(m) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event and 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. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, considering the risks and uncertainties surrounding the obligation. 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.
Contingent liabilities may arise from litigation, taxation and other claims against the Company. Where it is management’s assessment that the outcome is uncertain or cannot be reliably quantified, the claims are disclosed as contingent liabilities unless the likelihood of an adverse outcome is remote such contingent liabilities are disclosed in the notes but are not provided for in the financial statements.
Contingent assets are not recognised but are disclosed in the notes where an inflow of economic benefits is probable.
Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.
(n) Employee Benefits Short-term Benefits
Short term employee benefits including accumulating compensated absences are recognised at an undiscounted amount in the Statement of Profit and Loss for the year in which the related services are rendered.
Post-retirement Benefits
Defined Contribution Plans
Retirement Benefits in the form of Provident Fund which is a defined contribution schemes is charged to the statement of profit and loss for the period in which the contributions to the fund accrue as per the relevant statute.
Defined Benefit Plans
The Company pays gratuity to the employees who have completed five years of service with the Company at the time of resignation/ superannuation. The gratuity is paid @ 15 days salary for every completed year of service as per the Payment of Gratuity Act, 1972.
The gratuity liability amount is contributed by the Company to the gratuity fund maintained with Life Insurance Corporation of India, exclusively for gratuity payment to the employees.
The liability in respect of gratuity and other post-employment benefits is calculated using Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees' services.
Re-measurements of Defined Benefit Plans in respect of post-employment are charged to the Other Comprehensive Income.
(o) Taxes on Income
The tax expense for the period comprises of current tax and deferred income tax. Tax is recognised in Statement of Profit and Loss, except to the extent that it relates to items recognised in the Other Comprehensive Income or in Equity, in which case, the tax is also recognised in Other Comprehensive Income or Equity.
Current Tax
Tax on income for the current period is determined on the basis on estimated taxable income and tax credits computed in accordance with the provisions of the relevant tax laws and based on the expected outcome of assessments / appeals. 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 substantially enacted, at the reporting date.
The company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognised amounts and where it intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Deferred Tax
Deferred tax is recognised on temporary differences between carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax relating to items recognised outside the statement of profit and loss is recognised outside the statement of profit and loss, either in other comprehensive income or directly in equity. 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 assets to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period.
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.
p. Financial Assets, Financial Liabilities and Equity Instruments
Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value, except for trade receivables which are initially 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 profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.
The Company derecognises a financial asset only 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 entity. The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired.
Investments in subsidiaries:
Investments in subsidiaries are carried at cost less accumulated impairment losses, if any.
Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount.
q. Earnings Per Shares
Basic earnings per share are calculated by dividing the Profit or Loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the Profit or Loss for the
period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.
C. Recent Acccounting Pronouncements
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
11.2 Rights, preferences and restrictions attached to equity shares :
The Company has only one class of equity shares having par value of H 10 each and the holder of the equity share is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive the remaining assets of the Company in proportion to the number of equity shares held.
11.3 Dividend
The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. During the year ended March 31, 2024, the company did not propose any dividend (Previous year - Nil) to the equity shareholders of the company.
11.4 Partly Paid up Rights Issue of Equity Shares :
The Rights Issue Committee in its meeting held on 09th Jaunary, 2023 approved issuance of 8,92,291 nos. of fresh equity shares at rate of H 555 per Equity Share (including premium of H 545 per Equity Share) on Rights Basis in the ratio of 2:17. The Company has completed allotment of shares on 15th February, 2024 (Except for 18273 Shareholders who has not paid the final call of H 333 per equity shares (including premium of H 327 per equity share).
11.5 The Company had, issued 8,92,291 equity shares of face value of H 10/- each on right basis (‘Rights Equity Shares’). In accordance with the terms of issue, H 222/- i.e. 40% of the Issue Price per Rights Equity Share, was received from the concerned allottees on application and shares were allotted. The Board has made First and Final call of H 333/- per Rights Equity Share (including a premium of H 327 per share) in January, 2024. As on March 31, 2024, an aggregate amount of H 60.85 lakhs is unpaid.
11.8 Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash within last five years
Pursuant to the Composite Scheme of Arrangment becoming effective and subsequent excercise of option by Equity share holders of Demerged entity, company has alloted 75,84,477 No of Equity Shares and 10,82,387 No of Non Convertible Redeemable Preference Shares to the shareholders of Demerged company Aarti Industries limited against Share capital Pending allotment as at 31st March 2019. Upon allotment, pre-scheme paid up capital of H5 Lakhs, held by Aarti Industries Limited, stand reduced, cancelled and extinguished in terms of the said Scheme.
13.1 a). 'Rupee term loan from Bank aggregating to H 5,138.03 lakhs is secured by first charge on all movable and immovable assets of the Company, including current assets, ranking pari passu inter-se and Vehicle loan from banks agreegating to H95.51 lakhs are secured by way of hypothecation of respective vehicles.
The details of Term Loans from Banks and Vehicle Loan from Banks availed by the Company is as below:
(i) Rupee Term Loan Amounting H 899.93 Lakhs (March 31, 2023: H 1,512.60 Lakhs) is repayable in 6 quarterly instalments, the next instalment is due on 30th June, 2024.
(ii) Rupee Term Loan Amounting H 2,095.24 Lakhs (March 31, 2023: H 3,238.10 Lakhs) is repayable in 22 monthly instalments, the next instalment is due on 14th April, 2024.
(iii) Rupee Term Loan Amounting H 2,142.86.00 Lakhs (March 31, 2023: H 3,000.00 Lakhs) is repayable in 30 monthly instalments, the next instalment is due on 17th April, 2024.
