(q) Provisions and Contingent Liabilities
Provisions are recognized 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. When the Company expects
some or all of a provision to be reimbursed the expense relating to a provision is
presented in the Statement of Profit and Loss net of any reimbursement. Provisions
are determined by discounting the expected future cash flows (representing the best
estimate of the expenditure required to settle the present 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
recognized as finance cost. Expected future operating losses are not provided for.
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
recognized as a finance cost.
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
arises from past events where it is either not probable that an outflow of resources
will be required to settle or a reliable estimate of the amount cannot be made. A
contingent liability also arises in extremely rare cases where there is a liability that
cannot be recognized because it cannot be measured reliably.
(r) Cash Flow Statement
Cash and cash equivalent in the balance sheet comprise cash at banks, cash on hand
and cheques on hand, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of
cash at bank, cash on hand and cheques on hand as they are considered an integral
part of the Company’s cash management.
(s) Corporate Social Responsibility (“CSR”) expenditure
CSR expenditure incurred by the Company is charged to the Statement of the Profit
and Loss.
(t) Earnings Per Share
Basic earnings / (loss) per share are calculated by dividing the net profit or loss for
the year attributable to the shareholders of the Company by the weighted average
number of equity shares outstanding at the end of the reporting period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the
year attributable to equity shareholders and the weighted average number of shares
outstanding during the period are adjusted for the effects of all dilutive potential
equity shares, except where the results will be anti-dilutive.
1C. Recent accounting pronouncements - Standard issued but not yet effective
Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the
existing standards under Companies (Indian Accounting Standards) Rules as issued
from time to time. For the year ended March 31, 2024, MCA has not notified any
new standards or amendments to the existing standards applicable to the Company.
b) Terms / Rights attached to Equity Shares
The Company has only one class of equity shares having a par value of ' 10/- per share.
Each holder of the Equity Shares is entitled to one vote per share held
Dividend, if any, proposed by the Board of Directors will be subject to the approval of the Shareholders in the ensuing Annual
General Meeting except in case of Interim Dividend.
In the event of liquidation of the Company, the holders of the Equity Shares will be entitled to receive remaining assets of the
Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held
by the shareholders.
Terms / Rights attached to 15% Redeemable Preference Shares
The Company has only one class of preference shares having a par value of' 10/- per share. The said shares are cumulative
in nature.
Dividend, if any, proposed by the Board of Directors will be subject to the approval of the Shareholders in the ensuing Annual
General Meeting except in case of Interim Dividend
In the event of liquidation of the Company, the holders of the preference Shares will be entitled to receive amounts to the
extent of their holding in the company before any distribution of remaining assets of the Company to the Equity Shareholders
of the Company.
Arrears of Redeemable Cumulative Preference Shares Dividend - ' 1.18/- (Previous year - ' 1.18/-)
The Balance 11,255 (Previous Year - 11,255) - 15% Preference Shares of' 10/- each are yet to be redeemed. The time for
redemption was extended up to 10.05.1999 vide resolution passed at the Board Meeting of the Company held on 16.07.1991.
Further extension is being sought for.
b. Arrears of Redeemable Cumulative Preference Shares Dividend - ' 1.18 lakhs
(Previous year - ' 1.18 lakhs).
c. Purchase of Raw Material viz 108 tonnes of steel was cleared by the Company at a
lower rate of duty i.e. at 75% (i.e. at pre- budget rate) against 175% (as increased by
the budget proposal 1981) as per the orders passed by a division bench of the High
Court at Delhi in the matter of a writ petition filed by the Company, challenging the
validity of the budget proposal. As per the said orders, the Company has furnished a
bond, till further order of the court. The said writ petition has been disposed off for
adjudication by customs. There is a contingent liability of ' 17.52 lakhs (Previous Year
' 17.52 lakhs).
d. The amounts of certain Sundry Debtors, Sundry Creditors, Advances and Lenders are
subject to confirmations / reconciliation and adjustments, if any. The management does
not expect any material difference affecting the current year’s financial statements.
e. In the opinion of the Board of Directors, unless otherwise stated in the Balance Sheet,
the current assets, loans and advances have value of realisation, in the ordinary course
business, at least equal to the amount stated in the Balance Sheet.
f. The Company had filed return of Income for the Financial Year 2018-19 (Assessment
Year 2019-20) after adjusting the carry forward depreciation loss with current year
capital gain. But, the Income-tax Department has not considered the view of the
Company and raised a demand of '. 11.19 lakhs in the intimation received u/s 143(1)
of the Act by the Company. The Company has filed necessary rectification request with
the Income Tax Department which is still pending. Against the said demand the
Company has paid (adjustment of Income tax refund) '. 10.16 lakhs (Previous year '.
