3.16 Provisions
Provision is defined as per Ind AS 37. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date. If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessment of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
3.17 Contingent liabilities and contingent assets (Refer Note 33)
A present obligation that arises from past events, where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Claims against the Company, where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities. Contingent assets are not recognised or disclosed in the financial statements.
3.18 Leases
Effective April 01,2019, the Company had adopted Ind AS 116 "Leases" by applying the modified retrospective approach. The Company, at the inception of a contract, assesses whether the contract is a lease or not lease.
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 assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date. The lease payments are discounted using the Company's incremental borrowing rate. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset.
The Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract.
The Company has elected not to apply the requirements of Ind AS 116 to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value and are recognized as an expense on a straight-line basis over the lease term.
Company as a lessor
At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease. The Company recognises lease payments received under operating leases as income on a straight-line basis over the lease term. In case of a finance lease, finance income is recognised over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor's net investment in the lease. When the Company is an intermediate lessor it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.
3.19 Earning Per Share
Calculation/Formula of Basic & Diluted Earnings Per Share is carried out in line with the principles & practices mentioned in the Ind AS 33. Basic earnings per share is computed by dividing the profit / (loss) after tax attributable to equity shareholder of the company by the weighted average number of equity shares outstanding during the year.
4. RECENT INDIAN ACCOUNTING STANDARDS (IND AS)
Ministry of Corporate Affairs (MCA) has not notified any amendments to Ind AS which are effective 1st April, 2024.
31 RISK MANAGEMENT Credit Risk Management
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company's receivables from customers and investment securities. Trade Receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. Credit risk is managed through credit approvals of customers to which the Company grants credit terms in the normal course of business and their past transactions. Impairment losses in respect of trade receivables is assessed at party level on each reporting date. The Company establishes an expected credit loss allowance for trade receivables based on historical trends. The ageing analysis of trade receivable (gross of provision) has been considered from the date invoice falls due. Following table depicts expected credit loss on age wise trade receivables.
Financial instruments & bank balances:
The Company limits its exposure to credit risk by generally investing in securities with a good credit rating. The credit rating is being reviewed by the Company periodically. Please refer to Note 43 and Note 44 regarding the Company's investment in (a) Non-Convertible Debentures of IL&FS Transport Networks Ltd and (b) Perpetual Bonds of Yes Bank Limited. Balances with banks are subject to low credit risks due to good credit ratings assigned to these banks.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. Typically, the Company ensures that it has sufficient cash on demand to meet expected operational expenses, servicing of financial obligations.
For the year ended March 31, 2024 every 1% increase/decrease of the respective foreign currencies compared to functional currency of the Company would result in loss / gain of ? 0.62 lakhs (net of tax).
For the year ended March 31, 2023 every 1% increase/decrease of the respective foreign currencies compared to functional currency of the Company would result in loss / gain of ? 0.08 lakhs (net of tax).
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. The Company's investments are primarily in fixed rate interest bearing securities and hence do not carry substantial interest rate risk. Company investments in bank deposits are normally for one-year fixed rate interest and hence subject to repricing risk on maturity. See Note 47 (d) and 47 (e) for attachment of investments.
Capital Management
The primary objective of Company's capital management is to maximize shareholders value and safeguard its ability to continue as a going concern. The Company is predominantly equity financed and has no borrowings.
Price Risk
The Company is mainly exposed to the price risk due to its investment in debt mutual funds. The price risk arises due to uncertainties about the future market values of these investments. The Company has laid policies and guidelines which it adheres to in order to minimise price risk arising from investments in debt mutual funds.
38 EMPLOYEE BENEFIT PLANS
Defined contribution plans: The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contributions plans, for qualifying employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company has recognised following amounts as contributions in the statement of profit and loss as part of contribution to provident fund and other funds in Note 25 Employee benefits expenses.
