18. Provisions, Contingent Liabilities and Contingent Assets:
A provision is recognised if, as a result of a past event, the group has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are
lower than the unavoidable costs of meeting the future obligations under the contract.
A disclosure for contingent liabilities is made where there is a possible obligation or a present obligation that may probably not
require an outflow of resources or an obligation for which the future outcome cannot be ascertained with reasonable certainty.
When there is a possible or a present obligation where the likelihood of outflow of resources is remote, no provision or disclosure
is made.
Contingent assets are neither recognized nor disclosed in financial statements.
32.2 Commitments :
Estimated amount of contracts remaining to be executed on Capital Account - -
32.3 a) The Company’s case in the matter of higher Electricity charges wrongly claimed by Maharashtra State Electricity
Distribution Company Ltd. (MSEDCL) from November, 1998 to June, 2008 by refusing to reduce the Contract
Demand had been decided in favour of the Company by Maharashtra Electricity Regulatory Commission (MERC)
and the order was upheld by the Appellate Tribunal, New Delhi in appeal preferred by MSEDCL. MSEDCL
preferred an appeal before the Hon’ble Supreme Court challenging the order of MERC and APTEL. The Hon’ble
Supreme Court vide order dated 28th February, 2020 in Civil Appeal No. 4304 of 2007, partly allowed the appeal
filed by MSEDCL and the orders of MERC and APTEL to the extent that they set aside the circulars and policy
decisions issued before the MERC was constituted, has been set aside without disturbing the findings / orders of
MERC and APTEL in favour of the Company on the issues of reduction of contract demand and drawing of power
from one of its Unit Plot-E-23 CPP to another Unit Plot E-1. The Company has then filed application before MeRC
seeking restitution of benefits and incentives which were denied to Company due to pendency of the Appeal and
which the Company was otherwise entitled to receive. MERC vide order dated 12th July, 2021 rejected Company’s
petition for restitution on the erroneous basis that the Supreme Court allowed the appeal preferred by MSEDCL.
The Company has filed Appeal No. 284 of 2021 before APTEL, Delhi on 16th August, 2021 against the order
dated 12th July 2021 and same is pending adjudication. The company has a good case on merits and should be
compensated for the loss caused to it due to pendency of legal proceedings, during which period, citing the
pendency, MSEDCL wrongfully denied the various benefits / incentives to the Company. The case is pending for
final hearing in “LIST OF FINALS” and disposal before APTEL, as per the APTEL Order dated 10.03.2022. The
Load factor incentive and prompt payment discount receivable Rs.178.06 lakhs are disclosed under Note 5 (a) of the
financial Statement. Also, security deposit of Rs. 62.18lakhs included in Note 3(a) and interest receivable of Rs.
10.02 lakhs on deposit is disclosed under Note 11 of the financial statement is wrongfully denied, upheld by
MSEDCL.
b) Similarly the High Court of Bombay has in the matter of electricity duty on Captive Power Generation decided in
Company’s favour and the Government has filed an appeal before the Hon’ble Supreme Court which is pending.
c) The Management foresees only a very remote possibility of an outflow of / adjustments to the resources embodying
economic benefits, in view of the expert legal opinion in the aforesaid matters obtained by the Company.
FINANCIAL INSTRUMENTS
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 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
Fair value estimation
For financial instruments measured at fair value in the Balance Sheet, a three level fair value hierarchy is used that reflects the
significance of inputs used in the measurements. The hierarchy gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).
The categories used are as follows:
• Level 1: quoted prices for identical instruments
• Level 2: directly or indirectly observable market inputs, other than Level 1 inputs; and
• Level 3: inputs which are not based on observable market data.
NOTE- 36
FINANCIAL RISK FACTORS
The Company’s principal financial liabilities comprise loans and borrowings, trade and other payables. The purpose of these financial
liabilities is to finance the Company’s operations and to provide to support its operations. The Company’s principal financial assets
trade and other receivables and cash and cash equivalents that derive directly from its operations.
The Company’s activities exposes it to Liquidity Risk, Market Risk and Credit risk. The Board of Directors reviews and agrees policies
for managing each of these risks, which are summarised as below
(a) Liquidity risk
The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by
delivering cash or another financial asset. Liquidity risk management implies maintenance sufficient cash including availability
of funding through an adequate amount of committed credit facilities to meet the obligations as and when due.
The Company manages its liquidity risk by ensuring as far as possible that it will have sufficient liquidity to meet its short term and
long term liabilities as and when due. Anticipated future cash flows, undrawn committed credit facilities are expected to be
sufficient to meet the liquidity requirements of the Company.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market
prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and
commodity risk. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency
exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market
risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loans and
borrowings.
