q) Provisions, Contingent Liabilities & Contingent Assets:
Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event and it is probable ("more likely than not”) that it is 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 balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the estimated cash flow to settle the present obligation, its carrying amount is the present value of those cash flows. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money in that jurisdiction and the risks specific to the liability.
Contingent Liability is disclosed after careful evaluation offacts, uncertainties and possibility ofreimbursement. Contingent liabilities are not recognised but are disclosed in notes.
Contingent Assets are not recognised in financial statements but are disclosed, since the former treatment may result in the recognition of income that may or may not be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
r) Government Grants:
Incentive received from the Government under sales tax deferral scheme, which is interest free in nature is determined based on fair value. Fair value is determined on the present value technique based on cash flow payable under the scheme & the same is amortized over the remaining period of sales tax deferral loan.
s) Leases:
On April 1,2019, the Company adopted Ind AS 116, Leases. Accordingly, the policy for Leases as presented in the Company's Annual Report is amended as under:
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116, Leases. Identification of a lease requires significant judgment. The Company uses significant judgement in
assessing the lease term (including anticipated renewals) and the applicable discount rate. The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Group is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
The Company as lessee:
At the inception of the contract, the Company assesses whether a contract contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. For the purpose of identifying if a contract contains a lease, the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease, and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee, except in case of low value leases and short term leases (a term of less than twelve months) wherein the lease payments are recognized as an operating expense on a straight-line basis over the term of the lease.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised. Lease liabilities are re-measured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
The right-of-use assets are initially recognized at cost. Cost includes the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the useful life of the underlying asset or the lease term, whichever is shorter. Right of use assets are tested for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
t) Recent accounting pronouncements:
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 March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
u) Significant accounting judgements, estimates and assumptions
- The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the company's accounting policies.
- The estimates and judgements involves a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
Critical estimates and judgements
The areas involving critical estimates or judgements are:
- Estimation of current tax expense and payable
- Estimated useful life of PPE & Intangible Assets
- Estimation of defined benefit obligation
- Recognition of revenue
- Recognition of deferred tax assets for carried forward tax losses
- Impairment of trade receivables and other financial assets
Estimates and judgements are continually evaluated. They are based on historical experience and other
factors, including expectations of future events that may have a financial impact on the company and that
are believed to be reasonable under the circumstances.
Rights, preference and restrictions attached to equity shares
The Company has only one class of equity shares having a par value of ' 2 per share. Each Shareholder is eligible for one vote per share. The dividend proposed by the Board of Directors is subject to the approval of shareholders, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company, after distribution of all preferential amounts, in proportion of their shareholding.
The Company has neither bought back any shares nor issued any bonus shares during five years immediately preceding the Balance Sheet date.
a. Security Premium Account : This Reserve represents the premium on issue of shares and can be utilised in accordance with the provisions of the Companies Act, 2013.
b. Retained Earnings : This Reserve represents the cumulative profits of the Company and effects of measurement of defined benefit obligations. This reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
c. Capital Redemption Reserve : This Reserve has been created in relation to issuance of debentures and can be utilised in accordance with the provisions of the Companies Act, 2013.
d. Equity Share Warrant Forfeited: This Reserve represents forfeiture of share warrant by failing to meet purchase requirements and can be utilised in accordance with the provisions of the Companies Act, 2013.
e. General Reserve : This Reserve created by an appropriation from one component of Equity (generally retained earnings) to another, not being an item of Other Comprehensive Income. The same can be utilised by the Company in accordance with the provisions of the Companies Act, 2013.
f. Other Comprehensive Income: Other Comprehensive Income is created in compliance with Ind AS notified under the Companies (Indian Accounting Standard) Rules, 2015, as amended.
Term Loans
1 ECB Euro Loan from Standard Chartered Bank (SCB) is secured by way of a first charge on the movable fixed assets of the Company pertaining to the Paper Division at Dandeli ranking pari passu with other term loan facilities and Short Term Loan from SCB.
2 Term loan from State Bank of India are secured by way of first charge on the entire movable and immovable fixed assets of the Company, present and future, with respect to its factory located at Telangana.
