xii) Provisions (other than for employee benefits)
a) A Provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
b) Provision for contractual obligation has been provided for in accounts based on management's assessment of the probable outcome with reference to the available information supplemented by experience of similar transactions.
c) The Company makes provision towards warranty obligation arising under the contract, while progressively recognising the revenue, based on management estimate and past experience of similar contracts. Such provision is maintained until the warranty period is completed. The unutilised provision if any, is reversed on expiry of the warranty period.
xiii) Revenue
The Company has adopted Ind AS 115 'Revenue from Contracts with Customers' with the date of initial application being April 1, 2018. Ind AS 115 establishes a comprehensive framework on revenue recognition. Ind AS 115 replaces Ind AS 18 'Revenue' and Ind AS 11 'Construction Contracts'.
a) Sale of goods and services - Performance obligation at a point in time
Revenue from the sale of goods in the course of ordinary activities is measured at the transaction price of the consideration received or receivable, net of returns, trade discounts. Revenue is recognised on the basis of despatches in accordance with the terms of sale when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of the goods can be estimated reliably, there is no continuing effective control over, or managerial involvement with the goods, and the amount of revenue can be measured reliably. The timing of transfers of risk and rewards varies depending on the individual terms of sale.
Other operating revenue includes scrap sale, interest income on margin money deposits etc.arising out of and incidental to the principal operation. The entire income under other operating revenue is recognised on accrual basis except in the case of interest income which is recognised using effective rate of interest method.
b) Construction contracts - Performance obligation over time
The Company uses the 'percentage of completion method' to determine the appropriate amount to recognise revenue in a given period. The stage of completion is measured by reference to the contract costs incurred upto the end of the reporting period as percentage of total estimated costs for each contract. Expected loss, if any, on the construction / project related activity is recognized as an expense in the period in which it is foreseen, irrespective of the stage of completion of the contract. While determining the amount of foreseeable loss, all elements of costs and related incidental income not included is taken into consideration. In respect of construction contracts, revenue includes variations in contract work, claims and incentive payments are included in contract revenue to the extent that may have been agreed with the customer and are capable of being reliably measured.
c) Other Income
Other income is comprised primarily of dividend income and exchange gain/loss on forward and options contracts and on translation of other assets and liabilities.
Dividend income: Dividend income is recognised in profit or loss on the date on which the Company's right to receive payments is established. Others: Any other income is recognised only on accrual basis.
xiv) Income tax
Income tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to other comprehensive income.
a) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustments to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantially enacted by the reporting date. Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended realise the asset and settle the liability on a net basis or simultaneously.
b) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purpose. Deferred tax is recognised in respect of carried forward losses and tax credits. Deferred tax also not recognised for temporary differences arising on the initial recognition of assets or liabilities in a transaction that affects neither accounting nor taxable profit or loss at the time of transaction.
Deferred tax assets and liabilities are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case of a history of recent losses, the Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised. Deferred tax assets — unrecognised or recognised, are reviewed at each reporting date and are recognised/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
xv) Segment Reporting
a) Segment policies:
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
b) Identification of segments:
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The board of directors of the Company assesses the financial performance and position of the Company and makes strategic decisions.
c) Segment Revenue and Segment Result:
Segment revenue includes revenue from operations and other income directly identifiable with / allocable to the segment. Expenses that are directly identifiable with / allocable to segments are considered for determining the segment result. Revenue and expenses which relate to the Company as a whole and are not allocable to a segment on a reasonable basis have been disclosed as unallocable.
d) Segment Assets and Labilities:
Segment assets and liabilities include those directly identifiable with respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.
xvi) Statement of Cash flows
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institution, other short-term, highly liquid investments with original maturities of twelve months or less that are readily convertible to known cash and which are subject to an insignificant risk of changes in value.
