The Company has obtained Independent Valuations of its investment property from independent registered valuer as defined under rule 2 of the Companies (Registered Valuers and Valuation) Rules, 2017. The fair value of the investment property have been derived using the Direct Comparison Method. The direct comparison approach involves a comparison of the investment property to similar properties that have actually been sold in arms-length distance from investment property or are offered for sale in the same region. This approach demonstrates what buyers have historically been willing to pay (and sellers willing to accept) for similar properties in an open and competitive market, and is particularly useful in estimating the value of the land and properties that are typically traded on a unit basis. This approach leads to a reasonable estimation of the prevailing price. Given that the comparable instances are located in close proximity to the investment property; these instances have been assessed for their locational comparative advantages and disadvantages while arriving at the indicative price assessment for investment property.
(ii) Fair Value Heirarchy
The fair value measurement for all of the Investment properties has been categorized as level 3 Fair value based on the inputs to the valuations techniques used.
(iii) The aggregate depreciation has been included under depreciation and amortisation expense in the statement of Profit and loss.
Note (i) : The above figure includes loans to whole time director in the capacity of employee amounting to Nil (Previous year C71.11 Lakhs) which is repayable in accordance with the Company's policy applicable to all the employees. Such loan outstanding as at the end of the year amounts to Nil (Previous Year 45.93%) of total loans to employees outstanding as on that date. The maximum balance outstanding during the FY 2022-23 was C71.11 lakhs (Previous year C80.00 Lakhs)
Note (ii) : The above figure includes loans to Chief Financial officer/Company Secretary (KMP) amounting to C20.52 Lakhs (Previous year C1.78 Lakhs) which is repayable in accordance with the Company's policy applicable to all the employees. Such loan outstanding as at the end of the year amounts to 68.4% (Previous Year 1.15%) of total loans to employees outstanding as on that date. The maximum balance outstanding during the FY 2022-23 was C22.00 Lakhs (Previous year C4.44 Lakhs)
b) Terms/Rights attached to equity shares
Company has only one class of equity shares having a par value of ' 10/-. Each holder of equity shares is entitled to one vote per share. The dividend (if any) 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 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 the number of equity shares held by the shareholders.
As per records of the Company, including its register of shareholders/members and other declaration received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares exept Bharat investments Growth Limited, in which significant benificial owner is Shri Ravi Jhunjunwala, Chairman, Managing Director & CEO, who is also the promoter of the Company and exercises significant influence over it.
NATURE AND PURPOSE OF RESERVES1) Capital Reserve:
The Company created part of Capital Reserve on account of warrant money forfeited and part on profit made on hive off of Steel business .
2) Capital Redemption Reserve:
The Company created Capital Redemption Reserve at the time of redemption of Preference Shares and buy back of its own shares. The reserve can be utilised for issuing bonus shares.
3) Retained Earnings
Retained earnings refer to net earnings not paid out as dividend but retained by the company to be reinvested in its core business. The amount is available for distribution of dividend to its equity shareholders. Remeasurements of Net Defined Benefit Plans: Differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised in other comprehensive income and are adjusted to retained earnings.
4) Reserve for other items through Other comprehensive income
The reserve represents cumulative gains and losses on remeasurement of defined benefit plan net of taxes. The balance in Other Comprehensive income can be transferred to Other Components of equity i.e. retained earnings as and when the company decides to do so. The company has transferred the said reserve to the retained earnings during the Previous year.
a) Working Capital Borrowings from Banks are secured by first charge against hypothecation of all stocks present and future, stores, spare parts, packing materials, raw materials, finished goods, goods in transit / process, book debts, outstanding monies receivable, claims, bills etc.
b) Pari-passu second charge over entire fixed assets (including land & building and plant & machineries) of the Company in respect of Graphite & Thermal Power Unit at Mandideep and Hydel Power unit at Tawa Nagar, Hoshangabad.
Refer Note 46B for Classification of Financial Liabilities
Refer Note 47 for carrying amount of assets pledged as security for borrowings.
Refer note 46C for information about liquidity risk and market risk in respect of borrowings.
c) Working Capital demand loans.
Working capital demand loans are repayable on demand.