Notes :
I Income Tax
a. During the year the Income Tax assessments of the Company have been completed for AY 2020-21 & AY 2021-22.
b. In the books of Accounts, the company is accounting Income tax refunds after adjustment of tax demands by IT authorities, if any. The matters are pending before High Court and ITAT for various issues. Based on legal opinion the Company is contesting those tax demands / disallowances at appropriate level. The company has therefore not recorded adjustment of taxes / order in books.
c. MATERIAL DEMANDS AND DISPUTES CONSIDERED AS "REMOTE" BY THE COMPANY:
The Company claimed deduction under Section 80 IA of the Income Tax Act 1961, in its return for Power Undertaking for Financial Year 1998-99 to 2022-23 and for Effluent ( Water ) treatment for financial year 2016-17 to 2021-22. The assessing officer partly disallowed the benefit of deductions at assessment stage for Financial year(s) 2019-20 and 2021-22 and fully disallowed deduction upto FY 2016-17. The Company had preferred appeals with Commissioner Appeals and / or ITAT. The ITAT partly allowed the appeals of the company. Department / Company have preferred appeal against the order of ITAT. As advised by legal advisors, Company has a strong case / merit for claiming the deduction and thus expects a favorable outcome.
d. The total demand outstanding as on 31.03.2024 on account of income tax dues is ' 4,586.19 lakhs (Previous year ' 2,794.22 lakhs), net of tax paid / adjusted under protest ' 657 Lakhs.
Note 40 LOAN PURCHASE AGREEMENT
The Company had entered into a loan purchase agreement with ICICI Bank Ltd. for ' 4,000.00 Lakhs in respect of borrowings of Shree Rama Newsprint Limited (SRNL) after sale of its investment in shares of SRNL. The loan purchase agreement stipulates that upon occurrence of default ICICI Bank Ltd. will have "a right" to require the Company to purchase the loan outstanding of SRNL along with transfer of underlying security by ICICI Bank Ltd.,
Note 46 SEGMENT INFORMATION
Pursuant to Accounting Ind AS 108 - Segment Reporting, information about Business Segments (Information provided in respect of revenue items for the year ended March 31,2024 and in respect of assets / liabilities as at March 31,2024 ) is disclosed as under :
a) Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and Expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Unallocable”.
b) Segment Assets and Segment Liabilities represent Assets and Liabilities in respective segments. Investments, tax related assets and other assets and liabilities that can not be allocated to a segment on reasonable basis have been disclosed as " Unallocable”.
Note 55 FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND DISCLOSURES 1 Financial Risk
The company's operational activities expose to various financial risks i.e., market risk, credit risk and risk of liquidity. The company realizes that risks are inherent and integral aspect of any business. The primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk & interest rate risk. The Company uses derivative financial instruments to reduce foreign exchange risk exposures.
i Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of fluctuation in market prices. These comprise three types i.e., currency rate, interest rate and other price related risks. Financial instruments affected by market risk include loans and borrowings, deposits, investments and derivative financial instruments. Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Regular interaction with bankers, intermediaries and the market participants help us to mitigate such risk.
a Foreign currency risk and sensitivity
The primary market risk to the company is foreign exchange risk. The Company uses derivative financial instruments to reduce foreign exchange risk exposure and follows its risk management policies to mitigate the same. After taking cognizance of the natural hedge, the company takes appropriate hedges to mitigate its risk resulting from fluctuation in foreign currency exchange rate(s).
b. Interest rate risk and sensitivity
The Company's exposure to the risk of changes in market interest rates relates primarily to long term debt. The Company has entered into various interest rate swap contracts, in which it agrees to exchange, at specific intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed upon principal amount. Borrowings at variable rates expose the Company to cash flow interest rate risk. With all other variables
ii Credit Risk
The Company evaluates the customer credentials carefully from trade sources before appointment of any distributor and only financially sound parties are appointed as distributors. The Company secures adequate deposits from its distributor and hence risk of bad debt is limited. The credit outstanding is sought to be limited to the sum of advances / deposits and credit limit determined by the company. The company have stop supply mechanism in place in case outstanding goes beyond agreed limits.
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to ' 15,976.24 Lakhs and '15,086.23 Lakhs as of March 31,2024 and March 31,2023, respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India. Credit risk has always been managed by the company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. 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 to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account as per the Company's historical experience for customers.
