Nature and purpose of reserves:(i) Securities Premium
Securities premium is used to record the premium on issue of shares. This premium is to be utilised in accordance with the provisions of the Act.
(ii) General Reserve
The General Reserve is a free reserve, retained from Company's profits. The reserve can be utilised as per the provisions of the Act.
(iii) Equity Instruments through Other Comprehensive Income
The Company has elected to recognize changes in the Fair Value of certain Equity investments in Other Comprehensive Income. These changes are accumalated in the 'Equity Instruments through Other Comprehensive Income' within Equity. The company transfers the amounts from this reserve to retained earnings when the relevant equity securities are de-recognised.
(iv) Share Based Payment Plan Account
The above reserve relates to share options granted by the Ultimate Holding Company to specific employees of its subsidiaries under its employee stock option plan. Further information about share-based payments to employees is set out in Note 46.
(v) Revaluation Surplus
Revaluation Surplus was created under the erstwhile Indian GAAP to recognize the gain due to increase in value of certain Tangible assets as on June 30, 1988. The surplus can be utilised as per the provisions of the Act.
During the year, the Company has been sanctioned a Term Loan amounting to ' 25,00 lakhs from a Bank for purchase of capital assets. The said Term Loan is secured by lien on Fixed Deposit with bank (Refer Note 7). The loan is repayable in 60 equal monthly installments from the date of first disbursement and carries interest rate of 7% p.a. as at March 31,2023 (6.30% p.a. as at March 31, 2022).
II. Defined Benefit Plans:
Contribution to Gratuity Fund
The Company makes annual contributions to the Employees' Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India and HDFC Group Term Plan Scheme of the HDFC Life Insurance Company Limited, a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company's policy, whichever is beneficial to the employees.
The carrying amounts of trade receivables, employee advances, cash and cash equivalents and other short term receivables, trade payables, unclaimed dividend, capital creditors, loan to a related party, borrowings and other current financial liabilities are considered to be the same as their fair values, due to their short-term nature.
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
42 FINANCIAL RISK MANAGEMENT
The Company’s activities expose it to market risk, liquidity risk and credit risk.
This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.
The Company’s risk management is carried out by a central Treasury department under policies approved by the Board of Directors. The Treasury department identifies, evaluates and hedges financial risks in close co-operation with the Company’s operating units. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and nonderivative financial instruments, and investment of excess liquidity.
(A) Credit risk
Credit risk is the risk of incurring a loss that may arise from a borrower or debtor failing to make required payments. Credit risk arises mainly from outstanding receivables from free market dealers, cash and cash equivalents, employee advances, security deposits and investments. The Company manages and analyses the credit risk for each of its new clients before standard payment and delivery terms and conditions are offered.
Credit risk on cash and cash equivalents and investment is limited as company generally invests in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in debt mutual fund units.
(i) Credit risk management
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial Instrument, which requires expected lifetime losses to be recognised from initial recognition of the receivables. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company's historical experience and informed credit assessment and including forward looking information.
The Company believes that there are no customers or group of customers that would be subjected to any significant credit risks in the collection of the trade receivable.
(B) Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The company ensures sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the dynamic nature of the underlying businesses, the Treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Company's liquidity position (comprising the undrawn borrowing facilities below), cash and cash equivalents and investments on the basis of expected cash flows.
(ii) Maturities of financial liabilities
The tables below analyse the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
(C) Market risk
(i) Foreign currency risk
Currency risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency sales and purchases, primarily with respect to EUR and USD. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (?) The risk is measured through a forecast of highly probable foreign currency cash flows.
The risk is measured through a forecast of foreign currency sales and purchases for the Company’s operations. The Company uses foreign exchange forward contracts to manage its exposure in foreign currency risk. Entire foreign currency receivables and payables have been hedged.
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March 31, 2023
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March 31, 2022
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44 CONTINGENT LIABILITIES
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(a)
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Excise, Service Tax & Custom Duty demands pending with the appropriate authorities and disputed by the Company
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4,35.72
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5,27.74
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(b)
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Sales Tax demands pending with the authorities and disputed by the Company
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36.44
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38.33
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(c)
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Claims against the Company under the Labour Laws disputed by the Company
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1,22.31
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3,55.75
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(d)
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Guarantees given by Banks, as counter guaranteed by the Company
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9,18.06
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5,38.63
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(e)
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Non-Agricultural Land Cess
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37.79
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37.79
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(f)
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Other Claims against the Company not acknowledged as debts
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1,21.81
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1,21.81
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(g)
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Demand raised by Southern Power Distribution Company of Andhra Pradesh Ltd(SPDCL) disputed by the company and subjudice in High court/Supreme court *
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13,40.77
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46,50.53
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(All amounts in ' lakhs, unless otherwise stated)
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March 31, 2023
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March 31, 2022
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(i) Income tax liability on account of disputed disallowances
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20.34
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88.32
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(j) Good and Service Tax liability for Credit of duty paid on goods and services received prior to July 1,2017
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16.18
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8.09
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*The invoice of SPDCL towards power charges reflect a demand of ' 91,65.00 lakhs as at March 31,2023 towards disputed matters which is not acknowledged as debt by the Company. The Company after considering the legal opinion, has determined the amount relating to ongoing disputes and disclosed the same in (g) above.
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March 31, 2023
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March 31, 2022
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44 A COMMITMENTS
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Capital commitments
Capital expenditure contracted for at the end of the reporting period but not
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recognised as liabilities is as follows: Property, Plant and Equipment
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59,50.70
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13,62.10
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45 The segment information is presented under the Notes forming part of the Consolidated Financial Statements as required under the Indian Accounting Standard - 108 on "Operating Segment”.
46 SHARE BASED PAYMENTS
(a) Performance Share Plan
Certain employees of the Company in India are allotted Performance shares of the Ultimate Holding Company. These plans are subject to eligibility criteria based on the employee’s period of service (service conditions) with the Group as well as performance criteria (performance conditions). The Ultimate Holding Company does not charge any cost for this benefit, the cost of this benefit has been arrived at using Black and Scholes method.
49 During the current year, the Company has acquired 100% equity shares of PRS Permacel Private Limited (PRS) at a consideration of ' 121,12 Lakhs. Consequently, PRS has become a wholly owned subsidiary of the Company effective May 27, 2022. Further, the Board of Directors of the Company at their meeting held on July 29, 2022, approved the Scheme of Amalgamation of PRS with the Company, the appointed date being May 27, 2022. The said Scheme has been filed with the National Company Law Tribunal on August 24, 2022, and is awaiting necessary approvals, as required.
51 (a) There are no subsequent events that would require adjustments or disclosure in the financial statements as on the balance sheet date.
(b) The other matters as required under paragraph “L - Additional Regulatary Information” under part I of Division II of Schedule III of the Companies Act,2013 and Paragraph 7(l) and 7 (n) of Part II of Division II and Schedule III to Companies Act 2013, are either not applicable or there are no reportable matters.
(c) Previous year's figures have been audited by firm of Chartered Accountants other than Kalyaniwalla & Mistry LLP, Chartered Accountants.
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