9.34 lakhs).
g. Considering the losses incurred by the Company and uncertainty about future profits, it
is considered prudent by the Board of Directors to not to provide for any Deferred Tax
Assets / liabilities for the year ended March 31, 2024.
h. The operating results have been adversely affected due to very low level of activities
and the accumulated losses of the Company as at 31st March, 2024 stand at '. 1,564.10
Lakhs as against the share capital of '. 167.50 Lakhs. Also current liabilities as at 31st
March, 2024 exceed current assets by '. 1,270.73 Lakhs. At present the Company does
not have any manufacturing facility of its own and most of the workers / staff of the
Company have left the employment. These conditions indicate the existence of material
uncertainty about the Company's ability to continue as a going concern, which is
dependent on the Company establishing profitable operations and sustainable cash
flows.
The Management is in the process of further rationalizing the expenses, continuously
reducing its liabilities and also considering the measures to generate additional revenue
apart from revenue generated during the year. Accordingly, the Company continues to
prepare its accounts on a "Going Concern" basis.
28 Financial Risk Management objectives and policies
In the course of its business, the Company is exposed primarily to fluctuations in
foreign currency exchange rates, interest rates, equity prices, liquidity ad credit risk,
which may adversely impact the fair value of its financial instruments. The Company
has a risk management policy which not only covers the foreign exchange risks but
also other risks associated the financial assets and liabilities such as interest rate risks
and credit risks. The risk management is approved by the Board of Directors. The risk
management framework aims to:
(i) Create a stable business planning environment by reducing the impact of
currency and interest rate fluctuation on the Company’s business plan.
(ii) Achieve greater predictability to earnings by determining the financial value of
the expected earnings in advance.
a) Market Risk
Market risk is the risk of any loss in future earnings, in realisable fair values or in
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 interest
rates, foreign currency exchange rates, equity price fluctuations, liquidity and other
market changes. Future specific market movements cannot be normally predicted
with reasonable accuracy.
b) Market Risk - Interest rate risk
Interest rate risk is that the fair value of future cash flows of a financial instrument
will fluctuate because of changes in market interest rates. The Company’s exposure
to the risk of market interest rate relates primarily to the Company’s debt obligations
with floating interest rates. The Company manages its interest rate risk by having
more of fixed rate loans and borrowings.
c) Interest rate Sensitivity
As the most of the debts of the Company are fixed rate loans and borrowings, there
will be minimum impact on the Company’s profit before tax due to possible change
in interest rates.
d) Market Risk - 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 primarily to the Company’s operating
and financing activities. The Company’s exposure to foreign currency changes from
investing activities is not material.
The Company manages its foreign currency risk by hedging transactions, wherever
the Company’s feels that there is need to hedge the foreign currency risk.
The carrying amounts of the Company’s foreign currency denominated monetary
assets and monetary liabilities at the end of the reporting period are as follows.
The Company did not have any foreign currency liabilities as on March 31, 2024 and
March 31, 2023.
e) Foreign currency sensitivity
Movement in the functional currencies of the various operations of the Company
against the major foreign currencies may impact the Company’s revenues from
operations. Any weakening of the functional currency may improve the Company’s
exports and any strengthening of the functional currency may impact the Company’s
exports. The foreign exchange rate sensitivity is calculated for each currency by
aggregation of the net foreign exchange foreign exchange rate exposure of a currency
and a simultaneous parallel foreign exchange rate shift in the foreign exchange rates
of each currency by 3% which represents management’s assessment of the reasonably
possible changes in foreign exchange rates. The sensitivity analysis includes only
outstanding foreign currency dominated monetary items and adjusts their translation
at the period end for a 3% change in the foreign currency rate.
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent
foreign exchange risk because the exposure at the end of the reporting period does
not reflect the exposure during the year.
f) Exposure to Credit Risk
Credit risk is the risk that counterparty will not meet its obligation under a financial
instrument or customer contract, leading to a financial loss. Financial instruments that
are subject to credit risk and concentration thereof principally consists of trade
receivables, loans receivable, investments and cash and cash equivalent.
The carrying value of financial assets represents the maximum credit risk. The
maximum exposure to credit risk was 139.70 and '. 142.72 lakhs as March 31,
2024 and March 31, 2023 respectively, being the total carrying value of trade
receivables, balances with banks, bank deposits, and investments.
Customer credit risk is managed by the Company subject to the Company’s
established policy, procedures and control relating to customer credit risk
management. An impairment analysis is performed at each reporting date on an
individual basis for major customers. The Company does not hold any collateral.
Trade Receivables are consisting of large number of customers. The Company has
credit evaluation policy for each customer and based on the evaluation, credit limit of
each customer is defined. Wherever, the Company assesses the credit risk as high, the
exposure is backed by either advance payment / deposit.
