I) Provisions and contingent liabilities:
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be
required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
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, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. A contingent liability is:-
a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
b) a present obligation that arises from past events but is not recognised because:-
i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
ii) the amount of the obligation cannot be measured with sufficient reliability.
Contingent liability is disclosed in the case of:
• a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;
• a present obligation arising from past events, when no reliable estimate is possible;
• a possible obligation arising from past events, unless the probability of outflow of resources is remote.
A contingent asset is disclosed where an inflow of economic benefits is probable.
Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.
m) Retirement and other employee benefits:
Post-employment benefits
• Payments to defined contribution benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial
gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is not reclassified to statement of profit and loss. Past service cost is recognised in statement of profit and loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
• Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
• Net interest expense or income; and
• Re-measurement.
The Company presents the first two components of defined benefit costs in statement of profit and loss in the line item “Employee benefits expense”, and the last component in Other Comprehensive Income. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Company's defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
Terminal benefits
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect ofwages and salaries, performance incentives and similar benefits other than compensated absences in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of compensated absences are measured on the basis of actuarial valuation as on the balance sheet date.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date. .
n) Earnings per share:
Basic earnings per share is calculated by dividing the profit/loss attributable to the owners of the Company
by the weighted average number of equity shares outstanding during the financial year.
Diluted earnings per share adjusts the figure used in determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
q) Operating segment
Identification of segment - Operating segments are reported in the manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM) of the Company.
Segment accounting policies - The Board of Directors of the Company have been identified as the Chief Operating Decision Maker (CODM) as defined under Ind AS 108. CODM reviews overall financial information of the Company together for performance evaluation and allocation of resources and does not review any discrete information to evaluate performance of any individual product or geography.
The Company prepares its segment information in conformity with accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
p) Onerous contracts
If the Company has a contract that is onerous, the present obligation under the contract is recognised and measured as a provision. However, before a separate provision for an onerous contract is established, the Company recognises any impairment loss that has occurred on assets dedicated to that contract.
An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Company cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract (i.e., both incremental costs and an allocation of costs directly related to contract activities).
q) Key sources of estimation uncertainty and critical accounting judgements
In the course of applying the accounting policies, the Company is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future period, if the revision affects current and future periods.
Key sources of estimation uncertainty
a) Useful lives of property, plant and equipment, intangible assets, investment property and right-of-use assets
Management reviews the useful lives of property, plant and equipment at least once a year. Such lives are dependent upon an assessment of both the technical lives of the assets and also their likely economic lives based on various internal and external factors including relative efficiency and operating costs. Refer Note 2 and 30 for further disclosure.
b) Property, plant and equipment, intangible assets and investment property
Determining whether the property, plant and equipment are impaired requires an estimate in the value in use of cash generating units. It requires to estimate the future cash flows expected to arise from the cash generating units and a suitable discount rate in order to calculate present value. When the present value of the cash flows are less than carrying value of property, plant and equipment a material impairment loss may arise. Refer Note 2 for further disclosure.
c) Impairment of investments in and loan given to subsidiaries and joint ventures
Determining whether the investments in and loan given to subsidiaries and joint ventures are impaired requires an estimate of the value in use. In considering the value in use, the Management have anticipated the future cash flows, discount rates and other factors of the underlying businesses/ companies. In certain cases, the Company engages third party qualified valuers to perform the valuation. The management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model. Refer Note 5, 6, and 38 for further disclosure.
d) Provisions, liabilities and contingencies Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past events that can reasonably be estimated. The timing of recognition requires application of judgement to existing facts and circumstances which may be subject to change.
In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Potential liabilities that are possible but not probable of an outflow of resources embodying economic benefits are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not recognized. Refer Note 36 for further disclosure.
e) Taxes
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. Refer Note 8 for further disclosure.
f) Employee benefit plans
The cost of defined benefit gratuity plan and other post-employment benefits are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The mortality rate is based on publicly available mortality tables for India. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Refer Note 28 and 40 for further disclosure.
g) Lease
The application of Ind AS 116 requires Company to make judgements and estimates that affect the measurement of right-of-use assets and liabilities. In determining the lease term, the Company consider all facts and circumstances that create an economic incentive to exercise renewal options (or not exercise termination options). Assessing whether a contract includes a lease also requires judgement. Estimates are required to determine the appropriate discount rate used to measure lease liabilities.
