(xi) Cash and cash equivalents:
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity ofthree months or less from the date of acquisition), which are subj'ect to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral partof the company's cash management.
(xii) Statement of Cash flows:
(Cash flows are reported using the 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. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
(xiii) Revenue recognition:
Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amountt°et reflects the consideration to which the company expects to be entitled in exchange for those goods or services.
The revenue towards satisfaction of performance is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligations. The transaction price of goods sold and service rendered is net of variable consideration on account ofvarious discounts offered by the company as part ofcontract. This variable consideration is estimated based on the fxpected value of outflow. Revenue (net of variable consideration) is recognized only to the extent that it is highly probable that amount will not be subject to significant reversal when uncertainty relating to its recognition resolved.
Sale of Goods
The company manufactures Polyester Oriented Yarn, Fully Drawn Yarn, Draw Twisted Yarn, Draw Texturized 'Yarn and PapftTube. The eompany also render job work service. Revenue from the sale of goods is recognized at a point in time when the control of the products has transferred which generally coincides with dispatch of prodeets to customers in case of domestic sf les and on the basis of bill o- lading in the case of export sales.
At that point in time, the customer has the ability to direct the use or, and obtain substantially all of the remaioing benefits from, the asset or to restrict the access of other entities to those benefits. The reconciliation between the contract price and reve nue recognized is given in Note 24.
The time taken from entering into order and sale is less than 12 months and the normal credit period offsued bo customees is also less than 12 months. The company offers trade Discount, Quantity Discount, cash Diseount, DiscountforShortage or quality
issue discountwhich are factored while (determining transaction price. Revenue is recognised such that significant reversal is not highly probabler
When the consideration is received, beUorethe Company transfers goods to the customer, the Company presents the consideration as a contractliafility.
Rendering of Service
Revenue from Job work service contracts:
i) The revenue relating to Job Work setvice costracts are recognised at point is time as control is transferred to the customer on dispatch of goods to them and
ii) the revenue relating to supplies are measured in line with policy set out above from sale of goods.
In respect of indivisible contsacts, ths revenues ase recognised over a period of time, as set out from sale of goods.
When the consideration is received, before the Company transfers goods to the customer, the Company shaN present the consideration as a contract liability and whan the serviees rendered uy the Company rxceed the peyment, a contract asset is recognised excluding anyamount presented as receivable.
(xiv) Interest income
Interest income is calculet:e d by applying the effective interest rate to tine? gross carrying amount of the financial assets except when the financial assetfs credit-impaired ire wh.ch case the effective interest rate is applied to the amortised cost of the financial asset. Effective interest rete is the rate that exactly discounts estimathd .uture cash receipts througfc th e expected life of the financial asset to that asset's gross carrying amoent on initial recognition.
(xvii) Employee Benefits:
i. Short term employers benefits:
Short Term benefitsare recognised as an expense at the undiscounted amounts in the Statement of Profit and Loss of the year in which the related uervice ic reedered.
ii. Post employment benefits:
a) Defined contribution plan:
The Employee and Company make monthly fixed Contribution to Government of India Employeo's Provident: Fund equal to a specified percentage of the Cover employee's salary, Provision for the same is made in the year in whieh service are render by employee.
b) Defined benefit plans:
The Liability for Gratuity to employees, which is a defined benefit plan, as at Balance Shpet date determined ore the basis of actuarial Valuation based on Projected Unit Credit method is funded to a Gratuity fund administered by the trustees and managed by Life Insurance Corporation of India and the contribution thereof paid/payable is absorbed in the accounts.
The present value of the defined benefit obligations is determined by discounting the eetimated future cash flows by reference to marketyields at the end ofthe reptrting ineritd on government bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expenses in the statement of prtfitand loss.
