(o) Provisions, contingent liabilities and contingent assets
Provisions: Provisions are recognised when there is a present obligation 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 there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the balance sheet date and are not discounted to its present value, unless the time value of money is material.
Contingent liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within 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.
Contingent Assets: Contingent assets are not recognised in the financial assets. However, the same is considered when the realisation is certain and it is no longer considered contingent. The asset is recognised in the period in which the change from contingent asset to asset occurs.
(p) Functional and presentation currency
Items included in the financial statements of the Company are presented in INR which is our Company's functional currency.
All amounts have been rounded-off to the nearest lakhs and decimals thereof, unless otherwise mentioned.
(q) Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in Other comprehensive income.
The Company has determined that interest and penalties related to income taxes, including uncertain tax treatments, do not meet the definition of income taxes, and therefore accounted for them under Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets.
i. Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantially enacted as at the reporting date.
Current tax assets and liabilities are offset only if:
a) there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority; and
b) there is intention either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any.
ii. Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).
The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore in case of history of recent losses, the Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary difference or there is convincing other evidence that sufficient taxable profits will be available against which such deferred tax asset can be realised. 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. Unrecognised 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.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets and liabilities are offset only if the entity has a legal enforceable right to set off current tax assets / liabilities and they relate to income taxes levied by the same taxation authority on the same taxable entity.
(r) Earnings per share (EPS)
Basic earnings per share (EPS) is computed by dividing the profit after tax or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the profit after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to dilutive potential equity shares, by the weighted average number of equity shares considered for deriving the basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all the dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity would decrease the net profit per share from continuing ordinary operations.
(s) Export incentives
Export benefits available under prevalent schemes are accrued in the year in which the goods are exported and there is no uncertainty in receiving the same.
(t) Segment Reporting
Operating segment are reported in a mmaner consistent with the internal reporting provided to the Chief operating decision maker ( CODM).
Identification of segments : In accordance with Ind As 108
"operating segment", the operating segment used to present segment information reviewed by CODM to allocate resources to the segments and assess their performance. An operating segment is a component of the Company that engages in the bussiness activities from which it earns revenues and incurs expenses, including revenues and expenses that relate to transactions with any of the Company's other components.
(u) Dividend
The Company recognises a liability for any dividend declared but not distributed at the end of the reporting period, when the distribution is authorised and the distribution is no longer at the discretion of the Company on or before the end of the reporting period. As per Corporate laws in India, a distribution in the nature of final dividend is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity.
(v) Standards 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 amended from time to time. There are no such recently issued standards or amendments to the existing standards for which the impact on the Standalone financial statements is required to be disclosed.
(w) Events after reporting date
Where events occur after the balance sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted with the financial statements. Otherwise, events after the balance sheet date of material size or nature are only disclosed.
2(ii) Key Judgments, estimates and assumptions
The preparation of the Company's financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities, and the accompanying disclosures along with contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information. The Management believes that the estimates used in preparation of the Financial Statements are prudent and reasonable.
Judgement
Information about critical judgements in applying accounting policies, as well as estimates and assumptions that have the most significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are included in the following notes:
• Useful lives of property, plant and equipment (including right of use assets) and intangible assets ( Note 3, 4 & 5)
• Definition of lease, lease term and discount rate for the calculation of lease liability (Note 37)
Assumptions and estimation uncertainities
Information about critical judgements in applying accounting policies, as well as estimates and assumptions that have the most significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are included in the following notes:-
• Identifying performance obligations under contracts with customer (Note 45)
• Timing of revenue recognition under contracts with customers (Note 45)
• Measurement of Defined Benefit Obligations (Note 41)
• Recognition and measurement of provisions and contingencies, key assumptions about the likelihood and magnitude of an outflow of resources (Note 38(b))
• Provision for Expected credit losses (Note 11)
• Recognition of deferred tax assets (Note 36)
The terms of the vehicle loans are as follows:
(i) The rate of interest of various vehicle loan ranges from 8.30% to 10.50%. The vehicle loan is repayable in equated monthly installments.
(ii) The loans are secured by hypothecation of underlying vehicles.
