1.19 Provisions and Contingencies
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources to settle the obligation in respect of which reliable estimate can be made as on the balance sheet date. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
Contingent Liabilities are present obligations arising from a past event, when it is not probable / probability is remote that an outflow of resources will be required to settle the obligation and they are not recognized but are disclosed in the notes.
Contingent Assets are neither recognized nor disclosed in the financial statements except where it has become virtually certain that an inflow of economic benefit will arise, the asset and the related income are recognized in financial statements of the period in which the change occurs Provisions for Contingent Liabilities and Contingent Assets are reviewed at the end of Balance Sheet date.
1.20 Operating cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
1.21 Exceptional items
Items of income and expenditure within profit and loss from ordinary activities are of such size, nature or incidence that their disclosure is relevant to explain the performance of the enterprise for the period, the nature and amount of such items are disclosed separately as Exceptional Items.
1.22 Commitments
(a) Commitments are future liabilities for contractual expenditure.
(b) Commitments are classified and disclosed as follows:
• Estimated amount of contracts remaining to be executed on capital account and not provided for;
• Uncalled liability on shares and other investments partly paid;
• Funding related commitment to subsidiary, associate and joint venture companies and
• Other non-cancel lable commitments, if any, to the extent they are considered material and relevant in the opinion of management.
(c) Other commitments related to sales/procurements made in the normal course of business are not disclosed to avoid excessive details.
(ii) Rights, preferences and restrictions attached to equity shares:
The Company has one class of equity shares having a par value of ' 1 0 each. Each equity shareholder is entitled to one vote per share held. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to number of equity shares held by the shareholders.
(ii) Rights, preferences and restrictions attached to Preference share capital:
The Company has only one class of 6% Optionally Convertable Redeemable Preference Shares having a par value
of Rs. 10 per share issued on 7th March 2023 by way of change in nomenclature of 6% Cumulative Redeemable
Preference Shares and waiver of accumulated preference dividend till 31.03.2023. Each holder of preference shares
is entitled to one vote per share.
(a) Terms of 2,50,00,000 - 6% Optionally Convertable Redeemable Preference Shares of Rs.10/- each.
(i) Period of redemption extended from 1 7th Nov, 2023 to 1st April, 2025
(b) 49,00,000 - 6% Optionally Convertable Redeemable Preference Shares of Rs.10/- each which are due for redemption on 1st April, 2025
(c) 95,36,813 - 6% Optionally Convertable Redeemable Preference Shares of Rs.10/- each which are due for redemption on 1st April, 2029.
(d) 17,10,210 - 6% Optionally Convertable Redeemable Preference Shares of Rs.10/- each which are due for redemption on 1st April, 2025.
(e) The Board of Directors of the company vide their meeting on 1st May 2023 based on the request of Holders of 6% Optionally Convertable Redemable Preference Shares i.e., T.S.R Holdings Private Limited and Gayatri Fin-Holdings Private Limited have approved the conversion of Preference Shares to Equity Shares and the same is subject to the Statutory Approvals.
a. Securities Premium Account
Securities premium is used to record the premium received on the issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 201 3.
b. Retained Earnings
Retained Earnings are the profits/ (Losses) that the Company has earned till date, less any transfer to general reserve, dividends or other distributions paid to shareholders.
c. Equity Component of Compounded Financial Instrument
This contains the equity portion of the 6% Optionally convertible preference shares.
d. Re-measurement gains/(losses) on defined benefits
The Company recognises remeasurement gain / (loss) on defined benefit plans in Other Comprehensive Income. These changes are accumulated within the equity under "Remeasurement gain / (loss) on defined benefit plans" reserve within equity.
11.1 Term Loan from Sugar Development Fund (SDF)
A Primary Security
First charge on movable and immovable fixed assets of sugar unit situated at Maagi Village ,Nizamsagar Mandal,Kamareddy District, Telangana.
B Terms of Repayment
i The SDF term loan was restructured on 20.05.2022 by capitalising the accrued outstanding interest due of Rs. 1,654.15 Lakhs to the principal amount of the term loan.
ii The restrustured SDF Term Loan carries a moratorium period of 24 Months from the date of restructuring. During the Moratorium period interest shall continue to accrue.
iii Post the Moratorium period, the SDF term Loan including accrued simple interest till 20.06.2024 shall be paid in 60 Equal Monthly Instalments.
iv The restructed SDF Term Loan Carries a interest rate of 4.65% Per Annum.
v Accrued additional interest upto 20.05.2022 of Rs. 938.23 Lakhs is waived off pursuant to the restructuring of the SDF Term Loan.
vi Refer note no. 27.14 for details of restructuring.
