12. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS
Provisions are recognized when the Company has a present obligation (legal or constructive) 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 a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain.
The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision 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 recognizes any impairment loss on the assets associated with that contract.
Contingent liability is disclosed in the case of:
o a present obligation arising from past events, when it is not probable that an outflow of resources will be required to see
the obligation;
o a present obligation arising from past events, when no reliable estimate is possible: o a possible obligation arising from past events, unless the probability of outflow of resources is remote.
A contingent asset is disclosed where an inflow of economic benefits is probable.
Provisions, contingent liability & contingent asset are reviewed at each balance sheet.
13. EARNING PER SHARE
Basic earnings per share is calculated by dividing the net profit after tax by the weighted average number of equities shares outstanding during the year. Diluted earing per share adjusts the figures used in determination of basic earnings per share to take into account the conversion of all dilutive potential equity shares.
14. RECENT PRONOUNCEMENT
The Ministry of Corporate Affairs ("MCA") notifies new standards / amendments under Companies (Indian Accounting Standards) Rules as issued from time to time. As of 31st March 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company that has not been applied.
Notes:
(a) Security and repayment details for cash credit facilities including working capital demand loans is as follows:
i) The cash credit is repayable on demand, interest ranging between 9.75% to 10.95%p.a. is /to be secured against first pari passu hypothecation charge on Stocks, Book Debts and entire current assets of the company, EQM of Property at Kesar Solitaire of Ranjan D Patel, Hemlata M Patel, Trupti M Patel, EQM of Commericial Property at Vikhroli of D Ravilal Resource Management Private Limited (Formely Known as Generic Engineering & Construction Private Limited).
ii) The Letter of credit/Bank Gaurntee is repayable on demand and is /to be secured against Fixed Deposit of the Company.
iii) Personal Guarantee of Manish R Patel and to all banks.
iv) Corporate Guarantee of Generic Engineering and Construction Private limited to all bank.
Collateral security:
1. Commercial unit no. 201, second floor, Plot Bearing Survey Number: CTS No:21a S No 99 P/96P/15 P Hissa No 1 P,Situated at Unit no 201 2nd floor "fitwell house opp hometown LBS Marg Vikhroli west Mumbai-400083 (metro), admeasuring total area : 2287 sq ft belongs to: Generic Engineering Constructions and Private Limited. Who is : Gurantor, Title Deed No: Bdr 7-08806-2011, Registered On : 25-Nov-11, At: Mumbai Maharashtra
2. Commercial unit no. 202, second floor, Plot Bearing Survey Number: CTS No:21a S No 99 P/96P/15 P Hissa No 1 P,Situated at Unit no 202 2nd floor "fitwell house opp hometown LBS Marg Vikhroli west Mumbai-400083 (metro), admeasuring total area : 2287 sq ft belongs to: Generic Engineering Constructions and Private Limited. Who is : Gurantor, Title Deed No: Bdr 7-08806-2011, Registered On : 25-Nov-11, At: Mumbai Maharashtra
3. Commercial Office No 1901 To 1906 Plot Bearing Survey Number: Plot No.5, Sector 19,Situated at Kesar Solitaire, Sanpada, Navi Mumbai-400705 (Semi Urban), Admeasuring Total area :4826 sq ft. Belongs to: D Ravilal Resource Management Private Limited, who is Guarantor
4. Office No : 2101 To 2106, 21st Floor, Kesar Solitaire, Plot Bearing Survey Number: 5 Sector-19, Sanpada. Navi - Mumbai-400705 (Semi Urban) including all alloted car parkings.
5. Commercial Office no. 501 To 504 Kesar Solitaire, Plot Bearing Survey Number: 5 Sector 19, Sanpada.
Fair value hierarchy
The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the group has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
- During the periods mentioned above, there have been no transfers amongst the levels of hierarchy.
- The carrying amounts of Security deposits, trade receivables, other financial assets, cash and cash equivalents, fixed deposits with banks, current borrowings, trade payables and other current financial liabilities are considered to be approximately equal to their fair value, since those are current in nature.