Note 18(b)
The terms of the term loan are as follows:
(i) Secured term loan from bank amounting to H 1,000.00 lakhs, outstanding as at March 31, 2024 H 783.88 lakhs (March 31, 2023 :
H 958.38 lakhs) is repayable in 60 equated monthly installments starting from January 07, 2023 with last installment payable on December 07, 2027. The rate of interest is bank reference rate plus spread of 1% to 1.5% p.a.. The Company has mortgaged identified immovable properties against the term loan (refer note 3(ii)).
(ii) Secured term loan from bank amounting to H 626.40 lakhs, outstanding as at March 31, 2024 H 550.54 lakhs (March 31, 2023 : H 620.79 lakhs) is repayable in 84 equated monthly installments starting from March 07, 2023 with last installment payable on February 07, 2030. The rate of interest is bank reference rate plus spread of 1% to 1.5% p.a.. The Company has mortgaged identified immovable properties against the term loan (refer note 3(ii)).
Note 18(c)
Unsecured loan from related parties carries interest rate in the range of 9.0% p.a. The tenor of the loan is 3 years from the
date of drawdown.
The terms of the cash credit facility are as follows:
The rate of interest is is bank reference rate plus spread of 1.4% to 1.6% p.a.
Cash credit facility from HDFC Bank is primarily secured by hypothecation by way of first and exclusive charge on all present and future stocks and book debts. Cash credit facility from BNP Paribas is secured by standby letter of credit. Quarterly statements of stock and book debts are filed with the HDFC bank which are in agreement with the books of accounts.
Note 20(b)
The terms of the buyer credit facility (sub limit of Cash Credit limit) are as follows:
The rate of interest is LIBOR/SOFR plus spread of 1.5 to 3.0% p.a..
The other terms of the facilities are same as mentioned in Note 20(a).
Note 20(c)
Cash credit facility from Axis Bank is unsecured. The rate of interest is 3 months MCLR plus spread of 0.20% to 0.45% p.a..
Note 20(d)
Unsecured loan from related parties carries interest rate in the range of 9.0% p.a. The loan is repayable on demand.
Utilization of borrowings from banks and financial institutions
Borrowings from banks and financial institutions have been utilized for the specific purpose for which it were taken.
Wilful Defaulter
The Company has not been declared as wilful defaulter by any bank or financial institution or any other lender.
39 Events Occurring after the Reporting Period
Pursuant to approval of Board of Directors received on March 20, 2024 and the subsequent Share Subscription Agreement and Shareholders Agreement entered between the parties on March 28, 2024, the Company paid share application money amounting to H 51.00 lakhs to acquire 51% stake in SKIDO Industries Private Limited ('SKIDO') by subscribing to 5,10,000 (Five lakhs and ten thousand) Equity Shares of H 10/- each. The shares of SKIDO were allotted to the Company on April 01, 2024 effective which SKIDO became subsidiary of the Company from that date.
40 Earning per share (EPS)
EPS is calculated by dividing the Profit / (loss) for the year attributable to equity holders by the weighted average number of equity shares outstanding during the period.
Diluted EPS are calculated by dividing the Profit / (loss) for the year attributable to equity holders by the weighted average number of equity shares outstanding during the period plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.
Ind AS 33 'Earnings per share', requires an adjustment in the calculation of basic and diluted earnings per share for all the periods presented if the number of equity or potential equity shares outstanding change as a result of issue of bonus shares. The weighted average numbers
41 Employee Benefits :
a) Defined contribution plans:
The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund, Labour Welfare Fund and Employees' State Insurance, which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to statement of profit or loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund, Labour Welfare Fund and Employees' State Insurance for the year ended March 31, 2024 aggregated to H 1,736.06 lakhs (March 31, 2023: H 973.71 lakhs).
b) Defined benefit plans:
The Company's gratuity benefit scheme is a defined benefit plan (unfunded). The Company's net obligation in respect of a defined benefit plan 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. Any unrecognised past service costs and the fair value of any plan assets are deducted. The calculation of the Company's obligation is performed bi-annually by a qualified actuary using the projected unit credit method.
