v. Provisions, Contingent Liabilities and Contingent Assets
Company recognizes provision, when there is a present legal or constructive obligation as a result of past events, where it is probable that there will be outflow of resources to settle the obligation and when a reliable estimate of the amount of the obligation can be made. Where 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. For long-term provisions, management performs an exercise at each balance sheet date to identify the best estimate of the expenditure required to settle the present obligation at the balance sheet date, discounted at an appropriate rate. The increase in provision due to the passage of time (that is a consequence of the discount rate) is recognized as borrowing cost.
Contingent liabilities are recognised only when there is a possible obligation arising from past events, due to occurrence or non-occurrence of one or more uncertain future events, not wholly within the control of the Company, or where any present obligation cannot be measured in terms of future outflow of resources, or where a reliable estimate of the obligation cannot be made. Obligations are assessed on an ongoing basis and only those having a largely probable outflow of resources are
provided for.
As per IndAS 37, Contingent liabilities, if any, are not recognized but are disclosed and described in the notes to the financial statements, including an estimate of their potential financial effect and uncertainties relating to the amount or timing of any outflow, unless the possibility of settlement is remote.
Contingent assets are not disclosed in the financial statements unless an inflow of economic benefits is probable.
w. Cash and Cash Equivalents
Cash and cash equivalents for the purpose of the cash flow statement comprise cash at bank and in hand and short-term investments with a maturity of three months or less.
x. Cash Flow Statement
Cash flows are reported using the indirect method where by the profit before tax is adjusted for the effect of the transaction of non-cash nature, any deferrals or accruals of past and future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.
In the cash flow statement, cash and cash equivalents includes cash on hand, deposits with banks, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
y. Related Party Disclosures
All disclosures as specified under IndAS 24 are made in these financial Statements in respect of the company's transactions with related parties.
z. Dividend
Dividends proposed or declared after the reporting period but before the financial statements are approved for issue, are not recognized as a liability at the end of the reporting period because no obligation exists at that time. The company recognizes the dividend to Equity Shareholders as a liability and deducts the same from Shareholder's equity only in the period in which the dividends are approved by the equity shareholders in the general meeting.
aa. Financial Instruments
Financial assets and financial liabilities are recognized on the Company Balance Sheet when the Company becomes a party to the contractual provisions of the instrument.
Financial Assets - Trade Receivables
Trade receivables are non-interest-bearing and are recognized initially at fair value, and subsequently at amortized cost using the effective interest rate method, less provision for impairment, if any.
Impairment of Trade Receivables
At each balance sheet date, the Company reviews the carrying amounts of its trade receivables to determine whether there is any indication of impairment loss. If there is objective evidence that an impairment loss has been incurred, the Company uses the Expected Credit Loss (ECL) model to assess the impairment loss.
Financial Assets - Investments
Investments consist of investments in equity shares, mutual funds & bonds and are recognized at fair value through profit & loss. Gains and losses arising from changes in fair value are recognized in profit or loss. Dividends, if any, on equity instruments are recognized in profit or loss when it is received. Investment in subsidiary and Joint Venture are accounted at cost using equity method of accounting.
Financial Assets - Loans and Advances to Staff
Loans and advances are given to staff which are either adjusted against salary or received on completion of the agreed period. The amount of loan and advances given being not material are carried at cost.
Impairment of Loans and Advances to Staff
At each balance sheet date, the Company reviews the carrying amounts of its loans and advances to determine whether there is any indication that those assets have suffered an impairment loss. The Company has not observed any impairment loss to the carrying value of loans and advances to staff.
Financial Liabilities - Interest-Bearing Borrowings
Interest-bearing bank loans and overdrafts are initially recorded at fair value, net of attributable transaction costs. Subsequent to initial recognition, interest bearing borrowings are stated at amortized cost with any difference between proceeds and redemption value being recognized in the Income Statement over the period of the borrowings on an effective interest basis.
Financial Liabilities - Trade Payables
Trade payables are non-interest bearing and are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
Financial Liabilities - Derivative Financial Instruments
Derivative transactions are entered into by the Company in the form of Forward/Option/Cross Currency Contracts to mitigate the risk of changes in the exchange rates on foreign currency exposures and changes in gold prices. The counterparty of these contracts is bank, financial institutions and commodity exchange. These contracts are generally entered against the underlying assets such as receivables, payables and inventory and orders received/issued from/to customers/suppliers. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are also subsequently measured at fair value. These derivatives constitute hedge from an economic perspective and are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to sales / purchase in statement of Profit and Loss.
Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet only when there is a current legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.
