(xiv) Provisions, contingent liabilities and contingent assets
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses, except on long term contracts, if applicable. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate.
Contingent liabilities are disclosed in respect of possible obligations that arise from past events, whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
Contingent assets are not recognised in the financial statements. However, it is disclosed only when an inflow of economic benefits is probable.
(xv) Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss (excluding OCI) for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a right issue, share split and reserve share splits (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.
Diluted earnings per share is computed by dividing the profit/ (loss) for the year as adjusted for dividend, interest and other changes to expense and income (net of any attributable taxes) relating to the dilutive potential equity
shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period unless they have been issued at a later date.
(xvi) Dividend payout
The final dividend on shares is recorded as a liability on the date of approval by the shareholders. Interim dividend is recognized as a liability on the date of declaration by the Company’s Board of Directors.
(xvii) Statement of cash flow
The statement of cash flow are reported using the indirect method as set out in Indian Accounting Standard (Ind AS 7), whereby profit before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments and item of income or expenses associated with investing or financing cash flows. Cash flow from operating, investing and financing activities are segregated.
(xviii) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors of the Company, which constitute as Chief Operating Decision Maker ('CODM'). The CODM is responsible for allocating resources and assessing performance of the operating segments of the Company.
(xix) Share-based payment
An employee of the Company and its subsidiaries is entitled to remuneration in the form of equity settled instruments, for rendering services over a defined vesting period. Equity instruments granted are measured by reference to the fair value of the instrument at the date of grant. The fair value
determined at the grant date is expensed over the period in which the performance and/or service conditions are fulfilled. The stock compensation expense is determined based on the Company’s estimate of equity instruments that will eventually vest using fair value in accordance with Ind AS 102, Share-based payment.
The Company has implemented the stock option plan through creation of an employee benefit trust. The Company treats such Trust as its extension and shares held by Trust are treated as treasury shares. The stock options exercised by the eligible employees are settled through the Trust. The balance equity shares not yet issued to eligible employee and held by the Trust are disclosed as a reduction from the share capital and securities premium account.
(xx) Investment in subsidiaries and joint ventures
The Company’s investments in its subsidiaries and joint ventures are accounted at cost less impairment. The Company reviews its carrying value of investments carried at cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is recorded. When an impairment loss subsequently reverses, the carrying amount of the Investment is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the cost of the Investment.
(xxi) Recent pronouncements
The Company has applied the pronouncements in relation to Ind AS 1, Ind AS 8 and Ind AS 12, pursuant to issuance of the Companies (Indian Accounting Standards) Amendment Rules, 2023 with effect from 01 April 2023. The impact of such amendments on the standalone financial statements is insignificant.
As on the date of release of these financial statements, Ministry of Corporate Affairs has not issued new standards/ amendments to existing accounting standards which are effective from 01 April 2024.
(d) Rights, preferences and restrictions attached to each class of shares:
Equity shares
The Company has one class of equity shares having a par value of H 5 each per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
(e) The Company has neither issued any shares for consideration other than cash nor has there been any buyback of shares during the five years immediately preceding 31 March 2024. Further, during the financial year ended 31 March 2020 the Company has issued bonus shares as follows:
a) 8,604,336 equity shares of face value H 5 each against conversion of its Series A, Series B, Series C and Series D cumulative compulsory convertible preference shares and
b) 83,208 equity shares of face value H 5 each against allotment of equity stock options.
(f) Employee stock option scheme
In the previous year, the Company has granted 100,000 Options of H 5 each to the employees of the Company and the subsidiaries. The shareholders of the Company at their meeting held on 27 September 2022 had approved AWHCL Employee Stock Option Plan 2022 (“AWHCL ESOP 2022”). Options granted under AWhCl ESOP 2022 vest on the expiry of one year from the date of grant i.e.19 December 2022. The options may be exercised on any day over a period of five years from the date of vesting and are settled in equity on exercise.
