(n) Accounting for Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognized, when there is a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.If the effect of the time value of money is material, the provision is discounted using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligationand the unwinding of the discount is recognised as interest expense.
Contingent liabilities are recognized only when there is a possible obligation arising from past events, due to occurrence or non-occurrence of one or more uncertain future events, not wholly within the control of the Company, or where any present obligation cannot be measured in terms of future outflow of resources, or where a reliable estimate of the obligation cannot be made. Obligations are assessed on an ongoing basis and only those having a largely probable outflow of resources are provided for. Contingent liabilities are not recognized in these financial statements, but are disclosed in Note to financial statements.
Contingent assets are not recognized in the financial statements.
(o) Borrowing Costs:
General and specific borrowing costs directly attributable to the acquisition or construction of qualifying assetsthat necessarily takes a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Borrowing costs consist of interest and other costs that the company incurs in connection with the borrowing of funds.
Interest income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Borrowing costs that are not directly attributable to a qualifying asset are recognised in the Statement of Profit or Loss using the effective interest method.
(p) Cash and Cash Equivalent (for the purpose of cash flow statements):
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
(q) Cash Flow Statement:
Cash flows are reported using the indirect method, whereby profit/ (loss) before tax is adjusted for the effects of transactions of no cash nature and any deferrals or accruals of past or future cash receipts or payments. Cash flow for the year are classified by operating, investing and financing activities.
(r) Earnings Per Share:
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of exceptional items, if any) by the weighted average number of equity shares outstanding during the year including potential equity shares on compulsory convertible debentures. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of exceptional items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
(s) Financial Instruments:
Financial Assets:
Classification
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
Initial Recognition and measurement:
All financial assets, in the case of financial assets not recorded at fair value through profit or loss, are recognised initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Debt instruments at amortised cost
A ‘debt instrument5 is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss. This category generally applies to loans and advances, deposits, trade and other receivables.
Debt instruments included within the fair value through profit and loss (FVTPL) category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
Equity investments
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments are classified as FVTOCI. Investment in subsidiaries, joint ventures and associates are carried at cost less impairment, if any.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company’s balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either:
(a) the Company has transferred substantially all the risks and rewards of the asset, or
(b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company’s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, and bank balance.
b) Trade receivables.
c) Financial guarantee contracts which are not measured at FVTPL.
The Company follows ‘simplified approach’ for recognition of impairment loss allowance on trade receivables which do not contain a significant financing component.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each Balance Sheet date, right from its initial recognition.
Financial Liabilities
Classification
The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall be subsequently measured at fair value
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are derecognised.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss.
This category generally applies to interest-bearing loans and borrowings.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.
(t) Corporate Social Responsibility:
The Company charges its CSR expenditure during the year to the statement of profit and loss.
35. Contingent Liabilities
Guarantees: Outstanding Guarantees furnished by banks on behalf of the company is 286.56Lakhs. (PY. 270.71 Lakhs)
36. There is no foreign exchange earnings and expenditure during the year.
37. Information in respect of Micro, Small and Medium Enterprises
Amount remaining unpaid to any supplier:
a) Principal Amount - 28.21 Lakhs(PY 11.51 Lakhs)
b) Interest due thereon - Nil (PY Nil)
The Company has not received any intimation from majority of suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the yearend together with interest paid / payable as required under the Act have not been given.
38. The Company advanced a sum of.Rs.1776.27Lakhs to HCL Agro Power Limited in the past to purchase power. However, the operation of HCL Agro Power Limited completely stopped few years back and there is no scope of the power being supplied. In view of this, considering the financial position/assets of HCL Agro Power Limited, company consider it prudent a provision. Accordingly, a total sum of Rs.1776.27 lakhs, including current year provision of Rs. 726.27 Lakhs is provided. Refer note no-7 of financials.
Fair Value Hierarchy
• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
Financial risk management
The Company's activities expose to limited financial risks: market risk, credit risk and liquidity risk. The Company's primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.
Market Risk
Market risk is the risk of loss of future earnings or fair values or future cash flows that may result from a change in the price of a financial instrument.
The company is exposed to market risk primarily related to foreign exchange rate risk (currency risk), Interest rate risk and the market value of its investments.
Credit Risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. It principally arises from the Company's Trade Receivables, Advances and deposit(s) made
Trade receivables:
The company has outstanding trade receivables amounting to Rs.1096.22Lakhs and Rs.879.33Lakhs as of March 31,2024 and March 31,2023 respectively. Trade receivables are typically unsecured are derived from revenue earned from customers. Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The company is not exposed to concentration of credit risk to any one single customer. Default on account of Trade Receivables happens when the counterparty fails to make contractual payment when they fall due.