Statement of Cash flows are prepared using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a noncash nature and any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
xvii) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institution, other short-term, highly liquid investments with original maturities of twelve months or less that are readily convertible to known cash and which are subject to an insignificant risk of changes in value.
xviii) Dividends
Final dividend on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company' Board of Directors.
xix) Earnings per share
a. Basic earning per share
Basic earnings per share is calculated by dividing
i. the profit attributable to owners of the Company
ii. by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares
b. Diluted earnings per share
Diluted earning per share adjusts the figures used in the determination of basic earnings per share to take into account:
i. the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
ii. the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares
xx) Contingent liabilities
The company recognizes contingent liability for disclosure in notes to accounts, if any of the following conditions is fulfilled:
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 enterprise; or
b) a present obligation that arises from past events but is not recognized because:
- it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
- the amount of the obligation cannot be measured with sufficient reliability.
xxi) Contingent Assets
Contingent assets has to be recognised in the financial statements in the period in which it is virtually certain that an inflow of economic benefits will arise.
xxii) Events after reporting date
Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the reporting period , the impact of such events is adjusted within the standalone financial statements .Otherwise events after the balance sheet date of materials size or nature are only disclosed.
a) The balance in project specific escrow,current and EEFC accounts have been netted off against respective project's working capital loan accounts.
b) The Company has availed working capital loan from State Bank of India on sole banking basis for its Product business and project business which have not been specifically funded by other banks. The loan is secured by hypothecation of inventories, trade receivables and movable assets of Product Division viz AFC, ETD, OGED, EED and EPD excluding Project assets specifically charged to the banks / Consortium of banks. The loan from State Bank of India is further secured by first charge on land property at Panjetti Village, Tiruvallur Dist, Tamilnadu and first charge on the fixed assets of the Product Division.
The Loan is further secured by corporate guarantee and collateral of land held by Sravanaa Properties Limited (Subsidiary Company), pledge of shares held by BGR Investment Holdings Company Limited in BGR Energy Systems Limited and the corporate guarantee of BGR Investment Holdings Company Limited.
c) The Company has availed contract specific working capital loans from State Bank of India, IDBI Bank, Punjab National Bank, Canara Bank, Bank of Baroda, Indian Bank, Bank of India, Central Bank of India, Axis Bank, ICICI Bank, Kotak Mahindra Bank Ltd and Union Bank of India. These loans are secured by hypothecation of inventories, trade receivables and movable current assets of the respective contracts. The participating banks share the securities on pari-passu basis.
d) The Company has availed unsecured Loans from Related Parties at the interest rate of 9.75% p.a. These loans are repayable on demand subject to approval from Banks. The details of Loan is tabulated below
Market risk is the risk of loss of future earnings or fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial
instruments including foreign currency receivables and payables. The company is exposed to market risk primarily related to foreign exchange rate risk (currency risk), interest rate r
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.
Foreign currency risk
The Company has entered into various contracts in several currencies and consequently the Company is exposed to foreign exchange risk through its sales, services and purchases from suppliers in various foreign currencies. The Company holds derivative financial instruments such as foreign exchange forward contract to mitigate the risk of changes in exchange rates on foreign currency exposures.
The exchange rate between the rupee and foreign currencies has changed substantially in recent years. The fluctuations in exchange rate may have an impact on Company's operations.
The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing purchase of Steel, Cement and other materials. Due to the significantly increased volatility of the price of the raw material, the Company also entered into various purchase contracts for supply of Steel, Cement & other material. The Company has escalation clause in some of their client contracts for variation in the price of commodities.
Equity price risk
The Company's listed securities are susceptible to market price risk arising from uncertainties about future value of the investment securities.
At the reporting date, the exposure to listed securities at fair value was Rs.205 lakhs (Rs.126 lakhs). An increase / decrease of 10% on the BSE Market Index could have an impact of approximately Rs.20.50 lakhs (Rs. 12.60 lakhs) on the OCI or equity attributable to the Group.
Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Trade receivables
Outstanding customer receivables are regularly monitored and any major export shipments to customers are generally covered by letters of credit. The maximum exposure to the credit risk at reporting date is primarily from trade receivables amounting to Rs.70596 Lakhs
44 During the year, certain clients have terminated/short closed contracts amounting to Rs.479758 lakhs representing the value of unexecuted contracts. The unbilled revenue due to termination or short closure amounting to Rs.25769 lakhs has been reversed.
