1. GENERAL INFORMATION
Creative Castings Limited (“the Company” ) is a public limited company domiciled in India The Company is engaged in manufacturing and selling of all types of Steel and Alloy Steel Investment Castings . The company is also engaged in generating of power from wind energy. The Casting Manufacturing unit of the Company is situated at G.I.D.C. Estate, Phase - II, Rajkot Road, Dolatpara, Junagadh - 362003. The company caters to both domestic and international markets.
The Company’s shares are listed with BSE.
a) No Shareholders holding more than 5 % shares in the company.
b) No Change in Equity shares and Equity Share Capital during the financial years 2017-18 and 2018-19.
c) The company has only one class of equity shares having a par value of Rs. 10/- per share.
Each holder of equity shares is entitled to one vote per share.
The Company declares and pays dividends in Indian Rupees.
The dividend where proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting .
d) For the period of five years immediately preceding the date of Balance Sheet,
- The Company has not allotted any shares as fully paid up without receipt of cash,
- The Company has not brought back any shares,
- The Company has not issued any shares by way of bonus shares
* The Company has not received information from vendors regarding their status under the Micro, small and Medium Enterprise Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act have not been given .
* Trade payables includes amount due to Directors for Remuneration Rs. 315,000/-.(Previous year Rs. 285,000/-) .
Disclosure in respect of Defined Benefit Plans in respect of Gratuity .
The present value of obligation and defined benefit plan is determined based on actuarial valuation report.
The Company has funded the gratuity liability ascertained on actuarial basis, wherein every employee who has completed five years or more of service is entitled to gratuity on retirement or resignation or death calculated at 15 days salary for each completed year of service, subject to maximum of Rs. 20 lakhs per employee. The vesting period for gratuity as payable under The Payment of Gratuity Act is 5 years.
Valuation are performed on certain basic set of pre- determined assumptions which may vary over time. Thus , the company is exposed to various risks in providing the above benefit which are as follows :
Interest Rate risk : The plan exposes the Company to the risk of fall in interest risk. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability ( as shown in financial statements ).
Liquidity Risk : This is the risk that the Company is not able to meet the short term gratuity payouts. This may arise due to non availability of enough cash / cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.
Salary Escalation Risk : The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.
Demographic Risk : The company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to.
Regulatory Risk : Gratuity benefit is paid in accordance with the requirements of the Payent of Gratuity Act, 1972 ( as amended from time to time ). There is a risk of change in regulation requiring higher gratuity payouts ( e.g. increase in the maximum limit on gratuity of Rs. 20,00,000).
Asset Liability mismatching or Market Risk : The duration of the liability is longer compared to duration of assets, exposing the Company to market risk for volatilities / fall in interest rate.
Investment Risk : The probability or likelihood of occurance of losses relative to the expected return on any particular investment.
SENSITIVITY ANALYSIS
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The result of sensivity analysis is given below :
Please note that the sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumption would occur in isolation of one another as some of the assumptions may be correlated.
There is no change in the method of valuation for the prior period._
B. Financial Risk Management
The Company has established the risk management policies to ensure timely identification and evaluation of risks, settings acceptable risk thresholds, identifying and mapping controls against these risks, monitor the risks and their limits, improve risk awareness and transparency.
The Company’s activities expose it to credit risk, liquidity risk and market risk .
The Board provides guiding principles for overall risk management as well as policies covering specific areas such as foreign exchange risk, credit risk and investment of surplus liquidity
(a) Credit risk
Credit risk refers to the risk of a counter party default on its contractual obligation resulting into a financial loss to the Company. The maximum exposure of the Financial assets represents trade receivables, work in progress and other receivables. In respect of trade receivables, the Company used a provision matrix to compute the expected credit loss allowances for trade receivables in accordance with the expected credit loss ( ECL ) policy of the Company. The Company regularly reviews trade receivables and necessary provisions, wherever required are made in the financial statements.
(b) Liquidity risk
Liquidity risk is that the Company will encounter difficulty in raising funds to meet its commitments associated with financial instruments. Liquidity risk may result from an inability to sell as financial asset quickly at close to its fair value.
The Company manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring for cast and actual cash flows and by matching the maturity profiles of financial assets and liabilities. Contractual maturities of significant financial liabilities are as follows :
(c) Market risk
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 foreign currency exchange rates, interest rates, credit, liquidity and other market changes.
The Company is earning in foreign currency and consequently, the company is exposed to foreign exchange risk. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.
(d) Capital management
The Company’s capital management objective is to maximise the total shareholders’ return by optimising cost of capital through flexible capital structure that supports growth. Further, the Company ensure optimal credit risk profile to maintain / enhance credit rating.
The Company determined the amount of capital required on the basis of annual operating plan and long term strategic plans. The funding requirements are met through internal accruals and long term / short term borrowings. The Company monitors the capital structure on the basis of net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.
2. In the opinion of the Board of Directors, Current assets and other non current assets have a value on realisation in ordinary course of business at least equal to the amount at which they are stated.
3. Confirmation of debit / credit balances have not been received and hence these balances are subject to adjustment if any.
4. Previous year figures :
The company has regrouped / rearranged previous year figures whenever necessary in view of easy comparison with current year figures.
5. Figures rounded off to nearest rupee.
All the figures including previous year figures have been rounded off to nearest rupee.
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