Company has only one class of shares referred to as equity shares having par value of Rs.10 each. Each holder of shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company in proportion to the number of equity shares held by the shareholders, after distribution of all preferential amounts.
12.7 The company has no holding company.
12.8 No shares have been reserved for issue under options and contracts or commitments for the sale of shares or dis investment.
12.9 No class of shares have been allotted as fully paid up pursuant to contract(s) without payment being received in cash, allotted as fully paid up by way of bonus shares or bought back during the period of 5 years immediately preceding the Balance Sheet date.
Nature and purpose of other equity:
13.1 General Reserve
The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provision of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.
13.2 Securities premium
The amount received in excess of face value of the equity shares is recognised in Securities Premium. It can only be utilised for limited purposes in accordance with the provisions of the Companies Act, 2013.
13.3 Surplus in Statement of Profit and Loss
The amount represents the surplus/ (deficit) in profit and loss account and appropriations.
13.4 Other comprehensive income
The Company has elected to recognise changes in the fair value of certain inve stments in equity securities in other comprehensive income. These changes are accumulated in the FVOCI equity investments reserve. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised or sold. Any impairment loss on such instruments is reclassified to the Statement of Profit and Loss.
i) &ii) Term Loan 3 &4 - 3373 Lakhs & 767 Lakhs Te rm Loans from Canara Bank
Loan of Rs.3373 Lakhs and subsequent additional facility of Rs.767 Lakhs have been secured by mortgage of 850TPD Cement Plant II, along with mortgage of 35 Acres and 15 Guntas land and building at Plant II (Lokapur plant) owned and maintained by the Company and 14 Acres 8 Guntas land and building and machinery of cement plant at Kaladgi. Fixed deposits of Rs.8 Lakhs are an additional security on the loan along with Rs.8000 Lakhs loan.
iii) Term Loan 5 - 8000 Lakhs Loan from Canara Bank
The loan of Rs.8000 Lakhs is secured by a First Charge on Project Land 103 Acres 34 Gunta acquired in the names of (1) Vilas Katwa & his wife Smt. Tina V Katwa (2) Deepak Katwa & his wife Smt. Prajakta Katwa, valued at Rs.6.84 crores including cost of converted land with development and civil works. All the owners will join as guarantors and execute mortgage in favour of bank, along with hypothecation on 20MW AC supply unit
and associated equipments and Collateral security on First Charge on Mortgage & Hypothecation of Cement plant 1 including 14 acres 8 guntas and building and Machinery of Cement plant at Kaladgi, Dist. Bagalkot. P&M valued at Rs.17.47 crore by Mr. S B Kalkundri vide valuation report dt 15.05.2017. Land & Building having market value at 6.47 crore & Realizable value of Rs.5.82 crore dt 05.06.2017 by Mr. Basavaraj G H and the project land of 95 Acres and 6 Guntas at S. No. 241, 242, 243/1, 243/3, 243/2, 244, 246, 250/1, 250/3, 250/4, 250/5, 251, 255/1, 255/2, 256/1, 256/2, 256/3, 256/4, 257/1, 257/2, 257/3, 257/4, 258/1, 258/2, 258/3 and 258/4 (located at Bisarhalli Taluka and District Koppal, Karnataka),. Fixed deposits of Rs.8 Lakhs are an additional security on the loan along with Rs.4140 Lakhs loan.
iv) Term loan 6 - 2000 Lakhs Working Capital Term Loan under GECL Scheme
The company has availed working capital term loan from Canara Bank under GECL Scheme 2.0.
Mortgage/ Hypothecation of 850 TPD Cement Plant II , Mortgage on 35 Acres of Land and building at
Naganapur, Lokapur Plant of SKCIL.
Project Land of 97 Acres 5 Gunthas of SKCIL located at S. No.243/1,2&3, 250/1,3,4&5, 251, 257/1,2,3&4, Bisarhalli, Taluk and District Koppal, Karnataka
Hypothecation on 20 MW AC supply unit: Module, power conditioning unit, transformer, module mounting structure, associated balance equipment, electrical unit and power evacuation located at Village: Bisarhalli, Dist Koppal, Karnataka & Fixed Deposits.
v) Term Loan 7 - 1900 Lakhs Working Capital Term Loan under GECL Scheme
The company has availed working capital term loan from Canara Bank under GECL Scheme 2.0.
