3.8 Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
3.9 Investment in subsidiaries
The Company has availed the optional exemption under Ind AS 101 and accordingly it has used the carrying value as at the date of transition i.e. 1st April 2016 as the deemed cost for investment in subsidiaries. The Company's investment in instruments of subsidiaries are accounted for at cost less impairment loss if any.
3.9.1 Investment in Associate
Investments in associates are initially recognized at cost, which includes transaction costs directly attributable to the acquisition. Subsequently, these investments are measured using the equity method, where the carrying amount is adjusted for the investor’s share of the associate's profit or loss and other comprehensive income. Any dividends received from the associate reduce the carrying amount of the investment. The investment is tested for impairment whenever there is an indication that the investment may be impaired, in line with Ind AS 36.
3.10 Financial asset
All regular way purchases or sales of financial assets are recognized and de-recognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.
All recognized financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
3.10.1 Financial assets at Fair Value Through Profit and Loss (FVTPL)
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognized in profit and loss. The net gain or loss recognized in profit and loss incorporates any dividend or interest earned on the financial asset and is included in the 'Other Income / Other expenses' line item. Dividend on financial assets at FVTPL is recognized when the Company’s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity and the amount of dividend can be measured reliably.
3.10.2 Financial Assets at Fair value through Other Comprehensive Income (FVTOCI)
Financial assets at FVTOCI are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognized in Other Comprehensive Income.
3.10.3 Impairment of financial assets
The Company applies the expected credit loss model (ECL) for recognising impairment loss on financial assets measured at amortised cost, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
For trade receivables or any contractual rights to receive cash or another financial assets that results from transactions that are within the scope of Ind AS 18, the Company always measures their allowances at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivable, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
3.10.4 Derecognition of financial assets
The Company de-recognizes a financial asset when contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralised borrowing for the proceeds received.
3.11 Foreign Exchange Transaction
Transactions in foreign currency are recorded at the standard exchange rates determined monthly. Monetary assets and liabilities denominated in foreign currency, remaining unsettled at the period end are re-stated at closing rates. The difference in translation of monetary assets and liabilities and realised gains and losses on foreign currency transactions (including those relating to acquisition of depreciable assets) is recognised in the Profit and Loss Account.
Foreign Exchange gain or loss on restatement of long term foreign currency borrowing is recognised in the profit and loss.
In the previous GAAP the Company has created Foreign Exchange Hedge Reserve and any foreign exchange gain or loss on restatement were transfer to this account and subsequently on actual realisation of exchange gain / loss, such amount is transfer to the profit and loss account. Under lnd-AS-21 -The effects in changes in foreign exchange rates, exchange gain / loss on such restatement of foreign currency loans needs to charge to profit and loss account. Accordingly on transition date i.e. 01/04/2016, debit balance in Hedge Reserve Account amounting to Rs. 3735.90 lakhs have been transferred to retained earnings.
3.12 Leases
In accordance with Ind-AS 116, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease, in case of short-term leases and leases of low value assets.
In case of long-term leases, the right-of-use assets are initially recognized 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 re-measured 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 re-measured 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 assets are separately presented in the Balance Sheet and lease payments are classified as financing cash flows.
3.13 Employee benefits
The Defined benefit plan
The Company's net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. The calculation of defined benefit obligations is performed periodically by an independent qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements. Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses and the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income (OCI). Net interest expense (income) on the net defined liability (assets) is computed by applying the discount rate, used to measure the net defined liability (asset). Net interest expense and other expenses related to defined benefit plans are recognised in Consolidated Statement of Profit and Loss. When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in Consolidated Statement of Profit and Loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
3.14 Financial Liabilities
Financial liabilities are subsequently measured at amortised cost or at FVTPL.
3.14.1 Financial liabilities at FVTPL
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognized in profit and loss. The net gain or loss recognized in profit and loss is included in the ‘Other Income / Other expenses' line item.