45 Bank guarantees encashed by clients amounting to Rs.36241 lakhs which form part of other current asset and the Company has initiated arbitration proceedings. Subsequently, till 29.05.2024 further 4 clients encashed BG valuing Rs.129336 lakhs.
46 Going Concern: The Promoters have infused unsecured loan, which is in excess of accumulated losses for the year ended as on 31st March 2024. Though there has been encashment of Bank Guarantees, the Company is continuing to execute the contracts and are hopeful of amicable solutions. Balance orders on hand as on 31.03.2024 is about Rs.167254 lakhs. The Company is in discussions with the Bankers for restructuring package. Based on the above, the Company is of the opinion that the accounts will be stated on Going Concern basis.
47 Pursuant to the orders of the The Honourable Rajasthan High court on 21.12.2023, the Company received demand notice from the Rajasthan VAT authorities amounting to Rs.50869.50 lakhs(Tax Rs.14552.35 lakhs and Interest Rs.36317.15 lakhs) on 12.01.2024. SLP has been filed In Supreme
court on 29.04.2024.
48 Due to non-visibility of profit in the near future, considering the balance orders in hand and expected order booking in future, the net deferred tax asset has been reversed to the extent of Rs.13269 lakhs in the third quarter.
49 Review of Sundry debtors has been made particularly for the Product segments and analysis of division wise collectible and non-collectible of debtors has been studied thoroughly relating to old projects which was already closed, but final closure and reconciliation of the contract are still under progress in most of the cases and the realization is not certain in some cases. As the outcome of the same the provision has been created for old and doubtful debtors to the tune of Rs.16076 lakhs of product segments and Rs.6611 lakhs related to construction segments totaling to Rs.22687 lakhs during the financial year.
50 Provision has been created for Rs.166.55 lakhs in Rates and taxes related to VAT/CST tax refunds pertaining to pre GST regime.
In case of Sundry creditors, ageing analysis has been carried out for the old contracts which was already completed and the balance amount in vendor ledger is not payable due to various factors considering the LD applicability, Risk and cost recovery toward the unexecuted portion of the contract and other recoveries towards various issues as per the terms & conditions of the contract. Accordingly, creditors write back has been worked out and arrived valuing to Rs.9519 lakhs during this quarter.
52 Upon termination of rental agreement with Progen, the factory activities have been discontinued as the building is not in our control at present. There are some Plant & Machinery inside the progen factory. Considering this situation, the fixed assets valuing about Rs.1096 lakhs related to Progen factory has been discarded. At the same time, balance rent payable of about Rs.153 lakhs is also reversed and taken to income.
53 During Mar-2023, Chattisgarh State Power Generation Co Ltd (CSPGCL) (Marwa Project) demanded encashment of two BGs totalling to Rs.16337 Lakhs. The Company obtained stay on encashment of bank guarantee from the Honourable Chattisgarh High Court. The said amount is included in Contingent Liability as on 31.03.2024.
During Jan-2024, Hindustan Urvarak & Rasayan Limited demanded encashment of CPBG and ABG totalling to Rs.1758.05 Lakhs. The Company obtained stay on encashment of bank guarantee from the The Honourable Delhi High Court. The said amount is included in Contingent Liability as on 31.03.2024.
54 The company reviewed its Investment in subsidaries i.e BGR Boilers Private Limited and BGR Turbines company Private Limited and confident of recovering its investment In lieu of settlement and seperation aggrement with Hitachi Group.Accordingly no provision for dlmunitation in value of Investment Is made.
55 Previous year figures
Figures of previous year have been regrouped / rearranged, wherever required to conform to the current year presentation.
For and on behalf of Board of Directors As per our report of even date
For Anand & Ponnappan Chartered Accountants Firm Registration No. : 000111S
ARJUN GOVIND RAGHUPATHY R PONNAPPAN
Managing Director Partner
DIN : 02700864 Membership No.021695
SADASIVAM DEIVANAYAGAM JEYAKRISHNA GANESAN
Independent Director Non-Independent Director
DIN : 07622466 DIN:03208035
Chennai
S.PATTABIRAMAN May 30,2024
Vice President & Chief Financial Officer
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