NOTE: 37 SEGMENT INFORMATION
The Company's Chief Operational Decision Makers consisting of Chief Executive Officer and Chief Finance Officer examines the company's performance both from product and geographic perspective and has identified two segments, i.e., Graphite electrodes (including other carbon products) and power. The business segments are monitored separately for the purpose of making decisions about resource allocation and performance assessment.
The Reportable Segments are:
• Graphite Electrodes (including other carbon products)- The segment comprises of manufacturing of graphite electrodes
• Power Generation - The segment comprises of generation of power for captive consumption and sale. Segment Measurement
The measurement principles for segment reporting are based on IND AS 108. Segment's performance is evaluated based on segment revenue and profit or loss from operating activities. Operating revenues and expenses related to both third party and inter-segment transactions are included in determining the segment results of each respective segment.
Inter segment transactions are carried out at arm's length price.
(i) Based on legal advice, discussions with the solicitors, etc., the management believes that there is fair chance of decisions in the company's favor in respect of all the items listed above and hence no provision is considered necessary against the same. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the company's financial position and results of operations.
Further Company has deposited amount to the tax authorities against the cases, which shown as payment under protest in Note 13 of Other assets.
(ii) The Company has received a letter dated 2nd May 2023 from the office of General Manager (O&M) M.P MKV Co. Ltd, Bhopal in connection with levy of surcharge/interest on the demand already deposited by the Company in respect of power related matter pertaining to the period prior to March 2011 which has not been charged in the power bills of all the years. As mentioned in the letter, the calculation of surcharge is under progress and shall be intimated to the company.
The company has contested such levy and filed petition in the H'ble High Court of Madhya Pradesh on the ground that this demand is time barred in accordance with the provisions of section 56 (2) of the Electricity Act, 2003 which states that no sum due from any customer is recoverable after a period of two years from the date when such sum became first due unless such sum has been showing continuously as recoverable.
(B) Defined Benefit Plan
The Company sponsors funded defined benefit plan for qualifying employees. This defined benefit plan of gratuity is administered by a separate trust that is legally separate from the entity. The trust is responsible for investment policy with regard to the assets of the trust and the contributions are invested in a scheme with Life Insurance Corporation of India (LIC) as permitted by Law. The management of fund is entrusted with the LIC. The liability for employee gratuity is determined on actuarial valuation using projected unit credit method.
These plans typically expose the Company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.
(i) Investment Risk
The probability or likelihood of occurrence of losses related to the expected return on investment. If the actual return on Plan assets is below the expected return, it will create Plan deficit.
(ii) Interest Risk
The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.
(iii) Longevity Risk
The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plans liability.
(iv) Salary Risk
The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan's liability.
Note : 46 Financial Instruments and Risk Management 46A. Capital Management
The company's objective when managing capital are to:
i) Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and (ii) Maintain an optimal capital structure to reduce the cost of capital
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Company monitors capital using a gearing ratio, which is net debt (net of cash and cash equivalents) divided by total equity.
(b) Fair value Measurement
The fair value of the financial assets and liabilities is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. This section explains the judgements and estimates made in determining the fair values of the financial instruments. To provide an indication about the reliability of inputs used in determining fair values, the company has classified its financial instruments into three levels prescribed under the accounting standards.
Level 1: Quoted prices (unadjusted) in the active markets for identical assets or liabilities
Level 2: Other techniques for which all the inputs have a significant effect on the recorded fair values are observable, either directly or indirectly
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.Sensitivity of Level 3 Financial Instruments is insignificant
The following methods and assumptions were used to estimate the fair values:
Quoted equity investments: Fair value is derived from quoted market prices in active markets.
Investments in mutual funds/ Fixed Maturity Plans/Bond funds : Fair value is determined by reference to quotes from the financial institutions, i.e. net asset value (NAV) declared by fund house.
Investment in Market Linked Non-convertible debentures: Fair value is determined by reference to valuation provided by CRISIL.
Investment in Infrastructure Trust: Fair value is derived on the basis of valuation certificate by independent professional based on net asset at fair value approach, in this approach the net asset at fair value is used to capture the fair value of these investments.
Derivative contracts: The Company has entered into foreign currency contracts to manage its exposure to fluctuations in foreign exchange rates . These financial exposures are managed in accordance with the Company's risk management policies and procedures. Fair value of derivative financial instruments are determined using valuation techniques based on information derived from observable market data, i.e., mark to market values determined by the Authorised Dealers Banks.
