N. Provisions, Contingent Liabilities and Contingent Assets
Provision is recognised if as a result of a past event, the Company has a present obligation (legal or constructive) that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognised at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. If the effect of 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.
Contingent liability exists when there is a possible but not probable obligation, or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions but are disclosed unless the possibility of outflow of resources is remote. Contingent assets are neither recognised nor disclosed in the financial statements. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
O. Earnings per share (EPS)
Basic EPS is computed using the weighted average number of equity shares outstanding during the period. Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the period except where the results would be anti-dilutive.
P. Key estimates and assumptions
The preparation of financial statements in accordance with Ind AS requires use of estimates and assumptions for some items, which might have an effect on their recognition and measurement in the balance sheet and statement of profit and loss. The actual amounts realised may differ from these estimates.
Estimates and assumptions are required in particular
for:
• Determination of the estimated useful lives of tangible assets and intangible assets and the assessment as to which components of the cost may be capitalized.
Useful lives of tangible assets and intangible assets are based on the life prescribed in Schedule II of the Companies Act, 2013. In cases, where the useful lives are different from that prescribed in Schedule II, they are based on management estimate, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers' warranties and maintenance support. Assumptions also need to be made, when the Company assesses, whether an asset may be capitalized and which components of the cost of the asset may be capitalised.
• Recognition and measurement of defined benefit obligations
The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation and vested future benefits and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the postemployment benefit obligations.
• Provisions and contingent liabilities
The Company exercises judgment in measuring and recognising provisions and the exposures to contingent liabilities related to pending litigation or other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation, as well as other contingent liabilities. Judgment is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of the financial settlement. Because of the inherent uncertainty in this evaluation process, actual losses may be different from the originally estimated provision.
• Measurement of fair values
The Company's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Company has an established control framework with respect to the measurement of fair values.
They regularly review significant unobservable inputs and valuation adjustments. If third party information is used to measure fair values then the finance team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
Q. Exceptional Items
When items of income and expense within profit or loss from ordinary activities are of such size, nature or incidence that their disclosure is relevant to explain the performance of the Company for the period, the nature and amount of such items is disclosed separately under the head exceptional item.
R. Non - Current Assets Held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and its sale is highly probable. The sale is considered highly probable only when the asset or disposal groups is available for immediate sale in its present condition, it is unlikely that the sale will be withdrawn and the sale is expected to be completed within one year from the date of classification. Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. These are not depreciated or amortised once classified as held for sale. Assets and liabilities classified as held for sale are presented separately in the Balance Sheet.
Non-current assets that ceases to be classified as held for sale are measured at lower of (i) its carrying amount before the asset was classified as held for sale, adjusted for depreciation that would have been recognised had that asset not been classified as held for sale, and (ii) its recoverable amount at the date when the disposal group ceases to be classified as held for sale.
S. Recent Accounting Pronouncements:
The 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. During the year ended March 31,2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
B. Measurement of fair values
Ind AS 107, 'Financial Instrument - Disclosure' requires classification of the valuation method of financial instruments measured at fair value in the Balance Sheet, using a three level fair-value-hierarchy (which reflects the significance of inputs used in the measurements). The hierarchy gives the highest priority to un-adjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to un-observable inputs (Level 3 measurements). Fair value of derivative financial assets and liabilities are estimated by discounting expected future contractual cash flows using prevailing market interest rate curves. The three levels of the fair-value-hierarchy under Ind AS 107 are described below:
Level 1: Level 1 Hierarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market are 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 are not based on observable market data, the instrument is included in level 3.
Transfers between Levels
There have been no transfers between Levels during the reporting periods
The following tables show the valuation techniques used in measuring Level 2 fair values, as well as the significant unobservable inputs used.
Financial instruments measured at fair value
The Company has exposure to the following risks arising from financial instruments:
Ý Credit risk ;
Ý Liquidity risk ; and
Ý Market risk
i. Risk management framework
The Company's board of directors has overall responsibility for the establishment and oversight of the Company risk management framework. The board of directors is responsible for developing and monitoring the Company risk management policies.
The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The audit committee oversees how management monitors compliance with the company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
ii. 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, cash and cash equivalents etc.
The carrying amount of financial assets represents the maximum credit exposure.
Trade receivables
All of the sales are domestic sales. For major part of the sales, customer credit risk is managed by requiring domestic and export customers to pay advances before transfer of ownership, therefore substantially eliminating the Company's credit risk in this respect.
Impairment
Management believes that the unimpaired amounts that are past due by more than 6 monhs are still collectible in full, based on historical payment behaviour.
The Company has no other financial assets that are past due but not impaired.
Concentration of credit risk
At 31 March 2024, the carrying amount of the Company's most significant customer is '165.94 lakhs (31st March, 2023 : '3.80 lakhs)
Derivatives
The derivatives are entered into with banks with good credit ratings.
Cash and cash equivalents
Credit risk from balances with banks is managed by the Company's treasury department in accordance with the company's policy.
iii. 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.
The Company has obtained fund and non-fund based working capital lines from various banks. The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.
As at 31st March, 2024, the Company had working capital of ' (8680.58) lakhs, including cash and cash equivalents of '42.55 lakhs. As at 31st March, 2023, the Company had working capital of '(7256.30) lakhs, including cash and cash equivalents of '43.76 lakhs
Exposure to liquidity risk
The table below analyses the Company's financial liabilities into relevant maturity groupings based on their contractual maturities for:
* all non derivative financial liabilities
* net and gross settled derivative financial instruments for which the contractual maturites are essential for the understanding of the timing of the cash flows.
iv. Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates ) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and long-term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of its investments. Thus, the Company's exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies. a) Currency risk
The company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchase, other expenses and borrowings are denominated and the functional currency of the company. The functional currency of the company is Indian Rupees (INR). The currencies in which these transactions are primarily denominated is USD.