35. CONTINGENT LIABILITY:
a) The Company has given Corporate guarantee of Rs. 83.37 crores (For F.Y. 2022-23 it was Rs. 82.22 crores) to Banks for facilities availed by its subsidiary company.
b) The Company has disputed liability of Rs. 3.32 crores (For F.Y. 2022-23 it was Rs. 3.32 crores) in respect of Customs duty raised by Commissioner of Customs. In respect of the demand raised by Commissioner of Customs, the Company is of the opinion that the demand is not tenable and has made appropriate submission to the department. The Company has received stay order form Gujarat High Court against the demand of Custom Duty.
c) The Company has disputed Income tax liability of Rs. 1.19 crores for A.Y. 2015-16 & Rs. 0.48 crores for A.Y. 2016-17. Out Of Rs. 1.19 crores for A.Y. 2015-16, demand for Rs. 0.75 crores is on account of errors in tax calculations by the Income Tax Department which will be rectified in due course. The Company is of the opinion that the remaining demands are not tenable and has filed appeal against them with Commissioner of Income Tax (appeals). An appeal has been filed in Bombay High Court by the Income Tax Department against the order of ITAT passed in favour of the Company including tax demand of Rs.1.50 crore for AY 12-13, Rs.8.03 crore for AY 13-14 and Rs.1.87 crore for AY 17-18.
The above demands i.e. (b) & (c) shall be charged to Profit & Loss statement, if required, on disposal of the matter.
36. Bank loan funds obtained during the year are not used for the purpose other than that mentioned in the sanction letter.
37. The books of accounts are in agreement with the periodical statements submitted to the banks during the F.Y. 2023-24.
38. The title deeds of all the immovable properties are held in the name of the Company.
39. No loans or advances are granted to the promoters, directors, KMP and related parties during the F.Y. 2023-24.
40. No proceedings are initiated or pending against the company for holding any benami property.
41. The Company is not declared as willful defaulter by any bank or financial institution or other lender during the F.Y. 2023-24.
42. The Company has not done any transaction with struck off companies during the F.Y. 2023-24.
FAIR VALUE RELATED DISCLOSURES:
Fair Value Measurement:
Fair value related disclosures for financial instruments and non-financial assets that are measured at fair value or where fair values are disclosed are summarized in the following notes.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset or market for the asset or liability the principal or the most advantageous market must be accessible by Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
Valuation Techniques and Inputs used
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
i. Long-term receivables/borrowings are evaluated by the Group based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses, if any, of these receivables.
ii. The fair values of the quoted equity shares are based on price quotations at the reporting date (Level 1 inputs).
iii. The Company enters into derivative financial instruments in the form of Foreign exchange Forwards & Options contracts. The counterparties of these contracts are Banks. These derivatives constitute hedge from an economic perspective and are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly in the revenue from Sale of products or purchases in the Statement of Profit and Loss. Foreign exchange forward and Option contracts are valued using valuation techniques, which employ the use of market observable inputs. The valuation technique applied is the use of "quoted prices in active markets".
iv. The fair values of the Group's interest-bearing borrowings and loans are determined by using DCF method using discount rate that reflects the issuer's borrowing rate as at the end of the reporting period.
Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure
fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value
hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Comparison by class of the carrying amounts and fair value of Financial Instruments
The management assessed that for all Financial Assets and Financial Liabilities, the carrying amounts are equal to the fair value.
OTHER FAIR VALUE RELATED DISCLOSURES Recurring / non-recurring classification of fair value:
All fair value measurements for the year ended 31/3/2024 and 31/3/2023 are recurring in nature and there are no Non-recurring fair value measurements of assets or liabilities in these periods.
Level 3 inputs related disclosure
There are no recurring fair value measurements using significant unobservable inputs (Level 3) in the reporting periods and hence there is no effect of the measurements on profit or loss or other comprehensive income for the period.
Transfers between Level 1 and Level 2
There have been no transfers between Level 1 and Level 2 of the fair value hierarchy for all assets and liabilities held at the end of the reporting period that are measured at fair value on a recurring basis.
Change in Valuation Techniques, if any
There has been no change in the valuation techniques in the reporting periods.
Credit Risk
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. Credit risk is managed 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. The Company establishes an allowance for credit losses and impairment that represents its estimate of expected losses in respect of trade and other receivables and investments.
The Company periodically assesses the financial reliability of customers / corporate taking into account the financial condition, current economic trends, analysis of historical bad debts and ageing of accounts receivable and loans receivable. These include customers / corporate, which have high credit-ratings assigned by international and domestic credit-rating agencies. Individual risk limits are set accordingly.
On account of adoption of Ind AS 109, the Company uses Expected Credit Loss (ECL) model for assessing the impairment loss. For this purpose, the Company uses a provision matrix to compute the expected credit loss amount for trade receivables. The provision matrix takes into account external and internal credit risk factors and historical data of credit losses from various customers.
None of the Company's cash equivalents, including term deposits with banks, were past due or impaired as at 31 March, 2024. Of the total trade receivables, Rs. 64,350.10 lakhs as at March 31,2024 and Rs. 68,715.53 lakhs as at March 31,2023 consisted of customer balances that were neither past due nor impaired. The Company's Credit risk management policies include categorizing the loans and trade receivables based on estimates of Probability of Default and calculation of Expected Credit Losses (ECL).
