranging from 30 to 180 days.
(ii) Maturities of financial liabilities
The tables below analyses the Company’s financial liabilities into relevant maturity groupings based on their
contractual maturities for:
a) all non-derivative financial liabilities, and
b) net and gross settled derivative financial instruments for which the contractual maturities are essential for an
understanding of the timing of the cash flows.
Note - 36: Other Notes to Accounts
a) Taxes on Income and Deferred Taxes :
The Company has not made any provision for Income Tax for the year, since the company has incurred loss during
the year.
The Deferred T ax Expenses of Rs. 383.85 lakhs- has been credited to the Profit and Loss Account and correspondingly
Deferred Asset (Net) amounting to Rs.728.81 lakhs have been disclosed in the Balance Sheet as at 31-03-2024.
The disclosure of the same is as follows:
b) Cash Flow Statement:
The statement of cash flow is prepared under "Indirect Method" and the same is annexed.
c) Events occurring after the date of Balance Sheet:
There are no events occurring after the date of the Balance Sheet, which has a material effect on the accounts.
d) Dues to Micro, Small and Medium enterprises:
Note: The information as required to be disclosed under The Micro, Small and Medium Enterprises Development
Act, 2006 is determined to the extent such parties have been identified on the basis of the certificates shared by
the supplier to the company. Further in view of the Management, the impact of interest, if any, that may be payable
in accordance with the provisions of the Act is not expected to be material. The Company has not received any
claim for interest from any supplier as at the balance sheet date.
e) Inventories
• Cost Comprises expenditure incurred in the normal course of business in bringing such inventories to its
location and includes, where applicable, appropriate overheads based on normal level of activity.
h) Related party disclosure:
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly, including any director whether executive or otherwise.
Key management personnel include the board of directors and other senior management executives.
The disclosure required to be made as per Indian Accounting Standard - 24 "Related Party Disclosure" has been
furnished separately as an Annexure 4 (Page No. 50) to this report.
i) Earnings Per Share:
Basic earnings per share have been calculated by dividing profit for the year attributable to equity shareholders,
by the weighted average number of equity shares outstanding during the year. The company has not issued any
potential equity shares and accordingly, the basic earnings per share and diluted earnings per share are the same.
j) Segment Reporting:
The Company operates two Units at Hunsur, Karnataka and Kulithalai Road, Manapparai, Trichy, Tamil Nadu.
However, as the products manufactured by both the units are same and as the risks and rewards attached to the
operations of both the units are not significantly different treating each unit as separate segment for purpose of
applicability of Indian Accounting Standard - 108 does not arise.
k) Contingent Liability:
a. An amount of Rs.8,02,455/- has been raised by The Superintending Engineer, Tamil Nadu Electricity Board
Trichy (Metro) Circle dated 13.05.2010 towards Excess Demand and Energy charges for exceeding the
demand and energy quota during the period November & December’08 to July 2009. The company had
remitted the amount and the matter had been disputed before the Appellate Tribunal for Electricity (APTEL),
New Delhi and the same has been decided in our favour and the Electricity Department has gone on an
appeal to the Supreme Court. The company is confident of obtaining complete relief in the Apex court there
by confident of getting refund of above amount
b. E-Tax on maximum demand charges which was levied in monthly CC Bill by Tamil Nadu Generation and
Distribution Corporation (TANGEDCO) was paid by the Company till September’2012. In view of an interim
order passed by the Hon’ble Supreme Court staying the procedure of leaving E-Tax on maximum demand
charges on 12/10/2012 responding to the SLP filed by SIMA (SLP (C) NO.31039 of 2012), the company
has not been paying E-tax for the maximum demand charges since October’2012.
