2. 14 Provision and Contingent Liabilites
A provision is recognized 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 resources embodying economic
benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions
are determined by discounting the expected future cash flows.
The Company uses significant judgement to disclose contingent liabilities. Contingent liabilities are disclosed
when there is 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 the obligation or a reliable estimate of the amount cannot be made.
Contingent assets are neither recognized nor disclosed in the financial statements.
2.15 Employee benefit
Providend Fund
Employees of the Company receive benefits under the provident fund, a defined benefit plan. The employee
and employer each make monthly contributions to the plan. A portion of the contribution is made to the
provident fund trust managed by the Company or Government administered provident fund; while the
balance contribution is made to the Government administered pension fund, a defined contribution plan.
For the contribution made by the Company to the provident fund trust managed by the Company, the
Company has an obligation to fund any shortfall on the yield of the Trust's investments over the administered
interest rates. The liability is actuarially determined (using the projected unit credit method) at the end of the
year.
Gratuity Fund
The Company provide for gratuity, a defined benefit plan (the "Gratuity Plan”) covering eligible employees.
The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective employee's base salary and the tenure of
employment (subject to a maximum of 20 lacs per employee). The liability is actuarially determined (using the
projected unit credit method) at the end of each year. Actuarial gains losses are recognized immediately in
the balance sheet with a corresponding debit or credit to other comprehensive income in the year in which
they occur.
2. 16 Financial Intruments
Financial assets and liabilities are recognised when the Company becomes a party to the contractual
provisions of the instruments Financial assets and liabilities are initially measured at fair value except for trade
receivables which are initially measured at transaction price. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial
recognition of financial asset or financial liability. Transaction costs directly attributable to the acquisition of
financial assets or financial liabilities at fair value through profit or loss are recognised in Standalone statement
of profit and loss.
Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at
:- Amortised cost
:- Fair value through other comprehensive income (FVOCI)- equity investment; or
:- Fair value through profit and loss (FVTPL)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the
Company changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not
designated as at FVTPL
The asset is held within a business model whose objective is to hold assets to collect contractual cash
flows;
:- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely for
payments of principal and interest on the principal amount outstanding.
Financial Liabilities
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at
FVTPL if it is classified as held- for- trading, or it is a derivative or it is designated as such on initial recognition.
Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense,
are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using
the effective interest method. Interest expense and foreign exchange gains and losses are recognised in
profit or loss.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect
to present subsequent changes in the investment's fair value in OCI (designated as FVOCI equity investment).
This election is made on an investment-by-investment basis. All financial assets not classified as measured at
amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivatives financial
assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets
the requirement to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or
significantly reduces an accounting mismatch that would otherwise arise.
Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all
of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither
transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the
financial asset. If the Group enters into transactions whereby it transfers assets recognised on its balance
sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred
assets are not derecognized.
Financial Liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or
expire. The Group also derecognises a financial liability when its terms are modified and the cash flows under
the modified terms are substantially different. In this case, a new financial liability based on the modified terms
is recognised at fair value. The difference between the carrying amount of the financial liability extinguished
and the new financial liability with modified terms is recognised in profit or loss.
Impairment Testing of financial Assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets
which are not fair valued through profit and loss. Lifetime ECL allowance is recognized for trade receivables
with no significant financing component. For all other financial assets, expected credit losses are measured
at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial
recognition in which case they are measured at lifetime ECL. The amount of expected credit losses
(or reversal) that is required to adjust the loss allowance at the reporting date is recognized in statement of
profit and loss.
Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when,
and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either
to settle them on a net basis or to realise the asset and settle the liability simultaneously.
Derivative financial instruments and hedge accounting
The Company enters into derivative financial instruments, primarily foreign exchange forward contracts and
interest rate swaps, to manage its exposure to foreign exchange and interest rate risks. Derivatives
embedded in non-derivative host contracts that are not financial assets within the scope of Ind AS 109 are
treated as separate derivatives when their risks and characteristics are not closely related to those of the
host contracts and the host contracts are not measured at FVTPL. Derivatives are initially recognised at fair
value at the date the contracts are entered into and are subsequently remea- sured to their fair value at the
end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the
derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in
profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
2.17 Dividend
Final dividend proposed by the Board of Directors is recognized upon approval by the shareholders who
have the right to decrease but not increase the amount of dividend recommended by the Board of Directors.