11.2 Rights, preferences and restrictions attached to preference shares - Refer note no. 9A(ii)
11.3 Unsecured Loan - From Related Parties
The loan from related parties carries an interest rate of 9.5% and shall be repaid by 31.03.2025. Further, the lender has an option to convert the said loan in full or part into Equity or Preferential shares at any time during the tenure of the loan. As at 31.03.2023 the lenders has not exercised the option to convert the loan.
11.4 Unsecured Loan - From Others
The Lender, has an option to convert the loan in full or partly into Equity or Preference shares of the company at any time during the tenure of term loan which is 31.03.2025 and rate of interest is 9.5%. The interest is payable on or before 31.03.2025 along with principal amount. As at 31.03.2023 the said lender has not exercised the option to convert the loan.
A Details of security for the Loan payable on Demand from Banks:
(i) Primary Security: Pari-passu first charge on all chargeable current assets of the Company (viz.)
sugar, molasses,ethanol, impured spirit, bagasse, stores and spares and receivables of the company.
(ii) Collateral Security:
a) Pari-passu first charge on the Company's present and future fixed assets and immovable properties of sugar unit and distillery unit situated at Adloor Yellareddy Village, Sadashivnagar Mandal, Kamareddy District .
(b) Pari-parsu second charge on the Company's present and future fixed assets and immovable properties of sugar unit situated at Maagi Village, Nizamsagar Mandal, Kamareddy District,Telangana.
(c) First pari-passu charge on pledge of 79 lakh shares of Gayatri Sugars Limited belonging to Smt. T. Indira Subbarami Reddy and Sri T.V. Sandeep Kumar Reddy, on pari-passu basis with other members of the consortium lenders.
b. Foreign Currency Risk
Foreign Currency Risk is the risk that the Fair Value or Future Cash Flows of an exposure will fluctuate because of changes in foreign currency rates. Exposures can arise on account of the various assets and liabilities which are denominated in currencies other than Indian Rupee. There is no Foreign Currency Risk as the Company doesn't have exposure in currencies other than Indian Rupee.
c. Equity Price Risks:
Since the Company has not invested in equity investments, the changes of equity securities price would not have a effect on the profit or loss of the Company.
(ii) Comodity Price Risk
Commodity price risk arises due to fluctuation in prices of Sugar Cane, other raw material and products. Cost of Sugar cane is depend on Government policy on fixation of Fair and Remunerative Price (FRP) which is the major cost of production. The company has a risk management framework aimed at prudently managing the risk arising from the volatility in commodity prices and freight costs. The company's commodity risk is managed centrally through well-established trading policies and control processes.
(iii) Credit Risk Management
Credit risk is the risk that a customer or counterparty to a financial instrument fails to perform or pay the amounts due causing financial loss to the company. The company has a prudent and conservative process for managing its credit risk arising in the course of its business activities.
The maximum exposure of the assets is contributed by trade receivables, cash and cash equivalents and other bank balances. Credit risk on trade receivables is limited as the customers of the Company mainly consist of the amount to be received from state government entities with respective sale of sugar and power. The company takes into account ageing of accounts receivables and the company's historical experience of the customers and financial conditions of the customers.
The Company basis their assessment believes that the probability of the occurrence of their forecasted transactions is not impacted by COVID-19 pandemic. The Company has also considered the effect of changes, if any, in both counterparty credit risk and own credit risk.
(iv) Liquidity Risk:
company has initiated the process for preferential share allotment for a sum of Rs. 4,1 50.00 Lakhs, the amount raised from such allotment shall help the company in its working capital needs. Further, the fact the Sugar Development Fund Term Loan is restructured and only certain provisional aspects are pending thereon. The management of the company is of the view that these factors compiled with the fact that the company has made profit during the year will help the company to improve its future financial position and accordingly the company doesnt forsee any liquidity risks thereon.
27.13 There are no derivative contracts taken during the year and outstanding as at the year-end. Further, there are no foreign currency exposures as at the year-end.