The Company generally hedges its estimated foreign currency exposure in respect of its forecast sales over the following 12 months and borrowings (ECB). The Company uses forward exchange contracts to hedge its currency risk. Such contracts are generally designated as cash flow hedges.
Further the company hedge its interest rate on External Commercial Borrowings by way of interest rate swap.
The Company, as per its risk management policy, uses foreign currency forward contract primarily to hedge foreign exchange. The Company does not use derivative financial instruments for trading or speculative purposes.
The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.
The Company monitors capital using a ratio of ‘net debt’ to ‘equity’. For this purpose, net debt is defined as total debt, comprising loans and borrowings less cash and cash equivalents and current investments.
NOTE NO.39
During the year, the Company has initiated the process of sale of certain non-core assets and has received advance of ' 240.85 Lakhs. Accordingly, the Company has reclassified such assets from PPE assets to Assets held for sale (AHFS). As the carrying value of the assets are higher than the expected fair value less cost of sell, the Company has adjusted carrying value of AHFS to '709.60 Lakhs and recognised re-measurement loss of '3,492.00 Lakhs under Exceptional Items. The transactions are expected to be completed in financial year 2024-2025.
NOTE NO.40
Employee Benefit obligations (A) Defined Contribution Plan
The Company has various schemes for long-term benefits such as provident fund and superannuation. In case of funded schemes, the funds are recognised by the Income tax authorities and administered through trustees / appropriate authorities. The Company's defined contribution plans are superannuation and employees' pension scheme (under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952) since the Company has no further obligation beyond making the contributions. The liabilities of the Company on the exempt Provident Fund managed by the trustees is restricted to the interest shortfall if any.
(B) Defined Benefit Plan
In accordance with the provisions of the Payment of Gratuity Act, 1972, the Company has a defined benefit plan which provides for gratuity payments. The plan provides a lump sum gratuity payment to eligible employees at retirement or termination of their employment. The amounts are based on the respective employee's last drawn salary and the years of employment with the Company.
Liabilities in respect of the gratuity plan are determined by an actuarial valuation, based upon which the Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees. Trustees adminster the contributions made by the Company to the gratuity scheme.
The most recent actuarial valuation of the defined benefit obligation along with the fair valuation of the plan assets in relation to the gratuity scheme was carried out as at 31st March, 2024. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
Based on the actuarial valuation obtained in this respect, the following table sets out the details of the employee benefit obligation and the plan assets as at balance sheet date:
NOTE NO.46
(a) The Company has incurred loss after Tax of '7113.93 lakhs for the year ended 31st March, 2024 ('5187.68 lakhs for the year ended 31st March, 2023) and other equity of the company as on 31st March, 2024 amounting to '(-) 23262.05 lakhs '(-) 16120.44 Lakhs as on 31st March, 2023). The net worth of the company eroded completely due to continuous losses over the period of time.
(b) (A). (i) During the year under review, Company continued to keep production activity of paper and paper board
business in abeyance and started the business of trading in Plastics & Packaging Materials
(ii) The Company is continuing its efforts for revamping its existing business by doing structural changes, reducing its high cost borrowings etc. Company has also appointed a consultant to evaluate the existing business and explore the possibility of entering into new areas of business to put to use the existing resources of the company to the optimum level.
(B) (i) Company has received security deposit of '17.50 crores by leasing its unused land at Ambivali and
utilised the said proceeds for repayment of debts
(ii) The Board of Directors had approved a proposal to raise the additional funds of '4510.73 Lacs through “Right Issue of Equity Shares” aggregating of 2,14,79,688 equity share of '10 Each at a price of '21/-per Share (including premium of '11/- per share) to the eligible Shareholders in the ratio of 2 (Two) Rights Shares for every 1 (One) Equity Shares held. Accordingly, the record date set for rights issue was March 15, 2024 and kept opened for subscription from April 02, 2024 to April 15, 2024, it was fully subscribed and shares were allotted on April 19, 2024. Proceeds of the Right issue was received on May 07, 2024 and the company utilised / utilising the funds for the purpose for which Right shares were issued.,
(iii) in addition to above, the company also raised / raising the funds through sale of Non-core fixed assets & other Plant and Equipments as approved by the shareholders through postal ballot on September 10, 2023.
Looking into all these facts, the Company has prepared the financial results as a “going concern basis”.
NOTE NO.47
OTHER STATUTORY INFORMATIONS:
i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Group for holding any Benami property.
ii) The Company does not have any transactions with struck off companies.
iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the
statutory period.
iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
v) The Company has not been declared willful defaulter by any bank or financial institution or government or any
government authority
vi) 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:
a) 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
b) Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
vii) All the title deeds of immovable properties are in the name of Company.
viii) 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 Group shall:
a) 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
b) Provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
ix) The Company has not 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)
NOTE NO.48
Due to substantial losses, the company has not incurred any expenditure under Corporate Social Responsibility (CSR) of the company.
NOTE NO.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 attached For D S M R AND CO Chartered Accountants
(Firm Reg. No.128085W)
For and on behalf of the Board of Directors
Dharmendra S. Songira Anurag P Poddar Manish O Malpani Omprakash Singh
Partner Chairman & Managing Director Whole-time Director & Company Secretary
Membership No. 113275 DIN:00599143 CFO
DIN:00055430
Place : Mumbai,
Dated : 13th May, 2024
|