(I) Provisions
Provisions are recognised when the Company has a present obligation
(legal or constructive) as a result of a past event, it is probable that the
Company will be required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation.
Provisions for restructuring are recognised by the Company when it has
developed a detailed formal plan for restructuring and has raised a valid
expectation in those affected that the Company will carry out the
restructuring by starting to implement the plan or announcing its main
features to those affected by it.
Provisions are measured at the best estimate of the consideration
required to settle the present obligation at the end of the reporting period,
taking into account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash flows estimated
to settle the present obligation, it's carrying amount is the present value
of those cash flows (when the effect of the time value of money is
material) and increase in the provision due to passage of time is
recognized as a Finance Cost in the Statement of Profit and Loss. The
measurement of provision for restructuring includes only direct
expenditures arising from the restructuring, which are both necessarily
entailed by the restructuring and not associated with the ongoing
activities of the Company.
(J) Employee benefits
Employee benefits include salaries, wages, contribution to provident
fund, gratuity, leave encashment towards un-availed leave, compensated
absences, post-retirement medical benefits and other terminal benefits.
Wages and salaries, including non-monetary benefits that are expected
to be settled within 12 months after the end of the period in which the
employees render the related service are recognised in respect of
employees' services up to the end of the reporting period and are
measured at the amounts expected to be paid when the liabilities are
settled. The liabilities are presented as current employee benefit
obligations in the balance sheet. The undiscounted amount of short-term
employee benefits expected to be paid in exchange for the services
rendered by employees are recognised as an expense in Employee
Benefit Expenses in the Statement of Profit and Loss during the period
when the employees render the services.
Post-employment benefits
Defined contribution plan
Employee Benefit under defined contribution plans comprises of
Contributory provident fund etc. is recognized based on the
undiscounted amount of obligations of the Company to contribute to the
plan. The same is paid to a fund administered through a separate trust.
The Company recognises contribution payable to the provident fund
scheme as an expense, when an employee renders the related service. If
the contribution payable to the scheme for service received before the
balance sheet date exceeds the contribution already paid, the deficit
payable to the scheme is recognised as a liability. If the contribution
already paid exceeds the contribution due for services received before
the balance sheet date, then excess is recognised as an asset to the
extent that the pre-payment will lead to a reduction in future payment or
a cash refund.
Defined benefit plans comprising of gratuity is recognized based on the
present value of defined benefit obligations which is computed using the
projected unit credit method, with actuarial valuations being carried out
at the end of each annual reporting period. These are accounted either as
current employee cost or included in cost of assets as permitted.
The net interest cost is calculated by applying the discount rate to the net
balance of the defined benefit obligation and the fair value of plan assets.
This cost is included in employee benefit expense in the statement of
profit and loss.
Remeasurement gains and losses arising from experience adjustments
and changes in actuarial assumptions are recognised in the period in
which they occur, directly in other comprehensive income. They are
included in retained earnings in the statement of changes in equity and in
the balance sheet.
Changes in the present value of the defined benefit obligation resulting
from plan amendments or curtailments are recognised immediately in
profit or loss as past service cost.
(K) Financial instruments
Financial assets and financial liabilities are recognised when an entity
becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair
value. Trade receivables that do not contain a significant financing
component are measured at transaction price. Transaction costs that
are directly attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial liabilities at
fair value through Statement of Profit and Loss (FVTPL)) are added to or
deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at
fair value through profit and loss are recognised immediately in
Statement of Profit and Loss.
(L) Financial assets
Recognition and initial measurement
The Company initially recognises loans and advances, deposits and debt
securities purchased on the date on which they originate. Purchases and
sale of financial assets are recognised on the trade date, which is the
date on which the Company becomes a party to the contractual
provisions of the instrument.
Classification of financial assets
On initial recognition, a financial asset is classified to be measured at -
• Amortised cost; or
• Fair Value through Other Comprehensive Income (FVTOCI) - debt
investment; or
• Fair Value through Other Comprehensive Income (FVTOCI) - equity
investment; or
• Fair Value through Profit or Loss (FVTPL)
Financial assets are not reclassified subsequent to their initial
recognition unless the Company changes its business model for
managing financial assets, in which case all affected financial assets are
reclassified on the first day of the first reporting period following the
change in the business model.
