19. Provisions, Contingent Liabilities and Contingent Assets:
A provision is recognised if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract.
A disclosure for contingent liabilities is made where there is a possible obligation or a present obligation that may probably not require an outflow of resources or an obligation for which the future outcome cannot be ascertained with reasonable certainty. When there is a possible or a present obligation where the likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent assets are neither recognized nor disclosed in financial statements.
32 DISCLOSURE PURSUANT TO IND AS - 19 "EMPLOYEE BENEFITS"
i) Gratuity: In accordance with the applicable laws, the Company provides for gratuity, a defined benefit retirement plan ("The Gratuity Plan") covering eligible employees. The Gratuity Plan provides for a lump sum payment to vested employees on retirement (subject to completion of five years of continuous employment), death, incapacitation or termination of employment that are based on last drawn salary and tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation on the reporting date.
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying amounts largely due to short term maturities of these instruments.
2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments is not materially different from their carrying amounts.
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
The Company's principal financial liabilities comprises of loans and borrowings, advances and trade and other payables. The purpose of these financial liabilities is to finance the Company’s operations and to provide support to its operations. The Company’s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations.
The Company's activities exposes it to Liquidity Risk, Market Risk and Credit risk. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised as below.
(a) Liquidity risk
The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk management implies maintenance of sufficient cash including availability of funding through an adequate amount of committed credit facilities to meet the obligations as and when due.
The Company manages its liquidity risk by ensuring as far as possible that it will have sufficient liquidity to meet its short term and long term liabilities as and when due. Anticipated future cash flows are expected to be sufficient to meet the liquidity requirements of the Company.
(b) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk includes investment, deposits, foreign currency receivables and payables. The Company's treasury team manages the Market risk, which evaluates and exercises independent control over the entire process of market risk management.
(i) Foreign currency risk
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. The Company has foreign currency trade payables and receivables and is therefore exposed to foreign exchange risk. The exchange rates have been volatile in the recent years and may continue to be volatile in the future. Hence the operating results and financials of the Company may be impacted due to volatility of the rupee against foreign currencies.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations. The Company is exposed to credit risks from its operating activities, primarily trade receivables, cash and cash equivalents, deposits with banks and other financial instruments.
Credit risk is managed by the Company through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business.
39 (a) Financial risk factors
Capital risk management
The Company's objectives when managing capital are to :
(i) safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
(ii) maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may issue new shares, adjust the amount of dividends paid to shareholders, etc. The Company's policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure.
42 Leases
The Company as a Lessor Leasing Arrangements
The Company has entered into operating lease arrangements for premises. These arrangements are cancellable in nature and range between one to three years. Lease rental income earned by the Company is set out in Note 24 as 'Rent Received'.
43 Title deeds of immovable properties not held in the name of the Company
The title deeds of all the immovable properties, (other than those that have been taken on lease) disclosed in the financial statements included in property, plant equipment, are held in the name of the Company as at the balance sheet date. In respect of immovable properties that have been taken on lease and disclosed in the financial statements as non current assets held for sale as at the balance sheet date, the lease agreements are duly executed in favour of the Company, except for the following:
44 Note on Corporate Social Responsibility
As per Section 135 of the Companies Act, 2013, the Company is not meeting the applicable threshold and needs not to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities.
45 Borrowings secured against current assets
The Company do not have any borrowing from banks or financial institutions on the basis if security of current assets.
46 Registration of charges or satification with Registrar of Companies (ROC)
The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
47 Ratios
The following are analytical ratios for the year ended March 31, 2024 and March 31, 2023
Reasons where the changes is more than 25%
* Improvement in margins during the year and improvement in liquidity, has resulted in the change in the ratio
48 Details of Benami Property Held
No proceedings have been initiated during the financial year or pending as at the end of the financial year against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
49 Relationship with Struck off Companies
The Company has not entered into any transaction during the current or previous financial year with the companies whose names have been struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956 and there is no outstanding receivable from / payable to such companies as at the end of year.
50 Details of Crypto Currency or Virtual Currency
The Company has not traded or invested in Crypto currency or Virtual currency during the current or preceeding financial year.
51 Utilisation of Borrowed funds and share premium
The Company has not advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) to or in any other persons or entities, including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).
The Company has also not received any fund from any parties (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
52 Undisclosed income
The Company does not 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 Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961)
53 Wilful Defaulter
The Company has not been declared as a wilful defaulter by any bank or financial institution or other lender in the current or preceeding financial year.
54 Compliance with number of layers of companies
The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017 for the financial years ended 31 March 2024 and 31 March 2023.
55 Compliance with approved Scheme(s) of Arrangements
There is no any scheme of Arrangement or Amalgamation initiated or approved by the Board of Directors and / or Shareholders of the Company or competent authority during the year ended 31 March 2024 and 31 March 2023 or in earlier years.
56 Event after reporting date
There have been no events after the reporting date.
57 Recent accounting and other pronouncements :
New Standards issued or amendments to the existing standard but not yet effective :
"Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time.As on 31 March 2024, there is no new standard notified or amendment to any of the existing standards under Companies (Indian Accounting Standards) Rules, 2015."
58 The Company is yet to receive balance confirmations in respect of certain financial assets and financial liabilities. The Management does not expect any material difference affecting the current year's financial statements due to the same.
59 The financial statements were approved for issue by the Board of Directors on May 30, 2024
60 The figures of the previous year's have been regrouped or reclassified wherever necessary to make them comparable.
As per our report of even date
For C. N. Patel & Co. For and on behalf of the Board of Directors
Chartered Accountants of Parnax Lab Ltd.
Firm's Registration No : 112552W
Sd/- Prakash M. Shah Baiju M. Shah
Director & CEO Managing Director & CFO
CA Manish Mandhana DIN 00440980 DIN 00440806
Partner
M. No. 112026 Sd/-
UDIN : 24112026BKFBQK3622 Preet Kukreja
Place : Mumbai Company Secretary
Date: 30th May, 2024
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