4.1) The Company has made an investment of ^.259.31 lacs ( £ 450.200) in Euroroyal Floors Ltd.( "ERF") wholly owned subsidiary in U.K.The subsidiary also owes ^ 2333.76 lacs ( Net of commission payable ^ 106.19 lacs ) towards supply of goods made to it. The principal customers of ERF in Russia did not honour the debts, Due to this ERF in turn, could not pay its creditors. The Company has been informed by the ex-local Directors of ERF that one of the creditors had filed a suit for winding-up of ERF pursuant to which the High Court of Justice of U.K.made a winding-up order dated 11th June,2001 against ERF and the official receiver has been appointed to liquidate the assets of ERF. Thereafter order dated 12/03/2002 was passed and ERF is dissolved. Under the circumstances , the Management had provided for diminution in value of investment made in ERF in the year 2000-01.As also, provision against the debt of ^ 2333.76 lacs due from ERF had been made during the earlier year.
12.1) Rights of Equity Shareholders
The Company has only one class of equity share of ^ 10/- per share, Each Shareholder of equity shares is entitled to one vote per share.
The Company has completed preferential issue of i) 66,21,250 equity shares of the Company having face value of INR 10/-each, to the members of the Promoters and Promoter Group at an issue price of INR 40/- per equity share including premium of INR 30/- per equity share and, ii) 1,79,00,000 equity shares of the Company having face value of INR 10/- each at par, to private investors (non- Promoters) on preferential basis ,Further these shareholders will have voting rights at par with existing shareholders.
Nature and Purpose of each reserve
a) Capital reserve - During amalgamation, the excess of net assets taken, over the consideration paid, if any, is treated as capital reserve.
b) Securities premium reserve - The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve. This reserve will be utilised in accordance with the provisions of the Companies Act ,2013.
c) Investment allowance reserve - Investment Allowance Reserve was created under the provisions of Income tax , when new machineries were purchased. In the current year this reserve has been transferred to General Reserve, on completion of the required number of years.
d) General Reserve is created on transfer of accumulated balance from Investment allowance reserve.
e) Revaluation Reserve is created during the year, on revaluation of Land based on report issued by an independent Valuer.
14.A. The original lenders of the Company namely IDBI, Bank of India, Oriental Bank of Commerce and EXIM Bank had assigned their dues to Asset Reconstruction Company of India Limited ('ARCIL') in the year 2006-07 and thereafter ARCIL assigned its rights in dues of the Company to SICOM Limited in the year 2011-12. During the financial year 2017-18, SICOM Limited assigned its rights in the dues outstanding from the Company to Finquest Financial Solutions Private Limited ('Finquest'). Similarly, during the financial year 2017-18, Saraswat Co-op Bank Ltd. assigned its rights in the dues outstanding from the Company to Finquest, interest of Rs. 1291.31 lacs was not provided in accounts in the pervious year. Pursuant to time to time deliberations and negotiations with FFSPL, the Company has finally negotiated with FFSPL to make a full and final payment of Rs. 860.00 lacs ("Settlement Amount") towards settlement of all outstanding dues and accordingly, completed the full payment of the entire Settlement Amount during July 2023. Pursuant thereto, the Company has received the No Dues Certificate dated July 14, 2023 from FFSPL confirming no outstanding dues in the loan accounts of the Company with FFSPL. Accordingly, the said loan accounts stands settled in the books of the Company and outstanding balance amount lying in books, which is not payable, Rs. 22860.45 lacs has been written back in the books.
B .Historically, the Company was under revival / rehabilitation under the provisions of the SICA 1985 and it's reference was pending before Hon'ble BIFR. In spite of the requisite financial support from certain members of the promoters and promoter group of the Company, the Company was in pressing need of financial support for its working capital requirements and in order to ensure its continuity and survival. However, due to sick status, it was not able to raise funds from banks / FIs on its own. In view thereof, the Company through its directors had requested the directors of the Company and other family members and group companies / entities including specifically Natroyal Industries Private Limited ("NIPL"), which are part of same family business group ("Promoter Group Persons”), to extend requisite support in securing financial support from banks / FIs. In view thereof, the Promoters Group Persons, by giving personal/family properties as collateral security, arranged Loans from banks / FIs on behalf of and for the sole benefit of the Company and such loan funds were initially disbursed to NIPL, as NIPL was a key party to such loan arrangement. As part of agreed arrangement between the Promoter Group Persons and the Company, such loan funds were transferred by NIPL to the Company and accordingly, the said loan / borrowed funds are shown in the name of NIPL and since then, the Company has been discharging all obligations in relation to said loan funds including payment of EMIs, principal repayment, interest and all other charges to the said banks / FIs. As part of agreed arrangement, the Company and Promoter Group Persons are primarily responsible for ensuring fulfilment of all obligations in relation to such loan funds including in case of default in repayment by the Company. Therefore, the Company remains primarily responsible for ensuring discharge of all obligations in relation to such loan funds availed from banks / FIs and standing in the name of NIPL.