Subsequent Measurement
a) Financial asset measured at Amortized cost
A financial asset is measured subsequently at amortised cost using EIR
method less impairment if any, if it meets both of the following
conditions and is not designated at FVTPL:
• The asset is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
• The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
The Amortization of EIR and loss arising from impairment if any, is
recognized in the statement of profit and loss.
b) Financial Assets measured at Fair Value through Other
Comprehensive Income (FVTOCI)
Financial asset, except trade receivables and contract assets that are
measured at transaction price, is classified as FVTOCI only if it meets
both of the following conditions and is not recognised at FVTPL:
• The asset is held within a business model whose objective is achieved
by both collecting contractual cash flows and selling financial assets;
and
• The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured
initially as well as at each reporting date at fair value. Fair value
movements are recognised in the Other Comprehensive Income (OCI).
However, the Company recognises interest income, impairment losses &
reversals and foreign exchange gain or loss in the Statement of Profit
and Loss. On derecognition of the asset, cumulative gain or loss
previously recognised in OCI is reclassified from the equity to Statement
of Profit and Loss. Interest earned whilst holding FVTOCI debt
instrument is reported as interest income using the EIR method.
c) Financial Assets measured at Fair Value through Profit and Loss
(FVTPL)
Financial asset which is not classified in any of the above categories are
measured at FVTPL. Financial assets are reclassified subsequent to their
recognition, if the Company changes its business model for managing
those financial assets. Changes in business model are made and applied
prospectively from the reclassification date which is the first day of
immediately next reporting period following the changes in business
model in accordance with principles laid down under Ind AS 109 -
Financial Instruments.
d) Investment in Subsidiaries, Associates and Joint Ventures
The Company has accounted for its investments in Subsidiaries,
associates and joint venture at cost less impairment loss (if any).
e) Other Equity Instruments
All other equity investments in scope of IND AS 109 are measured at fair
value through Profit and Loss except for those equity investments for
which the Company has elected to present the value changes in 'Other
Comprehensive Income'. Equity instruments which are held for trading
and contingent consideration recognised by an acquirer in a business
combination to which IND AS 103 applies are classified as at FVTPL. For
all other equity instruments, the Company may make an irrevocable
election to present in other comprehensive income subsequent changes
in the fair value. The Company makes such election on an instrument-by¬
instrument basis. The classification is made on initial recognition and is
irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI,
then all fair value changes on the instrument, excluding dividends, are
recognised in the OCI. There is no recycling of the amounts from OCI to
Statement of Profit and Loss, even on sale of investment. However, on
sale/disposal the Company may transfer the cumulative gain or loss
within equity.
Equity instruments included within the FVTPL category are measured at
fair value with all changes recognised in the Statement of Profit and
Loss.
Trade receivables and contract assets are recognized at Transaction
Price which is the amount of consideration Company expects to be
entitled to in exchange for transferring promised goods or services to a
customer, excluding the amounts collected on behalf of third party. The
Transaction price is net of discounts, sales incentives, rebates granted,
returns, sales taxes, GST and duties and any other recoverable taxes.
Where trade receivables contain a significant financing component, then
they are recognized at discounted transaction price using EIR. Unwinding
of such discount is recognized as Other Income in the Statement of
Profit and Loss.
All other financial assets are classified as measured at FVTPL.
In addition, on initial recognition, the Company may irrevocably designate
a financial asset that otherwise meets the requirements to be measured
at amortised cost or at FVTOCI as at FVTPL if doing so eliminates or
significantly reduces and accounting mismatch that would otherwise
arise.
Financial assets at FVTPL are measured at fair value at the end of each
reporting period, with any gains and losses arising on remeasurement
recognised in statement of profit or loss. The net gain or loss recognised
in statement of profit or loss incorporates any dividend or interest earned
on the financial asset and is included in the 'other income' line item.
Dividend on financial assets at FVTPL is recognised when:
• The Company's right to receive the dividends is established.