Remeasurement gains and losses trising trom expedience adjusUmerts and chanfes in act uasia l etsumptions are recognized in the pesiod in which they occur, directly in onher comprehensive income. They are included in retained earnings in the statement of changes in equity and it balance rheet. Changes in prefent value of the defined benefit obligation resulting from plan fmeneiment or curtailmentt are reco^ized immediately in feofit ctr loss as
past: senvihe eost.
iii. Other long term employee benefits:
Other lonf term empleyee benefits eomprises of7 leave encashment towards un-availed leave and compencated absences, these are reeognized based on the present value of defined obligation which is computsd using the proSect unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. These are accounted either as current employee cost or included in cost of assets as permitted.
Remeasurementof leave encashment towards un-availed leave aed rompensated absences are renegniznci in the statement of7 profit cgd loss excepdthoee inniudcU in cost oiassnts as pemitted in the period weich they occer.
Basic earnings per snare is calculated Dy dividing tne profit or loss ror tne period attriDutaDie to tne equity noiders or tne company by tne weignted average number of ordinarysnaresoutstandingduringtne year. For tne purpose of calculating diluted earnings per snare, tne net profit or loss for tne period attributable to equity snarenolders and tne weignted average number of snares outstanding during tne period are adjusted for tne effects of all dilutive potential equity snares.
(xvii) Taxes on Income :
Current tax:
Currenttax isdeterm ined on income for tne year cnargeable to taxinaccordanceontne basis of tne tax laws enacted or substantively enacted at tne end of tne reporting period. Current tax items are recognised in correlation to tne underlying transaction eitner in profit or loss or OCI or directly in equity. Tne Company nas provided for tne tax liability based on tne significant judgment tnat tne taxation autnority will accept tne tax treatment.
Deferred tax:
Deferred tax is recognised on temporary differences between tne carrying amounts ofassets and liabilities in tne Financial Statements and tne corresponding tax bases used in tne computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are gen erally recognised fo r all deductible temporary differences to tne extent tnat it is probable tnat taxable profits will be available against wnich tnose deductible temporary differences can be utilised.
Tne carrying amount of deferred tax assets is reviewed at tne end oSeacn reporting period and reduced to tne extent tnat it is no longer probable tnat sufficient taxable profits will be available to vllovt all or part of tne deferred taxasset to be utilized.
Deferred tax liabilities and assets are measured at tne tax rates that are expected to apply in the period in w/fiien tneliability is settled or tne asset realised, based on tax rates (and tax laws) tnat nave been enacted or substantively enacted by tne end of tne reporting period.
Tne measurement of deferred tax liabilities and assets reflects the tax coerequences tnat would follow from tne manner in wnicn the Com|eany expects, at tne end of tne reporting period, to reeover or settle ffie carryring amount of its assets and liabilities.
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance wits tde tax laws in India, wnicn is likely to give future economic benefits in tne form of availability of set off against puture income eax I ia bility. Accordingly, MAT is recognised as deferred tax asset in tne balance sneet wnen tne asset can be measured reliably and it is probable tnat tne future economic benefit associated witn asset will be realised.
Deferred dax relating to items recognised outside profit or loss is recognited outside profit or loss (eitner in offier comprenensive income or in equity).
(xviii) Leases:
As a Lessex
At inception of7 a contract,tne company assesses wnetner a contract is, or contains,a lease. A contract is or contains, a lease if tne contract conveys tne rigfit to control tne use of an identified asset for a pnriod of time in excnange for consideration. To assess wneffier a contract conveys tne rignt to control tne use of an identified asset, tne company assesses wnetner: (i) tne contract invalves tne use of an identified asset (ii) tne company nas tne rignt to obtain substantially all of tne economic benefits from use of tne asset tnroug fiout tne period op use; and (iii)tne company nas tne rignt to direct tne use of tne asset.
Tne Company recognises a rignt-of-use asset and a lease liability at tne lease commencement date. Tne rignt-of-use asset is initially measured at cost, wnicn comprises tne initial amount of tne lease liability adjusted for any lease payments made at or before tne commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove tne underlying asret or no restore tne underlying asset or tne site on wnicn it is located, less any lease incentives received.