Under the Duty Exemption Scheme of Advance License (as well as similar other license scheme) pursuant to Import & Export Policy of Government of India, duty free imports of raw materials were permitted, and they are required to be used in manufacturing of goods for export and export of goods has to be effected within the time allowed in terms of such scheme. In the past ( Prior to year 2000), the Company had availed benefit of such licenses from time to time and it had also fulfilled its export obligations as per the conditions of such scheme in many of the licenses but in some cases such exports were not done . The said matter relates back to the period of more than 25 years and as such, the management of the company, based on an expert opinion , evaluated its specific obligations which may still subsists, if any. Based on the comprehensive evaluation and expert opinion, the provision made in earlier years Rs. 5683.95 lacs has been written back .
Borrowing from Others in Previous year represents outstanding amount payable to Promoters & Promoters Group entities including LLPs, which were earlier Private Limited Companies. The same were advanced earlier due to the company being sick & was referred to BIFR etc . During the year loan outstanding of Rs.1398.50 Lacs has been converted into equity @Rs.40 per share and Rs.269.44 Lacs has been w/back, as no longer payable and Rs.621.53 lacs has been repaid. The balance outstanding as on 31.03.2024 represents amount payable to Ex-Directors.
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, it has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments 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.
Level 2: Such inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset and liability, either directly or indirectly.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.
Notes on Financial Statements for the Year ended 31st March, 2024
The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximates the fair value because there is wide range of possible fair value measurements and the costs represents estimate of fair value within that range.
The Management considers that the carrying amount of financials assets and financial liabilities carried at amortised cost approximates their fair values.
Note 30 - Financial Risk Management
The Company's activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company's risk management assessment and policies and processes are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company's activities.
A) Credit Risk
Credit risk is the risk of financial loss to the Company if a customer fails to meet its contractual obligations. a) Cash and Cash Equivalents
Credit risk from balances with banks and financial institutions is managed by the Company's treasury department in accordance with the Company's policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Board. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty's potential failure to make payments.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure as far as possible that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed condition, without incurring unacceptable losses or risking damage to the Company's reputation. The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of surplus funds, bank overdrafts, bank loans, debentures and inter-corporate loans.
The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding.
Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates and commodity prices) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and longterm debt. The Company is exposed to market risk primarily related to commodity prices and the market value of its investments.
Interest rate risk
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument 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 debt obligations with floating interest rates.
Note 32 - Capital Management
The company's objectives when managing capital are to:
> Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
> Maintain an optimal capital structure to reduce the cost of capital.
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.
Consistent with others in the industry, the group monitors capital on the basis of the following gearing ratio:
Note 33 - Segment Reporting
The company is engaged in manufacture of PVC products (PVC Flooring, Leather Cloth). Based on the information reported to the chief operating decision maker (CODM) for the purpose of resource allocation and assessment of performance, there are no reportable segments in accordance with the requirements of Indian Accounting Standard 108-'Operating Segment Reporting', notified under the Companies (Indian Accounting Standards) Rules, 2015.
Note 34: Exceptional Items
34.1 Written back of outstanding dues of Rs. 22860.44 lacs : Finquest Financial Solutions Private Limited ("FFSPL") , FFSPL had taken over the loans from SICOM & Saraswat Co-op bank. Pursuant to time to time deliberations and negotiations with FFSPL, the Company has finally negotiated with FFSPL to make a full and final payment of Rs. 860.00 lacs ("Settlement Amount") towards settlement of all outstanding dues and accordingly, completed the full payment of the entire Settlement Amount during July 2023. Pursuant thereto, the Company has received the No Dues Certificate dated July 14, 2023 from FFSPL confirming no outstanding dues in the loan accounts of the Company with FFSPL. Accordingly, the said loan accounts stands settled in the books of the Company and outstanding balance amount lying in books, which is not payable has been written back in the books. The required forms CHG-4 are filed with Registrar of Companies and current charges outstanding against above is nil.
