ii. Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares at a par value of ' 10 per share. Each shareholder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the equity share holders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion to their share holding.
Security and Salient Terms:
a) During previous year fresh unsecured loan of ' 20,000 Lakhs in Tranche-I and ' 5,000 Lakhs in Tranche-II were borrowed from DHL Logistics Private Limited on March 24, 2023 and March 27, 2023 with interest rate of 8.179% and 8.186% respectively with yearly interest reset on anniversary dates of the respective tranches. The interest rates have been reset in March 2024 to 8.099% & 8.089% for Tranche-I & Tranche-II respectively. The loan will be repaid on bullet payment basis, the Tranche-I loan of ' 20,000 Lakhs is due for repayment on February 24, 2025 and Tranche-II loan of ' 5,000 Lakhs is due for repayment on February 27, 2025.
b) In financial year 2021-22, Company has borrowed Unsecured term loan from Blue Dart Express Limited (Holding Company) in Tranche -I for ' 10,000 Lakhs, Tranche -II for ' 10,000 Lakhs & Tranche- III for ' 5,000 Lakhs at 6.10% p.a., 6.11% p.a., 6.34% p.a. respectively. During the previous year fresh additional unsecured loan were borrowed from Blue Dart Express Limited in Tranche - IV for ' 20,000 Lakhs at 7.704% p.a. respectively. All the tranches of unsecured loan were borrowed for business purposes only. The unsecured loan will be repaid in 20 quarterly payouts from the 27th month following end of the month in which the loans were borrowed. The interest rates were reset to 7.664% p.a. for all tranches effective from September 01, 2023.
c) Blue Dart Express Limited, the holding company, has provided the Letter of Comfort to the banks in respect of credit facilities provided by the banks to the Company.
The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets & deferred tax liabilities.
Significant management judgment is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets.
The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered. Any changes in future taxable income would impact the recoverability of deferred tax assets.
ii) LEASES [Refer Note 3(h)]
Company as lessee
The Company has lease contracts for various items of aircraft, buildings & vehicles used in its operations. Leases of aircraft generally have lease terms between 5 to 7 years, while building & vehicles generally have lease terms in excess of 1 year and upto 15 years. The Company's obligations under its leases are secured by the lessor's title to the leased assets.
The Company also has certain leases of buildings & vehicle with lease terms of 12 months or less or low value. The Company applies the 'short-term lease' and 'lease of low-value assets' recognition exemptions for these leases.
Refer note 4A for carrying amount of right of use assets recognized and the movements during the year.
The effective interest rate for lease liabilities is from 4.93% to 8.60 % for maturity between 2024 to 2031.
The maturity analysis of lease liability is disclosed in note 37 (b) iii.
Note 1: The carrying value of trade receivables, cash and cash equivalents, trade payables, other financial liability are considered to be the same as their fair values due to their short term maturities.
Note 2: Difference between carrying amounts and fair values of security deposits measured at amortised cost is not significantly different in each of the year presented.
Note 3: Borrowings are taken at variable interest rate which is reviewed and reset periodically considering the market trend and hence the carrying amount is not materially different from their fair values.
B Financial Risk management
i. Risk management framework
The Company's activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company's primary risk management focus is to minimize potential adverse effects of market risk on its financial performance. The Company's risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the policies and processes. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company's activities. The Board of Directors and the management is responsible for overseeing the Company's risk assessment and management policies and processes.
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. 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 does not have any financial assets that are past due but not impaired.
Trade and other receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. As the Company's customers are its holding company and group company hence impairment of trade receivables do not reflect any significant credit losses. Given that the macro economic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of no credit losses. Further, management believes that the unimpaired amounts that are past due by more than 90 days are still collectible in full, based on historical payment behaviour and extensive analysis of customer credit risk.
The Company has concentration of credit risk due to the fact that the holding company and other group company are the major customers and significant trade receivables are receivable from the parent company and group company as on March 31, 2024: ' 110 Lakhs (March 31, 2023 : ' 1,108 Lakhs). However the customers are highly reputed, credit worthy and regular in making payment.
Cash and cash equivalents
The Company held cash and cash equivalents with credit worthy banks and financial institutions of ' 3 Lakhs and ' 18 Lakhs as at March 31, 2024 and March 31, 2023 respectively. The credit worthiness of such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be good.
