2.15 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past event and it is probable that an outflow of resources will be required to settle the said obligation and the amounts of the said obligation can be reliably estimated. These provisions are reviewed at the end of each reporting period and are adjusted to reflect the current best estimates.
2.16 Amortisation of Expenses
Deferred Revenue Expenditure is amortised over a period of five years.
2.17 Contingencies
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent assets are disclosed where an inflow of economic benefits is certain.
2.18 Revenue Recognition
Revenue is recognised upon transfer of control of promised goods to customers i.e., when the performance obligation gets fulfilled in an amount that reflects the consideration which the company expects to receive in exchange for that particular performance obligation.
Revenue is measured based on the transaction price, which is the net of variable consideration, adjusted for discounts, price concessions and incentives, if any, as specified in the contract with the customer Revenue also excludes taxes collected from customers.
a. Revenue From Operations
i. Sale of Goods
Revenue from the sale of manufactured and traded goods is recognised when significant risks and rewards of ownership of goods have been transferred, effective control over the goods no longer exists with the Company, amount of revenue / costs in respect of the transactions can reliably be measured and probable economic benefits associated with the transactions will flow to the Company.
ii. Rendering of Services
Revenue in case of contracts/orders spreading over more than one financial year are booked to the extent of work billed. Sales include export benefits & net of sales return. Export benefits accrue on the date of export, which are utilized for custom duty-free import of material/ transferred for consideration.
iii. Revenue Recognition on Percentage Completion Basis
In case of unbilled work, Revenue is recognised when significant portion of the work exceeding 75 % is completed. Till such time the unbilled work is carried at cost in Work-In-Progress.
b. Other Revenue
1) Customs Duty
Customs Duty/incentive entitlement as and when eligible is accounted on accrual basis. Accordingly, import duty benefits against exports effected during the year are accounted on estimate basis as incentive till the end of the year in respect of duty free imports of raw material yet to be made.
2) Interest Income
Interest income is accrued on a time basis by reference to the principal outstanding and the effective interest rate.
3) Other Income/Miscellaneous Income
Other items of income are accounted as and when the right to receive such income arises and it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably.
2.19 Borrowing Costs
i. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take 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.
ii. All other borrowing costs are recognised in Statement of Profit and Loss in the period in which they are incurred.
iii. The Company determines the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the period less any interest income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets, to the extent that an entity borrows funds specifically for the purpose of obtaining a qualifying asset. In case if the Company borrows generally and uses the funds for obtaining a qualifying asset, borrowing costs eligible for capitalisation are determined by applying a capitalisation rate to the expenditures on that asset. The Company suspends capitalisation of borrowing costs during extended periods in which it suspends
2.20 Earnings Per Share (‘EPS’)
Basic earnings per share is calculated by dividing the net profit attributable to the equity shareholders of the Company with the weighted average number of equity shares outstanding during the financial year, adjusted for treasury shares.
Diluted Earnings per share is calculated by dividing net profit attributable to the equity shareholders of the Company with the weighted average number of shares outstanding during the financial year, adjusted for the effects of all dilutive potential equity shares.
2.21 Statement of Cash Flows
Statement of Cash Flows is prepared segregating the cash flows into operating, investing and financing activities. Cash flow from operating activities is reported using indirect method, adjusting the net profit for the effects of:
i. changes during the period in inventories and operating receivables/payables transactions of a non-cash nature;
ii. non-cash items such as depreciation, provisions, deferred taxes, unrealised foreign currency gains and losses and undistributed profits of associates; and
iii. All other items for which the cash effects are investing or financing cash flows.
2.22 Unclaimed Dividend
The Ministry of Corporate Affairs had notified provisions relating to unpaid / unclaimed dividend under Sections 124 and 125 of the Companies Act, 2013 and the Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 (IEPF Rules)
As per these Rules, dividends which are not encashed / claimed by the shareholder for a period of seven consecutive years shall be transferred to the Investor Education and Protection Fund (IEPF) Authority The IEPF Rules mandate the companies to transfer such shares of Members of whom dividends remain unpaid / unclaimed for a period of seven consecutive years to the demat account of IEPF Authority
2.23 Dividend Distribution
Dividends paid (including income tax thereon) are recognised in the period in which the interim dividends are approved by the Board of Directors, or in respect of the final dividend when approved by shareholders.