• It is probable that the economic benefits associated with the dividends
will flow to the entity,
• The dividend does not represent a recovery of part of cost of the
investment and the amount of dividend can be measured reliably.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights
to the cash flows from the asset expire, or when it transfers the financial
asset and substantially all the risks and rewards of ownership of the
asset to another party or neither transfers or retains substantially all of
the risks and rewards of ownership and it does not retain control of the
financial asset.
Impairment
The Company applies the expected credit loss model for recognising
impairment loss on financial assets other than those measured at Fair
Value through Profit and Loss (FVTPL).
Expected credit losses are the weighted average of credit losses with the
respective risks of default occurring as the weights. Credit loss is the
difference between all contractual cash flows that are due to the
Company in accordance with the contract and all the cash flows that the
Company expects to receive (i.e. all cash shortfalls), discounted at the
original effective interest rate (or credit-adjusted effective interest rate for
purchased or originated credit-impaired financial assets). The Company
estimates cash flows by considering all contractual terms of the financial
instrument (for example, prepayment, extension, call and similar options)
through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at
an amount equal to the lifetime expected credit losses if the credit risk
on that financial instrument has increased significantly since initial
recognition. If the credit risk on a financial instrument has not increased
significantly since initial recognition, the Company measures the loss
allowance for that financial instrument at an amount equal to 12-month
expected credit losses. 12-month expected credit losses are portion of
the life-time expected credit losses and represent the lifetime cash
shortfalls that will result if default occurs within the 12 months after the
reporting date and thus, are not cash shortfalls that are predicted over
the next 12 months.
If the Company measured loss allowance for a financial instrument at
lifetime expected credit loss model in the previous year, but determines a
the end of a reporting year that the credit risk has not increased
significantly since initial recognition due to improvement in credit quality
as compared to the previous year, the Company again measures the loss
allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant
increase in credit risk since initial recognition, the Company uses the
change in the risk of a default occurring over the expected life of the
financial instrument instead of the change in the amount of expected
credit losses. To make that assessment, the Company compares the risk
of a default occurring on the financial instrument as at the reporting date
with the risk of a default occurring on the financial instrument as at the
date of initial recognition and considers reasonable and supportable
information, that is available without undue cost or effort, that is
indicative of significant increases in credit risk since initial recognition.
Further, for the purpose of measuring lifetime expected credit loss
allowance for trade receivables, the Company has used a practical
expedient as permitted under Ind AS 109. This expected credit loss
allowance is computed based on a provision matrix which takes into
account historical credit loss experience and adjusted for forward¬
looking information.
(M) Effective interest rate method
The effective interest rate method is a method of calculating the
amortised cost of a debt instrument and allocating interest income over
the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash receipts (including all fees and points
paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the
expected life of the debt instrument, or, where appropriate, a shorter
period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments
other than those financial assets classified as at FVTPL and Interest
income is recognised in profit or loss.
(N) Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by a company are classified as either
financial liabilities or as equity in accordance with the substance of the
contractual arrangements and the definitions of a financial liability and
an equity instrument.
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 recognised at the proceeds
received, net of directly attributable transaction costs.
Financial liabilities
Financial liabilities are classified as measured at amortised cost or
'FVTPI '
A Financial Liability is classified as at FVTPL if it is classified as held-for-
trading or it is a derivative (that does not meet hedge accounting
requirements) or it is designated as such on initial recognition.
A financial liability is classified as held for trading if:
• It has been incurred principally for the purpose of repurchasing it in the
near term; or
• On initial recognition it is part of a portfolio of identified financial
instruments that the Company manages together and has a recent
actual pattern of short-term profit-taking; or
• It is a derivative that is not designated and effective as a hedging
instrument.
A financial liability other than a financial liability held for trading may be
designated as at FVTPL upon initial recognition if:
• Such designation eliminates or significantly reduces a measurement or
recognition inconsistency that would otherwise arise;
• The financial liability forms part of a group of financial assets or
financial liabilities or both, which is managed and its performance is
evaluated on a fair value basis, in accordance with the Company's
documented risk management or investment strategy, and information
about the grouping is provided internally on that contract basis; or
• It forms part of a containing one or more embedded derivatives, and
IND AS 109 permits the entire combined contract to be designated as
at FVTPL in accordance with IND AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or
losses arising on remeasurement recognised in Statement of Profit and
Loss. The net gain or loss recognised in Statement of Profit and Loss
incorporates any interest paid on the financial liability and is included in
the 'other gains and losses' line item in the Statement of Profit and Loss.
