(O) Provisions and Contingent Liabilities Provision
A provision is recognized when the Company has a present obligation as a result of past event, and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate the reflects current market assessment of the time value of money and the risk specific to the liability. The increase in the provision due to the passage of time is recognised as interest expenses.
Product Warranties
A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and weighting of all possible outcomes by their associated probabilities. Provisions for warranties are adjusted regularly to take account of new circumstances and the impact of any changes recognised in the statement of profit and loss.
Contingent Liabilities
Wherever there is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognised because (a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or (b) the amount of the obligation cannot be measured with sufficient reliability. Show cause notices are not considered as Contingent Liabilities unless converted into demand.
(P) Taxation
Income Tax expense represent the sum of the tax currently payable and deferred tax Current Income Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the statement of profit and loss because of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company's current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying unit intends to settle the asset and liability on a net basis.
Deferred Income Tax
Deferred income tax is recognised using the balance sheet approach. Deferred Tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax base used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax liabilities and assets are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends and has ability to settle its current tax assets and liabilities on a net basis.
Current and Deferred Tax For The Year
Current and deferred tax are recognised in profit or loss, except when they relate to item that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
(Q) Borrowing Cost
Borrowing costs are interest and other costs that incurs in connection with the borrowing of funds and include interest expense calculated using the effective interest method as described in Ind AS 39 Financial Instruments: Recognition and Measurement, exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss.
(R) Impairment
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of cash inflows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
(S) Cash Flow Statement
The Cash Flow Statement is prepared by the indirect method set out in Ind AS-7 on Cash Flow Statements and presents cash flows by operating, investing and financing activities of the Company.
(T) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Core Management Committee which includes the Managing Director who is the Chief Operating Decision Maker. The Core Management Committee examines performance both from product and a geographical perspective. The Company has identified two reportable business segments viz. Automotive and Other Segment comprising LED Luminaries on the basis of the nature of products, the risk and return profile of individual business and the internal business reporting systems.
(U) Lease
The Company has applied Ind AS 116 using modified retrospective approach.
The Company's lease asset classes primarily consist of leases for land and building. The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognise a right-of-use asset (“ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and leases of low value assets. For these short term and leases of low value assets, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made.
A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the leased assets.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
(V) Dividend on Equity Share
Dividends on equity shares are recorded on the date of approval by the shareholders of the Company.
(W) Corporate Social Responsibility (CSR) Expenditure
CSR Expenditure incurred by the Company is charged to the standalone statement of the profit and loss
(X) Earnings Per Share
The Basic and Diluted Earnings Per Share (“EPS") is computed by dividing the profit after tax (loss) for the year by weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earning per share, the net profit (loss) for the year attributable to equity shareholder and the weighted average number of share outstanding during the year are adjusted for the effect of all dilutive potential equity shares. The weighted average number of shares outstanding during the year are adjusted for events of bonus issue and share split, if any.
44 Financial Instruments and Risk Review Financial Risk Management Framework
The Company's financial liabilities comprise mainly of trade payables and other payable. The Company's financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.
The Company is exposed to Market risk, Credit risk and Liquidity risk. The Company oversees the management of these financial risks. The Company's approach to address uncertainties in its endeavor to achieve its stated and implicit objectives. It prescribes the roles and responsibilities of the Company's management, the structure for managing risks and the framework for risk management. The framework seeks to identify, assess and mitigate financial risks in order to minimize potential adverse effects on the Company's financial performance.
i) Capital Management
The Company's capital management objectives are:
The Company is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.
The Company manages capital risk by maintaining sound/optimal capital structure through monitoring of financial ratios, such as debt-to-equity ratio and net borrowings-to-equity ratio on a monthly basis and implements capital structure improvement plan when necessary.
The Company uses debt ratio as a capital management index and calculates the ratio as Net debt divided by total equity.
ii) Credit Risk
Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as trade receivables, other balances with banks, loans and other receivables.
In assessing, recoverability of receivables, the management has considered the asset type, past due status and other relevant factors considering the age of receivables. The provision for expected credit losses (ECL) are revised at each reporting date by the use of practical expedients viz provision matrix.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was Rs. 19,379.07 Lakhs (net of write-off/provisions) (Previous Year Rs. 14,080.24 Lakhs) respectively, being the total of the carrying amount of balances with trade receivables. An amount of Rs. 15.64 lakhs (previous year Rs. 37.09 lakhs) has been written-off during the year after re-assessing long outstandings and obtaining objective evidences on the impairment of the trade receivables.
Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of financial statement whether a financial asset or a group of financial assets is impaired. The Company recognises lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
The Company's primary customers are major automobile manufacturers (OEMs) with good credit ratings. Company's exposure to customers is diversified and some customers contribute more than 10% of outstanding accounts receivable which forms 62% of total receivables as at 31 March, 2024 (50% as at 31 March, 2023), however there was no default on account of those customers in the past.
