2.10.Provisions, Contingent Liabilities and Contingent assets :
A provision is recognized if, as a result of a past event, the company has a present legal or constructive obligation that is reasonably estimable, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Provisions are not recognized for future operating losses.
Provisions are determined based on the best estimate required to settle the obligation at the balance sheet date.
A contingent liability is disclosed unless the possibility of an outflow of resources embodying economics benefits is remote. Contingent assets are not recognized in financial statements since this may result in the recognition of income that may never be realized. However, when the realization of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
A contingent asset is disclosed, where an inflow of economic benefits is probable.
2.11. Earnings per equity share :
Basic earnings per share
Basic earnings per share are calculated by dividing:
- the profit attributable to owners of the Company
- by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares.
Diluted earnings per share
Diluted earnings per share adjust 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.
The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as at the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected
2.12.Employee Benefit :
All employee benefits payable wholly within twelve months rendering services are classified as short-term employee benefits. Benefits such as salaries, wages, short-term compensated absences, performance incentives etc., and the expected cost of bonus, ex-gratia are recognized during the period in which the employee renders related service.
Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered the service entitling them to the contribution.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method with actuarial valuations being carried out at each balance sheet date, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final obligation.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Remeasurements are not reclassified to the statement of profit and loss in subsequent periods.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.
The Company recognizes the following changes in the net defined benefit obligation under employee benefit expenses in the statement of profit and loss.
• Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements,
• Net interest expense or income.
Long-term employee benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the defined benefit obligation at the balance sheet date.
Termination benefits
Termination benefits are recognized as an expense in the period in which they are incurred.
2.13. Cash flow Statement :
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
2.14. Cash and cash equivalents:
All highly liquid financial instruments, which are readily convertible into determinable amounts of cash and which are subject to insignificant risk of change in value and are having original maturities of three months or less from the date of purchase, are considered as cash equivalents. Cash and cash equivalents includes balances with banks which are unrestricted for withdrawal and usage.
2.15. Lease :
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for shortterm leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-to use assets representing the right to use the underlying assets.
i) Right of use assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e. the date the underlying assets is available for use). Right-of-use assets are measured at cost. Less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized. initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received, Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated use full lives of the assets.
If ownership of the Leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful
life of the asset. The right-of-use assets are also subject to impairment. Refer to the accounting policies in section Impairment of non-financial assets.
ii) Lease Liability
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments (i.e. change in future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
iii) Short-term leases and lease of low-value assets
The Company applies the short-term lease recognition exemption to its short-term lease (i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option), it also applies the lease of low-value assets recognition exemption to lease that are considered to be low value. Lease payment on short- term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.
Company as a lessor
leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income Contingent rents are recognized as revenue in the period in which they are earned.
2.16. Exceptional Items
Certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company is such that its disclosure improves the understanding of the performance of the Company, such income or expense is classified as an exceptional item and accordingly, disclosed in the notes accompanying to the financial statements.
NOTE 37 : CORPORATE SOCIAL RESPONSIBILITY EXPENDITURE
As per the Companies Act, 2013, amount required to be spent by the Company on Corporate Social Responsibility ( CSR ) activities during the year was Rs. 52.01 lacs,( 2022-23 Rs. 49.67 lacs ) . During the year ended March 31, 2024 the amount approved by the Board to be spent on CSR activities and was spent 52.01 lacs ( 2022-23 Rs. 49.67 spent ) meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The main focus areas for CSR activities are health care, education, malnutrition and water hygiene and sanitation. A CSR committee has been formed by the company as per the Act to oversee and execute the company’s CSR policy.
Note: 41.1 : The company has adopted Ind-AS, 116 Leases and applied the standard to all lease contracts specific approach for tranasitioning existing on the date of initial application i.e. 1st April 2019 , The company has used the modified retrospctive approach to transitioning to Ind-AS, 116 with right-of -use asset recognised at an amount equal to the lease liability adjusted for any prepayments/accruals recognized in the balance sheet immediately before the date of initial application.
At the commencement date of a lease , the Company has recognised a liability to make lease payments ( i.e. the lease liability ) and an asset representing the right-of-use the underlying asset during the lease term ( i.e.the right-of-use asset).
The company has separetly recognised the interest expenses on the lease liability and the depreciation expense on the right-of-use asset. The operating leases recorded on the balance sheet following implementation of Ind-AS 116 are principally in respect of leasehold asset representing right-of-use as per contracts excluding low value assets and short term leases 12 month or less.