All the piece & parcel of land bearing R.S. Nos. 255/1, 255/2, 256/1, 258/1, 258/2, 258/3, 258/4, 241, 242, 243/1,
243/2, 243/3, 244, 246, 250/1, 250/3, 250/4, 250/5, 251, 257/1, 257/2, 257/3, 257/4, 256/2, 256/3, 256/4, 245, 248/2, 249/1, 249/2, 250/2, 255/3, 255/4, 255/5, 255/6 admeasuring 139 acres 30 gunthas thereon and plant and machinery situated at Bisaralli Taluka, Koppal Dist.
All the piece & parcel of land bearing R.S No. 346, admeasuring 14 acre 08 Guntas and plant and machinery Situated at Kaladgi Village, Tal & Dist. Bagalkot.
All the piece & parcel of land bearing 1. R.S.No. 15/4, R.S.No. 88/1, R.S.No. 88/2, R.S.No. 88/3, R.S.No. 88/4, R.S.No. 88/5, R.S.No. 88/6 totally 35 acre 15 guntas and plant and machinery situated in Naganapur Village, Tal : Modhol, Dist. Bagalkot, within the limits of Sub Registrar, Mudhol.
vi) Term Loan 8 - 4000 Lakhs Loan from Canara Bank
This loan is secured by a first charge on land & Building (Civil Construction) situated at Bisarhalli of 47 acres 06 gunta owned by the company, bearing S.No. 245, 248/2, 249/1, 249/2, 250/2, 255/3, 255/4, 255/5 and 255/6, along with charge of Plant & Machinery located at Bisarahalli.
vii) Term Loan 9 - 10 Lakhs Bolero Vehicle Loan from Canara Bank
This loan is secured by hypothecation of Mahindra Bolero Vehicle.
viii) Term Loan 10 - 8000 Lakhs new Loan from Canara Bank
This loan is secured by a Exclusive Charge on the Plant of the comapny situated in Bi saralli Village Koppal, Lokapur and Kalagdi inclusive of Land and building and Fixed Assets more particularily described in the Mortgage and Hypothecation Deed
ix) Sales tax Deferment Loan
The company has received four tranches of Interest free SGST loan from State Government of Karnataka granted under SGST promotion scheme. The same has been considered as a Government grant. This is secured by bank guarantees. The loans have a moratorium period of 10 Years and shall be repaid at the end of the moratorium period, maturing in the calendar year 2032 for three tranches and in Jan-34 for the fourth tranche and an additional security of fixed deposit of Rs.18.51 lakhs.
x) Unsecured Loan from Directors & Other Related Parties
This loan represents unsecured loans received from various directors and individual related parties, carrying an interest rate at the rate of 6% (Classified as Current Borrowings). Long-term loans obtained from Neel Holistic Infra Private Limited (formerly known as Katwa Constructions Company Private Limited) represent unsecured loans carrying an interest rate of 10% on Rs.900 Lakhs obtained on 29th March 2023 and 8% on other balances. However, if the Rs.900 Lakhs loan is prepaid within 1 year from the date of disbursement, the interest rate shall be 8%.
The terms of these loans were amended at the Board Meeting dated 16th March 2023 (and subsequent Extraordinary General Meeting dated 12th April 2023) of the company granting the right to the lenders to get the outstanding unsecured loan (as on 16th March 2023) converted into equity shares of the company at such price and on such date/time as may be determined by the Board after complying with the requisite sections/provisions/rules etc. as may be applicable to the Borrower Company' for such conversion and subject to the approval of Shareholders and such other regulatory authority, as may be applicable from time to time.
As per the same, loans amounting to Rs.2400 Lakhs has been converted into equity shares at the valuation of Rs.125 per equity share, basis the resolution passed by the members in the EGM dated 12th April 2023. Consequently, this portion of the loan has been classified under 'Other Equity' as on 31st March 2023 as per the principals laid down in IND AS 109. Further other equity amounting to Rs.2400 Lakhs has been coverted into Equity share capital during the FY 23-24 by issuing 19,20,000 shares of Face value Rs.10/- and securities premium of Rs. 115/- on 28th April,2024.
xi) Bank Overdraft
This loan is secured by a first charge on mortgage & hypothecation of stock and book debts of the company.