Security deposits given to lessors
The Company has given security deposit to lessors for premises leased by the Company as at March 31, 2024 and March 31, 2023. The credit worthiness of such lessors is evaluated by the management on an ongoing basis and is considered to be good.
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.
As of March 31, 2024, the Company has negative working capital of Rs. (49,294) Lakhs including inventories of ' 4,323 Lakhs, cash and cash equivalents of ' 3 Lakhs, trade receivables of ' 152 Lakhs, other assets of ' 3,195 Lakhs, Current Borrowings of ' 30,469 Lakhs, trade payables of ' 4,104 Lakhs, employee benefit obligation of ' 2,760 Lakhs, lease liability of ' 10,364 Lakhs and other current liabilities of ' 9,270 Lakhs.
As of March 31, 2023, the Company has negative working capital of ' (12,809) Lakhs including inventories of ' 3,151 Lakhs, cash and cash equivalents of ' 18 Lakhs, trade receivables of ' 1,138 Lakhs, other assets of ' 5,594 Lakhs, Current Borrowings of ' 2,250 Lakhs, trade payables of ' 4,155 Lakhs, employee benefit obligation of ' 2,341 Lakhs, lease liability of ' 10,271 Lakhs and other current liabilities of ' 3,693 Lakhs.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.
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 and 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 and interest rate risk. Thus, the Company's exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities.
a) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to market risk for changes in interest rates relates to deposits and borrowings from bank and financial institutions.
For details of the Company's short-term and long term loans and borrowings, including interest rate profiles, refer to Note 16 of these financial statements.
Interest rate sensitivity - variable rate instruments
A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased / decreased equity and profit or loss by amounts shown below. This analyses assumes that all other variables, in particular, foreign currency exchange rates, remain constant. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date. The period end balances are not necessarily representative of the average debt outstanding during the period.
b) Currency risk
The fluctuation in foreign currency exchange rates may have potential impact on the profit and loss account and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the entity.
Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in U.S. dollar, GBP and Euro, against the functional currency of the Company.
Sensitivity analysis
A 5% strengthening / weakening of the respective foreign currencies with respect to functional currency of Company would result in increase or decrease in profit or loss and equity as shown in table below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast revenue and cost. The following analysis has been worked out based on the exposures as of the date of statements of financial position.
38 CAPITAL MANAGEMENT
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. Management monitors the return on capital regularly.
The Company monitors capital using a ratio of 'adjusted net debt' to 'adjusted equity'. For this purpose, adjusted net debt is defined as total borrowings, comprising interest-bearing loans and borrowings and obligations under finance leases, less cash and cash equivalents. Adjusted equity comprises all components of equity.
39 A) SEGMENT INFORMATION
Based on the "management approach" as defined in Ind AS 108, the Chief Operating Decision Maker (CODM) comprises of Managing Director and Chief Financial Officer evaluates the Company's performance and reviews the segment business. The Company is primarily engaged in a single segment business to operate aircraft and provide aircraft maintenance services within India for the business of integrated air and ground transportation and distribution of time-sensitive packages of Blue Dart Express Limited. All assets of the Company are domiciled in India and the Company earns entire revenue from its operations in India. Revenue for the period ended March 31, 2024: ' 109,418 lakhs (March 31, 2023: ' 1,17,783 lakhs) is derived from the holding company.
39 B) The Company has used accounting software for maintaining its books of account for the year ended March 31, 2024 which have 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 no audit trail has been enabled at the database level for the accounting software Navision (MS SQL Database) to log any direct data changes.
40 The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective. Based on a preliminary assessment, the entity believes the impact of the change will not be significant.
41 Other Statutory Information
i. The Company do not have any Benami property, where any proceeding has been initiated or pending against company for holding any Benami property
ii. The Company do not have any transaction with companies struck off
iii. The Company do not have any charges or satisfaction which are yet to be registered with ROC beyond the statutory period
iv. The Company have not traded or invested in Crypto currency or virtual currency during the financial year
v. The Company had not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of
funds) to any other person(s) or entity, including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the intermediary will
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
vi. The Company have not received any fund from any person or entity, including foreign entities (Funding party) with the understanding (whether recorded in writing or otherwise) that the Company will
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
vii. The Company have 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 survey or survey or any other relevant provisions of the Income Tax Act, 1961)
42 Events after the reporting period
The company has evaluated subsequent events from the balance sheet date through April 30, 2024 the date at which the financial statements were available to be issued, and determined that there are no material items to be discussed other than those discussed above.
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