3. Critical Judgements and Estimation in applying the Company’s Accounting Policies
The estimates and judgements used in the preparation of the financial statements are based on historical experience and various other assumptions and factors (including expectations of future events), that the Company believes to be reasonable under the existing circumstances. The said estimates and judgements are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates include useful lives of Property, Plant and Equipment, Intangible Assets, allowance for doubtful debts/advances, future obligations in respect of retirement benefit plans, expected cost of completion of contracts, provision for rectification costs, fair value measurement etc. Difference, if any, between the actual results and estimates is recognised in the period in which the results are known.
The areas involving critical estimates and judgements are:
a) Estimation of current tax expenses and payable.
b) Recognition of deferred tax assets for carried forward tax losses - Refer Note No. 10
c) Revenue Recognition - Refer Note No. 23
d) Estimation of defined benefit obligation - Refer Note No. 28
28. Employee Benefits Expenses as per IND AS - 19. (Contd.)
Defined Benefit Plan
The Company operates one Defined Benefit Plan, viz., Gratuity Benefit, for its employees. The Gratuity Plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days basic salary payable for each completed year of service as per the Payment of Gratuity Act. The Company does not have any fund for Gratuity Liability and the same is accounted for as provision.
Under the other long term employee benefit plan, the Company extends benefit of compensated absences to the employees, whereby they are eligible to carry forward their entitlement of earned leave for encashment upon retirement / separation or during tenure of service. The Plan is not funded by the Company
Compensated Absences
Compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as undiscounted liability at the balance sheet date. Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as an actuarially determined liability at the present value of the defined benefit obligation at the Balance Sheet Date.
Defined Contribution Plan
Contributions to Defined Contribution Plans are recognised as expense when employees have rendered services entitling them to such benefits.
36. Financial and Capital Risk 1. Financial Risk
The business activities of the Company expose it to a variety of financial risks, namely Market Risks (i.e. Foreign Exchange Risk, Interest Rate Risk and Price Risk), Credit Risk and Liquidity Risk. The Company’s Risk Management Strategies focus on the unpredictability of these elements and seek to minimise the potential adverse effects on its financial performance.
The Financial Risk Management for the Company is driven by the Company’s Senior Management and internal/ external experts subject to necessary supervision.
The Company does not undertake any speculative transactions either through derivatives or otherwise. The senior management is accountable to the Board of Directors and Audit Committee. They ensure that the Company’s financial risk-taking activities are governed by appropriate financial risk governance frame work, policies and procedures. The Board of Directors periodically reviews the exposures to financial risks, and the measures taken for risk mitigation and the results thereof.
i) Foreign Currency Risk
Foreign Exchange Risk arises on all recognised monetary assets and liabilities and on highly probable forecasted transactions which are denominated in a currency other than the functional currency of the Company. The Company has foreign currency trade payables and advance from customers.
The Foreign Exchange Risk Management Policy of the Company requires it to manage the foreign exchange risk by transacting as far as possible in the functional currency.
36. Financial and Capital Risk (Contd.)
ii) Price Risk
The Company uses surplus fund in operations and for further growth of the Company. Hence, there is no price risk associated with such activity
iii) Credit Risk
Credit risk refers to the risk of default on its obligation by the counter-party, the risk of deterioration of creditworthiness of the counter-party as well as concentration risks of financial assets and thereby exposing the Company to potential financial losses. The Company is exposed to credit risk mainly with respect to trade receivables.
Trade Receivables
The Trade receivables of the Company are typically non-interest bearing un-secured. As there is no independent credit rating of the customers available with the Company the management reviews the credit-worthiness of its customers based on their financial position, past experience and other factors. The credit risk related to the trade receivables is managed / mitigated by concerned team based on the Company’s established policy and procedures and by setting appropriate payment terms and credit period. The credit period provided by the Company to its customers depend upon the contractual terms with the customers.