27.14 During the previous years, the company had defaulted in repayment of the Sugar Development Fund (SDF) loan. Pursuant to the said default, SDF through its monitoring Institution i.e., IFCI Limited had filed a petition before the Debt Recovery Tribunal (DRT) for recovery of its dues. Subsequently, based on various representations made by the company and the entire sugar industry to the Government of India for restructuring of the SDF loan, the Ministry of Consumer Affairs, Food, and Public Distribution brought out operational guidelines on 03.01.2022 for restructuring loans taken from the Sugar Development Fund under rule 26. Pursuant to said guidelines, the company had applied for restructuring of its SDF loan on 3rd March 2022. According to the terms of restructuring, the company has to withdraw its Interlocutory Application filed before Hon'ble Debt Recovery Tribunal-1, Hyderabad, and accordingly, the company had withdrawn the same on 22nd March 2022. The Committee for Rehabilitation (CRF) scrutinised the company's application for restructuring the SDF loan in the meeting dated 28th March 2022 and recommended for consideration of restructuring the SDF loan by the Standing Committee. The Standing Committee in its meeting dated 22nd April 2022 considered the recommendations by CRF and recommended for Administrative Approval (AA) from the Ministry of Consumer Affairs, Food, and Public Distribution, for restructuring of the SDF loan and waiver of additional interest in full in respect of SDF loans. The Central Government has granted Administrative Approval (AA) on 20th May 2022 and the company had entered into Tripartite Agreement (TPA) for the Restructuring of the SDF Loan with GOI and the nodal agency (IFCI) on 18th August 2022. Further, the company has executed security documents i.e deed of hypothecation, escrow agreement and memorandum of deposit of title deeds and also opened an escrow account for synchronising interest and principal payable for restructuring of SDF Loan and filed a modification of charge with Registrar of Companies ("RoC") and a certificate for registration for modification of charge dated 02.02.2023 was issued by ROC. As per the said restructuring, the entire additional interest due on the loan shall be waived in full and the balance interest shall be capitalised along with the principal. Further, there shall be a moratorium period of 24 months and during the moratorium period, simple interest @4.65% p.a shall be accrued. The entire loan including the accrued interest during the moratorium period is to be paid in 60 equal monthly installments commencing from 20.06.2024. In view of the above, the company has recognised the impact of the restructuring i.e., capitalised the accrued interest of '1 654.1 5 lakhs with the principal amount of ' 1991.60 lakhs and waiver of additional/penal interest of ' 938.24 lakhs in the audited financial statements for the year ended 31st March 2023. Further, The Company is of the opinion that as it has complied with all the requirements per the Tripartite Agreement. The petition filed by the SDF through its Monitoring agency IFCI before DRT will be withdrawn in due course.
27.15 During the Financial Year 2022-23, the company earned a net profit of ' 846.58 Lakhs before exceptional items and a profit of ' 3,432.08 Lakhs. Further, the Company has initiated the process of raising funds of ' 4,1 50.00 Lakhs by way of issue of equity warrants on a preferential basis, to arrange the working capital
requirements of the company and general corporate purpose, this will enable the company to have better cash flows and the Board of Directors of the company vide their meeting on 1st May 2023 based on the request of Holders of 6% Optionally Convertable Redemable Preference Shares i.e., T.S.R Holdings Private Limited and Gayatri Fin-Holdings Private Limited have approved the conversion of Preference Shares to Equity Shares and the same is subject to the Statutory Approvals. The management of the company is of the view that these factors along with the fact that the company has made a profit during the year will help the company to improve its future financial position.
27.16 The Hon'ble High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh dismissed the Company's writ petition (along with the other petitions on the same matter filed by other companies) vide its common order dated May 19, 201 6 ('the Order') in which it upheld the validity of levy of Electricity Duty @ 25 paisa per unit by the State Government on consumption of electricity by captive generating units relating to earlier years. In the year 2016-17, the Company filed a Special Leave Petition (SLP) in the Hon'ble Supreme Court which dismissed the SLP vide order dated September 27, 201 6 on the grounds that these matters were pending before the Board for Industrial and Financial Reconstruction (BIFR), and unless payments were being made by the petitioners as directed in its interim orders @ 15 paisa per unit. The Hon'ble Supreme Court also granted liberty to the petitioners to revive the petitions after the decision is given by the BIFR. Currently, the case filed before BIFR stands abated and the Company has not initiated any proceedings before the NCLT.