Common Collateral for both Work Capital Loans (Bank Overdrafts) and Term Loan Facilities
All loans (Working Capital & Term loans) have a common collateral - First charge of Mortgage & Hypothecation of Cement Plant I at Kaladgi (Dist. Bagalkot) including Land measuring 14 Acres and 8 Gunta, buildings and machinery at the same location.
Additionally, th e loans carry the following guarantees -
Personal Guarantee of Mr. Venkatesh H Katwa (Chairman), Mr. Vilas H Katwa (MD & CEO), Mr. Deepak H Katwa (Executive Director) and Mr. H D Katwa (Chairman Emeritus)
Corporate Guarantee of M/s Katwa Infotech Ltd
(b) The amount of interest paid by the buyer in terms of section 16 of the Act
(c) The amount of the payment made to the supplier beyond the appointed day during the year
(d) The amounts of interest accrued and remaining unpaid at the end of financial year
(e) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the due date during the year) but without adding the interest specified under this Act.
(f) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues above are actually paid to the small enterprise, for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.
Sensitivities due to mortality is not material and hence impact of change is not calculated.
Sensitivities as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement and life expectancy are not applicable being a lump sum benefit on retirement.
Description of Risk Exposures:
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such the Company is exposed to various risks as follows:
a) . Salary increase: Actual salary increases will increase plan’s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.
b) . Investment risk: If plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
c) . Discount rate: Reduction in discount rate in subsequent valuations can increase the plan’s liability.
d) . Mortality & disability: Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
e) . Withdrawals: Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact the plan’s liability.
Sensitivities due to mortality is not material and hence impact of change is not calculated.
Sensitivities as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement and life expectancy are not applicable being a lump sum benefit on retirement.
Description of Risk Exposures:
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such the Company is exposed to various risks as follows:
a) . Salary increase: Actual salary increases will increase plan’s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.
b) . Investment risk: If plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
c) . Discount rate: Reduction in discount rate in subsequent valuations can increase the plan’s liability.
d) . Mortality & disability: Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
e) . Withdrawals: Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact the plan’s liability.
The financial instruments are categorised into two levels based on the inputs used to arrive at fair value measurement as described below:
Level 1: It includes financial instruments measured using quoted prices.
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 fair value of financial assets and liabilities included in Level 3 is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes of similar instruments.
2. Financial Risk Management Objective and policies:
Company’s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations and to provide guarantees to support its operations. The Company's principal financial assets include Security deposits, trade and other receivables, and cash and cash equivalents that derive directly from its operations.
The Company’s activities expose it to market risk, liquidity risk and credit risk. The Company’s overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company.
2.1. Market Risk:
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, commodity prices, 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, payables and borrowings.
2.1.1 Interest Rate Risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument which 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 long-term debt obligations with floating interest rates.
The exposure of the company’s borrowing to interest rate changes at the end of the reporting period are as follows:
2.1.2 Commodity Price Risk Management:
Commodity price risk for the Company is mainly related to fluctuations in coal and pet coke prices linked to various external factors, which can affect the production cost of the Company. Since the Energy costs is one of the primary costs drivers, any adverse fluctuation in fuel prices can lead to drop in operating margin. To manage this risk, the company enter into long-term supply agreement for pet coke, identifying new sources of supply etc. The pet coke has to be procured at spot prices. Additionally, processes and policies related to such risks are reviewed and controlled by senior management and fuel requirement are monitored by the central procurement team.
Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing / investing activities, including deposits with banks and financial institutions. The Company has no significant concentration of credit risk with any counterparty.
The Company's credit risk is primarily to the amount due from customers and loans. The Company maintains a defined credit policy and monitors the exposures to these credit risks on an ongoing basis. Credit risk on cash and cash equivalents is limited as the Company generally invests in deposits with scheduled commercial banks with high credit ratings assigned by domestic credit rating agencies.
Trade Receivable
The maximum exposure to the credit risk at the reporting date is primarily from trade receivables. Trade receivables are unsecured and are derived from revenue earned from customers primarily located in India. The Company does monitor the economic environment in which it operates and the Company manages its Credit risk through credit approvals, establishing credit limits and continuously monitoring credit worthiness of customers to which the Company grants credit terms in the normal course of business.
On adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company establishes an allowance for impairment that represents its expected credit losses in respect of trade receivable. The management uses a simplified approach (i.e. based on lifetime ECL) for the purpose of impairment loss allowance, the Company estimates amounts based on the business environment in which the Company operates, and management considers that the trade receivables are in default (credit impaired) when counter party fails to make payments as per terms of sale/service agreements. However the Company based upon historical experience determine an impairment allowance for loss on receivables.
When a trade receivable is credit impaired, it is written off against trade receivables and the amount of the loss is recognised in the income statement. Subsequent recoveries of amounts previously written off are credited to the income statement.
The gross carrying amount of trade receivables is Rs.539.59 Lakhs (March 31, 2023: Rs.434.63 Lakhs). Trade receivables are generally realised within the credit period. The Company believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on historical payment behaviour.
Refer Note 7 for the company's exposure to Credit risk for Trade Receivables (Ageing).
2.3 Liquidity Risk:
Liquidity risk arises from the Company’s inability to meet its cash flow commitments on time. Prudent liquidity risk management implies maintaining sufficient stock of cash and marketable securities.Company accesses domestic financial markets, Banks and Financial Institutions to meet its liquidity requirements. The company’s liquidity is managed centrally with operating units forecasting their cash and liquidity requirements.
43. CAPITAL MANAGEMENT
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The company's policy is to keep the gearing ratio between 40% and 60%. The gearing ratio of the company during the reporting period (including previous period) is substantially high due to substantial long term debt fund raised for the purpose of expansion of plant capacity and solar power generation plant set up. The management is of the opinion that the new investment will reduce the cost of production and increase the profitability of the company in near future and reduce the debt. The company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.
For the purpose of the Company's capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the company. The primary objective of the Company's capital management is to maximise the shareholder value.
High Gearing ratio is mainly attributed to the significant borrowings for solar power plant at Bisarhalli and cement plant expansion at Lokapur and Kaladgi. These expansion project have been completed resulting in depreciation charge and Interest cost to the equity.
44 SEGMENT INFORMATION
The company's operating segments are established on the basis of those components that are evaluated regularly by the Executive Committee (the 'Chief Operating Decision Maker' as defined in Ind AS 108- 'Operating Segments'), in deciding how to allocate resources and in assessing performance. These have been identified taking into account nature of products and services, the deferring risks and returns and internal business reporting systems.
The company has four principal operating segments; viz. 1. Cements, 2. Petrol and Diesel , and 3. Solar Energy. The accounting policies adopted for segment reporting are in line with the accounting policy of the Company with following additional policies for segment reporting.
i. Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the segment.
Revenue and Expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as “Unallocable”.
ii. Segment Assets and Segment Liabilities represent Assets and Liabilities in respective segments. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as “Unallocable”.
iii. The business, which were not reportable segments during the year, have been grouped under the “Others” segment.
45 Leases
On adoption of IND AS-116, the Company recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IND AS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 April 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 April 2019 was 12.0% p.a.
48 OTHER EXPLANATORY INFORMATION
1 The Company does not have any transactions with companies struck-off under Section 248 of the Companies Act, 2013 or Section 560 of the Companies Act, 1956.
2 The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
3 The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
4 The Company have 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
(a) 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
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
5 The Company have 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
(a) 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
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
6 The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies ("ROC") beyond the statutory period.
7 The Company has not done any such transaction which is not recorded in the books of accounts 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).
8 The Company has not been declared a wilful defaulter by any bank or financial institutions or other lender in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
9 The Company has not used any borrowings from banks and financial institutions for purpose other than for which it was taken.
10 These financial statements were approved for issue by the Board of Directors on May 24, 2024.
11 During the year the company has complied with section 2(87) of the Companies Act 2013 read with Companies (Restriction on number of Layers) Rules, 2017.
12 During the year no scheme of arrangements has been approved by the Competent Authority in terms of section 230 to 270 of the Companies Act 2013.
51 Disclosure on Government Grants
(a) Sales Tax deferment loan has been considered as a government grant and the difference between the fair value and nominal value as on date is recognized as an income over the life of the grant. Every year, interest expense is accounted based on the fair interest rate used for determining the fair value of the loan on the date of receipt of the loan.
(b) Accordingly, an amount of Rs. 84.66 Lakhs (PY - 65.12 Lakhs) has been accounted as Other Income in respect of the same.
(c) Additionally, an amount of Rs. 57.42 Lakhs (PY - 41.00 Lakhs) has been accounted as Interest Expense on account of the changes in the Fair Value.
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