3.4 Provisions, Contingent Liabilities And Contingent Assets
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 an outflow of resources
embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Company expects some or all of a provision to be reimbursed, reimbursement is recognised as a separate asset, but only when the reimbursement is virtually
certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost in respective expense.
Contingent Liabilities and Contingent Assets
Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.
3.5 Income tax
Current tax:
Provision for current tax is made as per the provisions of the Income Tax Act, 1961.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax
items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns
with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax:
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes at the reporting date.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent
that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items
are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates
(and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes
relate to the same taxation authority.
3.6 Employee Benefits
Short-term Employee Benefits:
Employee benefit liabilities such as salaries, wages and bonus, etc. that are expected to be settled wholly within twelve 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 an undiscounted amount
expected to be paid when the liabilities are settled.
Post-employment benefit plans:
Defined Contribution Plans:
State governed Provident Fund Scheme and Employees State Insurance Scheme are defined contribution plans. The contribution paid / payable under the schemes is
recognised during the period in which the employees render the related services.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
The Company’s gratuity scheme is a defined benefit plan. Currently, the Company’s gratuity scheme is unfunded. The Company recognises the defined benefit liability in
Balance sheet. The present value of the obligation under such defined benefit plan and the related current service cost and, where applicable past service cost are
determined based on an actuarial valuation done using the Projected Unit Credit Method by an independent actuary, which recognises each period of service as giving rise
to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligations are measured at the present value of
the estimated future cash flows.
Re-measurements, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) is reflected immediately in Other Comprehensive
Income in the Statement of Profit and loss. All other expenses related to defined benefit plans are recognised in Statement of Profit and Loss as employee benefit
expenses. Re-measurements recognised in Other Comprehensive Income will not be reclassified to Statement of Profit and Loss hence it is treated as part of retained
earnings in the Statement of Changes In Equity.
3.7 Fair value measurement
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.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
? In the principal market for the asset or liability, or
? In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to/ by the Company.
Fair value hierarchy
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level
input that is significant to the fair value measurement as a whole;
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input that has a significant effect on the fair value measurement are observable, either directly or indirectly.
Level 3: Valuation techniques for which the lowest level input which has a significant effect on the fair value measurement is not based on observable market data.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in
the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting
period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or
liability and the level of the fair value hierarchy as explained above.
3.8 Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
a) Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
? Debt instruments at amortised cost - The Company has cash & cash equivalents, loans and trade receivables classified within this category.
? Debt instruments at fair value through other comprehensive income (FVTOCI) - The Company does not have any financial asset classified in this category
? Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL) - The Company does not have any financial asset classified in this
category as on 31st March 2023.
? Equity instruments measured at fair value through other comprehensive income (FVTOCI) - The Company does not have any financial asset classified in this category.
Debt instruments at amortised cost
A ‘debt instrument’ is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated
by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation and losses arising from
impairment are recognised in the Statement of Profit & Loss. The amortised cost of the financial asset is also adjusted for loss allowance, if any.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is
classified as at FVTPL.
In addition, the company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is
allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ‘accounting mismatch’). Company has not designated any such
debt instrument as at FVTPL.
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit & Loss.
Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the
contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company
neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. Any gain or loss on derecognition is
recognised in the Statement of Profit and Loss.
Impairment of financial assets
In accordance with IndAS 109, the company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial
assets and credit risk exposure:
Financial assets that are debt instruments, and are measured at amortised cost e.g. Loans and trade receivables.
The company follows ‘simplified approach’ for recognition of impairment loss allowance on Trade receivables that do not contain a significant financing component.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime
ECLs at each reporting date, right from its initial recognition.
Initial recognition and measurement
All financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
All financial liabilities are initially measured at fair value deducted by, in the case of financial liabilities not recorded at fair value through profit or loss, transaction costs
that are attributable to the liability.
Subsequent measurement
Financial liabilities are classified as measured at amortised cost using the effective interest method. The Company’s financial liabilities include trade payables,
borrowings and other financial liabilities.