Note 46C Financial risk management
This note explains the risk which company is exposed to and policies and framework adopted by the company to manage these risks.
The Company's principal financial liabilities comprise borrowings, trade and other payables and the main purpose of these financial liabilities is to manage finances for the day to day operations of the company. The Company's principal financial asset includes trade and other receivables, and cash and bank balances that arise directly from its operations.
The corporate treasury department reports quarterly to the Company's risk management Committee, an independent body who monitors risk and policies implemented to mitigate risk exposures.
The company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the management of these risks. It is the Company's policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and approves policies for managing each of these risks, which are summarized below.
(A) Market Risk:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments. The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks.
(i) Foreign Currency Risk:
Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD and EURO. The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to accounts receivable and accounts payable. The use of foreign currency forward contracts is governed by the Company's strategy approved by the Board of Directors, which provide principles on the use of such forward contracts consistent with the Company's Risk Management Policy. The Company does not use forward contracts for speculative purposes.
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. In order to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of the fixed rate and floating rate financial instruments in its total portfolio.
(a) Price Risk:
The Company manages the surplus funds majorly through investments in debt based Fixed Maturity Plans, mutual fund schemes, Non-convertible debentures and infrastructure trust. The price of investment in Fixed Maturity Plans, mutual fund schemes is reflected though Net Asset Value (NAV) declared by the Asset Management Company on daily basis as reflected by the movement in the NAV of invested schemes. The price of investment in Non-convertible debentures is reflected through valuation by CRISIL on weekly basis. The price of investment in infrastructure trust is reflected through valuation certificate by the independent professional on quarterly basis where valuation is deteremined based on fair value of assets of trust as on date of valuation. The Company is exposed to price risk on such Investments.
(B) Credit Risk:
Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial loss to the company. The Company is exposed to credit risk from its operating activities (primarily trade receivables, loans to employees and security deposits). Credit risk on cash and cash equivalents, other bank balances is limited as the company generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies. The Company's credit risk in case of all other financial instruments is negligible.
To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current economic trends, and analysis of historical bad debts and ageing of accounts receivable.
The Company considers the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period.
The Company's major sales are export based which is diversified in different countries and none of the customer contributes 10% or more of the total company's revenue for the financial year 2022-23 and 2021-22
(C) Liquidity Risk:
Liquidity risk is defined as the risk that company will not be able to settle or meet its obligation on time or at a reasonable price. The financial liabilities of the Company, other than derivatives, include loans and borrowings, trade and other payables. The Company's principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The company's treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risk are overseen by senior management. Management monitors the company's net liquidity position through rolling, forecast on the basis of expected cash flows.
Prudent liquidity risk management implies maintaining sufficient availability of standby funding through an adequate line up committed credit facilities to meet financial obligations as and when due.
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments:
(ii) Trade receivables and Contract Balances
The company classifies the right to consideration in exchange for deliverables as receivable.
The balances of trade receivables and advance from customers at the beginning and end of the reporting period have been disclosed at note no. 10 and 24 respectively.
The revenue recognised during the year ended 31st March, 2023 includes revenue against advances from customers amounting to C310.07 Lakhs (Previous Year- C142.55 lakhs) at the beginning of the year.
The revenue of CNil has been recognised during the year ended 31st March, 2023 (Previous Year -Nil ) against performance obligations satisfied (or partially satisfied) in previous periods.
(iii) Performance obligations and remaining performance obligations
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at the end of the reporting period and an explanation as to when the Company expects to recognize these amounts in revenue.
Note 54. Additional disclosures required as per Schedule III to the Companies Act, 2013
(i) The Company did not have any transaction with companies struck off under Section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956 during the financial year.
(ii) No proceeding have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988).
(iii) The company has not been declared as wilful defaulter by any bank or financial Institution or other lender.
(iv) No funds that 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 persons or entities, 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 ("Ultimate Beneficiaries") by or on behalf of the Company; or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(v) No funds have been received by the company 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 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.
(vi) During the financial year, the Company has not traded or invested in Crypto currency or Virtual Currency.
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