Other financial liabilities
Other financial liabilities (including borrowings and trade and other
payables) are subsequently measured at amortised cost using the
effective interest method.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the
Company's obligations are discharged, cancelled or have expired. An
exchange with a lender of debt instruments with substantially different
terms is accounted for as an extinguishment of the original financial
liability and the recognition of a new financial liability. Similarly, a
substantial modification of the terms of an existing financial liability
(whether or not attributable to the financial difficulty of the debtor) is
accounted for as an extinguishment of the original financial liability and
the recognition of a new financial liability. The difference between the
carrying amount of the financial liability derecognised and the
consideration paid and payable is recognised in profit or loss.
(O) Cash and cash equivalents
Cash and cash equivalent in the Balance Sheet comprise cash at banks
and on hand and short- term deposits with an original maturity of three
months or less, which are subject to insignificant risk of changes in
value.
(P) Share Capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issuance of new ordinary shares and share options
and buyback of ordinary shares are recognized as a deduction from
equity, net of any tax effects.
(Q) Segments reporting
The Company is engaged in the business of Injection Moulding and Blow
Moulding plastic articles such as Industrial containers, Healthcare
furniture, and automotive components. There is no separate reportable
segment in terms of IND AS-108 and hence there is no requirement of
segment reporting.
( R ) Earnings per share
Basic earnings per share
Basic earnings per share is computed by dividing the net profit after tax
by weighted average number of equity shares outstanding during the
period. The weighted average number of equity shares outstanding
during the year is adjusted for treasury shares, bonus issue, bonus
element in a rights issue to existing shareholders, share split and reverse
share split (consolidation of shares).
Diluted earnings per share
Diluted earnings per share is computed by dividing the profit after tax
after considering the effect of interest and other financing costs or
income (net of attributable taxes) associated with dilutive potential
equity shares by the weighted average number of equity shares
considered for deriving basic earnings per share and also the weighted
average number of equity shares that could have been issued upon
conversion of all dilutive potential equity shares including the treasury
shares held by the Company to satisfy the exercise of the share options
by the employees.
(S) Events after reporting period
Events after the reporting period are those events, favourable and
unfavourable, that occur between the end of the reporting period and the
date when the financial statements are approved by the Board of
Directors in case of a company, and, by the corresponding approving
authority in case of any other entity for issue. Two types of events can be
identified:
• those that provide evidence of conditions that existed at the end of the
reporting period (adjusting events after the reporting period); and
• those that are indicative of conditions that arose after the reporting
period (non-adjusting events after the reporting period).
The Company adjusts the amounts recognised in its financial statements
to reflect adjusting events after the reporting period.
The Company does not adjust the amounts recognised in its financial
statements to reflect non-adjusting events after the reporting period.
(T) Contingent assets and Contingent Liabilities
Contingent Liability is:
• a possible obligation that arises from past events and whose
existence will be confirmed only by the occurrence or non-occurrence
of one or more uncertain future events not wholly within the control of
the entity; or
• a present obligation that arises from past events but is not recognized
because:
• it is not probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; or
• the amount of the obligation cannot be measured with sufficient
reliability.
The Company does not recognize Contingent Liabilities in the books of
accounts and such Contingent Liabilities are disclosed as part of notes
forming Financial Statements except where an outflow of resources
embodying economic benefits becomes probable, except in the
extremely rare circumstances where no reliable estimate can be made.
Contingent Liabilities are assessed continuously to determine whether
an outflow of resourses embodying economic benefits has become
probable.
Contingent Asset is:
• a possible asset that arises from past events and whose existence will
be confirmed only by the occurrence or non-occurrence of one or
more uncertain future events not wholly within the control of the entity.
The Company does not recognize contingent assets in the books of
accounts except where the realization of Income becomes virtually
certain and where such assets no longer remain contingent. The
Company discloses Contingent Assets as part of notes forming Financial
Statements when an inflow of economic benefits is probable. Contingent
assets are assessed continually to ensure that developments are
appropriately reflected in the financial statements.