Under the effective interest method, the future cash payments are exactly discounted to the initial recognition value using the effective interest rate. The cumulative
amortization using the effective interest method of the difference between the initial recognition amount and the maturity amount is added to the initial recognition value
(net of principal repayments, if any) of the financial liability over the relevant period of the financial liability to arrive at the amortized cost at each reporting date. The
corresponding effect of the amortization under effective interest method is recognized as expense over the relevant period of the financial liability in the Statement of
Profit and Loss.
Derecognition:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by
another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated
as the Derecognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and
the consideration paid is recognized in the Statement of Profit and Loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount presented in the Balance Sheet when, and only when, the Company currently has a legally
enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the assets and settle the liabilities simultaneously.
3.9 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 an insignificant risk of changes in value.
3.10 Revenue Recognition
The Company recognises revenue to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
A 5-step approach is used to recognise revenue as below:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligation in contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Freight services
Revenue from services rendered is recognised in proportion to the stage of completion of the transaction at the reporting date when the outcome of the transaction can be
estimated reliably.
Revenue is measured at fair value of the consideration received or receivable, after deduction of any trade discounts, volume rebates and any taxes or duties collected on
behalf of the government which are levied on services such as Goods and service tax
Interest income
Interest income on financial asset is recognised using the effective interest rate (EIR) method.
3.11 Earnings per share
Basic earnings per share is computed using the net profit for the year attributable to the shareholders’ and weighted average number of equity shares outstanding during
the year.
Diluted earnings per share is computed using the net profit for the year attributable to the shareholders’ and weighted average number of equity shares.
3.12 Cash flow statement
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of
past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
3.13 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The board of directors of the Company
has been identified as being the chief operating decision maker by the Management of the company.
3.14 Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets up to the assets are
substantially ready for their intended use. The loan origination costs directly attributable to the acquisition of borrowings (e.g. loan processing fee, upfront fee) are
amortised in the year in which they occur
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs
eligible for capitalization. All other borrowing costs are recognised in the statement of profit and loss in the period in which they are incurred.
At inception of a contract, the company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the
company assesses whether:
Ý the contract involves the use of an identified asset - this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of
the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified.
• the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
• the Company has the right to direct the use of the asset. The Company has this right when it has the decision-making rights that are most relevant to changing how and
for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct
the use of the asset if either:
- the Company has the right to operate the asset; or
- the Company designed the asset in a way that predetermines how and for what purpose it will be used.
At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the
basis of their relative stand-alone prices.
3.15 Company as a lessee
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises
the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of
costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use
asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the
right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in
the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the
discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
Ý fixed payments, including in-substance fixed payments.
Ý variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date.
Ý amounts expected to be payable under a residual value guarantee; and
Ý the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is
reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Company is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a
change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or if the Company
changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if
the carrying amount of the right-of-use asset has been reduced to zero.
3.16 Company as a lessor
Leases in which the company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from
operating lease is recognised on a straight-line basis over the term of the relevant lease unless the payments to the lessor are structured to increase in line with expected
general inflation to compensate for the lessor’s expected inflationary cost increases or another systematic basis is available. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents
are recognised as revenue in the period in which they are earned.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the company to the lessee. Amounts due from lessees
under finance leases are recorded as receivables at the company’s net investment in the leases. Finance lease income is allocated to accounting periods to reflect a
constant periodic rate of return on the net investment outstanding in respect of the lease.
3.17 Short-term leases and leases of low-value assets
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value
assets. The company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Terms & Condition of Loans
i) Working Capital Loan from HDFC Bank is secured against hypothecation of current assets, FD's and mortgage of Immovable Properties of the company, and
carries effective interest @ 8.47% p.a.
ii) Working Capital Loan from DBS Bank is secured against hypothecation of Current Assets FD's and mortgage of Immovable Properties of the company and
Carries effective interest @ 8,30% p.a.
iii) Working Capital Loan from Axis Bank is secured against hypothecation of Current Assets and Fixed Deposit, and Carries effective interest @ 8.40% p.a.
iv) Working Capital Loan from Citi Bank is secured against hypothecation of Current Assets, and mortgage of Immovable Properties and Carries effective
interest @ 8.49% p.a.
v) Working Capital Loan from Indusind Bank is secured against hypothecation of Current Assets, fixed deposit and Carries effective interest @ 8.10 p.a.
vi) Working Capital Loan from HSBC Bank is secured against hypothecation of Current Assets, fixed deposit and Carries effective interest @ 8.48% p.a.
vii) Working Capital Loan from Bajaj Finance Ltd is secured against hypothecation of Current Assets, fixed deposit and Carries effective interest @ 8.20% p.a.
viii) Working Capital Loan from RBL Bank Ltd is secured against hypothecation of Current Assets, fixed deposit and carries effective interest @ 8.04% p.a.
vii) There is no default,continuing or otherwise,as at the balance sheet date,in repayment of any above loans.
