ix) Provisions, contingent liabilities:
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Further, long term provisions are determined by discounting the expected future cash flows specific to the liability. The unwinding of the discount is recognised as finance cost. A provision for onerous contracts is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
Disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.
x) Revenue from contracts with customers:
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
Revenue is measured based on the transaction price as specified in the contract with the customer. It excludes taxes or other amounts collected from customers in its capacity as an agent.
Revenue from Construction Contracts
Revenue, where the performance obligation is satisfied over time, is recognised in proportion to the stage of completion of the contract. The stage of completion of project is determined by the proportion that contract cost incurred for work performed upto the balance sheet date bear to the estimated total contract costs.
Contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. Contract costs are recognised as an expense in the statement of profit and loss in the accounting periods in which the work to which they relate is performed. An expected loss on a contract is recognised immediately in the Statement of Profit and Loss.
The Company recognises revenue using input method that is based on Company's efforts or inputs to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation. Contract revenue recognised at an amount which is higher than its right to consideration (i.e., right to invoice) from customer is recorded as unbilled revenue under other current assets.
Contract revenue includes the initial amount agreed in the contract plus any variations in contract work and claims payments, to the extent that it is probable that they will result in revenue and can be measured reliably. The Company recognises bonus/ incentive revenue on early completion of the project when it is highly probable that it will result in revenue."
Contract balances Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer e.g., unbilled revenue. If the Company performs its obligations by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset i.e., unbilled revenue is recognised for the earned consideration that is conditional. The contract assets are transferred to receivables when the rights become unconditional. This usually occurs when the Company issues an invoice to the Customer.
Trade receivables
A receivable represents the Company's right to an amount of consideration that is unconditional i.e., only the passage of time is required before payment of consideration is received.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue when the Company performs under the contract.
Other income
a) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the effective rate of interest.
b) Dividend income is recognised in profit or loss on the date on which the Company's right to receive payment is established.
xi) Retirement and other employee benefits:
a) Short term employee benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages etc. and the expected cost of ex-gratia are recognized in the period in which the employee renders the related service. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
b) Post Employment Employee Benefits:
Retirement benefits to employees comprise payments to government provident funds, gratuity fund and Employees State Insurance.
Defined benefit plans:
Gratuity liability is defined benefit obligation. The Company's net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value.
The present value of the obligation under such defined benefit plan is determined based on actuarial valuation by an independent actuary, using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the Balance Sheet date.
Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in Other Comprehensive Income. Net interest expense (income) on the net defined liability (assets) is computed by applying the discount rate, used to measure the net defined liability (asset), to the net defined liability (asset) at the start of the financial year after taking into account any changes as a result of contribution and benefit payments during the year. Net interest expense and other expenses related to defined benefit plans are recognised in Statement of Profit and Loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in Statement of Profit and Loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
Actuarial gains/losses are recognized in the other comprehensive income.
xii) Income taxes:
Tax expense comprises of current and deferred tax. It is recognised in the statement of profit and loss except to the extent that it relates to an item recognised directly in equity or in Other Comprehensive Income.
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with Income Tax Act, 1961. Deferred income tax reflects the impact of current year timing differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves unrecognized deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
Deferred tax asset / liabilities in respect of on temporary differences which originate and reverse during the tax holiday period are not recognised. Deferred tax assets / liabilities in respect of temporary differences that originate during the tax holiday period but reverse after the tax holiday period are recognised. The tax effect is calculated on the accumulated timing differences at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
Minimum alternate tax credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each balance sheet date and the carrying amount of the MAT credit is written down to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.
xiii) Earnings Per Share
a) Basic earnings per share:
Basic earnings per share is calculated by dividing:
- the profit attributable to equity share holders of the Company
- by the weighted average number of equity shares outstanding during the financial year.
b) Diluted earnings per share:
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
- the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
xiv) Operating segments:
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM) of the Company. The CODM is responsible for allocating resources and assessing performance of the operating segments of the Company.
I) Term loans
A) Term loan includes loan from a bank amounting Rs 462.26 lakh (March 31, 2022 : Rs 226.26 lakh) which is secured by a first and exclusive charge as under:
a) The facility to the extent of Rs 170.12 lakh is cover by 100% guarantee from National credit Guarantee Trustee Company Limited (Ministry of Finance Government of India) and Rs 292.14 lakh is a Term Loan availed against purchase of equipment.
b) Second charges as Equitable mortgage of Properties and Hypothication of current assets of the Company including Present and future except specifically charged;
The term loan of Rs 170.12 lakh carries an interest rate calculated on 3 months Repo rate of the bank plus a spread 4.50%. The term loan is repayable in 36 equal monthly installments plus 12 months Principal Moratorium commencing from the date of disbursement. Further, loan of Rs 292.14 Lakh carries an interest rate 8.25%.
II) Vehicle Loans
a) Vehicle loans from NBFC of Rs 92.79 lakh (from bank as on March 31, 2022 : Rs 3.51 lakh) carry interest rates ranging from 7.40% - 8.10% p.a. The loans are repayable in 60 monthly installments along with interest. The loans are secured by way of hypothecation of the respective vehicles.
III) Business Loan
a) Business Loan from NBFC of Rs 68.07 Lakh (March 31, 2022: Rs 13.68 Lakh) carry interest rate of 14.50% to 19.30% p.a. The loans are repayable in 36 monthly installments along with Interest. The Loan are secured by Personal guarantee of Mr. Pandurang Dandawate, Mrs. Jayashree Dandawate and Mrs. Tanvi Auti, Directors of the Company.