The management is of the view that as the case filed before BIFR stands abated and no demand notices were received thereafter for the payment, the Company has treated the estimated duty amount aggregating ' 283.99 lakhs as a Contingent Liability and no provision has been made in respect of the same. In the event of an unfavourable verdict/outcome in this matter, the Management based on the Supreme Court's interim orders and considering the inherent uncertainity in predicting the final outcome of the above litigation estimates the impact of the potential liability to be '1 70 lakhs.
In view of the above, the auditors have made a Qualified Opinion in their Audit Report about their inability to comment on the ultimate outcome of this matter and the consequential impact, if any, on these financial statements.
27.17 The managerial remuneration paid to Managing director for the financial year 2022-23 of ' 48 lakhs was approved by the Share holders at the Annual General Meeting held on 30/09/2020 as per requirement of Section 197 read with schedule V of the Companies Act, 2013.
27.18 Exceptional Items:
(A) During the year the company had requested Preference Share Holders for waiver of the right to receive dividends till 31.03.2023 and the same was favourably considered by the Preference shareholders and approved. Based on the nature of the event the company has recognised the said waiver of ' 1671.27 Lakhs as an exceptional item in the statement of profit and loss account.
(B) As stated in note no. 27.14 the Term Loan from Sugar Development Fund has been restructured with effect from 20.05.2022 (i.e. date of issue of Administrative Approval) in the form of capitalisation of balance interest of ' 1654.15 Lakhs accrued upto 20.05.2022 along with the principal amount of ' 1991.60 Lakhs and waiver of additional interest in full and considering the nature of the event the company has recognised the waiver of the additional interest of ' 914.23 Lakhs as an exceptional item in the statement of profit and loss account.
Note for Variance in ratios
Debt Service Coverage Ratio: DSCR has decreased due to repayment of non-current borrowings as short-term
borrowings.
Return on Equity Ratio: due to lower losses in the current year compared to the previous years
Inventory Turnover Ratio: Due to increase in turnover during the year
Net Capital Turnover Ratio: Due to lower losses Company current liabilities is higher than current assets.
Net Profit Ratio: Due to lower losses Company.
Return on Capital Employed: Due to higher EBIDTA.
27.20 Additional Regulatory Information as required by Schedule III of the Companies Act, 2013:
a No proceedings have been initiated or are pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder. b No charges are pending for registration with Registrar of Companies (ROC) beyond the statutory period.\
c During the current financial year, to the best knowledge of the company, it didn't have any relationship
with Struck-off Companies.
d The Company has not traded or invested in Crypto Currency or Virtual Currency during the current or previous year.
e The Company is not been declared as a Wilful Defaulter by any Bank, Financial Institution or other lenders
f There is no income surrendered or disclosed as income during the current or previous year in the tax
assessments under the Income Tax Act, 1961, that has not been recorded in the books of account. g The Company has not entered into any Scheme of Arrangement in terms of sections 230 to 237 of the Companies Act, 2013. Hence there will be no accounting impact on the current or previous financial year.
h The Company has not raised any funds through the Issue of Securities during the current or previous year i (A) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall: -
a) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by on or behalf of the company (Ultimate Beneficiaries) or
b) Provide any guarantee, security, or the like to or on behalf of the ultimate beneficiaries.
(ii) (B) 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.
a) 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
b) Provide any guarantee, security, or the like to or on behalf of the ultimate beneficiaries.
j The Company has not revalued its property, plant, and equipment during the current or previous year.
k The provisions of Corporate Social Responsibility Under Section 135 of Companies Act 2013 are not
applicable to the Company.
I The Company does not have any Immovable Properties where title deeds are not held in the name of the Company.
m The Company has not made any investment and do not have subsidiaries, therefore clause (87) of section
2 of the Act read with Companies (Restriction on number of Layers) Rules, 201 7, is not applicable.
27.21 The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and postemployment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period when the Code becomes effective.
27.22 Previous years figures have been regrouped / reclassified wherever considered necessary to correspond with the current year classification/ disclosures.
27.23 The financial statements were approved for issue by the Board of Directors on 23rd May 2023.
As per our report attached
For M O S & Associates LLP For and on behalf of the Board of Directors
Chartered Accountants
Sd/- Sd/- Sd/-
Oommen Mani T, Sarita Reddy T.V, Sandeep Kumar Reddy
Partner Managing Director Vice Chairman & Director
Sd/- Sd/-
Place : Hyderabad V.R. Prasad D.S.V.R. Sumita
Date: 23rd May, 2023 Chief Financial Officer Company Secretary
|