Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual funds that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
The Company's policy is to recognise transfers into and transfers out of fair value hierarchy levels at the end of the reporting period. On account of change in valuation estimates, certain investments were transferred from level 3 to level 2 valuation hierarchy and vice versa during the previous year.
ii) Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments are as under:
a. The fair values of investments in mutual fund units is based on the net asset value (‘NAV') as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date.
b. The fair values of quoted investment in equity shares is based on the current bid price of respective investment as at the Balance Sheet date.
c. The fair values of unquoted investment in equity shares of investee companies, including those having multiple business segments are derived as under:
- For investments of investee in listed securities, average closing price of the security for the previous six months from year end or the closing price as on the balance sheet date, as may be reflecting the correct position is considered.
- For investment in mutual funds, we have considered the NAV of the mutual funds as on Balance sheet date.
- For valuation of any land and property of investee, fair market value of the asset based on reports of experts is considered.
- For valuation of property purchased during current financial year, we have relied upon the stamp duty value as is taken in the financial statements.
- For investments of investee in unlisted non-operating companies, valuation is carried out on realizable net asset value basis, derived from the fair valuation of the underlying assets and liabilities or using DCF Method, in case if projections are made available.
- For valuation of any unlisted Cash Generating Unit / operating business of the investee, the valuation has been arrived by applying DCF method.
d. The fair values of unquoted investment in preference shares is arrived by discounting income/cash flows to its present value using the required rate of return and the cost of debt of Paushak Limited and returns expected on similar investments.
iii) Fair value measurements using significant unobservable inputs (level 3)
The following table represents the changes in level 3 items for the year ended 31st March, 2022.
v) Valuation Processes
Valuation of certain unquoted equity shares is done by an external valuation agency as per above valuation techniques.
P. Financial Risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk;
- Liquidity risk; and
- Market risk
The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk controls and to monitor risks. Risk management policies and systems are reviewed periodically to reflect changes in market conditions and the Company's activities. The Company monitors compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.
i) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers, deposit and other receivables. Credit risk is managed through continuous monitoring of receivables and follow up of overdues.
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 sector or specific country risks.
Trade receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer, demographics of the customer, default risk of the industry and country in which the customer operates. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
The Company has used expected credit loss (ECL) model for assessing the impairment loss. For the purpose, the Company uses a provision matrix to compute the expected credit loss amount. The provision matrix takes into account external and internal risk factors and historical data of credit losses from various customers.
There are no credit impaired Trade Receivable as on 31st March, 2022.
Other than trade and other receivables, the Company has no other financial assets that are past due but not impaired.
ii) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligation as they fall due. The Company ensures that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions.
Maturities of Financial Liabilities
The table herewith analyses 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. Balance dues within the 12 months equal there carrying balances as the impact of discounting is not significant.
iii) Market risk
Market risk is the risk that arises due to changes in market prices and other factors such as foreign exchange rates, interest rates and commodity risk. Market risk is also attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt.
Price Risk
The Company is mainly exposed to the price risk due its investment in equity instruments and equity & debt mutual fund. The price risk arises due to unascertainity about the future market value of these investments.
Management Policy
The Company maintains its portfolio in accordance with framework set by risk management policies duly monitored by competent professionals.
Q. Capital Management
The Company's capital management objectives are:
- to ensure the Company's ability to continue as a going concern; and
- to provide an adequate return to shareholders through optimisation of debts and equity balance.
The Company monitors capital on the basis of the carrying amount of debt less cash and cash equivalents as presented on the face of the financial statements. The Company's objective for capital management is to maintain an optimum overall financial structure.
R. Use of Estimates and Judgements
The preparation of the Company's financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in these notes.
S. Details of Hypothecation of Assets
No assets of the Company are hypothecated.
T. SEBI (Listing Obligation & Disclosure Requirements) Regulation 2015
Disclosures as required under Regulation 34(3) read with schedule V of the SEBI (Listing Obligation & Disclosure Requirements) Regulation 2015 have not been given as there are no such transactions with any such party.
U. Information on Dividend for the year
Dividends proposed or declared after the balance sheet date but before the financial statements have been approved by the Board of Director is not recognised as a liability at the balance sheet date. The Board of Director recommended final dividend of ' 12/- per equity share for the financial year ended on 31st March, 2022. The payment is subject to approval of shareholder in ensuing Annual General Meeting of the Company. (Previous year ' 6/- per equity share).
V. Relationship with Struck off Companies
The Company has no relationship with any struck off companies, other than the following struck off companies whose names are found in its register of members:
W. Other statutory information
i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
ii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
iii) The Company has not traded or invested in Crypto currency or Virtual Currency during the year.
iv) 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: (i) 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 (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
v) 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: (i) 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 (ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
vi) The Company does not have any such transaction which is not recorded in the books of accounts and that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
vii) The Company holds all the title deeds of immovable property in its name.
viii) There is no Scheme of Arrangements approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013.
ix) The Company is not declared as wilful defaulter by any bank or financial Institution or other lender.
x) The Company does not have any subsidiaries and hence compliance with number of layers of companies is not applicable.
Z. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.
AA. These Financial Statements were authorised for issue in accordance with the resolution of the Board of Directors at its meeting held on 6th May, 2022.
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