(i) Foreign currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign
exchange rates. The Company has foreign currency trade payables and receivables and is therefore exposed to foreign
exchange risk. The exchange rates have been volatile in the recent years and may continue to be volatile in the future. Hence the
operating results and financials of the Company may be impacted due to volatility of the rupee against foreign currencies. The
Company is not significantly exposed to foreign currency risk due to their limited transaction in the foreign currency.
Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in
market interest rates. The Company’s long term borrowings have fixed rate of interest and are carried at amortised costs. The
interest rate risk exposure is mainly from changes in fixed and floating interest rates. The interest rate are disclosed in the
respective notes to the financial statement of the Company. The following table analyse the breakdown of the financial assets
and liabilities by type of interest rate:
(c) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations. The
Company is exposed to credit risks from its operating activities, primarily trade receivables, cash and cash equivalents, deposits
with banks and other financial instruments. To manage the credit risk from trade receivables, the Company periodically assess
financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical
bad debts and ageing of accounts receivable. Individual risk limits are set accordingly. The Company considers the probablity of
default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis
throughout each reporting period.
NOTE 37
CAPITAL RISK MANAGEMENT
(a) Capital risk management
The Company’s objectives when managing capital are to :
(i) safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits
for other stakeholders, and
(ii) maintain an optimal capital structure to reduce the cost of capital
In order to maintain or adjust the capital structure, the Company may issue new shares, adjust the amount of dividends paid to
shareholders etc.
The Company monitors capital using a gearing ratio being a ratio of net debt as a percentage of total capital.
NOTE- 38
RECENT ACCOUNTING PRONOUNCEMENTS:
There has been no announcements in respect of amendments /announcement in IND AS applicable for next financial year 2024-25.
NOTE- 39
The Company is developing land at Uchagaon, Kolhapur bearing R.S.No.364/2, R.S.No.363/2A (Old R.S. No 363/2) and
R.S.No.365/B1 (Old R.S. No.365/B) at Euro Palace, Uchagaon, Kolhapur, admeasuring about 2300 Sq.Mtrs, 800 Sq.Mtrs. and
710 Sq.Mtrs. respectively. The Company has passed resolution at Board meeting held on 8th November, 2014 and 12th August,
2017 respectively to enter into Development Agreement with M/s Randive Builders & Developers and give necessary power of
Attorney for above specified land parcels to them. The development agreement has been executed on 20th December, 2014 & 14th
March, 2018 respectively. Accordingly, land parcels of 3810 Sq. Mtrs. have been converted into Stock-in-Trade from Property, Plant
and Equipment at fair market value of Rs.172.50 lakhs in August, 2014 and Rs.173.65 lakhs in September, 2017 respectively as per
valuation reports. Most of the civil constructions work have been completed and final internal finishing works are also completed in
mostly flats and shops. Many flats are sold and customers have paid sale considerations amount and agreement to sale registered and
possession is also handedover to respective customers. The project is likely to be completed before 31st December, 2024.
NOTE-40
The Board of Directors in their meeting held on 26th March, 2022, has decided for closure of its manufacturing plants situated at
Kolhapur under Industrial Disputes Act, 1947, due to continuous grinding halt of operations of plants at Kolhapur since 25th March,
2019 arising out of persistent, unfair and illegal activities of labour including severe inter-union rivalry and disconnection of power.
The Notice of Closure of the manufacturing plants at Kolhapur has been displayed on 30th March, 2022 at the main gate of the Plants
and a copy of said Notice has been sent to concerned workers and authorities.
The matter in respect of labour dues for lay off of workers which was subjudice, has been disposed off by the Hon’ble Supreme Court
mentioning that the remedy has to be sought in the Hon’ble High court. Accordingly, the Company has filed a writ petition before
Hon’ble High Court, Mumbai. In view of expert legal advice taken in the matter, the Company expects a favourable decision. The
management has settled all the dues of lender banks, studying ways to revive some operations of the Company as also to undertake
the further development of available land area at Kolhapur in near future and in view of such positivities, the financial statements have
been prepared on a going concern basis.
NOTE - 41 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 transactions with companies struck off.
iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding that the Intermediary shall a) directly or indirectly lend or invest in other persons or
entities identified in any manner whatsoever by or on behalf of the company (ultimate beneficiaries) or b) provide any guarantee,
security or the like to or on behalf of the ultimate beneficiaries.
vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (funding party) with the
understanding (whether recorded in writing or otherwise) that the Company shall: a) 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 b) provide
any guarantee, security or the like on behalf of the ultimate beneficiaries.
vii) The Company does not have 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.
viii) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the
Companies (Restriction on number of Layers) Rules, 2017.
ix) The Company is not declared wilful defaulter by and bank or financial institution or lender during the year.
NOTE- 42
The financial statements were approved for issue by the Board of Directors on May 24, 2024.
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