2.10 Provisions
A provision is recognised if, as a result of a past event, the Company 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 are determined by discounting the expected future cash flows, if material, (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. Expected future operating losses are not provided for.
2.11 Contingent liabilities
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
2.12 Foreign Currency Transactions
The Company's financial statements are presented in Indian rupee (INR), which is also the Company's functional and presentation currency.
Transactions in foreign currencies are translated into the functional currency at the exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Exchange differences resulting from such transactions are recognised in profit or loss.
2.13 Revenue Recognition Sale of Goods
Company's revenues arise from sale and trading of 'Greeting Cards', 'Stationery and paper bag items', 'Gifts and others'.
The Company recognises revenue when (or as) the performance obligation is satisfied, which typically occurs when control is transferred upon shipment of goods to the customer or when the goods is made available to customer, provided transfer of title to the customer occurs and the Company has not retained any significant risks of ownership or future obligations with respect to the goods shipped.
Revenue from sale of goods in the course of ordinary activities is measured at the amount of transaction price, net of returns, trade discounts, rebates which the Company expects to be entitled to in exchange for transferring distinct goods to a customer as specified in the contract, excluding amounts collected on behalf of third parties (for example taxes and duties collected on behalf of the government).
The consideration is fixed and not variable and the credit period varies between 0-60 days from the shipment or delivery of goods or services as the case may be. There is no significant financing component involved in the sale of goods.
Royalties Income
Royalties accrue in accordance with the terms of the relevant agreement and are recognised on that basis.
Interest Income
For all debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR) method as set out in IND AS 109.
Dividend Income
Dividend Income from investment is recognised when the right to receive the same is established, i.e. when shareholders approve the dividend.
2.14 Income Tax
Income tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to an item recognised directly in equity or in other comprehensive income.
i) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from 'profit before tax' as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company's current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Minimum Alternate Tax (MAT) credit is recognised as an asset only to the extent and when there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount is written down to the extent there is no longer convincing evidence to the effect that the company will pay normal income tax during the specified period.
ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
2.15 Segment Reporting
Segment Reporting are reported in the following manner as consistent with the internal reporting provided to the chairman and executive director as chief operating decision maker.
(i) Primary Segment
The Company operates in three primary business segments - Greeting cards. Stationery and Gifts.
(ii) Secondary Segment
The Company has operations within India as well as entities located in other countries. Its reportable segment is based on geographical location of its customers.
2.16 Earnings per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares, except where the results would be anti-dilutive.
2.17 Borrowing costs
Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
2.18 Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government Grants (Export Promotion Capital Goods License) relating to the purchase of capital goods are included in the Property, Plant and Equipment. Such Grants are also recognised under non-current liabilities and current liabilities as deferred income and recognised in the Statement of profit or loss as and when the export obligations are completed and presented within other income.
2.19 Leases
As a lessee
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, company's incremental borrowing rate. The Company uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
a) Fixed payments, including in-substance fixed payments;
b) Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
c) Amounts expected to be payable under a residual value guarantee; and
d) The exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Company is reasonably certain not to terminate early.
The Company does not have leases of low value of assets.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Company presents right-of-use assets that do not meet the definition of investment property in 'property, plant and equipment' and lease liabilities in 'Financial Liabilities' in the Balance Sheet.
All the leases are either for running Company store or for use as office. All the terms are as per normal lease agreements. In few cases there is a lock-in period for both parties. All leases are for a fixed tenure. In few cases the lease can be renewed by mutual consent by increasing the consideration.
Company can terminate the lease after expiry of lock-in period. The lessor can terminate the agreement in case of default on the part of lessee.
In cases where the lessor has the right to terminate the lease giving few months' notice has been covered under short term leases.
The cases where the Company has to pay consideration at some percentage of net sales have been considered as variable lease payments and covered under short term leases. The future cash outflows in such leases depend upon the future revenue of the Company and can't be determined in advance.
There is no case where Company has to give residual value guarantee.
Short-term leases
The Company has applied the practical expedient in for accounting of short term leases i.e. it recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
Standards / amendments issued 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. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
b) There are numerous interpretative issues relating to the Honorable Supreme Court judgment on Provident Fund dated 28.02.2019. As a matter of caution, the Company has made a provision on a prospective basis from the date of the said order. The Company will update its provision, on receiving further clarity on the subject.
*A demand of ? 9.02 Lakhs of Tax Deducted at Source was raised against the company by Deputy Commissioner of Income Tax, Delhi for the Financial Year 2011-12 vide order dated 25.03.2019. Company has filed an appeal against the said order with Commissioner of Income Tax (Appeals).
# Pending resolutions of the respective proceedings, it is not practicable for the company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgments/decisions pending with the various forums/authorities.
c) During the year ended 31 March 2021, the company have received a claim for ? 502.34 lakhs(Net of charge of ? 0.11 lakhs) against a claim lodged for of ? 510.55 lakhs. Further the company have raised another claim to insurance company through legal notice dated 29 May 2021 for ? 219.59 lakhs including ? 95.44 lakhs for interest on delay in claim settlement as per Insurance Regulatory and Development Authority (IRDA) norms and ? 124.15 lakhs for excess deduction of stock. The company has also moved a petition to Delhi High Court for appointment of an arbitrator.