NOTE 14.1
Nature & Purpose of Reserves
a) Securities premium reserve : Securities premium reserve is created
due to premium on issue of shares. These reserve is utilized in
accordance with the provisions of the Companies Act, 2013.
b) General Reserve : Under the erstwhile Indian Companies Act, 1956, a
general reserve was created through an annual transfer of net income at
a specified percentage in accordance with applicable regulations. The
purpose of these transfers was to ensure that if a dividend distribution in
a given year is more than 10.00% of the paid-up capital of the Company
for that year, then the total dividend distribution is less than the total
distributable reserves for that year.
Consequent to introduction of Companies Act, 2013, the requirement of
mandatory transfer of a specified percentage of the net profit to general
reserve has been withdrawn and the Company can optionally transfer
any amount from the surplus of profit or loss to the General reserve."
c) Forfeiture Reserve: Share forfeiture reserve is a reserve account
created to hold the amount received from shareholders against share
capital whose shares have been forfeited due to non-payment of dues.
d) Retained Earnings : Retained earnings are the profits that the
Company has earned till date, less any transfers to general reserve,
dividends or other distributions paid to shareholders.
d) Items of Other Comprehensive Income
Remeasurements of Net Defined Benefit Plans : Differences between
the interest income on plan assets and the return actually achieved, and
any changes in the liabilities over the year due to changes in actuarial
Financial instruments
Fair values
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants
at the measurement date, regardless of whether that price is directly
observable or estimated using another valuation technique. In estimating
the fair value of an asset or a liability, the Company takes in to account
the characteristics of the asset or liability if market participants would
take those characteristics into account when pricing the asset or liability
at the measurement date. Fair value for measurement and/or disclosure
purposes in these financial statements is determined on such a basis.
In addition, for financial reporting purposes, fair value measurements are
categorised into Level 1, Level 2 or Level 3 based on the degree to which
the inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurements in its entirety,
which are described as follows:
• Level 1 : inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the
measurement date;
• Level 2 : inputs are inputs, other than quoted prices included within
level 1, that are observable for the asset or liability, either directly or
indirectly; and
• Level 3 : inputs are unobservable inputs for the asset or liability.
The management assessed that cash and cash equivalents, trade
receivables, trade payables, bank overdrafts and other current liabilities
approximate their carrying amounts largely due to the short-term
maturities of these instruments.
The fair value of the financial assets and liabilities is included at the
amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation
sale. The following methods and assumptions were used to estimate the
fair values:
• Long-term fixed-rate and variable-rate receivables/borrowings are
evaluated by the Company based on parameters such as interest
rates, specific country risk factors, individual creditworthiness of the
customer and the risk characteristics of the financed project. Based
on this evaluation, allowances are taken into account for the expected
credit losses of these receivables.
• The fair values of the quoted notes and bonds are based on price
quotations at the reporting date. The fair value of unquoted
instruments, loans from banks and other financial liabilities,
obligations under finance leases, as well as other non-current
financial liabilities is estimated by discounting future cash flows using
rates currently available for debt on similar terms, credit risk and
remaining maturities. In addition to being sensitive to a reasonably
possible change in the forecast cash flows or the discount rate, the
fair value of the equity instruments is also sensitive to a reasonably
possible change in the growth rates. The valuation requires
management to use Unobservable inputs in the model, of which the
significant unobservable inputs are disclosed in Note 41(B).
Management regularly assesses a range of reasonably possible
alternatives for those significant unobservable inputs and determines
their impact on the total fair value.
• The fair values of the Company's interest-bearing borrowings and
loans are determined by using DCF method using discount rate that
reflects the issuer's borrowing rate as at the end of the reporting
period.