- The fair values computed above for assets measured at amortised cost are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of indirectly observable inputs.
Valuation process
The Company evaluates the fair value of financial assets and financial liabilities on periodic basis using the best and most relevant data available.
NOTE : 36 : Risk Management :-
Financial risk management objectives and policies
The Company’s principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. Company’s senior management oversees the management of these risks. It is Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors review and agree policies for managing each of these risks, which are summarised below.
a) Market risk
Market risk is the risk of any loss in future earnings, in realisable fair value or in future cash flows 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 change in the interest rates, foreign currency exchange rates, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.
c) Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. For the Company, liquidity risk arises from obligations on account of financial liabilities - borrowings, trade payables and other financial liabilities.
Liquidity risk management
Company’s treasury department is responsible for liquidity and funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s net liquidity position through forecasts on the basis of expected cash flows.
The table below summarises the maturity profile of Company’s financial liabilities based on contractual undiscounted payments.
d) Credit risk
Credit risk arises from cash and bank balances, current and non-current financial assets, trade receivables and other financial assets carried at amortised cost.
Credit risk management
To manage credit risk, the Company periodically assesses the financial reliability of customers and other counterparties, taking into account the financial condition, current economic trends, analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly. The Company uses a provision margin to compute the expected credit loss allowance for trade receivable. Also, trade receivables are monitored on periodic basis for any non-recoverability of the dues.
Note No. 37 Disclosure under Ind AS 19 Employee Benefits Gratuity
Benefit Scheme:
Gratuity is payable to all the eligible employees at the rate of 15 days salary (Basic D. A.) for each completed year of service, subject to a payment ceiling of INR 2,000,000, in line with Payment of Gratuity Act, 1972.
The formula to calculate daily salary is 1/26 * monthly salary and vesting period is 5 years.
In line with Gratuity Act, service more than 6 months is considered as 1 year, so past service is calculated as rounded years of service.
Gratuity shall be payable to an employee on termination of employment due to superannuation, retirement or resignation after successful completion of the vesting period. The completion of vesting period is not applicable in the case where termination of employment is due to death, disability. To provide for the aforementioned eventualities and to arrive at the present value of the defined benefit obligation, we have incorporated the underlying assumptions for this actuarial valuation -
Valuation Assumptions:
Following assumptions are used in preparation of this actuarial valuation as required under Indian Accounting Standard 19 (Ind AS 19):
Discount Rate:
The rate used to discount employee benefit obligations reflects the estimated term of the benefit obligation and shall be consistent with the currency and term of the government bonds. We have used the Discount Rate as 6.41% p.a. which relates to the rate available on Government Securities (G. Sec.) for the tenure of 5 years i.e. the average expected future working life of employees (estimated term of obligation). The rate is taken as per the deal rate as on 31-03-2022.
Salary Escalation Rate:
Estimates of future salary increase are based on inflation, seniority, promotion and other relevant factors such as demand and supply in the employment market. This assumption has been determined in consultation with the entity. Salary Escalation rate is considered as 5.00% p.a. for all future years.
Attrition Rate:
As discussed with entity, Attrition rate is considered as 15.00% p.a. for all future years.
Mortality Rate:
Since no separate analysis of the mortality rate for the entity was undertaken, we have considered the latest unisex mortality table available. We have used Indian Assured Lives Mortality (2012-14) Ultimate - Urban table for death rate and to provide for liability on account of death while in service.
The rates are assumed to include permanent disablement.
Retirement Age:
We have considered the retirement age for all employees as 58 years, as provided by the entity.
Recognition of Actuarial Gains and Losses:
As required under Indian Accounting Standard 19 (Ind AS 19), Actuarial Gains and Losses should be recognised immediately in the Statement of Other Comprehensive Income.
Materiality:
Information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements.
The result of the valuation was shared with the entity. The determination and interpretation of the assumptions was discussed with the client and was thereby found suitable.