29. SEGMENT REPORTING/ DISAGGREGATION OF REVENUE
The Chief Operating Decision Maker, being the Chairman and Managing Director in the Company evaluates the company's performance and allocates resources based on an analysis of various performance indicators by business segments and geographical segments. The Company's financial reporting is organised into three major operating divisions viz. Greeting Cards, Stationery and Paper Bag Items, Gifts and Others. These divisions are the basis on which the company is reporting its primary segment information as follows:-
Financial Risk Management Financial risk factors
The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.
Market Risk
The company is exposed to foreign currency risk through its sales and purchases from overseas suppliers in US Dollar. The exchange rate between the rupee and US Dollar has changed substantially and may fluctuate substantially in the future. Consequently, the results of the Company's operations are affected as the rupee appreciates / depreciates against US Dollar.
For each of the years ended 31 March 2024 and 31 March 2023, every percentage point depreciation/appreciation in the exchange rate between the Indian rupee and US Dollar, has affected the Company's incremental operating margins by approximately 0.03% and 0.07% respectively.
Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting year and the current reporting year.
Credit Risk
Credit risk, refers to the risk of default on its obligation by the customers resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to ? 797.96 lakhs and ? 884.66 lakhs as at 31 March 2024 and 31 March 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 sale contract with customers and continuously monitoring the ageing of outstanding balance of customers to which the Company grants credit of 0-60 Days in the normal course of business. The Company uses the expected credit loss model as at each year end to assess the impairment loss or gain. No single customer accounted for more than 10% of the (a) Accounts receivable and (b) Revenues as at 31 March 2024 and 31 March 2023, respectively. There is no significant concentration of credit risk.
(f) Ageing analysis of trade receivables
Refer Note 9(a)
Liquidity Risk
The company's principal sources of liquidity are cash and cash equivalents and the cash flows that is generated from operations. The company has taken working capital loans from banks for its working capital requirement. The company believes that the working capital is sufficient to mitigate its liquidity risk. Accordingly, no liquidity risk is perceived.
As at 31 March 2024, the Company had a working capital of ? 3,077.30 lakhs including cash and cash equivalents of ? 14.29 lakhs. As at 31 March 2023, the Company had a working capital of ? 4,115.27 lakhs including cash and cash equivalents of ? 28.68 lakhs.
(iii) The quarterly returns/statement of current assets filed by the company with Kotak Mahindra Bank Ltd, HDFC Bank Ltd. and ICICI Bank Ltd. are in agreement with the books of accounts.
(iv) The company has not been declared as a wilful defaulter by any bank or financial institution or any other lender.
(v) The company has used the borrowings from Kotak Mahindra Bank Ltd, HDFC Bank Ltd. and ICICI Bank Ltd. for the financial year ended 31 March 2024 and 31 March 2023 for working capital purposes.
(vi) The company does not have any intangible assets in it's books of accounts as at 31 March 2024 and 31 March 2023, hence fair valuation of intangible assets is not applicable.
(vii) During the financial year ended 31 March 2024 and 31 March 2023 the Company does not have any relationship with Struck off Companies and the corresponding balances are Nil as at 31 March 2024 and 31 March 2023.
(viii) The provisions of clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017 are not applicable to the company.
(ix) No scheme of Arrangements has been approved by competent authority in terms of sections 230 to 237 of the Companies Act,2013 in respect of the Company.
(xi) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
No funds have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(xii) The Company has not recorded any transaction in the books of accounts during the year ended 31 March 2024 and 31 March 2023 that has been surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961.
(xiii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year ended 31 March 2024 and 31 March 2023.
(xiv) The provisions of Section 135 of the Companies Act, 2013 relating the Corporate Social Responsibility (CSR) are not applicable to the company.
(xv) The company does not hold any Invetsment Property in its books of accounts as at 31 March 2024 and 31 March 2023 hence fair valuation of investment property is not applicable.
(xvi) During the year, the company has not revalued any of its Property, Plant and Equipment.
(xvii) The company has not granted any loans or advances to Promoters, Directors, KMP's and other related parties that are repayable on demand or without specifying any terms or period of repayment.
(xviii) No proceedings have been initiated or pending against the company under the Benami Transactions (Prohibition) Act,1988 during the financial year ended 31 March 2024 and 31 March 2023.
As per our report of even date attached
for UBEROI SOOD & KAPOOR For and on behalf of the Board of Directors
Chartered Accountants
(Firm Registration NO.001462N)
Anil Moolchandani
Chairman and Managing Director
S. D. SHARMA
PARTNER
(Membership No. 080399)
Place: New Delhi Jagdish Moolchandani Neha Singh
Date: 29 May 2024 Executive Director and Chief Company Secretary
Financial Officer
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