Contribution to PF : ? 426.40 lakhs (Previous Year ? 385.90 lakhs)
Contribution to ESIC : ? 0.91 lakhs (Previous Year ? 1.43 lakhs)
Post employment defined benefit plans:
Gratuity Plan : The Company makes annual contributions to the Employee's Group Gratuity Assurance Scheme administered by the Life Insurance Corporation of India ('LIC'), a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment
1 There are no loans or advances in the nature of loans are granted to promoters, Directors, KMPs and their related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, that are:
(a) repayable on demand; or
(b) without specifying any terms or period of repayment
2 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ('Intermediaries') with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Compnay (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
The Compnay has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Funding party ('Ultimate Beneficiaries') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
41 During the year, in order to meet the working capital requirements of NSEL, the Company has subscribed to the right issues made by NSEL to the extent of ? 4,750 lakhs (Previous Year ? 3,500 lakhs). Over a period of time, the investments were made by the Company to NSEL out of commercial expediency for the purpose of enhancing the business and also preserving various assets of the Company. On conservative basis, the Company has been making allowance for expected credit loss in value of long-term investments in NSEL for any new investment made during the year. Post payment default in July 2013, NSEL does not have business of its own and in the near future there does not seem to be any possibility of NSEL generating any funds for its own functioning. NSEL has no revenue and has accumulated losses of ? 29,564.90 crores and most of its assets are frozen by various regulatory authorities. Considering the remote possibility of recovery of its investments, during the year, the Company has written off its entire investment in NSEL of ? 33,697.90 lakhs including the investment of ? 4,750.00 lakhs made during the year and corresponding provision made till year ending March 31,2023 of ? 28,947.90 lakhs has been written back.
43 The Company has investments of ? 20,000 Lakhs (face value) in Secured Non-Convertible Debentures issued by IL&FS Transportation Networks Ltd (ITNL) (subsidiary of Infrastructure Leasing & Finance Ltd - IL&FS). Resolution process has been initiated under Companies Act under the supervision of National Company Law Appellate Tribunal (NCLAT). The Company has filed its claim and also taken various measures including filing legal cases against specified parties at an appropriate forum. During the resolution process, Hon'ble NCLAT has approved the Revised Distribution Framework proposed by the New Board for interim distribution. During the current year, ITNL has made partial interim distribution out of recovery to the creditors including Company and Company has received ? 1,644.82 lakhs. The Company without prejudice to its rights had impaired the investment for the expected credit loss by ? 11,636.55 lakhs till March 31, 2023 and has written off above-mentioned amounts in respective years.
44 The Company has investments in 9% Yes Bank Perpetual Additional Tier I (AT-1) Bonds amounting to ? 30,000 Lakhs (face value). On March 06, 2020, the Central Government announced draft scheme of reconstruction of Yes Bank Ltd. (YBL). The Final Reconstruction Scheme had excluded the writing off AT-1 bonds. However, on March 14, 2020, Yes Bank through Administrator informed the stock exchanges that Additional Tier I Bonds for an amount of ? 8,415 crores written down permanently which led to legal action by the trustees of the issue and by the Company. The Hon'ble Bombay High Court quashed and set aside the decision by Administrator of Yes Bank to write off Additional Tier 1 (AT-1) bonds. Yes Bank and RBI have challenged the Bombay High Court's order before the Supreme Court where the matter is stayed subject to the final order to be passed by the Supreme Court.
45 Hon'ble Bombay High Court passed an ad interim order inter alia restraining the Company from distributing any dividend or depositing the same in the dividend distribution account in accordance with the provisions of the Companies Act, 1956 (to be read as Companies Act, 2013) pending the final hearing and disposal of the Notice of Motion. This Notice of Motion was filed in one of the suits relating to NSEL counterparty default. In compliance to the said order, the Company has not distributed the final dividend approved by the shareholders for the financial year 2014-15, 2016-17, 2017-18, 2018-19, 201920, 2020-21 and 2022-23 aggregating to ? 7,833.35 lakhs. All the Notice of Motions and the Contempt Petitions filed against the Company have been tagged together and pending for hearing.
On May 24, 2024, the Board of Directors of the Company have proposed a final dividend of ? 2/- per share in respect of the year ended March 31, 2024 subject to the approval of shareholders at the Annual General Meeting and appropriate judicial order. If approved, it would result in a cash outflow of ? 921.57 lakhs. The distribution of dividend is subject to appropriate Judicial order.