The Company formed an “AWHCL Employee Welfare Trust” (‘AWHCL EWT’) for allotment of equity shares of the Company under the AWHCL Employee Stock Option Plan 2022 (‘AWHCL ESOP 2022’). On 14 December 2023, the Company has issued 94,930 equity shares to AWHCL EWT. The Company has considered equity shares held by AWHCL EWT as treasury shares and accordingly adjusted such shares issued from its share capital and securities premium account.
During the year, the AWHCL EWT has issued 70,601 equity shares of face value of H 5 each at a premium of H 165 per equity shares pursuant to exercise of stock option by the holders under the AWHCL Employee Stock Option Plan 2022.
36 Fair value measurements
I. Fair value hierarchy
The fair values of the financial assets and liabilities are included at the amount 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.
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the standalone financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. For example, listed equity instruments that have quoted market price.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.
II. Valuation techniques used to determine fair value
The fair values for security deposits are based on discounted cash flows using a discount rate determined considering the incremental borrowing rate of the Company for the balance maturity period.
37 Financial risk management
The Company is exposed primarily to fluctuations in credit quality and liquidity management which may adversely impact the fair value of its financial assets and liabilities. The Company has a risk management policy which covers risk associated with the financial assets and liabilities. The focus is to assess the unpredictability of the financial environment and to mitigate potential adverse effect on the financial performance of the Company.
The Company’s principal financial liabilities comprises of borrowings, lease liabilities, trade payables and other financial liabilities. The Company’s principal financial assets include loans, trade receivables, cash and bank and other financial assets equivalents.
A Credit risk
Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms and obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and credit worthiness of the customer on continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. The financial instruments that are subject to concentration of credit risk principally consist of trade receivables, loans and cash and bank equivalents.
To manage credit risk, the Company follows a policy of providing 30 days credit to its customers. The credit limit policy is established considering the current economic trend of the industry in which the Company is operating. Also, the trade receivables are monitored on a periodic basis for assessing any significant risk of non-recoverability of dues and provision is created accordingly. Refer notes 4.2, 10.3 and 10.4 for ageing analysis and for information of credit loss allowance on trade receivables.
Bank balances and deposits are held with only high rated banks. Hence, in these case the credit risk is negligible.
Loans and other financial assets includes loans granted to related parties and deposits receivable from customers which are municipal parties at the end of the contract. These receivables are monitored on a periodic basis for assessing any significant risk of non-recoverability of dues and provision is created accordingly.
B Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company’s objective is to maintain optimum levels of liquidity and to ensure that funds are available for use as per requirement.
The liquidity risk principally arises from obligations on account of financial liabilities viz. borrowings, trade payables and other financial liabilities.
C 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 three types of risk: Foreign currency risk, interest rate risk and price risk. The Company's exposure to market risk is primarily on account of foreign currency risk and interest rate risk.
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate primarily because of changes in foreign exchange rates. The risk primarily relates to fluctuations in advances denominated in AED against the functional currency (H) of the Company.
In respect of the foreign currency transactions, the Company does not hedge the exposure, since, management believes that the same is insignificant in nature.
(d) Other arrangements
1 Refer note 22 (a) for guarantees and security given for borrowings of the Company.
2 Refer note 3.2 for shares in subsidiaries held as pledge to the lenders of the subsidiary.
3 Guarantees given by the Company:
i) In accordance with sanction letter ISME/MZ/ADV/2018-19 issued by Bank of Baroda, the Company has furnished corporate guarantee towards the credit facilities (cash credit and bank guarantees) taken by the Company, in respect of Antony Infra and Waste Management Services Private Limited, AG Enviro Infra Projects Private Limited, KL EnviTech Private Limited and the Company. Further, corresponding charge has been created over entire current assets and fixed assets of the Company as stated in the said sanction letter (along with other group companies as mentioned in the said sanction letter). Facility outstanding against which guarantee given is H 2,746.34 lakhs (31 March 2023: H 2,214.24 lakhs).