The Company does not have higher concentration of credit risks to a single customer
or group. With respect to trade receivables, the Company reviews the receivables on
periodic basis and to take necessary mitigation wherever required. The Company
creates allowance for all unsecured receivables based lifetime expected credit loss
based on a provision matrix. The provision matrix takes into account historical credit
loss experience and is adjusted for forward looking information. The expected credit
loss allowance is based on the ageing of the receivable that are due and rates used in
the provision matrix.
Credit risk on cash and cash equivalents, deposits etc. which is managed by the
Company’s finance department, is generally very low as the said deposits have been
made with the banks who have been assigned high credit rating by international and
domestic rating agencies.
Credit risk on derivative instruments is generally low as the Company enters into the
Derivative contracts with reputed banks and the size of the contracts is small.
g) Liquidity Risk Management
Liquidity risk refers to the risk that the Company cannot meet its financial
obligations. The objective of liquidity risk management is to maintain sufficient
liquidity and ensure that the funds are available for use as per requirements. The
Company has obtained various term loans from banks / NBFCs and also unsecured
loans from directors and others for its working capital requirements and purchase of
fixed assets.
The Company monitors its risk of shortage of funds on a regular basis. The
Company’s objective is to maintain a balance between continuity of funding and
flexibility through the use of term loans. The Company assessed its concentration of
risk with respect to refinancing of its debts and concluded it to be low.
h) Liquidity Tables
The following table details the Company’s remaining contractual maturity for its non¬
derivatives financial liabilities with agreed repayment periods. The table has been
drawn up based on the undiscounted cash flows of financial liabilities based on the
earliest date on which the Company can be required to pay:
29 Additional Regulatory Information
Additional Regulatory Information pursuant to Clause 6L of General Instructions for
preparation of Balance Sheet as given in Part I of Division II of Schedule III to the
Companies Act, 2013, are given hereunder to the extent relevant and other than those
given elsewhere in any other notes to the Financial Statements
(i) There are no Benami properties held by the Company. Also, there has been no
proceedings initiated or pending against the Company for holding any Benami
property under the Benami Transactions Prohibition) Act, 1988 (45 of 1988) and
rules made thereunder
(ii) The Company doesn’t have any transactions with companies struck off under section
248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956
(iii) There are no transactions which are recorded in the books of account which have
been surrendered or disclosed as income during the year in the tax assessments under
the Income Tax Act, 1961 (43 of 1961)
(iv) The Company has not traded or invested in Crypto currency or Virtual currency
during the financial year
v) The Company has utilized funds raised on short term basis of ' 145.00 lakhs for long
term unsecured loans repayment.
vi) The Company is not a wilful defaulter as declared by any bank or financial institution
or any other lender.
vii) There are no charges or satisfactions yet to be registered with Register of Companies
(ROC) beyond the statutory period.
viii) The Company has complied with the number of layers prescribed under clause 87 of
Section 2 of the Act read with Companies (Restriction on number of layers) Rules,
2017.
ix) During the year the Company has not advanced or loaned or invested funds (either
borrowed funds or share premium or any other sources or kind of funds) to pay other
person or entity including foreign entities (intermediaries) with the understanding
(whether recorded in writing or otherwise) that the intermediary shall
(i) directly or indirectly lend or invest in other person or entities identified in any
manner whatsoever by or on behalf of company (ultimate beneficiaries) or
(ii) provide any guarantee, security or the like to or on behalf of the ultimate
beneficiaries.
x) The Company has not received any fund from any person(s) or entity(ies) including
foreign entities (including funding party) with the understanding (whether recorded
in writing or otherwise) that the company shall
(i) directly or indirectly lend or invest in any manner whatsoever by or on behalf of
funding party (ultimate beneficiaries) or
(ii) provide any guarantee, security or the like to or on behalf of the ultimate
beneficiaries.
i. The Company has selected to present the audited accounts to the nearest figure in Lakhs
for the current year and previous year.
30. Figures of the previous year have been regrouped / reclassified / rearranged, wherever
necessary, to conform to the current year’s classification and presentation. Amounts and
other disclosures for the preceding year are included as an integral part of the current
year’s financial statements and are to be read in relation to the amounts and other
disclosures relating to the current year.
SIGNATURE TO NOTES 1 TO 30
As per our Report of even date attached
For MAHENDRA KUMBHAT & ASSOCIATES For and on behalf of the Board
Chartered Accountants
Firm Registration No. 105770W Avinash Jajodia Chairman and
(DIN : 00074886) Managing Director
Kanika Vijayyvergiya - Director
(DIN : 07651318)
Shilpa Dutt - Director
(DIN : 09384085)
(MANOJ PRAVINCHANDRA SHAH) Sampada Sakpal - CFO
Partner
Membership No. 043290
Place : Mumbai Place : Mumbai
Date : May 16, 2024 Date : May 16, 2024
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