The 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 loans, trade and other receivables, and cash and cash
equivalents that derive directly from its operations. The Company is
exposed to market risk, credit risk and liquidity risk. The Company's
senior management oversees the management of these risks providing
an assurance that the Company's financial risk activities are governed by
appropriate policies and procedures and that financial risks are
identified, measured and managed in accordance with the Company's
policies and risk objectives. It is the Company's policy that no trading in
derivatives for speculative purposes may be undertaken. The Board of
Directors reviews and agrees policies for managing each of these risks,
which are summarised below
(A) Financial risk management
The management of the company is responsible to oversee the Risk
Management Framework for developing and monitoring the Company's
risk management policies. The risk management policies are established
to ensure timely identification and evaluation of risks, setting acceptable
risk thresholds, identifying and mapping controls against these risks,
monitor the risks and their limits, improve risk awareness and
transparency. Risk management policies and systems are reviewed
regularly to reflect changes in the market conditions and the Company's
activities to provide reliable information to the Management and the
Board to evaluate the adequacy of the risk management framework in
relation to the risk faced by the Company.
The risk management policies aims to mitigate the following risks arising
from the financial instruments:
• Market risk
• Credit risk; and
• Liquidity risk
(B) Market risk
Market risk is the risk that the fair value of future cash flows of a
financial instrument will fluctuate because of changes in the market
prices. The Company is exposed in the ordinary course of its
business to risks related to changes in foreign currency exchange
rates, commodity prices and interest rates.
The Company seeks to minimize the effects of these risks by using
derivative financial instruments to hedge risk exposures. The use of
financial derivatives is governed by the Company's policies approved
by the Board of Directors, which provide written principles on foreign
exchange risk, interest rate risk, credit risk, the use of financial
derivatives and non-derivative financial instruments, and the
investment of excess liquidity. Compliance with policies and
exposure limits is reviewed by the Management and the internal
auditors on a continuous basis. The Company does not enter into or
trade financial instruments, including derivatives for speculative
purposes.
( C) Foreign currency risk management
The Company's functional currency is Indian Rupees (INR). The
Company undertakes transactions denominated in foreign
currencies; consequently, exposure to exchange rate fluctuations
arise. Volatility in exchange rates affects the Company's revenue
export markets and the costs of imports, primarily in relation to raw
materials. The Company is exposed to exchange rate risk under its
trade and debt portfolio.
Adverse movements in the exchange rate between the Rupee and any
relevant foreign currency result's in increase in the Company's overall
debt position in Rupee terms without the Company having incurred
additional debt and favourable movements in the exchange rates will
conversely result in reduction in the Company's receivables in foreign
currency. In order to hedge exchange rate risk, the Company has a
policy to hedge cash flows up to a specific tenure using forward
exchange contracts and options. In respect of imports and other
payables, the Company hedges its payables as when the exposure
arises. Short term exposures are hedged progressively based on their
maturity.
All hedging activities are carried out in accordance with the
Company's internal risk management policies, as approved by the
Board of Directors, and in accordance with the applicable regulations
where the Company operates.
The carrying amounts of the Company's monetary assets and
monetary liabilities at the end of the reporting period are disclosed in
Note 42
(D) Credit risk management:
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Company.
Credit risk encompasses both, the direct risk of default and the risk of
deterioration of creditworthiness as well as concentration risks. The
Company has adopted a policy of only dealing with creditworthy
counterparties and obtaining sufficient collateral, where appropriate,
as a means of mitigating the risk of financial loss from defaults.
Company's credit risk arises principally from the trade receivables,
loans, cash & cash equivalents and financial guarantees.
Trade receivables
Customer credit risk is managed centrally by the Company and
subject to established policy, procedures and control relating to
customer credit risk management. Credit quality of a customer is
assessed based on an extensive credit rating scorecard and
individual credit limits defined in accordance with the assessment.
Credit risk on receivables is also mitigated by securing the same
against letters of credit and guarantees of reputed nationalised and
private sector banks. Trade receivables consist of a large number of
customers spread across diverse industries and geographical areas
with no significant concentration of credit risk. The outstanding trade
receivables are regularly monitored and appropriate action is taken
for collection of overdue receivables. Company has also taken
insurance cover of trade receivable exposure to mitigate credit risk.
Cash and cash equivalents
Credit risks from balances with banks and financial institutions are
managed in accordance with the Company policy.
In addition, the Company is exposed to credit risk in relation to
financial guarantees given to banks and other counterparties. The
Company's maximum exposure in this respect is the maximum
amount of the Company would have to pay if the guarantee is called
upon.