Interim dividends are recognized on declaration by the Board of Directors. Final and interim
dividend excludes dividend on treasury shares.
2.18 Earnings per share (EPS)
The Basic EPS is computed by dividing the net profit / (loss) attributable to the equity shareholders for
the year by the weighted average number of equity shares outstanding during the reporting period. Diluted
EPS is computed by dividing the net profit / (loss) as adjusted for dividend, interest and other charges to
expense or income (net off any attributable taxes) relating to the dilutive potential equity shares by the
weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except
where the results would be anti-dilutive.
2.19 Recently Issued accounting Pronouncements
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards
under Compa nies (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.
Nature and purpose of other reserves
(i) Securities premium
The amount received in excess of face value of the equity shares in recognized in Securities Premium. The account in utilized in accordance with the provisions of the Companie's Act, 2013.
(ii) Retained earnings
Retained earnings are the profits that the Company has earned till date including gain/(loss) on remeasurement of defined benefits plans as adjusted for distributions to owners, transfer to
other reserves etc.
(iii) General Reserve
Under the erstwhile Companies Act, 1956, general reserves was created through an annual transfer of net income at a specified percentange in accordance with applicable regulations,
however the same is not required to be created under Companies Act, 2013. This reserve can be utilised only in accordance with the specified requirements of the Companies Act, 2013.
(vi) Statutory Reserves
Under the erstwhile Companies Act, 1956, general reserves was created through an annual transfer of net income at a specified percentange in accordance with applicable regulations,
however the same is not required to be created under Companies Act, 2013. This reserve can be utilised only in accordance with the specified requirements of the Companies Act, 2013.
Notes:
(i) Working Capital Term loan of Rs of Rs 3,4000 Lakhs was sanctioned (CY Rs 575.29 Lakhs and PY Rs 546.09 Lakhs) from HDFC Bank Ltd towards Business use which is secured against
Personal gurantee of Directors, Commercial property and vacant land which are owned by the Directors. The loan are repayable in 84 equal monthly installment starting from 07th November
2022 and carrying interest rate 7.50 % p.a.
(ii) Capital Expenditure Letter of Credit of Rs 1,000 Lakhs was sanctioned (CY Rs 905.98 and PY Nil) from HDF Bank Ltd for the purpose of capital expenditure which is secured against
Personal gurantee of Directors, commercial property and vacant land which are owned by the Directors. The loan are repayable in 48 equal monthly installment starting from 07th
October 2024 and carrying interest rate 9.50 % p.a.
(iii) Term Loan of Rs 646.12 was sanctioned (CY Rs 575.29 and PY Rs 546.09) from Yes Bank Ltd towards Business use which is secured against Royale Villa Property. The loan are
repayable in 240 equal monthly installment (PY 156 equal monthly installment) starting from 02nd October 2020 and carrying interest rate 13.86% p.a. (PY 9.80% p.a.)
Notes:
(a) The transactions with related parties are made on terms equivalent to those that prevail in arm's length transactions.
Outstanding balances at the year-end are unsecured. The settlement for these balances occurs through payment.
There have been no guarantees provided or received for any related party receivables or payables. For the year
ended March 31, 2025, the Company has not recorded any impairment of receivables relating to amounts owed by
related parties. This assessment is undertaken each financial year through examining the financial position of the
related party and the market in which the related party operates.
(b) As at March 31, 2025, the Company has granted loans KMPs (as defined under Companies Act, 2013), either severally or
jointly with any other person.