The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary
to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Company ‘would have to pay', which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. The Company estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates. Refer Note 44 for further disclosure.
h) Recoverability of Trade Receivables
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment. Refer note 11 for further disclosure.
i) Inventories
Inventories are reviewed on a regular basis and the Company make allowance for aged or obsolete inventories and write down to net realizable value primarily based on historical trends and management estimates of expected and future product demand and related pricing.
Inventories are stated at the lower of cost and net realisable value. Judgements are required in assessing the expected realisable values of Inventories. Factors considered includes demand levels and pricing competition in the industry. Refer note 10 for further disclosure.
j) Changes in accounting policies and disclosures
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated 31 March 2023 to amend the following Ind AS which are effective for annual periods beginning on or after 1 April 2023.
(i) Definition of Accounting Estimates -Amendments to Ind AS 8
(ii) Disclosure of Accounting Policies -Amendments to Ind AS 1
(iii) Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS 12
These amendments had no significant impact on the accounting policies and disclosure made in the standalone financial statements of the Company.
Note:
(i) Optionally Convertible Preference Shares :
During the previous year as per the Approved Resolution Plan, On 28th February 2020, the Company has issued and allotted 250,00,00,000 9% Optionally Convertible Preference Shares (OCPS) of ' 1/- each to Reliance Industries Limited (RIL). (i) RIL is entitled to convert these OCPS into equity shares of the Company (1:1 basis) at any time on or before 18 months from their date of allotment i.e. 28th February 2020. (ii) if RIL does not convert the OCPS into equity shares with in the period of 18 months, OCPS shall be redeemed at the end of 10 years from the date of allotment. (iii) dividend @9% per annum is payable on cumulative basis.
(ii) Non-Convertible Redeemable Preference Shares :
During the current year, the Company has issued and allotted 3300,00,00,000 9% Non-Convertible Redeemable Preference Shares (NCRPS) of ' 1/- each to Reliance Industries Limited(RIL). (i) These NCRPS shall be redeemable at par at any time at the option of the Company within a period not exceeding 20 years from the date of allotment i.e. 2nd January 2024. (ii) dividend @9% per annum is payable on cumulative basis.
32 In the earlier year, the Company has completed all the steps as laid down in the resolution plan approved by the National Company Law tribunal vide its order dated 8 March 2019 and the resolution applicants had obtained joint control over the Company and the Board of Directors had been re-constituted on 14 September 2020, being the closing date as determined by the Company in terms of the resolution plan.
During the year, the Company incurred a loss of ' 813.71 crore for the year ended 31 March 2024 and has accumulated losses of ' 22,099.59 crore as on that date, its current assets exceeds its current liabilities by ' 794.12 crore and it has earned EBITDA of ' 84.89 crore for the year ended 31 March 2024. The market condition is improving and considering the cash flow projection of the Holding Company, the financial statements have been prepared on a going concern basis.
33 As per Clause 1.2 (xi) of Approved Resolution Plan, the outstanding debt amounting to ' 17,384.02 crore assigned to Resolution Applicants shall not carry interest for the first 8 years from the Closing Date (as defined in the Approved Resolution Plan), hence such debt has been measured at cost. After such period of 8 years, the terms of assigned debt shall be mutually agreed among the Resolution Applicants and the Company. The Approved Resolution Plan has an overriding effect on the requirements of Ind AS, as per legal view obtained by the Company in this regard. Hence, had the Company applied the Ind AS, it would have recognised the assigned debt at its fair value and accordingly recognized the imputed interest cost over the period of loan in the statement of profit and loss.
34 As on June 2017, the Company had an amount of ' 11,623.94 crore receivable from trading debtors on account of sale of fabric (“Outstanding Trading Dues”). As at 31 March 2019, the Company had created full provision against said receivables by charging it to the statement of profit and loss in earlier years. As per the Approved Resolution Plan, if any of the trading debtors make payment towards the Outstanding Trading Dues or any person is required to contribute to the assets of the Company under any legal process against the Outstanding Trading Dues and has contributed the same, such amounts (net of any income tax payable by the Company on account of such receipt of the Outstanding Trading Dues) shall be deposited in a designated escrow account (“Escrow Account”) to be opened in the name of the Company. Provided however, nothing contained in the resolution plan shall oblige the Resolution Applicants or the Company to take steps for recovery of the Outstanding Trading Dues.