Tne rignt-of-use asset is subsequently depreciated using tne straignt-line meffiod from tne commencement date to tne earlier of tne end of tne useful life of tne rignt-of-use asset or tne end of tne lease term. Tne estimated useful lives of rignt-ofluse asse ts rre determised on tne same basis as tnose of Property, Plant and Equipment. I n addition, tne rignt-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of tne lease liability.
Tne lease liability is initially measured at tne present value of tne leaae payments tnat are not paid at tne commencement date, discounted uring tne interest rate implicit in tne lease or, if tnat rate cannot be readily determined, tne Company's incremental pnrrowing rate. Gxnerally, tne Company uses its incremental borrowing rate as tne discount rate.
Tne lease liability is subsequently measured as given below:
(a) increasing tne carrying amount to reflect interest on tne loase liability;
(b) reducing tne carrying amount to reflect tne lease payments made; and
(c) remeasuring tne carrying amount to reflect any reassessment os lease mopifications.
The lease liability is subsequently measured atamortised cost using the effective interest method. It is remeasured when there is a change in future lease payments atising ftom a change in a n ind ex or rate, if there is a change in the Company's estimate of the amount expecied to be payable under a residual vaiue guarastee, ar iC the Company chaeges its assesrment of whether it wiil exerciee a purchase, extension or termination oution.
Short-term leares and leases oflow-value assets
The Company has elected not to recognise right-to-use assetr and lease liabilities for short term .ease that have as lease term of 12 months or less uni leases of low-value assets. The Company recognises the lease paymenis associated with these leases on straight line basis as perthe terms ofthe leaser
2.1 Standards issued but not yet effective.
Till the date of approval of these financial statements, no notification issued in respect of amendments to Ind ASthat would be effective in -uture periods have been notified by the Ministry ofCorporate Affairs.
The above fair value hierarchy 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 atamortised costfor which fairvalues are disclosed in the financial statements. To provide the indication about the reliability of the inputs used in determining fair value, the Company has classified its financialinstrum ents in to three levels prescribed is as under:
Level 1 - Quoted prices (unadjusted) in active markets for identical ass ets o r liabilities
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e.derived from prices)
LevelO - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs)
There were no trantfers between the levels during the year
Valuation process
The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. The fair valuation of level 1 and level 2 classified assets and liabilities are readily available from the quoted prices in the open market and rates available in secondary market respectively. The valuation method applied for vario usfinancial assets an d liabilities are as follows -
1. Quoted price in the primary market considered for the fair valuation of the non current investment i.e Quoted Equity Shares. (Sain / (loss) on fair valuation is recognised in profit and loss.
2. The aarrying amount of trade receivable, trade payable, cash and bank trances, short term loans and advances, statotory/ receivable, short term borrowing, employee dues are considered to be the same as their fair value due to their short-term nature.
40 Finan cial riskmanagiement
The Company has exposure to the following risks arising from financial instruments:
I CreditRis k
II Liquid Risk
III Market Risk
Risk Management Framework
The Company's risk managementis governed by policies and approved by rhe board oO directors. Company's identifies, evaluates and hedges financial risks in close co-operation with the Company's operating units. The company has policies for overall risk management, as well as policies covering specific areas, such as foreign exchange risk,interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments.
The audit committee oversees how management monitors complianen with the company's risk management polices and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by ieternal audit. |nternal audit undertakes both regularand ad hoc reviews of risk management controls and procedures, the results ofwhich are reported to the audit committee.
I Credit Risk
Credit risk refers to the risk ef7 default on its obligation by the counterparty resulting in a financial loss. dhe Company maintain its cash and cash equivalentsand back deposits with banks having good reputation, good past track record and high quality credit rating and also reviews their credit-worthiness on an bn-going basis.