(c) All the liabilities for post retirement benefits being ‘Gratuity, compensated absence and pension benefit' are provided
on actuarial basis for the Group as a whole, accordingly the amount pertaining to Key management personnel are not
included above
(i) Trade Receivables
The customers are subjected to credit assessments as a precautionary measure, and the adherence of all
customers to payment due dates is monitored on an on-going basis, thereby practically eliminating the risk
of default. Customer credit risk is managed by respective department head subject to the Company's
established policy, procedures and control relating to customer credit risk management. An impairment
analysis is performed at each reporting date on trade receivables by lifetime expected credit loss method
based on provision matrix. The Company does not hold collateral as security. There is one single customer
from whom the Company earns revenue of more than 10%, however, there is no credit default risk from this
customer since the amount are generally received in advance. Refer note 5(B) for movement in credit loss
allowance during the year.
(ii) Financial instruments and deposits
Credit risk from balances with banks and financial institutions is managed by the Company's treasury
department in accordance with the Company's policy. Investments of surplus funds are made in bank
deposits and other risk free securities. The limits are set to minimize the concentration of risks and therefore
mitigate financial loss through counterparty's potential failure to make payments. The Company's maximum
exposure to credit risk for the components of the balance sheet at March 31, 2025 and March 31, 2024 is the
carrying amounts. The Company's maximum exposure relating to financial instrument is noted in liquidity
table below.
32. Capital management
For the purposes of Company's capital management, Capital includes equity attributable to the equity holders of
the parent company and all other equity reserves. The primary objective of the Company's capital management is
to safeguard its ability to continue as going concern and to ensure that it maintains an efficient capital structure
and maximize 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. To maintain or adjust the capital
structure, the Company may adjust the dividend payment to shareholders or issue new shares. The Company is
not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or
processes for managing capital during the year ended March 31, 2025 and March 31, 2024. The Company monitors
capital using gearing ratio, which is net debt divided by total capital plus net debt. Net debt is calculated as loans
and borrowings less cash and cash equivalent.
33. Additional Regulatory Information
(i) Details of Benami property: No proceedings have been initiated on or are pending against any of the
group companies for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of
1988) and Rules made thereunder.
(ii) Wilful defaulter: Company has not been declared wilful defaulter by any bank or financial institution or
government or any government authority.
(iii) Compliance with approved scheme of arrangements: The Company has not entered into any scheme
of arrangement which has an accounting impact on current.
(iv) Utilisation of borrowed funds : No funds (which are material either individually or in the aggregate)
have been received by the Company from any person(s) or entity(ies), including foreign entities (“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;
(iv) Details of crypto currency or virtual currency: The Company has not traded or invested in crypto
currency or virtual currency during the current or previous year.
(vi) Valuation of PP&E, intangible asset and investment property: The Company has not revalued its
property, plant and equipment (including right-of-use assets) or intangible assets or both during the current
or previous year.
(vii) Utilisation of borrowings availed from banks and financial institutions: The borrowings obtained by
the Company from banks and financial institutions have been applied for the purposes for which such loans
were taken including funding to one if its subsidiary.
Notes:
(a) Reasons for movement in ratios
(i) Current Ratio : Increase is due to cash & cash equivalent
(ii) Debt Equity Ratio : Increase in current year is primarily due to additional borrowings during the year.
(iii) Trade Receivables Turnover (times): Increase is due to higher collection at the year end
(iv) Net Capital Turnover Ratio: Decrease is due to Current Assets
34. The comparative previous year figures are reclassified or regrouped, wherever required.
The accompanying notes form an integral part of the standalone financial statements.
As per our report of even date attached
For SGCO & CO. LLP For and on behalf of the Board of Directors of
Chartered Accountants Magellanic Cloud Limited
Firm Registration No. 112081W/W100184 CIN : L72100TG1981PLCI69991
Sd/- Sd/- Sd/-
Suresh Murarka Joseph Sudheer Reddy Thumma Nikitha Tiparnapally
Partner Managing Director Director
Membership No. : 044739 DIN No. 07033919 DIN No. 07399613
Sd/- Sd/-
Sanjay Chauhan Sameer Lalwani
Chief Financial Officer Company Secretary
PAN: AFLPC7749G PAN: AIDPL4094N
Place : Mumbai Place : Hyderabad
Date : 05th May, 2025 Date : 05th May, 2025
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