The Company recognises all actuarial gains and losses arising from defined benefit plans immediately in the standalone statement of profit and loss except remeasurement of Defined Benefit Obligations which is recognised in Other Comprehensive Income. All expenses related to defined benefit plans are recognised in employee benefits expense in the Statement of profit and loss. When the benefits of plan are improved, the portion of the increased benefit related to past service by employees is recognised in the standalone statement of profit and loss. The Company recognises gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. In arriving at the valuation for gratuity following assumptions were used:
h) Code on Social Security, 2020:
The date of implementation of the Code on Social Security, 2020 ('the Code') relating to employee benefits is yet to be notified by the Government and when implemented will impact the contributions by the Company towards benefits such as Provident Fund, Gratuity etc. The Company will assess the impact of the Code and give effect in the financial results when the Code and Rules thereunder are notified.
42 Operating Segment
a) The Company has determined its business segment as "Stationery Products". Since the Company's business is from single business reporting segment i.e. sale of stationery products, there are no other primary reportable segments. Thus, the segment revenue, segment results, total carrying amount of segment assets, total carrying amount of segment liabilities, total cost incurred to acquire segment assets, total amount of charge for depreciation during the year is as reflected in the standalone financial statement.
b) Geographical Segment
The secondary segment of the Company is based on revenue generated from the geographical locations, these being within India (domestic) and outside India (exports).
Notes
i) The Company has not disclosed the fair value of financial assets such as Investments, trade receivables, trade payables, short term loans, deposits etc. because their carrying amounts are a reasonable approximation of fair value.
ii) The carrying amounts of the borrowings that are not measured at fair value are reasonable approximation of fair value, as they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period.
b) Measurement of fair values
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual funds that have quoted price. The mutual funds are valued using the closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
43 Financial instruments - Fair values and risk management (Contd.)
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.
There were no changes made during the year to valuation menthods or the processes to determine classification of level.
c) Financial risk management
The Company has a well-defined risk management framework. The Board of Directors of the Company has adopted a Risk Management Policy. The Company has exposure to the following risks arising from financial instruments:
• Credit risk ;
• Liquidity risk ; and
• Market risk
i) Credit risk
Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or fail to pay amounts due causing financial loss to the company. The potential activities where credit risks may arise include from cash and cash equivalents, security deposits or other deposits and principally from credit exposures to customers relating to outstanding receivables. The maximum credit exposure associated with financial assets is equal to the carrying amount.
Trade and other receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer and the geography in which it operates. 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 has a policy under which each new customer is analysed individually for creditworthiness before offering credit period and delivery terms and conditions.
The ageing analysis of trade receivables is disclosed in Note 11.
Exposures to customers outstanding at the end of each reporting period are reviewed by the management to determine incurred and expected credit losses. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.
The management assesses and manages credit risk based on the Company's credit policy. The management assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company's historical experience and informed credit assessment and including forward looking information.
The Company's trade receivables are geographically dispersed. The Management does not believe there are any particular customers or group of customers that would subject the Company to any significant credit risks in the collection of accounts receivable.
Other financial assets
Other financial assets includes loan to employees, security deposits, investments, cash and cash equivalents, other bank balance, advances to employees etc.
• Cash and cash equivalents and Bank deposits are placed with banks having good reputation and past track record with adequate credit rating.
• Company has given security deposits to lessor for lease . the Company does not have exposure to any credit risk.
ii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are proposed to be settled by delivering cash or other financial asset. The Company's financial planning has ensured, as far as possible, that there is sufficient liquidity to meet the liabilities whenever due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. The Company has practiced financial diligence and syndicated adequate liquidity in all business scenarios.
(iii) Market risk - Currency 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 Company's operations result in it being exposed to foreign currency risk on account of trade receivables, trade payables and borrowings. The foreign currency risk may affect the Company's income and expenses, or its financial position and cash flows.
The objective of the Company's management of foreign currency risk is to maintain this risk within acceptable parameters, while optimising returns. The Company's exposure to, and management of these risks is explained below:
Capital Management
The Company defines capital as total equity including issued equity capital, share premium and all other equity reserves attributable to equity holders of the Company (which is the Company's net asset value). The primary objective of the Company's financial framework is to support the pursuit of value growth for shareholders, while ensuring a secure financial base.
The Company monitors capital using a ratio of 'adjusted net debt' to 'adjusted equity'. For this purpose, adjusted net debt is defined as total interest-bearing loans and borrowings less cash and bank balances. Total equity comprises all components of equity.