34.2 Written back of outstanding Provisions for Custom Duty including interest of Rs. 5683.95 lacs : Under the Duty Exemption Scheme of Advance License (as well as similar other license scheme) pursuant to Import & Export Policy of Government of India, duty free imports of raw materials were permitted, and they are required to be used in manufacturing of goods for export and export of goods has to be effected within the time allowed in terms of such scheme. In the past (Prior to year 2000), the Company had availed benefit of such licenses from time to time and it had also fulfilled its export obligations as per the conditions of such scheme in many of the licenses but in some cases such exports were not done . The said matter relates back to the period of more than 25 years and as such, the management of the company, based on an expert opinion , evaluated its specific obligations which may still subsists, if any. Based on the comprehensive evaluation and expert opinion, the provision made in earlier years has been written back .
34.3 Unclaimed Liabilities/Balances written back Rs. 329.44 lacs : This represents balances of various parties ,which are no longer payable, have been Written back.
34.4 Total of all above is Rs. 28873.83 lacs
Note 37 - Capital Commitments
Capital expenditure contacted for ,at the end of the reporting period but not recognised as liabilities is Rs. 1.59 lacs ( Previous year Nil)
Note 38 - Earnings per Share
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the parent (after adjusting for interest on the convertible preference shares) by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.
c) Consequently, for all leases (other than short-term leases and leases of low-value assets), a right-of-use asset was recognized on the balance sheet for an amount equal to the liability for future lease payments, adjusted by the amount of any prepaid or accrued lease payments.
Note: This information has been determined to the extent such parties have been identified on ths basis of information available with the Company. Further interest is not provided, as Company is incurring continues losses and it is not in position to pay interest.
Note 43: The Company has suffered substantial losses in past and due to this, the entire net worth has been eroded. Operations are Continued and the accounts of the Company have been prepared on the basis that, the Company is a going concern. The Promoters are bringing funds required for working capital in order to have smooth operations. Further the Promoters of the Company has given a Letter to provide continious support to the Company , as and when required.
Note 44: The Board of the Directors of the Company in its Board Meeting held on 04th January, 2022, has considered and approved draft Scheme of Arrangement ("Scheme") in the nature of merger / amalgamation of , Royal Spinwell and Developers Private Limited, a group company with the Company (Royal Cushion Vinyl Products Limited ), , with effect from the Appointed Date of October 1, 2021 under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013. The Company received the NOC letter from BSE Ltd as required under Regulation 37 of SEBI, LODR and company had filled the application in NCLT in Oct 2023. Pursuant to the order dated December 15, 2023 read with the addendum order dated December 22, 2023 from Hon'ble National Company Law Tribunal, Mumbai Bench, Mumbai ("NCLT") , the Company had called meeting of it's Shareholders and Unsecured Creditors on 12.02.2024 .The coming into effect of the Scheme is subject to receipt of necessary statutory, regulatory and contractual approvals, permissions, consents, sanctions, exemption as may be required under applicable laws, regulations or guidelines in relation to the Scheme. Pending the coming into effect of the Scheme, these financial statements are prepared without giving effect to the provisions of the Scheme and as such, these financial statements are subject to revision / modification upon coming into effect of the Scheme.
Note 50 -The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which uses accounting software for maintaining its books of accounts, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of accounts along with the date when such changes were made and ensuring that the audit trail cannot be disabled. The Company uses the accounting software SAP for maintaining books of account. During the year ended 31 March 2024, the Company had not enabled the feature of recording audit trail (edit log) at the database level for the said accounting software SAP to log any direct data changes on account of recommendation in the accounting software administration guide which states that enabling the same all the time consume storage space on the disk and can impact database performance significantly. Audit trail (edit log) is enabled at the application level.
Note 51 - Other regulatory information:
a. The Company do not have any Benami property and no proceedings have been initiated or pending against the Company for holding any Benami property, under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.
b. The Company do not have any transactions with struck off companies under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.
c. The Company does not have any charge which is yet to be registered / satisfied with ROC beyond the statutory period.
d. he 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 directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Group (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
e. 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 Group shall 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
f. The Company has not undertaken any 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).
g. The Company has not traded or invested in Crypto currency or Virtual Currency during the current or previous year.
h. The Company has not been declared as a 'Wilful Defaulter' by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
i. The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.
Note 52: The figures of previous year have been regrouped / reclassified wherever necessary to compare with the current year's figures. Figures in brackets in the schedules and Notes pertain to previous year.
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