3.14.2 Terms / Rights attached to Equity Shares
The Company has only one class of equity shares having a par value of 110/- per share. The holders of the equity shares are entitled to receive dividends as declared from time to time, and are entitled to voting rights proportionate to their share holding at the meetings of shareholders.
In the event of liquidation of the company, the holders of equity shares will be entitled to receive any of the remaining assets of the company in proportion to the number of equity shares held by the shareholders, after distribution of all preferential amounts. However, no such preferential amounts exist currently.
3.14.5 There are no bonus shares issued, share issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date.
3.14.6 There are no shares reserved for issue under options and contracts/ commitments for the sale of shares/ disinvestment.
3.14.7 The company has transferred the unpaid or unclaimed dividend amount declared in August 2016 to the Investor Education and Protection Fund (IEPF) fund on October 21, 2023. This transfer was delayed by 10 days due to a technical error faced while filing the form on the Ministry of Corporate Affairs website.
Nature and purpose of reserves General Reserve
General reserve was created for declaration of dividends as per statutory requirement. Security Premium
Security Premium represents premium on preferential shares issued (net of issue expenses). Capital reserve
Capital reserve was created on forfeiture of shares as per statutory requirement.
Capital Redemption Reserve
Capital redemption reserve was created on Redemption of Preference Shares as per statutory requirement.
Retained Earnings
Retained earnings are the profits that the Company has earned till date, net-off any transfers to general reserve, dividends or other distributions paid to shareholders.
Revaluation Surplus
Gains/losses arising on the revaluation of the Company's owned properties. On disposal of the asset, the balance of the revaluation reserve is transferred to retained earnings.
Note: Above contingent liabilities exclude the demands raised by the Central Excise Department on earlier assessment aggregating to 11,899.67 lakhs which have been allowed in favour of the Company by the CESTAT. The department has filed an appeal with the Honourable Supreme Court, which is pending disposal. Also, with regards to Customs, the appeal filed by the Company against a demand of 148.14 lakhs has been allowed by the Commissioner (Appeals) against which the department has filed an appeal with the CESTAT, which is pending disposal.
Notes:
1. The Company does not expect any reimbursements in respect of the above contingent liabilities.
2. It is not practicable to estimate the timing of cash outflows, if any, in respect of matters pending resolution of the arbitration/ appellate proceedings.
5.3 Assets Held for Sale
Non-current assets or disposal groups comprising of assets and liabilities are classified as ‘held for sale' when all the following criteria are met : (i) decision has been made to sell, (ii) the assets are available for immediate sale in its present condition, (iii) the assets are being actively marketed and (iv) sale has been agreed or is expected to be concluded within 12 month of the Balance sheet date.
Subsequently, such non-current assets and disposal groups classified as ‘held for sale' are measured as the lower of its carrying value and fair value less costs to sell. Non-current assets held for sale are not depreciated or amortised.
The company has decided to move from inhouse to outsourcing within some of the non-core activities and classified certain assets as “asset held for sale" and consequently provided an impairment loss of 1211.54 lakhs. The details of whereas as under:
The carrying amounts of trade receivables, trade payables, capital creditors, cash and cash equivalents, other bank balances, other financial assets and other financial liabilities (other than those specifically disclosed) are considered to be the same as their fair values, due to their short-term nature.
6.2 Fair Value Hierarchy
The fair value of financial instruments as referred to in note 6.1 above has been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).
The categories used are as follows:
• Level 1 - Quoted prices (unadjusted) in active markets for identical Assets or Liabilities.
• Level 2 - Inputs other than quoted prices included within 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 assets or liabilities that are not based on observable market data (unobservable inputs).
6.3 Valuation Technique used to determine Fair Value:
Specific valuation techniques used to value financial instruments include:
1. Use of quoted market prices for Listed instruments
2. Expected credit loss model valued by the independent valuer
7. Financial Risk Management
The Company is primarily exposed to fluctuation in Market risk, Credit risk and Liquidity risk. The Company has a risk management policy which addresses the risk associated with the financial asset and liabilities.
Risk management framework
7.1.2 Interest Rate Risk
The Company is exposed to short-term and long-term borrowings. Long-term borrowing's interest rates are fixed and not subject to any interest rate risk. Short-term borrowings, being working capital loans, are subject to interest rate fluctuation based on the performance and external credit rating of the Company.
The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Company has constituted a Risk Management Committee (RMC) for identification, evaluation and mitigation of operations, strategic and external risks. RMC has the overall responsibility for monitoring and recovering the Risk Management Plan and associated practices of the Company.
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 RMC 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 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.
7.1 Market Risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company's income or the value of its holdings of financial 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, interest rate risk and the market value of investments. Thus, Company's exposure to market risk is a function of investing and revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.
Market risk comprises two types of risks.
7.1.1 Foreign Currency Exchange Rate Risk
The fluctuation in foreign currency exchange rates may have potential impact on the Statement of Profit or Loss, other comprehensive income and equity.
The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. Currently the Company follows a policy of hedging 100% of its trade payables. On an overall basis, the Company has hedged 52.58% of its foreign exchange exposure thus minimising the currency risk.
7.2 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, investment in mutual funds and cash and cash equivalents. The Company makes provision on trade receivables based on Expected Credit loss (ECL) method based on provision matrix.