Liquidity risk refers to the risk of financial distress or extraordinary
high financing costs arising due to shortage of liquid funds in a
situation where business conditions unexpectedly deteriorate and
requiring financing. The Company requires funds both for short term
operational needs as well as for long term capital expenditure growth
projects. The Company generates sufficient cash flow for operations,
which together with the available cash and cash equivalents and
short term investments provide liquidity in the short-term and long¬
term. The Company has established an appropriate liquidity risk
management framework for the management of the Company's
short, medium and long-term funding and liquidity management
requirements. The Company manages liquidity risk by maintaining
adequate reserves, banking facilities and reserve borrowing facilities,
by continuously monitoring forecast and actual cash flows, and by
matching the maturity profiles of financial assets and liabilities.
Collateral
The Company has pledged part of its trade receivables, cash and cash
equivalents and all current assets to fulfil certain collateral requirements
for the banking facilities extended to the Company. There is obligation to
return the securities to the Company once these banking facilities are
surrendered.
Capital management
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 parent. The primary objective of
the Company's capital management is to maximise the shareholder
value.
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
30% and 70%. The Company includes within net debt, interest bearing
loans and borrowings, trade and other payables, less cash and cash
equivalents, excluding discontinued operations.
The Company monitors its capital using gearing ratio, which is net debt
divided to total equity. Net debt includes, interest bearing loans and
borrowings less cash and cash equivalents, bank balances other than
cash and cash equivalents and current investments. Company's gearing
ratio at the end of the reporting period are disclosed in Note 36
In order to achieve this overall objective, the Company's capital
management, amongst other things, aims to ensure that it meets
financial covenants attached to the interest-bearing loans and
borrowings that define capital structure requirements. Breaches in
meeting the financial covenants would permit the bank to immediately
call loans and borrowings. There have been no breaches in the financial
covenants of any interest-bearing loans and borrowing in the current
period.
No changes were made in the objectives, policies or processes for
managing capital during the years ended 31 March 2025 and 31 March
2024.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded
in the balance sheet cannot be measured based on quoted prices in
active markets, their fair value is measured using valuation techniques
including the DCF model. The inputs to these models are taken from
observable markets where possible, but where this is not feasible, a
degree of judgement is required in establishing fair values. Judgements
include considerations of inputs such as liquidity risk, credit risk and
volatility. Changes in assumptions about these factors could affect the
reported fair value of financial instruments.
NOTE 43
No transactions to report against the following disclosure requirements as
notified by MCA pursuant to amended schedule III :
(a) There are no title deeds of immovable property which are not held in
name of the Company.
(b) The Company does not have any transactions with companies which
are struck off.
(c) The Company does not have any benami property, where any
proceeding has been initiated or pending against the Company for
holding any benami property.
(d) The Company is not declared a wilful defaulter by any bank or financial
institution or any other lender.
(e) The Company does not have any charges or satisfaction which is yet to
be registered with ROC beyond the statutory period.
(f) The Company has complied with the number of layers prescribed under
section 2(87) of the Companies Act,2013 read with Companies
(Restriction on number of Layers) Rules, 2017.
(g) The Company has not advanced or loaned or invested funds to any
other persons or entities, 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.
(h) 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.
(I) The Company does not have 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).
(j) The Company has not traded or invested in crypto currency or virtual
currency during the financial year.
NOTE 44
Previous year figures have been regrouped to comply with current year
groupings.
AS PER OUR REPORT OF EVEN DATE ATTACHED
FOR GOKHALE & SATHE FOR MITSU CHEM PLAST LTD-
CHARTERED ACCOUNTANTS CIN : L25111M-H988R-C048925
FRN : 103264W
ATUL A. KALE JAGDISH DEDHIA SANJAY DEDHIA
(PARTNER) (CHAIRMAN & WTD) (MANAGING DIRECTOR)
Membership No. 109947 DiN: 01639945 Din : 01552883
PLACE : MUMBAI MANISH DEDHIA SWECHHA SHENDE
DATE: 8th May 2025 (MANAGING DIRECTOR & CFO) (COMPANY SECRETARY)
DIN: 01552841
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