The Company has borrowings from banks against the security of current assets and the company is submitting the monthly statement of stock and receivables to the banks. The monthly
statements of current asset filed by the company are in agreement with the books of accounts with a variation of 3%. Such variations are incorprated along with any other audit related
changes at their respective time intervals. Following is the variance table in the respective months:
Defined Benefit Plan - Gratuity
The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days of total basic salary last drawn for each completed year of service. Gratuity is payable to all
eligible employees of the Company on retirement, separation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act, 1972.
Post-Employment Benefits plan defined in a(ii) and a(iii) above typically expose the Company to actuarial risks such as: Salary increase, Discount rate, Morality and Disability and withdrawals
a) Salary Increases :— Actual salary increases will increase the Plan’s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.
b) Discount Rate :— Reduction in discount rate in subsequent valuations can increase the plan’s liability.
c) Mortality & disability :— Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
d) Withdrawals :— Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan’s liability.
b) The following tables set out the status of the gratuity plan, unavailed leave and amounts recognized in the Company’s financial statements.
i) Change in benefit obligations
The Company’s principal financial liabilities comprise borrowings, security deposits, trade and other payables, etc. The main purpose of these financial liabilities is to
finance the Company’s operations. The Company’s principal financial assets include trade receivable, security deposit, cash and cash equivalents, etc. that derive
directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The management oversees the management of these risks. The management is responsible for
formulating an appropriate financial risk governance framework for the Company and periodically reviewing the same. The management ensures that financial risks are
identified, measured and managed in accordance with the Company’s policies and risk objectives. The management reviews and agrees policies for managing each of
these risks, which are summarised below.
(a) 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 market prices. Market prices comprise three
types of risk: interest rate risk, foreign currency risk and Equity price risk.
(i) Interest Rate Risk
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. Since the
Company has borrowings based on fixed rate and floating rate, therefore Company is exposed to such risk on borrowings with floating rates.
Relationship with Struck off Companies
The Company do not have any transactions with companies struck off.
Registration of charges or satisfaction with Registrar of Companies (ROC)
The company has no pending charges or satisfaction which are yet to be registered with the ROC beyond the Statutory period.
Compliance with number of layers of companies
The company has complied with the provision of the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number
of Layers) Rules, 2017.
Compliance with approved Scheme(s) of Arrangements
There are no Schemes of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013.
Discrepancy in utilization of borrowings
The company has used the borrowings from banks and financial institutions for the specific purpose for which it was taken.
Utilisation of Borrowed funds and share premium:
(A) The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or
entity(ies), including foreign entities (Intermediaries).
(B) the company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party).
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); orb) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;
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 Funding
Party (Ultimate Beneficiaries) or;b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
47 Additional Information
Undisclosed income
The Company has no transaction that 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 ofthe Income Tax Act, 1961).
Details of Crypto Currency or Virtual Currency
The company has not traded or invested in Crypto currency or Virtual Currency.
48 Previous year's figures have been regrouped/reclassified wherever necessary to conform current year's presentation.
As per our Report of even date annexed For and on behalf of the Board of Directors of
For MITTAL AND ASSOCIATES RITCO LOGISTICS LIMITED
Chartered Accountants
Firm Registration No.- 106456W
Sd/- Sd/-
Man Mohan Pal Singh Chadha Sanjeev Kumar Elwadhi
(Chairman & CFO) (Managing Director & CEO)
DIN: 01763805 DIN: 02694094
Sd/- Sd/-
Neeraj Bangur Gitika Arora
Partner (Company Secretary)
Membership No. : 462798 Membership No. A37409
UDIN: 25462798BMKOZF1141
Place: Patna Place: Gurgaon
Date:- May 19, 2025 Date:- May 19, 2025
|