The Company performs on-going credit evaluations of its customer’s financial condition and monitors the credit-worthiness of its customers to which it grants credit in its ordinary course of business. The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amount due or there are some disputes which in the opinion of the management is not in the Company’s favour. Where the financial asset has been written-off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit and loss.
iv) Liquidity Risk
Liquidity Risk is the risk that the Company will not be able to meet its financial obligations as they become due. Accordingly as a prudent liquidity risk management measure, the Company closely monitors its liquidity position and deploys a robust cash management system.
Based on past performance and current expectations, the Company believes that the Cash and Cash equivalents and cash generated from operations will satisfy its working capital needs, capital expenditure, investment requirements, commitments and other liquidity requirements associated with its existing operations, through at least the next twelve months.
The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments: -
v) Capital Risk
The Company’s objective while managing capital is to safeguard its ability to continue as a going concern (so that it is enabled to provide returns and create value for its Shareholders, and benefits for other Stakeholders), support business stability and growth, ensure adherence to the covenants and restrictions imposed by lenders and/ or relevant laws and regulations, and maintain an optimal and efficient capital structure so as to reduce the cost of capital. However, the key objective of the Company’s capital management is to, ensure that it maintains a stable capital structure with the focus on total equity uphold investor; creditor and customer confidence and ensure future development of its business activities. In order to maintain or adjust the capital structure, the Company may issue new shares, declare dividends, return capital to shareholders, etc. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions or its business requirements.
Proposed Dividend
The Board of Directors of the Company at its meeting held on May 2, 2024 have recommended payment of final dividend of Twenty paise per equity share of face value of Re. 1/- each for the financial year ended 31st March, 2024. The same amounts to Rs. 2,289.26 lakhs
The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognised as a liability.
38. Convertible Warrants Issue and Utilisation Statement
During the year under review, the Company raised the funds through -
The Board of Directors of the Company at its meeting held on 22nd November 2021 has made an allotment of 16,50,00,000 Convertible Warrants of Face Value of Re 1/- each at a premium of Rs. 2.86 to Promoter/ Promoter Group, on preferential allotment basis. Further the Board of Directors of the Company at its meeting held on 10th May, 2023 converted 7,50,00,000 (Previous year 9,00,00,000 convertible warrants of face value of Re.1/- each) Convertible Warrants of Face Value of Re 1/- each at a premium of Rs. 2.86 to Promoter/ Promoter Group, on preferential allotment basis. Company has received 75% of Rs. 2,171.25 lakhs the Issue price (25% amounting to Rs. 723.75 lakhs were received in Financial Year 2021-22).
The funds raised through the respective issues were utilized for the purpose for which it was raised and in accordance with the objectives of the said preferential issue stated in the explanatory statement to the notice of general meeting.
39. Right Issue and Utilisation Statement
The Board of Directors at its meeting held on 18th January 2024 allotted 6,34,64,610 shares to the Equity Shareholders of the Company through Rights Issue at issue price of Rs. 15.50 per equity Share (including a premium of Rs. 14.50 per equity Share). Company has received a sum of Rs. 9,837.01 lakhs.
The funds raised through the respective issues were utilized for the purpose for which it was raised and in accordance with the objectives of the said Right issue stated in the Letter of Offer.
43. Previous year’s figures are regrouped and rearranged wherever necessary.
44. Approval of Financial Statements.
The Financial Statements were approved by the Board of Directors on May 2, 2024.
As per our report of even date
For S Y Lodha & Associates For and on behalf of the Board of Directors
Chartered Accountants ICAI Firm Reg. No.: 136002W
Sd/- Sd/- Sd/-
Shashank Lodha Mukesh R. Gupta Kishore M. Pradhan
Partner Chairman Independent Director
Membership No.: 153498 DIN: 00028347 DIN: 02749508
UDIN: 24153498BKDHVZ8880
Sd/- Sd/-
Place: Mumbai Kalpesh P. Agrawal Rahima S. Shaikh
Date: 2nd May, 2024 Chief Financial Officer Company Secretary
ACS - 63449
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