The accrued E-Tax amount till March’2024 was Rs.35,88,255/-. As the case has been pending before the
Apex court and SIMA is confident of getting order in favor of its member mills, no provision has been
made in the books of accounts towards the same.
c. TANGEDCO has issued a show cause notice dated 20/04/2017 on the company, informing its intention to
levy Cross Subsidy Surcharge on the Company for an amount of Rs.5,44,94,998/- in connection with non¬
fulfilling of Captive Generating status for the Financial Year 2014-15,2015-16 and 2016-17. The Company
has filed its response to the show cause notice on 04/05/2017 where it has contested the claim of TANGEDCO.
As the move initiated by TANGEDCO on all H.T. Consumers as well as the Power Generating and Supplying
Plants was not maintainable as per the Central Electricity Rules 2005 the Hon’ble High Court of Madras
has directed TNERC to ascertain the status on the above and also stayed TANGEDCO from taking any action
based on its correspondences issued to the consumer on the above matter. The Company is confident of
obtaining complete relief in the matter and hence no provision is required to be made in the books of the
Company.
d. An amount of Rs.50,72,007/- on account of Deemed Demand has been stayed by an interim order granted
by Hon’ble Madurai Bench of Madras High Court in WP (MD) No.16278 of 2015 and MP (MD) No.2
of 2015 dated 08/09/2015. Mills have paid only 50% of Deemed Demand Benefit Charges to TANGEDCO
for the units purchased from ARS Energy Pvt. Ltd., thro’ GCP under Open Access during the period
August’2015 to March’2020 and hence the remaining 50% of the Deemed Demand Benefit Charges
amounting to Rs.50,72,007/- was not paid.
Hence, the mills are entitled to get the refund of Rs.50,72,007/- if it succeeds with the writ filed or liable
to pay the balance Deemed Demand Benefit Charges of Rs.50,72,007/- in case of the writ appeal filed by
the TANGEDCO is allowed.
l) Dividend:
Company has not declared any dividend for the year.
m) Financial instruments - fair value measurement
a. Accounting classifications and fair values
The Company does not have any financial assets or financial liabilities whose fair value is different from its carrying
amount.
n) Financial instruments - risk management
The Company has exposure to the following risks arising from financial instruments:
- credit risk (refer note (b) below)
- liquidity risk (refer note (c) below)
- market risk (refer note (d) below).
a. Risk management framework
The Company’s board of directors has overall responsibility for the establishment and oversight of the Company’s
risk management framework. The Company’s risk management policies are established to identify and analyse
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.
b. Credit risk
"Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument
fails to meet its contractual obligations, and arises principally from the Company's receivables from customers,
loans to related parties and cash and cash equivalents.
The carrying amount of financial assets represents the maximum credit exposure."
(i) Cash and cash equivalents
The Company holds cash and cash equivalents of Rs.28.84 Lakhs as at 31 March 2024. The cash and cash
equivalents are mainly held with nationalised banks which have a very low risk of default.
c. 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.
i) Financing arrangement
The Company had no undrawn borrowing facilities at the end of the reporting period.
d. Market risk
"Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices, which will affect the Company's income or the value of its holdings of financial instruments. The objective
of market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return."
i) Currency risk
Majority of the transactions entered into the company are denominated in INR. Accordingly, the company
does not have any currency risk.
ii) Interest rate risk
The Company does not have any borrowings from external banks/agency and hence there are no interest
rate risks.
o) The Company has not made any transactions with struck off Companies.
For and on behalf of the Board As Per our report annexed
For RAGHAVAN, CHAUDHURI & NARAYANAN
For MAR|S SP|NNERS L|M|TED Chartered Accountants
Firm Regn. No. 007761S
T RAGHURAMAN T.JAYARAMAN A HARIGOVIND N SRIDHARAN ASHOK RAGHAVAN
Managing Director Director Wholetime Director and Company Secretary Partner
[DIN No. 01722570] [DIN No. 01402853] Chief Financial Officer and Compliance Officer Membership No.: 203327
Place : Chennai [DIN No. 06428975] FCS 1646 Bengaluru
Date : 29th May 2024 29th May 2024
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