ii) The Company has provided corporate guarantee to a bank against loan borrowed by Antony Lara Enviro Solutions Private Limited, subsidiary of the Company. Outstanding amount of loan borrowed is H 3,138.79 lakhs (31 March 2023: H 4,996.44 lakhs)
iii) The Company has provided corporate guarantee to a financial institution against loan borrowed by AG Enviro Infra Projects Private Limited, subsidiary of the Company. Outstanding amount of loan borrowed is H 2,231 lakhs (31 March 2023: Nil)
Notes:
1 The above figures does not include provisional gratuity liability valued by an actuary, as separate figures are not available.
2 Mr. Iyer Subramanian N G is appointed as the group CFO however he is on the payroll of AG Enviro Infra Projects Private Limited, a subsidiary of the Company and hence there is no payment from the Company.
3 The amounts outstanding are unsecured and will be settled in cash or cash equivalent.
(d) The Honourable Supreme Court, has passed a decision on 28 February 2019 in relation to inclusion of certain allowances within the scope of "Basic wages" for the purpose of determining contribution to provident fund under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952. The Company, based on legal advice, is awaiting further clarifications in this matter in order to reasonably assess the impact on its financial statements, if any. Accordingly, the applicability of the judgement to the Company, with respect to the period and the nature of allowances to be covered, and resultant impact on the past provident fund liability, cannot be reasonably ascertained, at present.
(e) The Income Tax Department (“the Department”) conducted a Search under the provision of the Income Tax Act (‘IT Act’) (“the Search”) at two business premises of the Company and residential premises of few of the Directors during October 2021. During the search proceedings and thereafter, Management has provided required support and co-operation to the Department. Subsequently, during the year ended 31 March 2024, the Company is in receipt of demand order u/s 143(3) and 147 of Income Tax Act 1961, in respect of assessment year (‘AY’) 2018-19 and 2022-23 which primarily pertains to disallowances of certain expenses. Management has evaluated the demand orders and after considering all the available records and information known to it, subsequent to the year end, the Company has filed an appeal before the Hon’ble Commissioner of Income Tax (Appeals) against the aforesaid demand orders and has also filed for rectification of order with the Assessing Officer in respect of certain adjustments made by them for AY 2018-19. The demand as mentioned in the aforesaid orders of the Department is H 1,190.75 lakhs and has been included in note 41(a).
While the uncertainty exists regarding the outcome of the aforesaid assessment proceedings, the management has obtained views of an external expert in relation to its tax position on the aforesaid matters and also conducted an independent review of documents and information available with it, which supports the management’s contentions. Based on the above, the Company believes it can succeed in the appeals filed against the aforesaid demand orders and accordingly no material adjustments are required to these standalone financial statements.
42 (Contd..)
Sensitivity analysis:
Description of risk exposures
Valuations are performed on certain basic set of pre-determined assumptions which may vary over time. Thus, the Company is exposed to various risks in providing the above benefit which are as follows:
Interest rate risk: The plan exposes the Company to the risk of fall 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 liability (as shown in financial statements).
Liquidity risk: This is the risk that the Company is not able to meet the short term benefit payouts. This may arise due to non availability of enough cash/cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.
Salary escalation risk: The present value of the above benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase in 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.
Demographic risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.
Regulatory risk: Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (for example, increase in the maximum liability on gratuity of H 20 lakhs).
Asset liability mismatching or market Risk: the duration of the liability is longer compared to duration of assets exposing the company to market risks for volatilities/fall in interest rate.
Investment risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and attrition rate. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:
46 Trade receivables (non-current) as at 31 March 2024 include amounts which are due from two Municipal Corporations aggregating H 566.39 lakhs (31 March 2023 : H 566.39 lakhs), which are outstanding for a long time. The cases pertaining to such amounts are presently disputed under Honorable High Courts. Owing to the aforesaid, the recoverability of these amounts is expected to take some time. However, Management is hopeful of recovering these trade receivables in due course and hence, the same are considered as good for recovery as at the reporting date.