Trade Receivables:
The Company has outstanding trade receivables amounting to 113,187.65 lakhs and 112,370.80 lakhs as of March 31, 2024, and March 31, 2023, respectively. Trade receivables are unsecured in nature, except to the extent of security deposits received from the distributors. The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. Default on account of Trade Receivables happens when the counterparty fails to make contractual payment when they fall due.
Credit risk is managed by the Company by continuous monitoring of overdue receivables and also by making adequate provision towards expected credit loss in the books of account as per the simplified approach stated in the accounting policy.
7.3 Liquidity Risk
Liquidity needs of the Company are monitored on the basis of monthly and yearly projections. The company's principal sources of liquidity are cash and cash equivalents, cash generated from the operations and bank borrowings.
The Company manages the liquidity needs by continuously monitoring cash inflows and by maintaining adequate cash and cash equivalents. Net cash requirements are compared to available cash in order to determine any shortfalls.
Short term liquidity requirements consist mainly of sundry creditors, expense payable, employee dues and repayment of loans arising during the normal course of business as of each reporting date. The Company meets its short-term liquidity requirements primarily through efficient working capital management and by accessing additional and alternative credit facilities available in the financial market. The Company has acceptances in line with supplier's financing arrangements which might invoke liquidity risk as a result of liabilities being concentrated with few financial institutions instead of a diverse group of suppliers. The Company has established an appropriate liquidity risk management framework for the management of the Company's short, medium and long-term funding and liquidity management requirements.
The Company assesses long-term liquidity requirements on a periodical basis and manages them through internal accruals and bank borrowings.
The table below provides details regarding the contractual cash outflow for financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company is required to pay.
Expected credit loss assessment
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Management believes that the unimpaired amounts that are past due are still collectible in full, based on historical payment behaviour and extensive analysis of customer credit risk.
8. Capital Management
Equity share capital and other equity are considered for the purpose of Company's capital management. The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimize returns to shareholders. The capital structure of the Company is based on management's judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence. The management and the Board of Directors monitor the return on capital as well as the level of dividends to shareholders. The Company may take appropriate steps in order to maintain, or if necessary, adjust, its capital structure.
The Board of Directors seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.
The Company monitors capital using a ratio of ‘adjusted net debt' to ‘total equity'. For this purpose, adjusted net debt is defined as total liabilities, comprising interest-bearing loans and borrowings, less cash and cash equivalents and other bank balances. Total equity comprises all components of equity.
e) Company applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term.
f) The lease agreements do not impose any restrictions or covenants other than the security interests in the leased assets that are held by the lessor.
12. Disclosure in respect of Indian Accounting Standard (Ind AS)-19 “Employee Benefits”12.1 General description of various defined employee’s benefits schemes are as under:
a) Provident Fund:
The Company's Provident Fund (defined contribution fund) is managed by Regional Provident Fund Commissioner. The Company pays fixed contribution to provident fund at pre-determined rate.
b) Gratuity:
Gratuity is a defined benefit plan, in respect of past services provided by the employees is quantified based on the actuarial valuation.
The scheme is funded by the Company and the liability is recognized on the basis of contribution payable to the insurer. Disclosure of information as required under Ind AS-19 have been made in accordance with the actuarial valuation.
The summarized position of various defined benefits recognized in the Statement of Profit and Loss, Other Comprehensive Income (OCI) and Balance Sheet and other disclosures are as under:
b. The Company has been sanctioned a working capital facility of 110,500 Lakhs, by SBI Bank, valid upto January 14, 2025. The outstanding balance as on March 31,2024 - 1 Nil (Previous Year - 1 Nil). This facility is secured by way of a hypothecation of inventories, receivables and other current assets on pari-passu first charge basis both present & future. Further, it is secured by collateral property through equitable mortgage on factory land & buildings and other fixed assets including Plant & machinery along with Corporate Guarantee from Crompton Greaves Consumer Electricals Limited.
21. Code of Social Security, 2020
The date on which the Code of Social Security, 2020 (“the code") relating to employee benefits during the employment and post-employment benefit will come into effect is yet to be notified and the related rules are yet to be finalized. The company will evaluate the code and its rules, assess the impact, if any, on account of the same once they become effective.
22. Additional Disclosures
Additional information and disclosures as required under Schedule III to the act to the extent applicable to the company has been disclosed.
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the year ended March 31,2024.
(v) 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.
(vi) 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: (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 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).
(viii) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
(ix) The Company has neither declared nor paid any dividend during the year.
(x) Disclosure on number of layer of companies is not applicable as there are no such transactions.
(xi) There are no scheme of arrangements approved by the Competent authority in terms of Sections 230 to 237 of the Companies Act, 2013 during the year.
(xii) The title deeds of all of the immovable properties included in Property, Plant and Equipment are held in the name of the Company.
(xiii) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
(xiv) There are no outstanding loans or advances in the nature of loans that are granted to Promoters, Directors, KMPs and the related parties.
23. Figures for the comparative period have been regrouped wherever necessary in conformity with the current period classification.
24. The Financial statements were reviewed and recommended by the Audit Committee and has been approved by the Board of Directors at their meeting held on May 14, 2024
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