Accordingly, the Company has an obligation to deposit into the escrow account any collections received out of the “Outstanding Trading Dues” or otherwise, as stated above, for the benefit of the Financial Creditors and as a result therefore, the risk and reward associated with the Outstanding Trading Dues now belong to the Financial Creditors. Accordingly the Company had derecognised the said outstanding trade receivables and related provisions in the books. The Company has not received any amounts towards Outstanding Trading Dues in the current year.
Note
1 The Company has issued a letter of comfort to Alok Infrastructure Limited, wholly owned subsidiary Company in order to meet its financial obligations. As on 31 March 2024, management has assessed that the possibility of outflow of resources embodying economic benefits with respect to the letter of comfort issued is remote.
2 Claims / Debts against the Company up to the closing date which are addressed under the NCLT approved resolution plan are not included in contingent liabilities though many of such claims / debts may be pending for disposal at various judicial forums. As per clause 3.3.4 of the aforesaid resolution plan, these liabilities stands extinguished.
Accordingly, the management has assessed that the possibility of outflow of resources embodying economic benefits with respect to such claims / debts is remote.
3 All direct and indirect tax liabilities relating to assessments of earlier year up to the closing date stand extinguished as per the NCLT approved resolution plan. Further, the implementation of the resolution plan does not have any effect over claims or receivables owed to the Company. Accordingly, the Company has assessed that any receivables due to the Company, evaluated based on merits of underlying litigations, from various governmental agencies continues to subsist.
4 The Company had entered into a 15-year Gas Sale Agreement (GSA) dated 27th May 2013 with GAIL India Limited (‘GAIL') for the supply of re-liquified natural gas (RLNG) which included a Take or Pay (ToP) obligation on the Company. All of GAIL's claims against the Company were dealt with as per the provisions of the resolution plan which was submitted during the Corporate Insolvency Resolution Process of the Company and which was duly approved by the Hon'ble National Company Law Tribunal, Bench at Ahmedabad (NCLT) vide its dated 08 March 2019. For and in relation to the periods thereafter (post the closing date i.e. 14th September 2020), GAIL had been raising demands purportedly under the ToP regime of the said GSA, despite however the Hon'ble NCLT already having directed a renegotiation of the GSA.
During the current year, the Company has received a letter from GAIL, mentioning termination of agreement for RNLG supply (take of pay agreement), by virtue of NCLT order dated 8 March 2019 and accordingly there are no outstanding obligation under the said contract.
40 Disclosures Pursuant to - “Employee benefits”:
i) Defined contribution plans:
The Company's contribution to Provident Fund for the year 2023-24 aggregating to ' 9.74 crore (Previous Year: ' 9.30 crore), ' 0.89 crore (Previous Year: ' 0.88 crore) for ESIC has been recognised in the statement of profit and loss under the head employee benefits expense. (Refer Note 28).
ii) Defined benefit plans: a) Gratuity Plan:
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member's length of service and salary at retirement age.
The Company makes annual contribution to the Employee's Company Gratuity Assurance Scheme, a funded defined benefit plan for qualifying employees. The Fund invests in the scheme of insurance with the Life Insurance Corporation of India, IndiaFirst Life Insurance Company Limited, SBI Life Insurance Company Limited and Canara HSBC Life Insurance Company Limited. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each completed year of service or part thereof in excess of six months.
The plans typically expose the Company to actuarial risks such as: interest rate risk, longevity risk and salary risk. Interest risk : The plan exposes the Company to the risk off all in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability.
Longevity Risk : The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan's liability.
Salary risk: The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan's liability.
The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out at 31 March, 2024 by KP Actuaries and Consultants LLP. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the Project Unit Credit Method as per Ind AS 19.
42 Capital Management and Financial Management Framework:
The Company being in a working capital intensive industry, its objective is to maintain a strong credit rating, healthy ratios and establish a capital structure that would maximize the return to stakeholders through optimum mix of debt and equity.
The Company's capital requirement is mainly to fund its capex, working capital, repayment of principal and interest on its borrowings. The principal source of funding of the Company has been, and is expected to continue to be, cash generated from its operations supplemented by funding from bank borrowings and the capital markets. The Company is not subject to any externally imposed capital requirements.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Since net worth of the Company is negative, debt equity ratio is not calculated.