The following table gives details in respect of percentage of revenues generated from top customer and top five customers:
iii Liquidity Risk
Liquidity risk arises when the Company will not be able to meet its present and future cash and collateral obligations. The risk management action focuses on the unpredictability of financial markets and tries to minimise adverse effects. The Company uses derivative financial instruments to hedge risk exposures. Risk management is carried out by the Finance department under Forex Policies as adopted and duly approved by the Board. The Company's approach is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due and company monitors rolling forecasts of its liquidity requirements.
2 Competition and price risk
The Company faces competition from local and foreign competitors. Nevertheless, it believes that it has competitive advantage in terms of high quality products and by continuously upgrading its expertise and range of products to meet the needs of its customers.
3 Capital risk management
The Company's policy is to maintain an adequate capital base so as to maintain creditor and market confidence and to sustain future development. Capital includes issued capital, share premium and all other equity reserves attributable to equity holders. In order to strengthen the capital base, the company may use appropriate means to enhance or reduce capital, as the case may be.
Reasons for variances are as follows :
1. Current Ratio has improved due to substantial increase in current assets vis a vis current liabilities during the year.
2. Debt Equity ratio reduced & Debt service coverage ratio improved due to reduction in debts.
3. Return on Equity, Net capital turnover ratio and Return on Capital employed Ratios have reduced due to lower revenues and profits during the year.
4. Inventory Turnover Ratio decreased due to drop in sales volume and consequential increase in total inventory.
5. Return on Investment Ratio improved during the year due to favourable Market conditions and higher investment activities.
Note 59 OTHER STATUTORY INFORMATION
a) The Company does not have any benami property, where any proceeding has been initiated or pending against the Company for holding any benami property.
b) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
c) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (intermediaries) with the understanding 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.
d) 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.
e) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as search, survey or any other relevant provisions of the Income Tax Act, 1961)
f) The Company has complied with number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction of number of layers) Rules, 2017.
g) The Company is not declared wilful defaulter by any bank or financial institutions or lender during the year.
h) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
i) Quarterly returns or statements of current assets filed by the Company with banks and financial institutions are in agreement with the books of accounts.
j) The company has not carried out revaluation of items of Property, Plant & Equipment during the year and accordingly the disclosure as to whether the revaluation is based on the valuation by a registered valuer as defined under Rule 2 of the Companies (Registered Valuers and Valuation) Rules, 2017 is not applicable.
k) The Company has used the borrowings from banks and financial statements for the specific purpose for which it was obtained.
l) The title deeds of all immovable properties (other than immovable properties where the Company is the lessee, and the lease agreements are duly executed in favour of the Company) disclosed in the financial statements included in property, plant and equipment and capital work in progress are held in the name of the Company as at the balance sheet date.
m) The Company does not have any transactions with companies which are struck off under Section 288 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
Note 60 Acquisition of Uniply Decor Limited :
The Resolution Plan submitted by the Company for the Corporate Insolvency Resolution of Uniply Decor Limited (UDL) under the Insolvency and Bankruptcy Code, 2016 was approved by the National Company Law Tribunal (NCLT) Division Bench-I, Chennai vide its Order CP(IB)/137(CHE) / 2021 dated 20.09.2023. The total consideration of ' 2814.26 lakhs was paid by the Company as per the NCLT Order and UDL became a wholly owned subsidiary of the Company with effect from close of 31st October, 2023.
Note 61 Audit Trail :
The accounting software used by the Company, to maintain its Books of account have a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions recorded in the software. The Company has an established process of regularly identifying shortcomings, if any, and updating technological advancements and features including audit trail. The shortcomings identified during the course of audit are being reviewed and corrective action is being taken wherever required.
Note 62 Previous year's figures have been regrouped and reclassified wherever necessary.
Note 63 The financial statements are approved and adopted by Board of Directors of the Company in their meeting held on May 27, 2024.
The accompanying notes are an integral part of the Standalone Financial Statements.
As per our Report of even date For and on behalf of the Board
For Singhi & Co.
Chartered Accountants Firm Registration No. 302049E
Sudesh Choraria S. K. Bangur Virendraa Bangur
Fanner Chairman & Managing Director Joint Managing Director
M.No. 204936
Place: Dandeli Rajendra Jain Rajesh Bothra Brajmohan Prasad
Date: May 27, 2024 Executive Director Chief Financial Officer Company Secretary
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