46 The Union of India, through the Ministry of Corporate Affairs ("MCA"), has filed the Company Petition before the Company Law Board, inter-alia seeking removal and supersession of the Board of Directors of the Company. The NCLT has as interim arrangement with consent formed a committee for certain matters. In Appeal, NCLT dismissed the prayer of MCA for removal and supersession of the entire Board of the Company and ordered MCA to nominate three directors on the board of the Company. The NCLAT upheld the NCLT Order. The Company has filed civil appeal before Hon'ble Supreme Court challenging the orders passed by NCLAT & NCLT wherein in interim Hon'ble Supreme Court granted stay on appointment of director on the Company, the matter is pending for hearing.
47 a) Post July-2013, civil suits have been filed against the Company in relation to the counter party payment default occurred
on the exchange platform of NSEL, wherein the Company has been made a party. In these proceedings certain reliefs have been claimed against the Company, inter-alia, on the ground that the Company is the holding company of NSEL. These matters are pending before the Hon'ble Bombay High Court for adjudication. The Company has denied all the claims and contentions in its reply. There is no privity of contract between the Company and the Plaintiffs therein. The management is of the view that the parties who have filed the Civil Suits would not be able to sustain any claim against the Company. These matters are pending for hearing before the Hon'ble Bombay High Court.
b) First Information Reports (FIRs) have been registered against various parties, including the Company, with the Economic Offences Wing, Mumbai (EOW) and Central Bureau of Investigation (CBI) in connection with the counter party payment default on NSEL trading platform. After investigation, EOW, Mumbai has presently filed various charge-sheets in the matter. The Company has been named in the charge sheet filed in December 2018. CBI has filed charge-sheets including against the Company for alleged loss caused to PEC Ltd. & MMTC Ltd on NSEL platform and aforesaid cases are pending for trial before Court.
c) The SFIO has filed complaint with the Hon'ble Sessions Court under various sections of IPC and Companies Act against several persons/entities including the Company relating to NSEL payment default. The Company has challenged the issuance of process order before the Hon'ble Bombay High Court and the proceedings in the matter has been stayed by the Hon'ble High Court. The matter is pending for hearing before Hon'ble Bombay High Court.
d) State Government attached various assets of the Company under MPID Act by issuing Gazette Notifications. The Company is in process of pursuing its remedy before Hon'ble MPID Court against said Notifications.
e) The Enforcement Directorate('ED') has attached certain assets of the Company under the provisions of the Prevention of Money Laundering Act, 2002(PMLA). The Hon'ble Appellate Tribunal quashed the provisional attachment orders and imposed conditions with regard to the Company. The Company has filed the appeal before the Hon'ble Bombay High Court for the limited purpose for challenging the conditions put by the Hon'ble Appellate Tribunal. The Hon'ble Court was pleased to admit the appeal. ED has also filed cross appeal, which is tagged with the Company's appeal. The matters are pending for hearing. Meanwhile, ED filed a prosecution complaint before the Spl. PMLA Court, Mumbai against the Company and the same is pending for trial.
48 The Company has presented segment information in the consolidated financial statements which are presented in the same annual report. Accordingly, in terms of Paragraph 4 of Ind AS 108 'Operating Segments', no disclosures related to segments are presented in these standalone financial statements.
49 The Company did not have any transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
50 No transactions to report against the following disclosure requirements as notified by MCA pursuant to amended Schedule IN:
(a) Crypto Currency or Virtual Currency
(b) Benami Property held under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder
(c) Registration of charges or satisfaction with Registrar of Companies
(d) Relating to borrowed funds:
i. Willful defaulter
ii. Utilisation of borrowed funds & share premium
iii. Borrowings obtained on the basis of security of current assets
iv. Discrepancy in utilisation of borrowings
v. Current maturity of long term borrowings
51 Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification/disclosure.
For and on behalf of the Board
Chitkala Zutshi S. Rajendran
Director Managing Director & CEO
DIN- 07684586 DIN: 02686150
Hariraj Chouhan Devendra Agrawal
Company Secretary Whole-time Director and CFO
DIN: 03579332
Place : Mumbai Date : May 24, 2024
II. Audit Qualification:
A. Qualification
Basis for Qualifications pertaining to the Company and management response thereto :
1 As stated by the Management of the Company in Note 6 (a) to the Statement, Civil Suits have been filed against the Company in relation to event occurred on National Spot Exchange Limited trading platform. These matters are pending at various stages of adjudication. As stated in the said note, the management of the Company does not foresee that the parties who have filed Civil Suits would be able to sustain any claim against the Company. In addition, as stated by the management in Note 6 (b, c, d, e) to the Statement, there are First Information Reports ("FIR")/ complaints/ charge-sheets/ orders/ notices registered/ received against various parties including the Company from/ with the Economic Offences Wing of the Mumbai Police (EOW), Central Bureau of Investigation (CBI), Home Department - Government of Maharashtra under MPID Act, the Directorate of Enforcement and the Serious Fraud Investigation Office (SFIO). Above matters are pending at various stages of adjudication/investigation.
