B) Financial risk management
The Company has exposure to the following risks arising from financial instruments:
a. Credit risk ;
b. Liquidity risk;
c. Market risk; and
d. Other risk
Risk management framework
The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Board of Directors. The activities of this department include management of cash resources, borrowing strategies, and ensuring compliance with market risk limits and policies.
The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment.
The audit committee oversees how management monitors compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.
a. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers and investment securities. The carrying amounts of financial assets represent the maximum credit exposure.
Trade receivables
The Company extends credit to customers in normal course of business. The Company considers factors such as credit track record in the market and past dealings for extension of credit to customers. To manage credit risk, the Company periodically assesses the financial reliability of the customer, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivables. Outstanding customer receivables are regularly monitored to make an assessment of recoverability. Receivables are provided as doubtful / written off, when there is no reasonable expectation of recovery. Where receivables have been provided / written off, the Company continues regular follow up, engage with the customers, legal options / any other remedies available with the objective of recovering these outstandings. The Company is having limited group company customers and is not much exposed to the credit risk. The Company also takes security deposits, advances , post dated cheques etc from its customers, which mitigate the credit risk to an extent.
Investments in companies
The Company has made investments in subsidiaries, step down subsidiaries and Joint Venture. The Company does not perceive any credit risk pertaining to investments made in such related entities.
Cash and cash equivalents
The Company holds cash and cash equivalents with credit worthy banks of ' 72.84 lakhs and ' 47.21 lakhs as at 31 March 2024 and 31 March 2023 respectively. The credit worthiness of such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be good.
Exposure to credit risk
The allowance for impairment in respect of trade receivables during the year was ' Nil (31 March 2023: ' Nil)
The gross carrying amount of financial assets, net of impairment losses recognised represents the maximum credit exposure. The maximum exposure to credit risk as at 31 March 2024 and 31 March 2023 is as follows:
b. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
Exposure to liquidity risk
The table below summarises the maturity profile of the Company's financial liabilities at the balance sheet date based on contractual undiscounted repayment obligations.
c. Market risk
Market risk is the risk that the fair value or 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 include borrowings and bank deposits. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market interest rates. Exposure to interest rate risk:
The Company's exposure to market risk for changes in interest rates relates to fixed deposits and borrowings from banks.
The interest rate profile of the Company's interest-bearing financial instruments as reported to the management of the Company is as follows:
Fair value sensitivity analysis for fixed-rate instruments
The Company's fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in IND AS 107, since neither the carrying amount nor the future cash flow will fluctuate because of a change in market interest rates.
Foreign currency risk
The Company has negligible exposure to currency risk since almost all the transactions of the Company are denominated in Indian Rupees.
Commodity and other price risk
The Company is not exposed to the commodity and other price risk.
Note 41 : Capital Management
The Company manages the capital structure by a balanced mix of debt and equity. Necessary adjustments are made in the capital structure considering the factors vis-a-vis the changes in the general economic conditions, available options of financing and the impact of the same on the liquidity position. Higher leverage is used for funding more liquid working capital needs and conservative leverage is used for long-term capital investments. No changes were made in the objectives, policies or processes during the financial year ended 31 March 2024. The Company calculates the level of debt capital required to finance the working capital requirements using traditional and modified financial metrics including leverage/gearing ratios and asset turnover ratios.
(d) Performance obligation
The Company is engaged in the business of management consultancy services in relation to developing, owning and operating of shopping malls, commercial and residential premises to its group companies in India. Revenue is recognised at a point in time upon satisfaction of the performance obligations which is typically upon rendering of services based on the contractual terms with the group companies. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established and the Company does not give significant credit period resulting in no significant financing component.
(e) Transaction price allocated to remaining performance obligation
The Company has recognised revenue as the amount that the entity has a right to invoice, thus there are no unsatisfied performance obligation.
Note 43 : The Code on Social Security 2020 :
The Code on Social Security 2020 ('the Code') relating to employee benefits, during the employment and post-employment, has received Presidential assent on September 28, 2020. The Code has been published in the Gazette of India. Further, the Ministry of Labour and Employment has released draft rules for the Code on November 13, 2020. However, the effective date from which the changes are applicable is yet to be notified and rules for quantifying the financial impact are also not yet issued. The Company will assess the impact of the Code and will give appropriate impact in the financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
Note 45 : Other Statutory Information
i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has no 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 or survey or any other relevant provisions of the Income Tax Act, 1961.)
(vi) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
(vii) The Company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
(viii) The company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
(ix) Audit trail:
The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021. The said proviso requires companies, which uses accounting software for maintaining its books of accounts, to use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of accounts along with the dates when such changes were made and ensuring that the audit trail cannot be disabled. The Company used an accounting software during the year ended 31st March, 2024, which has a feature of recording the audit trail (edit log) facility. Further, there were no instances of audit trail feature being tampered with in respect of this software.
(x) Back up of books of account:
As required by law, the Company has maintained proper books of account relating to preparation of the Financial Statements including the daily back-up of books of accounts, and other books and papers in electronic mode in a server physically located in India except on Saturday and Sunday (on account of non-operational and non-functional days) till February 27, 2024 only.
Note 46 : Utilisation of Borrowed funds and share premium
During the year company has not advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) in any persons or entities, including foreign entities ("Funding Parties") with instruction in writing or otherwise for further lending, investing or providing guarantee directly or indirectly to any persons or entities or on behalf of its Ultimate Beneficiaries.
During the year company has not received any funds from any persons or entities, including foreign entities ("Funding Parties") with instruction in writing or otherwise for further lending, investing or providing guarantee directly or indirectly to any persons or entities or on behalf of its Ultimate Beneficiaries.
Note 47 :
The members of the Company vide their approval dated January 19, 2023 through Postal ballot process approved the change of name of Company from "Prozone Intu Properties Limited" to "Prozone Realty Limited". The Company has received the certificate of Incorporation pursuant to change of name dated Mar 26, 2023.
Note 48 : Title deeds of Immovable Properties not held in name of the Company
The title deeds of all the immovable properties (other than properties where the company is the lessee and the lease agreements are duly executed in favour of the lessee), as disclosed in note no.4 to the financial statements, are held in the name of the company.
Note 49 : Subsequent events
There are no subsequent events that have occurred after the reporting period till the date of this financial statements which require any adjustment to the financial statements.
As per our report of even date attached
For M S K A & Associates For and on behalf of the Board of Directors of
Chartered Accountants Prozone Realty Limited
Firm's Registration No: 105047W CIN: L45200MH2007PLC174147
Bhavik L. Shah Nikhil Chaturvedi Bipin Gurnani
Partner Managing Director CEO & Wholetime Director
Membership No: 122071 DIN : 00004983 DIN : 07966971
Anurag Garg Ajayendra Jain
Chief Financial Officer Company Secretary & CCO
Place : Mumbai Place : Mumbai
Date : May 28, 2024 Date : May 28, 2024
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