47 Other financial assets (current) as of 31 March 2024 include amount of H 3,505.96 lakhs which represent receivable towards reimbursement of minimum wages from a Municipal Corporation, which are overdue for a substantial period of time. The Company has received balance confirmation and communication from the municipal corporation, stating approval has been received from the State Government for reimbursement of payments and the municipal corporation is in the process of arranging funds to settle the aforesaid dues. Considering all these factors and ongoing discussions with the municipal corporation, Management expects that the outstanding balances will be realized and accordingly above receivables have been considered as good for recovery as at the reporting date.
48 Trade receivable (current) as at 31 March 2024 include amount of H 1,500.00 lakhs which represents dues from a Municipal Corporation, which is overdue for substantial period of time. The dues represent contractual amounts which were deliberated and approved by standing committee of the Municipal Corporation and conciliation agreement is being signed. Post approval, the Municipal Corporation moved to the Hon'ble High Court against the decision of the standing committee, which was quashed by the Hon'ble High Court in favor of the Company. The Municipal Corporation further challenged the judgement at the Hon'ble Supreme Court. The matter is currently under review with the Hon'ble Supreme Court. Based on the contractual tenability of the dues and legal opinion obtained, the Management is hopeful of recovering these amounts and hence, the same is considered good of recovery as at the reporting date.
49 Segment reporting
(a) The Company is primarily engaged into business of providing service pertaining to collection and transportation of waste along with mechanical power sweeping of roads. The Chief Operating Decision Maker (CODM) reviews the Company’s performance as a single business segment. There being only one segment, separate disclosure for segment is not applicable.
(b) Entity wide disclosures
As per Ind AS 108 - Operating Segments, the Company is required to disclose revenue from individual external customers when it is 10% or more of entity's revenue. Revenue of H 5,284.51 lakhs and H 5,403.91 lakhs has been generated from three external customers contributing more than 10% individually during the year ended 31 March 2024 and 31 March 2023, respectively.
50 Information on audit trail
The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which uses accounting software for maintaining its books of accounts, shall only use such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled. The new requirement is applicable with effect from the financial year beginning on 1 April 2023.
The Company uses an 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 accounting software. However, during the current financial year, the audit trail (edit log) feature for any direct changes made at the database level was not enabled.
51 Corporate Social Responsibility (CSR)
As per Section 135 of the Companies Act, 2013 (“the Act”), 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. A CSR Committee has been formed by the Company as per the Act. Following are the details required as per the Act.
54 Other Statutory Information
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies beyond the statutory period.
(iii) The Company has not traded or invested in Crypto currency or Virtual Currency during the reporting years.
(iv) 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.
(v) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
(vi) The Company has complied with the number of layers prescribed under the Companies Act, 2013.
(vii) The Company has not entered into any scheme of arrangement which has an accounting impact on the current or previous financial year.
(viii) There are no transactions or outstanding balances with struck off companies as at and for the years ended 31 March 2024 and 31 March 2023.
(ix) Reconciliation of book debt statement submitted to banks by the Company with book of accounts where borrowings have been availed by the Company and its subsidiaries namely AG Enviro Infra Projects Private Limited, K L EnviTech Private Limited and Antony Infrastructure and Waste Management Services Private Limited based on security of current assets
These are the notes to financial statements referred to in our report of even date
For Walker Chandiok & Co LLP For and on behalf of the Board of Directors
Chartered Accountants
Firm Registration No. 001076N/N500013
Rakesh R. Agarwal Jose Jacob Kallarakal Shiju Jacob Kallarakal
Partner Chairman & Managing Director Director
Membership No.: 109632 DIN: 00549994 DIN: 00122525
Place: Mumbai Iyer Subramanian N G Harshada Rane
Date : 24 May 2024 Chief Financial Officer Company Secretary & Compliance Officer
Membership No.: A 34268
Place: Thane Date : 24 May 2024
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