Reasonableness of Assumptions:
The assumptions with regards to salary escalation and attrition rates are the expectations of the entity based on the salary increment that the entity will provide in future and the expected turnover in the future.
As per Accounting Standard assumptions are management’s best estimate assumptions and thereby the assumptions given by entity are accepted. We have checked for reasonableness of assumptions and discussed impact of assumptions on provision to ensure entity’s accounts give true and fair view.
The results are particularly sensitive to some assumptions, such as the discount rate, level of salary inflation, level of employee turnover and mortality. For example, a decrease in the assumed discount rate or an increase in salary inflation will lead to an increase in reported liability.
Method of Valuation:
To calculate the Defined Benefit Obligation, we have used the Projected Unit Credit Method (PUCM) which is suggested under Indian Accounting Standard 19 (Ind AS 19) as notified under The Companies (Indian Accounting Standards) Rules, 2015.
Valuation Result:
Accrued liability (discontinuance liability) as on 31-03-2022 after considering all employees (vested and non-vested employees) works out as INR 5,346,665. This is for representation purpose only and not to be accounted in balance sheet.
The result of this actuarial valuation report is dependent on the actuarial assumptions used. The Defined Benefit Obligation towards Gratuity along with the Current and Non-current liability in accordance with Schedule III of The Companies Act of India, 2013 is tabulated below:
Gratuity Plan - Unfunded
The entity has a defined benefit gratuity plan in India (unfunded). The entity’s defined benefit gratuity plan is a final salary plan for employees. Gratuity is paid from entity as and when it becomes due and is paid as per entity scheme for Gratuity
Risk Exposure
Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan's liability.
Interest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision.
Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Entity has to manage pay-out based on pay as you go basis from own funds.
Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.
Note: 38 : SEGMENT REPORTING
The Company is mainly engaged in the business of Construction of residential buildings/ commercial complexes and activities connected and incidental thereto. On that basis, the company has only one reportable business segment- Construction, the results of which are embodied in the financial statments. The Company operates in only one Geographical segment -- within India
The Company has three Customers contributing more than 10% of the revenue from operationsin FY 2023-24 having 13.48% ,21.27% and 11.82% of revenue from operationsand two customers in F.Y 2022-23 having 30.16% and10.38% of revenue from operations
Note: 39 : DISCLOSURE OF RELATED PARTY AND TRANSACTIONS
The transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the period-end are unsecured and settlement occurs in cash or credit as per the terms of the arrangement. Impairment assessment is undertaken each financial year through.
Note 42: Other Statutory Information
i) No proceedings have been initiated or are pending against the Company for holding any benami property under the Prohibition of Benami Property T ransactions Act, 1988 (as amended) and rules made thereunder.
ii) The Company do not have any transactions with companies struck off.
iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
v) The Company have 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 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 provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
vi) The Company have 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 have no 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 assements 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 has not been declared a wilful defaulter by any bank or financial institution or other lender (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
43. Previous year figures have been regrouped/ rearranged where-ever necessary.
The accompanying notes 1-35 are an integral part of the financial statements.
As per our report of even date
For Bilimoria Mehta & Company For and on behalf of the Board of Directors of
CHARTERED ACCOUNTANTS Generic Engineering Construction And Projects Limited
ICAI FRN : 120759W CIN No. L45100MH1994PLC082540
Sd/- Sd/- Sd/- Sd/- Sd/-
CA Prakash Mehta Manish Patel Jayesh Rawal Tarak Gor Krishna Sharma
PARTNER Managing Director Director Whole Time Director (WTD) Company Secretary
Membership No. : 030382 DIN: 00195878 DIN: 00464313 & Mem No.: A40183:
PLACE: MUMBAI PLACE: MUMBAI PLACE: MUMBAI Chief n^na^cy1" (CFO) PLACE: MUMBAI
DATE: 30th May 2024 DATE: 30th May 2024 DATE: 30th May 2024 pD'Nf°m50mrai DATE: 30th May 2024
UDIN : 24030382BKFJCM9187 dATeT30thMMUaMyB2024
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