I) Loans repayable on demand
A) Loans repayable on demand include an overdraft facility from a bank amounting Rs 718.92 Lakh (March 31, 2022 : Rs 961.77 Lakh) which is secured as below:
a) First charge by way of hypothecation of all the current assets, present and future, of the the company.
b) Equitable Mortgage of the following Properties as under :
i) Row house No. 4, Ground Floor Building No. F 20, Vrindavan CHS Ltd., Sec-4, Sanpada, Navi Mumabi, Thane registered in the name of Mr. Pandurang Dandawate.
ii) Office No. 501, 5th floor of the building, Pujit plaza Co-oprative premises Society Ltd., Plot No. 67, Sec- 11, CBD Belapur, Navi Mumbai.
iii) Office No. 507 & 508, 5th floor of the building, Pujit plaza Co-oprative premises Society Ltd., Plot No.67, Sec- 11, CBD Belapur, Navi Mumbai.
iv) Residential Flat No. A-801 & 802, at shreeji Hights, Plot No.1, 1A, 1B & 1C, Sec-46A, Nerul, Navi Mumbai, Registerd in the name of Mr. Pandurang B. Dandawate & Mrs. Jayashree P. Dandawate.
v) Office at shop no. 3, Yashashree Plaza, Sec - 8, Sanpada, Navi Mumbai, registerd in the name of Mrs. Jayashree Pandurang Dandawate.
c) Personal Guarantee of Mr. Pandurang Dandawate, Jayshree Dandawate, Sandeep Dandawate and Tanvi Auti.
Loan carries an interest rate calculated on the 3 months Repo rate of the bank and a spread of 2.94% p.a. (i.e. 8.0%)
Note : 27
Financial risk management
The Company has exposure to the following risks arising from financial instruments:
Credit Risk
• Trade Receivables
• Other Financial Instruments
Liquidity Risk Market Risk
• Interest Rate Risk
i. Risk management framework
The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk management framework. Management is responsible for developing and monitoring the Company's risk management policies, under the guidance of Audit Committee.
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 obligation.
The Company's Audit committee 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 Audit 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.
ii. Credit Risk
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments
(a) Trade Receivables
The Company follows a 'simplified approach' (i.e. based on lifetime ECL) for recognition of impairment loss allowance on trade receivables. For the purpose of measuring lifetime ECL allowance for trade receivables, the Company estimates irrecoverable amounts based on the ageing of the receivable balances and historical experience. Receivable balances and deposit balances are monitored on a monthly basis with the result that the Company's exposure to bad debts is not considered to be material.
The Company has no significant concentrations of credit risk. It has policies in place to ensure that sale transactions are made to customers with an appropriate credit history.
The Company does not have any credit risk outside India.
Financial instruments - Fair values and risk management (continued)
iii. Liquidity Risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company's objective is to maintain optimum level of liquidity at all times, to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including bilateral loans, debt etc. at an optimised cost. Working capital requirements are adequately addressed by internally generated and borrowed funds.
The following tables detail the Company's remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have 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. The tables include both interest and principal cash flows. To the extent that interest flows are at floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period.
iv. 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. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments.
The Company's activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments such as foreign exchange contracts to manage its exposures to foreign exchange fluctuations. All such transactions are carried out within the guidelines set by the risk management committee.
The analysis excludes the impact of movements in market variables on the carrying value of post-employment benefit obligations, provisions and on the non financial assets and liabilities.
- 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.
Majority of borrowings of the Company are at fixed interest rate and are carried at amortised cost. They are therefore not subject to interest rate risks, since neither the carrying amount nor the future cash flows will fluctuate because off a change in market interest rates.
iv. Market Risk
Market Risk is the risk that changes in market prices - such as foreign exchange rates, interest rates will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
iv(a). Currency risk:
The risk that the value of a financial instrument will fluctuate because of changes in foreign exchange rates. The functional currency of the Company is Indian Rupees ("Rs.”). Company does not have any foreign currency transaction. Accordingly, the Company is not significantly exposed to any foreign currency risk.
iv(b). 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 the risk of changes in market interest rates relates primarily to the Company's long-term debt obligations with floating interest rates.
v(b). Other
The Company does not have any Financial investment/ investment in shares that are subject to market risk. Hence, the market risk will not have any/ material effect on the company with respect to financial investments or investment in shares.
Exposure to interest rate risk
The Company's interest rate risk arises from borrowings. Borrowings taken and issued at fixed and floating rates exposes the Company to fair value and cash flow interest rate risk. The interest rate profile of the Company's interest-bearing financial instruments as reported to the management of the Company is as follows.
xvii) Details of Crypto Currency or Virtual Currency
The Holding Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
xviii) Previous year's figures have been re-grouped / re-classified wherever necessary, to confirm to current year's classification
For and on behalf of the Board of Directors For Dhruv Consultancy Services Limited
As per our report of even date
For Mittal & Associates., Tanvi T Auti P. B. Dandavate
Chartered Accountants Managing Director Director
Firm Regn No 106456W din 07618878 DIN: 01202414
Hemant R Bohra Isha S Kulkarni
Partner Snehal L Patil Company Secretary
MeiTibership N°. 165667 Chief Financial Officer M No. A34065
UDIN: 24165667BKEZEE5224
Place: Mumbai Place: Navi Mumbai
Date: 27th May, 2024 Date: 27th May, 2024
|