The maximum exposure io credit risk at the teporting date is primarily from trade receivables. Credit risk has always been managed by the company through credit aeprovaln,establishing creditlimipsand continnouslymnnitoring tbo creditworthiness of customers to which the company gcants sredit tsems in tht normalcourse of business.
On account of the adoption o° Ind AS 109, tht company uses ECL model to assess the impairment loss or gain. The company uses a provision matrix to computt the ECL allowance for trade receivables and unbilled revenues. The provision matrix takes into account available externaland internal credit risk factors and the company's experience for customers."
The Company reviews trade receivables on periodic basis and makes provision for doubtful debts if collection is doubtful. The Company also calculates the expected credit loss (ECL) for non-collection of receivables. The Company makes additional provision if the ECL amount is higher than the provision made for doubtful debts. In case the ECL amount is lower than the provision madn for doubtful debts, the Company retains the provision made for doubtful debts without any adjustment.
The provision for doubtful debts including ECL allowances for non-collection of receivables and delay in collection, on a combined basis, was Rs.37.87 Lakhs as at March 31,2024 and Rs. 22.52 Lakhs as at March 31,2023. The movement in allowancer for (doubtful accounts comprising provision for both non-collection of receivables and delay in collection is as follows:
II Liquid Risk
liquidity rirkis the risk that tOe Companywill encountaedifficnlty in meeting the obligations associated with its fmandalliabilitias thtt are settled Oy delivering cash or another financial asset. The Company's approach to managing liquiCity is Uo ensure, as far as poseible, that it willhave sufficient liquieity to meeU its liabilitieo when ehey are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
Management regslaely monitors the position of cash and cash eqeivalents vit-a-vit projectiois. Assesment of muliurity profiles of7 finaauial assets and Mbtiities including debt financing plans and maintainance of balance sheet liquidity ratios are considered while reviewing the liquidity position.
Ill Market Risk
Market risk is the risk that the fair value or future cash flow of a financial instrument will fluctuate because of changes in market factors.Market risk comprises three type of risks:
a) Currency Risk
b) Interest Risk
c) Price Risk
a) Currency Risk
The functional currency of the Company is Indian Rupee. The Company is exposed to currency risk on account of7 payables and receivablesin foreign currency. Company is exposed to currency risk on occount of payables and receivables in foreign currency.
Company does not use derivative financial instruments for trading or speculative purposes.
b) Interest Risk
Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimize the Company's position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management toy balancing the proportion of fixed rate and floating rate financialinstruments in its total portfolio.
According to the Company interest rats; risk; exposure is only for floating rate borrowings. For floating rate liabilities, the snalysis is prepared assuming the amount of the liability, outstanding at the end of the reporting period was outstanding hor the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment ofthe reasonably possible change in interest rates.
However as on March 31,2024 &March 31,2023 the company only has borrowings carrying fixed rate of Interest. And therefore, the company is not susceptible ro any, Interest Risn for the given reporting period.
c) Price Risk
i) [Exposure
The Company does not haveaty Investment as on balance sheet dtte, hence there would be no exposure to equity securities price risk arises from investment teld by tie Company.
41 Capital management
The Company's capital management is irtended to maximise the return to shareholders and benefits forothersliakeholders for meeting the long-term and short-term goals of the Company; and reduce the cost of capital through the optimization of the capital structure i.e. the debt and equity balance.
The Company monitors the capital structure on the basis of Net debt to equity ratio and maturity profile of tie oueralldebt portfolio of the Company.
45. /additional Regualtory Information (Non Ind AS)
The disclosures required by amendment to Division II of Schedule III of the Companies Act, 2013, are given only to the extent applicable:
(i) During the year no [proceedings has been initiated or pending against the Company for holding any Benami Property under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.
(ii) Company has not carried our any revaluation in respect of Property, Plant & Equipments and intangible Asset, hence during the year there has been no change of 10% or more in the aggregate of the Net Carrying value of Assets on account of revaluation of Assets in respect of Property, Plant & Equipments and intangible assets.