In this regard, the Management and those charged with Governance have represented to us that other than as stated in the said notes to the Statement, there are no claims, litigations which require adjustments to/ disclosures in the Statement.
Accordingly, in view of above representations regarding legal matters at various stages of adjudication and ongoing investigations/ matters, the outcome of which is not known and is uncertain at this stage, we are unable to comment on the consequential impact in respect of the same on the results for the quarter and year ended 31 March 2024.
B. Type of Audit Qualification:
Qualified Opinion
C. Frequency of observation
Qualification stated in paragraphs A 1 - since year 2012-13.
D. For Audit Qualification(s) where the impact is not quantified by the auditor:
Management's reason for unable to estimation on the impact of audit qualification
(1) For qualification referred in Sr. No. A 1 above,
i) a) Post July-2013, civil suits have been filed against the Company in relation to the counter party payment default occurred on the exchange platform of NSEL, wherein the Company has been made a party. In these proceedings certain reliefs have been claimed against the Company, inter-alia, on the ground that the Company is the holding company of NSEL. These matters are pending before the Hon'ble Bombay
High Court for adjudication. The Company has denied all the claims and contentions in its reply. There is no privity of contract between the Company and the Plaintiffs therein. The management is of the view that the parties who have filed the Civil Suits would not be able to sustain any claim against the Company. These matters are pending for hearing before the Hon'ble Bombay High Court.
b) First Information Reports (FIRs) have been registered against various parties, including the Company, with the Economic Offences Wing, Mumbai (EOW) and Central Bureau of Investigation (CBI) in connection with the counter party payment default on NSEL trading platform. After investigation, EOW, Mumbai has presently filed various charge-sheets in the matter. The Company has been named in the charge sheet filed in December 2018. CBI has filed charge-sheets including against the Company for alleged loss caused to PEC Ltd. & MMTC Ltd on NSEL platform and aforesaid cases are pending for trial before Court.
c) The SFIO has filed complaint with the Hon'ble Sessions Court under various sections of IPC and Companies Act against several persons/entities including the Company relating to NSEL payment default. The Company has challenged the issuance of process order before the Hon'ble Bombay High Court and the proceedings in the matter has been stayed by the Hon'ble High Court. The matter is pending for hearing before Hon'ble Bombay High Court.
d) State Government attached various assets of the Company under MPID Act by issuing Gazette Notifications. The Company is in process of pursuing its remedy before Hon'ble MPID Court against said Notifications.
e) The Enforcement Directorate('ED') has attached certain assets of the Company under the provisions of the Prevention of Money Laundering Act, 2002(PMLA). The Hon'ble Appellate Tribunal quashed the provisional attachment orders and imposed conditions with regard to the Company. The Company has filed the appeal before the Hon'ble Bombay High Court for the limited purpose for challenging the conditions put by the Hon'ble Appellate Tribunal. The Hon'ble Court was pleased to admit the appeal. ED has also filed cross appeal, which is tagged with the Company's appeal. The matters are pending for hearing. Meanwhile, ED filed a prosecution complaint before the Spl. PMLA Court, Mumbai against the Company and the same is pending for trial.
In the light of the above ongoing investigations and matters, the outcome of which is not known and is
uncertain at this stage, we are unable to quantify the impact.
(ii) Auditors' Comments:
Quantification is not possible.
For 63 moons technologies limited In terms of our Report issued under Regulation 33 of the
Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulation, 2015.
For Sharp & Tannan Associates
Chitkala Zutshi Chartered Accountants
Chairperson Audit Committee (Firm Registration No. 109983W)
S Rajendran Pramod Bhise
Managing Director & CEO Partner
(Membership No. (F) 047751)
Devendra Agrawal
Whole Time Director & CFO
Place: Mumbai
Date: May 24, 2024
|