Loans and advances include loans given to staff Rs. 142.89 lakhs as at March 31,2024 and Rs. 156.76 lakhs as at March 31,2023 which the company perceives no impairment loss to be provided for.
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 manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company's reputation.
Market Risk
Market risks include Interest Rate Risk and foreign Currency Risk. There are no identifiable Commodity Price Risks or Equity Price
Risks foreseen in the current reporting period.
Interest Rate Risk
The Company is mainly exposed to the interest rate risk due to its variable and fixed rate domestic and foreign borrowings. The interest
rate risk arises due to uncertainties about the future market interest rate on these borrowings.
Foreign Exchange Risk
The Company is exposed to foreign exchange risk principally via:
• Transactional exposure that arises from the sales / receivables / contracts entered based on orders denominated in a currency other than the functional currency of the Company
• Transactional exposure that arises from the cost of goods sold / payables / contracts entered based on orders denominated in a currency other than the functional currency of the Company.
• Foreign currency exposure that arises from foreign currency working Capital loans (including interest payable) denominated in a currency other than the functional currency of the Company.
Commodity Risk
The Company is exposed to the commodity rate risk due to uncertainties in availability of Gold for its jewellery operations. Forward contracts for Gold entered into by the company and outstanding as on 31s March, 2024 covers 1 Kg. for purchase of Gold (For F.Y.2022-2023 it was 8 Kgs.). Sensivity analysis for commodity risk is not done as it is not material.
Sensitivity Analysis
The sensitivity analysis reflects the impact on income and equity due to financial instruments held at the balance sheet date. It does not reflect any change in sales or costs that may result from changing interest or exchange rates.
55. CAPITAL MANAGEMENT
The Company's objectives when managing capital (defined as net debt plus equity) are to safeguard the Company's ability to continue as a going concern in order to provide returns to shareholders and benefits for other stakeholders, while protecting and strengthening the balance sheet through the appropriate balance of debt and equity funding. The Company manages its capital structure and makes adjustments to it, in light of changes to economic conditions and the strategic objectives of the Company. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, buy back shares and cancel them, or issue new shares. The Company finances its operations by a combination of retained profit, bank borrowings, disposals of property assets, etc. The Company borrows uses borrowing facilities to meet the Company's business requirements.
The Company monitors capital using gearing ratio, which is total debt divided by total capital plus debt.
The capital gearing ratio as on 31st March, 2024 and 31st March, 2023 was 41% and 40%, respectively.
56. CAPITAL COMMITMENTS
The Company has not made any Capital commitments as at March 31,2024 and March 31,2023 for purchase of Capital asset or any Investment.
57. COLLATERALS
The Company has obtained working capital loan from banks which are secured by:
• Fixed deposits - Value Rs. 17,985 lakhs
• Hypothecation of Stock in trade and Trade receivables - Value Rs. 1,57,368 lakhs
• Mortgage of premises at Mumbai & Surat - at Market Value Rs. 16,168 lakhs
Defaults
For loans payable recognised at the end of the reporting period, there have been no defaults of non-payment of loan by the company.
58. INVESTMENT PROPERTY
As on 31/3/2017, the Company had transferred one property from "owner-occupied property" to investment property in accordance with IndAS 40. The accounting policy adopted by the Company for measuring this property is the cost model as prescribed in IndAS 40. There are no direct operating expenses or rental income from this property in the current reporting period. There are no restrictions on the realisability of this property or the remittance of income and proceeds of disposal nor any contractual obligations to purchase, construct or develop investment property or for repairs, maintenance or enhancements.
Though the Company measures investment property using cost based measurement, the fair value of investment property as on 31.3.17 was Rs. 5,084 lakhs. Fair values was determined based on evaluation performed by applying a valuation model by an accredited external independent valuer who holds a recognised and relevant professional qualification and has recent experience in the location and category of the investment property being valued. However, no significant change in the market value is observed, and management has decided to keep the fair valuation same as of 31.3.17.
60 . The figures of previous year have been regrouped / reclassified wherever necessary and possible so as to confirm with the figures of the current year.
As per our report of even date attached
For V. A. PARIKH & ASSOCIATES LLP For and on behalf of the Board
Chartered Accountants FRNo: 11278W/W100073
NIRAV R. PARIKH PUJADEVI R. CHAURASIA ARVIND T. SHAH VIPUL P. SHAH
Partner Company Secretary Chairman, CFO & CEO & Managing Director
Membership No. 121674 Whole Time Director
DIN - 00004720 DIN - 00004746
Place : Mumbai Place : Mumbai Place : Mumbai Place : Mumbai
Dated: May 17, 2024 Dated: May 17, 2024 Dated: May 17, 2024 Dated: May 17, 2024
UDIN: 24121674BKABUS2097
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