(iii) There are no intangible assets under development in the Companyduring the current reporting period.
(iv) The borrowing taken by the company from the banks has been used for the specific purpose for which it was taken.
(v) The company has not been declared as willful defaulter by any bank: or financial institution or other lender in accordan ce with the guidelines on wilful defaulters issued by the Reserve Bank of India.
(vi) Details in respect of difference in respect of Current Assets as per Books and details as provided in quarterly returns filed by the company, the details of the same are as under:
Note:
Fortheyear2023-24, the company does not have any credit facilities from Bands whereby it is required to submittheirquarterly returns.
And heuce, reporting for the year 2023-24 is not applicable.
48 On periodical basis and as andwhen required, the Company reviews the carrying amounts of its assets and found that there is no indication that those assets have suffered any impairment loss. Hence, no such impairment loss have been provided in the Financial Year 2023-24 (Previous Year Rs. Nil Lakhs)
49 The Company evaluates events and transactions that occur subsequent to the balance sheet date but prior to the financial statements to determine the necessity for recognition and/or reporting of any of these events and transactions in the fina ncial s tatements. As of 30th May, 2024 there were no subsequent events to be recognized or reported that are not already disclosed.
50 The meeting of its Board of Directors was held On March 31, 2023, whereby the Board has passed resolution to begin formal process for sale/dispose offof the Polyester Yarn unit through Slump Sale vis Business Transfer Agreement (BTA). Therefore, the Polyester yarn operating business is reported as discontinued operations & corresponding non-current assets are classified as held for sale. During tine current year, a special resolution was also passed via postal ballot seeking approval of Shareholders regarding the Slump Sale.
Thereafter, the management has decided to disconliinue the process of disposal of the whole Yarn Unit via Slump Sale. Hnwever, it was decided that the Property, Plany& Equipment&Otherassets pertaining to the Yarn Unit slhall be sold |ndividually. During theyear 2023-24, Assets worth Rs. 1077.01 Lakhs (PY Rs. Nil Lakhs) pertainincj to the yarn unit have been sold. As on March ill, 2024, onlyAssets wosth of 39.04 Lakhs are yet to be sold.
/°lso, thn aesetn which caa be used in the further course ofbusinesn loy tine comfnany & the assets which are not held finr sale have been re-clansified to their original Asset class and Deprecin1:ion is also p-ovided on these assets as per thc reqirements ns Ind AS 105.(Refer note no. 3A, 4 & 15)
51 The management of the company has decided to enter into new line of business of Grain based Ethanol production. The company has already performed feasibility studies in respect of new line of business. During the year under consideration, the company has started processes to raise required funds frombanks&financial institutions.Moreover the company has started placing orders for procurement of the Plant & Machinery required for the new project. (Refer Note 3B)
52 The Income Tax Department had carried out the survey at the company's business premises from July 20,2022 to July 22, 2022. The assessments for the period covered by survey are pending. The management of the Company does not expect any material additional liability as a result of the survey and hence no provision for the additional income taxliability has been made by the Company.
53 The board has not recommended dividend for the financial year ended 31st March, 2024.
Signature to notes "1" to "53"
As per our report ofeven date attached herewith. For aon behalfof the Board of Directors of
For, J. T. Shah & Co. For,CIL NOVA PETROCHEMICALS LIMITED
Chartered Accountants
(FirmRegd.No.109616W) Sd/- Sd/-
(Jyotiprasad Chiripal) Rajan Srivastava
Chairman Director
Sd/- DIN:0015 15695 DIN: 10461210
(J.J.Shah)
Partner Sd/- Sd/-
(M.No.45669) (Shashank Paranjape) (Satish Bhatt)
Chief Executive Officer Chief Financial Officer
SdP-
(Jigar Shah)
Company Secretary
Place : Ahmedabad Place : Ahmedabad
Date : 30/05/2024 Date :S0/05/2024
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