For the contingent liabilities in respect of the ESIC, PF and Income Tax pending before the respective appellant authorities are likely to be matter of settled in favor of company, In view of the management and accordingly no impact on the standalone financial statements. Further, the Employees State Insurance Corporation (ESIC) authorities have erroneously raised a demand of ESI Contribution of Rs.206.38 Crores u/s 45A of the ESI Act, the same was stayed for recovery by the Employees Insurance court, Mumbai vide its order dated 28.09.2017.
**Out of the total tax demand for FY 12-13, the Original Demand was Rs.43.50 crores, refunds/payments adjusted with the demand Rs. 17.53 crores. For the relevant year, the appeal filed before the CIT(A) stands dismissed and the company filed an appeal before the Hob'ble ITAT, Mumbai. In view of the management the decision should be in favor of the company.
#During the year the company had received an enquiry from the GST department, for the alleged incorrect availment of GST input credit, where the enquiry is still under process. The company had reversed the GST input credit of Rs.15 crores as appearing in the GST ledger and charged it to profit and loss account.
* Basic & Diluted for the calculation of the EPS are same & not adjusted for Debentures as the same are optionally convertible.
Note: 42 Note on CSR
Pursuant to section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 including further amendments thereto, a company has to spend, in every financial year, at least 2% of the average net profits of the company made during the last Three years immediately preceding financial year, as per the objects mentioned in the Rules.
The company has no average net profits during the immediately preceding last Three financial years, hence the provisions of section 135 of the Companies Act, 2013 are not applicable.
A. Pursuant to Reserve Bank of India (RBI) vide its circular reference no. DBR.No.BP.BC. 101/21.04.048/2017-18 dated 12thFebruary, 2018 the company had submitted the resolution plan for the restructuring of it's loans in the previous year to the lenders where dues became Non-Performing Assets (NPA) in their Books. On offer from J M Financial Asset Reconstruction Company Limited (JMFARC), all of the lenders except Axis Bank Ltd., either settle the dues as one time settlement ("OTS") or opted to assign their outstanding Loans to JMFARC including working capital loans and Optionally Convertible Debentures (OCDs) Accordingly, total borrowings worth Rs.3,399.94 crores out of the total debt of Rs.3,801.36 crores, approximately 89.44% of total debt is with JMFARC on assignment of loans Since JMFARC is not a bank, the loan assigned to JMFARC is reflected in 'others.' The Lenders have not charged the interest on Loan amount being NPA but the company has made the provision of total interest amount (Rs. 91.89 crores) as per sanction terms in the Books of accounts and same is included in the total amount by Bankers.
B. The company has executed Business Transfer Agreement (BTA) on 20th November, 2020 with the a newly incorporated subsidiary Company BRFL Textiles Private Limited (BTPL) for the transfer of it's Tarapur Undertaking i.e. manufacturing facilities at C6 & C7, Tarapur Industrial Area, Tarapur MIDC for a total consideration of Rs. 630.00 crores.
As Consideration for the transfer on 21st December 2021, BTPL has allotted the company the following:
a. 20 crores equity shares of Rs.10 each totalling to Rs.200 crores.
b. 36 crores series A Cumulative Preference Shares (Series A CCPS) of Rs.10 each totalling to Rs.360 crores.
c. 60 lacs Non-Convertible Debentures (NCDs) of Rs.100 each totally to Rs.60 crores and
d. Cash payment of Rs. 10.00 Crores.
As per terms of BTA, on satisfaction of condition precedents (CPs) the closing date was 22nd December,2021. All the corresponding effects pertaining to the operations and transfer was taken in the books of accounts of the company till the closing date. The same is shown as a loss in the profit and loss account at Rs.3.82 crores under Transitional Period transaction (net).
Financial risk management objectives and policies
The Company's financial risk management is an integral part of how to plan and execute its business strategies. The Company's financial risk management policy is set by the Managing Board.
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loans and borrowings.
The Company manages market risk through the managing board, which evaluates and exercises independent control over the entire process of market risk management. The managing board recommend risk management objectives and policies, which are approved by Senior Management.
Market Risk- Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimize the Company's position with regards to interest income and interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio. Particulars of unhedged foreign currency exposures as the reporting date
The Company aim to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to our shareholders.
The capital structure of the Company is based on management's judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.
The Company's policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure.
On an assessment of long dues of debtors and its recovery status, a provision for doubtful debts of Rs. 177.79 crores has been made in accounts for the year.
In the opinion of the Board and to the best of their knowledge and belief, the Trade Receivables/Payables, Trade Advances, Capital Advances, Deposits and Loans are subject to reconciliation, confirmation and consequential adjustments that may arise on reconciliation which may have major impact. Thus the balances of receivables and Payables as well as Loan & Advances have been taken as per the books of accounts submitted by the Company and are subject to confirmation from the respective parties.
Various trade creditors with the outstanding's of Rs.65.69 crores, have filed a plea before the Hon'ble NCLT for recovery of dues, the cases are pending before the Hon'ble NCLT.