Leases previously accounted for as operating leases
The company recognised right-of-use assets and lease liabilities for thouse leases previously classified as operating leases, using term of non cancellable intention to extend except for short-term leases and lease of low value assets.
The right-of-use assets for most leases were recognised based on the carrying amount as if the standard had always been applied, apart from the use of incremental borrowing rate at the date of initial application. In some leases, the right of use assets were recognised based on the amount equal to the lease liabilities, adjusted for any related prepaid and accrued lease payments previously recognised. Lease liabilities were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at the date of initial application.
NOTE 45: Financial Risk Management Objectives and Policies
The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by the Management Board.
Market Risk is the risk of loss of future earning, fair values or future cash flow 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 the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market Risk is attributable to all market risk sensitive financial instruments including investment and deposits , foreign currency receivables, payables and loans and borrowings.
The Company manages market risk through its finance department, which evaluate and exercises independent control over the entire process of market risk management. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.
Credit Risk
Credit risk arises from the possibility that counter party may not be able to settle their obligation as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking in to account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limit are set accordingly.
The company considers the possibility of default upon initial recognition of asset and whether there has been a significant increse in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increse in credit risk the company compares the risk of a default occuring on the asset as at the reporting date with the risk of default as at the date of initial recognition.
Raw Material and Fuel Price Risk
The company is impacted by the price volatility of certain commodities like raw materials, packing materials and fuel. The Company is impacted by the price volatility of Fuels like Gas, Furnace Oil, etc.
To minimize the risk related to fuel price change, the Company uses alternate fuel based on their market prices. The Company swaps and uses alternate fuels based on the cost of energy efficiency and, hence, quantification of sensitivity is not practical. To mitigate the volatility in market price of major raw materials, the company has entered into fixed price contract.
NOTE 46: Capital Risk Management
The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimize returns to our shareholders.
The capital structure of the Company is based on management’s judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. The Company may take appropriate steps in order to maintain, or if necessary adjust, its capital structure.
NOTE 47: Fair Value Measurement
Financial Instrument by category and hierarchy
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
The following methods and assumptions were used to estimate the fair values:
1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying amounts largely due to short term maturities of these instruments.
2. Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments is not materially different from their carrying amounts.
The fair values for Non-Current borrowings, loans and security deposits were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or
indirectly.
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
NOTE 48 : Operating Segments:
DISCLOSURES AS REQUIRED BY INDIAN ACCOUNTING STANDARD (Ind AS) 108 OPERATING SEGMENTS Identifications of Segments :
The chief operational decision maker monitors the operating results of its Business segment separately for the purpose of making decision about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the standalone financial statements, Operating segment have been identified on the basis of nature of products and other quantitative criteria specified in the Ind AS 108.
Segment revenue and results:
The expenses and income which are not directly attributable to any business segment are shown as unallocable expenditure & income. Segment assets and Liabilities:
Segment assets include all operating assets used by the operating segment and mainly consist of property, plant and equipments, trade receivables, Inventory and other operating assets. Segment liabilities primarily includes trade payable and other liabilities. Common assets and liabilities which can not be allocated to any of the business segment are shown as unallocable assets / liabilities.
(#) Decrease in Trade Payable ratio is on account of decrease in purchases and accordingly decrease in trade payables.
(*) The increase in net capital turnover ratio is especially on account of increase in short term borrowings and decrease in trade receivables.
(A) The increase in net profit ratio is on account of compensation received as stated at Note No 28.10
As per our report of even date For and on behalf of Board of Directors of
EMPIRE INDUSTRIES LIMITED
for A. T. JAIN & CO. S. C. MALHOTRA (DIN : 00026704) Chairman
Chartered Accountants RANJIT MALHOTRA (DIN : 00026933) Vice Chairman & Managing Director
FRN 103886W DILEEP MALHOTRA (DIN : 00027168) Joint Managing Director
KABIR MALHOTRA (DIN : 07019714) Executive Director
S. T. JAIN RAJBIR SINGH (DIN : 00826402)
Partner SUBODH CHANDRA (DIN : 02076844) Directors
Membership No. 033809 GEETANJALI NAIDU (DIN : 08713727) }
UDIN : (24033809BKARXZ8752) ANUJA N MOHE (DIN 09263246)
Place : Mumbai S. C. NANDA Director Finance & Company Secretary
Mumbai, 22nd May, 2024 Mumbai, 22nd May, 2024
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