The key risks associated with day to day operations of the Company and working capital management are given below:
A. Credit Risk:
Credit risk is the risk that counter party will not meet its obligation under a financial instrument or customer contract leading to a financial loss. The Company is exposed to credit risk mainly from trade receivables and other financial assets.
i) Trade Receivables:
Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk has been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix and forward-looking information and an assessment of the credit risk over the expected life of the financial asset to compute the expected credit loss allowance for trade receivables. Concentrations of credit risk with respect to trade receivables are limited.
ii) Other Financial Assets & loans
The Company has limited credit risk arising from cash and cash equivalents as the deposits are maintained with banks and financial institutions with high credit rating. Hence, these are low risk items and the Company evaluates the recoverability of these financial assets at each reporting date and wherever required, a provision is created against the same.
The Company had in earlier years given loans to its subsidiaries/a Company in which erstwhile directors were interested of ' 1,465.99 crore, which are fully provided for in the books. The net exposure of ' 171.78 crore is with respect of one wholly owned subsidiary whereby the Company has impaired to the extent of the fair valuation of the subsidiary's investment properties / inventories.
B. Market Risk:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of three types of risks - interest rate risk, currency risk and other price risk in a fluctuating market environment. Financial instrument affected by market risks includes loans and borrowings, deposits, derivatives and other financial assets.
i) Currency Risk
The Company's functional currency is Indian Rupees (INR). The Company undertakes transactions denominated in foreign currencies; consequently, exposure to exchange rate fluctuations arise. Volatility in exchange rates affects the Company's revenue from export markets and the costs of imports. The Company has exports and to that extent has a natural hedge as a mitigation measure to cover foreign exchange risk on account of imports/ expenses in foreign currency. The Company hedges its foreign currency risk by entering into forward contracts.
iii) Commodity Price Risk
Commodity price risk arises due to fluctuation in prices of raw materials like PTA, MEG, cotton and yarn. The Company has a risk management framework aimed at prudently managing the risk arising from the volatility in commodity prices and freight costs. The Company's commodity risk is managed centrally through well-established trading operations and control processes.
C. Financial risk management objectives
The Company has a Risk Management Committee established by its Board of Directors for overseeing the Risk Management Framework and developing and monitoring the Company's risk management policies. The risk management policies are established to ensure timely identification and evaluation of risks, setting acceptable risk thresholds, identifying and mapping controls against these risks, monitor the risks and their limits, improve risk awareness and transparency. Risk management policies and systems are reviewed regularly to reflect changes in the market conditions and the Company's activities to provide reliable information to the Management and the Board to evaluate the adequacy of the risk management framework in relation to the risk faced by the Company.
D. Liquidity Risk:
Liquidity risk refers to the risk of financial distress or extraordinary high financing costs arising due to shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and requiring financing. The Company requires funds both for short term operational needs as well as for long term capital expenditure for capex. The Company generates sufficient cash flow from operations, which together with the available cash and cash equivalents provide liquidity in the short-term and long-term. The Company has established an appropriate liquidity risk management framework for the management of the Company's short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk through cash generated from operations, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. As at 31 March 2024, the Company has undrawn committed borrowing facilities amounting to ' 123.75 crore and the Company expects to enjoy all the working capital limits sanctioned to it in FY 24-25.
The following tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The contractual maturity is based on the earliest date on which the Company may be required to pay.
Fair value hierarchy
The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instrument by valuation technique:
(i) Level 1 — quoted (unadjusted) market prices in active markets for identical assets or liabilities;
(ii) Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable;
(iii) Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
There has been no transfers between level 1 & level 2 during the period.
44 Lease Disclosures Company as a lessee
The Company has lease contracts for land used in its operations, which has a lease terms of 95 years. As per the terms of lease, the Company was required to make one-time advance lease payment for the leased land. Hence, following the terms of the leased agreement, the Company has made the one-time lease payment and consequently, there are no lease liabilities recorded in the Balance Sheet as at 31 March 2024.
The Company has also entered into new lease contracts (from 1 October 2022), for factory buildings with tenure of 10 years with a lock in period of 3 years.
Refer note 2 for disclosure relating to right of use assets.
The Company had total cash outflows for leases of INR ' 5.06 crore in 31 March 2024 (Previous Year: ' 2.53 crore). incremental borrowing rate for lease liabilities is 9%.
Extension and termination option
The lease of building contain termination options exercisable by both the lessor and the lessee after the end of the non-cancellable contract period. Where practicable, the Company seeks to include termination options in new leases to provide economic viability. The Company assesses at lease commencement whether it is reasonably certain to exercise the termination options. The Company reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances within its control.