9 :
Disclosure of payable to vendors as defined under the "Micro, Small and Medium Enterprise Development Act, 2006" (MSME Act) is based on the information available with the Company regarding the status of registration of such vendors under the said Act, as per the intimation received from them on requests made by the Company.
In terms of MSME Act interest on dues to vendors have been calculated and provided for in the Books, but the payment of interest will depend upon the terms/ understanding of mutual agreement with the parties. i : Exceptional Items:
Loss on Sale of Fixed Assets:
During the year, as per plan for reduction of the Debt, the Company had disposed off its Non-Core Assets, and accordingly incurred a loss of Rs.168.97 crores on such sale.
Term Loan Written Off:
Under the restructuring plan few of the Banks have opted for One Time Settlement (OTS) of their respective loans and accordingly the principal amount of Rs. 2.27 crores has been waived off by them. Which has resulted in a write back of Rs.2.27 crores in the books of accounts.
Reversal of the Interest payable.
The consortium Lenders with exposure of 89.44% of the Debt assigned their debt to JM Financial Asset Reconstruction Company Limited(JMFARC). The Company is pursuing with JMFARC for a viable restructuring package, with certain concession on interest and repayment terms and pending approval of the same, has decided not to provide the interest on these assigned loans w.e.f. 1st April, 2020 & reverse the interest provided for prior period. The JMFARC have notified the Company that the interest is applicable as per the rates contracted as per restructed sanctions and the impact of the non-provision is understatement of finance cost for the quarter and year ended to the extent of Rs.142.32 Crores and Rs. 449.38 Crores. Had the Company provided for interest, the loss would have been higher to that extent.
Transition period transactions (net)
The net loss of the period from Business Transfer Agreement Date & Closing Date on transfer of business to it's subsidiary during the year amounting to Rs.3.82 crore (net) is accrued for.
During the year Company redeemed the 46,313 optionally convertible Debentures of Rs. 1000 each issued to the lenders.
Note: 52
World Health Organisation (WHO) declared outbreak of Coronavirus Disease (COVID-19) a global pandemic on March 11, 2020. Consequent to this, Government of India declared lockdown on March 23, 2020 and the Company temporarily suspended the operations in all the units of the Company in compliance with the lockdown instructions issued by the Central and State Governments. COVID-19 has impacted the normal business operations of the Company by way of interruption in production, unavailability of personnel, closure / lock down of production facilities etc. during the lockdown period. However, production and supply of goods has commenced during the month of May 2020 at Bangalore manufacturing facility of the Company.
The Company has made detailed assessment of its liquidity position for the next year and the recoverability and carrying value of its assets comprising property, plant and equipment, intangible assets, right of use assets, investments, inventory end trade receivables. Based on current Indicators of future economic conditions, the Company expects to recover the carrying amount of these assets. The situation is changing rapidly giving rise to inherent uncertainty around the extent and timing of the potential future impact of the COVID-19 which may be different from that estimated as at the date of approval of the financial results. The Company will continue to closely monitor any material changes arising of future economic conditions and impact on its business Note 53: Recent pronouncements
On March 24, 2021, the Ministry of Corporate Affairs (''MCA'') through a notification, amended Schedule III of the Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from April 1, 2021 i.e. for FY 2021-22. Key amendments relating to Division II which relate to companies whose financial statements are required to comply with Companies (Indian Accounting Standards) Rules 2015 are:
A. Balance sheet:
'- Lease liabilities should be separately disclosed under the head 'financial liabilities', duly distinguished as current or non-current.
- Certain additional disclosures in the statement of changes in equity such as changes in equity share capital due to prior period errors and restated balances at the beginning of the current reporting period.
- Specified format for disclosure of shareholding of promoters.
- Specified format for ageing schedule of trade receivables, trade payables, capital work-in-progress and intangible asset under development.
- If a company has not used funds for the specific purpose for which it was borrowed from banks and financial institutions, then disclosure of details of where it has been used.
- specific disclosure under 'additional regulatory requirement' such as compliance with approved schemes of arrangements, compliance with number of layers of companies, title deeds of immovable property not held in name of company, loans and advances to promoters, directors, key managerial personnel (KMP) and related parties, details of benami property held etc
B. Profit and Loss
'- Additional disclosures relating to Corporate Social Responsibility (CSR), undisclosed income and crypto or virtual currency specified under the head 'additional information' in the notes forming part of the standalone financial statements.
The amendments are extensive and the Company will evaluate the same to give effect to them as required by law.
The Code on Social Security, 2020
'The Code on Social Security 2020 ('Code') has been notified in the Official Gazette on 29th September, 2020.The Code is not yet effective and related rules are yet to be notified. Impact if any of the change will be assessed and recognized in the period in which said Code becomes effective and the rules framed thereunder are notified.
Previous year figures have been re-grouped/reclassified wherever/necessary to make them comparable with current year.
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