3.14.2 Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held for trading and are not designated as at FVTPL are measured at amortised cost.
3.14.3 Derecognition of financial liabilities
The Company de-recognizes financial liabilities when, and only when, the Company's obligations are discharged, cancelled or have expired.
3.15 Cash flow statement
Cash flows are reported using the indirect method, whereby net profit before tax 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 are segregated.
3.16 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for the events for bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares). Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on conversion of all dilutive potential equity shares.
3.17 Segment Reporting
The Company is engaged in only one type of business i.e. ownership/charter of offshore support vessels. There are no separate reportable segments.
3.18 Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company's accounting policies, which are described in note 3, the management of the Company is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
4 Amendment to Existing issued Ind AS Recent pronouncements
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31st March, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
(A) Defined benefit plans
The Company earmark liability towards Gratuity and provide for payment under Group Gratuity Scheme administered by the Life Insurance Corporation of India (LIC).
(a) Characteristics of defined benefit plan
The Company has a defined benefit gratuity plan in India (funded). The Company’s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. The fund is managed by a trust which is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy.
(b) Risks associated with defined benefit plan
Gratuity is a defined benefit plan and Company is exposed to the Following Risks:
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. A fall in the discount rate generally increases the mark to market value of the assets liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.
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.
Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.
Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.
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.
Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance Company and a default will wipe out all the assets. Although probability of this is very less as insurance Companies have to follow regulatory guidelines.
(c) Characteristics of defined benefit plans
The Company has the benefit scheme in line with Payment of Gratuity Act, 1972, for those employees who are getting benefit as per Payment of Gratuity Act, 1972. Change in liability (if any) due to this scheme change is recognised as past service cost.
(d) A separate trust fund is created to manage the Gratuity plan and the contributions towards the trust fund is done as guided by rule 103 of Income Tax Rules. 1962.
30 - Risk management 30A Capital risk management
The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the returns to stakeholders. 30B Financial instruments
The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income & expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are as disclosed in notes to financial statements.
30C Financial and liquidity risk management objectives
The average payment terms of creditors (trade payables) is 90-120 days. Other financial liabilities viz. employee payments, other payables are payable as and when due.
30D Credit risk management
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. The major class of financial asset of the Company is trade receivables. For credit exposures to customer, management assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. As the Company does not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the statement of financial position.
30E Foreign Currency risk management
Since part of the revenues of the Company are denominated in US Dollars, there is a translation risk as the Company has to report its financial performance in INR. However, a small portion of the risk is “paired”, as some of the Company’s operating costs are incurred in US Dollars.
31 - Segment Information
The Company is engaged in only one type of business i.e. charter of offshore support vessels. There are no separate reportable segments.
36 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 that have been struck off.
iii. The Company has created charges in favour of an ARC which have “"stepped into the shoes"” of erstwhile lenders of the Company. The Company has filed satisfaction of Charges with MMD ( Mercantile Marine Department) and ROC (Registrar of Companies), in respect of dues that have been repaid. However, some old charges are still appearing in the record of MCA site for the loans that has been repaid in full. The Company is in the process to vacate the same.
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 has 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 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.
37 The Company does not have any material significant impact due to Ind AS 116 - Leases, as all the lease arrangement are of short term nature with insignificant value.
38 Previous year’s figures have been regrouped / reclassified, to correspond with the current year's classification / disclosure.
As per our report of even date attached For and on behalf of the Board
For D. Kothary & Co. Aditya Garware J. M. Guhathakurta M. M. Honkan
Chartered Accountants Chairman Director Wholetime Director
Firm Reg. No. 105335W DIN: 00019816 DIN: 10306595 DIN : 08392886
Deepak O. Narsaria P. S. Shah A. C. Chandarana
Partner Chief Financial Officer Company Secretary
Membership No. 121190 & President - Legal &Admn.
UDIN: 24121190BKBOTE9763
Mumbai, 29th May 2024 Mumbai, 29th May 2024
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