45 Ind AS 115 - Revenue from Contracts with Customers
i) The Company is in the business of manufacturing, trading and selling of stationery. All sales are made at a point in time and revenue
recognised upon satisfaction of the performance obligations which is typically upon dispatch/delivery depending on the contractual terms with the customers. Accruals for discounts/incentives are estimated (using the most likely method) based on accumulated experience and underlying schemes and agreements with customers. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established and the Company does not give significant credit period resulting in no significant financing component.
46 Corporate Social Responsibility
As per Section 135 of the Companies Act 2013, the Company has formed a Corporate Social Responsibility (CSR) Committee. The CSR Committee approved CSR Policy where certain focus areas out of list of activities covered in Schedule VII of the Companies Act 2013, have been identified to incur CSR expenditure.
i) Gross amount required to be spent by the Company during the year H 72.52 lakhs (March 31, 2023: H 21.04 lakhs). During the current year, the company has spent H 74.00 lakhs (March 31, 2023: H 31.00 lakhs) for purpose other than construction/acquition of asset. Out of the excess amount spent, the company has carried forward H 1.48 lakhs (March 31, 2023: H 9.95 lakhs ) to next year to offset against the mandatory spend in the next year.
48 Transaction with Struck off Companies
The Company has reviewed transactions to identify if there are any transactions with struck off companies. To the extent information is available on struck off companies, there are no transactions with struck off companies.
49 Disclosure of Intermediaries
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 any other person or entity, including foreign entities (Intermediaries) with an understanding that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company or provide any guarantee, security or the like to or on behalf of the Company.
The Company has not received any fund from any person or entity, including foreign entities (Funding Party) with the understanding that the Company shall 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 provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
50 Other statutory information
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 charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
iii) The Company has not traded or invested in Crypto Currency or Virtual Currency during the period.
iv) The Company has 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, search or survey or any other relevant provisions of the Income Tax Act, 1961).
v) The Company is in compliance with the number of layers prescribed under Clause (87) of Section 2 of the Companies Act read with the Companies (Restriction on number of Layers) Rules, 2017.
51 During the year ended March 31, 2024, the Company has completed its Initial Public Offer ("IPO") of 1,51,96,510 equity shares of face value of H 10/- each comprising of (i) fresh issue of 43,67,088 equity shares at an issue price of H 790 per equity share; (ii) fresh issue of 69,930 equity shares at an issue price of H 715 per equity share for employee quota; (iii) an offer for sale of 1,07,59,492 equity shares at an issue price of H 790 per equity share. The equity shares of the Company were listed on BSE Limited ("BSE") and National Stock Exchange of India Limited ("NSE") on December 20, 2023.
Out of the Net proceeds which were unutilised as at March 31, 2024, H 24,400.00 lakhs are temporarily invested in Fixed Deposits, H 903.70 lakhs is held in the Company's Monitoring Account, while the balance amount is held in the public offer account towards the Company's share of expenses related to Issue.
52 Dividends declared are based on the profit available for distribution. On May 24, 2024, the Board of Directors have recommended a
dividend of H 2.50 per equity share in respect of the year ended March 31, 2024, subject to the approval of shareholders at the ensuing Annual General Meeting. If approved, the dividend would result in a cash outflow of H 1,517.18 lakhs.
As per our report of even date attached
For B S R & Co. LLP For and on behalf of the Board of Directors of
Chartered Accountants DOMS Industries Limited (formerly known as DOMS Industries Private Limited)
Firm Registration No. 101248W/W-100022 CIN: L36991GJ2006PLC049275
Tarun Kinger Santosh Raveshia Sanjay Rajani
Partner Managing Director Whole-time Director
Membership No: 105003 DIN: 00147624 DIN: 03329095
Place: Umbergaon, India Place: Umbergaon, India Place: Umbergaon, India
Date: May 24, 2024 Date: May 24, 2024 Date: May 24, 2024
Rahul Shah Mitesh Padia
Chief Financial Officer Company Secretary
Membership No: A58693
Place: Umbergaon, India Place: Umbergaon, India
Date: May 24, 2024 Date: May 24, 2024
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