Further for amounts overdue are constantly monitored by the management and provision towards expected credit loss are made in the books. Management estimated of expected credit loss for the Trade Receivables are provided below with the classification on debtors.
Trade receivables are impaired in the year when recoverability is considered doubtful based on the recovery analysis performed by the company for individual trade receivables. The company considers that all the above financial assets that are not impaired for each reporting dates under review are of good credit quality.
Liquidity Risk
Our liquidity needs are monitored on the basis of monthly and yearly projections. The company's principal sources of liquidity are cash and cash equivalents, cash generated from operations and Short term facilities from banks.
The company manages liquidity needs by continuously monitoring cash inflows and by maintaining adequate cash and cash equivalents. Net cash requirements are compared to available cash in order to determine any shortfalls.
Short term liquidity requirements consist mainly of sundry creditors, expense payable, employee dues, advances received from customers during the normal course of business as of each reporting date. We maintain a sufficient balance in cash and cash equivalents to meet our short-term liquidity requirements.
Interest Rate Risk
The company has a limited exposure to Interest rate risk, as it does not have any variable interest rate exposure.
Capital management
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure. 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 or by adequate funding by the shareholders to absorb the losses of the Company. The Company's capital comprises equity share capital, retained earnings and other equity attributable to equity holders. The primary objective of Company's capital management is to maximize shareholders value. The Company manages its capital and makes adjustment to it in light of the changes in economic and market conditions.
40. Disclosure in respect of Indian Accounting Standard (Ind AS)-19 "Employee Benefits"
i) General description of various defined employee's benefits schemes are as under:
a. Provident Fund:
The company's Provident Fund is managed by EPFO. The company pays fixed contribution to provident fund at pre-determined rate.
b. Gratuity:
Gratuity is a defined benefit plan, provided in respect of past services based on the actuarial valuation carried out by LIC of India and corresponding contribution to the fund is expensed in the year of such contribution.
The scheme is funded by the company and the liability is recognized on the basis of contribution payable to the insurer, i.e., the Life Insurance Corporation of India, however, the disclosure of information as required under Ind AS-19 have been made in accordance with the actuarial valuation.
43. Operating Segments
The Company is engaged in the production and sale of "Cement" and therefore, has only one reportable segment in accordance with Ind AS 108 'Operating Segments'.
Information relating to geographical areas
The company's operations is restricted to India and the whole of company's revenue is received from sales within India. The company's only manufacturing facility is located in Andhra Pradesh, India and no non -current assets are held outside India.
44. During the financial year 2023-24, the Company has maintained its books of accounts in the accounting software "PACT" which does not possess the required audit trail functionality and edit log requirements as stipulated by Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, as amended. The Company is in the process of migrating to a new accounting software, "PACT Revenue" during the year, which is expected to be fully operational from 1st April 2024. The new software will contain the necessary controls and documentation regarding the audit trail.
45. Under section 135 of the Companies Act, 2013 the company is required to spend Nil/-(P.Y Nil) during the year under review towards Corporate Social Responsibility (CSR) activities as framed by the company in its Corporate Social responsibility program.
46. Details relating to Title deeds of Immovable Property not held in name of the Company- Nil
47. Details relating to ageing of Intangible assets under development- Nil
48. Details relating to loans or advances in the nature of loans to Promoters, Directors, KMP and related parties- Nil
49. Details relating to Benami Property held by the Company- Nil
50. There is no Material difference between the stock and book debts statements submitted to the bank and books of accounts.
51. Details relating to declaration of the company as wilful defaulter by any bank or financial institution or other lender- Nil
52. Details relating to the nature of transaction carried out with the struck- off company- Nil
53. Details relating to the transactions under taken in Crypto or Virtual currency- Nil
54. Details relating to the undisclosed income reported- Nil
55. Details regarding registration or satisfaction of charges with Registrar of Companies, beyond the statutory period - complied with in the due date
56. Details regarding compliance with number of layers of companies - Nil
57. Details regarding compliance with approved scheme of arrangements- Nil
58. The company has not declared any dividend during the year.
59. Ratios are attached.
60. Previous year's figures have been regrouped and reclassified wherever necessary
As per our report of even date
For S B S B AND ASSOCIATES
Chartered Accountants
(Firm Regn. N°. 012192S) For and on behalf of the Board
S/d
S/d S/d
D.Sharath Kumar Badri Narayanrao Dabbir Dr. Sivasamy Raju
Partner Director Director
DIN:01180539 DIN:06961330
M.No: 024568
UDIN :24024568BKCZGS4425
S/d S/d
K.Surayanarayanan Krish Narayanan
Chief Financial Officer Company Secretary
Place: Chennai S/d
Date: 27.05.2024
Gunasekaran Ohmprakash Chief Executive Officer
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