Company as a lessor
The Company has entered into leases on its investment property portfolio consisting of certain Residential flats and commercial buildings (see Note 3). These leases have terms of between 5 and 20 years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. Rental income recognised by the Company during the year is ' 0.14 crore (2022-23: ' 0.07 crore). There are no non-cancellable leases.
45 The Company had granted interest free loan in earlier years (prior to corporate insolvency resolution process) to a company which is outstanding as at the year-end amounting to ' 233.32 crores (against which an impairment allowance of ' 233.32 crores is made). Further, the Company had granted interest free loan in earlier years (prior to the corporate insolvency resolution process) to its wholly owned subsidiaries (‘WOS') which are outstanding as at the year-end amounting to ' 2,605.66 crores (against which an impairment allowance of ' 2,433.88 crores is made). Based on legal opinion obtained by the Company, the provisions of section 186 of the Companies Act, 2013 are not applicable to all such interest free loans granted under the erstwhile Companies Act, 1956 and by virtue of the resolution plan approved by the NCLT, any claim from the authorities with respect to the breach / contravention / non-compliance of any Applicable law is abated, settled and extinguished as at the closing date (i.e. 14 September 2020).
46 As per Section 135 of the Companies Act, 2013, a company meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects.
A CSR committee has been formed by the Company as per the Act. The Company has incurred losses in current and in previous years, Accordingly, as the average net profit for immediately preceding three financial years is NIL there are no amounts required to be spend on corporate social responsibility under section 135 of the Companies Act, 2013. Consequently, there are no unspent amount on ongoing projects / other than ongoing projects.
47 In the earlier year, on 22 March 2021, the NCLT has passed the order for withdrawal of the corporate insolvency resolution process for Alok Infrastructure Limited (“AIL”), wholly owned subsidiary of the Company. Post this, the subsidiary had also performed a valuation of its investment properties / inventories with the help of external valuation specialists and accordingly considered impairment in its books in earlier years. AIL do not have significant business operations and
has made a loss of ' 12.73 crore for the year ended 31 March 2024 and has accumulated losses of ' 1,517.95 crore as on 31 March 2024. During the current year, the said subsidiary has also reassessed the valuation of its investment properties / inventories with the help of external valuation specialist and there are no significant change in the valuation, however the company has incurred losses during the year and accordingly the impairment provision of ' 1,201.21 crore (previous year ' 1,190.87 crore) against gross loan value of ' 1,372.99 crore (previous year ' 1,372.99 crore) is made as on 31 March 2024 (refer note 6).
48. The Company has not advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) to or in any other person or entity, including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 on behalf of the Ultimate Beneficiaries.
Further, the Company has not received any funds from any person or entity, including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, 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.
49. The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, there are no instance of audit trail feature being tampered with.
50 Other Disclosure
a. There are no proceedings initiated or are pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
b. The Company has not entered into any transactions with struck off companies during the year.
c. The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
d. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
e. The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
f. The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
g. The Company has complied with the relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and the Companies Act for the above transactions and the transactions are not violative of the Prevention of MoneyLaundering Act, 2002 (15 of 2003).
52 There are no standards that are notified and not yet effective as on the date.
53 Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.
As per our report of even date For and on behalf of the Board of Directors of
Alok Industries Limited
For S R B C & CO LLP A. Siddharth | (Chairman) (DIN:00016278)
bartered Accountants Vinod Sureka Mumtaz Bandukwala (Non-Executive, Independent Director) (DIN:07129301)
ICAI firm registration number -
324982E/E300003 Chief Finanaal °fficer Rahul Dutt (Non-Executive, Independent Director) (DIN:08872616)
Hitesh Kanani Hemant Desai (Non-Executive, Non Independent Director) (DIN:00008531)
per Pramod Kumar Bapna Company Secretary Anil Kumar Rajbanshi (Non-Executive, Non Independent Director) (DIN:03370674)
Partner V. Ramachandran (Non-Executive, Non Independent Director) (DIN:02032853)
Membership Number: 105497 Nirav Parekh (Non-Executive, Non Independent Director) (DIN:09505075)
Place: Mumbai Place: Mumbai
Date: 20th April 2024 Date: 20th April 2024
Corporate Identity Number of Alok Industries Limited - L17110DN1986PLC000334
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