Terms/ Rights attached to equity shares
The Company has one class of equity shares having a par value of Rs. 1 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, 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 amount, in proportion to their shareholding.
a) General Reserve
General reserve is created by the Company by appropriating the balance of Retained Earnings.
b) Retained Earnings
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.
c) Capital Reserve Account
Any proft or loss on purchase, sale. Issue or cancellation of the Company's own equity instrument is transferred to capital reserve.
1 Term Loan- Referred above taken from banks secured by first charge of entire fixed assets and second charges on current assets of the company. The said Term Loan is further secured by Personal Guarantee of director of the company.
Nature of Security with bank
i) Primary Security:
First pari passu charge by way of hypothecation over the Company's entire stocks of inventory, receivables and current assets of the Company
ii) Collateral:
Second pari passu charge on the entire fixed assets of the Company and personal guarantee of promoter of the company
iii) Interest
The above loan carried interest rate in the range of 4% to 9%
Segment Information
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM is considered to be the Board of Directors who makes strategic decisions and is responsible for allocating resources and assessing performance of the operating segments.
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Contingent Liabilities and Capital Commitment
a. Claims against the Company (including unasserted claims) not acknowledged as debt:
(? in Lakhs)
As At As At 31/03/2023 31/03/2022
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Service Tax
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-2013-2014
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3.31
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3.31
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-2014-2015
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5.11
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5.11
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-2015-2016
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1.04
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1.04
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Excise Duty
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-2016-2017
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11.59
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11.59
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Custom
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-2017-2018
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635.35
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635.35
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-2018-2019
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225.85
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225.85
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i) Service Tax
Joint Commissioner C.E. Isssued Duty Demand For Sales Commission of Service Tax Credit. Reference number as F.No.CE/15-41/Circle-II/AP-VI/FAR-68/R.P.03/2015-16 dated 21.07.2016.
ii) Excise Duty
Duty demanded against semifinish and finish goods destroyed in fire Reference No F.No. III/Remission/Shree Jagdamba/04/17-18 dated 22.05.2018
iii) Custom
Show cause notices issued under The Custom Act,1962,Pre Import Condition From Dri, Kolkata And Transfer To Dri, Mumbai Vide Notification No. 17/2021-Customs(N.T./Caa/Dri)Dated 09.02.2021
The management assessed that fair value of cash and short-term deposits, trade receivables, trade payables, and other current financial assets and liabilities approximate their carrying unts largely due to the short-term maturities of thes e instruments.
The fair value of the financial assets and liabilities is 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:
Long-term fixed-rate receivables/borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk i) factors, individual creditworthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are
taken into account for the expected losses ofthese receivables.
Fair values of the Company’s interest-bearing borrowings and loans are determined by using DCF method using discount rate that reflects the issuer’s borrowing rate as at the end of the reporting period. The own non- performance risk as at March 31, 2023 was assessed to be insignificant.
u)
The fair values of the unquoted equity shares, if any have been estimated using a discounted cash flow model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility, the probabilities of the iii) various estimates within the range can be reasonably assessed and are used in management's estimate of fair value for these unquoted equity investments.
Financial Risk Management
The Company’s principal financial liabilities, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support its operations. The Company’s principal financial assets include loans, trade and other receivables, and cash and short-term deposits that derive directly from its operations.
The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk, foreign currency risk and interest rate risk. The Company's 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. The Company uses foreign currency borowings to mitigate foreign exchange related risk exposures.
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities. Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counter parties, taking into account their financial position, past experience and other factors.
Trade and other receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. In addition, receivable balances are monitered on an ongoing basis with the result that the Company's exposure to Bad debt is not significant. Also the Company doesnot enter into sales transaction with customers having credit loss history. There are no significant Credit risk with related parties of the Company. The Company's is exposed to Credit risk in the event of non payment of customers. Credit risk concentration with respect to Trade Receivables is mitigated by the Company's large customer base. Adequate expected credit losses are recognised as per the assessment.
The history of Trade receivables shows an allowance for bad and doubtful debts of Rs Nil ( Nil as at March 31,2023). The Company has made allowance of Rs Nil ( Nil as at March 31,2022) against Trade receivable of Rs. 7033.06 Lakhs ( Rs. 7765.36 Lakhs as at March 31,2022).
Bank Deposits
The company maintains its cash and cash equivalents and bank deposits with reputed and highly rated bank. Hence, there is no significant credit risk on such deposits.
Investments
The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rating. The company does not expect any losses from non- performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk through credit limits with banks.
The Company’s corporate treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management.
The Company’s exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in U.S. dollars and British pound sterling ) and foreign currency borrowings (primarily in U.S. dollars ). A significant portion of the Company’s revenues and cost are in these foreign currencies, while balance portion of costs are in Indian rupees. As a result, if the value of the Indian rupee appreciates relative to these foreign currencies, the Company’s revenues measured in rupees may decrease. The exchange rate between the Indian rupee and these foreign currencies has changed substantially in recent periods and may continue to fluctuate substantially in the future. The Company's management meets on a periodic basis to formulate the strategy for foreign currency risk management.
Consequently, the Company management believes that the borrowings in foreign currency and its assets in foreign currency shall mitigate the foreign currency risk mutually to some extent.
Foreign currency sensitivity analysis
The Company is mainly exposed to the currency USD on account of outstanding trade receivables and trade payables in USD.
The following table details the Company’s sensitivity to a 2% increase and decrease in INR against the USD . 2% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 2% change in foreign currency rates. A positive number below indicates an increase in profit or equity where the INR strengthens 2% against the relevant currency. For a 2% weakening of the INR against the relevant currency, there would be a comparable impact on the profit or equity, and the balances below would be negative.
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. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with floating interest rates and investments.
Capital management
The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Company monitors the return on capital. The Company’s objective when managing capital is to maintain an optimal structure so as to maximize shareholder value.
(a) Details of crypto currency or virtual currency
The Company has neither traded nor invested in Crypto currency or Virtual Currency during the financial year ended March 31, 2023 and March 31, 2022. Further, the Company has also not received any deposits or advances from any person for the purpose of trading or investing in Crypto Currency or Virtual Currency.
(b) Undisclosed income
During the year ended March 31, 2023 and March 31, 2022, the Company has not surrendered or disclosed as income any transactions not recorded in the books of accounts in the course of tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(c) Loans or advances to specified persons
The Company has not granted any loans or advances in nature of loans to promoters/directors/KMPs/Related parties (as defined under the Companies Act, 2013) for the year ended March 31, 2023 and March 31, 2022.
(d) Compliance with numbers of layers of companies
The Company is in compliance with the number of layers of companies in accordance with clause 87 of Section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017 during the year ended March 31, 2023 and March 31, 2022.
(e) Utilisation of borrowed funds and share premium
During the year ended March 31, 2023 and March 31, 2022, the Company has not advanced or loaned or invested funds (either borrowed funds or share premium or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:
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 to or on behalf of the ultimate beneficiaries.
During the year ended March 31, 2023 and March 31, 2022, 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:
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.
(f) Relationship with struck off companies
The Company does not have any transactions with the companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956 during the year ended March 31, 2023 and March 31, 2022.
(g) The Company has not been declared Wilful Defaulter by any bank or financial institution or government or any government authority.
(h) No proceeding have been initiated nor pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act,1988 (45 of 1988) and rules made thereunder.
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