The Company performs credit assessment for customers on an annual basis and recognizes credit risk, on the basis lifetime expected losses and where receivables are due for more than six months.
iii) Liquidity Risk (Amount Rs in Lakhs)
a) Liquidity risk management
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company's principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company has no outstanding borrowings as at 31/03/2024. The Company believes that the working capital is sufficient to meet its current requirements. As at March 31, 2024, the Company had a working capital of Rs. 41,094.96 Lakhs including cash and cash equivalents of Rs.20,381.03 Lakhs. As at March 31, 2023, the Company had a working capital of Rs. 29,504.04 lakhs including cash and cash equivalents of Rs. 17,993.47 Lakhs.
iv) 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 the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company's exposure to market risk is primarily on account of foreign currency exchange rate risk. a) Foreign Currency exchange rate risk
The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the respective entities. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro, and Japanese Yen against the respective functional currencies of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange.
The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments. The information on foreign currency exposures that are not hedged by derivative instruments is as follows.
49 ADDITIONAL REGULATORY DISCLOSURES AS PER SCHEDULE III OF COMPANIES ACT, 2013
(i) Title Deed of the Immovable Properties
The title deeds of the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the Company, except a piece of land (area approx.. 1913 sqm) adjacent to unit-9 at Karsanpura, Gujarat, purchased for Rs. 18.23 Lakhs from other company. The seller company require permission from the state government for registration of sale deed, which is already applied by seller company. However, the permission could not be obtained during the year under reporting. The Company is regularly following-up with the seller company for getting the registration.
(ii) Investment Property
The Company does not have any investment property.
(iii) Revaluation of Property Plant and Equipment & Intangible Assets
As per the Company's accounting policy, Property, Plant and Equipment (including Right of Use Assets) and intangible assets are carried at historical cost (less accumulated depreciation & impairment, if any), hence the revaluation related disclosures required as per Additional Regulatory Information of Schedule III (revised) to the Companies Act, is not applicable.
(iv) Disclosure on Loan Given to Specified Persons (Promotors, Directors, KMPs and their Related Parties)
The Company had given home loan of Rs. 50.00 Lakhs at interest rate of 8.00% p.a (fixed) to joint managing director (Mr. Rajesh Sharma), which was repayable in 60 equal monthly instalment of Rs.1.05 lakhs each. Rajesh Sharma has re-paid entire home loan outstanding during the year. The amount outstanding and percentage of total loan is as below.
53 Fire Incident
Part of one building of Unit-7 situated at Plot No. 1915, Phase -V, Rai Industrial Estate, Sonipat-131029 (Haryana) caught fire on June 13, 2023 around noon. There were no human casualties reported. The carrying value of inventories of Rs 2583.74 Lakhs (including GST reversals) and carrying value of property plant and equipment of Rs 2456.79 Lakhs are written off in the statement of profit and loss. The company has a valid insurance policy which adequately covers the losses for the inventories and reinstatement value of property plant and equipment. The recoverable amount pertaining to the loss of the inventory as stated above and loss to the extent of carrying amount of the property plant and equipment have been shown as receivable. An estimated claim of Rs.11270.00 Lakhs on the Reinstatement Value basis ( including contingencies value upto 5% ) had been submitted to insurer on October 13, 2023. The loss is under evaluation by the surveyor and the outcome of the claim is subject to final assessment by the insurer in due course of time. The final entries would be recorded in the books of accounts on the finalization of the claim by the insurer.
54 The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment benefits received Presidential assent in September, 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come in to the effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
55 Audit Trail
In the SAP, audit trail at transaction level on application layer has an embedded audit trail in sub-ledger accounting tables which creates unique events for every transaction along with dates of creating and updating transactions with the identity of users. General ledger journals are not allowed to be modified after posting and the date and creator of journals are tracked. This feature cannot be disabled.
56 Previous year's figures have been regrouped/reclassified wherever necessary .The figures are rounded off to nearest rupees in lakhs unless otherwise stated.
For and on behalf of the Board of Directors As per our report of even date
for Anil S. Gupta & Associates Chartered Accountants
Firm Registration Number -004061N
Sd/- Sd/- Sd/- Sd/- Sd/-
( J. K. Jain ) (Vineet Sahni) ( O.P. Gupta ) ( Arvind K. Chauhan ) (Anil Kumar Gupta)
Chairman & Managing Director CEO & Director Chief Financial Officer Company Secretary Partner
Membership No.:-083159
Place: Rai, Sonepat (HR.)
Dated: 21/05/2024
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