2.20 Provision and contingent liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
If the effect of the 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. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
2.21 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Internal Management and the Board of Directors of the Company who are responsible for allocating the resources, assess the financial performance and position of the Company and make strategic decisions. The Company has identified one reportable segment "Pharma Packaging Research Solutions" based on the information reviewed by the Internal Management and Board of Directors.
Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or 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 creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. The assumptions for analysing Expected Credit Losses (ECL) are based on the current prevailing market scenarios. The Company only deals with parties which have good credit rating/ worthiness given by external rating agencies or based on Company's internal assessment.
Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, cash and cash equivalents, bank deposits and other financial assets. None of the other financial instruments of the Company result in material concentration of credit risk.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was '30,878.31 lacs and '31,166.96 lacs as at March 31, 2024 and 2023, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments excluding trade receivables. The maximum credit exposure on financial guarantees given by the Company for the Group and various financial facilities is disclosed in Note 32 Contingent liabilities.
The Company's exposure to customers is diversified and no single customer contributes to more than 10% of outstanding trade receivable as at March 31, 2024 and March 31, 2023.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, price and other market changes. The Company is not exposed to price risk, since the Company's investment is in equity instruments of subsidiaries and it carries no other external investments. The Company's exposure to market risk is primarily on account of foreign currency exchange rate risk.
a) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenue or expense is denominated in a foreign currency). Foreign currency risks are managed within the approved policy parameters. The Company has a natural hedge as it imports raw material and exports goods.
As at the end of the reporting period, the carrying amounts of the material foreign currency denominated monetary assets (including cash and bank balances) and liabilities are as follows:
2) Fair Value Hierarchy
The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instrument by valuation techniques:
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.
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. The following methods and assumptions were used to estimate the fair values:
- The fair value of quoted equity investment and mutual funds are based on price quotations at the reporting date.
- The fair value of unquoted equity investments are based on market multiple approach. Market multiple of EV/EBITDA are considered after applying suitable discounts for size, liquidity and other company specific discounts.
29 EMPLOYEE BENEFITS
Defined Contribution plans
Contributions to defined contribution plans are recognised as expense when employees have rendered services entitling them to such benefits, such as provident fund.
Defined Benefit plans
For defined benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Past service cost, both vested and unvested, is recognised as an expense at the earlier of (a) when the plan amendment or curtailment occurs; and (b) when the entity recognises related restructuring costs or termination benefits.
The retirement benefit obligations recognised in the balance sheet represents the present value of the defined benefit obligations reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.
The Company provides gratuity benefit to its employees which is treated as defined benefit plans.
Compensated absences
Compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as undiscounted liability at the balance sheet date. Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as an actuarially determined liability at the present value of the defined benefit obligation at the balance sheet date.
Employee benefit plans consist of the following:
Gratuity
In accordance with Indian law, the Company operates a scheme of gratuity which is a defined benefit plan. The gratuity plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days' salary payable for each completed year of service. Vesting occurs upon completion of five continuous years of service. The Company manages the plan through a trust and the fair value of the plan assets is deducted from the gross obligation.
Risk Analysis
Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as companies take on uncertain long term obligations to make future benefit payments.
1) Liability Risks
a. Asset-Liability Mismatch Risk-
Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined enefit liabilities, the company is successfully able to neutralize valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.
b. Discount Rate Risk -
Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practise can have a significant impact on the defined benefit liabilities.
c. Future Salary Escalation and Inflation Risk -
Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management's discretion may lead to uncertainities in estimating this increasing risk.
a. All plan assets are maintained in a trust fund managed by a public sector insurer viz; LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years.
b. The company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured. Also interest rate and inflation risk are taken care of.
30 LEASES
As a lessee
The Company has lease contracts for its facility usage with lease term between 1 year to 5 years. Details of carrying amount of right-of-use
assets and movement during the period is disclosed under Note 4.
Footnotes:
(a) The maturity analysis of lease liabilities are disclosed in Note 4 (iv) and Note 27 (2) Liquidity Risk.
(b) The effective interest rate for lease liabilities is 9.50%, with maturity between 2023-2028 on a renewable basis thereafter.
35 ASSETS HELD FOR SALE
The Company had a capital advance for purchase of land parcels and building vide an agreement to sell with the promoters. In terms of the agreements, the said land parcels and building have been capitalized in the books during the year against the capital advance which has become nil. As there are potential buyers for sale of these land parcels thus in accordance with Ind AS 105, these land parcels are classified as "Assets Held for Sale" as at March 31, 2024.
The Company has given the effect of the above and presented the Standalone Financial Statements as at 31 March 2024 in accordance -refer to statement below.
B OTHER DISCLOSURES
(a) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(b) The Company does not have any transactions with companies struck off.
(c) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(d) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(e) The Company 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:
(i) 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
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(f) 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 Company shall:
(i) 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
(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(g) The Company has no 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).
(h) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Companies Act, 2013.
(i) The Company has not made any donation to political parties.
(j) Except for the instances mentioned below, the company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software.
(i) The feature of recording audit trail (edit log) facility was not enabled at the application layer of the accounting software relating to 'Salesforce' for the period 1 April 2023 to 31 March 2024.
(ii) The feature of recording audit trail (edit log) facility was not operated at the application layer of the accounting software relating to 'GCS-related' activity for the period from 1 April 2023 to 31 March 2024.
(ii) The feature of recording audit trail (edit log) facility was not operated at the application layer of the accounting software relating to 'GCS-related' activity for the period from 1 April 2023 to 31 March 2024.
(iii) The Company uses the services of a third-party service provider for payroll processing, however, the Service Organisation Control Type 2 report i.e. SOC 2, was not available.
(iv) The feature of recording audit trail (edit log) facility was not operated at the database level throughout the reporting year to log any direct data changes for the accounting software used for maintaining the books of account.
The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that the feature of recording audit trail (edit log) facility was not enabled at the database level in relation to SAP accounting software throughout the reporting year to log any direct data changes. Further no instance of audit trail feature being tampered with was noted in respect of the accounting software.
(k) During the year the company has not been declared as a wilful defaulter.
(l) No material fraud by the Company and on the Company has been noticed or reported during the year.
38 Bilcare Mauritius Limited (BML) has been liquidated and the investment of BML in its subsidiaries viz. Caprihans India Limited, Bilcare GCS Inc, Bilcare GCS Ireland Limited, Bilcare Inc and cash equivalent has been transferred to the shareholder viz. Bilcare Limited as part of the liquidation proceeds. There is no financial impact of the same in the financial statements.
39 Consequent to the slump-sale that was effected on 27.03.2023 wherein the PPI division was sold to Caprihans India Limited, there was a transition period wherein some business transactions were done in the name of Bilcare Limited in the capacity of "facilitator" which mainly pertained to sales and purchases and are not reflected in the financial statements.
40 In respect of the public fixed deposit liability taken over by the Caprihans India Limited as per the Business Transfer Agreement, the statutory compliances is the responsibility of the Company.
41 The Company is focussing on the GCS business vertical and given the positive prospects going forward, including management's strategic projection plan for the foreseeable future, cashflow projection etc. the accounts are prepared on a going concern basis.
42 Disclosure pursuant to Schedule V read with Regulations 34 (3) and 53 (F) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:
- Loans and advances in the nature of loans for working capital requirements to a subsidiary: NIL
- Loans and advances in the nature of loans to firms/companies in which directors are interested: NIL
- Investment by the loanee (borrower) in the shares of the Company or its subsidiary: NIL
43 Previous year figures have been regrouped / reclassified wherever necessary.
|