(iv) Rupee Vehicle Loan Amounting H 95.51 Lakhs (March 31, 2023: H 81.05 Lakhs) is repayable in monthly instalments, the next instalment is due on 30 April, 2024.
(v) Term loan from banks carry an average interest rate of 9.15% to 9.95% (March 31, 2023: 6.70%to 9.87%) and Vehicle loan from bank carry an average interest rate of 8.50% to 11.65% (March 31, 2023 : 7.25% to 11.40%)
The Company do not have any charges which is yet to be registered with ROC beyond the statutory period. During the previous year, the Company had created a new pari passu charge of H 200 Crores, this supercedes the old charge of H 100 Crores. The Company had registered a new pari passu charge within the statutory period. However, the closure of the previous charge of H 100 Crores is still under process.
b). (i) Pursuant to the Scheme of Arrangement becoming effective and subsequent excercise of Option by Equity Shareholders of Demerged Entity Aarti Indutries Limited, 10,82,387 Nos of 0% Non-Convertible Redeemable Preference Shares of H 10/- each issued to the shareholders of Demerged Entity Aarti Industries Limited who has opted for Redeemable Preference shares valued at fair value of H 167.70 per share as per the Scheme.
b). (ii) 'Terms of preference shares:
The Company has only one class of Preference Shares being 0% Redeemable, Cumulative, Nonconvertible and Non-participating Preference Shares. The shareholders have right to vote only on resolutions which directly affect their interest.
The Preference Shares are Redeemable at the option of the Company such that shareholders will get 4% annualised return on fair value of H 167.70 declared in the Scheme of Arrangment
Nature of CSR activities undertaken by the Company
The CSR initiatives of the Company aim towards inclusive development of the communities largely around the vicinity of its plants and registered office and at the same time ensure environmental protection through a range of structured interventions in the areas of :
(i) Animal Welfare - Towards rescue, treatment and rehabilation of distressed wildlife.
(ii) Healthcare & Education Facilities - Distribution of medical equipments, Distribution of Benches, Chairs & Computers at Schools, Constuction of Healthcare facilities for special needs and autism individuals.
35 Segment Information
The operating segments have been reported in a manner consistent with the internal reporting provided to the Board of Directors, who are the Chief Operating Decision Makers. They are responsible for allocating resources and assessing the performance of operating segments. Accordingly, the reportable segment is only one segment i.e. Home and personal care ingredients.
Revenue from Type of Products and Services
There is only one operating segment of the company which is based on nature of product. Hence the revenue from external customers shown under geographical information is representative of revenue based on product and services.
37 Capital Management
The Company’s objectives for managing capital is to safeguard continuity and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth. The Company’s overall strategy remains unchanged from previous year.
The Company sets the amount of capital required on the basis of annual business and long-term operating plans which include capital and other strategic investments.
The funding requirements are met through a mixture of equity, internal fund generation, and other non - current/ current borrowings. The Company’s policy is to use current and non - current borrowings to meet anticipated funding requirements. The Company monitors capital on the basis of the net debt to equity ratio.
The Management believes that it will be able to meet all its current liabilities and interest obligations on timely manner.
B. Financial Risk Management
The Company’s principal financial liabilities comprise borrowings, trade paybles and other unsecured Lendings. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include Customer Receivables, Investments and cash and cash equivalents that it derives directly from its operations.
The Company is exposed to credit risk, market risk and liquidity risk. The Company’s senior management oversees the management of these risks.
a. Market Risk
(i) Foreign currency risk
The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities in exports and imports which is majorly in US dollars.
In case of Long term Contract with Large Customer, Currency Fluctuation is to Customer's Account.
b. Credit Risk
The company is exposed to credit risk from its operating activities (primarily for trade receivables).
Credit risk is the risk that a customer or counterparty to a financial instrument fails to perform or pay the amounts due causing financial loss to the company. Credit risk arises from company’s activities in investments and outstanding receivables from customers.
c. Liquidity Risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. For the Company, liquidity risk arises from obligations on account of financial liabilities such as trade payables and other financial liabilities.
The Company’s corporate treasury department is responsible for liquidity and funding as well as settlement. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows.
39 Additional regulatory information required by schedule III to the Companies Act, 2013
(a) The Company does not have any benami property held in its name. No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.
(b) The Company has complied with the requirement with respect to number of layers as prescribed under section 2(87) of the Companies Act, 2013 read with the Companies (Restriction on number of layers) Rules, 2017.
(c) Utilisation of borrowed funds and share premium:
(i) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
- Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
- Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
(ii) 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:
- directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
- provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
(d) There is no income surrendered or disclosed as income during the year in tax assessments under the Income Tax Act, 1961 (such as search or survey), that has not been recorded in the books of account.
(e) The Company has not traded or invested in crypto currency or virtual currency during the year.
40 Disclosure for Struck off companies
The company does not have any transations with companies struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956.
Notes: Explanation for Change in ratio by more than 25%
(i) Improvement in Return on Equity, Net Profit and Return on Capital Employed ratio largely on account with the improved profitablity.
(ii) Improvement in Net Debt-Equity is on account of term loan repayment during the year.
(iii) Decrease in Net capital turnover is on account of increase in current assets during the year.
As per our report of even date For and on behalf of the Board
For Gokhale & Sathe
Chartered Accountants
Firm Registration Number: 103264W
Partner
Uday Girjapure Chandrakant Gogri Nikhil Desai Priyanka Chaurasia Nitesh Medh
M.No. 161776 Director CEO & Managing Company Secretary Chief Financial Officer
Director
DIN : 0005048 DIN : 01660649 ICSI M.No.A44258 ICAI M.No : 155868
Place: Mumbai Date: 22nd April, 2024
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